In yet another victory for failed mortgage lenders and investment banks, the California Attorney General announced a new task force to investigate mortgage fraud.  The announcement comes more than 3 years after the mortgage meltdown.  The task force will focus on predatory lending practices, violations of the Truth in Lending Act, loan modification scams, and other fraudulent practices.

While I applaud any effort by the attorney general to crackdown on mortgage fraud, I have serious questions about the purpose and intentions of the task force.  Perhaps the most ridiculous part about the new task force is that it comes years too late and after thousands have already lost their homes.  In 2010, Riverside County alone experienced over 55,000 default notices or sale notices.  More interestingly about the timing of the task force is that many of the violations by banks are subject to a statute of limitations that will have run for most homeowners.  For instance, violations of the Truth in Lending Act for certain disclosures are subject to a one year statute of limitations.  Claims under the California Business and Professions code are subject to a three years statute of limitations.  Unless a homeowner was defrauded within the last three years (i.e. after the mortgage meltdown), they will likely be left without a legal basis for recovery.  In short, they are three years too late.

If the Attorney General is interested in helping people, he can do one of two things.  He can either travel back in time to help howeowners starting in 2008 or he can propose new legislation that extends lender liability for years to come.

 

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