Recently deemed, ForeclosureGate, the mortgage crisis is reportedly much worse than anyone suspected. Mortgage lenders are being scrutinized by the Federal Reserve after a committee review that began last October revealed disturbing accounting and recordkeeping discrepancies.
The term "ForeclosureGate" seems appropriate for the biggest scandal Americans have ever witnessed. If reports are true, the banking industry could be shaken to the core and further devastate the financial sector.
The lies, deceit, and cover-ups are so widespread that a coalition of homeowners created ForeclosureGate.org to help Americans stay abreast of current events. This group offers a mega-store of articles, resources, reform campaigns, and activist group meetings.
Last week, I was talking with an investor friend who has lost a boatload of money with investment properties. He was venting about how this mess was all caused by 'deadbeat borrowers' and if people would get off their lazy butts none of this would be happening. Unfortunately, this is the mindset of a lot of people.
Certainly, there are people out there who bought more house than they could afford. Even so, banks loaned the money, so who is really at fault? The majority of people losing their house to foreclosure are hard-working middle class Americans.
A lot of them were sucked into buying houses by lender's marketing machines offering the promise of achieving the American Dream. Banks touted no-money down, no-income verification loans and handed out money like it was going out of style. Unless they were complete idiots, banking executives had to know a large percentage of those loans would end up in default.
Then Americans were dealt with 9/11 and everything changed. The U.S. was off to war that escalated into two wars. America was going broke. The banks collapsed. The taxpayers bailed them out. Then they thanked everyone by embarking on a foreclosure frenzy which caused everyone's property value to take a nosedive.
Now, we have borrowers owing substantially more than their property is worth. They try to work things out with their bank, but soon discover banks don't care. Even though laws are in place to protect homeowners from improper foreclosure, banks are rushing documents through the courts and repossessing houses at breakneck speed.
In Florida, the foreclosure process is being handled through kangaroo courts. Cases are presented to retired judges who admittedly have no knowledge of mortgage law. Speculation is they also have favorable relations with major banks.
These judges have been mandated to process foreclosures as fast as possible. In November 2010, Rolling Stone magazine published an exposé about Florida's 'rocket docket' entitled, "Invasion of the Home Snatchers." Journalist, Matt Taibbi revealed "how foreclosure courts are helping big banks screw over homeowners." It's an enlightening read.
What people often fail to realize about the mortgage debacle is this is a power struggle between the U.S. Government and the banks. Right now, the banks are winning. The only way homeowners will win is by becoming educated about what's really going on.
The banks and government have the finest marketing machines so if you want the truth you'll need to scout out homeowner advocacy groups and underground journalist reports. A good place to start is ForeclosureGate.org.
One thing is certain... the mortgage mess isn't going away any time soon. Speculation is ForeclosureGate will soon be headline news. We will be providing updates surrounding this issue, so take a moment to subscribe to our mailing list or RSS feed to obtain breaking news.