Fixing the Foreclosure System

Posted March 27th, 2008 by Joe Kaiser

And in Minnesota, the system isn't just broken, it's crumbled to the ground.

Dear Rob,

In Minnesota late last year they held a conference called, “Fixing the Foreclosure System,” where industry leaders got together to discuss their ineffective foreclosure laws.

The culprit?

In 2004, a new law was enacted that included things like creating an 82 percent of value minimum as the price investors had to pay to transact with individuals in foreclosure.

And the result?

See for yourself . . .


No investors to be found

And, for the record, after 2006 it gets much worse.

Turns out when you take investors out of the marketplace by creating laws that impede free enterprise, things break down. And in Minnesota, the system isn’t just broken, it’s crumbled to the ground.

Take Hennepin County, please.

Since 2004, when the new system kicked in, foreclosures there have almost quintupled. Yes, I understand foreclosures are up everywhere, but by a factor of five? That, Rob, doesn’t happen by accident.

It happens when well intended though ill-conceived laws make it impossible for people in foreclosure to transact. So, by attempting to fix the system, these laws condemn it and the people caught up in it to certain failure.

Just like in Minnesota.

And now, just like in Washington.

Success leaves clues

Were I to take on the task of creating an effective new system to deal with a problem, the first thing I’d do is look to see what’s working elsewhere and consider modeling that system.

Just as important, I’d look at what’s not working and do everything possible to avoid doing anything close to it.

How to fix our foreclosure system here in Washington?

You can be sure an October 2007 Fixing the Foreclosure System summit in Minnesota would have been a good reason to take Minnesota off my list of possible model candidates.

Call it a clue.

The model system

So, readers, whose model have we emulated?

I’ll let Rob tell you . . .


It’s not a new idea. Ahhh, it is a bill that, ugh, was copied after a statute in Minnesota that was adopted in 2004 . . .— Attorney General Robert M. McKenna
KUOW Radio, March 9, 2008

Yes, as incredible as it seems, the Office of the Washington State Attorney General has created our own new foreclosure laws based on the Minnesota statutes so fatally flawed that when implemented, foreclosures in some areas increased by a factor of five.


Minnesota Happens

Getting a new foreclosure bill before the legislature and taking credit for protecting homeowners in foreclosure was the agenda. It is, after all, an election year.

But getting it right, clearly, wasn’t on the list of things that mattered. Had it been, we wouldn’t be modeling the very Minnesota statutes that virtually everyone acknowledges do not work.

Probably time to pencil in our own Fixing the Foreclosure System summit, Rob. Put me down for front row seats.

In the arena,

Joe Kaiser

8 Responses to: “Fixing the Foreclosure System”

  1. loya responds:
    Posted: March 27th, 2008 at 6:03 pm

    Hey, 2006 was before the big melt-down of mortgages………so it was 5 times before it really got bad. Can’t wait see to what 2007 and 2008 are…….Kudos to Rob to bring a system like this to us! Typical government worker with no business sense…………..

  2. Joe Kaiser responds:
    Posted: March 28th, 2008 at 7:05 am

    Here’s an update from Minnesota.

    In part . . .

    In 2006, 4,375 homes were foreclosed on in the Minneapolis/St. Paul/Bloomington area, according to RealtyTrac. In 2007, that number shot up 147 percent to 10,798.

    “This year it’s going to be almost certainly north of 30,000 foreclosures. The number we’re talking about is staggering,” said Cox. “Really these are depression-era levels of foreclosures and will result in depression-era levels of evictions.” —, Feb 26, 2008


  3. Joe Kaiser responds:
    Posted: March 28th, 2008 at 7:29 am

    From Public Radio:

    The law was written in part by Prentiss Cox, the former head of the consumer division of the Minnesota Attorney General’s office.

    Cox, now a clinical professor of law at the University of Minnesota, says victims often agree to much larger payments than they can possibly make, and perpetrators make huge profits on reselling the property. Cox says the law addresses both issues.

