You know an argument has been lost when a writer reduces himself to ad-hominem before presenting his argument, as Adam Levitin does here:
Some bloggers on the left (e.g. here and reposted here) are upset with the servicing standard term sheet that got leaked because they think it just prohibits things that are already illegal. This is an incorrect reading of the term sheet. Let me give three examples.
Bloggers on the left?
Certainly you jest. My political views and positions have been called many things, but left has not, to the best of my knowledge, ever been used in the same sentence with my political leanings.
Steph over at FedUpUSA, incidentally, picked up my article wholesale (they do that over there on a regular basis, with explicit permission) and Yves, over at Naked Capitalism, didn't bother looking either. I guess this sort of mis-attribution passes for some resemblance of investigation and fact-finding these days too, just as Adam does with his claim that I'm "on the left."
But let's deal with the substance of Adam's claims rather than just get into a whizzing contest:
1. Prohibition on false affidavits and sworn statements.
Filing a false affidavit or sworn statement with a court is likely already illegal in every jurisdiction. But what some bloggers have missed is that the definition of "affidavit or sworn statement" in the term sheet is broader than what the law already covers. At best, the law currently covers statements filed with the court--that means in judicial foreclosures. The term sheet mandates certain affidavits and sworn statements in nonjudicial foreclosures and includes them under the definition of "affidavits and sworn statements" to which the false statement prohibition applies. That's an important step.
How many felonies do we have to see unprosecuted before we stop pretending that they will be prosecuted in the future?
We have somewhere around 150,000 admitted false affidavits filed with courts thus far. I will cite from Florida's Perjury Statute:
837.02 Perjury in official proceedings.
(1) Except as provided in subsection (2), whoever makes a false statement, which he or she does not believe to be true, under oath in an official proceeding in regard to any material matter, commits a felony of the third degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084.
We're a judicial foreclosure state. Therefore, every one of these false statements ("I read the material" when all you did was look for the "X" and sign) presented to a court is a felony. Exactly how many thousands, or is that hundreds of thousands, of felonies do we have to see before we stop pretending that future violations of the law will somehow be enforced? Note that the documents in question may be true but that's immaterial in this case, since the affidavit swore the affiant read and had personal knowledge of the contents when in fact if they "robosigned" they knowingly did not. That's the scienter test for perjury, and it's pretty clear it has been met.
2. HAMP requirements.
The term sheet appears to repeat some existing HAMP requirements. What bloggers have missed is that the CFPB and AGs currently have no authority to enforce HAMP violations. The inclusion of these terms makes HAMP violations a violation of the settlement with the AGs/CFPB, which means that the AGs and CFPB can enforce these violations. Given Treasury's unwillingness to demand serious HAMP compliance, that too is an important step.
Again: The State AGs have the authority to prosecute perjury in the courts of their states. They have intentionally and willfully failed to do so despite apparent and clear admissions that those acts of perjury took place. It is particularly-easy to prove a criminal case where the person or entity who you would charge has effectively admitted to the essential elements of the offense through a press release! Incidentally, Florida's statutory "out" for withdrawal of perjured documents without liability expires when it becomes apparent you will be discovered, which means their window to do so expired long before the admissions in the press and mass-withdrawals took place.
If an AG was unwilling to prosecute murder I would be less-than-enthralled with expectations that they would bother with a "mere" bank robbery, say much less jailing someone who held up a "mere" convenience store.
I agree that the US DOJ and Treasury have been unwilling to prosecute HAMP violations. Where Adam and I differ is that I see the 50 State Attorneys General as nothing more than co-conspirators in that willing refusal to lay charges since they had and have every ability to do so with the bogus affidavits and didn't. Therefore, until I have evidence otherwise I find that both the Federal and State "law enforcement" agencies are willfully and intentionally refusing to take action against the banks, because on the clear record that is exactly what has been and is occurring right here, right now.
3. UDAP and Good Faith/Fair Dealing Requirements
I'm not entirely sure of the purchase of deeming violations of the agreement unfair and deceptive acts and practices (UDAP). It might mean that the penalty for violation would track UDAP penalities for each state or CFPB. Or it might, just might, give homeowners grounds for a suit.
