Weekend Open Thread (2011-01-14)

Here is your open thread for the weekend beginning Friday January 14th, 2011. You may post random links and off-topic discussions here. Also, if you have an idea or a topic you’d like to see covered in an article, please make it known.

Be sure to also check out the forums, and get your word in the user-driven discussions there!

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About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.

66 comments:

  1. 1
    Sniglet says:

    Does anyone know what rights delinquent borrowers have to force lenders to foreclose?

    We are hearing of an increasing number of cases where lenders refuse to initiate foreclosure proceedings because the value of the property is so marginal that they prefer to just write-off the mortgage rather than incur the expense of foreclosure.

    What is a borrower to do in such cases? This puts borrowers in some strange Kafkaesque limbo, where they could be listed as delinquent for many decades, never being able to clean up their credit score. Normally borrowers can eventually heal their credit score by waiting for 7 years after a foreclosure. However, when the bank refuses to foreclose the delinquency remains active indefinitely.

    Will bankruptcy purge mortgage debt even if the lender doesn’t want to foreclose? Do borrowers have the right to FORCE banks to deed the property to them outright if they don’t foreclose?

  2. 2
    Pegasus says:

    RE: Sniglet @ 1 – The delinquent borrowers will have their credit cleaned up as the negative Information is deleted seven years from the original delinquency date when they missed their first payment. The date of the foreclosure is irrelevant. The clock starts with the first delinquent payment.

  3. 3
    EconE says:

    RE: Sniglet @ 1

    Good question.

    There is a poster on Dr. Housingbubble that states that is the exact limbo that he is in. He has already moved out and just wants to move on yet the bank does nothing. He’s upset because he says he’s still responsible for maintenance and also because he feels that if the bank sold the house a year ago that they would have received a better price.

    So much for jingle mail eh?

    Somehow I doubt you’ll get a definitive answer here however.

  4. 4
    Sniglet says:

    He’s upset because he says he’s still responsible for maintenance

    This is another great issue. You could have the city continue to issue new fines, and keep pursuing you indefinitely, if the bank refuses to foreclose on the property. You could continue to get dings on your credit report 20 years after going delinquent because of NEW fines the city might issue. Is the borrower simply in bondage to the home they left for the rest of their lives, responsible for upkeep, taxes, etc?

  5. 5
    Pegasus says:

    RE: Sniglet @ 4 – Someone has to pay the property tax. If the borrower does not and the banks doesn’t the property will be sold for delinquent taxes. End of problem. Think of all the free rent the borrower gets if the bank never forecloses? What fines are you speaking about? The county/city isn’t automatically fining people late on their mortgages.

  6. 6
    EconE says:

    RE: Sniglet @ 4

    That was the way the poster made it sound. Not a happy camper at all.

  7. 7
    EconE says:

    RE: Pegasus @ 5

    The person I’m referring to has already moved out but he has to pay someone to mow the lawn because the bank won’t take the house back. No free rent for him. Not to mention, he’ll have a larger deficiency judgement if he refinanced as the bank dragged their feet bringing it to market.

  8. 8

    RE: Sniglet @ 1 – Well first, I don’t think you’re seeing those kinds of stories here as to the property not being valuable enough–except when it comes to second mortgages. If you could force a creditor to non-judicially foreclose then you could effectively wipe out that second position debt, but you can’t as far as I know.

    Yes a bankruptcy should take care of the debt assuming it’s properly listed and there is no exception to the discharge (e.g. the owner gave a false financial statement in getting the loan). Note though that the bankruptcy will not take care of the ownership interest, so if there is some liability that results post-bankruptcy from ownership (e.g. a trip/fall), that could still fall back on the debtor.

    Someone with these issues should consult an attorney to determine their exact exposure and best means to deal with it.

  9. 9

    By EconE @ 3:

    So much for jingle mail eh?

    Amazing–legal advice over the Internet doesn’t work! ;-)

    I’ve always said the right to live in a house during foreclosure is probably the most valuable right that a mortgagor has. Sometimes a job change forces a move, but other than that you should typically stay put.

  10. 10

    By Pegasus @ 5:

    RE: Sniglet @ 4 – Someone has to pay the property tax. If the borrower does not and the banks doesn’t the property will be sold for delinquent taxes. End of problem. Think of all the free rent the borrower gets if the bank never forecloses? What fines are you speaking about? The county/city isn’t automatically fining people late on their mortgages.

    Correct, and in Washington there is no personal liability for real property taxes.

    There can be fines for things like vegetation over the sidewalk and other code violations.

