Posted by kevin on February 28, 2013 under Foreclosure Blog | 
One of the recurring themes in this blog (and others) has been the dismal record of US governmental agencies in trying to thwart lawlessness on the part of banks and individuals in the securities industry. Whether it was the sell out known as the $25B settlement, or the OCC’s abrupt curtailment of the foreclosure audits or the administration’s about face on Chapter 13 cramdowns, you get the impression that the consumer enforcement agencies are not there for the consumers.
In the latest debacle, the US Supreme Court voted 9-0 against the SEC effectively throwing out an enforcement action against two money managers at Gabelli Funds. The grounds- the SEC did not bring the action within the 5 year statute of limitations. The acts complained of happened between 1999 and 2002. The SEC claims it discovered the violations in 2003 but did not bring the penalty action until 2008. Given that the US Supremes are so divided, it is a real slap in the face of the SEC that they were shot down by a unanimous court.
On one hand, you could say that the SEC was thwarted in trying to protect the public. However, on the other hand, the question is why did it take the SEC 5 years from discovery to file its complaint. Clearly, it could not have been a high priority. Which gets us back to the initial question of whether the agencies are helping the consumer or playing ball with their future employers. Without strong restrictions on going from agencies like the SEC to Wall St, I do not think that you are going to root out this problem.
Posted by kevin on February 20, 2013 under Foreclosure Blog |
In a previous blog, I alerted you of the unpleasant fact that the NJ Court Mediation Program is running out of funds. I have heard nothing official in the last 10 days. However, I was advised that a major HUD counselor is not taking on any new mediation clients.
One thing is for sure (or at least appears to be sure)- Judges do not want to run the mediation program. Now, that is understandable since the judges have to deal with their own out of control calendars. But, on the other hand, what has been lacking in the mediation program? There is no stick for servicers who continue to jerk borrowers around. Wouldn’t or couldn’t a few tough judges straighten that problem out in short order?
Maybe good old fashion settlement conferences can work in the foreclosure arena.
Posted by kevin on February 11, 2013 under Foreclosure Blog |
Last week, the Justice Department filed a civil suit against Standard & Poors for its contribution to the mortgage meltdown. Why did it take almost 5 years?
S&P rates securities based presumably on risk. A high S&P rating (AAA) could mean the difference between selling a security and not selling it. This concept was not lost on the purveyors of mortgage backed securities. It was essential that S&P (and the other raters) deem their higher tranches to be AAA so that insurance companies and pension would buy. As was stated in a recent blog, S&P provided the gift wrapping for the sponsors of securitized trusts.
The problem, however, as brought out by many commentators (and now the feds), was the S&P was taking a bunch of subprime loans none of which could be rated AAA, bundling them together and somehow the bundle was rated AAA. How could you turn chicken feathers into chicken salad?
S&P, in its own defense, is saying that the government is trying to blame them because they did not predict the housing bubble. Well, not really. What the feds are saying is that S&P really did very little analysis before that gave their stamp of approval on questionable securities. Why? Because S&P got paid a lot of money. Moreover, when it started to become evident that there were problems, S&P was pretty slow on the uptick in downgrading these questionable securities.
We can only hope that the feds do not make a quick and cheap settlement so that it could get a headline in the WSJ. The truth should come out. A may lead to a better method of evaluating securities
Posted by kevin on February 6, 2013 under Foreclosure Blog |
NJ set up a mediation program for residential property in foreclosure. To qualify, the property must be owner occupied, and a foreclosure complaint must have been filed already. According to the judges who run the foreclosure bench-bar conferences, about 40% of cases in mediation reach some form of resolution. What “some form of resolution” is, I am not exactly clear. I know that I have not received any permanent modifications through the mediation process.
That being said, mediation does have some good points. First, the servicer has to appear (telephonically but that’s better than nothing) at each hearing. So, you have a live body on the other end of the phone who has read your submission most of the time. Second, the mediation process takes time, and time is the ally of the homeower.
Now, that does not mean that it is not frustrating. You submit papers, get no feedback, and then on the day of the mediation, you are told that the documents are “stale”, or some documents are missing, or that no decision has been made. Mediators try to make the servicers move the case, but the mediators really have no muscle. The only person who can effectively get the attention of the servicer to expedite the process and make meaningful offers is the judge. However, judges have been reluctant to step into that role. (Perhaps they are too overburdened with their court calendars.)
Rumors have been swirling around the last few months that the mediation program will be cut or discontinued because of a lack of funding. At the bench-bar conference last week, it was announced that the mediation program will end in the beginning of March, 2013 unless the Chief Justice can come up with additional funding. Of course, the CJ does not have the ability to print money, so he is looking to the Governor for money. I have not heard anything from the governor’s office on this.
There has been some talk about lawyers running the mediation on a pro bono (free) basis. Frankly, I do not see any attorney doing more than 1-2 cases on a pro bono basis. Moreover, I do not see many HUD counselors working for nothing either.
Stay tuned. This may get intersting.
