November 9, 2007

Ted Strickland and Marc Dann Unleash the Subpoenas on the Subprime Mortgage Lending Industry

Marc Dann has let the subpoenas fly. Reuters reports:

Ohio Attorney General Marc Dann said Thursday that more than a dozen civil investigative demand subpoenas will be sent shortly to companies in the subprime mortgage industry.

He said information from the subpoenas will be used to explore possible anti-trust and civil rights law violations, as well as violations of Ohio’s consumer sales practices act. He did not identify the recipients of the subpoenas.

The action followed the lack of support by loan servicers in the state for Gov. Ted Strickland’s compact, which would require them to step up their efforts to help borrowers avoid foreclosure. Dann said no servicer agreed to sign the compact, which was unveiled last month.

Imagine that. Party A creates a legal document for Party B, expecting that Party B will accept it with absolutely no changes. Party B balks. At this point, you’d expect people of good faith to begin negotiating something mutually agreeable.

“Somehow,” Reuters fails to mention, as the Cleveland Plain Dealer did, that the mortgage lenders actually responded with a plan of their own. Although I don’t know what that plan is, the Ohio Mortgage Bankers Association’s (OMBA’s) web site has a fairly constructive statement, apparently issued shortly before the subpoenas began flying, on its home page, acknowledging progress and hoping that a “summit” can help “towards our mutual goal of helping Ohioans preserve homeownership.”

It’s too bad for the OMBA, and Ohio, that Strickland and Dann, in demanding all or nothing, have shown that they aren’t interested in negotiation. What they appear to want instead is intimidation, humiliation, and, ultimately, capitulation.

The governor’s 24-point Compact to Help Ohioans Preserve Homeownership” begins about 25% of the way through this gubernatorial press release. Let’s take a look at some of what Strickland and Dann demanded (bolds are mine):

1.1 Servicers pledge to prepare the requisite staffing and resources necessary and to engage foreclosure counsel as necessary to perform large-scale modifications of residential, owner-occupant subprime loans …..

2.1.2 For loans entered into with no or low documentation of a borrower’s annual income, assets and liabilities, Servicers agree to make reasonable efforts to obtain appropriate documentation verifying the same and utilize that information in attempting loan modification or other workout in accordance with Section 4.1.2 below.

3.1 Servicers pledge to modify loan terms to the greatest extent possible so as to provide permanent, affordable relief to Ohio borrowers, doing so in accordance with their fiduciary, legal and contractual obligations and in accordance with prudent mortgage lending and servicing practices.

3.1.2 For subprime “no-documentation” or “low-documentation” and stated income loans, Servicers agree to modify the borrower’s loan so as to make regular monthly payments economically feasible, including but not limited to converting the loan’s interest rate into an affordable fixed rate.

3.1.4 For loans consummated as described in Sections 3.1.1, .3.1.2, and 3.1.3 above, Servicers agree to use their best efforts in removing any negative reports on the borrower’s credit report related to default of such loans and to assist borrowers in improving their credit scores in appropriate cases where loan modification has resulted in changing a delinquent loan to a performing loan.

Section IV, among other things, requires servicers “to document all interaction with borrowers and efforts made to workout mortgage loans,” and then to certify the accuracy of the details of those interactions.

Section V imposes very detailed and clearly onerous reporting requirements.

The compact was broad-brush harassment at the highest level. Lenders were “asked” to redo their deals on a massive scale, regardless of whether or not the original deals were done on a good-faith basis totally by the book, and to pay for the costs of redoing them.

Let’s be clear: The Strickland-Dann Compact was, and still is, an attempt to legislate, under threat of fishing-expedition subpoenas paired with frivolous antitrust and other actions, from the Executive Branch. It has been clear that the foreclosure situation has been worsening in many parts of Ohio for some time. If all of the Compact provisions are such great ideas, the governor should have gone to the General Assembly to get appropriate laws passed, either as emergency or temporary legislation. They were in session for quite a while earlier this year, if I recall correctly.

