An editorial like this might cost you your job

[idrankwhat 0]

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How does a politician deal with a crisis? By deflecting blame!

I'm not sure that he was involved in his crisis at the time of the editorial. Then again he could have heard people sniffing around. But beyond that point does the GBBA apply to National Bank subsidiaries? I think that what Spitzer was referring to in his rant was the OCC's 2003-2004 activity that dealt with state laws like the Georgia Fair Lending act. Apparently in 2004 the OCC issued a ruling that state consumer protection laws don't apply to nationally chartered banks. While that may be true (and another strike against state's rights) I'm not sure that the protection would extend to the national bank's non-banking subsidiaries e.g., mortgage companies.

The reason that I posted the original message was because I hadn't stirred up much here in SC recently and this one caught my eye. Secondly, the preemption theme was still resonating from something I had read a couple of weeks ago. It was an article that referred to Daniel Troy while he was at the FDA and his use of the doctrine of preemption. Apparently his argument was that FDA approval was the gold standard. If a product received FDA approval then the manufacturer is protected from consumer protection lawsuits.
Throw in a preemptive war and you can see a theme developing.

[lawrocket 3]

And please note that the records suggest that roughly half of these foreclosures are from people who REFINANCED! Or who took out equity lines of credit. You know, people who used their home equity as an credit card for cash advances and got in over their heads.

Another note - what is becoming of these predators? CitiMortgage Home Equity WHolesale went kaput in the last week. Just one of about 250 major home lenders.

So who suffers? The borrowers. The lenders. And the governments are REALLY feeling it due to lost tax revenues.

My wife is hotter than your wife.

[lawrocket 3]

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I'm not sure that the protection would extend to the national bank's non-banking subsidiaries e.g., mortgage companies.

Congress specifically and explicitly preempted State intervention of, among other things, activities consisting of or related to extending credit and servicing loans (including letters of credit, factoring, and accepting drafts, brokering credit, performing appraisals, arranging real estate equity financing, etc... Sounds slike something a mortgage company would do.

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and another strike against state's rights

In a sense, yes. But what Congress was worred abotu was what we call the "dormant commerce clause." The "Commerce Clause" of the Constitution authorizes the feds to pass legislation affecting interstate commerce. This inplies a converse - that states may not pass laws that unduly burden interstate commerce. This doctrine has been around since the early 1800's, so it's not some newfangled thing.

What it means is that if a state passes a law that discriminates against other states (favors that state's interest over other states) then the state is, in effect, regulating beyond its borders.

The feds wanted the express preemption to prevent this. The OCC did not say that state consumer protection laws don't apply to national banks. The OCC likely said that one or more of the sections of Georgia's Fair Lending Act were preempted.

Again, Gerogia had the right to file a petition with the 11th Circuit Court of Appeals for a judicial determination.

Preemption is nothing new. Spitzer knows this. What's really frustrating is that members of the general public will believe this stuff because they do NOT know the history. What he writes is very compelling to a lay public looking for someone to blame. And it's the sort of thing that people eat up!

But pay no mind to the man behind the curtain. Of anyone of recent note, Spitzer knows that the real story is contrary to the image that he himself paints.

My wife is hotter than your wife.

[idrankwhat 0]

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Another note - what is becoming of these predators? CitiMortgage Home Equity WHolesale went kaput in the last week.

But Citi is doing just fine. As is Mozilo from Countrywide. True, he ended up forfeiting his original compensation package from the Bank of America buyout due to the public and government outcry, but he still gets his retirement benefits and deferred compensation. Not bad when you also consider that he sold $500 million worth of Countrywide shares over the last three years.
And I think one of his VP's is now running a company called "Pennymac". That business is in the business of making money off of the sub-prime mess that he helped create. Neat huh?

[piper17 1]

Sounds like the Washington Post took the article directly from this left-wing web site: http://www.democrats.com/node/15948

but that wouldn't be a surprise, now would it?

"A man can never have too much red wine, too many books, or too much ammunition"...Rudyard Kipling

[Amazon 7]

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Sounds like the Washington Post took the article directly from this left-wing web site: http://www.democrats.com/node/15948

but that wouldn't be a surprise, now would it?

