Since the basis of libertarian philosophy is property rights, I would have expected a little more outrage from places like Reason about robo-signing, yet a search of their blog finds scant mention of the way that banks have been able to leverage shoddy paperwork to deprive mortgage holders of their property rights. Maybe I’m not well versed enough in the nuances of libertarian thinking to understand why a mortgage holder doesn’t have the same property rights that libertarians are usually so quick to defend. But it really is remarkable that the Supreme Court of communitarian Massachusetts can be harsher on this topic than the Reasonoids.
The last substantive article I can find over there is Tim Cavanaugh’s move along, nothing to see here piece on the December ruling by New Jersey’s Supreme Court. On today’s front page, there’s plenty of discussion of gun control, snack food taxation and the evils of Obamacare. There’s also a link to an article by Matt Welch explaining Reason’s “self-marginalization”, which is a fancy way of saying “nobody gives a shit about what we say because we want it that way.”
I’ve got news for Welch: nobody gives a shit about what Reason says because (edit) too much gun control, USDA advocacy of brown rice snack cakes and the wickedness of healthcare reform are all white people problems. The road to serfdom starts at the bar of a courtroom running a rocket docket, not at the front steps of the Department of Agriculture.
Update: Just to be clear, “White People Problem” is the Louis CK phrase meaning a problem that is so minor that most people around the world wouldn’t even call it a problem.
Comrade Javamanphil
A cynic might surmise that it has something to do with which party potentially benefits politically from this particular issue.
Marc
It’s not white people problems; it’s problems that are useful to their paymasters, or problems that might impact people with money.
There are plenty of white folks on the wrong end of the policies favored by the libertarian tools of the wealthy.
mistermix
@Marc: “White People Problems” is slang for “not really a problem, just something people bitch about”.
WyldPirate
Bullshit title.
There really is no need to bring race into this specific issue because you perceive that Reason and the “powers that be” don’t give a fuck about “middle class”–or as you crudely imply “white people” issues.
Your case could have been made without your snide, subtle chip-on-the-shoulder race baiting implicit in your title and the last paragraph. There are a fuckload of people of color in the “middle class” that are getting hammered by the recession and there are a fuckload of white people in the “lower-middle” class that that are getting hammered as well.
The only color the “powers that be” that are fucking people over give a shit about is green.
Warren Terra
Your statement got truncated – you forgot the last five words, “of corporations and wealthy individuals”. The property rights of poor folks can just go Galt unless they are somehow rhetorically useful to their Betters. This is nowhere more true among Libertarians than in the Institutional Libertarianism, the Reasonoids and their ilk who suck at the teat of the Koch brothers and other wealthy sociopaths who see Libertarianism as a path to complete irresponsibility, maximum wealth stratification, and de facto plutocracy.
I think it’s a mistake to bring Race into this, though. It’s really about Privilege, not Race. The two are far from unconnected, and if you systematically dump on the less privileged you’ll be hitting a lot of racial minorities. But that’s incidental to their aim, and by implying they’re racists with your “white people problems” line you let them play the victim card in an attempt to avoid talking about their true priorities. It’s really about “rich people problems”, with the occasional foray into “extremely comfortable people problems.”
WereBear
It’s stupid to call it Reason, that’s why.
It’s just another Orwellian exercise; like Bush calling his relaxation of pollution standards the Clear Air Act, or a Federal mandate to buy his brother’s standard tests No Child Left Behind.
Jonny Scrum-half
I don’t get the constant insults toward Reason and libertarianism. I don’t agree with everything they write, and their priorities aren’t necessarily mine, but it’s absolutely not the case that they write only about “white people’s problems.” There’s a hell of a lot of Radley Balko posts about police abuse that is everyone’s problem.
Sly
The Massachusetts case does not provide the Reasonoids with an opportunity to attack Democrats, ergo it does not exist in their universe.
Libertarians are the anti-existentialist in that, for them, self-identification is the only plausible basis for assigning a category. Because they do not call themselves Republicans they are not Republicans, despite the fact that their exhibited behavior would cause any rational observer to call them Republicans. Like a student who never studies and fails a test, only to protest their failing grade by saying, “But I really am a good student!”
ant
I have to admit, i had to go follow your urban dictionary definition of “white people problems”.
LMFAO. Indeed.
Look like some others didn’t follow your link.
middlewest
And now we learn which commenters are too dumb to understand the urban dictionary.
Sly
@Jonny Scrum-half:
The most suitable weapon against intellectual fraud is mockery.
Marc
@middlewest:
Nope, I just think that we have plenty of reasons to call wingers on racial issues. Using racially-charged language when it isn’t relevant results in having those words mean nothing when they’re needed.
TR
@Jonny Scrum-half:
They’re childish idiots who deserve to be constantly insulted. What’s not to understand?
As John Rogers said, “There are two novels that can change a bookish fourteen-year old’s life: The Lord of the Rings and Atlas Shrugged. One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes, leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world. The other, of course, involves orcs.”
WyldPirate
@middlewest:
Horseshit. I followed it. It’s bullshit in this context and it’s one of those terms that black folks can get away with using that would cause vapors and screams of racism if white folks used something similar.
There was no need for it. If you want a color-blind society, all sides have to play.
ETA: And if anyone thinks gun control and health care are “white people problems”, they’re simply too stupid for words.
TR
@Marc:
For the last time — as explained in the hotlink and re-explained with an explicit update — the phrase “white people’s problems” has nothing to do with race. Put away the smelling salts.
Jesus, I’m having flashbacks to the 80s when I had to explain to my mother that when the kids today said something was “bad” they actually meant it was “good.”
mistermix
@WyldPirate: Because, as we all know, Louis CK is black. That’s why he gets away with it.
ETA: “Gun Control” is not a problem today. Assault weapons are legal for christ sake. And Reason wants to repeal Obamacare – that’s a non-solution to the healthcare problem.
TR
@WyldPirate:
First, your reading comprehension is for shit. Here’s what the link says:
As the definition says, this is about class not race.
And for the record, if Louis CK were any whiter, he’d be translucent.
mistermix
@Jonny Scrum-half: Yep, Balko does good work.
TR
Oh, if anyone still needs an explanation for why libertarians in general and Reason in particular deserve mockery, just read WyldPirate here.
