As Fraud Scandal Grows, White House Opposes National Moratorium on Foreclosures
Tuesday 12 October 2010
AMY GOODMAN: A coalition of as many as forty state attorneys general is expected to announce Wednesday a joint investigation into the recent revelations that major lenders may have committed fraud while forcing thousands of people out of their homes. Major banks and lenders are also backpedaling in light of these allegations. On Friday, Bank of America became the first bank to halt foreclosures in all fifty states. JPMorgan Chase and Ally Financial have already suspended foreclosures in twenty-three states.
But both Wall Street and the White House are against the moratoriums. On Monday, the Securities Industry and Financial Markets Association warned that, quote, "It would be catastrophic to impose a system-wide moratorium on all foreclosures and such actions could do damage to the housing market and the economy."
While senior congressional Democrats have joined the calls for a national moratorium on foreclosures, the White House is arguing against punishing the industry. On Sunday, White House adviser David Axelrod said a national moratorium is not needed.
DAVID AXELROD: We’re working with these institutions. I’m not sure about a national moratorium, because there are in fact valid foreclosures that probably should go forward.
AMY GOODMAN: Shaun Donovan, secretary of Housing and Urban Development, said Monday, quote, "Irresponsible banks need to be held accountable, but if we have not found a problem with a bank’s process we do not believe that we should impose a moratorium where that can hurt the market and hurt individual buyers."
Federal Housing Administration Commissioner David Stevens also opposes a nationwide moratorium, telling the Washington Post it’s not the "prudent step to take in this fragile housing market."
Well, for more, I’m joined now on the phone by a Democratic lawmaker who supports a nationwide moratorium on foreclosures and has called for the top ten mortgage banks and lenders to immediately and voluntarily suspend foreclosure proceedings in all fifty states. Congressman Edolphus "Ed" Towns is a New York Democrat, chair of the House Committee on Oversight and Government Reform.
Congressman Towns, welcome to Democracy Now! Explain exactly what you’re calling for.
REP. EDOLPHUS TOWNS: What I’m calling for is a moratorium on all banks and asking them to—let’s take a look at what the problems are, what went wrong, and to be able to reassure people that were taken out of their homes, in many instances already, and at the same time to let people that are going through the process know that we are going to look at this and look at it carefully, because we’ve been told that there’s this robot signing and of course the fact that there’s no real system in place or to see in terms of whether or not the foreclosures should move forward, people are confused, the fact that there seem to be a lot of discrepancies and outright fraud.
And so, I just think that people who are saying that this is going to hurt—I think that it’s going to help, because once people gain confidence in the fact that they’re being treated fairly and that there’s no discrepancies in the records, then people will feel very comfortable in terms of trying to move forward. But until that happens, you’re always going to have these comments about the fact that that was not done right, it was done unfairly. And, of course, I think there’s enough here for us to stop and to pause and to say, let’s take a look here before we move forward. So a moratorium is definitely in order.
AMY GOODMAN: And what about President Obama’s senior adviser David Axelrod saying "there are in fact valid foreclosures that probably should go forward"?
REP. EDOLPHUS TOWNS: Yeah, but I think that even if you have one that should go forward, and you have ten that should not, then, to me, that also says let’s have the moratorium, until we can rectify the situation and make certain that what we are doing is not just hurting people, and at the same time, to look at the mistakes that we made and to be able to clear them up before moving forward. I think that’s the kind of attitude that we should have, not saying that a hundred people are being hurt, there’s one that should not be. I mean, that—I mean, I just think that that kind of thinking has no place in today’s market.
AMY GOODMAN: Congressman Towns, Shaun Donovan, the secretary of Housing and Urban Development, said that a moratorium could "hurt the market and hurt individual buyers." Why? Because then fewer people would be able to buy cheaper foreclosed homes?
REP. EDOLPHUS TOWNS: Yeah, Shaun Donovan, who I have great admiration and respect for, I think he’s a fine public servant, but I think he’s missing the point here. Many people are losing their homes and being put out of their homes because of the lack of paperwork or fraudulent activities that took place that put them into the bad situation. And we cannot ignore that. And, of course, I understand, in terms of his views, but the point is that it just does not make sense with this day and age, when we have the problems that we have encountered over the past few months. People have lost their homes that should not have lost them, because of the fact that the paperwork was done improperly. All these kind of things. And to walk the streets and to listen to people that the only thing they own is that home and then to lose it in this fashion, and sometimes it’s almost outright trickery—and, of course, I would hope that people like Sean would look at that, look at those situations, and say, "Look, time out. Let’s get this right. Let’s do it right."
