Home > Mortgages > What the Death Penalty and Foreclosure Have in Common

Comments 0 Comments

So what to do? Some settlement is necessary and should be done quickly. Any relief for foreclosure victims, in particular those who truly are victims, is probably a good thing given America’s lousy economy and terrible housing situation. But how do you make it happen without causing huge controversy?

The attorneys general of five states have already abandoned settlement negotiations in favor of seeking their own remedies against the banks. These include Beau Biden in Delaware and Kamala Harris in California. Last week Biden brought suit against MERS, Mortgage Electronic Recordation Systems, Inc., a company set up by the banks (and Fannie Mae and Freddie Mac) in the ’90s to streamline mortgage procedures in order to facilitate, among other things, easy securitization. Biden’s suit claims that MERS engaged in deceptive practices, not by inducing borrowers to take out loans that they shouldn’t have, but rather by constructing a process that severely hampered borrowers from pursuing their rights. MERS routinely took nominal ownership of mortgages written by its constituent banks, thereby undermining the traditional state system of mortgage and property ownership records keeping. In other words, a buyer of a mortgage-backed security—if he ever looked—would see that everything was owned not by any individual, but rather by MERS.

[Related Article: Delaware AG Sues Mortgage Registry]

I think Biden has uncovered the belly of the beast, and that he and others should be allowed to pursue their initiatives against systemic problems involving mortgage procedures.

In the meantime, it’s best for the country that the settlement go forward quickly at whatever number with whatever mechanisms are agreeable to both sides. Enough time has been consumed arguing about numbers and mechanisms. It’s just throwing more darts at the dartboard anyway. Frankly, there is no right way to do a settlement, and no right number that will really solve the problem. No one will get what they deserve; they will only get what they negotiate.

[Tool: Quickly assess your risk of identity theft for free]

That said, the settlement should not include a blanket release. The banks should only be released from money claims, not from the necessity of making procedural reforms if the states prevail in their ongoing initiatives in court and otherwise. Further, I encourage all currently nonparticipating attorneys general to join the settlement and strongly suggest that those who are seeking further relief act in unison rather than filing separate actions in each state.

We need to get a settlement together, put numbers and mechanisms behind us, and let the state AGs do what they will to attack MERS and other integral parts of the mortgage procedure and foreclosure establishment in an organized and efficient manner in order to reform a systemic problem. In fact, I believe that the entire real estate and mortgage meltdown was more the result of systemic issues—in lender behavior, regulatory perspective, and borrower attitudes—than the result of natural economic forces. And although it’s difficult to be verbally precise about exactly what the systemic problem is, I once again return to the words of Mr. Justice Stewart (about a very different subject): “I know it when I see it.”

[Featured Product: Looking for credit cards for fair credit?]

Pages: 1 2

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other sponsored content on Credit.com are Partners with Credit.com. Credit.com receives compensation if our users apply for and ultimately sign up for any financial products or cards offered.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team