Each cog in this vast machine works to maximize short-term profit -- and reduce long-term risk... and responsibility. That's why the megabanks, greased by a national policy to foster home ownership, threw underwriting rules out the window in the mid-2000s and started lending money to almost anyone who could fog a mirror. They were far less interested in whether those loans succeeded or failed, because they made their money on volume, not performance.
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Hence, the crash. Hence, the "Settlement." Hence, this latest outrage. The mistake many states are making is, in principle, precisely the same: taking the easy money, going for the quick fix to balance the books. Let blighted neighborhoods stay blighted. Let victimized homeowners fend for themselves.
It's time we reject this sort of short-term thinking and get serious about long-term solutions. That means punishing those who treat American homeowners' finances like a piggy bank to be raided at will. It is totally indefensible that any governor would feel justified in plugging an "unpluggable" budget hole with funds that could be dedicated to assuring 2008 never happens again.
If you've been hurt by your mortgage servicer, this is your money and your future. Whether you choose the courts or the ballot box, I urge you to -- as we say in New Jersey -- "do what you gotta do."
Adam Levin is chairman and cofounder of Credit.com and Identity Theft 911. His experience as former director of the New Jersey Division of Consumer Affairs gives him unique insight into consumer privacy, legislation and financial advocacy. He is a nationally recognized expert on identity theft and credit.