Category: Capitalism

Who Owns Your Mortgage? Or Anybody’s For That Matter!

On By southwerkIn business ethics, Capitalism, ethics, Philosophy of Business3 Comments

Dan Edstrom is a specialist. He performs securitization audits.

He decided to use his specialized training to discover who owned his mortgage.

The chart below is the result.

Do you know who owns your mortgage? Could you figure it out like he has?

From the article –

The following flow chart reverse engineers the mortgage on the Ekstrom family residence. It took Dan over one year to take it this far and it clearly demonstrates what happens when there are too many lawyers being manufactured.

You can click on it and it gets bigger.

Do I need to point out to you that with what has been happening with mortgages over the last five years, it might be unwise to allow banks to have someone sign off that they understand the account?

James Pilant

Can Thinking In The Long Term Help With The Future Of The Mortgage Industry?

On By southwerkIn business ethics, Capitalism, ethics, Philosophy of Business2 Comments

Jim Russell writes in an article posted on “Media Center,” the web site of Tom Gyepes, Loan Doc Originator & Broker. He addresses a question that has also been on my mind. How is the mortgage industry going to change in the face of this, at the very least, public relations disaster?

He has several suggestions but I like this one best. Make the mortgage “originator” a long term actor in the deal than just a one time salesman.

Read how he puts it –

Mortgage originators have long been compensated just for getting loan applicants to the closing table. After funding many mortgage originators simply lose interest in the borrower’s financial situation until they see another opportunity for origination income. The insurance industry dealt with this issue long ago. Today every insurance agent is tied to his/her client with a golden rope…

Most insurance companies do not fully compensate independent agents at the time of sale like the mortgage industry. Instead agents are partially compensated at the time of sale while the remainder of their income is paid out at a later date depending on the performance of the insurance policy they sold. This compensation practice is called “contingent commission” and it creates an incentive for every agent to act in the insurer’s best interests because if they don’t, they won’t be paid.

Let me share an example. There are two active groups of golfers at my club; mortgage originators and insurance agents. These two groups have very similar economic profiles, they are all high net worth income earners and they all constantly manage their book of business. There is one big difference in the way these two groups maintain their lifestyles though; the mortgage originators are highly dependent on landing new deals while the insurance agents are dependent on the long-term performace of the deals they’ve already written. This forces insurance agents to fully understand the risk profile of their clients before they close the deal and it also forces agents to maintain contact with their book of business.

If you are a business student, this is a great topic for a paper. But beyond this it is an idea that needs to be taught across our society, to think and act in the long term. Thinking only of the next quarter is an excellent way to convert a successful society into an apparently successful one, just as long as you believe the numbers.

There are a lot of areas in our economy where thinking in terms of the long haul would be in the best interest of all the players as well as our nation as a whole.

James Pilant

A Thirty Dollar Fee?

On By southwerkIn business ethics, Capitalism, Corporate Social Responsibility, ethics, Government Failure, Philosophy of Business, President Obama, White Collar Crime

Now you, common middle class citizen, you have to pay a thirty dollar fee at a court house in most states for them to record a change in ownership in property. They have to do paperwork and change that little county map that shows who owns what. Now suppose you change the ownership again. You transfer it your spouse, your child, or you’re paying the fee as part of a sales contract. You have to pay a second thirty dollar fee.

Annoying, right? Of course, but has to be done. You have to know who owns what, right?

What if you don’t want to pay the second time? Well, you are out of luck there too. The state is not going to let you out of the fee. Besides without paying the fee, the records won’t show who owns the property, so it’s a good idea to pay it, right?

Everybody has to pay the fees, right??

No, they don’t.

If you are a bank using the MERS system, you don’t have to pay a second fee. (MERS = Mortgage Electronic Registry System)

You see all the transactions are done by computer therefore there is no fee for any transaction after the first one. The banks often transferred these properties dozens of times, but every transfer after the first one was free. Isn’t that great?

Now, you probably would like to say something dumb like, “Isn’t that state law?” Then you might follow it up with, “Doesn’t that mean they don’t own the property?!”

You silly person, don’t you realize this a is a banking institution? They are not like you.

They just decided not to pay.

See, when you want to change a law, you have to lobby and talk to people and ask the legislature to consider a bill changing the law, then it has to go through both houses and then be signed by the governor.

But when you are a bank, you simply decide not to pay the fees. It makes everything simple.

