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Thursday, October 1, 2009

PERS bottom-feeding goes deeper

If you're in trouble on your mortgage, the state employee pension fund is in cahoots, big time, with a guy who may be buying up your IOU.

Comments (12)

Money makes strange and hypocritical bedfellows..hey?
This union worshiping government employee's group has been in bed with some strong union busting partners, such as: KKR known as Kohlberg, Kravis and Roberts and now John Grayken, as described, a bare knuckled investor in distressed properties.A legal rip-off artist.
Seems that if Sizemore would have made money for these ingrates he would have been worshiped.

The real problem with PERS is they are gambling with someone else's money. Who cares about the risk, the taxpayers are on the hook to make up any losses.

If you went to vegas and were bankrolled by someone else, of course you would take more risks, and probably lose more.

If someone sells a note shouldn't the obligor have an opportunity to meet or beat that price, either contemporaneously or upon discovery of the sale (or proposed sale)?

ORS 646.040

Mortgage notes are certainly treated as a "commodity[.]" And no statutory exception is provided for the obligor. I am sure the wheelers and dealers would like to keep their dealings and prices secret, even if the OIC is intimately involved. If there is some gain to be had by the State Treasurer's (OIC's) preferred buyer this is potentially actionable price discrimination against a note obligor that is strategically excluded from bidding, or even being denied information about the price and deals so as to assert a timely demand.

I would sure like to have a copy of the big bad list of all the mortgages transfered, with price and address information. I could send them each a letter, just as would the Attorney General would when warning folks of the cheating Katrina Hurricane victim's relief fund folks going door to door to fund their habits. Hey, the AG could himself assert the price discrimination thing:

646.990 Penalties. (1) Each violation of any of the provisions of ORS 646.010 to 646.180 by any person, firm or corporation, whether as principal, agent, officer or director, is punishable, upon conviction, by a fine of not less than $100 nor more than $500, or by imprisonment in the county jail not exceeding six months, or by both.

I don't see an exception if it is the State Treasurer or OIC (on behalf of PERS, or anyone else) that is the violator.

Any legislator could ask the AG to put his opinion on the applicability of ORS 646.990 and ORS 646.010 to 646.180 in writing and then make that opinion public. Now that would be a good public service.

I understand what you're saying about Grayken, but I'll give the PERS mgmt some credit at least they don't seem to be hit as hard as a lot of the retirement funds by the property crash.

Of course, that won't affect the taxpayers' contribution to PERS (see the O front page) which is going to get even bigger - but, we owe to them.

"If someone sells a note shouldn't the obligor have an opportunity to meet or beat that price"

Sure you do, just show up on the court house steps with $0.01 more than the note in the form of a cashier's check. Not to mention the min of 120 days of foreclosure notice they get to get out of default prior.

I don't have a problem with Grayken since he is buying notes legally from people who can't pay. I know it's a dirty business.

I really think that these large institutional investors, who are in many regards US!, are a larger part of the economic collapse than we might realize.

The sale of the note is not a foreclosure proceeding. If Grayken/OIC/Oregon Teachers can make a bid on the note then the obligor on the note should be able to do so, from any source of funds that they can get their hands on. The obligor has the power to supply a new lender and the old lender with a novation of the agreement, the substitution of a whole new replacement agreement. This frees the old lender from further responsibility, which Grayken cannot offer.

The obligor at a foreclosure auction can not be barred from making a bid from any source of funds. Would you bar the obligor from making a bid at a foreclosure auction too, or let the federal government -- as with TARP -- designate only an approved set of buyers as elegible to bid (as a political Crony Statist favor)?

Hey, they won't be able to fulfill those promises to stem foreclosures if they don't have any foreclosures to stem.

"This frees the old lender from further responsibility, which Grayken cannot offer."

I don't know where Grayken is in process, but you're right they could buy the notes from the bank (releasing the bank) and then foreclose on the property owner.

Either way, Grayken gets a big discount since they are taking on a lot of risk (you might want to see what people do to a foreclosure house.)

I don't think he is going around picking off homeowners though (unless he bought a big portfolio from Chase for example.) Most of these guys are looking for easier to manage stuff like the Trump Tower (if that makes it beter) at a big discount.

A Grayken/OIC agreement with the bank is a thrid-party transaction where the original obliger is not a party, not in privity with Grayken/OIC. The word novation has a wiki page.


Absent novation the bank is released from nothing, as to the borrowers claims, inclusive of a claim that the sale is void. ORS 646.180.

The original lender can get more from the borrower, by way of novation, if the lender gets precisely the same amount of money direct from the original borrower, rather than from Grayken/OIC. It would get a release.

Grayken/OIC wants to get a benefit that exceeds what even a surety (who insured an obligation from the outset) would get, recovery of their amount of cover. Even then they must not be a "volunteer[.]" Maine Bonding v. Centennial Ins. Co., 298 Or 514, 521 (1985).

"Absent novation the bank is released from nothing, as to the borrowers claims"

OK, what would a borrower claim be in a foreclosure in reality? Grayken buye the note and gets the rights of the note, but what would a claim be against the bank that sells it?

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