    “It sets standards to make sure the homeowner has the ability to pay off the transaction, and the second is, it puts a floor there, what every civilized society should do, which is to say you can’t profit unconscionably from these transactions,” Cox says.

    Cox and others say it’s too early to tell if the law is effective, but he says it has caught the attention of unscrupulous agents and lenders.

  4. anemonehead responds:
    Posted: March 28th, 2008 at 1:08 pm

    Mind boggling!

  5. David Alexander responds:
    Posted: March 29th, 2008 at 2:27 pm

    Leave it to an educator and not a doer in the real life to make policy and law…. without consulting real life folks in the trenches….

    Hey let’s do this… this should fix it… with no real world application or reality to what is conscionable or unconscionable based on risk and reward…

    Leave it to government to accept someone’s answer because they have are an educator and have degrees instead of real world experience…

    They only care about their agenda… it’s not about creating a prosperous city or state or nation… it’s about creating feel good legislation to get re-elected… nothing more… research bedamned…

    I have a degree.. I must be smarter…

  6. Todd responds:
    Posted: March 29th, 2008 at 9:26 pm

    “can’t profit unconscionably from these transactions”

    what a load of B.S. …………. exxon gouges all of us, every day at the pump……..

    I would love to see the A.G. create a law that stops the oil tycoon’s from unconscionable profits!!! that would put a damper on the $164 BILLION Exxon made last year…….

  7. olyguy responds:
    Posted: March 30th, 2008 at 11:11 pm

    This bullstuff from Moron Rob reminds me rent control in Berkeley.

    The “guvmint” really needs to stay out of the real estate business.

    Perhaps those running against Rob for AG will bring this stupidity into the light. I will contact one of them.

    Thanks Joe, for your time and efforts in bringing the dark slime of Rob and his gang of thieves into the light of public scrutiny.

  8. Davido responds:
    Posted: April 1st, 2008 at 10:20 am

    Dear Joe and fellow investors,

    I think many are missing the big picture here. The promoters of these laws is neither ignorant nor well intentioned. They are designed to achieve profits for the owners of major banking corporations and increased control of individuals for government entities, Indeed Americans and the entire world will experience the greatest wealth transfer ever seen during the two decades just ahead.

    Of course, there are a number of “well intioned” but ignorant, follow the leader type legislators, However, those ignorant followers in the legislature do not write nor actively promote wealth transfer laws. They merely follow the lead of those in control. The real promoters of such laws work behind the scenes and do so with evil intent. They know the global troubles that lie ahead and fully intend to amplify and profit from those troubles.

    Though most real estate will more than double in value during the next 10 years (as inflation takes off), the average U.S. citizen will struggle mightlily. We will be increasingly squeezed by the declining value of the US dollar, constantly increasing taxes, sky rocketing food, energy and comodity costs, and crippling energy shortages. Eventually energy shortages will become a crisis leading to electrical power outages and food shortages.

    All that is planned. Crisis is planned partly as a means to motivate the public to support plans for further wars to enable US control of global energy supplys and partly to enable the passage of laws to further cotrol us, -the formerly free people of the U.S.

    The result will be that, after a brief realestate comeback 2009-2012, foreclosures will once again begin to sore. Major banks will end up with the majority of foreclosed homes. I say again, these “foreclosure laws” are but a small part of a well thought out long term plan to increase governmental control and major corportion profits. We deceive ourselves to label such laws as “well intentioned” or to think they are promoted by the ignorant. While many legislators are indeed ignorant, the ignorant are not in control. The money power is in control. One needs to look ahead and follow the money.

    Best Wishes, Davido

Post a Comment

Enter Your Details:

You may write the following basic XHTML Strict in your comments:
<a href="" title=""></a> · <acronym title=""></acronym> · <abbr title=""></abbr>
<blockquote cite=""></blockquote> · <code></code> · <strong></strong> · <em></em>

  • If you’re a first-time commenter, your response will be moderated.
  • If your response includes a link, it will require moderator approval.
Enter Your Comments:

Note: This is the end of the usable page. The image(s) below are preloaded for performance only.