More on Florida House Bill 87: Proof the system isn't broken

I've blogged about Florida House Bill 87, which would change the procedures for the foreclosure process in Florida so that the burden of proof would be on the homeowner to prove that the foreclosure shouldn't happen instead of the current system, where the bank would have to show that the foreclosure should happen.

Those behind the law say that it just wants to streamline the process and points to the fact that it currently takes an average of 2 and a half years for the foreclosure process to happen.

Wow. That is a long time. The process must be broken if it has always taken that long.

What's that? It hasn't always taken that long? In 2007 it took less than 6 months for the process to happen.

The process hasn't changed since 2007 but the timeline has had a 5 fold increase. Which makes me think that maybe the process isn't the problem, but the parties involved. Either we need more foreclosure courts to handle the increased caseload. Or banks need to not use potentially illegal paperwork (which then forces them to have to wait to complete the case with the non-fraud paperwork). But the process is not the problem.

Which brings up one of the largest problems with House Bill 87, it is a permanent solution to a temporary situation. One day (possibly when we all have flying cars) the housing crisis will be over and things will be back to normal. Except homeowners will have lost their procedural rights because of this law. They are changing the court system to solve a problem that is not going to last forever. It is like deciding to throw away all your lamps because the power went off.

HB 87 call still be stopped. Find your Florida Rep. and let them know that you are against this bill (also known as Senate Bill 1666). 

Lotto Scholarship Funding Change: I'm not saying you are racist but your policy is

The Tampa Bay Times reports on a change in the funding for Bright Future Scholarships that will lead to an over 50% reduction in the number of Black and Hispanic students who receive the college funding for state schools. The change? They will be raising the SAT requirement from 1020 to 1170 (ACT from 22 to 26).

I understand how the people behind this bill probably thought it through. You have a limited amount of funds. You have to make a distinguishing factor somehow. Why not the SAT?

I, with my remaining faith in humanity, don't think that the goal was to make sure the money went to white kids. I don't think that the people making the rule were racist. But, the result certainly was.

The testing gap on the SAT is well documented with whites scoring higher on all sections of the test. Some of the largest problems comes in the reading/verbal section. On the very difficult words, the ones that would only have been learned from school, the racial gaps go down. On the "easier" words they go up. That's because what the (mostly white) test makers think are common, if fancy, words (like plethora) may not have been heard in the non-white (or non-wealthy) homes.

Or, to put it another way, the groups who have historically been kept out of higher education for racial reasons didn't have the opportunity to develop the vocabulary in their communities that other groups with access to higher education did. And now they use a test that is, in part, based on the knowledge of that vocabulary to keep their children out of school. I don't think that the goal is racist in motivation, but the results certainly are.

The weirdest thing is that this move by Florida to make the SAT more important comes at a time when schools are moving away from the test. As Joseph Soares' essay for Inside Higher Ed explains

Even the College Board stipulates in its technical literature that high school grade-point average is the variable that holds the highest statistical correlation with first year grades and with cumulative grades. And high school G.P.A. is the best predictor of who will finish a college degree. High school G.P.A. alone performs better than test scores alone, whether one uses the SAT or the ACT; when combined with high school G.P.A., test scores increase our statistical power by one percentage point, as found at DePaul University, using the ACT, or at the University of Georgia, using the SAT. For me, a variable that raises one’s adjusted r-square in a statistical model by one point contributes diddly to our predictive powers. And what it contributes that isn’t diddly is the transmission of social inequality. There is no correlation between high school G.P.A. and family income; the same cannot be said for the SAT/ACT.  

So, why not raise the GPA requirement for Bright Futures instead of SAT? Why not add the long talked about "need" element to Bright Futures (currently the state pays for every student who meets the qualification, even if they come from wealthy families or qualify for a scholarship from their school)? Why not do what many people do, and shuffle the freshmen classes to Junior Colleges were they can get their required classes for less money. Or, offer to pay the equivalent of what the Jr. College would cost and allw students choosing to go to other schools to pay the difference.

Or, you know, raise taxes. I know. That isn't allowed in Florida. Because we have to keep taxes low so that businesses will come here and then...we can not tax them? I'm not sure. It's sort of an underwear gnome mathematical model.

But any of these would be better than the one solution the picked, SAT and ACT scores.

I really don't think that you're racist, Florida, but your policy really is.

Florida House Bill 87: Another Gift to the Banksters

The Florida legislative session is in full swing, and there's been a lot of attention towards the typically idiotic bills created by the most idiotic body in one of the more idiotic states. Yes, we have an anti-Sharia Law bill. And the decision that Stand Your Ground is working so well that it shouldn't be amended. But not much attention has been directed to Florida House Bill 87, An act relating to mortgage foreclosures.Currently the foreclosure process, at least according to conventional wisdom, takes too long. The average length of the foreclosure proceeding is almost two years and this bill looks at making that process shorter.

