Too Little, Too Late
Dec 10th, 2007 at 1:33 pm by Susie
Krugman on the administration mortgage plan:
The plan is, as a Times editorial put it yesterday, “too little, too late and too voluntary.” But from the administration’s point of view these failings aren’t bugs, they’re features.
In fact, there’s a growing consensus among financial observers that the Paulson plan isn’t mainly intended to achieve real results. The point is, instead, to create the appearance of action, thereby undercutting political support for actual attempts to help families in trouble.
In particular, the Paulson plan is probably an attempt to take the wind out of Barney Frank’s sails. Mr. Frank, the Democratic chairman of the House Financial Services Committee, has sponsored legislation that would give judges in bankruptcy cases the ability to rewrite mortgage loan terms. But “Bankers Hope Bush Subprime Plan Will Scuttle House Bill,” as a headline in CongressDaily put it.
As Elizabeth Warren, the Harvard bankruptcy expert, puts it, “The administration’s subprime mortgage plan is the bank lobby’s dream.” Given the Bush record, that should come as no surprise.
Anybody facing foreclosure needs to put the burden of proof back on the bank to confirm who holds the actual title to the property. Mortgages have been folded, stapled, mutillated, sliced and diced so much that it will be difficult to tell who owes whom, and more importantly, who owns what.
Can a Wall Strret investor who loses money on bad paper come in and take your house? I’d say not. What about the Wall Street firm that shuffled all the mortgages together and re-dealt them as mortgage backed securities? Nope.
So who is it that’s foreclosing? And why wouldn’t they NOT jack your rates, (since the resets are optional) and just leave you in the house making the payments? Isn’t the goal to collect interest for the next 30 years? What are they going to do with an overpriced house and no buyers?
One judge recently squelched a foreclosure (by a German bank,
no less) for that very reason — they couldn’t prove they actually
owned the mortgage.