Month: February 2012

Nye Lavalle, Mortgage Sleuth

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From my own personal experience and 20 years of research and investigation, nothing — and I mean nothing — that a bank, lender, loan servicer or their lawyer says or puts on paper can be trusted and accepted as true.

The quote above comes from Nye Lavalle, who after his personal experience of losing his home to foreclosure, set out to learn all he could about the mortgage industry, traveling nationwide to dig into records. In 2003, he compiled a dossier of practices at Fannie Mae.

For two years, he corresponded with Fannie executives and lawyers. Fannie later hired a Washington law firm to investigate his claims. In May 2006, that firm, using some of Mr. Lavalle’s research, issued a confidential, 147-page report corroborating many of his findings.

And there, apparently, is where it ended. There is little evidence that Fannie Mae’s management or board ever took serious action. Known internally as O.C.J. Case No. 5595, in reference to the company’s Office of Corporate Justice, this 2006 report suggests just how deep, and how far back, our mortgage and foreclosure problems really go.

“It is axiomatic that the practice of submitting false pleadings and affidavits is unlawful,” said the report, a copy of which was obtained by The New York Times. “With his complaint, Mr. Lavalle has identified an issue that Fannie Mae needs to address promptly.”

What Fannie Mae knew about abusive foreclosure practices, and when it knew it, are crucial questions as Congress and the Obama administration weigh the future of the company and its cousin, Freddie Mac. These giants eventually blew themselves apart and, so far, they have cost taxpayers $150 billion. But before that, their size and reach — not only through their own businesses, but also through the vast amount of work they farm out to law firms and loan servicers — meant that Fannie and Freddie shaped the standards for the entire mortgage industry.

Almost all of the abuses that Mr. Lavalle began identifying in 2003 have since come to widespread attention. The revelations have roiled the mortgage industry and left Fannie, Freddie and big banks with potentially enormous legal liabilities. More worrying is that the kinds of problems that Mr. Lavalle flagged so long ago, and that Fannie apparently ignored, have evicted people from their homes through improper or fraudulent foreclosures.

According to the report, Fannie held about two million mortgage notes in its offices in Herndon, Va., in 2005 — a fraction of the 15 million loans it actually owned or guaranteed. Various third parties owned the rest of the notes. At that time, Fannie typically destroyed 40 percent of the notes once the mortgages were paid off. It returned the rest to the respective lenders, only without marking the notes as canceled. According to Mr. Lavalle, Fannie Mae lacked a centralized system for reporting lost notes. And so the the potential for confusion and abuse became rampant. The piece explains that anyone who gains control of a note can, in theory, try to force the borrower to pay it, even if it has already been paid.  Or that someone might try to force homeowners to pay the same mortgage twice. Or that loans could be improperly pledged as collateral by some other institution, even though the loans have been paid. All of these things happened during and and after the financial crisis of 2006-2008. It’s refreshing to read that there were some people who took matters into their own hands and fought for the consumer.

Best Super Bowl Trivia

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This Sunday, the Giants will face the Patriots in Super Bowl XLVI. Everyone will watch or care about the game for different reasons: there’s Madonna at the halftime show, the gambler who wants to cover the spread, the nonchalant fan, the ones in it for the commercials, and of course, the die-hard fans of the Giants and the Pats.

But Ken Jennings (the 74-time Jeopardy! champion and the author of books Maphead and Brainiac) argues that no one appreciates the Super Bowl as a whole the way a trivia buff does. So he compiled a top ten list of best Super Bowls in trivia history:

10. Super Bowl XIX

In beating the Dolphins, the 49ers became the only team ever to win the Super Bowl at home (sort of — Stanford Stadium is less than 30 miles from Candlestick). But this game is mostly of note to fans of movie trivia, since a fictional San Francisco-Miami championship was a major plot point in Ace Ventura: Pet Detective and Any Given Sunday. Oh, and Teri Hatcher was a 49ers cheerleader in 1985, and got almost as many ABC-TV close-ups during this game as she did during the third season of Desperate Housewives.

9. Super Bowl XLV

In 20 years, will anyone remember that the Packers won Super Bowl XLV? I doubt it. But will they remember Christina Aguilera mangling the national anthem by singing “What so proudly we watched, at the twilight’s last reaming”? Absolutely. Will they remember Lindsay Lohan’s $100 million lawsuit of E*Trade, for featuring a substance-abusing baby named Lindsay in one of their ads? I hope so. Will they remember Bryan Bulaga, the 21-year-old Green Bay lineman who became the youngest starter in Super Bowl history? Okay, probably not.

