Environmentalism and the Nazis

In the 1950’s communists were said to be infiltrating the government and the entertainment industry, as well as operating under several fronts. The McCarthy era ended when the demagoguery was challenged and the true charlatans were identified. While it lasted, though, it was a ticket to political prominence.

In the last few years some people have taken to identifying environmentalists as Nazis. This is actually done on national television and similar venues; we have almost grown to expect it in political campaigns. Such fear and hate mongering seems to be efficacious. You would think that it would backfire, but there must be more people swayed by it than repulsed.

On national media in 2006 Al Gore was compared to Nazi propagandist Goebbels and to Hitler for his success in publicising global warming. (It is a bit ironic that the people who diminish the Holocaust in this way tend to be Israel’s most zealous supporters.) On CNN Senator Inhofe actually described Gore’s testimony to the Senate Committee on the Environment and Public Utilities in that manner with the concurrence of Glenn Beck, the host.

In 2007 Fox News Radio continued the Gore/Hitler diatribe. CNN continued to transmit unbelievable comparisons to Hitler and Nazis. Glenn Beck recently said that Gore’s global warming campaign is like Hitler’s use of eugenics to justify exterminating 6 million European Jews.

With the new report on global warming just out, a report subscribed to about a dozen scientific groups associated with our government, doesn’t this treatment of science remind you of earlier, more primitive, periods of history?  Imagine: A world wide scientific conspiracy.  Really?

The hate and fear mongering diatribes are uniformly nothing more than name calling. There is no real rebuttal. Scientists picked “An Inconvenient Truth” apart pretty thoroughly finding some questionable facts and theatrics that suggested an unsupported conclusion. A UK judge found nine factual errors in the film.

But scientists and the British judiciary (one member anyway) agree that the film is rooted in good science and its overall message is supported by sound scientific theory and belief. This was known in 2007 and then Gore got a Nobel Peace Prize along with a U.N. panel of scientists investigating global warming. This, if anything, seemed to fan the flames of hate mongers.

This very odd discourse about environmentalism is probably the progeny of a pseudo-intellectual eddy in revisionist history. People are actually positing that environmentalism is a Nazi program, sort of like “Boys from Brazil.” This theory has been debunked by legitimate historians and even the people who are credited with originating this view disclaim any association with it.

A couple of years ago Jonah Goldberg’s book “Liberal Fascism: The Secret History of the American Left, From Mussolini to the Politics of Meaning” appeared. This book seemed to revitalize the “environmentalism is fascism” diatribe, although Goldberg claimed to have written nothing that was intended to suggest such a thing. The book sold well to mixed reviews. It was celebrated by conservative reviewers and panned by others.

The book’s thesis, behind all the pseudo-intellectual blather, is essentially Libertarian: Fascism means governmental regulation and liberalism means governmental regulation; therefore liberalism is fascist. Environmentalists want governmental regulation therefore they are fascists too. For proof just look at Nazi Germany where environmentalism was born. Nazis called themselves the national socialist party therefore socialists are fascists. Socialists are liberals. Very simple-minded stuff hiding in a lot of jargon.

This silly word parsing though unhinges people like those at the Building Industry Association of Washington who have made a habit of labeling anyone opposing their views as Nazis. In March their newsletter, in addition to more conventional name calling, called the Washington State Department of Ecology Nazis and lumped all environmentalists under that moniker.

This set off a local firestorm culminating in and Anti Defamation League demand for a retraction or apology. The B.I.A.W. of course refuses claiming the article (written by its storm drain columnist) is academically grounded. The B.I.A.W. is widely regarded as the Washington State Republican Party’s attack dog and neither the party nor any of its candidates has attempted to separate from this absurd propaganda machine.

Ladenburg’s Statistics Counter Tort Reform Argument

I attended a seminar at which John Ladenburg, the Pierce County Executive and candidate for Washington Attorney General, spoke and gleaned some statistics that I thought I’d share. We often hear about the crippling burden of litigation and the extravagant liability that businesses and government are exposed to.

