In recent weeks, there have been extremely disturbing revelations about how the nation’s biggest financial institutions handle foreclosures. After widespread reports about “robo-signers” — bank officials who would sign foreclosure forms without even reading them — several large financial institutions declared they were halting their foreclosure process. For example, a Bank of America official admitted in a bankruptcy case that she signed 7,000 to 8,000 foreclosure documents a month and “typically” did not read them “because of the volume,” and last week, Bank of America announced it was stopping all foreclosures across the country until it could be sure the process was fair to homeowners.
Several lawmakers have joined the banks in calling for foreclosure moratoriums until banks can carry the process out in a fair and legal manner. And a bipartisan group of attorneys general is also demanding action — for example, Texas Attorney General Greg Abbott, a Republican, is asking 30 lenders to stop foreclosures until they can prove it’s being done legally.
On Fox News Sunday, Rep. Debbie Wasserman-Schultz (D-FL) called for a nationwide moratorium on foreclosures, saying “it’s absolutely imperative that we keep people in their homes.” House Minority Whip Eric Cantor (R-VA) disagreed strongly, however, saying he was “just perplexed” at Wasserman Schultz’s answer, and that “people have to take responsibility for themselves.”
CANTOR: I’m just perplexed to that answer, Bret… what we’re seeing if you do that, if you impose a moratorium on foreclosures what you are telling people and institutions that lend money is they do not have the protection to take the risk they need to, to extend credit for people will get a mortgage. You’ll shut down the housing industry if that is the case[…]
What we’re talking about, Debbie, you have 10 percent, if that, of the population who are now in a foreclosure situation or in a mortgage that they have been unable to meet the obligations… Now, come on, people have to take responsibility for themselves. We need to get the housing industry going again. We don’t need government intervening in every step of every aspect of this economy.
Congressional Republicans have largely been silent on a foreclosure moratorium, as the Wonk Room has noted. But now, apparently, they are ready to take a stand — in defense of the housing industry. Nina Easton of Fortune Magazine piled on later on Fox News Sunday as well. “I thought it was really troubling when Congresswoman Wasserman-Schultz said we need to keep people in their homes,” Easton said. “What she should have said was ‘keep people in their homes they can’t afford.’”
But of course, people may be losing their homes when they should not, due to the banks’ reckless foreclosure process. Sorting out the potentially thousands of homeowners who may have been improperly foreclosed upon is going to be a monumental task, as is reorganizing the process to ensure that no more homeowners are improperly thrown out of their homes. This is about more than simply those homeowners: it’s about upholding the rule of law and due process. A moratorium and investigations are more than warranted, despite the seeming desire of Cantor and other Republicans to protect big financial institutions.