The following is from Banker & Tradesman:
Where Were Bank Regulators?
Why would you commit yourself to a loan that you know you can’t really afford?
A special investigation in today’s Banker & Tradesman offers some clues about how and why that could happen.
The report highlights what happened to Latino homebuyers who were misled into mortgages that were way beyond their means.
Some of the buyers were told their mortgage payments would be a certain amount, only to come to the closing table and find out their monthly payments amounted to thousands of dollars more.
So why didn’t they just walk away?
The mortgage brokers, who they trusted, assured them they could refinance the loans at a later time or the brokers threatened to keep the buyers’ hard-earned deposits.
So where was the Massachusetts Division of Banks, which licenses brokers and lenders, during all of this?
According to the special report, the division failed to act on some complaints — or if it did the regulators didn’t take formal enforcement action. (The division only reports on formal punitive actions.) Regulators revoked or suspended less than 3 percent of brokers and lenders between 2007 and June 1, 2009.
In that time, over 24,000 foreclosures have occurred in Massachusetts, according to The Warren Group.