Posted on Monday, October 18, 2010
The number of lawmakers calling for investigations or a freeze on foreclosures is growing, in the wake of an increasing amount of evidence pointing to faulty proceedings. Nearly all of these public officials, however, are Democrats; most Republicans have either stayed silent or opposed a moratorium.
At issue are people known as "robo-signers" -- bank employees who signed off on thousands of foreclosure affidavits without evaluating their merits or even laying eyes on them. Bank of America, the largest in the nation, has suspended foreclosures in all 50 states in the course of an internal review of the matter, while firms including JPMorgan Chase have suspended foreclosures in certain states.
The Obama administration is not backing a nationwide foreclosure freeze, with Treasury Secretary Tim Geithner saying it would do more harm than good. The President did, however, veto a bill that some consumer advocates believed would have made it tougher for homeowners to fight fraudulent foreclosures.
And congressional Democrats have seized on the issue and begun calling for investigations or an immediate moratorium in their states. As The Huffington Post's Arthur Delaney has reported, House Speaker Nancy Pelosi and other California Democrats have asked the Justice Department, the Federal Reserve and the Office of the Comptroller of the Currency to launch investigations into foreclosure fraud. Sens. Al Franken (D-Minn.), Bob Menendez (D-N.J.) and Jeff Merkley (D-Ore.), and Reps. Barney Frank (D-Mass.), Corrine Brown (D-Fla.), Luis Gutierrez (D-Ill.) and Dennis Moore (D-Kan.) have also asked government agencies and/or banks to investigate.
In a letter dated Oct. 3, Senate Majority Leader Harry Reid (D-Nev.) wrote to Ally Financial, Bank of America, Wells Fargo, Citigroup and JPMorgan Chase, urging them for a moratorium."I write to request that your mortgage-servicing division suspend foreclosures on Nevada home owners until systems are in place to ensure Nevadans are not being improperly directed into foreclosure proceedings," the letter reads. A freeze on foreclosures has also been pushed by Reps. Alan Grayson (D-Fla.), John Conyers (D-Mich.), Carolyn Kilpatrick (D-Mich.), Maxine Waters (D-Calif.), Debbie Wasserman-Schultz (D-Fla.), Gabrielle Giffords (D-Ariz.), Elijah Cummings (D-Md.) and Earl Blumenauer (D-Ore.).
The debate has also started to hit the campaign trail, with Michigan Democratic gubernatorial nominee Virg Bernero calling for a moratorium during a recent debate. "We need a moratorium for all people in Michigan, so that they can review their practices and know what they're doing," said Bernero. "I say we should err on the side of the homeowner. Let's err on the side of keeping people in their homes. The vast majority of people -- nobody's trying to trick the bank. Nobody's trying to hold back. People are good people who are going to pay their bills."
The relative silence of most Republican lawmakers stands in stark contrast to these outcries. A spokesman for House Minority Leader John Boehner (R-Ohio) told The Huffington Post, "At a time when economic uncertainty and unemployment are putting great pressure on homeowners and the housing market, it is imperative that we get all of the facts about this situation, and quickly."
One person who has spoken out is Rep. Eric Cantor (R-Va.), who said on "Fox News Sunday" that he is opposed to a freeze. "[I]f you impose a moratorium on foreclosures, what you are telling people and institutions that lend money is they do not have the protection to take the risk they need to, to extend credit for people will get a mortgage," he said. "You'll shut down the housing industry if that is the case. ... Now, come on, people have to take responsibility for themselves. We need to get the housing industry going again. We don't need government intervening in every step of every aspect of this economy."
Richard Shelby of Alabama, the ranking Republican on the Senate Banking Committee, has called for an investigation, but he is one of the few Republicans to do so.
The effort on the state level has been far more bipartisan. On Wednesday, Alabama Republican Troy King became the final attorney general to join all other 49 states in a national mortgage foreclosure working group, a coordinated effort to investigate fraud led by Iowa's Democratic attorney general. On Oct. 4, Texas Attorney General Greg Abbott, a Republican, wrote a letter to 27 companies that maintain mortgage loans in Texas and demanded that they suspend foreclosures.
Some progressive activists are starting to encourage Democrats to run on the foreclosure issue in the final days of the midterm election season. "There is a huge opportunity to create a late shift for the better in Democratic electoral fortunes because of the foreclosure fraud scandal," political consultant Mike Lux wrote on the site Open Left. "With the issue exploding, Democrats need to take advantage of the fact that it us who are doing the right thing on this issue, while Republicans are at best standing on the sidelines doing nothing, and at worst getting in the way of solving the problem."
The blogger known as Digby wrote, "This is the clearest example I've seen of the difference between the two parties in dealing with the ongoing economic crisis. ... The Dems are far from blameless and it's true that the owners exert outsized influence over both the parties. But in situations like this you can see a clear distinction between the moral and ethical impulses that make a politician -- and a voter -- choose one party over another."
This call for investigations and a moratorium is likely not endearing Democrats to Wall Street, which is already sending more cash to Republicans. Dave Levinthal of the Center for Responsive Politics said that since President Obama signed Wall Street reform legislation, financial firms have largely given Democrats the cold shoulder in terms of contributions. "Our target ratio for the 2010 cycle is 80-20 Republican," said Karen Klugh of the American Financial Services Association.
UPDATE: The campaign of Ohio Democratic Senate candidate Lee Fisher sent out a statement on Oct. 14, saying that Fisher is renewing his call for a foreclosure moratorium. "As we see more and more evidence that Ohioans are wrongly being forced to foreclose on their homes, it is clear that we need to freeze foreclosures and press our government agencies to investigate fraudulent proceedings," spokeswoman Holly Shulman said. "Congressman Portman hasn't bucked his party and spoke out in favor of a single Democratic initiative this year, but calling for a foreclosure moratorium and investigations into foreclosure fraud would be a good place to start."
UPDATE: Rep. Marcy Kaptur (D-Ohio) has also frequently spoken out on this issue, urging people threatened with foreclosure to exercise squatters' rights and stay in their homes. Huffington Post