Right from the start we’ve been saying that the foreclosure fiasco is going to prompt government intervention to remedy the flaws and perhaps forgive certain types of fraudulent behavior by banks. Now it seems that Sheila Bair agrees.
“Ultimately this problem will require some type of global solution,” Bair said at a housing conference in Arlington, Virginia Monday. “In developing that solution, I would suggest that all interested parties consider some type of triage on foreclosures.”
She indicated that a “global solution” might include banks lowering interest rates for borrowers in exchange for safe-harbors for some foreclosures.
We’re reading between the lines here. But it sure sounds like Bair is moving toward supporting intervention to prevent the foreclosure fiasco from producing a home loan credit crunch and housing market meltdown.
Bair predicted that more flaws in the foreclosure process will be uncovered by regulators. The resulting litigation will be “very damaging to our housing markets,” she said.
Mike Shedlock’s run-down of new foreclosure fiasco litigation suggests that things the litigation explosion has already begun.
Bank of America has been hit with a class-action lawsuit filed in federal court in New Jersey accusing the bank of “an undisciplined rush to seize homes" through "pervasive and willful disregard of knowledge, facts and statutes."
The Attorney General of Texas has issued subpoenas to Bank of America, JP Morgan Chase, Citi Mortgage, Ally Financial and Wells Fargo. This thing is going to get a lot worse before it gets any better.
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