Dodd’s comments were misdirected at best. It really doesn’t have anything to do (in most cases) families losing their homes to sloppy bureaucratic mismanagement or fraud. It’s about making the lenders follow the rules the same way the lenders insist that borrowers follow the rules. Credit card companies jack up interest rates when a borrower is late on a payment on a different credit card. They close HELOCs because they “think” equity has eroded. They do these things because, to the letter of the law, and their written agreements, they’re allowed to. Lenders and loan servicers SHOULD be held to these same kinds of standards in the foreclosure process.
The parties that should really be outraged by this is the investors in those loans. The banks, investment houses, the MBS holders. For those that are happy every time a house gets foreclosed, because another cause of the bubble gets their just reward, should be just as elated at this. The lenders and packagers were just as responsible. Now they get theirs. It will take time, but eventually all the dirty laundry will be cleaned from the system.
Patience.
As an aside, it’s a bit unclear to me why the moratorium include california and other states with non-judicial foreclosure, and rather lax document substition rules. Are loan servicers so dumb that they can’t figure out in which states these fuck-ups are important?
