Together, Mike and Lora Zook have faced cancer, a disabling accident, a crippling genetic disease, and even a fire that almost destroyed their home. What they couldn't face was the idea of losing their home to foreclosure.
A federal regulator is standing by its decision to bar Fannie Mae and Freddie Mac from reducing principal for borrowers at risk of foreclosure, resisting pressure from the Obama administration. The Federal Housing Finance Agency announced the decision Tuesday after months of considering the option.
Will homeowners see a penny of the reimbursements that the government has ordered 16 mortgage lenders to pay? Not likely, foreclosure victims and housing activists say, because the independent review ordered by regulators is too weak.
Regulators want the nation's big banks to reduce what borrowers owe on underwater mortgages, but they're still focused on solutions that rely on banks to voluntarily do the right thing. But we've already seen that won't work, and history shows what will -- giving bankruptcy judges back the right to cram down mortgages.
A partial settlement plan has been constructed by a group of state attorneys general and federal regulators. In theory, it addresses banks' flawed mortgage servicing, modification and foreclosure practices. In reality, it just lets the banks off the hook.
