Major Banks to Resume Foreclosures

Reports today that Bank of America and GMAC are reopening tens of thousands of halted foreclosures, saying that they have found no major problems with their foreclosure process.  Bank of America described this as "an important first step in debunking speculation that the mortgage market is severely flawed."


This is like listening to someone claim that he can't stop drinking, because people might think he's a drunk.  It's possible that there really is no problem with the mortgages at GMAC and Bank of America.  But after all the lurid stories that have splashed across the press, most of us would probably like something a little more compelling than BofA's heartfelt assurance that this is the case.

Already, the legal system is pushing back--the Cook County sheriff is saying that he won't enforce foreclosures for some of the biggest banks until they prove that the foreclosures were "handled properly".

This sounds laudable but:  how do they bell the cat?  The normal way that a bank overcomes these sorts of paperwork problems is to submit an affidavit--just the sort of affidavit that the foreclosure mills are suspected of forging.  The same caveat applies to judges.  There's been a lot of talk of making banks prove that they own the right to foreclose, but no one has been very clear as to what, exactly, they would accept as proof.  Unless we follow Thoreau's plan of simply giving people the house in the case of contested mortgages, the burden of proof is going to end up on the homeowner--and if we follow Thoreau's plan, the number of contested mortgages will end up roughly equalling the number of mortgages.

I don't know what the answer is.  But simply going on as if nothing has happened is definitely not it.  
Presented by

Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

The Best 71-Second Animation You'll Watch Today

A rock monster tries to save a village from destruction.

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register.

blog comments powered by Disqus

Video

The Best 71-Second Animation You'll Watch Today

A rock monster tries to save a village from destruction.

Video

The Case for Napping at Work

Most Americans don't get enough sleep. More and more employers are trying to help address that.

Video

A Four-Dimensional Tour of Boston

In this groundbreaking video, time moves at multiple speeds within a single frame.

Video

Who Made Pop Music So Repetitive? You Did.

If pop music is too homogenous, that's because listeners want it that way.

Video

Stunning GoPro Footage of a Wildfire

In the field with America’s elite Native American firefighting crew

More in Business

Just In