Posts Tagged ‘mortgages’

The “sovereign citizen” cult

A big source of frivolous litigation these days, the “sovereign citizen” cult originated on the political right but has now spread more widely [Lorelei Laird, ABA Journal]:

When involved in any legal matter, from pet licensing to serious criminal charges, sovereigns are known for filing legal-sounding gibberish, usually pro se, learned from other sovereigns who sell lessons in “law” online. Frequently, they cite the Uniform Commercial Code, maritime law and the Bible.

They’re also known for the sheer volume of their filings, which can double the size of a normal docket. …

Some sovereigns hold trials in their own “common-law courts,” convicting public officials in absentia and sentencing them to death for “treason.” …Sovereigns sometimes say they are subject only to “God’s law” or to “common law,” meaning the U.S. legal system as they believe it existed before the conspiracy. They may declare themselves independent nations, join fictional American Indian tribes or attempt to create a replacement government within the sovereign community.

Don’t assume that public officials and public employees are the only ones swept in:

The Atta family locked up their Temecula, Calif., home and went on vacation in 2012. While they were gone, Victor Cheng moved in.

Cheng had owned the home before the Attas, but he lost it in foreclosure. Nonetheless, he filed a fraudulent deed with the county recorder’s office, transferred the utilities into his name and even tried to evict the Attas after their return. During his prosecution for burglary, trespassing and filing a false document, he insisted that he was not the person being prosecuted because the indictment spelled his name in all capital letters.

Full story here.

Maryland roundup

  • Reminder: SB 353, which would ban bringing of knives and other weapons onto private school property whatever the school’s wishes, up for hearing at 1 p.m. Wed. Feb. 26 [text, Senate, related Virginia] With Ninth Circuit’s Peruta decision, Maryland now one of only six holdout states to resist any recognition of gun carry rights [David Kopel]
  • Slew of labor proposals moving through Annapolis would require employers to offer paid sick leave, push unionization on community college employees, and require employers to pay interns’ transportation costs. Study finds boosting state’s minimum wage would cost jobs [WaPo]
  • Supremely irresponsible: state already hobbled by nation’s slowest foreclosure process, but NAACP, Casa de Maryland and Legislative Black Caucus demand six-month foreclosure moratorium on top of that [Washington Post; earlier on Maryland foreclosure law here, here (couple spends five years in million-dollar home without making mortgage payment), here, etc.]
  • Review of recent developments in asbestos litigation in the state [Lisa Rickard, Chamber Institute for Legal Reform]
  • Goodbye to another Free State tradition? Senate votes ban on sale of grain alcohol, with urging from Johns Hopkins Bloomberg nanny crew [Washington Post]
  • Just say no to the Maryland Small Business Development Financing Authority [Mark Newgent, Baltimore Sun]
  • Sen. Zirkin “litigates dog-bite cases on behalf of plaintiffs” and is player on dog bite bill [Insurance Journal]

Banking and finance roundup

  • Presumed-reliance (“fraud on the market”) theories, which SCOTUS is likely to reconsider in Halliburton, aren’t just confined to securities litigation, but crop up in various other areas of litigation including third-party payer drug suits [Beck, Drug and Device Law; more background]
  • Why restrict alienability?, pt. CLXXI: Neil Sobol, “Protecting Consumers from Zombie-Debt Collectors” [NMLR/SSRN]
  • Will Congress step in to curtail fad for eminent domain municipal seizure of mortgages? [Kevin Funnell, earlier here and here]
  • More commentary on J.P. Morgan settlement [Daniel Fisher, Michael Greve, earlier here, here, and here]
  • Judge Jed Rakoff: Why have no high level execs been prosecuted over financial crisis? [Columbia Law School Blue Sky Blog]
  • Treasury Department’s Financial Stability Oversight Council (FSOC) turns its sights to investment advisers. The logic being…? [Louise Bennetts, Cato/PJ Media]
  • Property-casualty insurer association challenges new HUD disparate-impact rules [Cook County Record]