Most governmental entities insure against litigation expenses and awards but Pierce County decided to cancel its policy and self-insure. In the course of doing this Pierce county kept careful track of its litigation and related expenses. The results are surprising.

From 2001 through 2007 Pierce County was involved in a total of seven trials and binding arbitrations. One each year on average. The County won all the trials and lost two of the three arbtrations. That’s two adverse results in seven years.

To sue the government a person must first file a claim. These claims are investigated and the County reports its decision on the claim to the claimant. About half of the claims are paid because they are meritorious, although usually payment is for less than the amount asked.

The half which are not paid, after receiving the explanation from the County, usually drop their claims. Only about roughly three to six percent of the claims result in lawsuits in Pierce County. Once filed, the vast majority the lawsuits against Pierce County are dismissed or settled.

This procedure in which the people’s claims are treated respectfully and a fair settlement is sought from the beginning has resulted in cutting amounts paid in the settlement of claims almost in half over the seven year period. This approach has saved the County a great deal of money.

Mr. Ladenburg’s impression is that high jury awards and huge litigation expenses are not the result of frivolous claims by litigation-crazed citizens, but a result of the aggressively adversarial treatment of people with claims. By refusing reasonable claims and settlement offers, governmental (and other) entities add to the burden on the courts and increase their own risks.

If you have ever been in a lawsuit with a big corporation or governmental entity, chances are that you perceived a refusal to entertain a settlement offer you thought was reasonable and a strategy that drove up the cost of the litigation. The strategy of some “deep pocket defendants” and their insurance companies is to make the litigation prohibitively burdensome and expensive, so people cannot see it to conclusion.

Mr. Ladenburg’s statistics suggest that plaintiffs are generally reasonable and those who are not reasonable meet with an appropriate fate in court. Corporations (governmental and private) that are aggressively litigious must bear a significant share of the responsibility for the caseload imposed on our courts.

Dual Agency Issues: The New Depressed Property Law

Real estate agents are concerned about the situation in which they present an offer to buy unlisted property that is being foreclosed.

In that context if the agent says that the owner ought to sell to avoid the foreclosure or something of the sort the agent risks risk being deemed a “distressed home consultant,” and would then have fiduciary obligations to both sides of the transaction, as the agent would with a dual agency. In this situation though there is an inherently strong conflict of interest.

I believe that you would have to have the seller consult with a lawyer of his or her choice and have the seller be independently represented in the sale by the lawyer or an independent agent, perhaps chosen by the lawyer. The seller’s interests would then be protected and in the abstract I believe the agent would probably be deemed to have fulfilled his or her duty to the seller.

I would certainly recommend that even after the seller has independent representation the agent make full disclosure to the other side and maintain the highest level of honesty. I would strictly comply with the other requirements of the new law.

I’m not sure whether the new NWLS forms cover this situation, but it would certainly be appropriate to discuss the details of the situation with a lawyer at that time.

Washington Distressed Property Law (2)

It appears that most of the complaints about the equity skimming law are originating with representatives of real estate agents. (See a comment to an earlier entry.) The reason for this is that the law impresses new duties on the agents and with the new duties the prospect of liability. Over the years there has been a good deal of marketing to get you to think of real estate agents as “real estate professionals.” This law they believe is taking this idea too far.

The crux of this concern is that real estate agents might be characterized as “distressed home consultants” who the new law says owe a fiduciary duty to the the distressed home owner, someone facing foreclosure. Courts have described “fiduciary duty” as the highest obligation of care, loyalty and good faith. Most distressed home owners believe that they are getting this from the person who is advising them. (For that matter many people who retain a real estate agent imagine that they are receiving this level of commitment.) Illegal equity skimming, at least the cases I have seen, all involve engendering this level of confidence in the home owner and practicing beneath that level.

Representatives of real estate agents argue that this is not fair to the agents because the standard is vague and broad in scope. Remember though that the law applies only to agents, as well as all other people, who meet the definition of “distressed home consultants.” The law describes two categories of these “distressed home consultants.” The first is a person who solicits or contacts a “distressed home owner” and makes a representation or offer to to provide a service that will avoid the foreclosure.

