We’d like to think it was those employees’ faults. Some had no idea what a loan was, and yet they agreed to sign thousands of loan documents. Others signed thousands and then admitted they didn’t even read what they were signing.
And the disaster-lover in all of us would like to think that banks wrongly foreclosed upon tons of people like Nancy, a woman not in foreclosure, who made a terrifying 911 call a couple of weeks ago because someone hired by JPMorgan was breaking into her house.
But the hedge fund manager of T2 Partners, Whitney Tilson, would bring us back to reality.
“I’d be very surprised if there were more than 1% of people who were actually kicked out of their homes who were actually current on their payments,” he told us.
He explains Foreclosure-gate in one simple sentence.
“What has happened is, some percentage of foreclosures were probably legitimate foreclosures, but the letter of law was not followed because the system wasn’t designed to handle the amount of volume of foreclosures that occured, and banks, lawfirms, etc cut corners.”
The system broke under the pressure of mass foreclosures. That’s it.
People realised the law was not being followed and they halted foreclosures. Simple.
Simple but not harmless. According to a report, foreclosure-gate is going to devastate Bank of America more than any other bank. Click here to read it >