How does Martha Coakley, Massachusetts’s attorney general, think she’s helping homeowners with her nutty robo-signing lawsuit against five big mortgage lenders? Already, the suit has brought about an entirely predictable result: one of the lenders, Ally Financial, has announced it will no longer buy loans originated in the state. Presto! Thanks to Coakley, mortgage credit in Massachusetts is less available than it used to be.
Memo to Martha: if the government puts up a lot of roadblocks to foreclosure or hassles lenders generally, mortgage lenders will be less willing to write loans. It’s a simple business decision. So your lawsuit is apt to have the exact opposite effect that you want. As we’ve seen, it already has. Brilliant.
Besides, explain to me again how it is that the “victims” of the robo-signing practices Coakley so deplores were actually hurt by what the lenders did. The people were delinquent on their loans, sometimes by many, many months. Over that time, they got to live in the properties rent-free. No one is alleging that lenders took back properties from borrowers who were current. Rather, lenders were guilty of sloppy clerical practices. Do they need to clean up their acts? Of course–and they have. But their bad practices did not lead to material harm of borrowers. So why should those borrowers be compensated for anything?
Martha Coakley is one of those activist politicians who a) doesn’t seem to understand the way the real world works, and b) thinks she can fix the problems of the world by incessant meddling. That’s a bad combination. As a result, in this instance, Coakley is going to end up making the problems she’s trying to solve even worse.
What do you think? Let me know!