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Justice Kagan & Thomas yesterday (WP today): "At bottom, she's saying the county took her property, made a profit on it with the surplus equity, and it belongs to her," Justice Clarence Thomas said. He asked Washington lawyer Neal K. Katyal, representing Hennepin County, whether he could think of "any instance in which a creditor can . . . seize property and keep the excess profit or the excess amount over the debt that's actually owed?"
Justice Elena Kagan similarly pushed Katyal. "Are there any limits?" she asked. "I mean, $5,000 tax debt, $5 million house. Take the house, don't give back the rest?"
She added: "If the mind rebels at the notion that the government can seize your $100,000 bank account and not give you back the $90,000 that you don't owe, if the mind rebels at that, you know, why should . . . what was going on in 1200 or what was going on in 1776 change anything?"
Having the federal government run the GSE'S is ludicrous and the 'temporary' 14 year CONservatorships should alarm everyone.
Stevens is coming to the late realization that having the twins Nationalized comes with costs to the MBA, NAR, and all the financial intermediaries (and US consumers of Housing) that utilize the Secondary Mortgage Market.
There's a reason that private corporations are better at running the GSE'S than the Feds.
Haven't finished studying it yet, but the heart of the matter is that it involves the local government in Minnesota, taking unjustly for itself, more than was necessary to make the local government whole, at the expense of its citizens.
Much like the federal government has done with the Net Worth Swipe.
The Subsidization of lower LLPA fees on higher risk mortgages comes at the expense of the highly depleted Capital Reserves.
The US Treasury has already depleted the GSE'S Balance Sheets by hundreds of billions of dollars of CAPITAL (BTW, in return for NOTHING!).
And now, a 30 year veteran of Banking Regulations has gone against her better judgement in rebuilding the GSE'S to subsidize the current administrations targeted voting base.
https://www.scotusblog.com/2023/04/justices-appear-likely-to-side-with-homeowner-in-foreclosure-dispute/
"And if the county’s actions don’t violate the takings clause, Martin continued, at the very least they violate the Eighth Amendment’s ban on excessive fines, because the county’s seizure of Tyler’s property to punish her for not paying her property taxes on time goes well beyond compensating the government for any loss."
"Several justices pressed Katyal on the limits of his theory. Justice Elena Kagan outlined a scenario involving a $5,000 tax debt and a $5 million house. Could the government sell the house and keep the surplus?
When Katyal agreed that the government could do so in this and other similar scenarios, Chief Justice John Roberts chimed in. “If that’s all true,” Roberts queried, “what’s the point of the takings clause?”
Some justices saw a disconnect between Katyal’s theory and how the government deals with takings and forfeitures in other contexts. When Katyal agreed with Kagan that the government could not seize an entire bank account containing $100,000 to pay a $10,000 income tax debt, he explained that the main difference was “mostly historical,” although he allowed that the difference between real property – that is, land and buildings – and other items of property could also play a role.
That distinction left Kagan befuddled. “If the mind rebels,” she said, at the idea that the government can seize a $100,000 bank account to pay a $10,000 tax debt, why should the government be allowed to rely on 13th- or 18th-century history to do essentially the same thing with real estate?
Justice Brett Kavanaugh agreed. “Why,” he asked Katyal, “would we read the Constitution to disfavor real property? That seems counterintuitive.”
When was that interview, do you know?
Jim Parrot: "THEY'LL NEVER GO PRETEND PRIVATE AGAIN". "WE WILL SALT THE EARTH WITH THE SHAREHOLDERS CARCASSES"
-August 16, 2012
https://www.urban.org/author/jim-parrott
But how else can SLT and the current administration transfer much needed Fannie Mae and Freddie Mac capital for the capital rebuild to subsidizing their current administrations targeted voting base?
https://www.npr.org/2023/04/26/1170667154/grandma-didnt-pay-taxes-now-her-house-is-focus-of-property-rights-test-case
"Represented by the Pacific Legal Foundation, Tyler subsequently went to court, contending that by keeping the excess, the county had unconstitutionally taken her property.
"We call that home equity theft because it's essentially legalized government theft," lawyer Christina Martin of the Pacific Legal Foundation says.
Martin concedes that the county had the right to take Tyler's property for nonpayment of taxes but argues that "when the government takes more than it's owed, that's ultimately wrong, and we believe it's unconstitutional" — unconstitutional, she says, because it is a taking of property without just compensation."
