Mortgage Damage Spreads
Big Bank Stocks Hit Again as Modern Finance Collides With the Legal System
By NICK TIMIRAOS, JESSICA SILVER-GREENBERG And DAN FITZPATRICK
The unfolding foreclosure-processing debacle is causing bank stocks to slide and putting millions of delinquent borrowers in limbo.
But how disruptive the crisis ultimately becomes—for homeowners, the housing market and the broader economy—depends on how quickly a number of technical problems and legal challenges are resolved in the months ahead.
In essence, fast-paced modern finance is colliding with the much slower machinery of the U.S. legal system. While finance aims for efficiency and maximized profits, the courts demand due process. And that’s becoming a growing issue as lenders come under attack for taking short cuts to oust homeowners who haven’t mailed in a mortgage check for months.