In Monday’s The New York Times editorial The Fed and Foreclosures, The Times finally took the Fed to task. They wrote: “There are two sides to every delinquent loan – a lender who made a bad lending decision and a borrower who cannot repay. Yet banks have never acted as if they bear any responsibility for the mortgage mess.” The harsh reality is banks take little to no responsibility for the fraud-closure mortgage nightmare.
According to The New York Times editorial, the Federal Reserve has proposed a rule that would disable one of the more effective legal tools that borrowers have to fight foreclosures.
The Truth in Lending Act from 1968 gives borrowers the “right of rescission,” the ability to undo a home refinancing or home equity loan within three years of the closing if the lender did not make proper disclosures. The Fed’s proposal would change all that.
But the bigger question is why would the Fed even get involved with this hot potato? Isn’t the Fed a non-partisan – above the politics – holier-than-thou institution that keeps the economy humming and rocking? Aren’t they the ones with the ability to print money and inject it into the economy as they have the ability to suck money out of circulation when things get too heated? Aren’t they the ones that paid 100 cents on the dollar for underwater virtually worthless sub-prime mortgage bonds under the ruse that the funds paid for the bonds was the fastest way to get money into the economy?