Boot Camp graduate April Charney has been making the rounds with the news media because of her high profile in successfully defending foreclosures. In the following segment, a very calm April has a back and forth with Dan Mitchell of the Cato institute. A couple of things jumped out at me about Mr. Mitchell’s comments. When the CNBC reporter asked about situations when two different banks tried to foreclose on the same house because they didn’t even know which one owned the mortgage, Mr. Mitchell refers to it as a “technical” issue. Mr. Mitchell stated his concern that we are sending a bad message when we allow homeowners who are behind on their payments to stay in their home. He says they are not honoring their contract.
Apparently Mr. Mitchell isn’t concerned when the banks aren’t honoring their contracts like the pooling and servicing agreement or Fannie May and Freddie Mac servicing guidelines. When that happens, they are referred to as just “technical” problems or “paperwork” problems. Does Mr. Mitchell have the same sympathy for someone about to live on the street as he does for people in an industry that made billions upon billions of dollars over the last decade? When executives in the financial industry made the decision they couldn’t be bothered to follow contracts they signed or follow state or federal law because it would slow them down or cost them too much, apparently there’s no need to worry about what message that sends. Now that their improper cost and time saving shortcuts are being used against them, we should forget about those “technical” issues. Yes, let’s make sure we reward those people who saved hundreds of millions of dollars with their shortcuts by letting them off scott free when their bad behavior causes problems for them down the road. That will make them think twice about breaking their contracts or the law in the future.
The message that you can ignore contracts or the law when you’re rich but not when you don’t have money is the message I’m getting from people like Mr. Mitchell and those that agree with him.
– Bob Godnik