"By contrast, there is no indication that the Biden Administration is so keen to pursue a capital raise or even a Conservatorship exit. Having this case drag on for years to come is likely now less of a concern. The priorities of Acting Director Thompson and of the Administration lie elsewhere.
Unlike the Trump Administration, in which both Treasury Secretary Steven Mnuchin and his advisor Craig Phillips had ties to, and an interest in, the housing finance industry and Fannie and Freddie, there is no immediately identifiable member of the Biden Administration at either Treasury or in the White House charged with assuming responsibility for the question of “what to do with the GSEs.”
At some point, the retained earnings that are now accumulating (as required by the “fourth amendment”) will make a Conservatorship exit economically feasible – but that date is likely years off."
Clarence, here's that PLF case to be heard tomorrow morning at the SCOTUS Courthouse:
22-166 TYLER V. HENNEPIN COUNTY, MN
DECISION BELOW: 26 F.4th 789
CERT. GRANTED 1/13/2023
QUESTION PRESENTED:
Hennepin County confiscated 93-year-old Geraldine Tyler's former home as
payment for approximately $15,000 in property taxes, penalties, interest, and costs. The
County sold the home for $40,000, and, consistent with a Minnesota forfeiture statute,
kept all proceeds, including the $25,000 that exceeded Tyler's debt as a windfall for the
public. In all states, municipalities may take real property and sell it to collect payment
for property tax debts. Most states allow the government to keep only as much as it is
owed; any surplus proceeds after collecting the debt belong to the former owner. But in
Minnesota and a dozen other states, local governments take absolute title, extinguishing
the owner's equity in exchange only for cancelling a smaller tax debt, code enforcement
fine, or debt to government agencies.
The questions presented are:
1. Whether taking and selling a home to satisfy a debt to the government, and
keeping the surplus value as a windfall, violates the Takings Clause?
2. Whether the forfeiture of property worth far more than needed to satisfy a debt
plus, interest, penalties, and costs, is a fine within the meaning of the Eighth
Amendment?
https://www.scotusblog.com/2023/04/court-to-hear-dispute-over-confiscated-condo-title-and-sale/
https://pacificlegal.org/frequently-asked-questions-about-tyler-v-hennepin-county/
"The government is taking more than it is owed without just compensation for this public purpose of debt collection, and the government is also doing it to deter undesirable behavior; therefore, the excessive fines should provide another layer of protection."
"Property rights do not evaporate simply because you owe the government money or because the state passes a law declaring that the property interest doesn’t exist."
"Entrepreneurs now have more certainty that they can get their day in court to challenge the constitutionality of a rule or agency affecting them without going through a long administrative process that could bankrupt them. It has been a long road, but a substantial victory against the administrative state has finally been achieved."
According to the press, he's going to announce on Tuesday he's running again.
So long as we remain in these perpetual CONservatorships, Fannie Mae and Freddie Mac will continue to be run as tools of the whims of whichever party is in power, especially post Collins.
"No government ever voluntarily reduces itself in size. Government programs, once launched, never disappear. Actually, a government bureau is the nearest thing to eternal life we'll ever see on this earth!"
RR
https://fox8.com/news/homebuyers-with-good-credit-to-pay-higher-mortgage-rates/
https://www.msn.com/en-us/money/realestate/biden-rule-will-redistribute-high-risk-loan-costs-to-homeowners-with-good-credit/ar-AA1a4tTx
https://www.reviewjournal.com/opinion/editorials/editorial-housing-proposal-would-punish-those-with-good-credit-2763365/
https://www.yahoo.com/lifestyle/biden-rule-redistribute-high-risk-211102885.html
https://www.foxbusiness.com/real-estate/real-estate-expert-shreds-biden-rule-punishing-homebuyers-good-credit-madness
https://www.nationalreview.com/2023/04/how-to-make-the-housing-market-worse/
What do you think would happen to the US Economy if the federal government didn't backstop GSE MBS or debt holders?
What would have happened to the US Economy in March 2023 (i.e., last month) had the FDIC not stepped in and made depositors with more than $250,000 in deposits 100% guaranteed?
Kudlow today opens with a piece on Fannie Mae and Freddie Mac..
Guest appearance from Mark Calabria...
Larry asks, "Where are the Capitalists?"