And that makes a difference how???? Seems to me you cant handle the truth when you see the Justice department being used as a tool of the right wing there bubba???

The precedent has been set.. the laws are in place.. I wonder how the Democrats are going to use these new tools to go after the fascists who have been bilking the US Treasury of our nations wealth and getting rich off their friendships with this administration.

[lawrocket 3]

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Seems to me you cant handle the truth when you see the Justice department being used as a tool of the right wing there bubba???

Can't handle the truth? I POSTED THE TRUTH YESTERDAY! Who can't handle the truth? That "the truth" is right there in the books and in the legislative history? Oh, yes. I posted it. But it seems that objective evidence that counters subjective feelings is to be passed over.

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The precedent has been set

Yes. It dates back to 1824 in Gibbons v. Ogden.

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the laws are in place..

Yes. These particular ones that are the topic of the article in the original post were put on the books in 1999.

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wonder how the Democrats are going to use these new tools to go after the fascists who have been bilking the US Treasury of our nations wealth and getting rich off their friendships with this administration.

In several ways:
1) They will use existing laws to go after predators (in the same way that it was described in my post last night by the US Attorney in Sacramento.)
2) They will use their pulpit to pick scapegoats and go for that. (Bush uses terrorists. Dems will use "fascists" and "evil corporations" - except for the ones they own)
3) They will make their own friends wealthy and rich.

Repeat ad infinitum.

My wife is hotter than your wife.

[idrankwhat 0]

I'm not quite sure what your point is. The Washington Post "took the article" from Eliot Spitzer. It's an editorial from about 5 weeks ago. It's not "news" and I don't know of anyone else who is talking about it.

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Sounds like the Washington Post took the article directly from this left-wing web site: http://www.democrats.com/node/15948

but that wouldn't be a surprise, now would it?

[idrankwhat 0]

I'm not disagreeing with your argument because
a) I'm not that vested in this issue
and
b) I haven't researched it very much because of "a"

But, there seems to be something missing from the discussion. I honestly don't know by which route you traced it back to 1824 but I'll certainly give a lawyer the benefit of the doubt for some link. Where I'm lost is in Spitzer's numerous references, over a couple of editorials, to joining with "49 other Attorney's General" to combat predatory lending issues. He gives the impression that he and the AG's from all states were having some luck in combating bad lending practices but were stymied, beginning in 2003 by the feds. What I don't know, is what specific concerted effort was extended through these 50 AG's. You may not want to do it but I'm willing to give him a certain benefit of the doubt. He's successfully argued some high profile, big money cases against a number of the big boys. I don't think he was trying to wag the dog. If his editorials came out a few weeks later I might have a different opinion.

If you're interested, here's a similar editorial that came out a couple of days later. It's mentions a couple of specific cases. I'm really not that interested but since I started the thread it would be rude to abandon it
http://www.startribune.com/opinion/commentary/15679507.html

[lawrocket 3]

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I honestly don't know by which route you traced it back to 1824 but I'll certainly give a lawyer the benefit of the doubt for some link.

That was th efirst Supreme Court case to elicit the "dormant commerce clause" doctrine, where matters of state regulation cannot exceed the borders of the state. Also, explicit federal pre-emption has been allowed since 1787.

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He gives the impression that he and the AG's from all states were having some luck in combating bad lending practices but were stymied, beginning in 2003 by the feds.

This may be true. I provided the reasons why they would have been stymied - at least initially. I provided the legal background for why they were stymied, and that it was not due to the caprice of the Bush admin, but because his administration was enforcing a law.

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What I don't know, is what specific concerted effort was extended through these 50 AG's.

He said individually and in concert. Individually? That may have been preempted. In concert? Well, that's the job of the Feds, now isn't it? The feds control "interstate commerce" - not the several states. That's the "dormant commerce clause" issue, too. The law specifically put in that state interference was not to be tolerated.

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may not want to do it but I'm willing to give him a certain benefit of the doubt.

I'm not. He's governor. And knowing what I know about it (my job specifically involves some of this stuff) is good cause to call bullshit. He left out the important stuff. He is to be an advocate for his state. That's his job. His is not to be a neutral.