Keith G
@WyldPirate: For shit sake WP, google Louis C.K and watch his bits on this topic and try not to go off half cocked – oops did I just offend cocks?
Ija
@TR:
Wait, WyldPirate is a libertarian? I thought he is a liberaller-than-thou who is upset at Obama for being a sellout.
Chyron HR
@WyldPirate:
Thanks for taking time out of your busy schedule of denouncing “Black Jesus” and his “crack hos” to lecture us on racial sensitivity.
debit
@Ija: See, I used to think that too, then suddenly he just started talking about pies. Weird.
Mike Furlan
@WyldPirate:
Ever wonder about why they seem to want to go back in time to the days that there was no income tax, but there was slavery?
White people problems, exactly.
stuckinred
The big white problem is this snow storm that has Georgia totally fucked!
Alwhite
@TR:
It took me a while to stop laughing at WP – Louis CK is white, a flaming ginger in fact.
I used to believe everyone had a right to their opinion but guys like that are forcing me to change my mind.
WyldPirate
@mistermix: A.) You aren’t a comedian and your post wasn’t a comedic piece., C.) Gun control isn’t a problem? WTF? Did you sleep through the past weekend? D.) I know what Reason wants to do to HCR. I don’t think Reason has an answer, but that doesn’t mean that HCR reform even comes close to addressing the problem. “Obamacare” is a band-aid on a severed carotid artery given that wages and benefits are going down and health care costs are skyrocketing. I will grant you that I didn’t make that clear in my edit, but they the state of health care is a problem for everyone and can bankrupt the well off–even the white people who are well-to-do.
TR
@Ija:
Eh, I have no idea. Getting the vapors over the attacks on Reason and insisting “both sides” need to be color-blind sounded like pure glibertarianism to me.
Either way, he’s an idiot. The name might have been our first clue.
TR
@WyldPirate:
Well, in fairness, you aren’t a comedian either and we’ve all been laughing at your comments all the same.
Rictor-Rockets
Just to be clear, “White People Problem” is the Louis CK phrase meaning a problem that is so minor that most people around the world wouldn’t even call it a problem.
“Nerdcore Godfather” MC Frontalot has a whole song refering to these, called “First World Problems”, i.e., stuff that is so trivial, only people in the First World actually complain about it.
rachel
@WyldPirate: Way to miss the point again, dude. “Pie” it shall be.
WyldPirate
@TR: I don’t usually give a fuck what you do, TR. Today is no different.
If you’ve got nothing else, you can run along and go play with yourself.
Morbo
@WyldPirate: I’m 12; what is context?
TR
@WyldPirate:
Usually? You’ve been here before?
Huh, with hysterical tantrums like this, you think I would’ve noticed.
WyldPirate
@Alwhite:
I’m not from the “right”.
Learn to read. I didn’t say Louis CK was black. I said he was a comedian. mistermix was the one that said he was black.
mistermix
Since it wasn’t crystal clear, I edited the post to point out that the issue of *too much* gun control is a “white person’s problem”. The potential inability of some people to purchase a giant assault rifle is the biggest non-issue in our politics today.
Similarly, the repeal of Obamacare, which Reason advocates, is a go-nowhere dead letter.
chopper
@Chyron HR:
hah!
also, louis c.k. == win.
rachel
@mistermix: It was crystal clear to me.
ETA: And I’d never heard of Louis CK until just now.
Bulworth
I suspect the folks at Reason believe the actual property owner is the mortgage holder, i.e., the banksters. Households are typically divided into “owners” and “renters” but as the housing crisis has illustrated, we are really just “borrowers” and “renters”. All of which is to say, What Warren Terra said.
Alwhite
I think Monty Python may have had WP in mind when they wrote:
Ija
@Bulworth:
We have a winner.
Chyron HR
@WyldPirate:
Surely even you can understand that the word “right”, when used in the statement “I used to believe everyone had a right to their opinion,” does not refer to a particular political alignment?
(Next up, WyldPirate starts screaming that he’s being persecuted by people calling him “Shirley”.)
chopper
@mistermix:
indeed. to spell it out to the retards here (ahem), health care is not a ‘white-guy issue’. repealing health care reform is.
WyldPirate
@TR:
What part of “it’s bullshit in the context of the piece..” –which is what I said after I responded to someone’s “following the link” comment to the definition of white people’s problems did you not understand?
Nothing is wrong with my reading comprehension. Maybe you should check yours.
mistermix
@Bulworth: I hear you, but even if the bank is the owner, the contract with the homerenter should be sacrosanct to libertarians, because contracts are the mechanism that enforces property rights.
Alwhite
@TR:
I remember WP but there had been a blessed absence for a long time. Quick to take offense, slow to comprehend and an inability to recognize when he was incorrect and admit it or move on.
@WyldPirate:
Didn’t think you were from ‘the right’, though it has always been difficult to tell where the hell you are coming from (in an entirely non-political spectrum sense).
Punchy
In Mexico, today’s date is Oh Juan/juanjuan/juanjuan.
WyldPirate
@rachel:
good for you rachel.
john b
i liked the term better when it was called “first world problems”
Alwhite
@Chyron HR:
Please accept this Internet, here after known as the Dr. Rumack memorial trophy, with our deepest admiration!
Lord Omlette
Pretty sure it’s “first world problems”:
http://www.youtube.com/watch?v=M3w1_E1V46M
Steve
When I saw the update to this post, I said to myself, “Aha, someone must have flipped their wig in the comments.” I’m glad I clicked over because it’s hilarious watching someone just keep digging that hole deeper and deeper. My favorite is comment #27 where he demonstrates that my 4-year old knows the alphabet better than he does – the part from A to D, at any rate!
Tom Hilton
@WyldPirate:
F) You forgot B).
Jamey: Bike Commuter of the Gods
@middlewest:
“Urban”? Isn’t that slang for “black”?!
(Yes, I know…)
Culture of Truth
there’s plenty of discussion of gun control, snack food taxation and the evils of Obamacare
You’ll pry those twinkies from my cold, dead, hands…
rachel
@WyldPirate: I disagree. Frozen pre-made pie dough is disgusting. All brands, all disgusting.
Learn to make your own, and you’ll always have halfway decent pie.
ETA: unless you use canned pie filling. Then there’s no hope for you.