Now, there are those in this country who are bizarre individuals. Those strange people want the banks to cough up the money. So, the banks, their feelings deeply injured, have run to their friends in the United States Congress who are planning a surprise party for you.

At the surprise party a thinly clad financial industry lobbyist will leap out of a cake and tell you that Congress has legalized all that stuff that the banks have been doing for, Oh, about five years now.

Now you might ask another question at this point and it is not “Why aren’t I getting any cake?” Your question is “Doesn’t those payments to the country, those thirty dollars each time, aren’t those part of my county’s taxes?”

Why, yes, they are.

But remember, Virginia, there is a Santa Claus and he just took your county’s money and gave it to the banks.

What a sad story!

And it’s all true!!

From the Associated Press –

It used to be that every time a bank sold a mortgage, the county land recording office received a fee. It wasn’t much — $30 or so — but then real estate boomed in the 1990s and banks pooled millions of mortgages into securities that investors bought and sold.

One mortgage transaction became a dozen or more, and the tab grew ever larger. So the banks came up with a way around the fees. And now they are fighting to avoid perhaps tens of billions of dollars in penalties that have added up over the years.

From further down in the article –

MERS is “an admitted fee-avoidance scheme,” says Robert Hager, the Nevada lawyer who, along with his partner Treva Hearne, is filing the suits against MERS and its bank owners, including the government-backed mortgage-finance companies Fannie Mae and Freddie Mac. Fannie and Freddie provide a low-cost flow of funding to the nation’s mortgage markets by buying mortgages from lenders, packaging them into securities and then selling them to investors.

The suits were filed in California, Nevada and Tennessee and 14 undisclosed states where the cases are still under court seal. Hager and Hearne chose the states because their laws allow what are called false claims suits, in which citizens can take legal action against companies that may have cheated the government.

The suits allege that by privatizing public records, MERS enabled banks to circumvent American property law and bypass the counties’ fee and paperwork requirements, costing billions of dollars in lost revenue over more than a decade. MERS says its process is legal, and that the fees are not required under its system.

If only we were all banks!

James Pilant

MERS And Ownership

On By southwerkIn business ethics, Capitalism, ethics, Government Failure, Philosophy of Business, President Obama, White Collar Crime5 Comments

MERS, Mortgage Electronic Registry System, is a system used by the banks to evade paying fees or having to do the traditional paperwork necessary to change the ownership of property.

To quote the Associated Press –

MERS’ owners are all the big mortgage companies, including Bank of America, Citigroup, Wells Fargo, JPMorgan Chase and GMAC. They are all facing a foreclosure-fraud investigation launched by all 50 state attorneys general, and all took government bailout money after the financial meltdown in 2008.

As I mentioned in my last posting, our lame duck Congress is thinking (if you could ever refer to their processing as having thought) of legalizing this system now, years after the major banks began using it with full knowledge of its legal problems. (Being a bank is very much like being in love in the movie, Love Story, you never have to say you are sorry.)

This is from the Washington Post. It explains why MERS is a problem.

I very much appreciate the Washington Post for developing this little picture and trust it was useful to you.

James Pilant

No More X-Rated Searches!!@!

On By southwerkIn business ethics, Capitalism, ethics1 Comment

Do you really need to pass through a machine that looks at every square centimeter of your body to make airlines safer? Do you really have to (for all intents and purposes) pose nude for the airline cops? And if you refuse to pose nude, should they be able to grope you like some felon assaulting a schoolgirl on a subway in Japan?

Forbes proposes abolishing the TSA, which is, of course, nonsense. Forbes has never had too many rational thoughts. I consider them finding nude searches to be irrational and demeaning more the accident of them having to ride airplanes than from any actual concern for other human beings. In fact, I am reluctant to quote these doctrinaires but I think you and I will survive this once.

From Forbes –

For fiscal conservatives, it’s hard to come up with a more wasteful agency than the TSA. For privacy advocates, eliminating an organization that requires you to choose between a nude body scan or genital groping in order to board a plane should be a no-brainer.

But won’t that compromise safety? I doubt it. The airlines have enormous sums of money riding on passenger safety, and the notion that a government bureaucracy has better incentives to provide safe travels than airlines with billions of dollars worth of capital and goodwill on the line strains credibility. This might be beside the point: in 2003, William Anderson incisively argued that some of the steps that airlines (and passengers) would have needed to take to prevent the 9/11 disaster probably would have been illegal.

