The New York Times reports on April 28, 2008 that “(t) he mortgage industry, facing the prospect of tougher regulations for its central role in the housing crisis, has begun an intensive campaign to fight back.” Loan Industry Fighting Rules on Mortgages.
Who will be fighting for homeowners?
For all lenders care, people can live in discarded cardboard boxes under a freeway overpass.
The United States can do better.
Dispossessed homeowners who have been driven from their homes by rapacious lenders need legal help. Most cant do it themselves. The mortgage crisis has hit many people hard, grabbing from them their most important investment — and their shelter.
They need lawyers who know how the system works and who can make it work for them.
Legal aid lawyers cannot take the cases of dispossessed homeowners because they cant get attorney fees from the wrongdoers even when they prove their clients were wronged, nor can they file class-action suits against abusive mortgage companies for outrageous behavior.
Class actions by legal aid lawyers are banned under current law. These are incentives that would bring more advocates to those whove been abused — and not in a nice way.
The New York Times reports a civilian employee of the Army Reserve, earning a monthly salary of only $2,800, was ridiculously approved for a mortgage requiring a monthly payment of $4,000. That mortgage was destined for foreclosure from its inception. “The Neediest Cases: Helping to Keep Homelessness at Bay as Foreclosures Hit More Families.” New York Times, February 4, 2007.
Its a con game. And it shouldnt stand. Where are our lawmakers? Where are those who are supposed to represent the people? In hiding, probably. Or perhaps at lunch with lobbyists.
Clearly, sub-prime lenders have preyed on those who didnt have a clue about how the game worked. The lenders may be able to sleep at night, but those who lost their homes to them probably wont, or perhaps they will at a homeless shelter.
It’s time to turn loose the lawyers.
The 1995 the Republican Congress passed the Private Securities Litigation Reform Act a boon to cheaters. The GOP has long opposed class action lawyers efforts to represent consumers and investors.
We need to repeal the 1995 act and let loose the class action lawyers on the outlaws. Before 1995 investors could sue en masse to go after fat-cat executives who fraudulently reported sales and book-to-bill ratios; those who put off reporting business reverses to inflate stock prices, and auditors who looked the other way.
Before 1995, a strong plaintiffs bar of private attorneys had played a major role in the enforcement of securities law. No more.
That year, 1995, private civil enforcement of securities laws died. The result was a diminishing probability that crooks would be held responsible for cheating.
The aftermath of this bad bill is staggering. President Clinton foresaw the decimation of private enforcement of securities law. He vetoed it, but the Republican Congress overrode his veto, and we have seen the shameful results. Never before have there been as many financial frauds perpetrated on investors worldwide. Since 1995, Enron, WorldCom, ImClone, Global Crossing Ltd., Adelphia Communications, Xerox, Merck, Bristol-Myers Squibb and Qwest ripped off investors because there has been little fear of being sued. Sadly, this is a very partial list.
Lets bring back the fear to the big wheeler dealers who destroy pension benefits and hard-earned savings and to the real estate and mortgage industry for the current debacle.
In addition to stronger civil remedies for homeowners, including class actions against predators, like those who signed up a borrower making $2,800 a month for a $4,000 mortgage and then sold the paper to someone else who packaged it into a securities offering to investors, the criminal justice system should mandate the disgorgement of all profits, in addition to criminal penalties, in these cases.
Cities are using federal civil rights laws and city codes to stem the loss of their tax bases from destroyed property values, according to USA Today. These lawsuits are a reach, but expect leading courts to fashion creative remedies against the mortgage vultures.
Rather than an oblique attack on crooks. We should be going at them head-on. Nothing puts fear into corporate crooks like a judge certifying a lawsuit will proceed as a class action. Once that happens they know judgment day is coming.
Consumer class actions are truly powerful tools for correcting wrongs. That’s why we do them. Check our record.
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