  11. 11
    One Eyed Man says:

    RE: Sniglet @ 1

    In Washington, the statute of limitations on a written agreement is 6 yrs. Generally speaking, the lender has to bring an action to enforce the debt within 6 yrs of the borrowers default (or, if later, the date of the last action of the borrower reaffirming the debt like a modification or a partial payment by the borrower while remaining in default) or the borrower can plead the statute of limitations as a defense to any collection activity by the lender. If the debt is secured, once the statute of limitations on the underlying debt has run the borrower can bring an action for quiet title and have the lien of the mortgage removed from title.

    I don’t know of any good ways to force a creditor to assert their rights so the debtor can start the clock ticking to clean up their credit. Bankruptcy would bring the issue to a head, but it has its own set of other issues. The borrower could possibly bring some form of legal action against the lender that would require that the lender assert their claims as a compulsory counterclaim, and that could potentially result in a settlement that resolves the situation by extinguishing the debt in exchange for transfer of the collateral. But there’s no guaranty that the result would be to extinguish the debt in exchange for the collateral and there would be costs to the debtor to go thru the processl

    There may be strategies I’m not aware of. I never represented borrowers on issues of consumer credit or consumer bankruptcy so I never aquired any knowledge concerning cleaning up damaged credit reports.

  12. 12
    Pegasus says:

    RE: EconE @ 7 – He never should have moved. At some point the bank has to become responsible since they can control the foreclosure timing unless they can’t prove standing. In that case the bank has entered the twilight zone. Actually the guy appears to be making a big deal about nothing. He needs to get a life and get out more and stop worrying about things he can’t control. I certainly would not be paying someone to mow the lawn if I had abandoned the house. The guy is a fool. Next up….pfft.

  13. 13
    Pegasus says:

    RE: One Eyed Man @ 11 – Their credit will get cleaned up at the seven year mark on becoming DELINQUENT whether the debt is still outstanding or not.

  14. 14
    Pegasus says:

    RE: One Eyed Man @ 11 – “If the debt is secured, once the statute of limitations on the underlying debt has run the borrower can bring an action for quiet title and have the lien of the mortgage removed from title.”

    Not so sure about that. The SOL does not eliminate the debt. It just eliminates the ability to force collection through the court system which pretty much renders it uncollectible.

  15. 15
    One Eyed Man says:

    RE: Pegasus @ 12

    I was going to make a comment defending Pfft from degrading personally attacks, but I just got a new job with one of the big banks as an original note elimination technician and they need me at work right away.;-)

  16. 16
    One Eyed Man says:

    RE: Pegasus @ 14

    I haven’t looked at the case law in 8 or 10 years, but I think my memory is correct and I don’t think the law changed in that time period. If you’d like to wager a lunch on it I’d be glad to pull up the case law to see how advanced my dementia has really become.

  17. 17
    EconE says:

    RE: Pegasus @ 12

    Ummmm.

    Dudes not happy because he has to be responsibe for someone else to take care of the upkeep on the place. How do you know that staying there was an option? Maybe he had to move for a job. How does his getting out more get the lawn mowed from afar? Perhaps you’d like to do it for him? WTF does Pfft have to do with some guy getting a s#itty deal.

  18. 18
    Sniglet says:

    Cities will bill property owners when they have to come and clean up weeds, board up windows, kill vermin, etc, in abandonded homes. Thus, a delinquent borrower could continue to get bills from the city 20 years after they went delinquent if their name was still on the title.

  19. 19
    Pegasus says:

    RE: Sniglet @ 18 – My point is/was don’t abandon the property and unless you live like a pig you can mow the lawn yourself. Small price to pay for free rent unless personal hygiene is an issue.

  20. 20

    By One Eyed Man @ 16:

    RE: Pegasus @ 14

    I haven’t looked at the case law in 8 or 10 years, but I think my memory is correct and I don’t think the law changed in that time period. If you’d like to wager a lunch on it I’d be glad to pull up the case law to see how advanced my dementia has really become.

    I had a case years ago where there was a DOT given to a friend of the debtor that was securing a demand note. No payments had been made for over 10 years, but there was also no evidence that demand had been made.

    I remember somehow the law was uncertain, but I don’t recall whether that was due to the demand note aspect or because the law was uncertain as to whether the statute of limitations wiped out the security. My recollection is it was the former, but that case was probably about 20 years ago so there may have been cases since.

    I would note that bankruptcy wipes out the personal debt but not the security, so it’s not entirely inconceivable that the statute of limitations would have the same effect.

  21. 21
    Sniglet says:

    RE: Pegasus @ 19

    don’t abandon the property

    If the property requires significant maintenance (new roof, etc) it doesn’t make sense to pay for this work if you don’t plan on becoming current with your loan. Thus, there will inevitably come a time when you will have to abandon the property because it has fallen into complete disrepair. Just because the bank is letting you squat indefinitely (i.e. because they have no interest in foreclosing) doesn’t mean you won’t want (or need) to vacate the property.

    This is generally the case with most of the homes which banks refuse to foreclose on. In Detroit, for example, lenders will often let delapitated homes sit in permanent limbo without foreclosing. On the other hand, no one but junkies would want to live in the hovels that are still barely standing.