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e's successfully argued some high profile, big money cases against a number of the big boys.

Yes. He's used to being top dog. He gives the smackdowns, and was never the guy to have his ears pinned back. But it is BECAUSE of his background and experience that I am pissed off. He is disingenuous when he does not reveal why he was stymied - only that he was stymied.

From the link:

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"For example, in 1999 my office sued Delta Funding Corp., a large mortgage lender, for engaging in a wide range of predatory practices. In 2002, attorneys general and banking regulators from all 50 states entered into a settlement with Household International, the parent company of Household Finance, that resulted in restitution of $484 million to the victims of the company's predatory lending practices. In 2006, attorneys general and banking regulators of 49 states entered into a $325 million settlement with Ameriquest Mortgage Co. for engaging in a host of predatory lending practices."

Hmmm. Doesn't sound like he was stymied.

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The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government's actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules.

Indeed! Would you want power stripped? As a matter of political leaning, I agree with Spitzer. But despite my political beliefs, he's bullshitting.

Personally, I'd like to see mortgage brokers fall subject to state laws for predatory lending - even if the loan is made by a national bank or its subsidiary. But, the rules are what they are - and apparently no court has found this interpretation to be faulty. (this was the case of the Georgia situation).

Here's the way I see it: if he doesn't provide any explanations as to why, then he has no good one. He uses conclusory statements and rhetoric and circular logic.

He says, "They used a section of the National Bank Act." Well, what section? What does that section say? Is it still good law? What was wrong about it? ]



I call it, from politician speak, the "Dave Doctrine." Remember the movie Dave where he wen tup and announced how everybody should have a job? No details about how it would be done, but boy, what a nice sounding thing to do for people!

Though not as much as nerdgirl, I consider myself a wonk.

My wife is hotter than your wife.

[georgerussia 0]

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And please note that the records suggest that roughly half of these foreclosures are from people who REFINANCED! Or who took out equity lines of credit. You know, people who used their home equity as an credit card for cash advances and got in over their heads.

Yes. And most, if not all of them, KNEW they would not be qualified for a reasonable loan anyway, since they check everything. I knew several people who'd faked their income - including paystubs - to get a loan in attempt to get a home for $700K, sell it in three years for $1.2M and retire (that's kind of crap some RE agents told their eager clients).

Well, then the burble is bursted, usually everyone has a problem.

* Don't pray for me if you wanna help - just send me a check. *

[idrankwhat 0]

Nice post, thanks. I agree with your point about his lack of citation. That's the "something missing" part I was referring to. I would be interested to see which "new rules" were promulgated in 2003. And you're probably correct that the Administration was enforcing a law but I still do wonder how valid is Spitzer's argument that this was the first time in 140 years that the OCC was used, not as a check on the banks, but on the customers. This Administration has had some pretty novel views on law interpretation from war powers to executive privilege to torture to whether or not the VP is part of the executive branch etc. That's why I'm keeping my guard up on this one. Also, this is one of the other preemption issues that was rattling around in the back of my mind while dealing with this one. If you get a chance, let me know what you think.

http://www.law.com/jsp/article.jsp?id=1178183076770

[idrankwhat 0]

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Yes. And most, if not all of them, KNEW they would not be qualified for a reasonable loan anyway, since they check everything. I knew several people who'd faked their income - including paystubs - to get a loan in attempt to get a home for $700K, sell it in three years for $1.2M and retire (that's kind of crap some RE agents told their eager clients).

Well, then the burble is bursted, usually everyone has a problem.

I don't want to say that there's no blame to be placed on the customer but I can see how many of them may have been coerced by the lenders into thinking that the borrowers were making a good decision. The way the market HAD been for the previous few years gave them many success stories to use in the sale. Also the hard sell tactics of the lenders was ridiculous. If you were a first time buyer you'd have no idea that the offers that were out there were stupidly scary.