Villago Delenda Est
@WereBear:
The name “Libertarianism” is itself an Orwellian construct. It’s not about liberty at all. It’s about money, and the protection of both social and economic privilege.
These people are Mammon worshipers. They worship those who hold vast amounts of money. The very mercantile aristocracy that de Tocqueville warned of they celebrate. The one that Jefferson wanted to prevent from forming through an estate tax. The one that, through the Koch Brothers and Pete Peterson, heirs to fortunes all, who have position through accident of birth, not their own deeds, seeks to destroy every program designed to ease the poverty of the vast majority of Americans.
And these people DO use race as a means of furthering their goals.
This “all men are created equal” stuff is what drives these people bonkers. They insist that some people are more equal than others, and that their birthright is to rule. This country was not founded on that notion, but you’d never know from observing the results of “libertarian” thinking.
El Cid
The individuals affected by the foreclosure fraud and lack of documentation crisis are seen by libertarians and conservatives more generally as not being proper property owners.
First, homeowners who have mortgages don’t own their homes. Banks or other institutions do. They have made a loan agreement with individuals, and those terms are sacred contracts. Banks are the property owners. It is their rights which are to be respected. Mortgage-holders do not yet own their homes.
Thus there’s a conflict in what mere peons see as ‘property rights’, given that the people we are concerned about do not own the properties in question.
Second, the people we’re talking about — the people losing ‘their’ homes — shouldn’t be protected because it’s all about who they are and their own failings and about the importance of letting markets do what the markets should do.
In this view, those losing their homes are often people who have fallen behind on their payments, or close enough, or who didn’t understand the terms of their contract, or perhaps should have known better anyway. They are people who shouldn’t have bought a home in the first place — or, even worse, who only could have bought a home through some sort of coddling intervention by the government.
…The point is that in this subject area, these are not libertarian heroes under attack by a repressive state.
They are people who failed to maintain their role as powerful, responsible actors in the marketplace, in this view. They are weak, they are inadequate, they have made bad choices, they have been extended opportunities that a free market wouldn’t have allowed.
They lost their jobs and/or income, and them’s the breaks. The principles of the free market must be followed, and if these people get the down side of that, and employers no longer need them because they aren’t so perfectly essential and necessary that they are vulnerable to being let go, then that’s how it goes.
To act unhappy that the market is acting in its interest and firing employees it doesn’t need is contrary to our noble principles as libertarians who see free participation in a free market as the prime value of all existence.
They are incautious, not being correctly smart enough as true libertarian heroes would be in every working not only of their actual mortgage contracts but in every way it ever might work.
In other words, there is little concern with property rights among the propertarian crowd because these people are (a) inferior and caused their own problems and were too stupid or poor or unwise to avoid them, and (b) are not the opposite of such people as (a) being repressed by a coddling government.
They are the ones seeking government assistance and an over-stretch of judicial power in order to try and keep something they shouldn’t have anyway, either because of their own inadequacies or the simple facts of the market.
Sure, okay, every now and then some company will do something truly wrong, but all these lawsuits about documents and foreclosure mills are irrelevant because however it was done, the great majority of these people shouldn’t have kept their homes because they weren’t capable of keeping them and are just trying to keep the property owners
And you and I, by thinking there’s
People I’ve talked to — just ordinary grassroots conservatives and those people who like to use this ridiculous label of ‘libertarian’ — express sympathy for the banks and the sacredness of contracts, and blame homeowners for either screwing up, not understanding how contracts work, and for thinking that they deserve to own their house when the Democrats make businesses have to cut jobs, etc.
Yes, the same people who can bitch about Obama and the Democrats giving free taxpayer money to the banks while crippling them with terrible Stalinist regulations can see those banks as institutions we all depend on who are being hurt by all these irresponsible and probably colored (CRA!) folks trying to keep homes they shouldn’t have. And who didn’t make their payments and so violated The Sacred Contract they forged with the real injured parties, here, the banks.
Listen to AM talk radio. See how much sympathy there is for homeowners losing their homes. If it isn’t because of something which can be blamed on Democraps destroying the economy or on Jimmy Carter and ACORN giving free homes to blacks and illegal immigrants, then those losing their homes should lose them.
And problems about fraud and such in the actual foreclosure proceedings are just details and ‘technicalities’.
So libertarians are being concerned about property rights and the role of a proper housing market. It just doesn’t mean the same things you might think.
D. Mason
Why is casual racism so widely acceptable at this blog?
El Cid
Oh jesus fucking christ, I’m white and there’s nothing fucking racist about the god-damned title. I don’t get all crucified about the humor blog “Stuff White People Like” either. (And if you’re a Christian who doesn’t like me using Jesus’ name in an insulting manner, fuck off.)
rachel
@El Cid: Why is casual cursing so widely acceptable at this blog? Fuck me, that just ain’t right.
Tom Hilton
You know what the ultimate White People Problem is? Being offended by the phrase “White People Problems”.
Dork
I think the Fed’s next major anti-kiddie pr0n initiative should be called “No Child’s Left Behind”.
liberal
@Villago Delenda Est:
The big problem with Koch, Peterson et al. isn’t being heirs to fortunes. It’s the fact they’re all rent-collecting scum.
IIRC, as someone quoted Henry George as saying, it’s the difference between someone inheriting a pirate’s treasure, and someone making a fortune by inheriting a pirate shit (which they then use for ill-gotten gain).
Villago Delenda Est
The problem of course is the banksters more often than not cannot prove that they actually are the owners. Of course, for the reasonoids, this isn’t an issue. They are banksters. They shouldn’t have to prove anything. They have the might of money on their side. There is no need to go any further than this.
The entire problem with the foreclosure crisis is that there are people who have dutifully made their payments every month who are being foreclosed on because one set of banksters think they bought the note, but have not bothered to document it. The banksters who sold the note to the foreclosing banksters are still happily collecting the mortgage payments, and didn’t bother to inform the people making the payments.
Heck, in Florida, we’ve got cases where people who did not have mortgages at all were foreclosed on by banksters eager to process a foreclosure and collect the fees for doing so!
The reasonoids apparently do not see a problem with this. AT ALL.
lacp
@Tom Hilton: You know who else had a White People Problem…..
Ash Can
@Dork: Something about this made me just fall apart laughing.