If you think Marc Dann is done, you could not be more wrong. He apparently has visions dancing in his head of former New York Attorney General Eliot Spitzer’s march to the governor’s mansion in the Empire State on his shakedown of the mutual fund business. Dann’s Eliot-like encore appears to be tearing apart the mortgage industry from top to bottom:

In the anti-trust area, Dann said he planned to take his probe beyond frontline lenders to parties that funded or profited from subprime mortgage schemes.

“We’re taking steps to determine whether the groups of either warehouse lenders or the investment banks that securitized many of these subprime mortgages were involved in any kind of concerted action,” Dann said.

….. Dann said the number of Ohio subpoenas could mushroom to the hundreds over the next several years.

In July, the attorney general said he would be looking at lenders, investment banks, lawyers, accountants and Wall Street rating agencies as the state attempts to root out problems that resulted in a slew of mortgage foreclosures in Ohio.

This post from almost a year ago should make it very clear that I have little patience with predatory lending, and that I’m more than a little upset with the damage it has done in Cleveland and other part of Northeast Ohio. Problem is, the governor and attorney general seem to think that all subprime lending is predatory, and vice versa. Nothing could be further from the truth.

It would also help if more borrowers had a modicum of financial sense. That they don’t can be mostly blamed on lousy public schools Strickland isn’t interested in fixing until, oh, 2009 or so.

Instead of harassing every subprime lender, the attorney general should be finding and criminally prosecuting the companies and loan officers who knowingly did genuinely predatory deals.

But noooooo. Acting in concert with New York Attorney General Cuomo, who has been deservedly ripped into by Jim Cramer during the past few days, Strickland and Dann may succeed in restricting the availability of credit throughout the country to the point where the slowed-down housing market will stay slow, and consumers in general will have less to spend. This has the potential to put the brakes on the currently pretty-good economy, and could even trigger a recession.

Someone should ask Ted Strickland and Marc Dann if that’s what they want.

Couldn’t Help But Notice (110907)

I can retire from blogging now. I’ve been linked to by Lileks.

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But I will carry on, because watching the globaloney blowup is going to be so much fun that I wouldn’t think of being on the sidelines when it happens.

The latest gems: First at the BBC, John Feeney gets to the true enviro agenda, which is radical depopulation –

The growth in human population and rising consumption have exceeded the planet’s ability to support us, argues John Feeney. In this week’s Green Room, he says it is time to ring the alarm bells and take radical action in order to avert unspeakable consequences.

….. We’ve outgrown the planet and need radical action to avert unspeakable consequences. This – by a huge margin – has become humanity’s greatest challenge.

….. We are now in “overshoot”; our numbers and levels of consumption having exceeded the Earth’s capacity to sustain us for the long-term.

We must end world population growth, then reduce population size. That means lowering population numbers in industrialised as well as developing nations.

Notice in the bolds above that Feeney is entirely in the present tense. We’ve done the dirty deed already, and we must atone. So will he step up and voluntarily die when some World Authority figures out how many volunteers are needed?

Second, we have the ongoing spectacle of China giving the rest of the world the environmental finger:

China will reject any agreement that calls for binding limits on carbon dioxide emissions that will replace the Kyoto Protocol, an EU official said Wednesday.

I don’t blame the Chinese — or India, which if I recall correctly is #3 and gaining rapidly — for telling the world to buzz off. Both countries have hundreds of millions in poverty, and, finally, lifting most of them out of it in the next 20 or so years is in the realm of possibility. Enviros could care less, and as a matter of fact have been hostile to economy-improving developments worldwide.

In case you missed it, China became the world’s largest emitter this year. US emissions are leveling off, and in 2006 actually declined. Watch enviros treat China with kid gloves while demanding that the rest of the industrial world radically reduce living standards.

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Howler of the morning

Democratic White House frontrunner Hillary Clinton on Monday pledged that as president she would negotiate a successor treaty to the Kyoto protocol on climate change by 2010 – two years before Kyoto expires.

“This [tackling global warming] is too important,” she said. “We cannot afford to wait two more years.”

