WRONG
TURN
$1 million per violation.
There are some signs that practices are improving. But a monitor of the settlement appointed by
California Attorney General Kamala Harris intervened as recently
as September to stop banks from
foreclosing on homeowners being
considered for a modification in
that state — the same kind of dualtracking that cost Davis her home.
THE ‘MORAL HAZARD’
Sometimes the toughest part of a
journalist’s job is tracking down a
person whose experience properly
illustrates a story. Finding people
who feel they have been screwed
by their mortgage company,
though, is distressingly easy.
“I’m not sure I believe in America anymore,” said a cab driver
who picked me up at Los Angeles
International Airport last month.
I hadn’t told him I was a reporter, much less one who frequently
writes about foreclosures. I had just
asked him how things were going.
The driver, an Armenian immigrant named Gagik, told me that he
had a thriving business selling —
improbably — fireplaces in Southern California, prior to the housing
crash. When the business failed he
began driving a cab to support his
HUFFINGTON
11.04.12
“THE SPECTRE OF
‘MORAL HAZARD’ IS
AN IDEOLOGICALLY
DRIVEN FEAR BUILT
ON MYTHOLOGICAL
ASSUMPTIONS …”
wife and two daughters, he said.
He soon fell behind on the payments on the Burbank home he
had paid $700,000 for in 2006.
His bank wouldn’t consider
lowering the principal amount he
owed, even though the home’s value had dropped to just $300,000,
he said. “We needed help and they
wouldn’t listen,” he said.
For homeowners behind on their
payments and struggling to keep
their homes, mortgage debt relief,
or principal reduction, is the golden
ticket. Most have heard of it, few
have seen it. Almost all want it.
Geithner initially said forgiving debt wasn’t a priority. “This
program was not designed to start
with a principal reduction,” he
said at a Congressional Oversight
Panel hearing in Dec. 2009. “We