Monday, May 07, 2012


Our banking system has essentially become a government backed system of criminal fraud.

One of the more confounding aspects of the U.S. housing crisis has been the reluctance of lenders to do more to assist troubled borrowers. After all, when homes go into foreclosure, banks lose money.

Now it turns out some lenders haven’t merely been unhelpful; their actions have pushed some borrowers over the foreclosure cliff. Lenders have been imposing exorbitant insurance policies on homeowners whose regular coverage lapses or is deemed insufficient. The policies, standard homeowner’s insurance or extra coverage for wind damage, say, for Florida residents, typically cost five to 10 times what owners were previously paying, tipping many into foreclosure.

Better give them some more free money.

The first paragraph shows that The Editors of Bloomberg don't understand what's going on. As we've long known, servicers do indeed have big incentives to push people into foreclosure. They collect lots of fees that way. It's the new business model.