Guest Author: Martin Andelman who writes at Mandelman Matters. Full bio at end of the article.
Original Title: “A Funny Thing Happened on the Way to the AZ House of Representatives… After passing the Senate 28-2… S.B. 1259 Completely Disappeared”
Photo: Arizona State Capital Arizona State Senator Michele Reagan, was first elected to serve in the Arizona House of Representatives in 2002. In 2010, she was elected to the Arizona State Senate. She is Vice-Chairman of the Banking and Insurance Committee, and Chairman of the Committee on Economic Development and Jobs Creation.
Well, as you might remember from the article I posted on February 23rd of this year, she and her husband were sued by their servicer, Texas-based Colonial Savings FA, when they sent the bank a letter last July stating that they were planning to rescind their loan due to violations of the Truth in Lending Act or TILA.
Apparently, Senator Reagan found herself having a dickens of a time finding out who exactly owned her note, and she wasn’t at all happy about it. So, in response, and working with Arizona attorney, Beth Findsen, she sponsored Senate Bill 1259.
Michele Reagan, in a telephone interview, said:
“If you foreclose on somebody you should have to tell them who owns the property. People have the right in this country to face their accusers.”
And, according to Findsen:
“It makes Michele mad that the bank servicers will not disclose to a borrower the true noteholders,” Findsen said. “She was taken aback that such basic information was not readily available.”
When I learned that last February S.B. 1259 passed the Arizona State Senate… a Republican dominated senate, by the way… by an overwhelming 28-2… well… I got kind of excited about the prospects for the bill’s ultimate passage by the Arizona House of Representatives because were it to pass and then be signed by the governor, servicers and lenders would actually have to follow the state’s laws related to chain of title, and therefore would be bringing fraudulent documents into court… at the very least… far less often.
And presumably the servicers that haven’t followed the laws and therefore that have broken the chain of title rules, would now have a powerful incentive to modify loans, instead of perpetuating illegal foreclosures.
Of course, it came as no surprise that Arizona Bankers Association CEO, Paul Hickman was quick to issue the banking industry’s standard threatening warning, issued whenever anything might change existing rules:
“If Arizona passes this, it will be the only state in the union that will require a production of chain of title. States that pass these types of laws will be riskier environments to lend in and more difficult environments to get a loan in.”
But that’s nothing more than just the industry’s standard scary bedtime story, nothing to get too excited about… at least that’s what I thought at the time.
So, I posted my article on Senator Reagan’s S.B. 1259 this past February and waiting anxiously to hear about its passage by the House. The governor, smart money was already saying, would sign the bill upon its passage. This was going to be good… don’t you just love Arizona, was all I could think to myself.
It was perhaps a little over a month later when I found myself packing my suitcase, about to leave for the greater Phoenix area on my second annual pilgrimage to watch Major League Baseball’s Cactus League during Spring Training.
I called an Arizona foreclosure defense attorney, Don Loeb, who lives in Phoenix, and who had suggested that we meet for dinner during my stay in the Valley of the Sun, and while I had him on the phone, I asked him about the status of Senator Reagan’s bill, as I had been unable to find anything about its status online. In fact, when I had searched for information on-line, S.B. 1259 seemed to be about something about firefighters… I was sure I was doing something wrong.
What I heard Don say, however, made no sense to me whatsoever and it simply wasn’t sinking in for the first minute or two… Don said S.B. 1259 was gone, replaced by something having to do with firefighting… he said I needed to speak with Beth Findsen to get the details.
I hung up feeling kind of numb, to be honest. How could such a thing have happened? I went back to Google to search for anything describing what had transpired… to absolutely no avail. There was not a single news story on S.B. 1259’s demise… nothing written by a journalist… nothing even on the state senate’s Website.
Beth Findsen is a foreclosure defense and consumer lawyer whose been a reader of mine for some time now, and I like her a great deal. Her husband is an ex-Wall Street type… not a banker per se, but more an financial advisor kind of guy I think.
Beth answered her cell phone when I called, having arrived in Phoenix the night before… and she confirmed that although she couldn’t comment on every aspect of Michelle Reagan’s bill as a result of attorney-client privilege issues, she could confirm my finding that it had vanished into thin air. It had happened over the weekend just prior to it landing in the House for the vote.
I asked Beth to meet me with Don Loeb and I for drinks and appetizers at the Flemming’s restaurant in Scottsdale and she said she’d absolutely try. She and her husband were already there when I walked into the bar and sat down about an hour later. It was what it looked like… and all she could really say was that she had been told that compromises were required at times.
Let’s be very clear here… this is not about the foreclosure crisis… even though it also is.
This is not about chain of title issues, even though it is as well. This is about our country… our republic… our representative democracy… the land of opportunity… where there are no castes from which one is relegated to spend a lifetime. Where corruption, although sporadically exposed… is never abided, respected, or in any way condoned. This is about the very nature of our great society.
This proposed piece of legislation, which would have required banks and servicers to follow what are for the most part existing laws governing foreclosures and the transfer of property rights. Nothing particularly heinous… certainly nothing that makes me fear for the survival of free market capitalism.
But it was also something the bankers and servicers… and they’re really the same for our purposes… could not tolerate… and would not allow… period. To hell with out political process and system of government.
So, using their immense power to drive our democracy, they did what ever they had to do to… so that they could maintain the status quo because… well, because that’s what they wanted and decided would be best for everyone.
Had they wanted our opinions, they would have given them to us.
And they not only possess the power to make federal bills sing in the key of Wall Street… they are equally adept at reaching out to Arizona over a weekend and swatting away a bill proposed by an elected official without so much as a classified ad to herald its death… even though it had just passed the senate, 28-2. Perhaps next time, we should make a mental note to say “pretty please,” as opposed to just please.
Oh my God, I hope we haven’t gone too far this time and potentially angered our bankers. That’s a very scary thought, don’t you think? In fact, I better stop talking about this now.
Author’s bio: Prior to devoting his time to writing Mandelman Matters, Martin Andelman spent 20 years as the CEO of his own strategic communications consulting firm, The 4th Floor LLC, and has worked at the C-Suite and senior management level for such clients as JPMorgan, Merrill Lynch, Nationwide, AXA Equitable, Arthur J. Gallagher, Bain & Company, and numerous other professional service firms and Fortune 500 companies.
Martin Andelman started writing the blog in the latter part of 2008 and to-date has published over 450 in-depth articles that have been read by over 6,000,000 readers all over the country, from Senators to School Teachers. Mandelman Matters offers original editorial insight covering the political, economic, social and legal aspects of the financial and foreclosure crises
Martin has been a professional writer for twenty years and is widely known known for his ability to make complex subject easy to understand, for never pulling any punches, and many have commented on his sardonic wit.
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