Deficiency Of Regulation Caused Foreclosures? No, Banks Just Don’t Care

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The number of federal laws ostensibly created to shield homeowners and borrowers from predatory or discriminatory lending is mind boggling. With the dozens of laws in place that had been meant to safeguard people buying homes and regulate the monetary market, it ought to have been a huge surprise to politicians and regulators once the real estate bubble burst and foreclosure rates skyrocketed – after all, this is what all those regulations had been guaranteed to protect against, right?

Many commentators, politicians, pseudo-economists, as well as other media proclaimed professionals have pointed out only 1 (false) trigger of the housing crisis – the lack of regulation on Wall Street, on subprime lenders, and others in the genuine estate market. These very same professionals who failed to foresee the collapse, although, can only suggest one answer – give additional power to the government within the type of more regulations, more laws, and more bailout programs.

The following is often a partial list of some of these laws and rules that had been put into place particularly to regulate the financial or housing markets, at the same time as a large number enacted for other factors but which have relevance to the great housing market bubble:

Community Reinvestment Act

Department of Housing and Urban Development Act

Equal Credit Opportunity Act

Fair Credit Reporting Act

Fair Debt Collection Practices Act

Fair Housing Act

Homeless Assistance Act

Housing and Community Development Act

Indian Housing Act

National Housing Act

Real Estate Settlement Procedures Act

Truth In Lending Act

Veterans’ Disability Compensation and Housing Benefits Amendments

The truth is, this is only a very small sampling of the Act of Congress that have been created to regulate the housing market, the financial industry, and mortgage lending in particular. And even banking acts and laws have been mostly kept out of the above short list, despite the fact that they are designed to control the institutions that supply the most money for mortgages.

It is not lack of regulation of the housing market that caused the foreclosure rate to skyrocket and real estate costs around the nation to plummet. The vast number of regulations on banks and lenders and mortgage brokers and appraisers and real estate agents and title companies had been all supposed to prevent a crisis of the magnitude the country now faces from ever happening.

However it is not the regulations or laws or lack thereof that is the difficulty. The genuine difficulty is that banks and financial firms that would like to take advantage of their customers face completely no consequences for fraudulent or predatory actions. This scenario where banks own the government which rules over the rest of the individuals within the nation has come about through two key elements.

First, access to the courts for homeowners facing foreclosure has been severely restricted. In nonjudicial foreclosure states, homeowners do not have the proper to confront the bank plus the charges against them – the lender is merely able to advertise a sheriff sale of a property, regardless of the borrowers’ circumstances or if they’ve ever missed a payment. And it is going to price them potentially thousands of dollars to file their very own lawsuit against a bank to stop foreclosure, a cost which numerous homeowners dealing having a monetary hardship are unable to pay.

But even in states where homeowners should be sued in court by the lender, access is still severely restricted. Even discounting the prevalence of “rocket docket” jurisdictions holding 30 second foreclosure hearings and lawyers basically lying to judges so that you can push through situations, all of the complicated procedural rules have been written to keep the average person from becoming able to comprehend how the court system works. And once more, if the owners want a fair shot at defending their house, they most often have to hire an expensive lawyer of their very own.

The banks, on the other hand, are effortlessly able to afford high priced lawyers all over the country when pursuing foreclosure against customers. The banks and lawyers are the two groups which contribute probably the most to political campaigns, and it can be no surprise that judges are often willing to overlook gross deficiencies in lawsuits against borrowers to be able to proceed to auction and eviction much more promptly.

Thus, the banks know that homeowners can’t afford the protection of the thousands of pages of laws which might be supposed to protect them. How will one more few thousand pages of lending laws and regulations be certain a crisis in the housing market in no way happens once more, if borrowers are still not able to realize the law on their very own or afford to hire somebody who does understand?

Second, the banks know that they are going to in no way face significant consequences for their fraudulent lending auctions simply because they have been given bailout immediately after bailout time soon after time for decades. Each and every time there is a slowdown in the economy, the Federal Reserve lowers interest rates and also the politicians borrow or print additional money out of thin air to “stimulate the economy.” In practice, this constantly indicates handing out much more money to the banks to create even much more debt out of thin air.

Thousands of laws have not discouraged predatory lenders from creating money out of absolutely nothing, pumping real estate markets full of inexpensive money, and then dumping the worthless investments made from these mortgages onto markets around the world. The most meaningful responses by government to these acts have been decreasing the time homeowners need to prevent foreclosure and stealing trillions of dollars from workers and consumers to hand over to banks.

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