Sloppy, greedy mortgage lenders helped inflate the housing bubble of the Great Recession, now the Federal Reserve is investigating to see if the same avaricious instincts are being applied to home foreclosures.
All of this belated attention by federal banking regulators is too late for taxpayers covering the losses of mortgage-backed gambling by Wall Street.
At the heart of the review announced by Federal Reserve Chairman Ben Bernanke on Monday are the paperwork and procedures of a volume industry moving product. In one mode, the mortgage giants were cranking out dubious loans; now in retreat, they are processing foreclosures on full automatic.
It is more corner-cutting by lenders with potentially disastrous consequences for consumers who do not know all the rules and safeguards as well as the financial pros who cannot be bothered with the basics, such as reading the paperwork. Bernanke reported that one in five borrowers owe more than their house is worth, and another third have an equity of 10 percent or less in their property. With legions of vulnerable homeowners, the review of foreclosure practices by 10 federal agencies has a huge, anxious audience.