You wake up in the morning hoping and praying that some justice will be meted out to the giant foreclosure industry for the crimes they have committed. In that hope is mixed the great sorrow for all the people who have suffered the loss of their homes in this foreclosure crisis.
Now, let’s go back a little in time and see how the crisis was treated by the public’s stalwart defenders in the press. Obviously, once the stories of owned foreclosed, shabby procedures and busted paperwork trail, the press was eager to fight for the public.
Not exactly, more of a yawn and a condemnation of the homeowners who owed too much.
In mid 2010, the beltway press knew it was all overblown. It “has become a bit overblown in some tellings.“ You see, “there’s little evidence that this has resulted in improper foreclosures..” You see, “Anectdotally, these things do seem to have happened…” At that time we had only heard the occasional, once in a while, sort of, story about some poor schmuck losing his property.
This is from the Atlantic Monthly, an article called – The Real Scandal of the Foreclosure Mess – October 8th, 2010 – by Megan McCardle –
The story on the foreclosure mess has become a bit overblown in some tellings. It’s clear that banks have been taking some shortcuts in preparing their foreclosure documents. The banks are obviously overwhelmed with the volume of foreclosures, and the (apparently) many instances in which sloppy securitization has resulted in lost paper trails, obscuring who, exactly has a right to foreclose. Rather than seeking legislative or judicial clarification, they’ve resorted to dubious practices that seem (to my non-legally-trained eye) illegal.
That is bad. But as Arnold Kling points out, there’s little evidence that this has resulted in improper foreclosures: evicting people who’ve paid, or who never had a mortgage with your company. Anectdotally, these things do seem to have happened, but there’s no evidence that they’re frequent, or that they are connected to the procedural irregularities that we’re now discovering with foreclosure documents.
Arnold says that the real scandal is our antiquated title system:
The real scandal is that the process of recording property title is so antiquated, and there are so many interest groups that resist modernizing it. The MERS mortgage database shows what a modern system could look like. But all of the counties that charge fees for title recording, the title “insurance” companies that shake down home buyers to buy “protection” from getting sued to prove that they own their property–these interest groups want to keep the title recording system as expensive and unreliable as possible.
. . . and that it’s taking so long to get people out of homes they can’t afford.
These are my comments on the Atlantic web site –
What!? You don’t see much but “anectdotal” evidence? What were you going to see? No one knew to look until now. You can’t have statistical evidence until you know there is a problem and can look at the numbers.
Anecdotal evidence is the beginning of discovery. Sometimes it turns out that the stories lead nowhere. This time they scored big. And now, and only now, can we find out how big the problem is.
“Only anecdotal evidence” Oh, PLEASE!
And then, about five minutes later, when I got even more angry –
The saddest thing about this article is that in two years after this disaster, this legal catastrophe, when the facts and the numbers are available, no one is going to pull this article out of their Windows’ recycle bin, and wonder what in the hell possessed the author to write it.
According to the article, the “real” scandal of the mortgage crisis is 1) our antiquated title system and 2) “. . . and that it’s taking so long to get people out of homes they can’t afford.” Now, Ms. McArdle is all in agreement with Arnold Kling on the the title system being the real scandal but on the second statement (getting the people out of homes…) she disagrees. I give her full credit for disagreeing with the second statement and therefore my scorn for her writing is only for the first statement.
What?!, the antiquated title system is the real scandal? I cannot generate enough invective for this statement. The world is too short of obscenities for me to throw at it. Let’s just go to the next one.
“… and that it’s taking so long to get people out of homes they can’t afford.”
Let me tell you a story… About ten years ago, housing prices began to go up but strangely the ease of buying them multiplied. Banks began to demand less and less evidence of credit history and salary down to the point where they eventually just filled in the blanks. This lack of oversight was because the great financial institutions of this nation were packaging mortgages as securities and using them as chips in the great game of casino capitalism. It was a strange time, in which the Internet was utterly blanketed by ads calling upon you to refinance your credit card debts – mortgage your home or to refinance your home for a lower rate. By about 2005, that something was terribly wrong was becoming clear. But the the regulatory agencies, the Congress, the Presidency, the financial press or the “Fed” did nothing about it. The selling if anything became more frenzied. Banks hired celebrities to participate in sales meetings in the black communities. Phone banks and mailings to those who rented and those who owned their own homes or even to those who were about to finish paying their mortgages proliferated. The messages was always the same, re-mortgage for lower rates, re-mortgage to pay off debts and the best one, buying a home is cheaper than rent. Many of the ads were carefully aimed at first time home buyers counting on their lack of financial sophistication to smooth the process. In 2006, the boom was pretty much exhausted, but the great financial institutions nursed it along for the next year by trading securities based on mortgages to the foolish as good investments and to each other simply to keep the market going. And then it all fell down.
“… and that it’s taking so long to get people out of homes they can’t afford.”
Simple statement. Factually correct.
They signed the contract, didn’t they? They’re adults. They got in too deep. They have to pay the price.
That is what it looks like if you live in a skycastle. “Skycastles,” that’s where people live so high and so far above the common herd, that they and only they can see what’s real, where the air is clear and the thoughts razor sharp.
From there they watch the little people like bacteria on a petri dish and wonder why God made so many, unless their cold hard intellects have freed them from religious delusions.
I’m down here with the other inconsequential. I say that these people were victimized and deserve mercy. These people did what the government, the media, and the financial industry told them was the intelligent, the correct and the best decision. These people were generally misled, lied to directly and were often the victims of fraud.
But I don’t live in a skycastle.
James Pilant
Pilant's Business Ethics Blog 
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