It looks like Wall Street is making another public relations blunder.
This time, it’s not phantom foreclosure documents, fat bonuses to executives at bailed-out banks or 30% surcharges on things like late credit card payments or checking account overdraws.
Now they are blaming anxious and struggling homeowners for the recent foreclosure mess.
Ironically, homeowners may get the last laugh from the foreclosure fiasco (or at least some much-needed breathing room), but more on that in a moment.
For now, the financial services industry is increasingly laying the blame for its own failure to police home mortgage documents on homeowners - many of whom are jobless or unable to work for health reasons - who can’t pay their mortgages.
Sure, not every delinquent homeowner is sick or out of work. But with about three million jobs lost in the U.S. since 2007, and about three million foreclosures over the same time period, it’s hard not to notice how those two trends match up so neatly.
Unless of course, you work on Wall Street, where bailouts for toxic, billion-dollar banks are completely legit, but sympathy for struggling homeowners is in short supply. "If you didn't pay your mortgage, you shouldn't be in your house. Period. People are getting upset about something that's just procedural," Walter Todd, portfolio manager at Greenwood Capital Associates, told Reuters last week.
"Everyone's responsible for following the law. If we all don't have to pay our mortgage, should we just stop paying taxes, too?" added Anton Schutz, president of Mendon Capital Advisers. "Your mortgage didn't get to a robo-signer by accident; it's because you're not paying."
Of course, many of those foreclosures could have been avoided if banks had worked with more delinquent homeowners to modify their mortgages. Or if they hadn’t engaged in predatory lending schemes that put buyers in impossible positions to begin with. But tale after tale of lenders losing paperwork, not responding to homeowners’ requests for loan modifications, and turning down applicants who met their initial loan modification obligations are legendary in consumer advocacy circles.