State Attorneys General Take on the Foreclosure Crises
As federal authorities continue to dither and make excuses why they can't stop foreclosures, the states have stepped up to the plate.
November 18, 2010
A recent New York Times article highlights the role state Attorneys General have taken in the banking crises. As federal authorities continue to dither and make excuses why they can't stop foreclosures, nor do anything to help people trapped in the foreclosure mill process, the states have stepped up to the plate. And, they've come out swinging.Tom Miller, Attorney General of Iowa is leading the current effort. The Times notes that practically overnight "all 50 of them agreed to conduct a joint investigation into the bank practices that led to the scandal."
The story points out that the assistant attorneys general have years of experience working together and are dedicated to helping out homeowners who have seen little by way of assistance from the federal government.
A Clear Goal
Miller wants the banks to "institute widespread, systematic loan modifications." He sees this as much more useful to the average borrower who is underwater than symbolic, but valueless to them, fines.
The banks have been resistant to this strategy, and the federal regulators have not made it a priority. As a result, thousands of homeowners have been unable to obtain realistic loan modifications from their banks.
The Times story suggests a further problem with the federal regulators, and why they have failed so miserably, both in their awareness of the gathering storm and their response to the aftermath, is their isolation in Washington. The state Attorneys General deal with the problems much more closely and have to come up with working solutions, not empty political posturing.
The Sorry State of Federal Regulation
The two principal federal regulators of the banking industry are the Office of the Comptroller of the Currency (O.C.C.) and the Office of Thrift Supervision (O.T.S.). These two offices frequently intervened on behalf of the banks in the years preceding the crises and saw their role, as the Times puts it, "incredibly, as protecting banks from consumers rather than the other way around."
Riding to the Rescue
The states built up an impressive record of accomplishment suing predatory lending institutions; however, they were limited in their scope, as most of the national entities were under the regulation of the O.C.C and O.T.S. However, they developed experience investigating these types of transactions, and the coalition of states, led by Tom Miller, is back together to examine the mortgage foreclosure scandal.
Dodd-Frank Wall Street Reform and Consumer Protection Act
An important element is the Dodd-Frank Act, which now stops federal regulators from using preemption (meaning federal law "preempts" state law) and allows the states to enforce their consumer protection laws.
Of course, the industry is already worried about possible abuse by state attorneys general. Given the magnitude of the current crises, and the reckless behavior of the banks over the last decade, it seems prosecutorial abuse may be the least of our worries.
Until the states are able to achieve actual results in dealing with the mortgage foreclosure crisis, if you are concerned about a potential foreclosure on your mortgage, speak with a knowledgeable attorney, who can look at your financial situation and provide informed advice on how to proceed in a way that protects your rights and interests.
Article provided by Charles M. Sabo, P.C.
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