Sometimes It's Nice Not To Be Noticed

One interesting sidelight of the Bernard Madoff financial scandals, at least here in Arizona, is the lack of any gossip about local investors or institutions who have lost money invested with him. I've heard nothing, and I spend a lot of time talking with some of the biggest gossips in the Phoenix Jewish community. (Cue faux outrage: I resemble that remark, sir!) We're perfectly capable of developing our own financial houses of cards, but apparently none of our machers achieved the level of status that allowed them the privilege of putting their money in the leading national Jewish Ponzi scheme.

In other words, in the American Jewish community hierarchy, in the contest of who you know (and is there any other game?), we in Phoenix rank behind Latin America.

Your Arizona Real Estate Bubble In Action: 10933 W. Hopi Street, Avondale

Anybody interested in just how screwed up the real estate market got in Arizona during the bubble needs to read this Wall Street Journal online article (complete with video and slide show) entitled "Would You Pay $103,000 for This Arizona Fixer-Upper? That Was Ms. Halterman's Mortgage on It; 'Unfit for Human Occupancy,' City Says."

The house is 10933 W. Hopi Street in Avondale, Arizona (map), Maricopa County Assessor Parcel No. 101-17-250; the legal description is Lot 70, Cashion Park South (MCR 89/14) for fellow real estate law mavens. The house is 576 square feet in area; the lot is 6,500 square feet. The County Assessor valued the property (full cash value) at $63,500 in 2007; the assessed value rose to $76,500 in 2008, but fell to $50,100 in 2009. (See link for Assessor valuations)

The owner originally purchased the house in the 1960's for $3,500. Effective February 15, 2007, she obtained a mortgage for $103,000, which is the value an assessor and hence the lender placed on the property. (The deed of trust is available here; enter the document number, which is 2007-0235982. I tried to put in a direct link but it decays if you haven't visited the County Recorder website first.) The loan was placed through a local mortgage lender, one of the non-banks which never had to worry much about the Community Reinvestment Act; it sold the loan to Wells Fargo, which in turn sold it to HSBC, which placed it into "HSI Asset Securitization Corporation Trust 2007-WFI" which is probably in your 401(k) or mutual funds portfolios as we speak.

Ms. Halterman, the borrower, used the "cash out" from the property for bills; she never managed to pay all much on the loan, which had an adjustable rate starting at 9.25% and capped at 15.25%. In 2008, the lender foreclosed, and the property has been sold to neighbors for $18,000; the neighbors plan to tear it down. (The City of Avondale has posted the property as condemned as unfit for human habitation.)

Anybody who thinks this made any economic sense as a global matter is just nuts. But nobody involved in the transaction -- not the borrower, not the local lender (which got a couple thousand in fees from the transaction), not the assessor, not the title company handling the escrow and lender's title insurance, not the bank bundler (which also got fees both for assembling and servicing the loan), not the underwriter of the mortgage-backed security, and not the rating agencies which called collections of subprime mortgages extremely safe securities (for a fee) -- had any incentive to say no at any point in the process. (UPDATE: Actually, it was a great deal for the borrower; she used the 2007 loan to refinance a home equity loan, rolling it all into the first loan on the property. She would have remained personally liable on the home equity loan but the anti-deficiency statute prevents the lender from pursuing the difference between the value received in foreclosure and the remaining debt. That wouldn't have been true if she had continued to have two loans on the same property, the second creditor could have pursued her after foreclosure. (Probably not successfully, but still.) If a business did this, we'd congratulate the savvy of the CFO.)

Sure, it may have been nuts for the state, national, and world economy, but why would anybody in the long chain of fees have any personal incentive to pass on this deal? The risks would get passed down the chain; the fees stayed with you. So they didn't. They would have been fired if they had, because somebody else would have made the deal instead.

So much for the "self-regulating market."

More "Magic Negro" Thoughts

To follow up on this post, Chris Rock points out that people who are so worried about "PC" attitudes on race have one thing going for them, namely their race. "You wouldn't switch places with me. And I'm rich." (H/t: Ta-Nehisi Coates.)

My Trib Gig Ends Thus

Here’s my last column for the print version of The East Valley Tribune. On Jan. 1, the paper ceases distribution in Phoenix, Scottsdale, and Tempe. Home delivery will be restricted to four days a week and only in certain neighborhoods (upscale ones, natch!) in Mesa, Chandler, Gilbert, Queen Creek, and Apache Junction. You’ll be able to pick up paper copies at Circle Ks and convenience stores. Sic transit gloria mundi, and it’s actually a blessing that Jonathan Marshall isn’t around to see the final demise of the Scottsdale Progress.

Lots of local ‘wingers complain that the major daily is “too liberal” and thus losing readers. But the paper closer to their editorial viewpoint folded first. Apparently there are enough ‘wingers to support talk radio or a newspaper, but not both, and reading is lots harder than listening. Ditto that!

