Friday, May 01, 2009
Two stories in today's Wall Street Journal tell of a legal system that has become increasingly irritated by what the nation's mortgage lenders have left in the wake of the late, great housing bubble. First, from Indio, California, this report on how a law passed last year allows banks to be charged with a criminal misdemeanor if their foreclosed properties start to look trashy.
The upshot is that faraway banks have become the de facto landlords of Indio, and people here say the absentee lenders are letting the whole valley fall apart. Houses "look like dust bowls," says Gene Gilbert, the mayor pro tem, who thinks a glut of run-down homes may depress his hometown's local market long after the recession ends.Isn't it about time that banks start abandoning foreclosed properties in large numbers, turning ownership back over to the local government?
Criminalizing things like algae in a pool has given Mr. Ramos [the local police chief] a stick to make lenders snap to attention. Without that threat, the police chief says, "far-off banks, billion-dollar corporations, they could simply ignore us."
Maybe not in Indio where the median home price is still well over a hundred thousand dollars, but, in other parts of the country, where prices are much lower, this would make sense.
Thousand of miles to the east in sunny Florida, another of the many former housing bubble locales, the Journal reports($) that former Countrywide CEO Angelo Mozilo was in the news again. It seems that a lawsuit filed by the state Attorney General regarding deceptive lending practices was remanded back to the local court where the environment is expected to be less favorable to the Orange Man.
This week, a U.S. District Court judge remanded a lawsuit against Mr. Mozilo, filed by Florida Attorney General Bill McCollum, back to Broward County Circuit Court. While the action is a procedural move, it increases the possibility that Mr. Mozilo, at one time the head of the nation's largest mortgage lender, could appear in court in the state of Florida. The state alleges that Mr. Mozilo engaged in deceptive and unfair trade practices involving mortgage loans made to state borrowers.Having been mentioned here at this blog on dozens of occasions in recent years, the world's largest Oompa Loompa is sometimes missed but, normally, that feeling passes quickly.
If Mr. Mozilo's case does go to trial, he would be the highest-profile mortgage executive to face such legal action since the mortgage-market meltdown began. "Angelo Mozilo should absolutely face a Florida court and Florida's citizens for his business practices, especially those which victimized Florida homeowners," Attorney General Bill McCollum said in a statement. Mr. McCollum added that his office "will continue to aggressively pursue its case against Mr. Mozilo."