VIEWPOINT: THE MARCH 2007 SENATE INQUIRIES ABOUT EPIDEMIC MORTGAGE FORECLOSURES and U.S. ATTORNEY GENERAL ALBERTO GONZALES
Posted by Barbara Ann Jackson on March 26th 2007 to News
Subprime / Predatory Loans, Adjustable Rate Mortgages …FORECLOSURE MILLS-DEBT COLLECTION FRAUD
**Updated** The epidemic of mortgage foreclosures and lender shutdowns due to a “Subprime Mortgage Market” crisis is causing an uproar. Less than a week ago at Capital Hill, the Senate Banking Committee conducted hearings to determine from regulators what went wrong and how to fix it. A chief concern seems to be the investors’ and high rollers’ worry that the ever-growing mortgage mess will spill over into the banking industry. According to some who spoke at the hearing, the mortgage situation has been worsening for 3 three years. Clearly, Congress knew this problem existed. *Latest ramification from subprime marketing: On Monday April 2, 2007, New Century Financial Corp., the once largest subprime lender of higher-risk mortgages, filed for Chapter 11 bankruptcy protection and 3,200 workers were laid off.
(Notably, a few participants at the hearing are campaigning for president. The mortgage crisis could be a valuable instrument. By the same token, countless college students will be glad when the Senate looks into the longtime predicament affecting student loans.)
Unwanted results in the mortgage industry might have continued without recourse if things had not gotten out so of hand to cause investors to get wind of problems. The Senate had not yet determined whether crimes have been committed from this current subprime mortgage market mess. All the same, by comparison, improprieties within the Enron Corporation and effects upon investors seems to be what caused probes into Enron’s Kenneth Lay and others. As such, the Congressional investigation into Enron’s activities uncovered the fact that countless retirement investments no longer existed.
Synonymous with subprime loans, predatory loans mostly evolve from subprime loans, although not all subprime loans are predatory. Also, not everyone who receives a subprime loan deserves it. In fact, some people’s credit rating actually qualified them for better loans rates, but they were misled into thinking otherwise. These type loans are given to borrowers with low credit scores and require little money down. The loans are more susceptible to default since borrowers are given (sometimes unethically) subprime Adjustable Rate Mortgage (ARM) loans. Subprime loans became widely accepted due to lenders’ (creditors’) argument about minorities and crime neighborhoods factoring into loan default risks.
Moreover, what MUST be underscored is the fact that FORECLOSURES ENTAIL THE EMPLOYMENT OF DEBT COLLECTORS. Unfortunately, not all debt collectors are ethical –especially pertaining to real estate property flipping. With the rise of foreclosures, real estate and mortgage fraud is perhaps now a trillion dollar white collar crime operation.
“Congressional findings and declarations of purpose” and published again on January 2005, pursuant to the Consumer Credit Protection Act (15 U.S.C. 1601 et seq.), under section 802, the FTC wrote:
“There is abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors. Abusive debt collection practices contribute to the number of personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of individual privacy.”
Consequently, in light of the unmitigated fact of documented debt collect abuses, and in the light of proven ruinous lending practices, and speculative foreclosures, the “mortgage mess” encompasses a far broader scope than what the Senate Banking Committee is probing.