The statute lists 13 types of offers that render a person a “distressed home consultant.” They include such things as avoiding or delaying the foreclosure, arranging a lease with a purchase option and the like. Do any of these things and you are a “distressed home consultant” with a fiduciary duty to the home owner. Clearly a real estate agent could inadvertently say something that would render him or her potentially liable as a fiduciary. So could anyone else.

The other way a person can be a “distressed home consultant” is by systematically contacting owners of homes that are in foreclosure. If you systematically solicit people in foreclosure you owe them a fiduciary duty. This should reduce the wildly misleading solicitations that are routinely sent to people after a notice of foreclosure is recorded, then published. Home owners in foreclosure receive dozens of these mailed promises of relief. Real estate agents, and others, who do mass mailings and target these people fall under the definition.

“Fiduciary duty” is a court-defined term that has been in use since long before Washington was a state. It is a term imposed by the courts where there is a relationship of trust and dependence. Its scope is defined by published cases, trial judges and juries. Lawyers have a fiduciary duty to their clients. Escrow agents and closers have fiduciary duties to both the buyer and the seller. The successor trustee performing the foreclosure has fiduciary duties. Trustees of real estate trusts and all other trusts have fiduciary duties. Partners in real estate transactions have fiduciary duties to each other. The concept is far from alien in real estate transactions.

What is interesting to me is that the real estate agents who are so confounded by the idea of having a fiduciary duty already have a fiduciary duty to their clients. This was imposed by the courts some time ago. When agents represent the buyer and the seller, a “dual agency,” they have fiduciary obligations to both sides. I hope that they are aware of this.

I presume that the aspect of fiduciary duty that troubles real estate agents the most is the standard of care. If a real estate agent or anyone else presumes to tell a person in foreclosure what to do or promises relief from the foreclosure, he or she should be held to the standard of care of a profession that can give such advise. This is currently the law. A real estate agent has court approval to fill in the blanks on real estate forms. A real estate agent is not permitted to discuss with the client the legal effect of contractual provisions. This would be the unauthorized practice of law. They are supposed to refer the client to a lawyer for legal advise.

In the context of a foreclosure a real estate agent, or any other person offering advise about what steps to take, is usually offering legal advise regarding foreclosure procedure or legal artifices to avoid foreclosure. This is not something most people (including real estate agents) are qualified to do and it has recently led to broad scale disasters for home owners in connection with equity skimming. A real estate person or anyone else finding himself or herself in this situation should refer the home owner to a lawyer rather than offering legal advise. This is already the law.

Equity Skimming in Washington: A Brief History

There are three main reasons that real estate has attracted so many unscrupulous people in recent years.

First it is an asset that can be highly leveraged. Homes can be purchased for a relatively small amount down and the balance financed. When property goes up in value this confers wild profit on the owner. For example, say you buy a home for $100,000 and pay 10% down. When the transaction closes you have purchased a $100,000 asset for an expenditure of one tenth its value. Putting aside transactional costs, if the property increases in value 25%, you have gained $25,000 in value on an original investment of $10,000. You more than doubled your money on a 25% increase in value of the asset.

The second aspect that attracts the criminally inclined, is that these very valuable assets are often owned by people who are not sophisticated in real estate financing. This is an area where people typically just given themselves to the grinding wheels of commerce without knowing a lot about what is going on in a real estate transaction. Thus there is great opportunity for duplicity behind a mask of convention.

This area is also relatively unpoliced. In the early 1900’s the scam of choice was securities fraud. So many people were falling victim to fraudulent securities schemes that the federal government created the Securities Exchange Commission and in the 1930’s passed legislation imposing severe penalties for securities fraud and implementing broad disclosure requirements.

Many equity skimmers would probably have been selling bunko stock one hundred years ago. The equity skimming schemes of today occupy a relatively unpoliced area without much in the way of legislation (although states such a Washington are passing legislation to thwart this form of fleecing). In short home sales is an area where a lot of money passes hands, there is potential for fast profit and there is not a great deal in the way of scrutiny — similar to stock sales before the Security Exchange Commission.

