Anita Hill: Mortgage Plan a 'Quick Fix'

The attorney explains why Obama's plan and fair-lending settlements don't address the full problem.

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TR: What more comprehensive solutions do you think the government should be taking up?

AH: One of the things that I talk about in my book is community problems that have been created by the foreclosure crisis. In the state of Illinois, the state attorney general has a lawsuit against Wells Fargo that is ongoing. If successful, she wants the money from the lawsuit that involves civil rights and consumer-law violations to help rebuild some of the devastated communities.

But as we're restoring these communities, I think we've got to look at issues that existed before the foreclosure crisis, and that's an endemic lack of private and public services. One of the specific services [the communities] lacked was financial services. There was no adequate competition in the communities so that an individual could say, "I don't like the loan that Wells Fargo has offered me, so I'm going to go to another bank and get a different kind of loan." When payday-loan operations and check-cashing services at best is all you have, that causes communities to suffer.

But there were other things that were missing even before the crisis, like food outlets. All these things are going to have to be looked at if we're really going to restore neighborhoods. Otherwise, you're going to re-create the situation that made them vulnerable to the fraud that was going on. I'm not saying we're going to be able to rebuild them all overnight, but there needs to be attention paid to a systemic problem as opposed to just a quick fix for the foreclosure crisis.

TR: Earlier you mentioned people who lost their homes in the foreclosure crisis. In December the Justice Department reached a $335 million settlement with Countrywide on behalf of 200,000 black and Latino families that were steered into subprime loans, regardless of their financial situation. How should the government compensate families that lost their homes this way -- is this the right model?

AH: In terms of the numbers, the most someone will recover will be $10,000. Anyone who has gone through the process of having their credit wrecked knows that probably will not get them back to where they should be. And $335 million is a lot of money.

But are we really talking about a "make whole" remedy? For an individual who was defrauded, who lost their homes and their credit rating, what does it take to make them whole? The work of looking into those questions has not been done.

TR: Is that something that can be calculated into a dollar amount?

AH: I don't know what the solution should be. I don't know if it will involve people being able to go back and clear up their credit records, or exactly all that it will take. I'm willing to say at this point, if I were going to do research on it, I would start out with the premise that $10,000 is not enough.

TR: On a broader scale, the Obama administration is days away from finalizing a larger settlement with the nation's largest banks over foreclosure abuses. Many advocates call the settlement a slap on the wrist, arguing that people should be prosecuted and jailed. What do you think would hold banks accountable?

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