They already have grounds for a suit, which is the point. This alleged "term sheet" does nothing to advance that case. It does not, for instance, impose a defined penalty for such a violation and make it a matter of an administrative proceeding or otherwise enhance the penalties available.
This entire set of "requirements" is a fluff job and imposes little or nothing beyond what's already present.
I don't think the AGs and CFPB were just piling on fluff requirements. This settlement is a pretty extensive and well-thought through document designed to give the AGs and CFPB broad ability to reform the servicing industry, and the inclusion of these provisions seems well-thought out (although I haven't cracked the 3d one).
Essentially all of what is in this alleged "term sheet" is already black-letter law. It fails to impress me when an alleged law-enforcement agency willfully and intentionally ignores the law for years and then says "now now be good in the future and don't break the law again", without having one single hard and defined "or else" present in the settlement on a forward basis, nor is there any actual prosecution of previous actions.
Oh, and how about MERS? It's not in there. Intentionally.
Imposing a one-time "cost of doing business" fine is not going to do it. Locking some of the perjurers up in "pound-me-in-the-butt" prison and making clear that each and every incidence of perjury on a forward basis will be prosecuted would have quite an impact. But that's missing from this document.
So would a requirement in the so-called "Settlement" that before a foreclosure could be prosecuted a clear and unbroken chain of ownership of the note and mortgage would have to be shown, documented with contemporaneous and sequential endorsements, allonges or actual change in possession that took place from origination to the current holder. Homeowners (and investors) get exactly zero protection against the very-real possibility that the person standing in court (or filing in a non-judicial state) doesn't actually have legal ownership of the note in question, back-dated documents in a fraudulent manner, or worse, that the security interest under the UCC and the Note itself has been permanently lost and thus there is no right to foreclose at all! That's missing too. Oh sure, there's a "requirement" but there's also a back-door for it in the next point down, and once again that requirement already exists in State Law - but is being ignored.
If the State Attorneys General refuse to bring the cases then all the ink on paper means nothing.
The problem with this "settlement" is the same as that with Pfizer years ago with their off-label marketing which, while a felony, led only to two fines - the second as a repeat offender! It's a mere cost of doing business and does not deter behavior because it remains profitable to scam. The only way to stop these acts is to hit people with either a fine that is so large compared to the potential profit that the risk of getting caught makes the activity unprofitable or start locking people up and seizing their assets as the product of a criminal conspiracy (as we do with drug dealers.)
Without deterrent value this alleged "settlement" will do nothing, and there is very little - other than the dual-track prohibition - that is not already a requirement under existing law.
Incidentally, that point - which I've been pounding the table on since this began and which you started with, is exactly what you said here:
The biggest question mark about the settlement and what everything, and I repeat everything, depends on is enforcement. This agreement is not self-executing, and it doesn't appear to give homeowners the right to invoke noncompliance as a foreclosure defense. If the CFPB and AGs are vigorous in demanding strict compliance, then this settlement is huge. If they are lax in enforcement, then it's largely a paper victory.
What's the record of the AG's thus far Adam? How many perjury indictments have been filed?
You owe me an apology Adam for leading with an ad-hominem load of nonsense. I'm sure it'll be forthcoming when Hell freezes. Further, since you "covered" yourself well, I don't expect that when I hoist the "Told 'ya so" sign you'll recant either - you'll simply say "well, I did say that if they didn't enforce it....."
Which, incidentally, was my entire point. There's no evidence that the State AGs will do a damn thing when it comes to enforcement for the simple reason that they haven't thus far.
This alleged "tough settlement" is nothing other than yet another fellatio-job provided to the banks - this time by the State Attorneys General, selling out of their respective populations (once again.)
Mark my words: Not one homeowner will be protected against anything by this fluff piece.
I've generally been reasonably-impressed with Adam's work in the past, in that he's been willing to call out the banks as explicitly insolvent and go after MERS. Where he gets the idea that this "settlement" will somehow address any of the underlying problems is beyond me.
The basic issues with MERS, modifications and Foreclosuregate is quite simple:
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