Many lessons to take from the mortgage mess

You’d think we would have learned something from the Enron and WorldCom debacles. Rampant fraud, fueled by greed, equals meltdown and consumers getting defrauded. We need to closely regulate large corporations or they’ll cut corners, pull shenanigans, or just flat out commit fraud in order to make more money as quickly as possible. That’s what the latest mortgage scandal is all about.
By way of background, we all remember the crazy housing boom and the fly-by-night mortgages that were given to anyone who could fog a mirror. These mortgages were sold off to “trusts,” which, in turn, sliced and diced them into mortgage-backed securities. These trusts were legally required to obtain and account for the original mortgage notes that specified the borrower’s obligations. But now it’s obvious that these legalities were frequently neglected. And this means that many of the foreclosures that are now taking place are, in fact, illegal.
It’s almost certain that many borrowers are, or have already been, defrauded by the nation’s largest banks and mortgage companies. Their officers have sworn under oath that they have these original notes, when, in fact, they do not. Perjury is the tip of the iceberg.
What should you do? If you are being foreclosed upon, hire a lawyer to review the documents that the bank is relying upon to insist that they have the right to take back the home. If you are not in default but behind on the payments, now might be a good opportunity to look for that mortgage modification, even a substantial principal reduction, with the banks facing massive litigation. They might be willing to actually be reasonable and work with you. You never know.
If anyone ever tells you that we have too much regulation and business needs fewer controls, let’s remember what happens when we trust large corporations to regulate themselves; the consumer gets the shaft!