That just sounds painful.
I do not know if consumers should be smarter than what they appear sometimes. Should they not know they cannot afford the house payments being proposed? Should they not read the fine print? That argument aside, why should huge lenders, including mortgage lenders, be allowed to take advantage of these people, those that actually end up funding the loans, and society as a whole?
CNNMoney, as well as other new sources, is reporting that the FBI is investigating whether Countrywide Home Loans used fraudulent lending practices and financial reporting to write all of those subprime loans, liar loans, and other non-conforming loans it did over the years. The probe will examine underwriting and mortgage origination practices, and whether the company misrepresented losses related to subprime loans.
The reason this is shocking still is that Countrywide is the nation's largest home lender, responsible for 1 in 5 (20%) of the home notes written in this country. If they cannot be trusted, if the government is unable to proactively protect those most threatened by predatory lending, then really nobody is safe.
The government starts its forensics only once the harm is done. Countrywide is in serious financial trouble. It is in the process of being acquired by Bank of America. The foreclosures are already taking place. The CEO has already left with an obscene paycheck in his pocket.
And yet, where is the poor aggrieved consumer to turn. They are the ones that moved out of their shelter to buy the new home through Countrywide and others. There houses are being foreclosed now. They are in financial distress now. The only place they can practically turn is to the bankruptcy courts and the law is ill equipped to deal with the problem.
Congress needs to act to allow bankruptcy judges to adjust interest rates and re-amortize home loans. You can do it in Chapter 12 -- family farmer -- bankruptcies and that is a helps. Pay the new house payment through the 13 trustee for 5 years, but re-amortize the note for up to 30 years. I contend that will help the system of mortgage loans and not hurt it.
The question is do we have the political will to do what is right and necessary?
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