Of course, the first question is if there is actually a problem. Florida led the nation in completed foreclosures in 2012. It isn't as if courts are sitting empty either. NPR reported on the foreclosure backlog in Florida, including trial that took a total of three minutes. The NPR story said that 1 in 32 homes in Florida receive notice of default, more than double the national average. Certainly, the number of homes in foreclosure is a problem. And realtors say that the lack of homes available is preventing a full turn around in Florida's housing market. So, at first glance it seems logical to get people out of their foreclosed properties and get these new buyers into them.

But who are these buyers? It isn't that people are flocking to Florida. And those 1 in 32 who are losing their homes are not buying new ones (since they are going to be unable to get a loan). So, who is buying it?  A recent article in the Chicago Tribune offered a possible answer:  (quoting Florida real estate consultant Jack McCabe)

opportunities out there, but mostly, they're being taken advantage of by foreign buyers who have cash and by hedge funds who are buying homes at the rate of several hundred at a time and fixing them up to be rented out. Those two groups are probably doing 70 percent of the deals. One hedge fund recently bought 970 (foreclosure) properties in one sale, and you've got these others that are picking off 20, 30, 50 or 100 at a time.

We're not, by any means, back to a normal, healthy market where the buyers are the retail-type owner-occupants buying their American dream. Floridians haven't, for the most part, been able to participate in these buying opportunities, partly because getting a mortgage is so much harder these days.

We're seeing a great transformation of wealth, as these properties are going to be owned by big corporations, and many more people will be renting rather than owning for a period of years.

The thing slowing down the foreclosure process, according to the NPR story and other experts I've talked to, is that many times the banks have lost the initial paperwork. Or, at least they claim to have lost it. After the roboform scandal, it is possible that they realize that the paperwork they have was not properly recorded in the first place, and so they don't want to take it into court. In either case, the banks have screwed up. They are the ones who are preventing these things from moving along. "I lost the paperwork but you should trust that I had it and it was valid" is enough to get you laughed out of any court, even those on daytime TV.  But not in Florida. In Florida when enough banks screw up that it means that the entire legal process slows down it isn't a failure of the banks, but of the laws.

So, House Bill 87 will fix things for the bank. You don't need the actual paperwork. You just need to sign an affidavit saying that you do have the legal right to foreclose on the home. It is then up to the homeowner to prove that you don't. How exactly does he do that? The bill doesn't say. Because apparently they believe that a false foreclosure could never happen. Except those 700 ones involving military homeowners recently uncovered. The story also discusses at least 20 cases where the homeowner was completely up to date on payments but were nonetheless foreclosed upon. Admittedly, many of these were in states that have adopted the more streamlined procedures that Florida is considering. False foreclosures are more difficult here because the court procedure makes sure that the banks have their ducks in a row before proceeding. But instead of taking the news of wrongful foreclosures as a sign that other states should adopt the Florida model, we decide to get rid of our homeowner protections.

So, big banks and corporations drive the push to get people home loans that they aren't qualified for and can't manage because they know they can re-sell them in mortgage baked derivatives and pass along the risk to someone else.  When the banks go to foreclose they don't have the right paperwork and it takes longer to move the process along. And this is bad because other bankers want to buy those homes as investment opportunities. So, Florida decides that what we really need to do is to change the system to help out these bankers. Because why should they be punished for not actually having the stuff they need in court.

Oh, and when these people are pushed out of their homes guess what? They'll be renting some of those new hedge fund owned investment properties.

The prospects are even more dire for people face wrongful eviction. If the bank swears that you refinanced with an ARM at one rate and you didn't...how are you going to prove that? How can you prove that you didn't sign a contract? That you didn't make an agreement? What if you were a victim of some of the mortgage fraud where people stole the identities of others to get refi-loans, and you don't hear about it until you are foreclosed upon. How can you prove you never agreed to anything? Currently, the banks have to bring in the paperwork and you get to view it in discovery. You can see that it isn't your signature or that numbers were falsely filled in later. But if Bill 87 passes you are out of luck.

And the worst part (yes, it gets worse) is that if you are a victim of wrongful eviction you can't get the house back. The law would make it so that you can still sue for a wrongful eviction action but that the only damages will be monetary. The bill doesn't say what the value will be set at, but I suspect the banks will argue that the value of the home is what it sold at auction for. Much reduced from the actual value, not to mention potentially inappropriate when what you really want is the home your family has lived in for years.

Florida House Bill 87 isn't getting much press attention. I'm hoping to change that, but I know that I'm just a single person. But look into the bill yourself and share the information with others. Let's get the media talking about this! If it is such a great law then getting more attention won't harm anyone. And since it is going to fundamentally alter the way the foreclosure process is done, it doesn't seem right for it to be hidden away.