Friday, February 27, 2009

There Has To Be A Job In This

Hi, hi, hi. I'm an American expat in Cambridge, UK raising two children, Liberty and Owain. In some ways more interestingly, in 1996 I did a trial in DC District Court - I had Judge Roberts - called Williams v. First Government and that was the first time a federal court had ruled that local consumer protection legislation applied to mortgage loans. And the loan we litigated was the original sub-prime mortgage, a predatory loan. That loan had a surface compliance with every HUD-1, TILA, and RESPA obligation, but had margins and origins that made it "unconscionable".

In the pre-trial hearing, the lawyer for First Government argued that I should not be able to use the word "predatory" during the trial. I put my expert on the stand to say that he felt more appropriate words were "loan shark" and "usury". First Government backed off and the term predatory lending entered the lexicon of the trial, and, I dare say, some housing-related activist speech afterwards.

So now the U.S. Government has a stake in the banks, and the banks own these mortgages, in fact they are foreclosing on these mortgages and my question is, has anyone done any sort of analysis to determine whether or not these foreclosures are based on facts similar to Williams. Because whether or not the mortgagee is willing to press a claim or a lawsuit, we owe it to ourselves (since we are spending a lot of tax money on this) to only foreclose on the ones that are not unconscionable or usurious. (And ones that don't have TILA and RESPA obligations)

I think that since the financial products created from amalgamations of subprime mortgages are now owned, effectively, by the U.S. government, the U.S. government should know what happened and at least investigate, maybe on a mortgage by mortgage basis. I have bounced this idea off people and they have told me that the mortgage products, the collateralized financial products, are bunched up, chopped and diced and divided amongst banks and portfolios in a way that makes such review impossible. My responses are twofold: (1) you can reverse engineer anything - there is enough of a papertrial in modern banking - we reverse engineered all the transactions in U.S. v. ACM (tax court) (2) even if you can't ascribe blame or extract a financial penalty (although I think you can by reverse engineering) - going through these mortgages will have the effect of determining what percentage of the market is abusive and fraudulent. People are not going to stop buying houses, and this may be a good time for mortgage reform.

So in short, can someone please tell me if any measure of US government spending is going to answer these questions, because i would like to offer my services, especially if it pays enough to get me and my husband and children back to the United States, specifically, Washington. Washington was the place I felt like I belonged. I am now in a provincial outlying village in a small European country and I am dying to get out. Too big for a theme park, too small for a country, says my friend Tina who lived in Berlin for five years.

It's time to come home.

Mr. Williams, by the way, had eleven children and was illiterate, the son of a sharecropper in Georgia. His wife was the only one who could read. They got their house with federal assistance and paid it off, but after his wife died in the cross-fire of a crack dealer fight in 1991, in their neighborhood, he fell behind in paying the property tax. He tried to borrow the $1400 tax bill from banks but he was only given offers to re-mortgage the property. By the time the predatory lenders were done with him, he was about to be foreclosed on a $63,000 mortgage on his property. He only ever saw $4,000 of that money. (Amounts are approximate: the trial was thirteen years ago, but they are about right) The thing is, I spoke to so many other First Government mortgagees and I got a real sense that this kind of economic pirateering through disadvantaged neighborhoods was not uncommon. I don't think every mortgage violates the consumer protection law as set forth in First GOvernment, I just think some of them might, and it is worth knowing.