Friday, October 15, 2010

The global economy's kyūsho is in Denmark, Maine

The Japanese word kyūsho means vital point, or tender spot - the place where one applies the legendary "death touch" in kung-fu movies.

If you've been reading the news lately, you might be aware that a growing scandal over fraudulent foreclosures is consuming the entire global credit market in uncertainty. I was listening to a report on all this on NPR's "Marketplace" last night, and it occurred to me that, somewhere, there was a family that had been foreclosed on erroneously, fought the bank, and set into motion the events that are bringing credit markets to their knees once again.

In other words, somewhere out there was a single house that was powerful enough to shake the global credit markets to their very core. A kyūsho for the global economy.

And this morning, I found it, via the New York Times. Funnily enough, the house happens to be in the rural municipality of Denmark, Maine, just a few miles from where I grew up.

The Times reports:
Nicolle Bradbury bought this house seven years ago for $75,000, a major step up from the trailer she had been living in with her family. But she lost her job and the $474 monthly mortgage payment became difficult, then impossible.

It should have been a routine foreclosure, with Mrs. Bradbury joining the anonymous millions quietly dispossessed since the recession began. But she was savvy enough to contact a nonprofit group, Pine Tree Legal Assistance, where for once in her 38 years, she caught a break.
The story goes on to tell of how attorney Thomas Cox found and deposed the bank employee who had signed the foreclosure order. During that deposition, this employee "casually acknowledged that he had prepared 400 foreclosures a day for GMAC [the lender] and that contrary to his sworn statements, they had not been reviewed by him or anyone else."

The rest is more or less history. "Robo-signers" who approved hundreds of foreclosures a day without even looking at them were exposed nationwide, and foreclosures have now been frozen in 23 states.

This tiny $75,000 house in rural Maine is a lot like Bruce Lee's one-inch punch: we see the mighty banks knocked down, but it's damned hard to see how it happened. Mr. Cox and Ms. Bradbury are like Bruce Lee on the right, and the GLOBAL FINANCIAL SYSTEM is the sad sack on the left:

The entire story is extremely worth reading for anyone who wants to relish some schadenfreude at the expense of bankers and their lawyers, and as a case study for the lack of humanity in the financial system. Reporter David Streitfeld also tells us that Mr. Cox, the lawyer, had previously worked at a bank to call in loans on small businesses, often taking business owners' homes as collateral when they couldn't pay. The job ruined his mental health and his marriage, and he's since volunteered to work on behalf of borrowers "to make amends." I hope that this story redeems his conscience - it certainly ought to.

Ms. Bradbury's case deserves to make her a hero of modern times. It's already set a precedent that's letting thousands of families stay in their homes at the expense of negligent banks. And maybe someday, her humble house in the woods of Denmark will be memorialized as the place that finally foisted honesty on the banking system.

P.S. Pine Tree Legal Assistance, the group that Mr. Cox is volunteering for, is a nonprofit law firm. A judge ruled that GMAC would pay the legal expenses for Mr. Cox's work, but Pine Tree serves a good many clients who can't afford to pay, and here's how you can help them.

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