In contrast to President George W. Bush’s administration, which is pushing for non-binding international standards on carbon emissions reductions, Ms Clinton said she would negotiate mandatory targets that would bind all the world’s polluters – including China and India.

Mrs. Clinton seems to forget that Kyoto was never ratified by the Senate, and never will be ratified by the Senate. A “protocol” doesn’t become a “treaty” until that occurs. In fact, a Senate resolution rejected it 95-0, and the treaty was never brought up for a formal vote that would have meant certain defeat.

Earth to Hillary: There’s nothing to “succeed.”

Also note that Mrs. Clinton and her two principal Democratic rivals would be perfectly comfortable with hundreds of millions of Indians and Chinese remaining mired in poverty. Some “party of compassion.”

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Huckabee’s not the only one to wonder about on this:

An author and investigative journalist says Republican presidential candidate Mike Huckabee’s pledge for strong border enforcement doesn’t match his record on the issue when he was governor of Arkansas.

Huckabee continues to be dogged by a lingering controversy over the role he played in establishing a Mexican consulate office in Little Rock that was financed by Arkansas taxpayers and local businesses.

The fact is, there are at least 48 Mexican consulates (scroll down to middle of link) in the US. No other country has more than a dozen (correction: Canada has 19), and those countries with multiple locations (e.g. Canada, Japan, UK) can justify their presence because of international trade.

Consulates, schmonsulates — There is no legitimate foreign policy or trade-related reason for the Mexican government to have established so many locations. These are nothing more than consciously established illegal-immigrant assistance centers. At least 75% of them should be shut down.
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You’ve got to admire how “clever” the New York Times is at burying the lede and/or the story itself.

Here’s the key paragraph from the first example:

As a consequence, the group from the Centers for Disease Control and Prevention and the National Cancer Institute reports, there were more than 100,000 fewer deaths among the overweight in 2004, the most recent year for which data were available, than would have expected if those people had been of normal weight.

The Old Grey Lady’s “Please don’t read this” Headline: “Causes of Death Are Linked to a Person’s Weight”

Here’s the opening paragraph from the second example, found on Page A19 in the November 7 print edition:

American forces have routed Al Qaeda in Mesopotamia, the Iraqi militant network, from every neighborhood of Baghdad, a top American general said today, allowing American troops involved in the “surge” to depart as planned.

Headline: “Militant Group Is Out of Baghdad, U.S. Says”

Unfortunately, the “cleverness” and moonbat-driven story placements demonstrated in these two examples both go a long way towards explaining why the Times’s business is suffering mightily, and deservedly. Its only consolation is that it has plenty of company.

Also: Major kudos to our troops and their Iraqi counterparts on what they have just accomplished. Thankfully, the news isn’t buried, despite the Times’s attempt to do just that.

Positivity: Writing helped Dozier overcome Iraq injuries

Filed under: Positivity — Tom @ 6:00 am

Following up on two Positivity posts from last year (here and here):

Friday, November 02, 2007

CBS correspondent Kimberly Dozier became the story she was in Iraq to report on when she was critically wounded in a car bombing in Baghdad. Two of her CBS colleagues, cameraman Paul Douglas and sound man James Brolan, were killed in the incident, along with the Army captain and Iraqi interpreter they were following.

When Dozier regained consciousness after the blast on May 29 of last year, she had more to deal with than her painful and massive injuries. “I was just finding out that Paul Douglas and James Brolan — my colleagues, my friends — had been killed,” she says. “I was dealing with the guilt that I had survived and they hadn’t.”

Dozier suffered multiple trauma injuries, including broken bones in both legs, severe burns, shattered ear drums and shrapnel injuries. Later complications included excessive bone growth at fracture sites that required more surgery and acinetobacter, a drug-resistant bacterial infection that is becoming common among wounded troops recovering in military hospitals.

The recovery process took nine months. In February, after a final round of surgery, she went back to work. “Many people have not caught up to my recovery,” she says. “I still get get-well cards. I’m probably going to have to run a marathon to show people I’m OK now.” …..

Go here for the rest of the story.