Two researchers from the International Monetary fund have conducted research that shows how lobbyists for the banking industry led to the financial crisis of 2007.
According to the report, which will be published in the June edition of the IMF’s Finance and Development magazine, deregulation of the mortgage industry led to the housing market crash. Between 2000 and 2006, the researchers found that more bills were passed that loosened banking regulations than bills that tightened regulations. The report states that “there was a clear association between the money affected financial firms spent on lobbying and the way legislators voted on the key bills before the financial crisis.”
The economists also found that “lender’s that lobbied heavily between 2000 and 2006 tended to engage in risky lending practices.” Some of the risky loans include subprime loans that can make a mortgage payment increase by hundreds of dollars a month. And the use of derivatives, which can make it hard to determine which entity actually owns the mortgage loan.
These risky lending practices led to exorbitant number of home loans going into default and face foreclosure. These homeowners turn to experienced foreclosure attorneys to help them save their homes.
The major banks also engaged in unsavory foreclosure practices which have led to Federal investigations. Numerous mortgage holders have faced wrongful foreclosure and must employ foreclosure lawyers to challenge the defaulted loans. Although, large banks have been instructed to change the way they handle foreclosures, many people still face the prospect of being evicted from their homes unless they contact a foreclosure attorney.
