LOOTED: note on CARES Act

The CARES Act only protected homeowners from foreclosure who were covered with federally-backed (a.k.a. “agency”) mortgages, and was conceived so badly that it gave further encouragement to the systemic threat that mortgage service firms pose. Even if homeowners themselves weren’t required to make payments under the CARES Act, servicers – overgrown collection agencies – like Quicken and Freedom still had to keep paying the bondholders every month.

Servicers tricked customers into skipping the forbearance program, telling homeowners that even if they thought they were getting a bailout break, they would still have to make it all up in one balloon payment at the end of the deferral period. As we found out in 2008, homeowners facing servicer disruptions can immediately be confronted with all sorts of problems, from taxes going unpaid to payments vanishing to incorrect foreclosure proceedings taking place. Such problems can take years to resolve. A likely scenario would involve their businesses being swallowed up by big banks, perhaps with the aid of incentives tossed in from yet another bailout package.