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Barney Frank drops a bombshell: How a shocking anecdote explains the financial crisis - Salon.com

The TARP legislation included specific instructions to use a section of the funds to prevent foreclosures. Without that language, TARP would not have passed; Democratic lawmakers who helped defeat TARP on its first vote cited the foreclosure mitigation piece as key to their eventual reconsideration.

TARP was doled out in two tranches of $350 billion each. The Bush administration, still in charge during TARP's passage in October 2008, used none of the first tranche on mortgage relief, nor did Treasury Secretary Henry Paulson use any leverage over firms receiving the money to persuade them to lower mortgage balances and prevent foreclosures. [...]

Whether or not you believe that sky-is-falling narrative, Frank kept pushing for action on foreclosures, which by the end of 2008 threatened one in 10 homes in America. With the first tranche of TARP funds running out by the end of the year, Frank writes, "Paulson agreed to include homeowner relief in his upcoming request for a second tranche of TARP funding. But there was one condition: He would only do it if the President-elect asked him to."

And now...

Foreclosure to Home Free, as 5-Year Clock Expires - NYTimes.com

[In] a growing number of foreclosure cases filed when home prices collapsed during the financial crisis, lenders may never be able to seize the homes because the state statutes of limitations have been exceeded, according to interviews with housing lawyers and a review of state and federal court decisions.

In November 2009, her mortgage servicer at the time, Aurora Loan Services, a unit of the now-defunct Lehman Brothers, filed to foreclose on her house.

Instead of making her roughly $1,300 monthly mortgage payment, she pays her lawyer $500 a month to represent her in court.

In June 2010, Aurora agreed to modify her loan on a trial basis, she said, but waited months to send her the modification deal. When she received the contract in the mail, she refused to sign it, saying that documents had arrived too late.

For months, she heard nothing about her case. It turned out that the law firm that negotiated her modification deal on behalf of Aurora had been shut down after complaints about improper foreclosures, including backdated documents. Nationstar, meanwhile, took over the servicing duties of many of Aurora's mortgages.

In August 2012, Nationstar made contact with Ms. Rodolfi for the first time, saying it was now servicing her loan.

by das monde on Thu Apr 2nd, 2015 at 04:49:30 AM EST
And what proportion of US bank assets include home loans that can't be foreclosed on?

There's a similar law for debt in the UK. The time limit is six years. If the debt isn't acknowledged legally in that time, it slides off the credit record and is considered "statute barred" - i.e. it still exists, but no collection action can be taken.

This doesn't stop some collectors from trying to collect on it anyway, because - of course - most people don't know the law, and many are honest enough to believe that debts should be paid for moral reasons.

I don't know this if this applies to mortgages too - but it would be exceptionally unlikely for a UK lender to ignore mortgage arrears for more than six years.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Thu Apr 2nd, 2015 at 08:52:50 AM EST
[ Parent ]


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