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