A rather nauseating statement from a Government Accountability Office report on foreclosures:
Because they generally focus on the areas with greatest risk to the institutions they supervise, federal banking regulators had not generally examined servicers’ foreclosure practices, such as whether foreclosures are completed; however, given the ongoing mortgage crisis, they have recently placed greater emphasis on these areas.
You read that right. Bank regulators in the United States were not even looking at foreclosure practices before the media latched onto the foreclosure fraud outbreak. The Office of the Comptroller of the Currency and the Federal Reserve acknowledged this in hearings two weeks ago, but it's still harrowing to see the degree to which mortgage banking remains totally free of oversight, even after it drove the global economy off a cliff.
The rest of the report is about banks abandoning properties instead of proceeding with a foreclosure sale. Kind of sick-- throw a family out, then just abandon the house altogether, don't even bother to sell it. The GAO says it's not happening too much, but any sane businessperson would make sure that it never happens. A simple loan modification would cut everybody's losses here, but the banks can't be bothered with that. And nobody is bothering the banks about it.
You may recall that there was a tremendous legislative battle earlier this year over the creation of a new Consumer Financial Protection Agency. The bank lobby and regulators at the Fed, the OCC and yes, even the FDIC, all argued that we didn't need it, while essentially everybody else said we did. But the existing regulatory chiefs all made essentially the same argument against the CFPA: We have several regulators who oversee consumer protection, and they're all just great at it. Creating a new agency that focused only on consumer protection would be end up destabilizing the financial system, because regulating consumer protection without looking at bank safety and soundness would jeopardize bank capital levels.
This argument was absurd at the time, most obviously because the existing regulators were simply awful. They totally failed to restrain predatory mortgage lending for nearly a full decade precisely because they considered "safety and soundess" regulation to be their only job. Safety and soundness was construed as "bank profitability"—if a bank had lots of money, it was less likely to fail. In practice, that meant regulators would allow consumer protection violations so long as they made money for the bank. With the mortgage crisis, this consumer protection failure ultimately lead to a safety and soundness catastrophe, but that's not actually very common. Usually predatory lending is very profitable, which is why banks do it.
So what happened after all the top regulators went out in public and repeatedly screamed that we absolutely can't allow them to lose their consumer protection authority? They totally ignored consumer protection regulation. Look at the excuse that bank regulators fed to the GAO (emphasis mine):
Because they generally focus on the areas with greatest risk to the institutions they supervise, federal banking regulators had not generally examined servicers’ foreclosure practices.
Translation: Even after consumer protection violations wrecked the largest banks in the country, we still don't look at consumer protection unless it actually hurts a bank's bottom line, right away, right now.
The amazing thing here is that the legal liabilities from these foreclosure abuses once again could be putting bank solvency on the line. Global economy to Elizabeth Warren: Help!
Also, the link above is to a summary of the GAO report. The full report is here.
RealtyTrac has just reported that even though the volume of foreclosed homes plunged by 25% from Q2 to Q3 and 31% from Q2 of 2009, the discount on foreclosed homes has hit a five year high, as interest in even ultra bargain properties has collapsed following the expiration of the homebuyer tax credit, and confirming yesterday's bad Case Shiller (remember that one?) number. Per RealtyTrac: "foreclosure homes accounted for 25 percent of all U.S. residential sales in the third quarter of 2010 and that the average sales price of properties that sold while in some stage of foreclosure was more than 32 percent below the average sales price of properties not in the foreclosure process — up from a 26 percent discount in the previous quarter and a 29 percent discount in the third quarter of 2009." Yet despite the major price drop, buying interest has evaporated as nobody there is no longer any purchasing power left in the lower and middle sections of the housing market: "a total of 188,748 U.S. properties in some stage of foreclosure — default, scheduled for auction or bank-owned (REO) — sold to third parties in the third quarter, a decrease of 25 percent from the previous quarter and a decrease of nearly 31 percent from the third quarter of 2009. The average sales price of properties in some stage of foreclosure was $169,523, down 2.46 percent from the previous quarter and down 0.44 percent from the third quarter of 2009." And while the average price of non-foreclosed homes posted a slight uptick in Q3, the volume drop was even worse: "The average sales price of properties not in foreclosure was $249,721, up 6.42 percent from the previous quarter and up 4.36 percent from the third quarter of 2009. Sales volume of non-foreclosure properties decreased 29 percent from the previous quarter and nearly 31 percent from the third quarter of 2009."
More from RealtyTrac's Jim Saccacio:
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As the debate over the health-care public option heated up, a Fox News executive told staffers to change the way they talked about it. Howard Kurtz on the memo that echoed a GOP talking point.
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As the debate over the health-care public option heated up, a Fox News executive told staffers to change the way they talked about it. Howard Kurtz on the memo that echoed a GOP talking point.
Fox <b>News</b> Spun Health Care | Bill Sammon And Goverment Option <b>...</b>
From August of 2009 to March of 2010, the debate over health care reform was effectively story number one on cable news, in part because, it seemed a perfect metaphor for the new Obama administration. As expected, some saw it as an ...
bench craft company scamIn Defense of the Fox <b>News</b> Ban on “Public Option” - Swampland <b>...</b>
Fox News Washington managing editor Bill Sammon is under fire today for instructing his newsroom - during the height of the health care debate - not to use the term “public option.
How Fox <b>News</b> Spun the Health-Care Debate - The Daily Beast
As the debate over the health-care public option heated up, a Fox News executive told staffers to change the way they talked about it. Howard Kurtz on the memo that echoed a GOP talking point.
Fox <b>News</b> Spun Health Care | Bill Sammon And Goverment Option <b>...</b>
From August of 2009 to March of 2010, the debate over health care reform was effectively story number one on cable news, in part because, it seemed a perfect metaphor for the new Obama administration. As expected, some saw it as an ...
bench craft company scamIn Defense of the Fox <b>News</b> Ban on “Public Option” - Swampland <b>...</b>
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As the debate over the health-care public option heated up, a Fox News executive told staffers to change the way they talked about it. Howard Kurtz on the memo that echoed a GOP talking point.
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bench craft company scamIn Defense of the Fox <b>News</b> Ban on “Public Option” - Swampland <b>...</b>
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bench craft company scamIn Defense of the Fox <b>News</b> Ban on “Public Option” - Swampland <b>...</b>
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How Fox <b>News</b> Spun the Health-Care Debate - The Daily Beast
As the debate over the health-care public option heated up, a Fox News executive told staffers to change the way they talked about it. Howard Kurtz on the memo that echoed a GOP talking point.
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bench craft company scamIn Defense of the Fox <b>News</b> Ban on “Public Option” - Swampland <b>...</b>
Fox News Washington managing editor Bill Sammon is under fire today for instructing his newsroom - during the height of the health care debate - not to use the term “public option.
How Fox <b>News</b> Spun the Health-Care Debate - The Daily Beast
As the debate over the health-care public option heated up, a Fox News executive told staffers to change the way they talked about it. Howard Kurtz on the memo that echoed a GOP talking point.
Fox <b>News</b> Spun Health Care | Bill Sammon And Goverment Option <b>...</b>
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