Big Banks Continue to Settle Charges of Defrauding Homeowners

Nowadays, newspapers regularly publish articles about big banks settling charges that they routinely “misled investors while selling billions of dollars of investments linked to home loans.”

The unfortunate reality is that homeowners were likely ill-advised (if at all) by these same banks of the intricacies of the loans they were taking, including the impact of interest rate hikes, the reality that they were borrowing more than they could pay, etc. Likewise, the banks that were lending to these homeowners failed to advise Wall Street about the risky nature of the loans, Wall Street failed to advise the insurance companies (like AIG) about the risky insurance derivative swap business, and so on and so forth. While this was happening, America rejoiced. The housing market boomed, home prices soared, mortgage brokers earned high fees and, naturally, banks collected huge fees. Then the inevitable happened: homeowners defaulted on the loans they could never afford, foreclosure filings increased, real estate values stopped rising and, little by little, the real estate bubble burst and the crisis unfolded.

Now, after being bailed out by Congress and Wall Street, the same big banks are settling serious charges, such as misrepresentation and failure to disclose, and agreeing to pay “hefty” fines. However, are these fines hefty enough when compared to the trillions of dollars that were diverted? Will the fines actually help homeowners? Or, at the end of the day, will these banks have gambled and won at the expense of the American public?

 

 
This entry was posted in Debt Relief, Foreclosure. Bookmark the permalink. Follow any comments here with the RSS feed for this post. Both comments and trackbacks are currently closed.
  • LH&M is considered a debt relief agency.
    LH&M helps people file for bankruptcy relief under the Bankruptcy Code.

    Attorney advertisement. Prior results do not guarantee a similar outcome.