Tuesday, April 08, 2008

Ohio is Doomed

Y'all up north sure have some odd ducks in charge of stuff.

Ohio’s “Compact to Help Ohioans Preserve Homeownership” is being promoted as a first of it’s kind in the US by none other than Governor Ted Strickland; it is indeed a first of it’s kind but the guv is seriously confused about this bit of public-relations fluff.

In the first place, while admitting it’s not legally enforceable, they like to call it “a cooperative step.” Strickland defended any lack of legal standing by claiming: "These companies are putting their honor and prestige on the line."

Newsflash, guv – they didn’t put anything on the line. You can't put up what you don't have. Whoever wrote that for you may actually believe those companies are honorable and have any prestige. That either gullible or ignorant staffer needs to find another occupation – one that doesn’t put his or her leader in a position of playing the fool in press conferences.

The servicers (among them some of the most-predatory companies in the industry and notably without uber-squaliforme EMC Mortgage) crossed their fingers and signed up to “work with the state in making every possible attempt to prevent default loans and foreclosures in Ohio.”

Wink-wink, nod-nod and (drum-roll please) here’s what they will supposedly do:

1. Engage in a substantial and large-scale loan modification effort for adjustable-rate mortgage resets and subprime mortgages.

2. Identify, evaluate and make good-faith attempts to contact at-risk or defaulting borrowers as soon as possible.

3. Modify loans to the extent permissible within fiduciary, contractual or other legal obligations and in accordance with prudent mortgage lending and servicing practices.

4. Create incentives for staff and foreclosure counsel to modify loans rather than foreclose.

5. Report progress to the Ohio Department of Commerce.

6. Enter into a nonbinding agreement with the state for a defined period of time. The agreements extend to June 30, 2009.

Well, let ol’ Judge Bean take a look at those one by one:

Number one is nothing more than meaningless blah-blah-blah-blah.
Question: "What the hell is “a substantial and large-scale loan modification effort?”
Answer: Anything the servicer says it is.

Number two is something they’re supposedly already doing – the hiccup is that pesky thing known as “good faith.” They indeed may make a good-faith effort to contact the at-risk borrower, but many at-risk borrowers know who they're dealing with and may not want to jump into the water with the squaliforme while they're bleeding from fresh injuries. And of course, if they do make contact, whether the servicer will then act in "good-faith" in trying to prevent a foreclosure is supposedly but inadequately addressed in number three.

Three is where the alleged agreement becomes a complete nullity. That little phrase “in accordance with prudent mortgage lending and servicing practices,” is the problem; the companies are the sole determinants of what those practices are or should be, and prudence dictates staying in business and maximizing returns for the ownership of the company, which among the predatory and opportunistic servicers means defaults and expeditious foreclosures when they alone, deem them appropriate.

Four is interesting because someone is letting it slip that the previous incentives weren’t geared toward what the servicers have been claiming they have been doing all along – trying to maintain borrowers in their homes.

Five is another one of those meaningless statements because there isn’t even an attempt to determine what “progress” is; but whatever they say it is will have to be reported.

"Dear Ohio Department of Commerce:

Progress is good.



And the non-binding agreement has an oxymoronic term limitation of a little over a year.

Finally, consider the clause that Litton Loan 's agreement has:
"... is not intended to convey, and does not convey, any beneficiary rights to any person, entity, government or regulatory authority, including, without limitation, borrowers, lenders, investors, counselors or advocacy groups."
If this isn’t just a late April Fool’s blunder, Ohioans should be concerned that their Governor is either a simpleton when it comes to making agreements on behalf of the citizenry or he is a simpleton when it comes to selecting staff members to make agreements on behalf of the citizenry.

The Honorable Judge Roy Bean

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