  22. 22
    Pegasus says:

    By EconE @ 17:

    RE: Pegasus @ 12

    Ummmm.

    Dudes not happy because he has to be responsibe for someone else to take care of the upkeep on the place. How do you know that staying there was an option? Maybe he had to move for a job. How does his getting out more get the lawn mowed from afar? Perhaps you’d like to do it for him? WTF does Pfft have to do with some guy getting a s#itty deal.

    You do realize I post a lot of satire that no one else gets here? That said the guy is still a fool for paying anything on a house that the bank has possession of and also full control of the foreclosure timing no matter what the banksters are telling him he has to do or pay. All he has to do is send a certified letter to the banksters stating exactly that and that the bank may have a financial interest in delaying foreclosure to his detriment. Better still have an attorney send it. If the bank pursues a deficiency judgement he can bring it to court to get a fair hearing. So he either does that and moves on or he can spend his time crying about the big bad banksters on blogs. Easy choice for me.

  23. 23
    Pegasus says:

    By Sniglet @ 21:

    RE: Pegasus @ 19

    don�t abandon the property

    If the property requires significant maintenance (new roof, etc) it doesn’t make sense to pay for this work if you don’t plan on becoming current with your loan. Thus, there will inevitably come a time when you will have to abandon the property because it has fallen into complete disrepair. Just because the bank is letting you squat indefinitely (i.e. because they have no interest in foreclosing) doesn’t mean you won’t want (or need) to vacate the property.

    This is generally the case with most of the homes which banks refuse to foreclose on. In Detroit, for example, lenders will often let delapitated homes sit in permanent limbo without foreclosing. On the other hand, no one but junkies would want to live in the hovels that are still barely standing.

    I find your thinking flawed. The borrower did want to live in the house when he bot it. He just stopped making payments for a number of reasons. Granted the neighborhood and the house can fall into disrepair. He was responsible for the house not the junkies. He can fix the roof if he wants. The owner is probably saving $10,000 to $15,000 a year in rent payments. He can afford to mow the lawn. His credit will clean up just as fast whether or not the bank forecloses. Than he can move on and buy another house that he can trash and blame on the junkies or someone else.

  24. 24
    One Eyed Man says:

    RE: Kary L. Krismer @ 20

    Without checking Washington case law, this is my recollection and I would say I’m about 90% certain it was correct at the time I last checked (about 10 yrs ago). The law on demand notes is that the SL starts to run when the note is made. There was an issue for some years as to whether the running of the SL on the note just eliminated the ability to bring an action on the note or whether it also eliminated the security interest. About 10 yrs ago a case came down saying that the security interest was also eminimated when the SL ran on the secured obligation.

  25. 25

    RE: One Eyed Man @ 24 – I’m pretty sure my research was over 10 years ago, so that could very well be.

    Actually, I’m pretty sure my research was before 1991.

  26. 26

    Happy Martin Luther King Jr Birthday Everyone!

    Enjoy your 3 day holiday!

    Dr King’s famous Earthday quote:

    “…Unlike plagues of the dark ages or contemporary diseases we do not understand, the modern plague of overpopulation is soluble by means we have discovered and with resources we possess. What is lacking is not sufficient knowledge of the solution but universal consciousness of the gravity of the problem and education of the billions who are its victim.

    -Martin Luther King, Jr.,
    1929-1968

  27. 27
    One Eyed Man says:

    RE: Kary L. Krismer @ 25RE: Pegasus @ 14

    My dementia appears to be limited to my relative velocity as time has moved faster for the general population than it has for me. I believe the case I was thinking of was “Walcker” in 1995. Here’s a quote from the “Westar Funding” case in Sept of 2010 giving the general analysis.

    “Statute of Limitations

    ¶ 19 Sorrels contends that the statute of limitations does not bar him from collecting on the 1992 deed. The 1992 deed came due in 1994 and the six-year statute of limitations on collection of the note expired in 2000. The statute of limitations bars Sorrels’s collection action and the trial court did not err in granting Xui quiet title to the property.

