Reading Between The Lines: Did the Obama Administration Let Mortgage Abusers Off the Hook?

Friday, February 10, 2012

Did the Obama Administration Let Mortgage Abusers Off the Hook?

By Anna Manzo

Here's a collection of stories with updates on the housing/mortgage crisis and holding banks accountable, in case you missed them:

Forty-nine of 50 State Attorneys General Settle with 5 Major Banks on Mortgage Agreement, Feb. 9, 2012

After years of what appeared to be reluctance by the Obama administration to investigate or prosecute those responsible for the abusive home mortgage practices that led to the nation's economic crash, 49 of 50 state attorneys announced Feb. 9 that the five largest U.S. banks have agreed to a $25 billion settlement to end lawsuits related to the mortgage scandal.

On Feb. 10, a WNYC interview with HUD Secretary Shaun Donovan also discussed reducing principals on underwater mortgages. However, it's possible that only a small percentage of those who have already lost their homes are likely to even get cash payments of $1500 to $2000. Donovan mentioned a new website that has been set up: NationalMortgageSettlement.com.

A National People's Action and The New Bottom Line proposal in September 2011, "The Win-Win Solution: How Fixing the Housing Crisis will Create 1 Million Jobs," discussed how "lowering the principal balance on all underwater mortgages to their current market value, over $70 billion per year, would be pumped back into our economy, and millions of families would be able to stay in their homes, and over 1 million jobs would be created."

Here's an excerpt of the response from those two organizations on the Obama administration's announcement:

"The mortgage fraud settlement being announced today is a tiny drop in a big bucket. It does not do justice for the millions of homeowners who lost their homes or hold the banks fully accountable for their crimes. For homeowners who were defrauded and lost their homes, $2,000 is too little, too late. It is a paltry down payment toward full relief for homeowners."

National People's Action (npa-us.org) is a network of grassroots organizations with a reputation for direct action from across the country that work to advance a national economic and racial justice agenda.

New Bottom Line (newbottomline.com) is a campaign organized by a coalition of community, faith-based and labor organizing groups working together to challenge established big bank interests on behalf of struggling and middle-class communities.

To keep the pressure on the president, The National People's Action has its urgent message here:

"We need to make sure that President Obama:

Uses the new mortgage fraud task force to conduct a robust and far-reaching investigation that ultimately leads to at least $300 billion in reduced principal on underwater mortgages and $50 billion in restitution for affected homeowners

Replaces the leadership at the Federal Housing Finance Agency, which has obstructed efforts to reduce principal that would save the taxpayers tens of millions of dollars.

Makes sure there is a strong, robust enforcement mechanism in the deal announced today, with swift and severe consequences for banks that fail to live up to the terms of the settlement"

Rolling Stone contributing editor Matt Taibbi speaks with Sam Seder on Current TV's "Countdown with Keith Olbermann," on this bailout:

Meanwhile, if you want to know whether your home mortgage is underwater, here's a good article: "How to Find out if Your Home Mortgage is Underwater," by eHow.com.

Sources and related links: