Saturday, January 7, 2012

Watchdogs and Predators

   The sad story of William and Endia Eason was tailor-made to justify the President's ostensible recess appointment of Richard Cordray to head the new Consumer Financial Protection Bureau (CFPB.)  No doubt this is why the White House chose to highlight it on their blog.  There appears to be little doubt that the Easons were taken advantage of and, in combination with unwise decisions on their part, this led to a serious personal financial crisis.  Ironically, however, their crisis was resolved with the help of an existing non-profit with no cost to the taxpayers.  Would the CFPB have prevented the crisis in the first place, or even have done as good a job of helping the Easons once the crisis began?  There are many unasked and unanswered questions here.
   First, the story states that city officials in Cleveland "issued the couple a citation to make repairs to bring their home up to code," apparently to their "steps, garage, and roof."  As a homeowner living in a city, I am well aware of the nature of such citations, and the selective application of codes.  Is there a federal agency to guard homeowners against rogue housing inspectors?  The story goes on to say that "the repairs were never done."  So did the city fine the Easons?  Are there currently pink "Pending condemnation" notices posted all over their front door?  No?  Was it government harassment that precipitated the crisis in the first place?
   Next, how did the mortgage broker just happen to knock on their door?  Perhaps he was attracted by the pink notices (my city uses pink) all over their door.  Or was there some other public record that "predatory" mortgage brokers troll for victims?  Did government not only open the chicken house door, but then whistle for the wolves also?
   And then, assuming the mortgage broker lied as extensively as it appears, why wasn't he standing on the other side of the President from the Easons in an orange prison jumpsuit?  He made $4,000 on an $8,000 loan by committing fraud and he walked away?  Has he gone into hiding, on the lam with his $4,000 windfall?
   Further, what about the two heroes of the whole affair?  The non-profit who helped the Easons resolve the crisis and the mortgage company who took a loss on a loan that they had purchased in good faith are unnamed.  Two members of the private sector, a for-profit and a non-profit, working together to keep an older, needy, disabled man and his wife in their lifelong home.
   Finally, the Easons did not call the non-profit until foreclosure proceedings had begun.  What are the chances the Easons would have called the CFPB any sooner?  And if they had, what are the chances the CFPB, an agency of the federal government (think IRS,) would have responded more propitiously than the local non-profit?  The White House blog helpfully states that "the Bureau will forward each issue to the proper financial institution for review and resolution. And if the institution doesn't resolve the issue, CFPB will investigate the complaint directly and make sure that the financial institutions are held accountable under Federal law."  How long exactly would such a process take?  Would the Easons have learned about the resolution of their crisis from their cots at the homeless shelter?
   Will a new government 800-number be the panacea so glibly promised by the White House this week?  I wouldn't bet the house on it.

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