COMMENTARY

Peter Burgess

Dimon: To Fix Housing, Everyone Should Get in a Room and Decide to Do My Bidding

Jamie Dimon has a big plan to fix the housing market. It mirrors John McCain’s big plan to fix Iraq: get people in a room and yell “Stop the bullshit!”

“I would convene all the people involved in the business, I would close the door, I’d stay there until we resolved a bunch of these issues so we could have a more healthy mortgage market,” the 55-year-old chief executive officer of JPMorgan Chase & Co. said today.

The patchwork of U.S. and international regulatory policies governing the housing and mortgage markets are hampering recovery here and abroad, Dimon said on a conference call with analysts after the New York-based bank released fourth-quarter earnings. In the U.S., state foreclosure laws conflict with a variety of federal policies on refinancing or modifying loans to troubled borrowers, Dimon said.

Leadership is needed to overhaul the industry, including reviving the market for private-label residential mortgage bonds and reforming regulations governing mortgage repurchases and foreclosures, he said.

“You could fix all this if someone was in charge,” Dimon said, tapping on the table for emphasis. “No one is in charge.”

Don’t let it be said that Dimon’s supporters aren’t working on this. The New York Times published a story clearly intended to criticize Kamala Harris for walking away from the state AG talks, in the hopes that she will back down and return to the fold:

In an interview, Geoff Greenwood, spokesman for Attorney General Tom Miller of Iowa, who is leading the multistate settlement negotiations, said Ms. Harris’s decision to walk out of the talks had “enabled us to secure” a mortgage refinancing plan for borrowers who owe more than their houses are worth, which “added several billion dollars to the deal.” But the additional concessions, aimed at bringing California back to the negotiating table, have not been enough for Ms. Harris, who continues to hold out.

“We would certainly welcome California’s participation in a settlement,” Mr. Greenwood said, “but if absolutely necessary we’re prepared to pursue a path to a settlement without California.”

Dustin Hobbs, spokesman for the California Mortgage Bankers Association, said that raised the possibility California borrowers “would get nothing.”

Greenwood is laundering his demands for Harris through the media, with the absurd claim that Harris pulling out of the talks somehow rebounded positively on the settlement terms.

But this hasn’t worked yet to secure Jamie Dimon’s dream of everyone getting in a room and agreeing to something Jamie Dimon wants. And Dimon should hope that a real bout of democracy doesn’t break out.

The legal tide is turning against MERS and the banks, giving rise to some interesting possibilities for relief at the county level. Local governments have the power of eminent domain: they can seize real or personal property if (a) they can show that doing so is in the public interest, and (b) the owner is compensated at fair market value [...]

To ameliorate the negative effects of foreclosures, some communities are creating public entities – known as land banks – to return these properties to productive reuse while simultaneously addressing the need for affordable housing.

States named as adopting land bank legislation include Michigan, Ohio, Missouri, Georgia, Indiana, Texas, Kentucky and Maryland. HUD notes that the federal government encourages and supports these efforts. But states can still face obstacles to acquiring and restoring the properties, including a lack of funds and difficulties clearing title.

Both of these obstacles might be overcome by focusing on abandoned and foreclosed properties for which the chain of title has been broken, either by MERS or by failure to transfer the promissory note according to the terms of the trust indenture. These homes could be acquired by eminent domain both free of cost and free of adverse claims to title.