In the editorial supporting the governments foreclosure settlement (Feb. 13), the Herald has ignored the real causes of the mortgage crisis.
Knowledgeable and open-minded readers realize that a number of factors and entities were to blame for the real estate debacle. Shouldnt they be able to expect the Herald to have the same understanding? The facts are readily available through various publications, including the official government edition of The Financial Crisis Inquiry Report on the Causes of the Financial and Economic Crisis in the United States.
The list of those responsible includes the Federal Reserve, two administrations, Congress, Fannie Mae and Freddie Mac, real estate agents, real estate brokers, government regulators, rating agencies, Wall Street firms, dishonest borrowers, and, of course, the banks.
While many banks exercised bad judgment in accepting substandard mortgagors, bad business practices in themselves do not constitute a crime. However, banks that robo-signed foreclosure documents were acting illegally and should be punished for the harm they caused. But lets be clear: robo-signing did not cause real estate values to crash across the country. It did not cause the relaxation of credit standards or any of the other problems associated with the real estate bubble. There does not appear to be many, if any, borrowers being foreclosed upon who are current on their mortgage payments. While robo-signing is illegal, it is hardly comparable to the deceptive practices that led to the tobacco settlement.
Your editorial explains that the foreclosure settlement money will flow to consumers who owe more on their home than the home is worth, or who deserve to have the principal amount of their loan reduced. What criteria does the Herald apply in determining that a group of people deserves to have principal reduced?
A handful of banks should not have to bear all of the blame and all of the financial penalties when it is clear that they were only part of the problem.