The odds of dying from a terrorist attack are much lower than the odds of dying from doing any of a number of incredibly mundane things we do every day. You are almost certainly more likely to die or be injured driving to the airport than you are to be injured by a terrorist once you’re in the air, even without a TSA. Indeed, once you have successfully made it to the airport, the most dangerous part of your trip is over. Until it’s time to drive home, that is.

Boy, these guys can take a matter of personal dignity and come up with, “Let’s get rid of a public agency! We can find a corporation to come to the rescue! Give us public money now! Now!”

Okay, personal dignity. Do these kinds of searches make us safer? Probably not.

These kinds of searches are more the kind of thing we subject prison inmates to. I fully agree that if all airline passenger are convicted felons, the searches are merited. Are we all one step away from being criminals stopped only by a little humiliation? (Okay, a heaping big helping of humiliation.)

We have given up our internet privacy, our financial privacy, been subjected to camera surveillance all in the name of safety. At what point, are you going to say stop? When they mount camera’s in your home? in your bathroom? implant chips in your children?

Let’s stop them. This has become insane, crazy, just plain loco.

Do we want people around the world to decide that Americans are witless cattle willing to undergo any indignity, any loss of rights because of 20,000 scumbags hiding in caves in North Pakistan?

I think Americans are brave and resourceful. I have never believed that we needed to give up any rights at all in this struggle. These criminals are just a small band of criminals. Those that advocate a war with Islam can’t think and can’t count. There are a billion and a half Muslims. A good number don’t like us, that is not a crime. The organization that attacked us is tiny and we can handle this without this kind of surrender to our worst fears and instincts.

We’re Americans! Did the Kaiser, the Nazis, Tojo’s Japan, or Mussolini scare us into naked searches or genital groping?

No, they didn’t. We have courage. That’s why we have been successful as a nation. When we give up courage, what’s left to fight for?

James Pilant

White Collar Job Are Disappearing

On By southwerkIn business ethics, Capitalism, ethics, Government Failure, Philosophy of Business

India is a jobs creator! So speaketh our President. What are the facts?

From McClatchy –

The good paying, predominantly white-collar jobs that once sustained many American communities are disappearing at an alarming rate, keeping the unemployment rate stubbornly high despite the end of the Great Recession.

More troubling, these jobs in accounting, financial analysis, commercial printing and a broad array of other mostly white-collar occupations are unlikely to come back, experts predict.

There isn’t a single cause to the trend. Some of it is explained by changing technology, some of it is the result of automation. Sending well-paying jobs to low-cost centers abroad is another big part of the story. So is global competition from emerging economies such as China and India.

Well, isn’t this sweet! At what point does any politician from any party address this issue? Don’t worry about the question. They won’t. They want to talk about abortion, family values, that mess in Washington, anything in short to take your attention away from the real game.

What’s the real game, you might ask?

How many American jobs, how much American infrastructure, how much American education, science and technology, can you sacrifice to make money? Actually, you could probably rephrase it to ask, “How much money?”

What can’t you sell? Blue collar jobs? Pretty much sold most of them. Remember when they told you we were going into a post industrial world and that a good education got you a job? Well, sorry, Charlie Brown, we moved the ball again.

And we’re not going to stop moving the ball. As long as you are stupid enough to believe that with enough education, enough grit, enough self reliance, you’re going to have and keep a good job, you’re part of the problem.

You see as long as your jobs are moving overseas, as long as your jobs are rendered useless by destroying the American economy and infrastructure, as long as government policies mitigate against stability and security, you’re just a bullseye waiting for the arrow.

And it’s never going to stop unless we stop it.

The promise of America is earned not given. The promise of America is worth an enormous amount of money and if you intend to have an American dread, you have to stop the people who are willing to sell it.

James Pilant

Austerity!

On By southwerkIn business ethics, Capitalism, Corporate Social Responsibility, ethics, Government Failure

“Austerity” is just a con to further enrich the nationless capital markets and the super-rich. Nothing more. The very rich have no interest in the history of America from the 1940s through the 1970s, when a rising and secure middle class, and 90-percent tax rates on top earners, still supported fine lifestyles for the wealthy as well as the world’s greatest economy and society. Now we have to lose so they can win yet more. But austerity and tax cuts are the watchword, the intellectual fraud that has taken the day.