There have always been lots of real estate scams but for our purposes the story starts in the 1970’s. There was a recession in the early 70’s (or something that looked remarkably like one). An average house in Seattle could be purchased for $15,000, due in large part to local economic problems. This was followed by a period of inflation and breathtakingly high interest rates.

The inflation encouraged people to sell their real estate profitably, but the high interest rates prevented many people from getting loans to buy real estate. These pressures created an era of seller financing. The buyer would give the down payment to the seller and make monthly payments to the seller with an agreement to pay the purchase price off in full in three to five years, when financing could be obtained. This sort of arrangement was commonplace.

The buyer got the house and with it the obligation to pay payments to the seller and the obligation to continue to pay the seller’s mortgage. The buyer could assume FHA loans but usually the buyer just agreed to make the payments for the seller after the sale. The malevolent instincts that had been somewhat suppressed by federal laws in the area of securities sales were revived in this situation.

All sorts of bad things happened. Crooks would buy homes with faulty seller financing documents so sellers could not foreclose if they were not paid by the buyer, while at the same time they remained obligated on the mortgage which the buyer might choose not to pay. Companies were formed that bought real estate on seller financing, then just stripped the property of everything of value and left the barren property for the sellers to foreclose upon.

Seller financing deals could be structured to protect the seller, but there is always a portion of the population that does not consult a lawyer before entering into a transaction of this sort. It is this group around which financial vultures circle.

There was nothing of the magnitude of the massive systematic fraud of recent years, so the legislature was relatively slow to address the problem of equity skimming. In 1988 Washington passed a law that criminalized equity skimming and declared it to be a violation of the Consumer Protection Act. The forward to the bill states in part:

The legislature finds that persons are engaging in patterns of conduct which defraud innocent homeowners of their equity interest or other value in residential dwellings under the guise of a purchase of the owner’s residence but which is in fact a device to convert the owner’s equity interest or other value in the residence to an equity skimmer, who fails to make payments, diverts the equity or other value to the skimmer’s benefit, and leaves the innocent homeowner with a resulting financial loss or debt.

Financial institutions had their hands full in the 1980’s. Seafirst Bank, the biggest bank in the Northwest was going bankrupt until it was purchased by Bank of America. Other big banks swallowed smaller ones into the nineties. Two of the biggest Seattle banks, Peoples Bank and Old National Bank, were bought by U.S. Bank of Oregon and merged into U.S. Bank of Washington. This activity seemed to occupy attention much more than occasional fraud on homeowners.

The opportunity for homeowner fraud errupted like never before during the Bush Administration. The administration’s laizes faire, anti-regulation bias allowed this situation to reach international economic crisis proportions, despite obvious abuses all along the way. (The policies that created the situation were constant between Clinton and Bush, but Bush’s response to the financial crisis made Katrina relief look adequate and timely.)

The subprime era was awash in home loan money; lenders could hardly give it away fast enough. Home loans were obtained without a great deal of review for as much as the full purchase price of a home. This was like a petri dish for raising a culture of financial fraud.

People were so eager to get at the money there were numerous seminars given on equity skimming. Small fortunes were made on the price of admission alone. These week-long seminars were packed with local real estate people, real estate agents, brokers and miscellaneous others. People from Seattle, Everett, from all over the Western part of the state attended.

Recently indicted Charles Head (California based) advertised on the internet, sent faxes to mortgage brokers and people in the real estate industry and nurtured relationships with lenders and escrow companies. He had dozens of companies that were nothing more than names to confuse the public. Sometimes the companies described themselves as facilitators, sometimes as lenders, sometimes as lenders’ agents, sometimes buyer’s agents, sometimes both lender and buyer’s agents and often not at all.

Don’t Buy Foreclosed Property From Dirty Lenders

There is a hidden risk in buying foreclosed property that nobody seems to be talking about.  Many of the houses being foreclosed upon were subjected to liens securing sub-prime loans.  Many of these loans were made by disreputable lenders, sometimes by now indicted loan officers.

