The meaning of the word “chutzpah” varies by context. In criminal court, it might refer to murdering one’s parents then asking for leniency because the perpetrator is an orphan. In family court, it might be invoked when abandoning a child, then pleading the child has been alienated from the parent who left.
We now have a property court usage: perpetrating a massive, well documented fraud then complaining that court bottlenecks – which exist solely because of fraud perpetrated by bank lawyers – cause expensive delays. An Oct. 9 article published by Lord, Whalen, LLC “Tail Risk: Kamala Harris Declares War on Lenders, Loan Servicers in CA,” sets forth this nervy argument.
Bank maven Chris Whalen’s analyses are normally top notch but he seems to have fallen under a Svengali spell of the parasitic foreclosure support industry – particularly foreclosure mill lawyers. Like fingernails drawn against a blackboard, foreclosure attorneys, analysts, and even the FHFA relentlessly rant that judicial foreclosure must be eliminated, and that recent legislation expands judicial foreclosures.
Due solely to gross abuses of process by foreclosure lawyers, California – a state that all but outlawed foreclosure defense lawyers – has passed legislation to ensure foreclosure lawyers follow the law. The California Homeowner Bill of Rights, which is effectively a pro-borrower escalation in the bank-led war against the rule of law, is causing the parasites to fume:
“Saying just follow the law and you won’t have a problem is complete and utter non-sense [sic],” reads a quote from Bob Jackson, president and attorney of Irvine, CA Jackson & Associates.
Jackon’s firm describes their mission statement as “representing the REO and default industries in post-foreclosure legal matters.” Translation: he owns a CA foreclosure mill. Jackson refers to homes in foreclosure as “Occupied REO,” a non-sensical pugnacious new term.
Bob Jackson is the father of Paul Jackson, publisher of Housing Wire, and also a shareholder in Housing Wire parent company LTV Publishing, a fact exposed by David Dayen of FDL News in “The Corruption of the Financial Press: A Look at Housing Wire,” published Mar. 25, 2011. As proof, Dayen linked to a LinkedIn page, presumably for LTV, which unsurprisingly no longer exists. I’m willing to take David’s word that it was once there, disappearing without a trace like the fraudulent documents Jackson argues are perfectly fine.
In Whalen’s piece, Housing Wire stories are used extensively to back up the older Jackson’s nonsense. This proves the elder Jackson either instilled his values in his son or at least taught him the lesson of obedience. That is, Bob Jackson may be incoherent but at least he’s a good father by most standards. I’d prefer that my son find his own job – it’s better for grown children to succeed or learn the lessons of failure on their own – though I digress.
The argument by Jackson Sr. reminds me about the cries from insurance companies forced to pay out meritorious claims for insurance policies they wrote. “Paying out claims will increase premiums,” paraphrases their consistent answer. Nobody seems to push back that not paying out claims makes the insurance entirely worthless; the premium’s a waste and the product a fraud. Similarly, forcing the seller of a good or service, including legal services, to provide what is paid for does drive down profitability: returns are great when you can pocket money and provide nothing in return. But you’d think the banks, if not various regulators, would cringe when their lawyers argue they needn’t follow the law lest it lower profitability.
As if the Whalen article couldn’t get stranger, it does. “Within a year, lawyers in shopping malls across CA will have a template for filing these (wrongful foreclosure) claims, a template provided by state and national trial lawyer associations,” Whalen continues. However, when one clicks through to the provided link, the website for the American Association of Justice, the only packet that remotely addresses this field is 662 pages entitled “Debt Collection.” They summarize: “Sample case materials include a complaint, responses to a motion for summary judgment, letters to debtors, payment plans, spreadsheets, and client communications.” This packet is for creditor lawyers, like Jackson. There is nothing related to foreclosure defense, or anything related to defending borrower rights. It’s no wonder the author whines about the website; he must see it as a potential competitive risk.
Whalen finally tilts towards an outright harangue, complaining about debtors rights in Spain where “borrowers are receiving debt relief en masse via rescission of investments.” Huh? Spain has strict deficiency judgment rules, and harsh garnishment provisions, leaving borrowers on the hook, forever, for the difference between the value of the loan and what the home is sold for.
Bloomberg splashes a dose of reality into the Spanish system in an Oct 9, 2012 article entitled “Spain Foreclosures Spread to Once Wealthy: Mortgages.” “The kids lose their homes, go live with mom and dad and then mom and dad lose the home that they worked all their lives to pay for because it backed their children’s debts,” reports Bloomberg Destroying the economic foundation of entire families, forever, sounds overly lenient. I think mass executions – or maybe labor camps to appease the liberal pussies who believe productive people should be given a second economic chance in life – would be a more reasoned response.
Although Whalen apparently believes extracting blood from stones is good for business, Bloomberg reports
The economic crisis is wiping out businesses and the finances of families that were comfortably off .. foreclosures are not massively threatening businessmen and families in high income areas.
OK, so maybe it’s great for foreclosure lawyers like Jackson, or New York’s Steven Baum (if it’s not pronounced bum it should be), or maybe Florida’s own stellar David J. Stern, who remains an attorney in good standing even after every major client fired him. Everybody else, not so much…
Finally there’s even the question of whether the core premise – that non-judicial foreclosure speeds recovery and should be expanded to all states – is true. Florida Statute 702.065, passed in 2001, legislates that if a mortgagee waives the right to a deficiency judgment the court must enter a final judgment within 90 days. That is, Florida bank lawyers have an option to opt for a California model; if they waive the right to collect deficiency judgments the system moves along as fast, and with as little paperwork, as California.
I’ve argued that delays in foreclosure court are illusory; the Chief Administrative Judge of Miami-Dade, in charge of foreclosure court, said there have been no delays in her courtrooms for two years. Where once we pretended there was an imaginary non-problem – a massive housing bubble – now the same people are pretending there is an imaginary problem, judicial foreclosure. Fiction trumping fact, a common theme since the beginning of the bubble, remains alive and well.
Finally, while pundits have argued about the judicial/non-judicial divide they’ve ignored that many of the real-estate gains are spurred by foreign cash buyers in desirable retirement communities. Non judicial Phoenix real-estate is doing great, and odds are rising that we’ve reached at least a temporary floor in Las Vegas, but condos in judicial state Miami are also booming. Foreigners in border towns carrying suitcases of cash have always attracted attention, but when they’re buying real-estate the attention seems more positive than in the past.
I’ve heard credible anecdotal reports, from multiple sources, that banks – especially consumer banks – have had it with the status quo. When all is said and done “winning” foreclosures while losing one’s customers, the ordinary American’s who increasingly hesitate to deposit and store money in TBTF checking accounts, is a net loss. Borrowing an old cliché winning the battle and losing the war sucks, but losing half the battles on the way to inevitably losing the war sucks worse. It is telling that bank lawyers, who stand to collect easy fees, are supportive of Whalen. However conspicuously missing are consumer bankers; those who stand to lose their jobs as depositors flee the tarnished brands of their once well regarded banks.