    ¶ 20 Former RCW 4.16.040 (1989) governs the statute of limitations on promissory notes and deeds of trust. That
    ——————————————————————————–
    Page 785

    statute imposes a six-year limitation for ” [a]n action upon a contract in writing, or liability express or implied arising out of a written agreement.” Former RCW 4.16.040(1). When an action for foreclosure on a deed of trust is barred by the statute of limitations, RCW 7.28.300 authorizes an action to quiet title. See Walcker, 79 Wash.App. at 742-46, 904 P.2d 1176; Jordan v. Bergsma, 63 Wash.App. 825, 828-31, 822 P.2d 319 (1992).”

    http://www.aol.lawriter.net/CaseView.aspx?scd=WA&DocId=13016&Index=%5c%5cnewdata%5cfulldata%5cdtSearch%5cINDEX%5cWA%5cWACASEP3D&HitCount=245&hits=42+44+4f+66+8f+b0+b8+b9+ba+bd+be+ce+fb+125+12d+13e+13f+140+142+174+180+182+18d+19f+1a2+1a7+1ab+1b8+1c9+1d4+1dd+1eb+1fd+206+207+208+20f+212+217+220+22f+241+242+243+257+27e+290+29e+2a3+2ac+2c0+2ea+303+326+330+343+34a+34f+360+375+37d+393+3b6+3c8+3dc+3dd+3de+3f0+40f+413+414+415+424+441+453+476+47b+488+49d+4b1+4c7+4d7+4d8+4d9+4f2+510+52b+531+538+53a+548+556+557+558+568+587+5b1+5b8+5cd+5d0+5ff+60e+61d+630+63c+653+654+655+67f+691+6c6+6ca+6cb+6cc+6e1+6f7+700+717+718+719+734+759+784+791+797+7b1+7e5+7fb+80f+818+819+81a+81c+81d+826+82a+83b+83c+83d+843+844+845+84f+852+85b+85c+85d+860+867+868+869+887+888+889+88f+890+896+8ac+8bd+8be+8bf+8c4+8c5+8c6+8f7+8ff+900+901+978+979+97a+998+9a5+9a9+9aa+9ab+9b8+9b9+9ba+9c0+9c1+9c2+9dc+9f0+a02+a07+a08+a09+a32+a55+a56+a63+a66+a67+a68+a6c+a7d+a83+a93+a9c+aa7+aa8+ab4+abe+abf+ad7+ae4+b0b+b13+b19+b1a+b1b+b1e+b2d+bac+c04+c2e+c3d+c41+c4c+c62+c77+c82+c95+c9a+ca7+cb3+cbf+cd1+cf0+d07+d0b+d2b+d34+&hc=67925&fcount=273&fn=239+P.3d+1109%2c+157+Wn.App.+777&id=3&ct=4

  28. 28
    MacroInvestor says:

    By Pegasus @ 12:

    RE: EconE @ 7 – He never should have moved. At some point the bank has to become responsible since they can control the foreclosure timing unless they can’t prove standing. In that case the bank has entered the twilight zone. Actually the guy appears to be making a big deal about nothing. He needs to get a life and get out more and stop worrying about things he can’t control. I certainly would not be paying someone to mow the lawn if I had abandoned the house. The guy is a fool. Next up….pfft.

    Yes, he sure is a fool. If he can’t take advantage of free rent (forever!?) why doesn’t he rent the place out and collect free income? I’m surprised none of you thought of that… you guys aren’t devious enough :)

    Or why doesn’t he send the bank a certified letter informing them that their collateral is vacant and deteriorating? Then he can loot his own house of appliances, copper, etc (just joking on that one).

  29. 29
    Pegasus says:

    RE: One Eyed Man @ 27 – Can the bankers bring the action to quiet title? Example: Borrower stops making payments and abandons the home. The bank never forecloses but retains control of the house. SOL passes. Bank has maintained the house and paid the taxes. Can they get quiet title or squatters rights?

  30. 30
    Sniglet says:

    RE: Pegasus @ 29

    Bank has maintained the house and paid the taxes. Can they get quiet title or squatters rights?

    This would NEVER happen. A bank simply wouldn’t pay for taxes or maintenance unless they had taken posession through foreclosure. I have never heard of such a thing happening. In fact, the avoidance of costs for keeping the property is one of the key attractions of refusing to foreclose in the first place. If a bank was willing to pay for the upkeep then they’d might as well foreclose and get the legal rights that go with ownership.

  31. 31
    Pegasus says:

    RE: Sniglet @ 30 – I understand it is far fetched. I just wanted to know if they would have the right and a chance to win. Who has the right to seek quiet title…..In all probability the homes in the areas where the banks are refusing to foreclose, the county or city will end up with them and they will be bulldozed long before the SOL clock runs out. A borrower that abandons the home is probably not anymore likely to be seeking quiet title after the 6 years SOL runs out nor is he going to be paying taxes and maintaining the home either but one-eye appeared to be suggesting that as a possibility.

  32. 32
    One Eyed Man says:

    RE: Sniglet @ 30RE: Pegasus @ 29

    If the SL has expired, the bank can’t foreclose on the Deed of Trust or pursue collection of the Note. But assuming that the maintenance of the property is enough to meet the requirements for adverse possession and they’ve been paying the taxes, they could bring a quiet title action based upon adverse possession after, I think its 7 yrs. It would be 10 yrs if the bank weren’t paying the taxes, but I think the county forecloses on the tax lien once 3 yrs are delinquent. If I recall correctly, the adverse possession time period is really the statute of limitations for the person in title to bring an action for ejectment to kick the squatter out.

