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Monday, July 30, 2012

The Great American Foreclosure Story by Paul Kiel

The Great American Foreclosure Story by Paul Kiel of ProPublica tells the miserable story of Sheila Ramos.  She once lived in a three-bedroom home.  Now she lives in a tent.  Unfortunately, her tale is typical.

This is a horrifying story of fraud, errors, incompetence and deception. One cause of the problem is that mortgage servicers made more money by foreclosing on mortgages rather than modifying them.  Attempts to help people modify their mortgages appear to be doomed to failure.

Other causes include false documents, fake companies which forged signatures on mortgage documents and exaggerated incomes on mortgage documents.  The Appendix of cases in the back of the book is especially interesting in this regard.  These summarize the gist of the book and tell some devastating tales.

I found this book rather difficult to read.  It's short but it's fairly technical and a bit dull.  This is a pity because the book makes excellent points about the power of Wall Street and the banks and how hard it is to take action if you are threatened with foreclosure.

Unfortunately, these financial disasters have been occurring in Australia as well.  I sometimes wonder whether we are on the verge of the same sort of property collapse here, despite the way that the government brags about our wonderful economy.

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