Sonia Jaspal’s blogs have been reblogged by me on several occasions. Do not expect it to stop. The writing is good and commentary is timely.
This is the author’s “resume.”
I recommend that you add the site to your favorites and check every few days.
I have added this to my list of links. This doesn’t happen very often. This is my ninth link.
If you read my blog much, you know that Alain Sherter is one of my favorite writers. Well, he’s hitting one out of the ballpark this time. This is from his article on BNET. It’s called “Foreclosures: Did Wall Street Banks Conspire to Rob Homeowners?” Read! –
Are the financial firms alleged to have fraudulently repossessed people people’s homes more like the gang that couldn’t shoot straight or the mob? That question underlies the spreading foreclosure scandal, and how it is answered could affect any ensuing legal or legislative remedies to resolve the crisis.
Ohio Attorney General Richard Cordray is unequivocal in his assessment. In suing GMAC Mortgage and corporate parent Ally Financial in order to to block it from proceeding with any foreclosures in the state, he characterized the company as preying on vulnerable homeowners “through fraudulent and unfair and deceptive practices.”
Now take a look at the previous article – “Foreclosures: Help for Homeowners Means Hurt for Banks.”
The foreclosure crisis is morphing into a full-blown political crisis — and it’s about time. In Washington, lawmakers are urging the Obama administration to investigate whether financial institutions have broken the law in dealing with borrowers at risk of losing their homes. At the local level, legal officials are pressing lenders to cease foreclosures. …
Several things are happening here. First, the foreclosure epidemic, until recently mostly a subplot in the national economic drama, is now front-page news. Revelations that some of the nation’s biggest financial firms, including JPMorgan Chase (JPM), Bank of America (BAC) and Ally Financial, have “robo-signed” people’s homes away have seen to that. With midterms elections only weeks away, Congress has no choice but to sit up and take notice, if only to cover their backs.
Second, more and more homeowners face eviction. One in seven people with a mortgage is past due or in foreclosure, according to the Center for Responsible Lending, a consumer advocacy group. That’s up from one in eight in 2009 and one in 11 the previous year.
You should follow the links and read the whole articles. Better yet, check every few days to keep up with crisis, you can’t do any better that Sherter’s reporting.
James Pilant
You cannot accuse Professor MacDonald of not being timely.
This article is a very clever while straightforward analysis on what on the surface is a simple question but ethically has more arms than an octopus in circus sideshow.
Here is the ethical thought problem he poses –
So, a thought experiment: what if there were only one company qualified to do the rescue work, or only one company available locally? What should that company charge?
A few quick options:
1. They should charge whatever the market will bear, which would essentially amount to charging the most the Chilean government and/or the mining company involved are willing to pay.
2. They should charge nothing. They should be happy to be involved, and to charge anything would be to put a price on human lives, which is unacceptably exploitative.
3. They should charge just enough to cover their own costs — machinery, fuel, and maybe their own workers’ wages.
4. They should charge exactly the same to drill this hole as they would to drill any other hole of similar size, depth, and complexity. No more (that would be exploitative), and no less (that would be foolish).
Do you favour one of those four? On what grounds? Or can you suggest another principled answer?
Follow his columns, he writes regularly and if you follow the articles and pay a little attention, you will probably have the equivalent experience of an undergraduate class in business ethics!
James Pilant
My buddy Andrew adds his thought to my recent post, “Anectdotal Evidence Or Life In The Skycastle!”
While I agree that a more up to date central title system will help keep mistakes from happening, it is not the problem. The problem is with the banks and how they do business. Thats all there really is to it.
I also agree that we should help out as many people as we can with getting refinanced and keeping their homes. This should especially be done for the people who did fall victim to deceptive lending practices.
However, we must keep in mind that not EVERYBODY who defaults on their mortgage is a poor victim in this case. At the end of the day, these people signed the papers to a mortgage that they couldnt afford. Just because external influences say that its the right thing to do doesnt mean that it ACTUALLY is the right thing to do. When we excuse sheep-like behavior from citizens, then we end up with a population full of sheep. Would you want your son, or any family member for that matter, to make a major life choice based on what external sources say is best, or do you want him to figure out, on his own, what is best for him and go for it?
