Banks Sticking Taxpayers With Costs of Bad Mortgages
The action of sending in the keys to the property instead of the loan payment has been termed “jingle mail.” Both homeowners in default or who do not want to overpay for their property as well as financial corporations are increasingly relying on jingle mail to relieve themselves of enormous financial obligations.
Investment banks have also been engaging in jingle mail, a form less public than homeowners but also more socially destructive. The Federal Reserve is allowing banks to use as collateral bad mortgage debt in exchange for loans, which is allowing the whole financial system to get these defaulted loans off of their accounting records and keep up an appearance of financial health.
When investment institutions send in nonperforming loans to the Fed in exchange for Treasury securities and low interest loans, they are building up an edifice of financial fraud and sticking the rest of the country with their toxic mortgage debts. Large financial institutions sending in jingle mail and sticking the American taxpayers with the bill is a clear reflection on the moral risk, corruption, and economic manipulation of corporations taking advantage of the feds.