Senator Warren's Autobiography to be Published

Jill Lepore's review of Senator Elizabeth Warren's new autobiography, A Fighting Chance, in the current issue of the New Yorker, makes for fascinating reading.  Lepore compares Warren's book with Louis Brandeis's Other People's Money and How the Bankers Use It, which was published in 1914.  "Brandeis was concerned with Gilded Age plutocrats' use of people's bank savings to build giant, monopolistic conglomerates answerable not to the people but to shareholders."  The writings of the future Supreme Court Justice, well known for his "ability to enlist data in the service of a legal argument," which came to be known as the "Brandeis brief," were instrumental in the effort to reform antitrust law and regulate the financial industry.  Lepore argues that these reforms "in the middle decades of the [twentieth] century, made possible the growth of the middle class."

Unlike Brandeis, who focused on saving and monopolies, Warren focuses on borrowing and debt.  She is concerned about the collapse of the middle class.  Warren blames the rise in personal bankruptcy on credit card companies that "lured borrowers in with 'teaser rates,'" and on mortgage companies that sold "'mortgage products,' with low down payments, ballooning rates, and prepayment penalties."  After home prices skyrocketed and then plummeted, the middle class was left holding the bag.  Brandeis and Warren share the Progressive distrust of "legislatures and courts that have allowed the nation's social and economic policies to be made by corporations and bankers."

Warren shares some of her compelling personal story with her readers.  One vignette to which I could easily relate occurred in 1978.  Warren was holding her baby son on her hip trying to calm him down, while frying pork chops and keeping one eye on her daughter, who was coloring on the floor.  In the midst of this controlled chaos, she received a call from the University of Houston Law Center about a possible teaching position.  Somehow she made it through the conversation and got the job, the start of her academic career.

Like Brandeis, who worked to abolish child labor and to establish maximum-hour and minimum-wage laws for men and women, Warren is concerned about women, in particular "the unintended economic consequences that arise when women rearing children enter the paid labor force ... earning money has made women who are mothers more economically vulnerable, not less."  The two-income family has been hard hit--with two wage earners and low down payment requirements, middle-class families assumed larger mortgages than they could afford.  If one wage earner loses a job and the family is forced to live on one income, bankruptcy is the almost inevitable result.  The situation is aggravated if the family includes children.

A Fighting Chance will be published next week.  Warren denies that she is planning to challenge Hillary Rodham Clinton for the Democratic presidential nomination, but the publication of her autobiography is fueling the rumor machine.

Zombie Titles - albatross mortgages around homeowners' necks

Reuters reports on a little-known feature of the mortgage crisis -- the zombie title. Michelle Conlin, writing from Columbus, Ohio, tells a hair-raising story about home-owners who receive notice from their banks that the bank is foreclosing on their home for a delinquent mortgage. The home-owner leaves the home, and believes that that is the end of the story for them and this house.

Apparently, a number of banks are not following through with selling these foreclosed properties. They either do not notify the home-owner, or the home-owner fails to receive the notice, for whatever reason. But the home-owner's name continues to be on the deed, on the tax records, on all the legal documents. So when the county sends a notice that the property is becoming derelict, the home-owner is liable. When the taxes are due and over-due, the home-owner is liable. And -- surprise! -- the mortgage payments are still due... and piling up with interest and penalties. All happening without the home-owner's realizing they are responsible for anything about the property.

The Reuters report includes some heart-rending examples of how people's lives are being devastated. This is not happening all the time, but often enough that some agency or lawyer should be looking at either a cause of action or some regulatory action. The report mentions that out of some 10 million mortgage foreclosures, 2 million have not come out for various reasons, including the banks simply dropping the mortgage action, as with these zombie titles. The report goes on the say that housing court judges are seeing thousands of these zombie title issues across the country, and that the number seems to be rising.


The home-owner who has the zombie title cannot qualify for disability, because the title to the phantom house appears to be a capital asset. Home-owners find

wages garnished, their credit destroyed and their tax refunds seized. They've opened their mail to find bills for back taxes, graffiti-scrubbing services, demolition crews, trash removal, gutter repair, exterior cleaning and lawn clipping. At their front doors they've encountered bailiffs brandishing summonses to appear in court.

In some cities, people with zombie titles can be sentenced to probation - with the threat of jail if they don't bring their houses into compliance.

Banks have realized that holding the asset or trying to sell the mortgaged house actually saddles them with a loss. Thus, they are often quietly stopping all action towards the sale of the property after beginning the foreclosure effort. Homeowners too often expect the banks to act as they used to, and assume the bank will put the house up for auction to satisfy the outstanding debt on the mortgage. But banks have realized that by walking away from the debt, they often gain more by filing for insurance on the debt, and avoid all the costs and responsibilities of owning the property. But if they do not properly notify the mortgagee, a zombie title results. Reuters says there is no regulation requiring banks to notify the home-owner, and so it often does not happen.

A number of cities have attempted to create registries of abandoned houses to try to force the mortgagors to take more responsibility for the properties they seize. Neighborhoods become blighted as the properties are gutted by vandals, and the banks or other mortgage servicers claim they have no responsibility to manage or maintain the properties. These organizations have opposed the registries proposals, according to the Reuters report.

Tip of the OOTJ hat to my terrific, peripatetic daughter for pointing me to this story.
The decoration for this post comes from a clever and entertaining blog, The Rules Lawyers, "Applying the Supreme Court's rules of statutory interpretation to resolve Warhammer 40K rules disputes" http://www.theruleslawyers.com/2012/10/6th-edition-rulings-plague-zombies-unit-size-limits/