Sunday, August 12, 2018

C.F.P.B. Not Up to Challenging Americas' Rigged System

Donald Trump called the American system "rigged."

GOP establishment scratched their heads. Rigged? How so?

When untangling the massive spider web that is indicative of the American financial system, it all but paralyzes the brain!

The plethora of Wall Street woes is another topic for a different post. It's comforting that discrepancies have been noted.Namely that Glass-Steagall was mistakenly repealed in bi-partisan fashion. The jury is still out on which chosen methodology will prove to be the ultimate remedy.

The mortgage industry is another thing. Attempts have been made, by well meaning, but essentially unqualified people. Dodd-Frank was intended to address the most flagrant of grievances. Even laws done under the best of intentions are only as good as those carrying out their implementation.

A Financial Consultant, formally with Washington D.C. based, Wiener, Brodsky, Sidman and Kider explained. "Ideally, you would have people who were on the cutting edge of the industry working at a regulatory agency such as the "Consumer Finance Protection Bureau." What you have are basically a bunch of political hacks who supported the Obama campaign. Most are non-industry people who see Elizabeth Warren as a "enlightened reformer" and the ultimate authority on how things work. Never mind that most agents have seen only the classroom."

As in academicians?

A friend from Boston once proclaimed about his fellow statesmen. "In Massachusetts, the Democrat party is tight. So tight, that many Massachusetts Democrats would vote for Adolph Hitler and his Jewish policies if he were running as a Democrat."

So explains how Massachusetts voters turned their nose up at a true centrist, Scott Brown, in favor of academician, Elizabeth Warren. Warren's orientation comes solely from the classroom. Yet her stamp is clearly evident at the C.F.P.B.

Perhaps the most glaring example is how C.F.P.B. prioritizes. Here is a prime example.

Dodd-Frank includes what are distinguished as the U.D.A.P guidelines. In essence, "Unfair, Deceptive and Abusive Practices" exercised by banks. In theory, the agency is suppose to oversee banking activities ranging from loans to servicing that are considered "unfair, deceptive and abusive." Good idea,at least on paper! Implementation is another thing.

I recall a mortgage client who had been raked over the coals by his lender. Offered repeated modification opportunities, there was always something not quite right. His mortgage payments were returned. In frustration, he filed a complaint with C.F.P.B.

The response was unexpected. After filling out numerous on line forms, the C.F.P.B. agent responded. "You need to hire a lawyer."

My client countered. "What exactly do you do?"

The C.F.P.B. agent explained. "We build a case file. We document the complaint. Other than that, it's up to you to seek legal council."

Sorta like the "dental monitor who does not practice actual dentistry!" Big help!

The Commonwealth of Kentucky is one of the least consumer friendly states in the union. Exempted from the state's consumer protection statutes are mortgages. How could this happen?

"Because the people who write the checks want to keep it that way." A Lexington attorney explained.

Wait a minute! The state leadership has chosen to preclude itself from the U.D.A.P. laws? Isn't this nullification?

"It's the way that it's always been." The attorney continued. "Nothing will ever change."

My first thought was, "what about the state's two "progressive" newspapers, Louisville Courier-Journal and the Lexington Herald- Leader? One would think that their editors would be on the warpath with such as standard!"

The attorney smirked. "Now Jeff, you gotta understand! Those guys don't think like Harry S. Truman and John F. Kennedy Democrats! They are more concerned with "transgender bathrooms and tearing down Confederate statues" than pointing out that the people living in Kentucky are subjected predatory lending and loan servicing practices. Not to mention scandalous debt recovery practices!"

A sobering thought!

In theory, the C.F.P.B. would be swooping down on Frankfort and forcing mortgage inclusion on the state consumer protection laws. Or else!

Evidently, it's not a priority for the agency...

As one Senate Finance committee aid phrased,"Everyone of the committee is "scared shitless" of Elizabeth Warren. She is a "bully and a blowhard." But when a real grievance surfaces, such as Kentucky practicing nullification, she is totally inept. I think she is over her head, in that she doesn't know where to start on something as obvious as a state catering to a few well heeled, insiders at the expense of it's residents."

In other words, Elizabeth Warren is the consummate "combination of impudence and impotence."

The U.D.A.P. guidelines are one of the few actual positives of Dodd-Frank. If the proponents of the act were truly competent, they would be addressing how our current system is compromising Americans daily.

Perhaps the most glaring example is how banks confuse and frustrate borrowers with automation, then bury them in bureaucracy. Here's an example:

Under the U.D.A.P. guidelines, borrowers are supposed to be assigned one loan councilor. But this never happens. A common complaint is "I am never able to talk to the same person twice."

There is also the standard practice of transferring a borrower to representatives literally all over the planet! As one frustrated borrower remembered, "My loan got sold. I sent in my payment, but it was returned. I called the new bank. I started out in Dallas, then I was transferred to the Philippines, who transferred me to San Diego, who transferred me to India.

"It was tough enough understanding the faulty English and dealing with the redundancy and seemingly endless hold times! What made things worse was that I was on the phone for more than one hour and never got my question answered!"

The compromising of Americans' privacy by Fortune 500 countries who employ cheap, unvetted, offshore labor is still another subject for a different post. This cheap help has contributed to "79%" of Americans holding mistakes in the credit repositories which subsequently resulted in lower credit scores.

Maybe this is what the President meant when he described our system as "rigged." Lower credit scores can mean the difference in securing a mortgage insurance free, conventional loan versus an FHA loan, which requires expensive Mortgage Insurance Premiums. Or, paying 18% for an auto loan, versus 6%. Or, 24% for a revolving account versus 12%.

A potent C.F.P.B. could put a stop to this practice!

For starters, they could force states like Kentucky to cease their nullification practices. They could likewise enact a statute that would "preclude jobs requiring all or part of an Americans social security number from off shore outsourcing."

I was never a supporter of Dodd-Frank. It placed too many restrictions on borrowing money for home loans, while making them more cumbersome and expensive.

The legislation also concluded that some banks were "too big to fail." Resulting were multi-tiered banks with international locations that are usually a nightmare to deal with. Unintended foreclosures have resulted; often because the "left hand didn't know what the right hand was doing."

The current housing shortage is a fruit of Dodd-Frank. Sanctimonoius, non-industry people will airily say, "but they kept consumers out of those crazy, predatory loans!" Never mind that those "crazy predatory loans" disappeared in 2008!

Sadly, the C.F.P.B, is as incompetent as their "enlightened reformer," Elizabeth Warren. Most of their players are as inept as the Massachusetts Senator. They could make a positive difference in American lives. The are in position to right many wrongs in the industry.

It's proof that "political partisanship" places a distant second to "experience and competence."

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