More than a decade and a half ago the worst foreclosure crisis in U.S. history hit Florida and it devasted hundreds of thousands of consumers financially throughout the entire U.S. Now 17 years later the threat of a second foreclosure crisis may be averted.
Cape Coral was one of the most heavily devastated cities in the U.S. I remember it well when I went shopping for foreclosures to buy. Homes that today sell for more than $300,000 were listed for $130,000 and that’s after they peaked at around $350,000.
The banks had lent too much money to too many mortgage buyers with little or nothing down. The housing market of dirty second mortgages as they were called were offered by lenders all over with little or no conscience. It took more than five years for the housing market to recover.
New legislation was enacted as a result of the financial crisis and the Consumer Financial Protection Bureau was developed to protect consumers. These days the Trump Administration is trying to dismantle the agency.
In the U.S. we have gotten used to having open and free business markets, but only to a degree. Crime and corruption have shown business cannot be trusted to protect their customers. Stock markets are protected by laws and monitored by policing agencies. Banks are state regulated. Real estate brokers are licensed and regulated.
Second Foreclosure Crisis
The Consumer Financial Protection Bureau is a government agency created in the wake of the 2008 financial crisis to regulate the consumer finance industry, including banks, lenders and other financial institutions to stop them from abusive and predatory practices. It’s a consumer-focused agency which goal is to ensure people can access fair, transparent and competitive markets for financial products.
The CFPB was established by the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010. It was intended to bring better enforcement and accountability to the consumer finance industry after the financial crisis exposed consumers vulnerability.
Too many people getting a loan for a mortgage or a new car was thought to be well regulated until they found out it was not.
By creating a consumer protection agency, the federal government-initiated supervision of financial product and service providers that had largely flown under the radar. Second mortgages or HELOCS went greatly unregulated. A second foreclosure crisis would have a lower chance of developing.
Judge Blocks Trump
Judge Amy BermanA federal judge blocked the Trump administration from dismantling the Consumer Financial Protection Bureau and ordered that all terminated employees be reinstated.
The temporary injunction from Judge Amy Berman Jackson at the U.S. District Court in Washington, D.C., also prevents the administration from firing any more CFPB workers or from deleting any of the agency’s data or records, as part of a sweeping ruling to protect the agency.
“There is a substantial risk that the defendants will complete the destruction of the agency completely in violation of law, well before the court can rule on the merits, and it will be impossible to rebuild,” Berman Jackson wrote in the order.
It was reported June 10 that the acting director of the CFPB, Cara Petersen resigned from her position, saying the agency’s leadership “has no intention to enforce the law in any meaningful way.” The Federal Reserve inspector general is reportedly reviewing the Trump administration’s efforts to dismantle the agency.
The Office of Inspector General, which is an independent watchdog overseeing the Federal Reserve and the CFPB, is reviewing the administration’s attempts to lay off most of the CFPB’s staff and cancel the agency’s contracts. Should the agency be fully re-activated a second foreclosure crisis would be fully averted or so it seems. Today’s real estate markets are generally in good condition and fear little when it comes to a crisis.
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