Culture of Truth
Agree with El Cid, but I expect a crucial different for the folks at Reason is that mortgagees are not defending property rights against the government, but against other private citizens who of course claim the same rights.
Eventually, though, the sheriff will be called. Then the libertarian rubber meets the property rights road. Or something.
Villago Delenda Est
@liberal:
They may be rent collecting scum, but they also decry “entitlement programs” when their own fortunes are based on an entitlement, called an inheritance. Purely accident of birth. These assholes, like George W. Bush, were born on third and think that through their own grit and talent they hit a triple.
Then they leverage their birthright into even more lucre, part of which is used to make sure the peasants don’t get out of the mud. Because in addition to being rent collecting scum, they are sociopaths.
El Cid
@Villago Delenda Est:
Yes, and the propertarian crowd responds with hand-waving that there are almost always really just arguments about documents and these people know that they’ve done wrong and maybe one or two cases happen where a bank truly makes a mistake about whom they’re foreclosing on, but we’re all whining about it in order to protect all these people who shouldn’t be keeping their home anyway.
Culture of Truth
Ok, so, a White People Problem is like a whiny privileged guy’s problem, a Reason problem, a problem for someone with no real problems, a not-enough-foam-on-my-latte problem, a glib hispter problem, a “glibster” problem.
Ash Can
@efgoldman: It was a month. Time flies when you’re having fun.
stuckinred
Just drove through the ice and Boortz was railing about Ayers and Obama
Ash Can
@El Cid: Some property owners are more equal than others.
El Cid
@Culture of Truth:
That’s what I’m saying, with the exception that I’m going a step ahead to suggest who it is that the propertards identify with as the most likely aggrieved party. And that this proper working out of property rights is going fine until people get improper government involvement.
Now, as for Reason itself, I don’t give the slightest shit what they think or who writes there or not. But the people and sources who those people are likely to encounter emphasize those two perspectives, along with moral indignation that the home-owning private citizens claiming the same rights are probably just trying to fight what should happen anyway.
But, yeah, your point also gives the context to why there’s outrage if the government seems to be taking someone’s home away, but not if a private interest is doing so, without regard to the contractual propriety of the latter. I mean, it may be wrong, but it’s not something to get all excited about. It’s not some crime like regulating health insurance.
El Cid
@Ash Can: Again — mortgagees aren’t the property owners. Banks are.
Amir_Khalid
@efgoldman: IIRC, it was for dropping a C-bomb on asiangrrlMN (not that she was even slightly fazed, of course) and Cole said Wyldpirate was not to come back until he’d learned some manners. Well, WP’s back but it looks like he hasn’t learned.
El Cid
@stuckinred: It was Bill Ayers who shot this Congresswoman, if you think about it.
Villago Delenda Est
@El Cid:
Well, for them, the fact that it’s just a “paperwork” problem indicates that they really don’t grasp is that the solid bedrock of capitalism is being ruthlessly mined to make a quick buck now with absolutely no concern about any long term consequences.
Florida’s economy is fucked now, for decades, because there is absolutely no assurance that if you buy a piece of property in Florida, it will stay bought. The chain on the title has been shattered, and this “minor paperwork snafu” has repercussions that the greedy Ferengi shitstains of “Reason” cannot even begin to grasp, because they are so blinded by their hatred of…wait for it…anyone BUT the wealthy.
James K Polk, Esq.
@Dork: How long have you been waiting to bust out that gem? :P
rikyrah
I love the title of this post.
stuckinred
@El Cid: I should clarify that I heard him because I was in the van with the radio on.
Belafon (formerly anonevent)
@Tom Hilton: Win!
Culture of Truth
I again agree with El Cid.
There are two answers to the question posed in the original post. One is that Reason takes the side of wealthy, powerful corporations over people, and other is that it’s only (perceived) government restrictions on property that gets them excited. Not mutally exclusive.
Alwhite
@D. Mason:
Can’t say as I have seen much casual racism here. Well practiced stupidity does pop up once in a while when people can’t read English sentences and comprehend their meaning. This is often compounded by quick response that assumes the worst possible motive possible from the misunderstood writing.
But it reaches a hilarious crescendo when the obvious meaning is explained in simple words by several other people but rejected with even sillier arguments.
That kind of stupidity takes practice.
TR
@Tom Hilton:
For the win.
Villago Delenda Est
Yet, the problem we’re seeing in the foreclosure crisis is that people are so busy reselling notes, just for the fees from the reselling, they’re not bothering to even tend to the most basic aspects of the notes themselves. Like making sure that the payments on the note actually reach them. You would THINK, these greedy bastards, would be just slightly concerned that the note was being paid on a monthly basis.
The entire chain of custody thing on the note gets in the way of the rapid churn which is where the money is. The idea, of course, is to not be holding the hot potato when the music stops, to mix a couple of metaphors.
But then again, since the idea is to send the hot potato on to some other Ferengi slimeball, and collect a fee, as fast as possible, why bother with the minor detail of the payments on the note? After all, you’ll be sending in on its merry way to some other guy, and that detail will be HIS problem!
Dom Phenom
My understanding of why there is a lack of outrage on these things is the fact that generally no one disputes the fact that the vast majority of home owners getting foreclosed on do in fact have mortgages, and are in fact very delinquent on them. Therefore, there is in fact someone out there with the right to foreclose.
Now, obviously that doesn’t mean that banks should be able to break the law in order to foreclose, or should be engaging in a process that is so shoddy that every now and then people without mortgages get their houses foreclosed. That is completely unacceptable and should be punished with fines in an amount that the banks feel it.
However – and I say this as someone who represents consumers against large lenders – it is hard to argue on an equitable or property rights basis that home owners who have not paid on a mortgage for 6, 12, 18 months or more are having their rights violated when their house forecloses – whether or not it’s the right party that forecloses.
Again, none of this excuses compliance with the law, but I think from a property rights model the non-paying resident is no longer the party with the greatest interest in the house – the lender who holds the security interest on which there has been a default is.
Suffern ACE
@El Cid:
All those people who then for some reason shouldn’t have their day in court, where these decisions on who owns what need to be made.
The reason that Reason couldn’t care less about this issue is that the people who clouded the mortgages so that the courts couldn’t decide who owns what are the banks and asset managers. The investors who bought into the pools didn’t safeguard their interests to ensure that what they were buying would be recognized by the court as a valid purchase. That’s rich people messing up and harming other rich people and that is best not mentioned…you know, that the rich people might be “losers” in a much grander style than the schmuck who was late with his mortgage payment.
