On December 21, 2010, Tim Fernholz, the Asset Building Program’s Research Fellow, gathered a panel of experts to discuss the foreclosure crisis currently affecting millions of homeowners. The emerging picture of the crisis details widespread problems in the way mortgages were bought, sold and combined into complex financial instruments leading to unjust and potentially unlawful foreclosure practices when the housing bubble burst. The result is a great deal of uncertainty about the foreclosure process and the rights or obligations of the parties involved. Unfortunately, the legal means to address the crisis are not developed enough to remedy the problems brought about by the flawed financial innovation in the housing and mortgage markets. The failings of inadequate foreclosure review and consumer protections are exacerbating problems in the wider economy.
Mike Konczal, Fellow at the Roosevelt Institute, gave an overview of the securitization process and how the foreclosure crisis emerged. Alon Cohen, author of the “Foreclosure Mediation Series” and an attorney affiliated with the Center for American Progress, presented foreclosure mediation as an alternative to the traditional foreclosure process and offered evidence of its positive outcomes for homeowners and lenders. Julia Gordon, Senior Policy Counsel at the Center for Responsible Lending, presented the need for a better triage system within the foreclosure servicing process to identify situations that would be better addressed through alternative means. Finally, Damon Silvers, a member of the Congressional Oversight Panel for TARP and Director of Policy and Special Counsel for the AFL-CIO, argued that the foreclosure crisis is building systemic risks that could further destabilize the financial sector and the wider economy.
After the individual presentations, a discussion among the panelists attempted to clarify the current responsibility of regulators to monitor foreclosure servicing, sketch the role of government sponsored corporations moving forward and list the top priorities to solving the foreclosure crisis.