In Washington, like many other states, the purchaser at a foreclosure sale takes the title that existed at the time that the loan was made and the deed of trust recorded.  If the lender had nothing to do with any deceit on the owner and was not on notice of any irregularity, then the lender is deemed a “bona fide purchaser for value.”  This is a legal term meaning that title cannot be recovered by the owner, even if there was fraud.  When the lender was involved in the fraud or had reason to know of it, then the owner can clear title of the deed of trust and the ownership interest of the purchaser at the foreclosure sale.

Thus, a truly prudent buyer at a foreclosure sale or purchaser from a bank after foreclosure should check to see which lender made the loan originally.  Only after finding out about that lender can the purchaser have comfort that title cannot be reclaimed by a defrauded or deceived owner.

A Victim of the “Foreclosure Crisis”

For many of the people in our community in the Northwest the “foreclosure crisis” is not an exercise in economic theory or a lame talking point. To some degree we have all been affected by the recent financial crisis which involves the selling of consumer mortgage debt as if it were a security. The billions of dollars that are washing around banks and investment firms and pouring out of our federal government to solve the crisis give us a notion of the scope of the problem. But that is all so theoretical seeming.

Over the last few years in the consumer lending industry there has been a frenzy not at all unlike the one that gripped our area 110 years ago. In the 1890’s the Puget Sound area experienced a boom driven by the rush to riches in Alaska. Timber was needed on a large scale, outfitting, shipping. This was the staging area for the search for gold in Alaska. At the same time wood was needed to rebuild Tokyo and logs could hardly be taken down fast enough. Coal then was found and mined in Eastern King County. People here were getting rich fast.

With our frontiers pretty much explored and exploited, the vast timber reserves gone, we discovered that our growing number human resources were not just a labor force but a potentially rich field for financial exploitation. Traditionally the home loan market has been relatively stable. Everybody want to buy a house and the average home is occupied about seven years before it is sold again.

The savings and loan scandal during the Aust years of the Regan administration was tremor of instability in which the relatively unregulated savings and loan industry was found to be exploiting home buyers and investors. It was quelled with federal money and added scrutiny. While it devastated many people scope of the problem was relatively confined. Here a few savings and loan institutions disappeared (anyone remember Shoreline Savings and Loan?) and a few real estate agencies were hurt.

That paled in comparison to what happened more recently. A few years ago people decided that mortgage loans could be bundled and sold on the open market. Investment banking firms could buy and sell these things. For a long time banks had been making home loans and selling them to quasi government institutions, Freddie Mack and Sallie Mae. Suddenly there was a new market for these instrument and far greater demand than ever. Not only that but this new makrket was largely unregulated. Banking has been highly regulated since the Great Depression of the 1930’s but investment banking was pretty much wide open. When banks had only Sallie Mae as a buyer of their home loans, all the home loans had to meet rather strigent requirements, but with new buyers in the field those requirements could be fudged. This new demand also allowed lending institutions that were not national banking associations to sprout up all over.

The federal reserve cooperated by keeping interest rates low so that money for buying homes could be obtained relatively cheaply. A set salary could afford the monthly payments on a higher debt with lower interest rates. This was magnified by the now well established custom of married couples both working. The housing industry boomed, the building industry boomed and house prices soared.

This caused the proliferation of what had been a rather quiet industry: mortgage brokers. With interest rates low and all sort of different lending program, a broker could be very helpful in finding a good deal. Everybody made money by closing deals. The mortgage broker made money when the loan closed, as did the real estate agent and the lender. The lender made more money when it sold the loan to a bundler who made money when the bundle was sold and so on down the stream of finance.

Around here people were now more plentiful that the forests that they had replaced and we began profiting on each other with the frenzy of a gold rush. This was of course a national phenomenon and often the loan was made by a far away lender but we were certainly on the front end of this financial sunami.

Somewhat ironically greed seems to flourish best when money accumulates. It must have to do with oppotunity. At any rate significant segments of our community sttod to profit by getting loans to close. Even the lenders were not motivated to make sound loans becasue they were just selling the paper upstream. Big profit depended on large vloume.

