Widespread reports about “robo-signers” — bank officials who would sign foreclosure forms without even reading them — have lead many business reporters to dub the crisis of potentially illegal bank foreclosures as “foreclosure-gate.” For example, a Bank of America official admitted in a bankruptcy case that she signed 7,000 to 8,000 foreclosure documents a month and “typically” did not read them “because of the volume.” Responding to this crisis, many lenders, like Bank of America, JP Morgan, and Ally Financial, have halted foreclosures, while Democratic lawmakers and a cadre of a bipartisan state attorney generals have called for a wider foreclosure moratorium and investigations into the banks’ practices.
However, most Republicans have balked at any attempt to seriously respond to the banks’ fraudulent foreclosures. In particular, House Minority Whip Rep. Eric Cantor (R-VA) said last Sunday that he opposed any efforts to expand a moratorium on foreclosures. “Now, come on, people have to take responsibility for themselves,” said Cantor, adding, “We don’t need government intervening in every step of every aspect of this economy.” But as Cantor runs defense for the mortgage banks, his extremely close ties to the industry present a clear conflict of interest:
– Many of Cantor’s top contributors are financial companies and lobbyists for the mortgage banking industry. Mortgage banks like Bank of America, Capital One, and Hartford Financial have contributed over $100,000 to Cantor’s two political action committees, and the Mortgage Bankers Association, a trade group of mortgage banker lobbyists, pitched in $23,500.
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– Cantor’s wife, Diane Cantor, serves as the managing director of a bank recently reported to have one of the highest foreclosure rates in the country. Diane Cantor leads New York Private Bank & Trust, which is among the top three banks in the mortgage business “with the the greatest percentage of family loans in the foreclosure process, according to SNL Financial.” New York Private Bank & Trust, a TARP recipient that has not paid back the taxpayer, is also a member of the U.S. Chamber of Commerce.
– Cantor is personally invested heavily into the mortgage industry. According to reporter Neil Simon, Cantor’s “personal ties to the mortgage industry helped play a leading role” in his decision to vote for the bank bailouts of 2008. For instance, before going to Congress, Cantor handled real estate law at his family’s law firm, and continues to own between a $250,000 to $500,000 stake in TrustMor Mortgage, a mortgage brokerage he opened in 1996. According to Cantor’s latest personal finance disclosure, Cantor still earns $5,000 to $15,000 in income from his TrustMor business stake.
While Cantor defends the banks’ power to foreclose on homes without due process or legal paperwork as part of his philosophy of “free enterprise” and “private property rights,” his stance may reflect more on his own relationship with the mortgage industry.
As the Wonk Room’s Pat Garofalo explained, there a number of concrete steps that can be taken to address the “foreclosure-gate” crisis. For example, loan “modification programs need to be taken out of the hands of those banks who have consistently failed to live up their end” of the Home Affordable Modification Program, and successful mortgage mediation programs—in which a bank must meet with a borrower, in the presence of a judge and housing counselors, before finalizing a foreclosure—must be expanded.