Bankstocks.com

About Us

Quick Takes

Presentations

Our Trading Policy

Please read our disclaimers and terms of use and take them seriously.

Thoughts & Comments

Martha Coakley's Lawsuit Is A Monumentally Bad Idea
It won't help borrowers. It will hurt them.

Thomas Brown ( about me )
Posted 12/05/2011
bankstocks.com
tbrown@bankstocks.com

How does Martha Coakley, Massachusetts’s attorney general, think she’s helping homeowners with her nutty robo-signing lawsuit against five big mortgage lenders? Already, the suit has brought about an entirely predictable result: one of the lenders, Ally Financial, has announced it will no longer buy loans originated in the state. Presto! Thanks to Coakley, mortgage credit in Massachusetts is less available than it used to be.

Memo to Martha: if the government puts up a lot of roadblocks to foreclosure or hassles lenders generally, mortgage lenders will be less willing to write loans. It’s a simple business decision. So your lawsuit is apt to have the exact opposite effect that you want. As we’ve seen, it already has. Brilliant.

Besides, explain to me again how it is that the “victims” of the robo-signing practices Coakley so deplores were actually hurt by what the lenders did. The people were delinquent on their loans, sometimes by many, many months. Over that time, they got to live in the properties rent-free. No one is alleging that lenders took back properties from borrowers who were current. Rather, lenders were guilty of sloppy clerical practices. Do they need to clean up their acts? Of course--and they have. But their bad practices did not lead to material harm of borrowers. So why should those borrowers be compensated for anything?

Martha Coakley is one of those activist politicians who a) doesn’t seem to understand the way the real world works, and b) thinks she can fix the problems of the world by incessant meddling. That’s a bad combination. As a result, in this instance, Coakley is going to end up making the problems she’s trying to solve even worse.

What do you think? Let me know!

Add your comment

Name / Pseudonym

Comment:

FSDA Posted On 12/5/2011 3:08:23 PM

Tom - You're monumentally naive. Coakley's decision is all about next year's Senate election, featuring another fave of yours, Elizabeth Warren!

Oy Posted On 12/5/2011 3:28:43 PM

How do you get slipshod practices eliminated? By ignoring them or by penalizing them? Maybe her lawsuit isn't the best solution, but given the banking industry's record, it's hard to believe anything less than a 2X4 upside the head is going to get them to change their ways.

galdc Posted On 12/5/2011 3:29:47 PM

If the results of her efforts are to make matters worse, then she "deserves" to be elected to Congress from Massachusetts since we know that everything that Congress touches turns to crap.

csb Posted On 12/5/2011 3:38:16 PM

You assert what her objective is and then savage her for pursuing what you say is her objective. Your false premise is misleading. Her job is to vindicate the law. It appears that the law has been massively violated. Hopefully the next gang of bank crooks will think twice about violating Massachusetts' law. And hopfully you will stop misrepresenting the positions of people whose actions or thoughts you oppose. Shame on you.

Bank Heaven Tom Posted On 12/5/2011 3:58:43 PM

FSDA's post is a bulls-eye.

Mike Lesse Posted On 12/5/2011 4:00:02 PM

Barney Google and Matha Coakley.. Massachusetts liberals who never had to make payments for employees or healthcare themselves.

Left Coaster Posted On 12/5/2011 4:06:51 PM

Correct you are, Tom. Martha is artfully pursuing a policy that will have the opposite effect of her stated intention, but will generate maximum media attention. But then, what else would you expect from a crusader who cares more about the TV moment than the actual results from her actions? BTW -- I agree that banks broke the law, but you suggest that there was no material harm to the borrowers. I would posit that there was a harm to society, in that any time businesses operate outside of the law, there is a loss of trust and confidence from the rest of society. Let the banks pay a fine and be done with it. Martha should stand down, as she is going to hurt a lot more folks than she will help.

Doug Posted On 12/5/2011 4:15:03 PM

Does anyone believe her objectine is anything more than to generate publicity? So she can show that she "stood up to big banks." If the objective is to bring light to robo signers in order to change regulation, then she should drop the suit - it's happened. Regardless of what her real objective is, this isn't going to help the people of Massachusetts.

RD Posted On 12/5/2011 4:20:04 PM

Tom, First, I don't agree with Massachusetts proceeding individually instead of in concert with the other states who are pursueing this together. That is a mistake. But it should be pursued. However, you are missing the point on the "victims". We are all victims of the robo-signing practice. It is just one of the illegal practices that led to the mass approval and packaging of bad loans. One would presume that if the banks had properly examined and certified the loans, some, perhaps many, would have been denied. Rather they chose to express process them and had no perspective of, or chose to ignore, the liabilities they were assuming or were passing on to others.

tom brown Posted On 12/5/2011 5:46:56 PM

RD, you have totally confused the underwriting, packaging and sale of loans/securities with the legalities of the foreclosure process after the borrowers failed to make payments.

david s Posted On 12/5/2011 7:00:57 PM

Tom, You're monumentally wrong. Dangerously wrong. Too many people like you, people who should know better, assume that if the bank says someone is delinquent on his or her mortgage, then they must true. They don't check the facts. They don't check the paperwork. They just assume. Yeah, most are, but not all. If you want to know what a nightmare is, imagine dealing with a bank that assumes you're a deadbeat despite evidence to the contrary because of the bank's own mistake. (I know first hand what it's like and yeah, despite your admiration for the industry, bankers make mistakes). Robo-signing is lazy, slipshod and stupid, and should never, ever be tolerated. A real human being allegedly looked at all the paperwork when a loan was reviewed and approved, a real human being can do the same thing on foreclosures. and for those of you who think this somehow benefits elizabeth warren, that is one of the most bizarre set of dots ever connected.

tom brown Posted On 12/5/2011 7:40:49 PM

david s, 99 percent of those borrowers never read the documents, they just had a lawyer summarize each one. And 99 percent of the foreclosures are on borrowers who havent made payments. Why dont you return from the land of OZ!

