WASHINGTON — Despite mounting evidence of big banks committing serious fraud in the foreclosure process, the U.S. Senate eliminated $35 million in legal aid to homeowners trying to keep their homes.
The fund was wiped out in order to meet government spending caps advocated by Sens. Jeff Sessions (R-Ala.) and Claire McCaskill (D-Mo.), but will likely end up costing taxpayers much more in the long run, as wrongful foreclosures burn through the balance sheets of Fannie Mae and Freddie Mac. The slashing of the foreclosure-assistance fund is just one casualty of Washington’s increasing bipartisan push to cut spending across the board.
The $35 million fund was created by the Wall Street reform bill signed into law by President Barack Obama in July, but the Senate never took the additional necessary step of appropriating the money. Even if it had been appropriated, Senate Majority Leader Harry Reid (D-Nev.) last week gave up on passing a budget for next year in the face of Republican opposition to earmarks.