The latest in the mortgage foreclosure crisis is that many servicers, or companies that collect payments on behalf of mortgage owners, who have been foreclosing on many mortgages and seizing homes have been ignoring the law and doing so without required documentation and in some cases seizing homes that were not in default. Significant numbers of borrowers are being defrauded by these trusts. Krugman says this could create another financial morass. The Obama administration’s response has been to oppose any action that would upset the banks, while Republicans have asked Americans to trust the banks. Krugman says this is unacceptable. Where no clear property rights exist, it’s the government’s job to create them because what we are doing now is not working.
Krugman is a New York Times columnist.