(MintPress) – As the U.S. grapples with a foreclosure crisis, with an estimated 15.7 homeowners are facing mortgages that now exceed the actual market value of their homes, Iceland is reaping the benefits of a system that forgave similar debts in 2008.
The forgiveness plans in Iceland were implemented by partially government run banks, indicating a similar measure in the U.S. would not play out in mirror fashion. But the move has put the country in an entirely different economic direction — one founded in growth during a time of global economic demise.
In 2008, Iceland banks defaulted on $85 billion. Its move to forgive the debts of homeowners facing mortgage debts of 110 percent or more than the houses’ actual values was seen as an effort to work its way to prosperity.
According to Bloomberg News, citing the Organization for Economic Cooperation and Development, the Icelandic economy is expected to grow at a rate that exceeds the developed world, on average.
“The lesson to be learned from Iceland’s crisis is that if other countries think it’s necessary to write down debts, they should look at how successful the 100 percent agreement was here,” University of Iceland economics professor Thorolfur Matthiasson told Bloomberg News, pointing to the fact that Iceland’s example is the largest debt relief agreement to be taken on by any country.
Iceland also has taken accusations of illegal loan practices to the courts, with an estimated 200 bank employees, including former CEOs, already facing charges, according to Bloomberg News. In the United States banking leaders have escaped charges — but it’s not because Americans have become complacent in their fight against predatory lending practices.
American homeowners facing foreclosure in underwater mortgage cases are uniting to form the Home Defenders League (HDL), a lobby group intent on bringing their issue to the forefront of November elections, petitioning President Barack Obama to relieve homeowners in underwater mortgage, arguing it would save families $6,500 a year — money that could be used to boost the economy.
HDL is also using its lobbying power to highlight politicians who, in its opinion, are on the side of Wall Street. As part of its canvassing efforts, HDL is going door-to-door and cold calling American residents, informing them how local and national politicians have voted — and what their platform for foreclosure-related policies are.
“The same Wall Street banks that crashed the economy continue to overcharge Americans on their mortgages and too many politicians have refused to stand up to them,” Rose Gudiel, a California homeowner, said in a press release.
HDL as a whole is blatantly calling out big banks, claiming homeowners were the victims of lenders inflating salaries on applications, and committing fraud in the process. They’re also claiming communication between homeowners and banks has left many with unanswered questions — stuck in a confusing process without clarification.
“Four years after Wall Street banks drove the housing market off a cliff, we have been left to pick up the pieces,” HDL states on its website. “We are wrestling with servicers that file fraudulent paperwork and don’t return our phone calls.”