    It’s my understanding that lenders usually don’t do the maintenance on properties if they’re not in possession, but they almost always pay the taxes. The bank is usually paying the taxes on a home loan thru an impound account anyway, and there’s almost always a tax service hired to notify the lender if the borrower doesn’t pay the real estate taxes. A lender would be foolish to risk losing their collateral at a tax sale for a few cents on the dollar

  33. 33
    Pegasus says:

    RE: Sniglet @ 30 – Also foreclosure is much more profitable for the loan servicers than say a modification. They get to run up the monthly tab with all kinds of bogus and overpriced fees for insurance and paying the taxes, etc. and take their cut off the top of the money received from the sale before the investors see a dime. The servicers have pretty much controlled the party and that is why there have been so few modifications. If they are not foreclosing than the house must be pretty much worthless.

  34. 34
    pfft says:

    By One Eyed Man @ 15:

    RE: Pegasus @ 12

    I was going to make a comment defending Pfft from degrading personally attacks, but I just got a new job with one of the big banks as an original note elimination technician and they need me at work right away.;-)

    hey I am no defender of the big banks. I am just tired of people thinking that the banks are the sources of all of our problems. most of these people are zombie bears making ill-informed political statements than anything approaching reality. the fact is all banks are too big to fail. all banks are bailed out via the FDIC. every friday a too small to fail bank is bailed out. small banks financed the CRE bust. small banks failed by the thousands in the early 90s and caused the S&L bust. if there is a trillion dollars of loses it doesn’t matter if there are 3 banks or 300 banks.

    the big banks have been stress tested and raised tens of billions on capital almost two years ago. banks failed and were absorbed by other banks or wrote down their assets. home prices have stabilized and banks have had two years to build up reserves as well as make profits. prices of toxic loans have gone up in value. by all means though anchor to a crisis that happened two years ago as if no time has passed and nothing has changed.

    what does the market say? Citigroup was a $1 stock two years ago and now it’s $5.

  35. 35
    Sniglet says:

    RE: Pegasus @ 33

    Also foreclosure is much more profitable for the loan servicers than say a modification.

    But don’t forget that many servicers are owned by banks servicing their own loans. If the bank owns the servicer they may well decide to either delay, or even refuse foreclosure altogether, if they don’t feel it’s in their interests. It doesn’t help Wells Fargo or BofA to just charge big fees back to itself if the actual foreclosure will cost them more money than doing nothing.

  36. 36
    Pegasus says:

    RE: pfft @ 34 – Channeling Krugman again? Once again you are spreading lies and distortions. And no I won’t be responding to your ridiculous reply.

  37. 37
    Pegasus says:

    RE: Sniglet @ 35 – Far and few. They sold all of the fraudulent and mislabeled loans to suckers but yes some of those are being put back to them but it is still only a small but growing part of their foreclosures. Obviously they are not going to overcharge themselves. That would be something a guy like pfft might do but the banksters are not stupid. They just pretend to be.

  38. 38
    pfft says:

    By Pegasus @ 36:

    RE: pfft @ 34 – Channeling Krugman again? Once again you are spreading lies and distortions. And no I won’t be responding to your ridiculous reply.

    too bad I just googled up a whole bunch of links to back me up.

    Three of the top 10 funds made money on mortgage bonds, according to Bloomberg data.

    http://www.bloomberg.com/news/2011-01-06/brownstein-s-mortgage-metaphysics-drives-50-gain-in-top-global-hedge-fund.html

    those small banks everyone loves?

    Failing loans for commercial real estate threaten small banks
    http://www.usatoday.com/money/industries/banking/2009-09-09-commercial-real-estate-loans_N.htm

  39. 39
    pfft says:

    By Pegasus @ 36:

    RE: pfft @ 34 – Channeling Krugman again? Once again you are spreading lies and distortions. And no I won’t be responding to your ridiculous reply.

    could you also respond to my links that proved increased demand was driving commodity prices? at least prove there was no demand for commodities. my links proved aluminum demand has increased double-digits according to Alcoa. maybe you have better information about aluminum demand than Alcoa?

  40. 40
    Lurker says:

    RE: pfft @ 34

    Pfft, you can’t really be serious, it is not a “bail out” when the FDIC steps in and takes over a bank. Do you consider WaMu to have been bailed out as well?

    To anyone interested, here is an interesting (old) piece on ideas regarding how to-big-to-fail banks are holding back recovery – http://www.washingtonsblog.com/2010/12/economy-cannot-recover-until-big-banks.html

    and another good (and older) one here – http://www.theatlantic.com/magazine/archive/2009/05/the-quiet-coup/7364/

  41. 41
    pfft says:

    By Lurker @ 40:

    RE: pfft @ 34

    Pfft, you can’t really be serious, it is not a “bail out” when the FDIC steps in and takes over a bank. Do you consider WaMu to have been bailed out as well?