Villago Delenda Est
@Dom Phenom:
The problem here is that due to their own reckless, greedy actions, the lender who holds the security interest can’t prove he actually holds it.
This was the case in Massachusetts. Two big banks THINK they hold the security interest, but they cannot demonstrate, in court, that they do. They need to go back and get the documentation. The problem for them is one of the entities that held the note at one time is in bankruptcy, which means that that action trumps their action. They have an “asset” on their books that they cannot prove is their asset. Furthermore, as they attempt to establish that proof, they run into a problem where the people they bought it from are long gone, the shell that supported them is in bankruptcy, which means that the “asset” is subject to assignment in that bankruptcy.
This is a huge mess. It will take years to unravel. In the meantime, the hot potato is burning a hole in their hands, and they want the Federal government to give them some sort of bailout for their own folly.
Left Coast Tom
@Dom Phenom:
Suppose I owe money, and suppose someone owes you money. How is it reasonable that I should be forced to pay you, absent your establishing that I actually owe that money to you? If I actually owe it to someone else but am forced to pay you then what happens when the real creditor comes along?
Stefan
Why is casual racism so widely acceptable at this blog?
Well, I like to think it’s because we’re all pretty casual here, pretty mellow, not too uptight about anything. There’s no need to formalize the racism, is there?
Mike Furlan
@TR:
Game over.
Wish I would have thought of it.
Stefan
Again—mortgagees aren’t the property owners. Banks are.
Actually, under law, banks aren’t the property owners, the mortgagees are. Banks own the right to repayment of the loan they made, which is secured by the real property of the house and land, but they aren’t the legal owner of the house and land — the legal owner is the mortgage holder.
Stefan
The entire problem with the foreclosure crisis is that there are people who have dutifully made their payments every month who are being foreclosed on because one set of banksters think they bought the note, but have not bothered to document it. The banksters who sold the note to the foreclosing banksters are still happily collecting the mortgage payments, and didn’t bother to inform the people making the payments.
Look, even if you didn’t make your payments every month and have defaulted, it’s still a problem if the bank trying to foreclose on you can’t actually prove that they own the note that you’ve fallen behind on.
Or, in simpler words, just because you owe money to Peter, it doesn’t mean that Paul has the right to come by and take your stuff.
Stefan
However – and I say this as someone who represents consumers against large lenders – it is hard to argue on an equitable or property rights basis that home owners who have not paid on a mortgage for 6, 12, 18 months or more are having their rights violated when their house forecloses – whether or not it’s the right party that forecloses.
What???? That’s a completely moronic thing to say. Of course your rights are being violated if the wrong party forecloses on your house. Let’s say you owe money to Bank A, but Bank B then comes along and forecloses on your house. OK, now you have no house, but you still owe the money to Bank A. Bank A later pops up and says “give us your house back” and you have to say “can’t, Bank B took it.” Bank A says “not our problem, if you can’t give us the house back now gives us back the money we lent you.”
See how this can be an issue? You can usually satisfy a default on a mortgage by surrending the real property securing that mortgage, but if someone else with no right to that property has just come along and taken it, then that doesn’t let you off the hook from your original debt.
Not to mention the unjust enrichment if Bank B is just allowed to go around taking peoples’ property that Bank B actually has no legal or contractual right to….
Dear god, I hope you’re lying when you say you represent consumers against large lenders, because with that attitude, your clients are fucked.
Mnemosyne
@Dom Phenom:
And if it turns out that the lender who claims to hold the security interest doesn’t actually hold it and the real holder comes along later wanting their money, what then? I doubt that the consumer is going to be able to say, “Hey, I already paid that, go talk to the guy who cashed my check.”
Omnes Omnibus
@Tom Hilton: I am offended by your comment, sir. I demand a retraction. Why, yes, I am an educated, white male. Why do you ask?
RSR
I’m sure they’re not concerned about foreclosure issues because not being able to afford your home tells them all they need to know about the homeowner.
Omnes Omnibus
@Dom Phenom: The problem here is not that the homeowners have superior rights vis a vis the mortgage/note holders, but that those claiming to be the holders of the mortgage/note cannot prove that they actually hold the rights. If a bank does not own the note or mortgage (or can’t prove that it does), then it has no more right to foreclose than James Hetfield or any other random person.
Suffern ACE
@Stefan: You mean it matters in a foreclosure proceeding who receives the property in the end? Go figure. I thought the point of the whole thing was to punish people and prevent them from stealing houses they couldn’t afford because just by taking out a mortgage they obviously committed fraud…
Michael
@Dom Phenom:
Find a new career. You’re a moron.
Barb (formerly Gex)
@rachel: Why is casual free expression of our thoughts so widely acceptable at this blog?
les
@D. Mason:
I dunno? Same reason for the acceptance of casual stupidity?
Dom Phenom
@Left Coast Tom:
You’re not forced to pay the bank – the issue is foreclosure of the collateral. You just can’t keep the house. In most of these cases (not the ones where its the wrong person being foreclosed on), the “homeowner” does not have any equity in the house. The bank (or rather, some bank out there) paid for the house, the “homeowner” has made mainly interest payments on that loan. Therefore, it is the bank that really owns the home. If the wrong bank gets it through a foreclosure, the aggrieved party is really the bank that held the note and was the beneficiary of the security interest. The aggrieved party from an equitable or property rights standpoint is not the homeowner – who will not ever have to make any more payments on the house after it is foreclosed.
And the bank that was the real party in interest cannot then go after the prior homeowner for foreclosure again – once its done its done. Their action would be against the party that actually foreclosed. And if they have their documents in place they should be able to foreclose out that other bank.
Generally once their is a foreclosure the right to collect the debt on the property that was foreclosed is extinguished, so you don’t have the problem of a foreclosure by the wrong party and then the right party suing on the debt – the fact of the foreclosure would be a defense. But i agree that if banks were doing that and courts were allowing it, it would be a huge huge problem.
Again – none of this makes what the banks are doing right. They’ve mucked up the system, and especially in cases where they are not properly noticing foreclosures, foreclosing on the wrong homes, etc. their actions are entirely indefensible and they should be made to pay for it in an amount that actually hurts.
