Category Archives: Debt

UPDATE IV: Forclosure Fracas (Still About Deadbeats)

Business, Debt, Federal Reserve Bank, Law, libertarianism, Private Property, Reason

Vox Day, friend and fellow (libertarian) rebel on WND.COM, has objected to my comments about his bank foreclosure comments in the BAB post titled “Financial Paperwork Crisis (No Conspiracy Thinking, Please).” Vox and I have been exchanging emails on the topic. Vox traces the arguments back-and-forth in his post “A dialogue with Ilana (UPDATED).”

Consider: You’re a homeowners. You have a mortgage with the bank. The title deed is yours; you have a legal right or title to the property. However, this obtains just as long as you honor your mortgage payments. The bank has a lien on the property until you pay-up the mortgage. If you pay your monthly mortgage installments, and the bank has cashed these payments, your bank account will reflect that. If you’ve met these conditions, and the bank, nevertheless, proceeds to foreclose on you—this is an error, and a legal and statistical anomaly; an outlier case.

It is my understanding that Vox refutes the above; says the latter scenario may be the norm, or could easily become the norm due to endemic fraud.

Distilled, I contend that it is almost always true that a necessary condition for a foreclosure is for the homeowner to have failed to make his mortgage payments. It is my understanding that Vox disputes this.

I told Vox that the one article he referred me to “began with a one-case study as its proof. This is statistically worse than insignificant. The article graduated to assertion. Then added another one-case study.” Vox may well be right, “but the data in the column he provided do not prove his case.

I have since Googled some of the terms Vox deploys in his post. One search led me to the Washington Post’s Ezra Klein. When Ezra does get something right it is only by accident. In any event, the Klein article does not support the Day case (as I understood it), namely that the foreclosed upon are being treated unjustly, even routinely robbed of their property.

Understand: I have no dog in the fracas other than the truth; am quite ready to find for Vox. So far, the hard evidence is missing.

Our debate might be delayed for a while, but it will continue. Stay tuned.

UPDATED I (Oct. 18): Difster’s comment hereunder is mostly waffle unless he is able to address what I wrote in the post: has the homeowner being foreclosed upon been paying his debt or not. He can’t. I really can’t abide argument that doesn’t cleave to reality and evidence. Bring me evidence of all the cases of paid-up homeowners who’ve been foreclosed upon. Present that here, please.

UPDATE II: Judging from this tale of woe, the lawyers for the defaulting borrower are themselves using what they consider irregularities of procedure to try and get their delinquent client’s debt forgiven. I am not saying that “MERS, the electronic mortgage tracking system,” and the banks that use it, are following the letter of the law, but what people seem to be skirting here, much to my horror, is that these borrowers owe money they borrowed. You don’t forgive someone’s debt because the debt-holder’s bureaucracy is bad, or even dubious. And you don’t accuse bankers as a group of robbing home owners of title to their homes, because of problems of paper trail. (As I pointed out here, to argue against the bankers, in this case, on the ground that they are, moreover, embroiled in the fractional reserve system is to make an error of logic, maybe even a categorical error. Along the lines of releasing murderers because justice system is corrupt, etc.)

Note too that nowhere do the delinquent borrowers deny that they have not paid their debts, only that they are struggling “to figure out who owns their loans, who can negotiate loan modifications with them, or even how to get a call returned.”

Also: Borrowers are deploying the very argument the bankers are using: it’s the bureaucracy.

What do you know, it seems that, as outlined in this BAB post, “the latest foreclosure crisis is indeed bureaucratic in nature.”

UPDATE III: The thing to take away from Vox’s WND column today is this line: “the law is very clear on the matter: ‘If the chain of title is broken, then the borrower’s loan is no longer secured by the property.'”

This is the positive law. The fact of the borrower’s debt is unchanged. A took from B in order to buy C. That’s another “chain” to keep in mind.

UPDATE IV (Oct. 19): STILL ABOUT DEADBEATS. From all the reports so far, FBN’s Gerri Willis’ being the latest, it is as I said. The defaulters owe boatloads of money. The bankers bungled the paper work in a manner that verges on the criminal. The reality, in as much as property rights go, comports with my distillation on this post and the one linked to it, “Financial Paperwork Crisis (No Conspiracy Thinking, Please).”

UPDATE IV: A National Reviewnik Thinks He’s "Contrarian"

Debt, Inflation, Journalism, Media, Neoconservatism, Paleoconservatism, Pseudo-intellectualism, Republicans

He’s trillions of dollars and a decade too late, but Kevin D. Williamson of National Review can assure himself he’s “contrarian” for advocating an about face in the Federal Reserve Bank’s fiddling.

Williamson may be reading Austrian economics. By that I mean the reality based thinking of Ludwig von Mises (taught at the Mises Institute); preached by Ron Paul (whom the neoconery mocked during the Bush years), practiced by financier Peter Schiff, written about by Tom Woods in Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse; as well as by Vox Day, and in this writer’s columns and blogs over the past decade.