Thank you Judge Steele and thanks Navy! I haven't finished reading the opinion but after reading the first several pages it seems like it's limited to ALJ'S and the Separation of Powers Doctrine.
FHFA doesn't have ALJ'S (Administrative Law Judges) as Sandra L Thompson is the lawmaker, judge, and executor of the rules and regulations affecting the twins.
It's a classic David v Goliath struggle. Ideally you need to show up at the courthouse with a team of attorneys to take on this 800 lb Gorilla.
Twistedly, under HERA, the Fannie Mae and Freddie Mac Shareholders are ultimately paying the legal fees for the US Government to defend itself from these Shareholders lawsuits.
HERA is an affront to our Liberties as US Citizens.
I like the MQD lawsuit idea, any one of the tens of millions of homeowners punished financially by this may or may not have standing to sue.
If they do have standing, they could run down to their local federal district court and ask a Judge for an injunction.
An affected financial intermediary may or may not also have standing to sue.
It's interesting to me, but also painful to watch and live this horrible train wreck as all of our Economic Rights have been transferred to the government and they are as recalcitrant as ever about the whole thing.
Not sure exactly.
I think that's right, can you image the Material Risks Disclosures on any SEC filing for a RE IPO?
57. UNDER HERA, THE FHFA MAY AT ANY TIME TRANSFER ALL THE PROFITS INTO PERPETUITY IN RETURN FOR NOTHING TO THE US TREASURY.
Oh don't worry, Uncle Sugar wouldn't do that again, TRUST US, WE'RE A GREAT PARTNER IN THIS PRIVATE CAPITAL IN A 1ST LOSS POSITION/US GOVERNMENT PARTNERSHIP! !
“It’s going to be a challenge trying to explain to somebody that says, ‘I worked my whole life for high credit and I’ve put a lot of money down and you’re telling me that’s a negative now?’ That’s a hard conversation to have,” one worried Arizona-based mortgage loan originator told The Post."
“It’s unprecedented,” added David Stevens, who served as Federal Housing Administration commissioner during the Obama administration. “My email is full from mortgage companies and CEOs [telling] me how unbelievably shocked they are by this move.”
"Under the new rules, high-credit buyers with scores ranging from 680 to above 780 will see a spike in their mortgage costs – with applicants who place 15% to 20% down payment experiencing the biggest increase in fees.
“This was a blatant and significant cut of fees for their highest-risk borrowers and a clear increase in much better credit quality buyers – which just clarified to the world that this move was a pretty significant cross-subsidy pricing change,” added Stevens, who is also the former CEO of the Mortgage Bankers Association.
The changes to LLPA fees take effect on May 1."
Looks like he said, "40 years", "I've been advocating for 40 years the privatization of Fannie Mae and Freddie Mac."
Larry apparently overcame his struggles with drugs in the 80's and has apparently worked under many administrations over the decades and seems well versed in economics and business. He has his buddy economist friend on regularly, Lafer.
I think Lafer came up with the Lafer curve didn't he?
Love the NABE, when I worked at Fannie Mae (88-93), they bankrolled 1/2 my MBA education expenses for an MBA at American University and when I graduated in 93, I left to work for the Head of the Real Estate and Finance Department at AU.
I worked on Economic Papers with a PhD from Harvard in Economics and flew around the country buying and selling Multifamily, Office, and Land for 21 LP's that he was the GP for. He's a sharp dude.
Good times, good times!
I think that was Steve Mnuchin. Larry Kudlow was on the previous administrations economic advisory group.
It was yesterday at the 15 mm on Fox Biz Network, Larry Kudlow has a 1 hour show every day where he has US Senators and House Reps and economists, and others in Gubmint.
One of the reporters did a piece entitled, "How the Progressives are subsidizing one socio economic group by taxing wealthier mortgage borrowers".
Apparently SLT and the Progressives at FHFA have decided to do this and the Fox Biz reporter says that it may be announced today.
Kudlow today: "We should privatize Fannie Mae, I've been saying it for over 4 years!"
It seems part of the problem is that Congress doesn't want to make the tough and sometimes unpopular decisions in government and instead delegates its legislative powers to Unelected Bureaucrats in the federal agencies.
One step in the right direction may be to put a Sunset Provision in these Acts or Laws that empower these federal agencies, especially (as in HERA) during National Emergencies when the transfer of tremendous discretion is greatest.
