Risks caused by self-Inflicted Moral Hazards spread to Mortgage Insurance Companies and Title Insurance Companies paying Claims.
The effects of an overwhelming number of Foreclosures on Mortgage Insurance Companies and Title Insurance Companies are well-documented. Mortgage Insurance Companies are overwhelmed with Insurance Claims by Banks and other Foreclosure Plaintiffs. Title Insurance Companies are similarly overwhelmed as a result of the actions by Banks and other Lenders. E.g., Dennis J. Wall, "Litigation and Prevention of Insurer Bad Faith" ยง 3:111, "Mortgage Insurance" (West 3d Edition 2011); see, e.g., "HUD Program Offers Hope of Relief ... to Mortgage, Title Insurers," April 5, 2011 post on Insurance Claims and Issues Web Log ; "Mortgage Insurance Absolutely No Antidote for Radioactive Investments," March 29, 2011 post on Insurance Claims and Issues Web Log;; "'Fraud Upon the Courts?' Insurance Crisis Result of False Swearing," November 3, 2010 post on Insurance Claims and Issues Web Log.
Florida's Attorney General since January, 2011, Ms. Pamela Bondi, sees a Moral Hazard in Residential Mortgage Foreclosures. She does not see a Moral Hazard in lending practices, as can be seen from her own actions since January. She instead sees a Moral Hazard in principal reductions, in even considering reductions of the Mortgage principal owed by Florida Homeowners to non-Florida Banks. Principal reduction is not a suitable negotiating chip in discussions between the 50 State Attorneys General and the Banks over the Foreclosure Fraud Fiasco, she has announced. General Bondi's announced views run counter to negotiation best practices from the beginning of these negotiations, see, e.g., Alejandro Lazo, "Banks Are Foreclosing While Homeowners Pursue Loan Modifications" (Los Angeles Times Online, April 14, 2011); "POSTSCRIPT: Prayers for Bondi, Mortgage Finance 'Unfair, Deceptive and Unconscionable' Actions," posted here on July 29, 2011, down through today. See Michael Hiltzik, "Foreclosure Reforms May Be Coming To a Head" (Los Angeles Times Online, Sunday, August 14, 2011).
These views also run counter to a view that fairness has a role to play in the process. "We have to bring a greater sense of equitable treatment. When we do that Americans will say, 'Yes, we are all in this together.'" Thomas M. Hoenig, President of the Federal Reserve Bank of Kansas City, quoted by Gretchen Morgenson, "Fair Game / Conventional Fed Wisdom, Defied" p. 1, col. 1 (New York Times Nat'l ed., "SundayBusiness" Section, Sunday, August 14, 2011).
Two Assistant Attorneys General received great respect from lawyers across the nation for their successful efforts in investigating Fraud by Mortgage Foreclosure Plaintiffs. The same two Assistant Attorneys General received high performance reviews of their work in the Florida Attorney General's Office after General Bondi assumed that Office. General Bondi forced them both to resign, claiming they instead performed poorly, a claim which has yet to be supported by a single page of documentation. See "POSTSCRIPT: Prayers Over Bondi, Mortgage Finance 'Unfair, Deceptive and Unconscionable' Actions," posted here on July 29, 2011.
Now, the Office run by General Bondi has provided more troublesome, potential Moral Hazards. Another Assistant Attorney General has resigned, this time after the Assistant A.G. investigated the number of cases in which former employees of the Florida Department of Legal Affairs (A.G.'s Office) have landed jobs with targets of the Residential Mortgage Foreclosure Fraud investigation. The Assistant A.G. concluded that, among other things, where there's smoke, there's fire. To paraphrase his own departing remarks as quoted in newspaper reports, the Assistant A.G. in question concluded that Florida Taxpayers deserve an Attorney General's Office which does not have its own self-inflicted Moral Hazards. He immediately resigned. The Florida A.G.'s Office charged that they were about to dismiss the Assistant A.G. in question on a claim that the Assistant A.G. had a business relationship with a target of the Mortgage Fraud investigation. See Aaron Deslatte and Kathleen Haughney, "Sentinel Watchdog / Bondi's Office Rocked by Accusations of Impropriety" p. A1, col. 1 (Orlando Sentinel, Saturday, August 13, 2011).
If we had any doubts before, you and I, we should not have any doubts now, that on this and every day we should pray unceasingly that we will have Justice in Florida, and in our country.
Please Read The Disclaimer.
Comments