Dont get me wrong, I do sympathize with the people who honestly fell for deceptive lending practices and fraud. Those people had no way of knowing that they were about to be taken for a ride.
The problem is, like you said, the numbers arent out yet. There is no telling how many people were actually affected by the banks inability to do a simple task such as record keeping. It could be less than 1% or it could be 50%. Who knows at this point.
I believe the banks should have to own up to their mistakes. We can do this by mandating a moratorium on foreclosures until this mess can be sorted out. After everything is sorted out, if you deserve to have your house foreclosed on, then you lose your house. If not, then you get to keep it. Like I said before, this is not mutually exclusive from showing mercy towards those who did fall for these lending practices. Im all for helping them refinance into a more fair situation.
I borrowed my title from an article series on CBS Moneywatch. I can’t improve on it. It covers eloquently and briefly the situation.
Here’s the lead paragraphs from the article –
After three years of terrible news about the housing market, you’d think it couldn’t get much worse. But over the past week, a whole new can of awful has opened up. It turns out that the banks who lent money with reckless abandon during the real estate bubble were just as incompetent on the way down as they had been on the way up. Big lenders and mortgage servicers have been forced to acknowledge that, as they rushed to foreclose on hundreds of thousands of properties, they didn’t always check to make sure that they actually held the mortgages.
In one case, a Florida man who had paid cash for house was foreclosed upon for defaulting on a loan he never took out. In other cases, mortgage documents have been forged. So-called “robo-signers” have been churning out affidavits without checking to see if they are true. In response, foreclosures are all but frozen in 23 states, House Speaker Nancy Pelosi has called for a federal investigation, and attorneys general around the country are seeking to halt foreclosures. One major title insurer has announced it won’t insure homes foreclosed upon by J.P. Morgan Chase. That may sound like a technicality, but if the trend spreads, it could send the housing market into a tailspin.
CBS provides a slide show to give you a quick overview of the crisis. I recommend it.
Do not read the comments on the CBS web site! Trust me. Life is too short for that kind of reading.
The CBS report is a seven parter. If you are interested in how this came about and what is likely to happen, it is the best thing at the moment. I’m sure as time goes by, we’re going to get some better stuff because we’ll have more information, but CBS was first and it’s a good job.
James Pilant
“White House doubts need to stop all home foreclosures” reads the headline. David Axelrod spinning the story like a top explains… well, let’s just let him tell us – from Yahoo News –
A top White House adviser questioned the need Sunday for a blanket stoppage of all home foreclosures, even as pressure grows on the Obama administration to do something about mounting evidence that banks have used inaccurate documents to evict homeowners.
“It is a serious problem,” said David Axelrod, who contended that the flawed paperwork is hurting the nation’s housing market as well as lending institutions. But he added, “I’m not sure about a national moratorium because there are in fact valid foreclosures that probably should go forward” because their documents are accurate.
Axelrod said the administration is pressing lenders to accelerate their reviews of foreclosures to determine which ones have flawed documentation.
“It’s a serious problem.” he says. I get that. So, since the story broke in the middle of last week you are dismissing a moratorium based on virtually no real information? Unless you, kind reader, think a giant national crisis, has run its course and everything is out on the table in the seven days since the story broke. If you don’t, you are with me in the disbelief column. Apparently the White House can see into the future and knows that no information will come out meriting action. I don’t know whether Axelrod has the “sight.” Perhaps, the White House has the super deluxe, limited edition, one of kind, ultimate ouija board. I hear it’s got a presidential seal on it.
But don’t worry, the White House has a plan. Let me run that line past you again – Axelrod said the administration is pressing lenders to accelerate their reviews of foreclosures to determine which ones have flawed documentation That’s right. They are going to go to the guys who lied to the court system roughly one million plus times and ask them to check their numbers. The people who have profited billions of dollars by cutting out those inconvenient legal requirements are gonna’ fix everything.
Fool me once, shame on you. Fool me twice, shame on me. – Maybe someone should send that in to our President?