I contracted the home that we built in 2003 so I was involved in every aspect of the project. I had settled on the builder/framer that I wanted because of his experience with post and beam. The first bank I went to did a thorough review on the project and our finances. I was very happy with the service. Then, at the last minute my lender told me he couldn't approve my framer and that the deal was off if I used him, which killed the deal. (Apparently he had some bad history with some subs. I found out why later. The firm, controlled, consistent teaching method I used on my Rottie came in handy. Works on people too. Although a shock collar would have made me happier.....I digress).

So at the last minute I ended up checking out Countrywide. Approval was TOO easy. I had a whole briefcase full of material to lay on the lender but she basically grabbed our credit scores and approved us. To shorten the story, she didn't even go through my project materials for almost a month, about two days prior to closing. At closing there was a $1500 dollar discrepancy that neither I nor my closing agent could figure out. The answer that I got from Countrywide was "It's right. It came out of the computer". It took me half a day of plowing through all of the numbers to finally figure out what had happened so I called to tell THEM what their numbers meant. After that most of it went well because I was dealing with someone besides Countrywide's front line but even then I ran into problems of the left hand of the company not knowing what the right hand was doing, as well as the infuriating "there's no box to check for that so it can't be done". In order to not get hosed (any more than I did) I had to be extremely involved and know what the hell I was talking about. I can't imagine how things would have turned out or how expensive it would have been if I hadn't been well prepared and demanding that they provide the services they agreed upon. I can easily see how someone who just trusted them at their word or, worse yet, had trouble with the language could have been seriously screwed (more than I was).

Holy crap I'm mad at them all over again. Damn, what was the question?

[georgerussia 0]

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I don't want to say that there's no blame to be placed on the customer but I can see how many of them may have been coerced by the lenders into thinking that the borrowers were making a good decision.

Probably it was different in other states, but I have not seen or known anyone who was forced to buy a property or get a loan. Obviously it looked good - every bubble always looked good, otherwise it woundn't be there - but the decision to jump into the bubble is still made personally by everyone. And it's not the lender's obligation to check whether the borrower is making a good decision, or not.

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The way the market HAD been for the previous few years gave them many success stories to use in the sale. Also the hard sell tactics of the lenders was ridiculous. If you were a first time buyer you'd have no idea that the offers that were out there were stupidly scary.

I was a first time buyer (and still is), and I heard all the same stories - mostly from real estate agents. I've seen what happens, and based my decision NOT to buy exactly on what I saw. Found it strange that the people got just hit by .com bubble burst, but still jump into another bubble, which was housing. The desire to become rich by doing nothing seem to be too strong.

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The first bank I went to did a thorough review on the project and our finances. I was very happy with the service. Then, at the last minute my lender told me he couldn't approve my framer and that the deal was off if I used him, which killed the deal.
...
So at the last minute I ended up checking out Countrywide. Approval was TOO easy. I had a whole briefcase full of material to lay on the lender but she basically grabbed our credit scores and approved us.

So basically you KNEW there were problems with them, but still decided to "go ahead" using a lender who gives out less reliable loans, and charges more for them. Was it the lender problem? No. You could get to the mob, and they'd lend you money without even looking on your credit score.

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Holy crap I'm mad at them all over again. Damn, what was the question?

You already answered it. There are good lenders who scrutinize every potential borrower, and give only to approved - which helps them to keep the costs low. There are, however, other lenders, who do not check anything, and lend to everyone. It should be common sense to understand that the second lender will cost you more. Sometime much more. So what's the problem? You decided to deal with crappy lender because one of subs had credit problems. So you've got a crappy deal, and it was expected. Don't deal with crappy lenders.

* Don't pray for me if you wanna help - just send me a check. *

[idrankwhat 0]

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Probably it was different in other states, but I have not seen or known anyone who was forced to buy a property or get a loan. Obviously it looked good - every bubble always looked good, otherwise it woundn't be there - but the decision to jump into the bubble is still made personally by everyone. And it's not the lender's obligation to check whether the borrower is making a good decision, or not.

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No, but it is the lenders responsibility to not misrepresent the loan, hide fees, not seek out people who they know can't pay for the product, and not to coerce appraisers to give you a desired appraisal figure.
That's minor predatory lending in my book. The real predatory stuff is the payday loan issue. I remember a time when loan sharking was illegal.

