Oh, Pity the Poor Banks

It's so sad.  Our megabanks are suffering.  I mean, we let them get away with all sorts of stuff--making bad loans, selling them to investors, shorting the investments as they sold them to investors, getting the government to bail them out, other stuff we all know about.  But now cometh the California Homeowner Bill of Rights, which makes said megabanks behave themselves--minimally.  It doesn't send the Board of Directors and major players off to prison.  It doesn't make them pay a fine.  All it does is require that they not conduct themselves like gangsters, that their dealings with distressed homeowners be clear and transparent, that they not do things to sneak through foreclosures on the unsuspecting.

Alas, we find that the Bank of America can't even do that.  A scant five months after the legislation came into effect, we have a case in which the agent for the bank double-tracked a homeowner--allegedly negotiating while filing a Notice of Default and attempting to proceed to foreclosure.  You'd think this was one of the simple rules: you will negotiate in good faith and not encourage people to sell their first-borns to keep their homes, all the while proceeding with the foreclosure.  Not only it it bad form and a specific violation of the law, but it's also easy for a distressed homeowner to show that she has asked for a modification.  There's paper evidence all over the homeowner's dining room table.

But it costs so much money!  The bank has to pay its own attorneys, the attorneys for the distressed homeowner etc. etc.  Awww.  Maybe BofA should have realized that a lot of lawsuits aren't worth the trouble.  That's what the rest of us do.  Too much hassle.  Not enough return.  Surely BofA has an economist somewhere on staff who could see that the recovery through foreclosure didn't justify defending this lawsuit.  Or they could have just obeyed the law in the first place.

Yves Smith has a really good piece on the same subject.