Joseph Nocera, who vehemently doesn’t approve of the OCC’s settlement with the big banks regarding their mortgage servicing and foreclosure practices, and who thinks the state AGs should have been in on the deal so they could make the banks pay, engages in a little snark:
The proposed terms call on servicers to have a single point of contact for homeowners with troubled mortgages. They would have to stop the odious practice of secretly beginning foreclosure proceedings while supposedly working on a mortgage modification. They would have to hire consultants to do spot-checks to see if people were foreclosed on improperly. (Gee, I wonder how that’s going to turn out?) [Emph. added]
Gee! . . . Wait, hold on: no one is accusing the banks of “foreclosing on people improperly”-if by “foreclosing on improperly” you mean evicting people who are current on their mortgages. The banks didn’t do that. No one says otherwise. All the banks did instead was screw up the paperwork on the foreclosure of borrowers who were legitimately in default. A big difference! In the former case, the borrowers would have endured real harm: their lives would have been upended, their credit ratings and reputations ruined, and their finances possibly shredded. In the latter case-pfeh! Not to sound too hard-hearted on the issue, but those people got what they deserved, and the paperwork snafus are mainly a sideshow. So why should the banks pay out $20 billion in penalties? And, especially, why should those delinquent borrowers deserve a principal reduction? That would be a temptation to moral hazard on a grand scale, and could turn a notable paperwork problem into a potential calamity for the banks. Even Joe Nocera presumably wouldn’t want that. He should save the hyperventilating for other issues. . . . .