Dom Phenom
@Omnes Omnibus:
I agree completely, and that’s why, from a legal standpoint, and in my opinion from an ethical standpoint what they are doing is wrong. I’m simply saying that I can understand why it might be that folks from Reason who think that “property rights” are supreme aren’t too concerned about this -because vis-a-vis the property owner there is a party out there who can assert a superior right.
For the record, and somewhat off topic, my view is that the idea espoused by so many on the right that “property rights” are natural rights is garbage. Property rights as we know it only exist because we’ve drawn certain lines that if crossed, the government will exert violent force on the person crossing the line. That’s it. There’s nothing natural or god given about it. Therefore in my view there’s nothing wrong with drastically changing those lines into something way more like socialism.
les
@Dom Phenom:
Maybe where you live. In fact, almost no consumer mortgages are “nonrecourse;” the borrower owes the amount borrowed, period. If in default, the lender can take the collateral (the house), sell it and apply the proceeds to the loan (net, of course, of costs, fees, etc., and nearly without regard to whether the sales price is really the value). If there’s any loan amount left, the borrower still owes the money and the bank can pursue other remedies like any other debt collector. So the fact that bank B takes the house in no way mitigates the obligation of the borrower to pay bank A. Nor does bank A have to pursue bank B. The party with a claim against B is the borrower; good luck on that.
Just in case my kid is ever interested, where did you get a law degree? So I can avoid the place?
Dom Phenom
@Michael:
sweet takedown bro.
Dom Phenom
@les:
You’re not getting my point. I’m not saying what they are doing is right (and i do in fact practice in a non-recourse state). I’m answering the question, which was why the folks at Reason might not care about this. And that’s because from their point of view, the resident in the house is not the one with the property rights? Can you get that?
Ash Can
@El Cid: Oh, I’m not arguing with you, I’m just being flippant.
Stefan
The bank (or rather, some bank out there) paid for the house, the “homeowner” has made mainly interest payments on that loan. Therefore, it is the bank that really owns the home.
Jesus Christ. No, the bank really owns the debt. The homeowner really owns the home. The home may be pledged as collateral to the debt, but that does mean the bank owns the home — it just owns the right of repayment of its loan, a right which is secured by the property. It may later be able to secure the home as collateral for repayment of the debt, but that does not make the bank the homeowner itself.
Let’s put this in simpler terms: you lend me $1000 to pay a TV. I go to the store, buy the TV, the bill of sale is in my name. The TV now belongs to me, not to you, even though you lent me the money for it. All you own is the right to be repaid $1000. You are in no way, however, the legal owner of the television itself.
Stefan
And that’s because from their point of view, the resident in the house is not the one with the property rights? Can you get that?
But the bank which is foreclosing does not itself have any rights if it can’t prove that it actually holds the note. As pointed out many times above, just because you owe money to Bank A does not mean that Banks B, C and D all have a right to come by and take your property away from you. Only the bank which can actually prove it has an interest in the real property has that right, and that’s a test that many banks have been failing.
Dom Phenom
@Stefan:
All I’m saying is that from a Glibetarian point of view it makes sense that the until you pay it off, you only have a possessory interest, and no real equity interest. If you never make a payment on the TV, the lender’s rights to the TV would be greater. If the party holding the collateral is in default on the terms of the loan and the security agreement, the secured party’s rights will trump them.
I think its a stupid point of view, but i thought that was the question posed at the beginning of the thread. don’t make me defend Reasonoids anymore, please.
Ailuridae
There was a whole lot of winning in this thread by El Cid and Tom Hilton.
I think propertarian should be a tag. That is all.
les
@Dom Phenom:
Well, actually, no, I don’t think I do get that. Oh, I get that they don’t care–they only care about privilege, but they’re no more likely to admit your point (which seems to be that without regard to the form and substance of the contracts involved and the various rights and obligations of the parties, that the owner doesn’t own anything and the lender actually owns the collateral) than to admit their defense of privilege. Sanctity of contract and all that. Also too, you might temper the generality of your descriptions of borrower status/obligations–nonrecourse consumer loans are a serious minority; in twenty years of practice in the midwest, I’ve never seen one. In fact, if you could steer me to a broker, I’d be in the market for a refi.
El Cid
@Suffern ACE:
Ye. And I think it goes farther, in that they’re even being forced to prove it.@Dom Phenom:
That question of whether or not the ‘right party’ forecloses is a crucial one. Even people at fault via a contract have the right to use as many laws in their favor as do major financial interest. Particularly when it’s the absolute basics, like who owns what.
The point is that prominent, wealth-favoring ‘libertarians’ just don’t give much of a shit about the fairly systematic violations against those who are not in those default conditions. No matter the small — though substantial — numbers of such cases there are in proportion to the cases against those who are violating a mortgage contract, or maybe terminating it, by not paying the agreed payments.
How often do such types scream about other tiny (in number) violations of property rights by government when it favors their anti-government-when-they-oppose-government-power views?
Their vehement excitement against perceived market violations by government (or liberal non-profits) are not related to the numerical significance of the problem. They continually scream about the deep, principled nature of the positions and concerns they take.
The subject of the post has to do with the basic legal rights (including proof of ownership) of the individual home mortgage holders or home property owners (without mortgages) which not only require that they abide by all the legal rules regarding their contracts, but that so do the those who assert the rights of the contract holders.
Your point is clear on why those not upholding their mortgage contracts could and should legally lose them (the wisdom of letting this simply happen without the government intervention which might avert some of this economic catastrophe whenever possible notwithstanding).
And this I think helps to explain why so few of the prominent defenders of property rights fail to be aggrieved at the violations of basic legal procedures faced by individual homeowners, when the same people are normally convulsed by the tiniest violations of the economic rights of the parties with whom they identify.
Policy-wise, one of the moves common in the New Deal by agencies related to or inspired by the HOLC was to incentivize or pressure the renegotiation of principal with both parties, though that was back in the day when the mortgage and its interest was what banks were interested in, rather than the fees for foreclosing no matter what the conditions.
Calouste
__
Fixed that for you.
Libertarianism is:
1) I am right about everything
2) IGMFY
3) Things are simple
4) see 1
Dr. Morpheus
@TR:
If it isn’t about race then why isn’t the phrase “rich people’s problems”?