Boy, you’d think Rogue Columnist was upset! This is his latest column.

The slogan under his masthead is “A Pen Warmed In Hell.”

Like him, I’m astonished to live in a country where you can’t raise taxes.

Ahh! you say with outrage. I’m a member of the middle class. I have no more to give!

You’re quite right. I’m not interested in you. I know you don’t have any more money. Since the mid-70’s the tax burden has been off loaded on you. The corporations (about 40 percent of which pay no taxes at all) evade their taxes and the wealthy want their taxes reset at 22% about a 1/3 less than now.

This is an incredibly wealthy country. A fair tax system could pay to fix our infrastructure, could pay to have an education system second to none, could pay to reestablish our industrial base, and could pay to invest in research, development and our fellow Americans so we regain our place as number one in standard of living, as number one in upward mobility.

Upward mobility? What’s that? That is where you or your children have the same shot as some gazillionaire’s child at making it. A country, a nation, where you are measured not by who your friends are, who your family was, but by what you can do.

That’s America!

James Pilant

Business Ethics – Entryway To The Nations

On By southwerkIn business ethics, Capitalism, ethics

Larry Ruddell wrote a paper of this title at Houston Baptist University. This is just the first paragraph of the abstract.

It’s a vision of business ethics as a positive force around the world. It’s the idea of business ethics as a weapon against the exploitation of the poor.

I’ll be looking for the whole thing. But in any case read this single paragraph. It has power.

As we think about “Bottom‐up Approaches to Global Poverty” we have to look at solutions in a systematic way. Business, Politics and Culture all play roles in helping or hindering the poor in cultures all over the world. A system has to be created to respect all people and create a just environment for law and business. One way the church can contribute in this endeavor is through business ethics delivered on a global scale but in a culturally sensitive way. Business ethics provides a natural way to discuss beliefs because beliefs form the foundation of one’s ethics. Business people can play an important role in business as mission by clearly understanding faith‐based ethical principles, being able to apply ethical principles, and using this natural business‐based application of principles to impact people inside and outside the organization. We could say that business ethics does not support the mission but it IS the mission. So business ethics can and should have a positive influence on global cultures. The goal is to create a business, political, cultural environment where the poor are not exploited, and are treated with respect, dignity and opportunity. Businesses can help through such efforts as: paying fair wages, giving back to the community, communicating openly and honestly with employees, developing skills of workers, and communicating ethics throughout the organization and in the business processes.

James Pilant

A Plain Blog About Politics

On By southwerkIn Capitalism, ethics

Jonathan Bernstein, a political scientist, writes on politics in his blog, “A Plain Blog About Politics.”

Here’s his latest post –

I’ll suggest two possibilities, both trend lines that may or may not turn out to be meaningful, one good, one bad. The good one is that jobless claims are falling a bit more…the four-week average is now below 450K, and at its lowest level, an AP story I’m looking at says, since before things went really south in September 2008.

The bad one is that after a summer in which year-to-year American and coalition deaths in Afghanistan had flattened out, casualties are back up this month. November is usually the start of a winter lull in casualties, but not this year (at least so far); in fact, this November is already the worst ever for American military deaths.

That’s an intelligent perspective. What I see currently on the web are a great deal of discussion about some athlete’s car that has a fridge in it. The republic will not doubt profit immensely from the intellect posed in that direction. But I’ll hang with Bernstein.

I went through a good number of his posts. He’s cynical. I like that, of course. He’s well read. (We well read people need to hang together!) We don’t agree quite a lot.

Strangely enough, this doesn’t bother me a bit.

So, good luck to him. Give him a read or a comment.

James Pilant

A Principle for Peter in the 21st Century (via The History of the Future)

On By southwerkIn Capitalism, ethics, Government Failure

This writer is more concerned than I am about the Federal Reserve’s buy back of American debt but I am still concerned. He has some interesting points and is literate and intelligent. He’s worth a look.

James Pilant

The world is lining up to not buy our debt so we are buying it ourselves in a move we call by the innocuous acronym QE2, which is short for Quantitative Easing two.  More traditional, or verbally honest, economists are calling this what it is: monetizing our debt.  This is a move which has our creditors heading for the doors and our enemies smiling as poor old Uncle Sugar stands with his pockets turned inside out, a bewildered look on his face as … Read More

via The History of the Future