Doug Walker Posted On 12/6/2011 8:05:57 AM

Per usual you are right. On a different subject, I would like to know if you would like a copy the 28th Constitutional Amendment, I have a rough drafted, which includes 1. Term limits, 2. Congressional rules, 3. Campaign contribution limits, 4. A simple Fat Tax, 5. A balanced budget section. No I have not gone off the deep end, just feel we need some basic improvements to our Constitution. Thank you Doug Walker dgw1370919@aol.com PS I am in manufacturing and the top one percent. Thank you for your thoughts

DrRoberts Posted On 12/6/2011 9:18:25 AM

No Tom, Martha Coakley's actions are intended to ride the wave of public indignation aimed squarely at the Big Banks to higher office. Hell, even the monumental hypocrite Elliott Spitzer is in the process of attempting to rehabilitate his once promising political career and playing the same frickin' game. It's time to stuff it down the throats of these so called do-gooder politicians with mountains of cash and fight them tooth and nail in the court system. Unfortunately, Romney is experiencing his own problems at the moment but at the very least Republicans in the Senate in 2013 will still be able to prevent a populist wave from destroying what so many of us have worked our entire lives for.

Larry Horan former Smith Barney colleague Posted On 12/6/2011 10:11:58 AM

We have had so many "policy" actions in the last three years with adverse economic consequences. We need to vote the bums out!

Charlie Posted On 12/6/2011 11:47:52 AM

Of course you're right. It's only in the land on the other side of the looking glass that these daffy ideas of the elite seem to make sense. Does she even know what Unintended Consequences are ? I'm old enough that my home is paid for, but my kids make their payments every month so it frosts me to see people like this woman making a case for the ones who don't pay their just debts. She should be made to remember that it was mainly the retiring Congressman from her state that allowed all this to become the huge mess that it did. We had a leftist government policy that put our economy at risk in order to satisfy a socialist mantra that everyone should have a home(read own a house) whether they could pay for it or not. Forcing banks to make subprime and even bad loans in fear of Redlining penalties just to buy votes should have been a criminal offense. The worst part is that the administration is still trying to do the same thing by other routes.

jk Posted On 12/6/2011 2:05:34 PM

The previous Florida AG said anyone who bought a property that was foreclosed on by one of the foreclosure mills (Florida Default Law Group etc.) does NOT have clear title to their property because of robosigning issues. This was 2 years ago. No one to this day has come up with a solution to how to get clear title. It is a big unresolved mess. Give everyone clear title and then you can tell me this lawsuit is a bad idea.

jk Posted On 12/6/2011 4:16:35 PM

The previous Florida AG said anyone who bought a property that was foreclosed on by one of the foreclosure mills (Florida Default Law Group etc.) does NOT have clear title to their property because of robosigning issues. This was 2 years ago. No one to this day has come up with a solution to how to get clear title. It is a big unresolved mess. Give everyone clear title and then you can tell me this lawsuit is a bad idea.

Gary Mero Posted On 2/14/2012 11:22:51 AM

I think she missed a few of the Giants in the lawsuits

Jimmy Posted On 3/2/2012 2:27:15 PM

The various state attorney generals characterize the large bank as worse than war criminals, rapists and murderers. Robo signing is less than a speeding violation, maybe jaywalking. Give us a break.

Bankstocks.com is a public web site operated by individuals who also operate investment advisory firms that serve as investment advisers to hedge funds (the "Firms"). Some articles are authored by employees of the Firms while others are authored by third parties. Under no circumstances does any article posted on Bankstocks.com represent a recommendation to buy or sell a security. This article is intended to provide insight into the financial services industry and is not a solicitation of any kind. The Firms do not vouch for the accuracy of any information contained in any article posted herein and the views expressed in any article herein do not necessarily reflect the views of the Firms. The Firms buy and sell securities on behalf of their fund investors and may do so, before and after any particular article herein is published, with respect to the securities discussed in any article posted herein. The Firms’ appraisal of a company's prospects is only one factor that affects the Firms’ decision whether to buy or sell shares in that company. Other factors might include, but are not limited to, the presence of mandatory limits on individual positions, decisions regarding portfolio exposures, and general market conditions, and liquidity needs. As such, there may not always be consistency between the views expressed in this article and the Firms’ trading on behalf of their fund investors. There may be conflicts between the content posted on Bankstocks.com and the interests of the Firms. For an explanation of these conflicts, including an explanation of our trading policy, and how we resolve them, click here.

Neither the authors nor any Bankstocks.com team members can provide investment advice or respond to individual requests for recommendations. However, we encourage your feedback and welcome your comments on any of the articles on this site. Neither the authors nor Bankstocks.com has undertaken any responsibility to update any portion of this article in response to events which may transpire subsequent to its original publication date.