I’ve recently met a few people who were sucked into this vortex of greed and induced to obtain mortgage financing. I’ll tell you about one of them. Nancy was a retired widow who wanted to buy a small home in the Redmond area but everything seemed too expensive, even the modest homes that she desired. She met a nice lady in a senior singles group who worked as a mortgage broker who told her that she should not be put off by the price. Instread she should look at the amount of the monthly payments and she should gage what she could buy by the amount she would have to pay each month. Prices increased quickly enough that she should view the payments as an investment because when she sold she would make a lot of money on th eequity she built up.

This made sense to Nancy so she decided to at least have a real estate agent show her some houses. They found a modest house and the real estate agent assured her that it was an excellent investment; houseswere going up in price so much that she could always sell the house without any trouble and after a year or so sell it at a profit. Nancy did not want to sell the house but this did give her comfort. She went back to her “friend” the morgage broker who said that she was getting a great deal on the house and that if Nancy did not buy it she would.

When Nancy asked about financing she was told that the payments would be about $1,300 per month. This was a bit of a stretch but something that she could afford. The broker ran off some numbers and printed a page showing that her payments would come to $1,334.50 each month. She was told that by renting the basement (which could be used as a stand alone aprtment) she could easily afford this. Nancy then signed a purchase agreement and went back to the broker who asked her to sign a poan application. She got a call a few days later from the mortgage broker who told her everything was ok and she would receive the loan. She then waived the financing contigency and was locked into buying the house.

Before the closing she went to the borker’s office again and was told that everything went smothly, that she had to tinker with the application a little bit but it was no problem. A couple of days laterwent to the closing office at a title company to sign the papers. She overwhelmed by the stack of papers that awaited her there. The note that she had to sign was three single spaced pages and was utterly incomprehensible. The Truth in Lending sheet showed that the amount would increase over time but not over $1900. When she called her friend about this she was told that this would not occur for anumber of years and that it would be covered by the rent of the improved basement out and anyway she could always sell the house for a profit.

That was two years ago and now she has monthly payments of $3,900, which she cannot afford to make. Foreclosure has been commenced and the house has been listed for six months without an offer. When the foreclosure is completed she will have lost her down payment of $100,000 and installment payments totaling about a third of that. The truth in Lending discloures were false, but the subprime lender that made the loan is long gone and bankrupt.

There are many people in Nancy position, truly victims of unscrupulous lending practices. I rankle when the “foreclsure crisis” is blamed on greed-driven consumers. Most victims are just people who were not very sophisticated and whose fault was misplaced trust.

Washington State: Haven for Special Interests

It is my impression that Washington, more than perhaps any other state, is led by special interests. My impression is based in part at least on my law practice which focuses on real estate and business, so my awareness of this influence is pretty much confined to those areas.Let me give you a few examples of what has given me the impression that special interests are more influential here than most other places.

Perhaps my most shocking moment practicing law occurred when, during oral argument before the State Supreme Court, a representative of the insurance industry pointed to the justices and told them that his people were closely looking at how each one of them voted on this case and the insurance industry would be heard from come election time. (I am paraphrasing here but this message was loud and clear.) I thought that this was a truly shocking insult to the integrity of the court, but the justices said nothing.

In the area of construction law Washington is I believe the most repressive with respect to consumer rights. Did you know that if a building or bridge collapses six years after it is permitted, there is absolutely no recourse against anyone in the construction industry, including builders, suppliers, architects, engineers, even surveyors and anyone one else claiming to be in the industry? Condominium owners have no recourse if their building collapses four years after it was permitted (although this is a little murky). In Washington, at least with respect to being able to enforce warranties and representations, all the talk about the useful life of structures is bogus. After six years (four for condos) no one is responsible.This is the result of Washington’s statute of repose, which is jokingly said to have received that name named because people had to be asleep for the legislature to get the law through.

Other states have statutes of repose. These were pushed through state legislatures by an unprecedented lobbying effort on the part of the insurance and building industries in the 1960’s. Washington’s four year statute for condos and six years for absolutely everything else is extremely rare among the states and may be the shortest of any state. If you buy a new condo you should know that you are stuck if anything (however disastrous) goes wrong four years after the permit was granted, which is ofter about two or so years after it is filled.

