HSBC Holdings, Europe’s biggest bank, has suspended U.S. foreclosures after “certain deficiencies” were found in the company’s processing, preparation and signing of affidavits and “other documents supporting foreclosures.” In other words, it sounds like another robo-signing type scandal in which foreclosures are simply pumped as quickly as possible through the court system. In response to the findings, HSBC has agreed to halt all foreclosures until they can address the problems in their system.
It’s not surprising that another bank has issued a foreclosure moratorium due to flaws in their foreclosure process. There were flaws in the issuing of many of these loans. The type of sloppiness that allows homeowners to take on loans which they obviously can’t afford, is the same type of sloppiness that illegally forecloses on homeowners who are not behind on their mortgage or who are protected from foreclosure such as active duty military men and women.
So how do we address the root of this foreclosure crisis, not just the illegal foreclosures; but the foreclosures which are caused by a lending system which has failed to take into account the long-term viability of toxic loans? One of the first steps of course is investigating and correcting flawed foreclosure processes. But the most important step is to root out the greed that has created the foreclosure crisis in the first place. We must be willing to charge mortgage lenders to engage in responsible lending practices and force them to fairly deal with those homeowners who have become victims of a toxic mortgage “boom” and a down housing market.