8. Super Bowl XXIX

This was the highest-scoring Super Bowl in history (49ers over Chargers 49-26) and a record fifth-straight Super Bowl for one player: backup Chargers QB Gale Gilbert, who had been signed from the Bills during the offseason. It’s also the game that Jerry was forced to attend with his nemesis Newman in the Seinfeld episode “The Label Maker.” But the highlight for me was the bizarre Disney synergy exercise of a halftime show, “Indiana Jones and the Temple of the Forbidden Eye,” in which an Indy look-alike (Harrison Ford refused to participate) rescued the stolen Vince Lombardi Trophy from a jungle lair whose dangers included frenzied temple worshipers, the evil Eye of Mara, and Patti LaBelle singing “New Attitude.”

7. Super Bowl IV

The first Super Bowls weren’t quite ready for prime time. (Even literally! Super Bowl XII was the first evening game.) In the very first AFL-NFL championship, for example, the first touchdown was scored by a hastily suited-up (and hungover) Packers reserve named Max McGee, and the second-half kickoff had to be rekicked because the TV cameras had missed it. Super Bowl IV’s halftime show was the first one headlined by a big celebrity: Miss Carol Channing. The on-field accomplishments were just as dubious: This was the game that marked the beginning of the Minnesota Vikings’ 0-4 Super Bowl record that, amazingly, still doesn’t include a single first-half score.

6. Super Bowl XXXVIII

This Patriots-Panthers showdown been called the greatest Super Bowl of all time, and you probably remember it as a classic quarterback duel. Tom Brady’s 32 completions are still a Super Bowl record, as is Jake Delhomme’s 85-yard pass to Muhsin Muhammad. But only trivia fans remember the record scoreless 27 minutes that opened the first half. And the British streaker who tried to crash the second-half kickoff in a G-string but got clobbered by linebacker Matt Chatham. And a terrible Bud Light commercial about a farting horse. With all that going on, the “wardrobe malfunction” seems like almost an afterthought.

5. Super Bowl XXIII

The first Bud Bowl! And a halftime show that was a stadium-wide 3-D card trick performed by a magician named — I wish I were making this up — “Elvis Presto.” For me the trivia MVPs of the game were Mike Cofer, the 49ers kicker who made a 41-yard field goal only to miss a 19-yarder (!) on the next drive, and legendary Canadian comedian John Candy. As the story goes, with the 49ers down three with three minutes to go, Montana calmed down a nervous huddle by pointing into the crowd and asking, “Isn’t that John Candy?” Then he proceeded to march the team 92 yards downfield for the game-winning touchdown to John Taylor. Cool customer.

 For the trivia and sports fan in you, the complete list is worth reading.

On Blurbs and Blurbing

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Alan Levinovitz has a great piece on blurbs, those short endorsements found on the front and back covers of books. Coined in 1906 by children’s book author and civil disobedient Gelett Burgess, blurbs have a fascinating history:

In 1936 George Orwell described them as “disgusting tripe,” quoting a particularly odious example from the Sunday Times: “If you can read this book and not shriek with delight, your soul is dead.” He admitted the impossibility of banning reviews, and proposed instead the adoption of a system for grading novels according to classes, “perhaps quite a rigid one,” to assist hapless readers in choosing among countless life-changing masterpieces. More recently Camille Paglia called for an end to the “corrupt practice of advance blurbs,” plagued by “shameless cronyism and grotesque hyperbole.” Even Stephen King, a staunch supporter of blurbs, winces at their “hyperbolic ecstasies” and calls for sincerity on the part of blurbers.

The excesses and scandals of contemporary blurbing, book and otherwise, are well-documented. William F. Buckley relates how publishers provided him with sample blurb templates: “(1) I was stunned by the power of [ ]. This book will change your life. Or, (2) [ ] expresses an emotional depth that moves me beyond anything I have experienced in a book.” Overwrought praise for David Grossman’s To the End of the Landinspired The Guardian to hold a satirical Dan Brown blurbing competition.

Have you ever been swayed to purchase a book based on a blurb as opposed to a description/summary of the book? Bill Morris performed an informal survey of his friends/colleagues last year, and the results of his blurbing query are here.

How Alzheimer’s Disease Spreads

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Researchers at Columbia and Harvard performed an experiment with genetically engineered mice that could make abnormal human tau proteins and have found a path for the spread of Alzheimer’s disease:

Alzheimer’s researchers have long known that dying, tau-filled cells first emerge in a small area of the brain where memories are made and stored. The disease then slowly moves outward to larger areas that involve remembering and reasoning.

But for more than a quarter-century, researchers have been unable to decide between two explanations. One is that the spread may mean that the disease is transmitted from neuron to neuron, perhaps along the paths that nerve cells use to communicate with one another. Or it could simply mean that some brain areas are more resilient than others and resist the disease longer.