Being of the establishment, however, Williamson can just put his hands over his ears and tell himself over and over again “I’m contrarian,” and this will be so.

“So here’s a contrarian take,” Williamson assures himself: “The Fed should stop trying to drive down interest rates. It should instead work to raise them. Why? Our economy needs savings and investment. …”

As I said, trillions of dollars and a decades too later … (“PUNDITS, HEAL THYSELVES!”)

Your host, writing in “Those Invisible Jobs,” did not anoint herself a “contrarian” for advocating that Fed supremo Ben Bernanke raise interest rates.” Not then, and not in 2000 (“The Central Bank’s Game is the Same, Whoever’s the Name”), and on all those occasions in-between.

Why? Because in the Austrian community, represented by some very prominent people, this is common wisdom.

Bloody annoying…

UPDATE I: I’ll be honest: it’s hard to know from Mr. Williamson’s wishy-washy articles exactly where he stands on matters of political philosophy (or if he is a neoconservative or not). However, this post’s point was pretty clear. It expressed annoyance that someone can call himself contrarian for proposing less quantitative easing. Granted, it’s a prickly post, but Mr. Williamson can understand, surely, why writers like myself get a tad testy? We’ve been marginalized for being right on foreign policy and fiscal matters our entire careers, such as they are. Then, when the rest catch up with us, a decade down the line, they pretend that truth began with them.

If I’ve learned anything about the American Mind it is this: Truth doesn’t exist until someone in the establishment pronounces it, usually a decade or so after it has been in circulation. I guess, better late than never, but why not acknowledge those who went before?

I saw Mr. Williamson go up against one or the other left-liberals on TV, and I remember thinking: much better than Rich. Still, I do not believe there is a sufficient amount of information to conclude that “better than Rich” is a meaningful statement.

Mr. Williamson is young (and presentable). He has plenty of time to correct any mistaken impressions I might have formed, not least of which is his sharing that horrible habit common among the Republican establishment of never admitting to being Johnny-come-latelies on Iraq, Bush, economy, QE, etc.

UPDATE II: Mr. Glisson, first, why don’t you provide hyperlinks and particular quotes in substantiation of your position that Mr. Williamson is never a neoconservative? Second, why misconstrue the point of this writer’s post, encapsulated again in the last two sentences of “UPDATE I”? Moreover, from a parenthetic statement about the neoconservatives’ attitude toward Ron Paul, Mr. Williamson concluded that I had called him a neoconservative. You do the same, for some reason.

Again, Mr. Williamson is better than Rich; way better. I am still unsure as to what kind of badge of honor this really is; or if Mr. Williamson is or is not a neoconservative. Isn’t that a condition of employment at National Review? John Derbyshire is NRO’s only paleoconservative (sort of). I’d love to see John thrust into the spotlight, but they keep him in the basement, so to speak.

UPDATE III (Oct. 17): We thank Kevin D. Williamson for responding to the intrigue he has generated on Barely A Blog. He remains a man of mystery, and that is not half bad. In the age of too much information (and letting it all hang loose), mystery is a good thing. We agree that Mr. Williamson ain’t Rich. Has Rich employed a non-neoconservative in the hope of generating some oscillation in the static National Review? Or because the readership has little patience with that old guard? Who knows? We also understand that a man has to make a living. To do so, he must often walk an ideological tightrope.

Nevertheless, those who went before—and remain permanently frozen out of mainstream—deserve mention. It gets terribly cold out here. Mr. Glisson seems to think I’m some kind of intellectual missionary, spreading the good word, pleased to turn the other cheek just so long as the new guard can adopt the gospel, even if they falsely pretend to be pioneers.

Rubbish. Nonsense on stilts. I’m all about justice. Intellectual justice included.

UPDATE IV (3/5/2016):

“NRO Writer’s ‘UnFollow’ Leads To Musing About The Manners-Morals Connection.”

QE2: That Ship Has Sailed

Debt, Economy, Federal Reserve Bank, Inflation, The State

I’m not talking about “The Queen Elizabeth 2” cruise ship, but of “‘Quantitative Easing,’ which is state-speak for the government’s monkeying with the money supply.” That ship has indeed sailed a long time ago. At the end of September, we reported here on a $1 trillion Fed infusion of paper into our hot-air balloon of an economy.

How many pinpricks away from runaway hyperinflation are we?

Now you know why a stock market rally does not a recovery predict. In fact, stocks will be buoyed after a funny-money injection. “But as usual,” concedes Larry Kudlow, ignored are “the plunging dollar and soaring commodity prices, which will lead to an inflation tax on consumers and businesses, something that is not good for profits or economic growth.”

UPDATE II: “Financial” Paperwork Crisis (No Conspiracy Thinking, Please)

Business, Conspiracy, Debt, Economy, Federal Reserve Bank, Reason, Socialism

As I read the facts, the latest foreclosure crisis is bureaucratic in nature, not economic. Described by The Wall Street Journal, “the wrong guy at the bank signed the foreclosure paperwork. … The affidavit was supposed to be signed by the nameless, faceless employee in the back office who reviewed the file, not the other nameless, faceless employee who sits in the front.”

