But industry insiders and legal experts say the limited capacity of mortgage companies is not the primary factor impeding the government’s $75 billion program to prevent foreclosures. Instead, it is that many mortgage companies are reluctant to give strapped homeowners a break because the companies collect lucrative fees on delinquent loans.For Mortgage Servicers, an Incentive Not to Help Homeowners - NYTimes.com. This ho hum attitude of the bankers toward the real life pain and suffering they're causing exists despite the fact, or maybe because of the fact, that foreclosures reached a record high this year. According to a May Washington Post article,
About 12.07 percent of mortgage loans were delinquent or in the foreclosure process during the quarter, according to a survey by the industry group. That is the highest level ever recorded by the survey, which has been conducted since 1972. It is up from about 8 percent during the first quarter of 2008.Making money off of fines and such, what economists call the financialization of banks, is exactly the sort of thing that the government should step in and say no to and in many respects the Obama administration has been trying, But fincialization, the idea that it's better to make money off of thin air, has been growing as the major source of revenue for banks for decades and it's a difficult habit to break. In some ways, fighting fincialization might require a radical restructuring of how we educate young MBAs, a sort of Ethics 101, as well as a lot more federal regulation. A recent article in Utne suggested that we first kill all the MBAs. That is, that we should really blame the finance professors for starting this mess by teaching things like financialization as good practice. Maybe we can just send the MBAs, the Mortgage Bankers, and all of Wall Street to re-education camps? How about in the blighted neighborhoods where they are making money off of some of America's most struggling citizens? I hear there's some cheap real estate- easily coverted into Ethics for Bankers and Other Criminals Centers.