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So basically you KNEW there were problems with them, but still decided to "go ahead" using a lender who gives out less reliable loans, and charges more for them.

At the time I didn't know they were less than reliable. And I assumed that part of the reason that the qualification went so easily was the amount of equity and preparation we already had in the project. They were the biggest lender in the country and loved to show off their consumer awards. And I didn't pay more for the loan, I paid less. I just ended up getting what I paid for.

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You already answered it. There are good lenders who scrutinize every potential borrower, and give only to approved - which helps them to keep the costs low. There are, however, other lenders, who do not check anything, and lend to everyone. It should be common sense to understand that the second lender will cost you more. Sometime much more. So what's the problem? You decided to deal with crappy lender because one of subs had credit problems. So you've got a crappy deal, and it was expected. Don't deal with crappy lenders.

Actually I got a good deal from what turned out to be a crappy lender. The loan wasn't crappy but the service was. I had no idea that such a successful company could have such ineptitude on the front lines. After I quit dealing with the bone headed key puncher that worked on the front line and started dealing with their computers, I've had no problem. I even saved money, but it cost me in hair pulling. The $1500 discrepancy was money that I owed but no one could tell me where it came from. That was my problem. I was dealing with people who could do little more than fill out a database form. Which brings me back to my point. When you have what is supposedly a reputable lender telling you everything looks great and makes things easy for you then you feel good about them. But after you've signed on the dotted line and things go south you have to resort to your "A" game. I was lucky. I was prepared and determined. Others who only listened to the smiling, friendly paper pushers were led into the corral and some got the stun gun.
And I don't know about you, but the week after I moved in we started getting the pre-approved equity loan offers and bazillion telephone calls offering us $300K for $700/month. The upside is that burning those offers significantly cut down on my heating bill.

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[georgerussia 0]

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No, but it is the lenders responsibility to not misrepresent the loan

It's very hard to define "mispresentation". Are you talking about oral promises or written commitment the lender didn't follow?

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hide fees,

They didn't. You said it yourself - at closing all the fees were there, on the paper.

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not seek out people who they know can't pay for the product,

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I do not know any law which would forbid lending money to those who _might_ not be able to pay it back. Anyone might not be able to pay it back.

I also suspect that the lender did not _know_ it - at least nobody is now claiming that they came to the lender saying they are deep in debt, have no stable income and still would get a loan. My understanding is that there are two groups of lenders - those who allow you to lie in your application, and those who do not. And it's up to you who to choose.

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and not to coerce appraisers to give you a desired appraisal figure.

Why do you think so? "Market value" is basically the price people are paying for the property on the market. And yes, the property facing a freeway could be honestly appraised to 800K in 2005, since someone has paid 800K for it. "Fair market value" is slightly different, but it still follows the market trend.

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At the time I didn't know they were less than reliable. And I assumed that part of the reason that the qualification went so easily was the amount of equity and preparation we already had in the project. They were the biggest lender in the country and loved to show off their consumer awards. And I didn't pay more for the loan, I paid less. I just ended up getting what I paid for.

So you were smart, and you got a good deal. Someone wasn't smart, and they got a worse deal. Happens everywhere anytime. I see no problems here.

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Actually I got a good deal from what turned out to be a crappy lender.

My understanding is that you got a crappy deal, but the general terms were good.

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When you have what is supposedly a reputable lender telling you everything looks great and makes things easy for you then you feel good about them. But after you've signed on the dotted line and things go south you have to resort to your "A" game. I was lucky. I was prepared and determined. Others who only listened to the smiling, friendly paper pushers were led into the corral and some got the stun gun.

Well, it's a life, and there are rules. People need to start reading what they are signing, and ask questions if something doesn't look good. The mortgage transaction is probably the largest transaction most people do in their life, and they still spend less time learning about it than they'd spend choosing a camera.

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And I don't know about you, but the week after I moved in we started getting the pre-approved equity loan offers and bazillion telephone calls offering us $300K for $700/month.

So? I'm getting emails every week telling me that I've won $1M in some lottery I never heard about, or asking me to play in some online casinos promising $5K bonus. Unfortunately emails cannot be used for heating :(

* Don't pray for me if you wanna help - just send me a check. *

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