Foreclosure Solutions Dogged by Scams and Financial Scandals

foreclosure scams

Foreclosures solutions are being dogged by scams and foreclosure scandals. What has been going on for the past decade has intensified and come into prominence with the breakout of the foreclosure epidemic. There was the accounting fraud of Enron and now the trading shame of mutual funds and sub-prime mortgages.

The Obama team is hoping to clamp down regulations on the financial system to give protection to the consumers in the future. How far President Obama will be successful in having his way, time alone can tell. The focus of the package is on the making of a new agency. Other plans are there to give protection to mortgage and credit card holders.

If given the green signal by the Consumer Financial Protection Agency will have wide powers to protect the credit, savings etc of the consumers. It would be an independent body and not share the platform with other entities that see to these duties now. Thus the powers of some will be taken away – the most notable one being the Federal Reserve.

These drastic steps have been taken in response to strong criticism levelled against the lenders and credit card firms for using fraudulent and deceptive practices to cheat consumers and to intentionally burden them with debts.

The new agency would have the power to lay down rules, change mortgage laws and scrutinize the operations of financial bodies. They will also have teeth by being able to enforce rules, imposing penalties and banning wrong practices. It would be expected of the financial firms to be “clear and conspicuous” in letting the consumers know ahead of the costs, the fines as well as risks involved in deals.

The states would now be permitted to pass laws that could be stricter than the federal standards.

The Obama government is determined to see that this new measure is not passed off lightly as just another drill by the bureaucracy. The term “plain vanilla” has been used in referring to a mortgage that would be straight and simple without confusions. The agency would expect of the banks to issue 30 year fixed rate mortgage loans without any traps attached. Even if the consumers opted for more complex products these too would be subject to stringent supervision and rules.

It is calculated that by proper functioning of these new measures future trouble would be avoided. Certain types of mortgages like the sub-prime ones would be firmly banned.