To give you a sense of the influence of the building lobby, in Washington say a school building collapses six years after completion and kills a child whose watch stops for no good reason. There would be no recourse against anyone in the construction industry but the parents could sue the watch manufacturer for the cost of the watch. Personal property here has a twelve year (or the useful life of the product) statute of repose.

Perhaps the best indicator of the exalted state of special interests here is that when three sitting justices of our State Supreme Court announced last week that they were seeking reelection, the newspaper interviewed not a law professor or someone who practices before the court, but a representative of B.I.A.W., the building industry lobby.

Washington Becomes a Lead State in Cracking Down on Foreclsore Scams

I almost missed it! This is great day because the legislature passed last night the equity skimming bill recommended by the Washington State Attorney General in January of this year. In two months the legislature passed a comprehensive bill specifically addressing foreclosure rescue scams. Representative McIntire called my this morning on his way back to Olympia from Seattle. He said that the yesterday’s session did not end until 1:30 this morning. The time was apparently very well spent.

This bill, HB 2791 , strikes right at the heart of the frauds that have been perpetrated on homeowners, making these scams felonies, as they should be. People who p[resent themselves to homeowners as consultants for foreclosures and default ed home loans are now subject to disclosure requirements and well articulated standards of behavior. The “savior” is prevented from absconding with more than 18% of the equity.

I will provide a more detailed discussion of the bill at a later date. When not impeded by special interests the Washington legislature is capable of very speedy action. With this bill (assuming the governor signs it, which is a safe assumption) Washington become one of the lead states in criminalizing this reprehensible behavior and regulating the permissible scope of legitimate activity.

Washington Senate Consumer Protection and Homeowners Committee

Sometimes a person could almost get skeptical about the legislature. Take for example the foreclosure crisis and the millions of dollars that are taken from homeowners through foreclosure rescue scams. The Attorney General recommended legislation to help avoid this type of larceny and to penalize those who perpetrate it. A blue ribbon Task Force on Homeowner Security was assembled which duly issued a report to the Senate Consumer Protection and Housing Committee.The report, like most of its kind, contains a lot of fluff. It says that it would be a good practice for lenders to enter into workout agreements which permitted the homeowner to pay an affordable amount. Duh! Apparently this blue ribbon panel was unaware that nearly every homeowner is this situation begs for such consideration, often without ever being able to reach a responsible person on the phone. There is much talk about consumer education and enhanced public awareness that might have helped some of the victims, but does not really get to the root of the problem.There were two areas of discussion though that particularly caught my eye. One was legislation addressing mortgage fraud and rescue scams. (This is what the Attorney General is seeking.) The other was that the foreclosure notices themselves could serve a public interest function by alerting the homeowner to legitimate counseling opportunities and warning against scams. What a great idea! This would truly serve a public purpose, at no public (or private) expense. People actually read those notices and what would it hurt to tell them about legitimate avenues of inquiry, as well as the threat of scams. This is exactly the information that the victims do not have. It would involve relatively minor changes to the Deed of Trust Act.

Dutifully Brian Weinstein, the chair of this committee (who has fought for a number of consumer oriented bills, usually with fellow Democrat Frank Chopp), sponsored a bill to change the Deed of Trust Act. The proposed changes though bore no relationship to the changes proposed by the committee’s task force. In fact they worsened the situation of the scam victim. The trustee is the person or company which actually performs the foreclosure. It has a fiduciary duty to the homeowner, the highest duty imposed by law. The proposed legislation eliminated that. It did provide that the trustee had to have an office with a telephone in this state, but then changed the law so that the trustee does not need to answer its phone. Requests for information need not be honored unless they are in writing and then the trustee need not respond sooner than 10 days. These changes limit and delay the information attainable by an aggrieved homeowner. That’s it! Nothing about informing the homeowner of legitimate counseling opportunities or warning about scams. How on earth could the chairman of the committee that had a report recommending changes to the Deed of Trust Act, sponsor a bill that, not just disregarded those proposed changes, but actually hindered the homeowner’s interest in being treated fairly and getting information.