It makes about as much sense as Michael Scott calling someone “Faggot” and claiming that, “It’s not about sexual orientation, it means you’re lame!”
No, using that word is a slur against gay people and has everything to do about sexual orientation.
Using the phrase “white people” has everything to do about race and little or nothing to do with class which is what it seems the thrust of the argument is about.
Mnemosyne
@Dr. Morpheus:
Because Louis CK is making fun of his own ethnic group. Is it now racist for white people to make fun of other white people? I didn’t get the memo.
Dr. Morpheus
@Mnemosyne:
I’m sure that the homeless that are white got quite a chuckle out of Louis CK’s droll jabs at their privileged lives.
Mnemosyne
@Dr. Morpheus:
You’re right, no one in the history of this country has been more oppressed than white people are right now. Oh, sure, the vast majority of the wealth and power in this country is in the hands of white people, but if there are a few poor white people around, that completely negates Louis CK’s point.
And before you start making accusations — yes, I’m white. I get to say these things, because I know my people are fucked up.
Neddie Jingo
I beg your pardon?
Rhayader
Yeah, the War on Drugs is a real white people problem. Ditto for police abuse.
I get that you guys like to have fun with libertarians here, and point out how intellectually stunted we all are. To be honest I really don’t care; have at it. But seriously, why do liberals so easily dismiss our entire set of policy concerns when many of them mirror your own? Why the universal hate?
There are plenty of important and worthwhile things that libertarians and liberals can agree upon. I’m fine with the standard glibertarian barbs, but I wish you guys would acknowledge every now and then that many libertarians do honestly care about social freedoms.
WaterGirl
@Barb (formerly Gex): Thought about you guys last night and this morning, and I know I am not alone in sending good thoughts your way.
Uncle Clarence Thomas
@WyldPirate:
.
.
Wyld, he should have said they’re all “balloonbagger problems.” Just to be clear, “balloonbagger problem” is the Uncle Clarence Thomas phrase meaning a problem that is so minor that most people around the world wouldn’t even call it a problem or take time out of their busy whiny-ass little high school bitchez on a slambook snorkelfest to comment upon it.
That’s the context here, as usual.
.
.
burnspbesq
There is an aspect of the mortgage meltdown that I hadn’t seen anyone talk about until this morning.
Every securitization of residential mortgage loans that I have ever seen was sold to investors with an explicit or implicit representation that the legal entity holding the mortgages and receiving payments to homeowners would not pay Federal income tax, so that substantially all of the money received would flow out to the investors. That treatment depended on the legal entity being a “REMIC,” a peculiar creature created under the Internal Revenue Code.
Now, in order to be a REMIC, an entity has to satisfy a number of tests. One is that 90 percent of its assets have to be “qualified mortgages.” The problem arises because if the paperwork is sufficiently screwed up that you can’t foreclose, you may not have a “qualified mortgage.”
If the IRS goes after a large number of REMICS for failing to have qualified mortgages, it may end up holding a lot of receivables for unpaid taxes, interest, and penalties from entities that don’t have any liquid funds to make the payments. The Federal tax lean trumps just about every other security interest to which it attaches, so the IRS could eventually end up as the owner of last resort of a sea of toxic paper. Fun, eh?
timb
@WyldPirate: Should I be shocked that this guy doesn’t get the reference?
No, I shouldn’t. I shouldn’t at all
timb
@Rhayader: Liberals are serious policy thinkers who have not made common cause with lunatics and Rush Limbaugh so that, for example, the major tyranny of marginal tax rates going up 3% on income above $250,000 is cursed by Jennifer Rubin and Gillepsie more than the purchasing of our government by Wall Street or the torture of American citizens by their government is.
Those jackasses made siding with wingnuts their business model, while real structural problems are ignored so they can whine about plutocrats getting to keep their ill-gotten gains.
In short, liberals are, for the most part, serious people, whereas libertarians are cranks who take up common cause with Mark Levin and Andrew Breitbart. is that math clear enough for you?
burnspbesq
@Suffern ACE:
Except when it’s not. Care to hazard a guess as to the volume of mortgage-backed securities that ended up owned by entities like public-employee pension funds and college endowments? The whole point of engineering these things so that they could be rated triple-A was so that entities like those would be legally permitted to buy them.
burnspbesq
@Villago Delenda Est:
Ever heard of title insurance?
Jebediah
@Tom Hilton:
Well-played, sir.
AAA Bonds
@burnspbesq:
Hey, could you go over this post again and give the remedial version if you have a minute? I think I follow but I’m not sure.
burnspbesq
@AAA Bonds:
Which post? 129? OK.
Most securitization vehicles are set up as either corporations or trusts. Corporations and trusts are normally taxpaying entities, and in general, if you’re a shareholder of a corporation or a beneficiary of a trust, and you get a dividend or a distribution, you pay tax on the amount you receive (with no credit for tax paid at the entity level). Voila, double taxation, so only about 40 percent of the pre-tax income of the entity becomes post-tax income in the hands of the owner.
Because Congress wants to encourage home ownership and facilitate securitization as a way of doing that, it created a special tax regime for REMICs. A corporation or trust can elect to be treated as a REMIC instead of being treated as what is legally is.
So long as a REMIC satisfies all of the requirements of Internal Revenue Code Sections 860A through 860G, it’s not subject to tax.
One of those requirements is that substantially all of its assets have to be qualified mortgages or permitted investments.
A qualified mortgage is defined in Code Section 860G(a)(3) as “any obligation (including any participation or certificate of beneficial ownership therein) which is principally secured by an interest in real property.”
If a lender or servicer’s paperwork is so fucked up that it can’t foreclose, then I think (and Robert Willens, who’s a lot smarter than I am, thinks) there’s a decent textual argument that the obligation isn’t principally secured by an interest in real property. if that’s the case, then the obligation’s not a qualified mortgage. If it happens on a mass scale, then the entity’s going to fail the substantially all test. And if it’s not a REMIC, then it’s going to be subject to tax.
No way of knowing whether the IRS is going to pursue this. If they do, it’s like throwing a Claymore mine onto a bonfire; it may take a while, but eventually a lot of people are going to get badly fucked up.
Jebediah
@WaterGirl:
You are definitely not alone in that.
