Saturday, February 23, 2008

Marc Dann: Stopping Foreclosures and Screwing Taxpayers

This highly informative Bloomberg News piece lays out the latest legal strategy in thwarting home foreclosures. During the housing market boom circa 2003-2006, there was a hot secondary trading market for mortgage notes. Now that many homeowners have fallen behind on their monthly payments and banks are seeking to foreclose on the property, homeowners are going to the courts and claiming banks cannot foreclose on them because they do not have the proper paperwork definitively proving either: (a) that particular owns the property (and thus has the right to foreclose on it or (b) the new owner of the mortgage note is granting permission to that bank for the foreclosure to take place.

Bloomberg also mentions that our very own Attorney General, Marc Dann, has employed this legal tactic to prevent a whole host of home foreclosures in Ohio. In the article, a representative from Dann's office makes the claim that, "The best thing to do is to keep people in their homes and for everybody to take steps necessary to make that happen.''

The obvious question is: Why? As critics of the tactic and this faulty philosophy point out, homeowners who cannot obviously afford the property hurt everyone. Other residents in the neighborhood suffer from lower property values as a result of foreclosed residents hanging on to property and letting it rot or . And area taxpayers suffer because these residents usually owe thousands of dollars in back property taxes that they also cannot afford.

Indeed, it was this obvious conflict of interest that led a Hamilton County Municipal Court Judge to chastise Marc Dann for trying to prevent a foreclosure when the state of Ohio had a lien on the same property.

And again as a real estate attorney points out in the Bloomberg piece, big lenders don't print their own money. The original home mortgage was funded through someone's savings account, retirement fund, etc. That's where banks get money. The homeowner then defaulted on a loan they likely had little chance of ever repaying.

And Marc Dann wants to protect that reckless homeowner.

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