If banks are going to take away people's homes through foreclosure, the least they can do is make sure the paperwork is correct.

Three major banks have halted foreclosures in 23 states because of flawed document preparation. In some cases, there is even doubt that banks held the title to the homes they are foreclosing on.

That alone shows the level of shenanigans that were going on when Wall Street became overly involved in turning homes into commodities to be sold and traded.

Now, President Obama has refused to sign a bill that would allow foreclosure documents to be accepted by multiple states. And he shouldn't until this mess gets straightened out. Too many lives and livelihoods are at stake.

According to The New York Times:

The bill would have mandated that notarizations of mortgages and other financial documents done in one state, including those done electronically, be recognized in other states. By the time the bill arrived at Mr. Obama's desk, however, it was caught in the controversy over major institutions' acknowledgment of problems in processing documents for tens of thousands of foreclosures. Those included suspected forgeries and notaries' failure to review the paperwork as required.



"That is why we need to think through the intended and unintended consequences of this bill on consumer protections, especially in light of the recent developments with mortgage processors," White House communications director Dan Pfeiffer wrote in a blog posting.

The bill would have allowed lenders to rush the mortgage process. What has become more and more clear is that the foreclosure process needs to be slowed down.

There should be a thorough investigation into the loan documents that homeowners signed. I'm sure we would find documents where homeowners' income and other assets were exaggerated in the rush to get people into homes they couldn't afford so that those mortgages could then be sold on Wall Street.

What this is boiling down to is people being victimized multiple times. First, potential homeowners were sold overpriced homes and sold the idea that home prices would rise forever as a justification for purchasing those homes. The media and Wall Street pushed homes as immediate investment instruments, which they are not.

Homeowners were then sold mortgage products that were not in their best interests or that they couldn't afford. They were sold these products because brokers were being rewarded and banks were shipping these mortgages off to be sold on Wall Street. Previously, banks were clearly interested in giving out mortgages to people who they felt were extremely safe bets to repay that money over time.

And when homeowners were no longer able to afford these homes, banks refused to modify the terms or lower the home value to reflect the accurate value. In their rush to repossess the homes, the banks did such shoddy paperwork that people's right to have the proper process followed was violated.

All Americans were affected by the fraudulent mortgages but minorities were particularly affected via the sub-prime mortgage crisis.

A 2007 study from Harvard's Joint Center for Housing Studies found that 46 percent of Latinos and 55 percent of African Americans received sub-prime mortgages in 2005, compared with 17 percent of whites. A 2007 study from the National Community Reinvestment Coalition found that middle-and-upper-income African Americans were twice as likely to receive higher interest rates as whites with similar incomes.

African Americans and Latinos already have 10 cents of wealth for every dollar of their white counterparts and are less likely to have investments in the stock market or opportunities for inter-generational transfers of wealth. For whites, home equity represented 43 percent of wealth, while the same figure was 63 percent for African Americans.

For blacks and Latinos, the loss of a home can equal a permanent loss of wealth and a lost opportunity to transfer generational wealth.

Attorney General Eric Holder said the Financial Fraud Enforcement Task Force, created by Obama, is examining the growing number of foreclosure fraud cases. That task force should get high priority. Current and future homeowners deserve answers and those who committed foreclosure fraud should be punished.