    To anyone interested, here is an interesting (old) piece on ideas regarding how to-big-to-fail banks are holding back recovery – http://www.washingtonsblog.com/2010/12/economy-cannot-recover-until-big-banks.html

    and another good (and older) one here – http://www.theatlantic.com/magazine/archive/2009/05/the-quiet-coup/7364/

    when the FDIC bails out your bank it’s a bailout. that goes for Wamu and all of them.

  42. 42
    Lurker says:

    RE: pfft @ 41

    I don’t think that word means what you think it means.

  43. 43
    Dirty Renter says:

    RE: pfft @ 34 – “most of these people are zombie bears making ill-informed political statements than anything approaching reality.”

    Worst yet, they’ve missed the investment opportunity of a lifetime.

  44. 44
    Lurker says:

    RE: Dirty Renter @ 43

    That was a harsh lesson.

  45. 45
    One Eyed Man says:

    RE: Dirty Renter @ 43

    I have to say “Bingo.” But if like me, you didn’t get out and get back in, or at least double down, all you are is back to even. But happy about it, none the less.

  46. 46
    Jillayne says:

    In case you missed it, here’s the Seattle Weekly story on Shaun Portmann:

    http://www.seattleweekly.com/2011-01-12/news/feature-hed/

  47. 47
    Pegasus says:

    Zombie Money Kills Real People…. Excellent read especially for the clueless

    “There are a number of fallacies – or delusions, if you will- concerning our economies that are set to inflict enormous – in many cases lethal- damage in both our own rich lives and those of people elsewhere in the world who are far less well-off than we still are – for now. These fallacies are closely connected, which adds greatly to their insidiousness as well as the perverse influence they have both on ourselves, and on our awareness of what’s happening around us. And whatever there may be that we can’t change overnight, we can at least try to comprehend some issues, file them, and move on. Let’s do these first:

    Recovery

    Inflation

    Food prices ”

    http://theautomaticearth.blogspot.com/2011/01/january-14-2011-zombie-money-kills-real.html

  48. 48
    pfft says:

    By Pegasus @ 47:

    Zombie Money Kills Real People…. Excellent read especially for the clueless

    “There are a number of fallacies – or delusions, if you will- concerning our economies that are set to inflict enormous – in many cases lethal- damage in both our own rich lives and those of people elsewhere in the world who are far less well-off than we still are – for now. These fallacies are closely connected, which adds greatly to their insidiousness as well as the perverse influence they have both on ourselves, and on our awareness of what’s happening around us. And whatever there may be that we can’t change overnight, we can at least try to comprehend some issues, file them, and move on. Letâ��s do these first:

    Recovery

    Inflation

    Food prices ”

    http://theautomaticearth.blogspot.com/2011/01/january-14-2011-zombie-money-kills-real.html

    By Pegasus @ 47:

    Zombie Money Kills Real People…. Excellent read especially for the clueless

    he’s got it all wrong. thanks for the dissenting view though.

  49. 49
    Dawn Glover says:

    RE: Jillayne @ 46 – read the article and feel angry and so I feel like a good rant. This guy was one of thousands of greedy crooks taking advantage of a situation…lawyers, brokers, banks, real estate agents, homeowners, flippers, investors, developers. I am way past being politically correct. Most people were drunk on greed for the past decade and have destroyed our economy..plain and simple. We’ve somehow painted the person taking on the loan as a victim, give me a break…these people lived for less than rent in a house that they otherwise would never have been in…how is that being the victim. The real victims are all of the responsible people like ME, who are paying the price for this…and of course our children (future taxpayers) who never even had a chance…

  50. 50
    pfft says:

    By Dawn Glover @ 49:

    RE: Jillayne @ 46 – read the article and feel angry and so I feel like a good rant. This guy was one of thousands of greedy crooks taking advantage of a situation…lawyers, brokers, banks, real estate agents, homeowners, flippers, investors, developers. I am way past being politically correct. Most people were drunk on greed for the past decade and have destroyed our economy..plain and simple. We’ve somehow painted the person taking on the loan as a victim, give me a break…these people lived for less than rent in a house that they otherwise would never have been in…how is that being the victim. The real victims are all of the responsible people like ME, who are paying the price for this…and of course our children (future taxpayers) who never even had a chance…

    amen. blaming big bankers who may have not even known the risk in their mortgage divisions is just the start.

  51. 51
    Dawn Glover says:

    I’d like to add that this guy was not a Loan Wolf, there were hundreds of them across the country doing the same thing and thousands of eager homeowners signing loans they could under no circumstances ever pay for. With this knowledge I can’t believe that anyone is still convinced that house prices will stabilize anytime soon.