I did get one fun email from a friend who grew up in Mesa, who used to be a delivery boy for the old locally-owned Tribune, and who in high school became a stringer reporting on high school sports. He got paid $2 per column inch, which 50 years later was still the going rate. I like to steal Calvin Trillin’s line and say I got paid in the low two figures.

Newspaper version of the column are available here (basic version) or here (how it looked on paper, for the last time). The editor took out some parentheticals and throw-away lines, and this time I’ve left them out except the Arpaio one in the third paragraph, that one stays.

THOMAS IS PREJUDICED AGAINST ME (AND YOU)
East Valley Tribune, Dec. 28, 2008

Maricopa County Attorney Andy Thomas must love “Monopoly” because he just invented the real-life “Get Out of Jail Free” card.

In intra-party squabbling that would be deemed too absurd for a soap opera, Thomas charged county Supervisor Don Stapley with dozens of felonies for filing incorrect financial disclosure forms. Thomas did wait until after the election, but Stapley didn’t seem appreciative. The county attorney is legal advisor to the county and its elected officials, but Stapley seemed dubious about getting legal advice from somebody seeking to convict him. The other supervisors agreed to hire outside counsel for so long as Thomas is prosecuting his ostensible client.

And whom did the supervisors select as their “outside legal consultant” (not lawyer)? Thomas’s predecessor, Rick Romley, who before he left office, was engaged in a long-running battle with Sheriff Joe Arpaio that could only be described as nasty, for there are no other types of battles possible with Arpaio, for whom all things are either personal or irrelevant.

Who needs Democrats (not that we have any in Maricopa County elected office, save for Supervisor Mary Rose Wilcox) to cause trouble when Republicans are so good at fighting among themselves? The infighting provides a welcome distraction from the fiscal difficulties that the county, with tax revenues dependent on development and retail sales, finds itself in. Like the ancient Romans, with less bread, we need more entertaining circuses.

For people who found the Romley-Arpaio feud beneath the dignity of both men and the exalted standards of public service in county government, who saw Thomas’s election in 2004 as a chance to resolve the friction between the two leaders of county law enforcement, well, you got your wish. The county attorney and sheriff now get along just fine. They just can’t get along with anybody else.

But the most interesting innovation developed by County Attorney Thomas is his expansion of the law of conflict of interest, which you (and criminal lawyers) could use to advantage. Remember that Maricopa County paid all that money to Thomas’s former employer, Dennis Wilenchik, to arrest the publishers of the Phoenix New Times newspaper because Thomas declared a conflict because of the paper’s strong, even pungent, editorial stands against him. Then when arresting newspaper publishers turned politically dicey, Thomas rose above supposed principle requiring his recusal and personally called off the investigation.

Now in the Stapley case, Thomas’s office has filed several motions seeking to have the judge assigned to the trial removed for bias. Thomas claims that the judge has ruled against him in the past, but lots of superior court judges have declined to agree with everything Thomas’s office proposes, and even Thomas’s henchmen (and women) must acknowledge that they don’t have any statistically valid evidence given the small number of rulings involved. Instead, their big claim is that the judge can’t be fair because he made a $390 contribution to Tim Nelson, Thomas’s opponent in November. (Repetitive disclosure: As did my wife and I, and Tim’s wife is one of my law partners.)

Thus, according to Andy Thomas, for a mere $390, you’re irrevocably prejudiced against him. So wouldn’t that mean that a $390 contribution makes Andy Thomas irrevocably prejudiced against you?

If I were a criminal defendant like, say, Don Stapley, I’d start writing angry newspaper columns against Thomas and send a $390 check to Tim Nelson to retire any remaining campaign debt immediately. Then you could demand (using Thomas’s own arguments) that Thomas recuse himself and send the case to a more rational, less grandstanding, prosecutor.

* * * *

Finally, please excuse a personal note. Along with the other changes at The Tribune, our Freedom Communications overlords eliminated the budget for outside writers, including their “house liberal.” So this column is my last, as it’s a bad idea to work for libertarians for free, it gives them the wrong idea. I greatly enjoyed, and appreciated, jousting with the editors, and with you readers, too, these past nine years. For future installments, however, visit my blog, www.samcoppersmith.com.

Plus At No Extra Charge, We've Thrown In "The Star Spanglish Banner" Song, Too!

It's uncanny how the same people who a few weeks ago got their knickers totally twisted over Pres.-elect Obama using the phrase "lipstick on a pig" are suddenly in the "light-hearted political parodies" business.

Your Holiday Greetings

Our favorite Phoenix-area dim sum restaurant won't open for a couple of hours, but one of my favorite artists (especially this song) is part of an urban hipster Jewish Christmas Eve tradition. (And it's not the War on Christmas.) So from our house to yours.



Lyrics (and tragic backstory) here.