The number of federal laws ostensibly designed to protect homeowners and borrowers from predatory or discriminatory lending is mind boggling. With the dozens of laws in place that were supposed to protect people buying homes and regulate the financial industry, it must have been a huge surprise to politicians and regulators when the real estate bubble burst and foreclosure rates skyrocketed – after all, this is what all those regulations were guaranteed to protect against, right?
Many commentators, politicians, pseudo-economists, and other media proclaimed experts have pointed out only one (false) cause of the housing crisis – the lack of regulation on Wall Street, on subprime lenders, and others in the real estate industry. These same professionals who failed to foresee the collapse, though, can only recommend one solution – give more power to the government in the form of more regulations, more laws, and more bailout programs.
The following is a partial list of some of these laws and rules that were put into place specifically to regulate the financial or housing markets, as well as a large number enacted for other reasons but which have relevancy 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
In fact, 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, although they are designed to regulate the institutions that provide 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 prices around the country to plummet. The vast number of regulations on banks and lenders and mortgage brokers and appraisers and real estate agents and title companies were all supposed to prevent a crisis of the magnitude the country now faces from ever happening.
But it is not the regulations or laws or lack thereof that is the problem. The real problem is that banks and financial firms that want to take advantage of their clients face absolutely no consequences for fraudulent or predatory actions. This situation where banks own the government which rules over the rest of the people in the nation has come about through two main factors.
First, access to the courts for homeowners facing foreclosure has been severely restricted. In nonjudicial foreclosure states, homeowners do not even have the right to confront the bank and the charges against them – the lender is simply able to advertise a sheriff sale of a property, regardless of the borrowers' circumstances or if they have ever missed a payment. And it will cost them potentially thousands of dollars to file their own lawsuit against a bank to stop foreclosure, a price which many homeowners dealing with a financial hardship are unable to pay.
But even in states where homeowners must 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 simply lying to judges in order to push through cases, all of the complicated procedural rules have been written to keep the average person from being able to comprehend how the court system works. And again, if the owners want a fair shot at defending their home, they most often have to hire an expensive lawyer of their own.
The banks, on the other hand, are easily 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 the most to political campaigns, and it is no surprise that judges are often willing to overlook gross deficiencies in lawsuits against borrowers in order to proceed to auction and eviction more quickly.
Thus, the banks know that homeowners can not afford the protection of the thousands of pages of laws that are supposed to protect them. How will another few thousand pages of lending laws and regulations make sure a crisis in the housing market never happens again, if borrowers are still unable to understand the law on their own or afford to hire someone who does understand?
Second, the banks know that they will never face serious repercussions for their fraudulent lending auctions because they have been given bailout after bailout time after time for decades. Every time there is a slowdown in the economy, the Federal Reserve lowers interest rates and the politicians borrow or print more money out of thin air to “stimulate the economy.” In practice, this always means handing out more money to the banks to create even more debt out of thin air.
Thousands of laws have not discouraged predatory lenders from creating money out of nothing, pumping real estate markets full of cheap 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 have to defend against foreclosure and stealing trillions of dollars from workers and consumers to hand over to banks.
Author Resource:-
Nick publishes articles for the My Foreclosure Lender site. These articles provide information to homeowners dealing with foreclosure, describing various solutions they can use to prevent foreclosure. The site examines various solutions, such as loan modification, foreclosure refinancing, deed in lieu of foreclosure, filing bankruptcy, and more. Visit the site to read more about how foreclosure works: http://www.myforeclosurelender.com/
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