John Boehner recently said that he felt the government should stop protecting homeowners who are facing foreclosure, and that they made bad investments and are now suffering the consequences. In some ways, I agree with that. There is a level of personal responsibility when it comes to something like this, and even if a person were given a sub-prime mortgage, they probably should have known better.
Where I disagree, though, is where there are people who are facing foreclosure and eviction through no fault of their own. While this may be a minority of people, they are out there, and I found out this week that this crisis has hit close to home.
This week, a friend of mine was surprised by the arrival of a sheriff at her home, which she has lived in now for three years or so and shares with her husband and two children. The sheriff explained (threatened was more like it, by the sound) that the family was facing foreclosure on their home, and that they would be homeless soon. My friend was utterly perplexed. Her bank had not contacted her, she had been making her payments on time, for the full amount, and had never had a single issue.
As it turns out, my friend had done absolutely nothing wrong. Neither had anyone else. The previous owner, upon selling the home, had notified their bank and submitted paperwork to transfer the property and mortgage into the name of the new owner. The old owner then stopped making payments, since it was no longer their residence.
This is where it gets complicated. The bank of the former owner reports that they "lost" the paperwork, and so did not transfer the title to my friend's name. According to their records, the house still belonged to the former owner, who was not making payments. Even though my friend was making her payments the entire time and never missed a one, the other bank began foreclosure proceedings. Here, though, is another strange twist. The bank never notified my friend, who was actually living in the home at the time. In fact, no one had heard that a foreclosure was coming. So, where did this all come from?
It's situations like this, rare though they may be, that convince me we continue to need government oversight and investigation into the mortgage and foreclosure practices of these big firms. There are many people who should not have gotten the mortgages they got, and should have known better than to believe the rates they were getting, but there are some who are truly innocent victims, and it is their stories that should calcify support for a change in the way these banks do business.
To begin with, government needs to put strict demands on banks around trading practices and the transfer of paperwork. If banks and lending agencies can give loans out to people who can't afford them, but then lose the paperwork or knowlingly commit fraud, that needs to be dealt with, and the only institution that has the authority to change those practices is the government.
I do believe that we must have government helping people who are being victimized. And while many people may be to blame for their situation, it's important to understand that even they may need some support. They may not keep their homes, but they should be able to find help somewhere. As for the innocent victims, there are enough of them that government should step in and work on their behalf to sort out just what caused these issues, and how they can be resolved.