Mike Konczal has a good, comprehensive piece in The American Prospect on how we need to go about fixing mortgage servicing and unraveling the foreclosure crisis. For those looking for a primer on the problem, Konczal’s is a good place to start:
Three elements are needed to reform this broken system. The first is an in-depth investigation of the mortgage-servicing industry’s abuses. The second is the creation of a proper system for the servicing of debt with enforceable consumer protections. The last is a more effective plan to limit foreclosures and get a floor under housing prices, using better and more comprehensive loan modifications.
The piece looks at ways to address these main issues. Overall I think Konczal pulls his punches a bit when it comes to the settlements floated out of the state attorneys general negotiations with banks, but this line about what the banks are asking for in a settlement is key:
The leaked settlement offer by the banks is nothing but a promise to do what they should have been doing all along. But whatever trust the largest banks may have had has been destroyed in the post-crash era, and any plan that has weak or nonexistent enforcement and penalties should be considered dead on arrival for progressives.
The banks’ proposal is a joke, as is anything that basically amounts to them following the laws and regulations they were already supposed to be following.