  52. 52
    Blurtman says:

    Criminals who commit fraud (and their apologists) always claim ignorance. It is the best defense if you are caught. Ken Lay and Jeff Skilling both claimed ignorance but one is doing jail time and the other likely roasting in Hades.

    And yet troll(s) continue to post on this blog that the banking execs did not know.

    Richard Bowen, chief underwriter at Citibank, testified that he warned upper managers at Citibank including Robert Rubin that Citi was selling fraudulent mortgages (70% defect rate).

    “Bowen’s testimony and history of complaints could make it harder for Citigroup executives to argue that they were ignorant of potential problems with the bank’s loans and other assets, and that the bank was a victim of circumstance, said Stanley Grossman, a plaintiffs’ lawyer.”

    http://uk.reuters.com/article/idUKTRE6383D720100409

    Moody’s analysts state that mortgage backed securities they were rating AAA were crap.
    “Indeed, one rating agency analyst admitted that the market for mortgage-backed securities was “little more than a house of cards” with a much higher risk of devaluation than indicated by the purported investment-grade “AAA” rating. Another rating agency analyst said that “we rate every deal. It could be structured by cows and we would rate it.””

    http://www.ohioattorneygeneral.gov/SecuritiesLitigationBriefing

    No one knew. No one knew.

    Pathetic.

  53. 53
    pfft says:

    By Blurtman @ 52:

    And yet troll(s) continue to post on this blog that the banking execs did not know.

    some of them knew. but if they all knew why did they lose their jobs, have their stock price plunge and lose hundreds of billions of dollars? it’s because they didn’t know. taleb said bankers are brainless. even some of the best fund managers didn’t know. I know that is very hard to except. it’s easier to picture bankers as pulling the strings. they are human like us. the boom blinded them just like it did the regular joes who took out the loans.

  54. 54
    Blurtman says:

    See The Besy Way to Rob A Bank is to Own One. I know it sounds fantastic, but you can make lots of money engaging in fraud while destroying the company. And if you are too big, you get bailed out. And I think folks pretended not to know, but knew just the same.

  55. 55

    By pfft @ 53:

    By Blurtman @ 52:

    And yet troll(s) continue to post on this blog that the banking execs did not know.

    some of them knew. but if they all knew why did they lose their jobs, have their stock price plunge and lose hundreds of billions of dollars?

    It’s all just part of a very clever cover! ;-) :-)

  56. 56
    Blurtman says:

    RE: Kary L. Krismer @ 55 – Do you think everyone at Enron knew the company was engaging in massive fraud? The evidence indicates that most folks hadn’t a clue. And yet the company did commit massive fraud and everyone lost their jobs. It is an illogical defense to state that since folks lost their jobs, fraud could not have happended. See The Best Way to Rob a Bank is to Own One.

  57. 57
    pfft says:

    By Blurtman @ 54:

    See The Besy Way to Rob A Bank is to Own One. I know it sounds fantastic, but you can make lots of money engaging in fraud while destroying the company. And if you are too big, you get bailed out. And I think folks pretended not to know, but knew just the same.

    some of them did know. but chuck prince had a classic “we’re still dancing” quote. did he know there could be problems? maybe. did he think citi would be a $1 stock? probably not. booms and busts can go further than anyone thinks.

    you can rail about the ratings agencies all you want. if a AAA rated bond is trading above AAA government debt it most likely isn’t AAA. people were reaching for yield. higher yield equals higher risk. any idiot with a computer could see housing prices were high.

  58. 58
    pfft says:

    By Blurtman @ 56:

    RE: Kary L. Krismer @ 55 – Do you think everyone at Enron knew the company was engaging in massive fraud? The evidence indicates that most folks hadn’t a clue. And yet the company did commit massive fraud and everyone lost their jobs. It is an illogical defense to state that since folks lost their jobs, fraud could not have happended. See The Best Way to Rob a Bank is to Own One.

    the people at the top weren’t running the mortgage divisions.

  59. 59
    pfft says:

    my basic point is that instead of thinking that people are diabolically evil you just have to entertain the question that maybe they were just dumb.

    everyone loves conspiracy theories though. a more nuanced approach maybe be that elements of competition bwtween wall street firms and the way pay was structured in those firms led to this disaster. there are many businesses in a company and the CEO doesn’t know all of them.

  60. 60
    Blurtman says:

    When a bankrobber is caught in the act, there is no “consiparcy theory.” Not sure what “diabolical” means. You don’t have to be “diabolical” to commit fraud, just amoral and greedy. Ken Lay did not seem to be “diabolical.” Although he may be now.

  61. 61
    Ginger says:

    I love the Olive 8 project and need to know more…there’s a floor plan chart showing where all the sales are in the building. If the pre-auction and auction prices were all in the lower part of the building how much would you expect to pay in the higher part for the same unit?

