The Real Estate Bloggers

Foreclosure Deal Between Washington and The Banks Is Toxic For Everyone Else

Posted: 29 Aug 2011 05:57 AM PDT

In the most recent Rolling Stone magazine there is an article on how the White House is trying to ram through an agreement between the government and the major banks on their handling of the foreclosure/mortgage securities fraud that banks have been involved in over the past few years.

Let’s just say that the article does not shine a very good light on these negotiations. The deal that is proposed will let the banks get away with the theft of billions of dollars from both homeowners and bond investors.

The banks in turn hid the crappiness of these loans via certain poorly-understood nuances in the securitization process – this is almost certainly where Scheniderman’s investigators are doing their digging – before hawking the resultant securities as AAA-rated gold to fools in places like the Florida state pension fund.

They did this for years, systematically, working hand in hand in a wink-nudge arrangement with clearly criminal enterprises like Countrywide and New Century. The victims were millions of investors worldwide (like the pensioners who saw their funds drop in value) and hundreds of thousands of individual homeowners, who were often sold trick loans and hustled into foreclosure when unexpected rate hikes kicked in.

In a larger sense, even the (often irresponsible) people who simply bought more house than they could afford were victims of this scam. That’s because in many of these cases, credit simply would not have been available to those people had the banks not first discovered a way to raise vast sums of money dumping crap loans on an unsuspecting market.

Read the whole article at Rolling Stone

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Foreclosure Deal Between Washington and The Banks Is Toxic For Everyone Else