It has become increasingly apparent that financial corporate interests have been throwing their weight around more than usual lately, especially since the financial collapse in 2008, but it would seem their efforts are not merely confined to influencing lawmaking in Washington DC, but when necessary can extend to generally much more independent state representatives as well.
Enter Arizona, who currently holds the nation’s second highest state foreclosure for three quarters running. Foreclosures in the state are nearly three times the national average; one in 49 homes have been foreclosed on, about 55,686 in just the first quarter of this year.
The state senate overwhelmingly passed a bill by a 28-2 vote that would require banks seeking to foreclose on homes to provide documentation to prove that they own the debt. Nationally, banks have been unable to produce the original documentation for many of the homes they’ve been foreclosing on. The attorney generals of all 50 states are currently investigating widespread foreclosure fraud.
Here is the bill in question (click to enlarge):
The bill, titled SB 1259, is less than one page long and was passed by the senate on April 22 with only two nay votes before heading to committee in the House, but something strange happened while in committee. The controversial bill was replaced with a different bill about reforming fire districts. They have the same name, but the entire contents of the original document have been removed and replaced with a bill about a completely different matter.
Click here for the original SB 1259 and click here for the new version which has nothing to do with foreclosed homes.
So what happened to the original SB 1259? On Arizona Capitol Television, the state equivalent of C-Span, Rep. Nancy McLain (R) was asked why the bill had not been brought up for a vote. She replied, “I was not going to hear the bill as it came over from the Senate.”
Rep. McLain single handedly chose to kill a bill which had only two days before achieved a large measure of bipartisan support and would likely have achieved a similar level of success in the House. She removed all contents of the bill and replaced it with another pending discussion. A closer look at her financial records provides a possible motive.
According to public records, While McLain has represented the third district of Arizona since 2004, she hasn’t accepted public financing since 2006, instead opting to concentrate on accepting private donations. In 2010, nearly 50 percent of her campaign contributions came from organizations related to finance, real estate, lobbying and lawyers. Roughly 20 percent of her contributions are from commercial banks and real estate businesses.
Bloomberg reports that Paul Hickman, a chief executive officer of the Arizona Bankers Association who donated more to McLain’s campaign than any other contributer, said, “If Arizona passes this, it will be the only state in the union that will require a production of chain of title.” He continues, “States that pass these types of laws will be riskier environments to lend in and more difficult environments to get a loan in.”
This doesn’t make any sense. Why would it be such a burden to produce proof of ownership? It’s obvious the banks are resisting because they can’t produce those documents for many of the homes they are currently foreclosing on.
Mortgage Electronic Registration Systems, Inc. (MERS) had reportedly hired Tri-Advocates, a lobbying group specializing in Arizona politics. Beth Findsen, a foreclosure defense attorney who helped write the bill complained, “Why are they so afraid of truth telling? A foreclosing party should be legally authorized. It should be easy to come up with a summary of transfers that must have already occurred at foreclosure.” While producing digital records is easy, the law requires original documentation which the banks rarely have since many of these loans, most of them sub-prime, have been frequently sold between banks during the housing bubble.
In any other industry, these banks would certainly qualify for prosecution under RICO statutes, but again, the power of the banks, coupled with a “too big to fail” attitude from the government, has allowed them to take advantage of even the most responsible citizens. The most scandalous part of these events is not that the industry used its power to influence a bill’s passage, no that is all to familiar, but that a single public official would use her authority to arbitrarily alter a popular bill and possibly for personal political gain. As Karl Denninger points out, under Article IV of the Constitution requires the United States to “guarantee to every State in this Union a Republican Form of Government.” That has not happened.
Further Reading:
Arizona Bill Would Void Foreclosures Without Full Title History
RealtyTrac.com – Q1 Foreclosure Report
LoanSafe.org – Foreclosures Increase 7 Percent Nationally in Q1
