WASHINGTON -- Republican presidential frontrunner Mitt Romney suggested he doesn't support foreclosure relief for the millions of Americans struggling with underwater mortgages, untold numbers of which have been the victims of fraudulent lending or foreclosure practices.
In a filmed interview with the editorial board of the Las Vegas Review-Journal, a newspaper serving the hardest-hit foreclosure state in the union, Romney criticized President Barack Obama for not foreclosing on American families fast enough.
"Don’t try to stop the foreclosure process. Let it run its course and hit the bottom," Romney said when asked what he would do to jump-start the floundering housing market.
"Allow investors to buy homes, put renters in them, fix the homes up and let it turn around and come back up," he continued. "The Obama administration has slow walked the foreclosure process ... that has long existed and as a result we still have a foreclosure overhang."
The foreclosure process in the United States is badly broken and has been for years, many observers say. Nevada Attorney General Catherine Cortez Masto sued Bank of America in August for allegedly foreclosing on homes it had no authority to foreclose on. The lawsuit includes a host of accusations of unseemly practices at the banking giant, from failing to process borrowers' payments, to raising borrowers' interest rates after inking a loan modification agreement to lower the interest rate.
Many other major American banks have been hit with allegations of engaging in similar practices, and have received formal regulatory sanctions from federal bank regulators. Banks seeking to foreclose on borrowers routinely forged signatures and fabricated documents in order to proceed with foreclosures. One Ally Financial employee, Jeffrey Stephens, acknowledged signing around 10,000 foreclosure documents a month without validating their claims, according to the Palm Beach Post.
In some cases this process has converted a manageable problem into a hopeless situation by improperly overstating a borrowers' debt burden and charging thousands of dollars in erroneous fees. Other times, banks have attempted to foreclose on homes that have been entirely paid off or on homes that are owned by other banks.
The Obama campaign was quick to attack Romney's comments.
"Mitt Romney’s message to Nevada homeowners struggling to pay their mortgage bills is simple: you’re on your own, so step aside," Obama campaign spokesman Ben LaBolt said in a written statement. "Instead of offering an opportunity, like President Obama has, for responsible homeowners who were scammed by their lender or trapped by falling housing prices to refinance, Governor Romney believes we should instead let the foreclosure process 'run its course and hit the bottom' so that investors can come in and make a quick buck after families lose their homes."
But the administration's own record foreclosure relief is far from flawless. The foreclosure fraud scandal has festered under the Obama administration's watch, and the administration has yet to take action to thwart it.
The administration's signature foreclosure prevention program, the Home Affordable Modification Program, has so-far been a failure and hasn't sanctioned banks participating in the program for mistreating borrowers. According to a recent federal audit, Ally Financial miscalculated borrowers incomes in more than 80 percent of cases going through HAMP, ProPublica reported.
A total of 870,000 struggling homeowners have been kicked out of HAMP, while just 657,044 remain in permanent modifications. Obama originally promised that the initiative would help 3 to 4 million families stay in their homes.
When the bank bailouts were being negotiated at the end of George W. Bush's presidency, Obama helped shore up votes for the package by promising Democrats he would push to give borrowers foreclosure relief in bankruptcy court if he was elected president. The bailout passed, but Obama never followed through on that promise.