“We wouldn’t file a complaint against someone who doesn’t have liability”

A group called the National Fair Housing Alliance has taken the lead in levying sensational bias charges against mortgage lenders, claiming that neglect of REO (real-estate-owned) properties following foreclosure has followed racially discriminatory patterns. It helped negotiate the extraction of $42 million from Wells Fargo, and is pursuing tens of millions in claims against Bank of America and other lenders. NFHA’s claims have routinely been given unskeptical circulation in the press, but now an investigation by Kate Berry and Jeff Horwitz in the American Banker is bringing overdue scrutiny:

The group has disclosed addresses for only a fraction of the properties it alleges the banks have neglected, but a review of those it has released indicates that NFHA regularly misidentified the institution legally responsible for maintaining specific homes. In some cases, it conflated the banks responsible for maintaining properties with those that were simply serving as trustees for mortgage-bond investors. In others, it faulted banks for damage that occurred before they took possession of properties.

Not in dispute is the leverage the NFHA has gained in its dealings with banks from its close ties to supporters in the federal government. Unusual among Washington agencies, the Department of Housing and Urban Development both funds housing discrimination investigations by nonprofits, including by the NFHA, and provides the venue for them to negotiate their claims.

Grants from HUD and Fannie Mae helped get the NFHA and its leader, Shanna Smith, into the profitable business of investigations in the first place. Banks complain without success about Smith’s practice of demanding a deal while withholding the actual identities and addresses of the properties said to be suffering from bank neglect. Now the HUD-brokered Wells Fargo settlement has paid off richly with $30 million+ for the NFHA and its affiliates, the better with which to stir up more complaints. And watch the revolving door spin, amid few qualms arising from conflicts of interest: “Sara Pratt, the HUD official responsible for investigating and resolving the NFHA’s complaints, and who oversaw its settlement with Wells Fargo, is a former NFHA staffer and consultant.” (cross-posted at Cato at Liberty).

Banking and finance roundup

  • J.P. Morgan and the Dodd-Frank system: “With Wall Street’s capable assistance, government has managed to institutionalize and monetize the perp walk.” [Michael Greve, related from Greve on the self-financing regulatory state]
  • Harvard needs to worry about being seen as endorsing its affiliated Shareholder Rights Project [Richard Painter]
  • Under regulatory pressure, J.P. Morgan “looking to pull back from lending to politically incorrect operations like pawn shops, payday lenders, check cashers” [Seeking Alpha]
  • Rare securities class action goes to trial against Household lending firm, HSBC; $2.46 billion judgment [Reuters]
  • Car dealers only thought they were winning a Dodd-Frank exemption from CFPB. Surprise! [Carter Dougherty/Bloomberg, Funnell]
  • “Memo to the Swiss: Capping CEO Pay is not an Intelligent Way of dealing with Income Inequality” [Bainbridge]
  • American Bankers Association vs. blogger who compiled online list of banks’ routing numbers [Popehat]

Banking and finance roundup

  • “Dodd-Frank and The Regulatory Burden on Smaller Banks” [Todd Zywicki]
  • Side-stepping Morrison: way found for foreign-cubed claims to get into federal court? [D&O Diary]
  • “Alice in Wonderland Has Nothing on Section 518 of the New York General Business Law” [Eugene Volokh, swipe fees]
  • “Financial Reform in 12 Minutes” [John Cochrane]
  • Why the state-owned Bank of North Dakota isn’t a model for much of anything [Mark Calabria, New York Times “Room for Debate”]
  • Regulated lenders have many reasons to watch SCOTUS’s upcoming Mount Holly case on housing disparate impact [Kevin Funnell]
  • Cert petition: “Time to undo fraud-on-the-market presumption in securities class actions?” [Alison Frankel]