Jebediah
@Omnes Omnibus:
To be fair, James Hetfield is only foreclosing on homes when he suspects that one of the residents may have pirated one of his songs.
kishnevi
Considering that you can’t even get past the first sentence without making a major error, why should anyone take you seriously?
Libertarianism is not about property rights. Libertarianism is bout INDIVIDUAL RIGHTS, of which property rights happens to be one category.
Libertarianism is based on one indisputable fact: that government intervention always screws things up, and the more government intervenes, the more things get screwed up. This whole mortgage mess is one example. Without government setting up the playing field to allow Wall Street to complexify things beyond understanding–the tax treatment of REMICs is a good example–this would not have happened. Or it would have been simply one bank that made bad loans, went bust, and everyone moves on without the economy going down the tubes.
So we libertarians are not angry about banks foreclosing with screwed up paperwork. We’re angry with government for setting up the situation that encourages banks to foreclose with screwed up paperwork and leaves everyone else holding the bag, and possibly leaves everyone else to actually pay for the mortgage.
But the only entity being hurt by the foreclosed mortgages is the entity, bank or otherwise, which paid real money for a mortgage it now can’t collect on.
I speak as someone in Florida who can’t sell his house because of too many foreclosures in this area. And whose mortgage was paid off a long time ago because we bought the house three decades ago, so don’t expect me to cry for people who tried to buy a house they knew, or should have known, they couldn’t really afford.
Juice
@timb:
Damn, timb. You’re pretty serious. That was some serious stuff. I’m serious.
burnspbesq
@kishnevi:
Fine. Explain to us how those rights can be exercised in the absence of the rule of law and a state with a monopoly on the legitimate use of violence. No libertarian that I know would last five minutes in the Hobbesian state of nature.
Libertarianism is a crock. Go sell that weak sauce on another corner.
PanurgeATL
@kishnevi:
Helluva big word, that “always”. Tell me: What should “government” have done? They set up the playing field this way, they set it up that way. What exactly constitutes not setting it up? What you’re describing is PRECISELY a matter of government “getting out of the way” (repealing Glass-Stegall, etc.). Would you prefer they have not done that? Would you prefer the status quo ante? Wasn’t that “government intervention??
nicrivera
[SARCASM]
I always wondered why libertarians were so obsessed with such trivial things as ending the War on Drugs and ending our wars in the Middle East!
White people problems! Of course! Because we all know that it’s “white people” who are the biggest victims of our government’s War on Drugs and its endless wars in the Middle East!
[/SARCASM]
JH
@Mnemosyne:
No, you get to say these things because we all have the right to speak our minds, but it still doesnt make you right.
I wish otherwise good guys like Louis CK and Tim Wise would stop racializing things, people need to move on from it.
JCitrus
@TR:
the irony of your statement is palpable. hurr durr libertarians are childish nya nya nya boo boo!
derek
I guess it completely make sense that ONE organization should be responsible for covering EVERY possible issue that comes up.
“Fine. Explain to us how those rights can be exercised in the absence of the rule of law and a state with a monopoly on the legitimate use of violence. No libertarian that I know would last five minutes in the Hobbesian state of nature.
Libertarianism is a crock. Go sell that weak sauce on another corner.”
Libertarianism is not about the absence of the rule of law, but the existence of it, and only in the instances when it protects individual rights. If you’re paying attention, you’ll notice we live in a country, not of laws, but of men, where police believe themselves to be dictator of everything they see.
MPH
“..banks have been able to leverage shoddy paperwork to deprive mortgage holders of their property rights.”
So the problem, according to the article eventually linked to by mastermix (the link “harsher on this topic” at the end of the first paragraph), is that Reason isn’t reporting on two banks that due to their own shoddy paperwork, are depriving themselves of their own property rights. If you read the article linked to, the MA Supreme Court is saying that the banks cannot foreclose a mortgage because they lack the proper paperwork to prove that they own the mortgage (keep in mind that the mortgage owners are the banks, and the property owners are the people who used the money lent to them by the banks to purchase the property). So a bank bought a mortgage from the current mortgage holder, then when attempting to foreclose that mortgage, was unable to prove that they actually owned the mortgage, and Reason (or anybody else) failing to report on this is supposed to be an indictment of Reason?
Reason seldom reports on events where people injure themselves, especially when it is entirely self inflicted.
Perhaps mastermix meant to say “..banks have been able to leverage shoddy paperwork to deprive property owners of their property rights.” But that makes no sense in the context of the first linked article, since that article concludes that the property owners may now no longer owe anything to the mortgage holder.
Perhaps mastermix meant to say “..property owners have been able to leverage shoddy paperwork to deprive mortgage holders of their property rights.” But that also makes no sense, as based on the article intially linked to, the property owners were not involved in the case; and even if they were, the mortgage holder is responsible for their own shoddy paperwork.
What I came away with here is mastermix is saying he doesn’t understand how Reason can claim to be libertarian because they aren’t reporting on some problem incoherently described by mastermix that, according to the article linked to, is a case of TWO banks harming themselves due to their own sloppy work. TWO! Yeah, that’s a widespread problem! I don’t understand why that isn’t front page, top of the hour, news everywhere! And certainly, failing to report on a bank’s self-inflicted wounds is damaging to anyone’s libertarian bona fides.
In any event, even if I could figure out exactly what problem mastermix thinks Reason should be reporting on, just because Reason’s priorities aren’t what mastermix thinks they should be doesn’t mean what mastermix thinks it means.
lunchstealer
If you want to know why Reason hasn’t been upset about the property rights of the mortgage holders in this case, a passage from the article may shed some light.
“Regardless of recording issues, there is little dispute that Antonio Ibanez, a special education teacher in Springfield, Mass., defaulted on his loan for $103,500. He did not even fight the foreclosure when it came in 2007. ”
It sounds as if the banks and investors should be suing each other over the failure to properly document their transactions, and that the original mortgage owner should proceed with the foreclosure and then get the crap sued out of them by the subsequent mortgage holders for fraud or failure to file paperwork or whatever.
The question seems to be who should be foreclosing, not whether a foreclosure is valid in this case, and a fight over minutia in recordkeeping between banks seems like white people problems, indeed.
The cases like the one in Texas (I think) where a bank tried to foreclose on a guy who’d paid cash for his house, and thus never had a mortgage to foreclose on, are a more appropriate cause for outrage.