Why no lawsuits about this?

There appears to be no real shame about the lousy job on short sales that a few notorious big banks are doing on short-sales. Just as there was little attempt on their part to hide their obvious disdain for earlier programs that the federal government tried to encourage loan modifications, those same big banks are showing less than expected or hoped for backing of short-sales instead of foreclosure. The initial excuses about being surprised and overwhelmed might have worked for the first year or so, but we are well into the 3rd year of this mess and those excuses just don't hold water.

What is surprising is the lack of class action law suits against these banks by their stockholders. Think about the billions that have been lost in stock value for those investors because these banks have completely mismanaged the whole distressed home process. There would seem to be a case to be made that bank management that delayed reacting to this crisis, forwhatever convoluteded reasons, have caused billions in unnecessary losses and thus caused a loss in value of the stock.

Three years in to this foreclosure mess, there are still banks that can't process a simple short-sale offer in less than 2-3 months. We Realtors all know who the worst offenders are and so do their stockholders. Three years in, we still hear the same overwhelmed and understaffed excuses. They can't sell that excuse to us and I wonder how they continue to be able to sell it to their stockholders.


I'm no lawyer and I'm just not sure what the burden of proof would have to be for a stockholder class action suit to succeed. There doesn't seen to be anything so overtly crooked going on that any kind of fraud could be proven and unfortunately management stupidity is probably not justification for a suit; however, there does seem to be enough evidence of a pattern of failure to manage the situation or mimismanagement of the situation that some punishment and compensation for stockholders from management would seem to be in order, especially from those billion dollar bonus managers who have overseen this shipwreck.


I suppose this is just another area in which corporate management is not held accountable in any meaningful way. Banks, especially those that got Federal bailout money, are making money hand over fist off the inflated credit card rates and fees that they were allowed to hike ahead o new regulations, so they are in no mood to dampen their profits by taking the haircuts that they need to take on distressed properties. It's in their interest to turn down short sales and enven to delay foreclosures, rather than take the losses.

So, we seem stuck in this twilight zone where no decision is the best decision and inaction is the best action for the banks. The feds can't seem to get them to do anything; maybe their own stockholders could.