Maryland roundup

  • You might as well live: estate and inheritance tax make it highly inadvisable to die as a Maryland resident [TaxProf]
  • “Foreclosures: The Chickens Come Home to Roost” [Calvert Institute, earlier]
  • Courts task force created earlier this year will study costly and open-ended Civil Gideon proposals [courts]
  • For your own good: state’s commissioner of financial regulation goes after banks that service payday lenders [Funnell]
  • Governor candidates angle for union support, bids include “greater use of collective bargaining agreements on state construction projects” [WaPo]
  • Really, it won’t kill you to respect people’s consciences on Frederick County boards and commissions [Bethany Rodgers, Frederick News Post on Pledge of Allegiance controversy, update, Ken at Popehat (“Freedom of conscience is like the good couch in the living room; it’s there to be had, not to be used.”), Gene Healy background] About time: city may ease restrictions on bed and breakfasts [Jen Bondeson, Frederick News Post]
  • Only a handful of states join Maryland in policy of unionizing home child carers [Go Local Providence, more]

Banking and finance roundup

  • “You can’t prove that favoritism influenced FDIC” in going easy on brass at Chicago bank [Kevin Funnell]
  • Securities and Exchange Commission won’t give up bid for more power in stale cases despite 9-0 SCOTUS loss [my new Cato Institute]
  • Is JP Morgan paying an enforcement price for Dimon’s outspoken criticism of regulators? [Prof. Bainbridge; WSJ (reporting claims that “it took Mr. Dimon too long to shed a combative stance with regulators… In April the bank’s two top regulators told Mr. Dimon and his board that they had lost trust in management.”)] More on Standard & Poor’s claims that it was targeted for retaliation by federal government [Peter Henning, NYT DealBook, earlier]
  • Judge rules against law passed by Chicago on bank-owned vacant buildings [Chicago Real Estate Daily]
  • Post-merger derivative claims: “Delaware refuses to feed the sharks” [Bainbridge]
  • Payday lending fight pits New York regulator against some Indian tribes [Funnell, Native American Financial Service Association]
  • Stay on the line to learn more about the Verizon/Vodafone deal, or just press the star key to sue now [Daniel Fisher, Forbes]

…and the right to collect legal fees

The Washington Post splashes an investigative story about the tax lien business, in which outsiders buy up delinquent municipal property tax liens sometimes amounting to mere hundreds of dollars, then roll in lawyers’ fees and costs that can push up the bill into many thousands, eventuating in the foreclosure of family homes. The narrative is less than clear about exactly how the process works, and even leaves the impression that a tax lien purchaser owed, say, $6,000 can walk away with all the proceeds from the foreclosure of a $197,000 house without having to hand any of it over to mortgage holders, let alone the original owner. And some of the solutions offered (let’s not allow lien foreclosures on elderly people!) would have unintended consequences that are also, to be polite, underexplained. Still, enough of the story is there that an important general principle comes through: it’s dangerous for the law to put opportunistic actors in a position to run up $450/hour legal fees pursuing adversarial process that might not actually have been needed to vindicate their interests.

Banking and finance roundup

  • With arbitrary power to order capital levels, FDIC is Death Star to community banking [Kevin Funnell]
  • “Oh please. We’re not going too easy on [convicted inside trader] Raj Rajaratnam.” [John Carney]
  • “Ronald Coase and the nature of shadow banking” [also John Carney]
  • “Say-on-pay” as “lawyer-driven” litigation [Pepper Hamilton via Bainbridge]
  • I’m a guest on Jim Puplava’s “Financial Sense” podcast [link]
  • Wall Street, housing lobby to get their way again: “I’m afraid that the fix is in on housing finance reform.” [Arnold Kling]
  • Channeling Bernie Sanders? Thumbsucker on decline of IBM as employer fingers shareholder value theory promoted by ever-so-wicked Chicago school [Washington Post]
  • Wells Fargo gets a lending-discrimination class action tossed, but there’ll be others where it came from [Andrew Trask]