The reality has not changed. We’re still talking about the same “consumer who borrow[ed] money to buy a house, [didn’t] make the mortgage payments, and then [lost] the house in foreclosure.”

Except that now 100,000 people get to keep homes for which they haven’t paid. Because bureaucracy runs the economy, the process of cleansing the housing market of these toxic acquisitions will be halted and gummed up even more so than before.

A major culprit is “GMAC Mortgage, whose parent Ally Financial is majority-owned by the U.S. government.”

Well, of course.

Every parasitical official seeking to renew or secure his sinecure on the public teat is demanding a halt to what looks to have been perfectly legitimate foreclosures on delinquent homeowners: state attorneys general, the Attorney General (Eric Holder), and assorted politicians, all interfering in local state affairs.

As the WSJ notes (rather meekly), “freezing activity in a $2.8 trillion financial market is the last thing this economy needs and is in no way proportional to the problems reported so far.”

The WSJ concludes on a stronger note:

“If evidence emerges of policies or actions that wrongly threw people out of their homes, by all means investigate and prosecute violations of law. But allowing people to live in homes without paying for them is not cost-free. That cost will be borne directly by investors in mortgage-backed securities and mortgage servicing companies, and ultimately by American taxpayers, who now stand behind 90% of new mortgages, thanks to guarantees by Fannie Mae, Freddie Mac and the Federal Housing Administration.

The bigger damage here is to the housing market, which desperately needs to find a bottom by clearing excess inventory and working through foreclosures as rapidly as possible. The moratoriums further politicize the housing market and further delay a housing recovery. In an economy and a financial system engulfed in Washington-created uncertainty, the political class has decided to create still more.”

Justice in the food-stamps nation …

UPDATE I (Oct. 11): It is clear that the above constitute “technicalities, not miscarriages of justice.” In “A Foreclosure Tightrope for Democrats,” the NYT suggests that the “White House shares those concerns, and it has tried to defuse the issue by arguing that problems can be addressed without imposing a moratorium.”

“‘There are, in fact, valid foreclosures that probably should go forward,’ David Axelrod, a senior White House adviser, said Sunday on CBS.”

The industry has argued in response that problems should be addressed without halting all foreclosures, because a moratorium would damage the economy. “It must be recognized that the mortgage market, investors and the health of the economy are all interrelated,” Tim Ryan, president of the Securities Industry and Financial Markets Association, said Monday.

Is the prospect of an election forcing some economic enlightenment at the White House?

UPDATE II (Oct. 12): It must be obvious to readers of this site that I would strongly disagree with the case my colleague Vox Day makes against the strict rule of law and for grand-conspiracy:

The idea that the foreclosure fraud is simply a little clerical error and that homeowners are attempting to capitalize on a minor issue of missing paperwork is a blatant and shameless lie. The mere fact of their focus on the borrowing parties rather than the banks is proof that they are intentionally evading the real issue. Karl Denninger, who has been on this for three years now, explains it more succinctly than anyone. “The issue is not about which paper-pusher signed documents. The issue is whether the origination and securitization of this paper in the first instance was fraudulent, and whether we now we have a Watergate-style coverup of what a gang of brigands did to steal literal trillions of dollars!” As he further elucidates, there are three primary parts to the problem; notice that the latter two have absolutely nothing to do with the borrowers that the Republican Cantor declares must “take responsibility for themselves”. But if a poor Hispanic family living in an overpriced house have to take responsibility for themselves, why don’t the bankers who are holding Cantor’s leash have to do likewise?

Similar opinions were expressed on BAB when we discussed “Strategic Defaulters.” There, John Danforth wrote:

What caused the drop in nominal property value? The inevitable collapse of prices that were superheated by banks puffing up fractional reserves with derivatives of the superheated asset prices. …No matter how debased the morality of the strategic defaulters, the banks are not any better.

Distilled, the argument for all-out sweetness and love for the foreclosed upon is that, because the banks are embroiled in the fractional reserve system, they should suffer the worst of fates.

That’s like saying that because the legal system is generally corrupt, murderers should go free; or because an owner who sells a parcel of land partakes in the property tax theft, the buyer should not have to pay him. Or because businesses often act like exuberant idiots during a phase of the business cycle—some as offenders; others as victims—their customers need not pay them. And on and on.

This is chaos theory; create chaos, and out of it, something good may come. And never mind that not all bankers are crooks; that not all of them understand the theoretical aspects of the system in which they are embroiled; and that not nearly enough bad things are said about the defaulters.

As to Vox’s point, it does not follow from “the mere fact of their focus on the borrowing parties rather than the banks,” that this “is proof that they are intentionally evading the real issue.”

Not in logic, at least.

Finally, the laws of economics are natural laws. Whoever is involved, it is categorically good that responsible buyers get to pick up foreclosed properties, and that the mortgage miasma is cleared and cleansed away.