Category Archives: Reason

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 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.

UPDATED: Astounding Healthcare Revelations (NOT)

Debt, Economy, Government, Healthcare, Reason, Regulation, The State

In “Heeere’s Health-Scare” I posited an absolutely revolutionary concept (NOT): that it was a mathematical improbability to expect “an expansion of government through an enormous entitlement program to drastically reduce the deficit and debt.”

Apparently that no-brainer has been recognized by an aide to the ruling Solons. Chief Medicare actuary Richard S. Foster grew a brain or got some courage, or both.

“In signing the measure last month,” writes the NYT, “President Obama said it would ‘bring down health care costs for families and businesses and governments.”

But Mr. Foster said, “Overall national health expenditures under the health reform act would increase by a total of $311 billion,” or nine-tenths of 1 percent, compared with the amounts that would otherwise be spent from 2010 to 2019.

In his report … Mr. Foster said that some provisions of the law, including cutbacks in Medicare payments to health care providers and a tax on high-cost employer-sponsored coverage, would slow the growth of health costs. But he said the savings “would be more than offset through 2019 by the higher health expenditures resulting from the coverage expansions.”

AMAZING. Why did I not think of that!? It takes an actuary to convince the country that when you cut expenses, expenses go down. And that when you steal from Peter to lavish on Paul, Paul’s expenses diminish.

Unbloody believable.

Oh, the actuary’s report also stated what I reported in another column, on August 7, 2009, where I contended that BHO was “Destroying Healthcare For The Few Uninsured.” For less than ten percent of the population, to be precise.

Mr. Foster’s report said that “34 million uninsured people will gain coverage under the law, but that 23 million people, including 5 million illegal immigrants, will still be uninsured in 2019.”

But illegals use ER facilities liberally for free. Going by statism’s logic (read lies) there has to be some savings in there somewhere.

UPDATED (Aug. 11): Via NewsMax:

“A published report saying the Obama administration knew that its healthcare proposal would increase costs instead of reducing them is “troubling,” according to a senior House Republican leader.

Administration officials from the president downward used claims that the legislation would reduce healthcare costs to get the votes of wavering members of Congress.

Department of Health and Human Services Secretary Kathleen Sebelius knew about a report from Medicare’s Office of the Actuary prior to the House’s March 22 vote, indicating the bill would increase healthcare costs, according to an April 26 report appearing in The American Spectator’s Washington Prowler blog.

The bill passed by a 219-212 margin with several self-proclaimed fiscally conservative Democrats voting in favor, believing it would reduce costs.”

UPDATED: Viva Vuvuzela?

Africa, Race, Reason, South-Africa, Sport, The West

“The Vuvuzela And World Cup: A Symbol Of The End Of Civilization”: This is interesting comment by one of Larry Auster’s readers; I’ve been urged to comment about it by one of ours. Here’s my problem with sweeping, slightly hysterical deductions about the incessant horn blowing at the Soccer World Cup as a symbol of the destruction of western civilization: As a writer who reasons rather than emotes, I’m not mad about indulging in such deductions. For one, the leap from horn-blowing to civilizational demise omits some rather crucial in-between steps such as I have been covering in my South Africa essays.

The flight into symbolism also leaves unexamined the phenomenon of British and European soccer hooliganism.

(I sincerely hope that this is what draws you to this site over others: immutable fairness—reasoning from fact and first principles, and not from symbolism. You known how to show your love.)

In any event, read Patrick H’s comment, and have at it (or at me, for that matter):

“I am wondering if you are going to comment on the inadvertent (and thereby revealing) comedy of the destruction by liberalism of the World Cup soccer tournament in South Africa.

The agent of liberal destruction is a horn. Specifically, a long plastic device called the vuvuzela. The employment by South African spectators of the vuvuzela as incessant accompaniment to the soccer matches on the pitch has–and I must insist I am not exaggerating–destroyed the experience of viewing the games almost completely. The use–constant, unrelenting–of this, ah, instrument, by thousands of fans produces a tuneless monotonous drone or hum that operates at the level of a roar (a bit like a bunch of great big kazoos might do–but without any melody). And it simply never stops. The effect on television presentations is remarkable. It sounds like the games are being played in a hive full of thousands of gigantic bees. All other sound is effectively eliminated: crowd roars come through dimly–probably because the vuvuzela-ists drop their horns to join in the collective huzzah when an occasional ball wanders near the net–but chants are gone. Singing: gone.” ….

UPDATE (June 16): As a courtesy to one of my readers I commented in passing on this topic. Larry Auster and one of his readers have decided to die on a molehill over my criticisms off this tack, framing it, grandiosely, as an “objection.”

They’d like to commandeer my blog to indulge this pettiness. Sorry.

I care not a whit as to how conservatives argue—increasingly they sound to me as irrational and emotional as liberals.

Larry’s reader claims the missive was farce; fair enough. Yet Larry wishes to continue debating the thing (on my blog) as if it were not; as though horn blowing as emblematic of a liberal/atavistic society were a serious argument.

Both refuse to plug their logical lacuna—explain European soccer hooliganism. It’s not that hard. The idea, moreover, of proceeding from the particular to the general is surely predicated on galvanizing more than one fact in support of your case. In the case of South Africa, that too is easy.

As one wag put it, “South Africa has blown it,” but I’d argue—and I’d have facts, not feelings, on my side—that it’s not necessarily the noisy horns that signify the end of civilization there and the triumph of liberal egalitarianism; it’s the piling bodies, looting of land and property, radical affirmative action (BEE), etc.