AMY GOODMAN: It’s very interesting, Congressman Towns. I mean, you’re in the leadership of the Democratic Party in the House. President Obama, the White House, is now finding itself together with the Republicans in opposing this. You have the White House that pushed through the bailouts of the banks, many of the same banks that have now admitted they foreclosed improperly, or they’re investigating foreclosures that they may have done improperly, of what? How many? Forty state attorneys general now going to launch investigations into fraud by these banks. You have Bank of America canceling how many? Halting foreclosures in all fifty states.
REP. EDOLPHUS TOWNS: Fifty states.
AMY GOODMAN: Yet the Obama administration, as Democrats go out around the country fighting for their seats in reelections, is saying no, they’re siding with the Republicans in siding with the bailed-out banks.
REP. EDOLPHUS TOWNS: Well, let me say that when you have situations that it’s not clear, it seems to me that we should just back up, take a look and see in terms of what needs to be done to fix it. And I really applaud these banks who have stepped out and said, "Look, we’re going to have a moratorium. There’s something wrong here." They’ve acknowledged that. The fact that Bank of America says in all fifty states they’re going to call for a moratorium, you know, I really respect that, because anytime you have a situation where you take a person out of his or her home, and this is all they have, and, of course, it’s done in a fraudulent fashion, I think that really you cannot just move and say that, "Well, yes, there’s a few that might be hurt, but in the meantime, we’re going to look at it." I think that that’s not the kind of thinking that should go on in this day and age.
We should now stop. Let’s correct this. Let’s make certain that we have this under control and that people are going to be treated fairly. Then I think the confidence will come back, and then that’s when the market will go. People will then begin to buy again. People will begin to understand how important it is to do things properly. Until that happens, I think that we’re going to have folks wondering whether or not I’m being treated fairly. And that’s an issue that we cannot have in this day and age. We need to make certain that if a person buys a home, that they’re going to be treated fairly, that the mortgage is going to be handled. And for the person that’s involved in a foreclosure, let’s make certain that all the paperwork and documentation has been checked.
AMY GOODMAN: So, as President Obama says no, and Democrats are fighting for control—maintaining control of the House and finding people all over the country are seeing unemployment at unprecedented rates, foreclosures at unprecedented rates, what do you have to say to your leader, to President Obama?
REP. EDOLPHUS TOWNS: I think the way to take back the House and to hold on to the House is to let people know that you’re about fairness. And once you show them that you’re about fairness, then I think the confidence will be there. I think that to say, "Let us look at the situation, and those that we think that should move forward should move forward, and those that should not should not"—and that, to me, is not the way to convince the American people that you’re concerned, that you’re dedicated, that you’re committed. No, I think the way to do it is to say, "Look, there’s a mess here, and we need to clean it up. And the way we clean it up is let’s have a moratorium now. Let’s look back at what happened and then move forward." And sometimes you have to go back before you can go forward.
AMY GOODMAN: Joining us from Sacramento, California, is Bruce Marks, the founder and CEO of the Neighborhood Assistance Corporation of America, a housing services organization that’s been calling for a national moratorium on foreclosures for years. Congressman Towns, I want to thank you for having been with us. I know you have to go. And I want to welcome Bruce Marks.
Bruce Marks, tell us what you’re doing in Sacramento.
BRUCE MARKS: Hi, Amy.
AMY GOODMAN: You’re usually in Boston.
BRUCE MARKS: Right. I mean, we’re here, and we’re doing a Save the Dream event here in Sacramento. We’ve had over 25,000 people over the last four days come through who are at risk of foreclosure, and we’re restructuring mortgages, meaning people are saving $500, $1,000 a month, you know, bringing interest rates down to as low as two percent. And people are sleeping overnight, because we’re going twenty-four hours. And we just got through with Los Angeles, doing the same thing for six days for over 125 straight hours. So, clearly—in Los Angeles, we had over 45,000 homeowners come through. So, clearly, it’s just as devastating here as it’s been over the last year or two.
AMY GOODMAN: We’re going to go to break, then come back. Bruce Marks is founder and CEO of the Neighborhood Assistance Corporation of America, has been calling for a moratorium on foreclosures for years. I remember when we had him on as the banks were being bailed out. He said first and foremost is a nationwide moratorium on foreclosures. We’ll also be joined by the lawyer for a woman who thought her house was being burglarized. She ran into the bathroom with her phone, called 911, and it turns out it was the bank who sent an agent to come into her house and change her locks. This is Democracy Now! Back in a minute.
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