“Hey, Mr. President, a massive wrong has been done to the American people. Send out the Attorney General! Mobilize the federal government, your regulators, your advisers, every friend you can muster! Let justice fall from Heaven like rain!”
“Oh? You can’t do that, Mr. President? Wouldn’t be prudent? Might upset the financial markets? That justice thing overrated anyway? Oh, I’m sorry I didn’t understand the burdens of your office. I’m sorry to bother you. Thanks for the engraved napkin.”
Yeah, everything going just fine.
James Pilant
Well, it’s begun. Editorialists, columnists, bloggers, all explaining why we must not have a moratorium. They further explain that most foreclosures were done correctly. Most of these homeowners had defaulted on their loans.
Now, poor stupid me, can’t help but wonder where you get your statistics on who should have been removed from the their home and was it justified. Those numbers aren’t public and since the mortgage companies didn’t look at these foreclosure records, they don’t know either. No one knows. But we are repeatedly assured the vast majority of home foreclosures were done properly.
I want to see some proof. I want some numbers. Taking the word of the mortgage companies on this issue doesn’t strike me as a particularly smart move.
We have been lied to, manipulated and played. I don’t like it.
Mortgage companies only had to assert to the courts that they had reviewed the necessary document. They did not have to proof knowledge in court because it was assumed that they knew the basic fast of the case. The lawyers for these firms affirmed that this was the case. They were lying. We don’t know if they owned the property. We don’t know if their numbers bear any passing resemblance to reality.
But the thing I’m curious about is that old Watergate question. Do you remember? Howard Baker asked it during the Watergate hearings. “What did the President know and when did he know it?”
Okay, I want to know. “What did the CEO’s and directors of the mortgage companies know and when did the know it?”
You can add. “Why didn’t they stop it.”
You see, the mortgage companies conduct is not legal. It is reckless behavior and unconscionable. You can get sued for this and put in jail for criminal acts associated with it. (Taking people’s homes when you don’t own them sounds remarkably like grand larceny, doesn’t it?)
Let’s get some justice!
James Pilant
Tom Peters has a speech or a presentation (you can get it on powerpoint) where he talks about “The Memories That Matter.”
This is the first paragraph – I won’t spoil it by telling you the rest. Got to the site and enjoy. It’s a good speech. (Since this was published the link has disappeared. I’m very sorry. I leave the first of what he said up and I’m adding some other videos of Tom Peters.)
In a month, as I write, I’ll be 68. No matter how hard one tries to be forward focused, at that age there is a frequent urge to “sum things up.” As one does look back, there is a certain class of memories that stand out. I know my own story—and I’ve talked to many others. When you look back at “what really matters”—it’s rarely “the numbers.” Make no mistake, as you soldier on, your tiny or huge enterprise must be profitable to survive. Wanna do great things? Well, check out the “cash flow” statement first. True, but still “the summing up statement” is far more about the basics of human behavior and character than about the angle of incline of a market share graph. What follows is then, in a fashion, “the memories that matter”—or will matter. Why point this out? Because to get the tally right on this one at age 68, the sorts of things enumerated here must have been “top of mind” throughout your career—i.e., yesterday and this morning.”
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 and their cruel treatment.
But don’t worry, it’s all overblown. Oh, excuse me, it “has become a bit overblown in some tellings.“ You see, “there’s little evidence that this has resulted in improper foreclosures..” I feel better all ready! Must not have been that big a deal?! You see, “Anectdotally, these things do seem to have happened…” You see we’ve only heard the occasional, once in a while, sort of, story about some poor schmuck losing his property but in the larger scheme of things, what’s the big deal?
This is from the Atlantic Monthly, an article called – The Real Scandal of the Foreclosure Mess – 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 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. Sorry! 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 “bacteria.” 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.
Getting them out of their homes should not be the first priority. Helping them to refinance and punishing those who committed crimes during this disgraceful episode should be the priorities.
But I don’t live in a skycastle.
James Pilant
I want you to look at the trailer. I will be discussing this film more at it reaches more people. What I have heard about it is impressive. I know its conclusions mirror my own.
James Pilant
Pilant's Business Ethics Blog 
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