  62. 62
    Pegasus says:

    10,000 GMAC Foreclosures Stopped in Maryland

    “In a major ruling Friday, a coalition of nonprofit defense lawyers and consumer protection advocates in Maryland successfully got over 10,000 foreclosure cases managed by GMAC Mortgage tossed out, because affidavits in the cases were signed by Jeffrey Stephan, the infamous GMAC “robo-signer” who attested to the authenticity of foreclosure documents without any knowledge about them, as well as signing other false statements.

    The University of Maryland Consumer Protection Clinic and Civil Justice, Inc., a nonprofit, filed the class action lawsuit, arguing that any case using Jeffrey Stephan as a signer was illegitimate and must be dismissed. In court Friday, GMAC agreed to dismiss every case in Maryland relying on a Stephan affidavit. They can refile foreclosure actions on the close to 10,000 homes, but only at their own expense, and subject to new Maryland regulations which require mandatory mediation between borrower and lender before moving to foreclosure. Civil Justice and the Consumer Protection Clinic also want any cases with affidavits from Xee Moua of Wells Fargo, who has also admitted to robo-signing, thrown out, but that case has not yet been settled.

    This was not the plan of GMAC and other banks caught using robo-signers last year. They hoped to undergo a pause in proceedings, run a quick “double-check” and then issue substitute documents in the same cases. That would have been a much more rapid solution for the banks and would have resulted in many more foreclosures. Now GMAC has to go back and basically file the entire case all over again, meaning they have to give notice of foreclosure to the borrower, engage the borrower in modification options, and basically run through the whole process from the beginning. They cannot use the shortcut solution, thanks to the class action suit filed. GMAC’s dismissal of every foreclosure in Maryland shows their doubts they would have won the class action.”

    http://news.firedoglake.com/2011/01/16/10000-gmac-foreclosures-stopped-in-maryland/

  63. 63
    karl says:

    from bloomberg. not sure I agree about adding another layer of government. but here it is for what its worth.

    http://www.bloomberg.com/news/2011-01-14/how-to-fix-mortgage-mess-in-three-steps-commentary-by-laurence-kotlikoff.html

  64. 64
    pfft says:

    By Blurtman @ 60:

    When a bankrobber is caught in the act, there is no “consiparcy theory.” Not sure what “diabolical” means. You don’t have to be “diabolical” to commit fraud, just amoral and greedy. Ken Lay did not seem to be “diabolical.” Although he may be now.

    can you at least admit that maybe bankers could have just got caught up in the boom like everyone else? the MBS industry such as it was was less than 5 years old when the loses began. taleb made an industry out of saying that bankers were brainless and didn’t know the risks.

    in the book “the big short” I believe he said the only firm that was hedged was Goldman. if the CEOs all knew what was going to happen why did they lose hundreds of millions? they all could have kept their jobs and their bonuses and gone short. why didn’t they? they didn’t know what was going on.

  65. 65
    EconE says:

    RE: pfft @ 64

    If the bankers (alcoholics) got caught up in the boom (party) and crashed the economy (car) then they need to suffer the consequences. Neither the banker nor the alcoholic were “diabolical”…just stupid.

    Stupid needs to be punished with jail time.

    There are more than enough cells for every banker, mortgage broker, appraiser, RE agent etc. They can swap their stainless steel appliances for stainless steel toilet/sink combos.

    If there aren’t enough cells, we can put the out of work construction workers to work building more of them. Job creation. We can pay for it all using the Pfft method of borrowing as much as we need to get the job done.

  66. 66
    Blurtman says:

    Criminals who commit fraud (and their apologists) always claim ignorance. It is the best defense if you are caught. Ken Lay and Jeff Skilling both claimed ignorance but one is doing jail time and the other likely roasting in Hades.

    And yet troll(s) continue to post on this blog that the banking execs did not know.

    Richard Bowen, chief underwriter at Citibank, testified that he warned upper managers at Citibank including Robert Rubin that Citi was selling fraudulent mortgages (70% defect rate).

    “Bowen’s testimony and history of complaints could make it harder for Citigroup executives to argue that they were ignorant of potential problems with the bank’s loans and other assets, and that the bank was a victim of circumstance, said Stanley Grossman, a plaintiffs’ lawyer.”

    http://uk.reuters.com/article/idUKTRE6383D720100409

    Moody’s analysts state that mortgage backed securities they were rating AAA were crap.
    “Indeed, one rating agency analyst admitted that the market for mortgage-backed securities was “little more than a house of cards” with a much higher risk of devaluation than indicated by the purported investment-grade “AAA” rating. Another rating agency analyst said that “we rate every deal. It could be structured by cows and we would rate it.””

    http://www.ohioattorneygeneral.gov/SecuritiesLitigationBriefing”

    No one knew. No one knew.

    Pathetic.

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