For example, the FHFA is still to THIS DAY, wielding power that is only limited to "in the FHFA'S best interests or the public it serves."
The Housing Crisis ended long ago but FHFA's broad sweeping powers under HERA remain as strong now as they were in 2008-9.
https://www.cnn.com/2023/04/14/politics/supreme-court-federal-agencies-constitutional-challenge/index.html
"The ruling is a win for critics of the so-called administrative state who are seeking to scale back the power of agencies that they believe are too insulated from the usual checks and balances essential to the separation of powers."
It's a Seperation of Powers case, but it focuses on just HOW MUCH power many of these federal agencies possess.
As you may be aware, these federal agencies are 'mini governments', with Executive, Legislative, and Judicial Branches ALL WRAPPED UP IN ONE!
Here, the FTC and SEC, have a Judicial Branch (i.e., tribunals with 'Administrative Law Judges') that determines the outcome of disputes between the federal agency and the Citizens and their businesses that the particular federal agency regulates.
Shockingly, the ALJ'S of the SEC and FTC were able to rule on whether or not they themselves were or were not setup Unconstitutionally and therefore a violation of the Seperation of Powers and the regulated people or business had to wait for the ALJ to rule, then I believe they could appeal to the federal district Appealate Court in DC.
How many years and dollars in legal expenses is that for the US Citizen or their business that dare challenge the awesome powers of the Great Oz? !
The FHFA has no Judicial Branch or tribunals and no ALJ's.
Looks like it took 10 years, JUST TO BE ABLE TO HAVE THE CASE HEARD IN THE FEDERAL DISTRICT COURT, todays WSJ: "We are thrilled that the Supreme Court has unanimously vindicated Michelle Cochran's right to have her day in court to challenge the constitutionality of the administrative apparatus she has fought for nearly a decade against the SEC," said Ms. Cochran's lawyer, Latham & Watkins partner Gregory Garre."
Todays WSJ: "Justice Kagan wrote that the FTC isn't well-suited to deciding constitutional questions about its own power. While joining the unanimous decision, Justice Clarence Thomas wrote a separate opinion to reiterate his concerns about tribunals run by administrative agencies."
No, I hear you, this case seems to be about Administrative Law Judges WITHIN the FTC and SEC adjudicating (i.e., deciding) whether or not the federal agency itself is Constitutionally permissible as set up in their respective enabling legislation or Acts.
The liberal 9th Circuit in essence said, "Sure, the respective ALJ'S can decide the Constitutionality of their federal agencies enabling statute, what could possible go wrong with a federal agency solely deciding whether or not it is structured Constitutionally?"
The more conservative 5th Circuit EnBanc Appealate Panel in essence said, "No, an Americans local federal district court is the proper venue to decide whether or not a federal agency is structured Constitutionally."
Just beginning to lift the hood on this one to see what implications it could have for reigning in the out of control Administrative State in America (including the FHFA and UST).
From the Case Syllabus, it looks like the SCOTUS UNANIMOUSLY choose to go with the well reasoned 5th Circuit EnBanc Appealate Panel and reject the 9th Circuit's contrary legal interpretation:
"But the en banc Fifth Circuit disagreed
as to the equivalent SEC question, finding that Cochran’s claim would
not receive “meaningful judicial review” in a court of appeals; that the
claim was “wholly collateral to the Exchange Act’s statutory-review
scheme”; and that the claim fell “outside the SEC’s expertise.”"
"Held: The statutory review schemes set out in the Securities Exchange
Act and Federal Trade Commission Act do not displace a district
court’s federal-question jurisdiction over claims challenging as uncon-
stitutional the structure or existence of the SEC or FTC. Pp. 7–18."
Yet ANOTHER slam dunk for NCLA at the SCOTUS, this one 9-0:
https://nclalegal.org/2023/04/victory-u-s-supreme-court-holds-that-federal-district-courts-have-jurisdiction-to-hear-challenges-to-unconstitutional-aspects-of-federal-agencies-administrative-proceedings/
I believe that the path would be 3 Judge Appealate Panel 1st, then a REQUEST for a EnBanc Appealate that would either be granted or denied, then a Petition for a Writ of Certerrori to the SCOTUS which will either be granted or denied.
Multi Billion dollar litigation just takes time especially when your adversary has virtually unlimited resources and time.