David Dayen has a great blog post explaining why, despite a drop in late mortgage payments so far in 2012, new figures show home foreclosures jumped a staggering 9% in May for the first time in over two years. Many in the media contend that the recent $25 billion bank settlement has freed up banks to foreclose on more homes because they now have clear foreclosure guidelines.
Dayen has a more likely explanation (emphasis added):
I don’t think it’s so much the [compensation] that the settlement offered as the implication that, even if you use forged or falsely generated documents to foreclose, the penalties would not be steep. It’s not that the servicers feel they can “play by the rules” now, as the RealtyTrac VP told Anna Louie Sussman, it’s that they feel they don’t have to.
The settlement has been a disaster on nearly every level; big banks who pushed “robo-signing” avoided criminal prosecution, while average working families who lost their homes because of the illegal actions of others may get a mere $2,000 for their loss, a tiny fraction of the average loan size of $180,000. This is to say nothing of the millions of homeowners who will get nothing, since their mortgage is owned or guaranteed by Fannie Mae or Freddie Mac.
The jump in foreclosures is a reminder that the most vulnerable people are still being left behind in favor of big banks, who have yet to face justice for causing the biggest economic meltdown of recent memory. It’s time they were brought to account for defrauding the public.