Bank of America chief Brian Moynihan has taken up a distasteful habit: hiding behind his delinquent homeowners.
“I don’t think we should be put in a position where we aren’t trying to help homeowners through this strife because people want us to foreclose faster,” he said in Boston, according to the Times.
Who are these people who purportedly want BofA to “foreclose faster”? They are investors, including the New York Fed, who have sued the bank in an effort to get it to re-purchase mortgages that, they say, the bank underwrote improperly and/or cannot properly service now.
Courts can sort out the legal claims (although it will be hard, as the mortgage-securities prospectuses that will govern the cases are chock-full of passive sentences about certain tasks that “will be required” of servicers and others, without much clarity as to who is doing all of this requiring).
But it’s a red herring for a bank to hide behind defaulted homeowners. Servicers, including BofA, have now had a long time — three years – to work with investors on slashing the amount of money that homeowners owe so that the borrowers can afford to stay.
If a servicer is unwilling or unable to offer a deal to the borrower — one that does more than kick the problem a few years into the future — it’s best all around to get the foreclosure over with. Nobody wants to live under a cloud of uncertainty forever.
The real problem is that some banks seem to be having a hard time of, well, doing their jobs: either slashing the debt or foreclosing legally and in a timely fashion.
It’s easy, then, to grasp why Moynihan would want to change the story, to one that softly recasts bank incompetence as some sort of ad hoc charitable endeavor for delinquent homeowners.
– Nicole Gelinas is a contributing editor to the Manhattan Institute’s City Journal.