by Peter Swire and Jordan Eizenga
For more, see here.
by Janneke Ratcliffe, Alon Cohen and Jordan Eizenga
Talk about critical timing. President Barack Obama’s newly formed mortgage crisis working group within the Department of Justice is charged with investigating fraud in the home mortgage market that led to the housing and financial crises and the Great Recession. The new group will begin its work just as state attorneys general from around the country are reportedly about to finalize negotiations with the nation’s leading mortgage servicers over a settlement for misconduct in the wake of the housing market collapse.
For more, see here.
Scott Pelley of 60 Minutes investigates the issue of foreclosed and vacant homes.
In good times, the housing industry comprises about 5-6 percent of our nation’s GDP and is historically what leads the economy out of recession. The Federal Reserve lowers interest rates, mortgages become cheaper, and housing starts increase.
Yet, we have long since emerged from recession and the housing market remains distressed. Home prices are down by more than a third since their peak four years ago and they have yet to stabilize.
The main reason we have not had a housing market recovery is that the bursting of the housing bubble has left us with a large overhang of vacant, foreclosed homes in the for-sale market. This serves to drag home prices down and blight neighborhoods throughout the country.
Just to put the problem in perspective – there are approximately 400,000 foreclosed homes today and 2.8 million more expected to become foreclosures.
Thus, to ensure a strong economy going forward, policymakers must respond to this foreclosure problem and my colleagues and I have written on several occasions (here and here) about one way to tackle this problem.
by Peter Swire and Jordan Eizenga
The current structure of the mortgage-servicing industry is such that servicers are responsible to investors and “owe no duty at all to consider the needs and interests of consumers.” That is, the clients of mortgage-servicing companies are investors in mortgage-backed securities for whom the servicers collect monthly mortgage payments from homeowners and, as a result, servicers have no fiduciary responsibility to protect consumers from improper acts and omissions by mortgage servicers.
For the rest of the article, see here.
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