While President Obama touts a modest new jobs bill as well as a modest new federal program to assist homeowners in refinancing home loans at lower interest rates, Occupy Wall Street and Professor Steven Ramirez decry these comparatively minor assistance efforts geared toward American citizens when compared to the massive bailouts and major assistance provided to corporations and Wall Street bankers. In fact, the massive corporate bailout continues through a never-ending line of cash provided to banks by the Federal Reserve. Rejecting Corporate Welfare and instead bailing out American citizens seems to be one of the rallying cries of Occupy Wall Street. Despite this cry, U.S. policy seems intent on providing vast Corporate Welfare while simply frittering around the edges of providing genuine assistance to American taxpayers.
And now, in news that will certainly inflame Occupy Wall Street protestors, recent reports indicate that commercial banks are no longer satisfied in simply short selling or foreclosing on American homeowners. Major banks are not only foreclosing on U.S. citizens, they are now, with increasing frequency, suing these foreclosed homeowners for the difference in price between the outstanding loan and the cash gained upon the foreclosure sale. Recently, this “foreclosure hangover” i.e., obtaining deficiency judgments — when the foreclosed home fetches less than what is owed, the bank sues the homeowner for the debt — has been on the upswing. Forty-one states and the District of Columbia allow lenders to add insult to injury, and sue the already-distressed borrowers for the remainder of the loan amount post foreclosure sale.
In Lee County, Florida, foreclosure hangover judgments are up 34% from last year, despite the fact that the number of foreclosures have decreased. With savvy investors lurking in the background and hoping to take advantage of these distressed-debt deals, this foreclosure hangover will continue to linger. With a surefire judgment possible against borrowers when the foreclosure does not clear the debt, banks and investors seemed poised to pounce upon the vulnerable.
Just when borrowers believe they are clear of the loan based on the foreclosure, they are being sued for recovery of the total debt. To be clear, many banks that accepted bailout funds from U.S. taxpayers, are now turning the continuing mortgage crisis to their advantage, by foreclosing, and then suing the taxpayers for the balance of the debt owed. Meanwhile, Corporate Welfare continues with no end in sight. Occupy Wall Street loudly cries for an end to this pattern. Bailout people, not banks.