Level the playing field in mortgage finance

With North Carolina on track to hit a record number of foreclosures this year, it’s worth learning more about big banks and their role as mortgage servicers.

In their weekend profile of Rep. Brad Miller, the New York Times explains the troubling financial relationship this way:

Often, the same bank that services a primary mortgage owned by another institution also owns a second mortgage or home equity line of credit on the same property. When that borrower has trouble meeting both payments, the servicer has an interest in making sure that amounts owed on the second lien, which it owns, continue to be paid even if the first loan, which it has no interest in, slides into delinquency. About two-thirds of primary mortgages are serviced by banks who do not own them but hold the accompanying seconds.

Rep. Miller, who sits on the House Financial Services Committee, is now working to draw more attention to the conflict of interest and is urging his colleagues to pass the Mortgage Servicing Conflict of Interest Elimination Act.

The 13th district Democrat knows he’s facing long odds in passing the bill, but sums it up this way:

“I’ve seen the banks going from losing no fights to losing a few fights,” he said. “What I’ve found is the more fights we pick, the more success we have.”