Could you end up in jail for not paying your bills? Is our country’s need for speed going to derail efforts to end improper loan-servicing and foreclosure practices? How do Florida’s nuclear power plants compare to those in Japan?
Those are just some of the questions being asked this week from top tier business and real estate reporters around the country. Most importantly, the answers could have profound effects on Florida’s housing market and our country’s economy.
Welcome to Debtors’ Prison, 2011 Edition
More than a third of all U.S. states allow borrowers who are behind on credit-card payments, auto loans and other bills to be jailed, according to The Wall Street Journal Business Writer Jessica Silver-Greenberg.
However lawmakers, judges and regulators are beginning to crack down on this practice analogous to the Shay’s Rebellion 2.0 Oppenheim Law described almost a year ago.
In Florida, training this week for dozens of new judges moving to courts with the power to lock up borrowers includes a session about potential abuses of debt-related warrants. “Before we take away a person’s freedom, we want to ensure that there are procedural safeguards,” said Peter Evans, a Palm Beach County, Fla., state-court judge who proposed the session.
A Swift Deal May Not Be a Sound One
This country’s need for speed derailed the mortgage industry, and that same breakneck pace is threatening to ruin a bank settlement being devised by state attorneys general relating to improper loan-servicing and foreclosure practices.
Gretchen Morgenson of The New York Times comments in her column, “While some might argue that a rapid approach will help borrowers, it is apt to benefit the banks far more.”
“Hurrying to strike a deal means less time to devote to understanding how pernicious the foreclosure practices were at the nation’s largest institutions. How can you determine appropriate penalties for troubling practices when you haven’t conducted a full-fledged investigation?”
The truth is you can’t.
How Florida’s nuclear plants compare to Japan’s
Sun-Sentinel House Keys Blogger Julie Patel offered an in-depth comparison of the Japanese nuclear plants in dire crisis and Florida’s plants, asking whether question our plants are prepared to deal with similar problems.
According to nuclear operators in Florida, the biggest threat their plants face is hurricanes. While extremely powerful, hurricanes provide plant operators far more time than a tsunami to shutdown the plant far in advance.
For a technical breakdown of other key differences between Florida’s nuclear plants and the ones facing meltdown in Japan, check out the entire article.
It seems our nuclear war zones have leaked from Wall Street to Main Street.
Posts Tagged ‘Gretchen Morgenson’
Oppenheim Law Round up: Debtors’ Prisons, Bank Settlements and Florida’s Nuclear Plants
Saturday, March 19th, 2011
Foreclosures Defense Close-Up: Ponzi Nation or Musical Chairs?
Tuesday, March 3rd, 2009Sharing my thoughts on Florida foreclosures yesterday with the NBC Nightly News team really brought back some past real estate scenarios.
Long before the Florida foreclosure meltdown and “double sold mortgage” became a widely used term, I represented a commercial pilot for a major airline who owned real estate in the Florida Keys. This client had a great house but wanted to live closer to mainland Florida so that he could be closer to work.
His decision? To sell his house. Nothing unusual… right?
Back then it took a few months to find a buyer, for the buyer to find a mortgage and then a few more weeks to close.
As the closing agent at Weston Title, my staff requested a pay-off letter from the lender and – to our utter surprise and the first time in my career – two banks lay claim to the loan. In other words the originating bank had sold the loan at least once, or twice, or maybe even more. Who really knows?
But as this client’s real estate defense counsel we could not figure out who owned the loan. Well… the real estate client lost the sale. We advised for him to rent out the property and place the monthly mortgage payments in escrow. He basically followed our advice, save the escrow.
Soon after, the banks started foreclosure. It became ugly and quite a mess. We counter-claimed and got real nasty. Even the judge and mediator could not believe the story. How could a well respected national bank have lost control of their real estate collateral and literally throw their good customer, a well respected professional, under the bus without any concern?
The banks ended up suing each other in federal court. It took years for the matter to resolve itself. In the interim, my client’s credit went down the tubes, his wife got terribly sick from the stress and little did I know it would take until now for me to start connecting the dots.
Yes we settled… my client was appropriately awarded damages, the house eventually sold, and I was paid well for my efforts too! This scenario should have been a one-time case in my career… an honest mistake by a large bank that mishandled the matter. Ok. That is how I viewed this case for ten years. Well I was wrong.
That was then…this is now.
What we had was the “tippy tip” of a massive iceberg completely submerged and covered by a real estate market that had run amuck due to unfettered greed, poor regulation, complacency, and out right corruption.
So you say what is he talking about? The story is slowly breaking… It started this past Sunday in Gretchen Morgenson’s column on the front page of the New York Times Business Section. She alleges that due to “sloppy bookkeeping” surprise, a few sub-prime mortgages, or for that matter, mortgages were maybe sold more than once into investment pools.
WHAT?? Just bad paperwork?? Fat chance!
According to the well-respected foreclosure defense attorney, April Charney, quoted in the Times piece, and with whom I spent eight hours with in a foreclosure crisis seminar yesterday, these loans were sold systematically and more than once into different investment pools.
It was simple. No one was checking… no one really cared. All incentives, all the way down the line, encouraged this trangressive behavior. Remember how Wall Street bonuses were always paid at year’s-end not after a loan was seasoned? Meaning after a borrower has paid on the loan for a year or two! In fact, on Wall Street, a loan was seasoned and bonuses paid all the way down the line after a borrower made even one payment!
Do I hear Madoff on steroids? Maybe? Maybe definitely! Maybe that is why Madoff is still at home and not in jail. What does he really know about a ponzi scheme that makes him look like yesterday’s news?
Bear Stearns in the fall of 2007 started seeing the writing on the walls. Internally warning of “double sold mortgages.” Well, I guess they rang the alarm a little too late.
In fact, Aunt Fanny and Uncle Freddy are refusing to buy back loans unless the lender can prove they, and only they, own the loan. That means the lender needs to produce the original note along with all the assignments appropriately endorsed. Shouldn’t be hard?
Why then, should the federal government all of a sudden be concerned if the lender has the note? Judges, until recently, didn’t seem to take notice, except for a few bankruptcy judges in California. The answer is simple. They are slowly catching on that the new money in the investment pools was simply being used to pay for loans that did not exist.
While the party music played and everyone kept on dancing… then all a sudden, the music stopped… oops not enough chairs for everyone.
NBC Nightly News new media journalist Mara Schiavocampo will be exploring these issues deeper this week. So, I guess you can say you heard it here first — from the trenches.