The new studies provide an answer. And they indicate it may be possible to bring Alzheimer’s disease to an abrupt halt early on by preventing cell-to-cell transmission, perhaps with an antibody that blocks tau.

According to Wikipedia, there are more than 25 million sufferers of Alzheimer’s worldwide. This is a disease that is predicted to affect 1 in 85 people globally by 2050. It’s encouraging to see progress being made in this field, even if we are many years away from a cure.

The Culture That is Japan

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This is a fascinating piece on the culture of Japan. Over the last twenty years of recession, the Japanese have traveled abroad and returned with acquired international tastes. In fact, as the piece attests, Japan may be a better destination than its foreign counterparts where the product is made. If you want to test fine French cuisine, head over to Tokyo rather than Paris, and this piece explains why.

Japan has become the most culturally cosmopolitan country on Earth, a place where you can lunch at a bistro that serves 22 types of delicious and thoroughly Gallic terrines, shop for Ivy League–style menswear at a store that puts to shame the old-school shops of Cambridge, Massachusetts, and spend the evening sipping rare single malts in a serene space that boasts a collection of 12,000 jazz, blues and soul albums. The best of everything can be found here, and is now often made here: American-style fashion, haute French cuisine, classic cocktails, modern luxury hotels. It might seem perverse for a traveler to Tokyo to skip sukiyaki in favor of Neapolitan pizza, but just wait until he tastes that crust.

An interesting factoid about the quality of food:

Though many Japanese foodies and critics deride the Michelin Guide for a perceived ignorance of traditional Japanese food culture, the publication of the first Red Guide to Tokyo just four years ago signaled a tectonic shift in the international culinary scene. In the latest guide, 247 of Tokyo’s restaurants have stars—almost four times the number in Paris, and more than the total number in London, New York City and Paris, pointing to the spectacular appeal of this city to foreign palates. 

It’s no surprise to see the top ranks of Japan’s Red Guide populated by tiny sushi bars and extravagant kaiseki restaurants, but each year there are also more and more non-Japanese restaurants earning stars for their creative cooking. One of Tokyo’s three-star establishments—an honor awarded to only 15 restaurants in the main cities of Europe but to 16 in Tokyo alone—is Quintessence, which serves contemporary French food created by a young Japanese chef named Shuzo Kishida.

On Japanese bars:

It’s this embracing of bartending as a vocation that makes Japan’s bars better than those anywhere else in the world. There’s also the hyperspecialization encouraged by the fact that bars can be so small—and that almost every narrow pursuit can find enough customers to at least break even. But maybe the central reason this city is so amazing for drinkers is that the quest to find the best is, by definition, a Sisyphean task.

Read the piece to find out about Katsuyuki Tanaka, an owner of a coffee shop who requires his baristas to train for at least a year before they can serve espressos.

I’ve never been to Japan, but from what I’ve read, the country is quickly becoming the best place in the world in which to eat, drink, shop, and sleep.

Wikipedia’s List of Lists of Lists

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Wikipedia’s list of lists of lists seems to be popular on the internet right now. And for a good reason. It’s a treasure-trove of meta awesomeness.

So dive in and spend a few hours on the internet, learning. My top five suggestions:

1) List of books

2) List of centenarians

3) Lists of most expensive items

4) List of small Solar System bodies

5) List of websites

What I’m looking forward to next: a list of lists of lists of lists on the internet.

Graffiti Artist to Make $200 Million from Facebook Stock

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Facebook announced its IPO yesterday, in an effort to raise $5 billion (perhaps more), which will be the largest internet public offering ever. Many people who hold Facebook shares are poised to become millionaires overnight. The New York Times reports a story of one David Choe, a graffiti artist who painted murals on the walls of Facebook’s first offices in Palo Alto, California. He chose to be paid in stock rather than in cash. Now, he’s poised to become an ultra-millionaire, to the tune of $200 million or more.

Many “advisers” to the company at that time, which is how Mr. Choe would have been classified, would have received about 0.1 to 0.25 percent of the company, according to a former Facebook employee. That may sound like a paltry amount, but a stake that size is worth hundreds of millions of dollars, based on a market value of $100 billion. Mr. Choe’s payment is valued at roughly $200 million, according to a number of people who know Mr. Choe and Facebook executives.

Sounds like Choe has won the lottery (by comparison, a $380 million Mega Millions jackpot in 2011 had a cash payout of $240 million, the largest in the history of the American lottery).

On a final note, what is the artist’s advice for living? “Always double down on 11. Always.”

The Farewell Letter to Your Coworkers

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The Wall Street Journal has a fun piece on funny or awkward farewell emails people have written to their coworkers upon departure from their employer:

At the law firm Alston & Bird, one departing associate baffled his colleagues by sending everyone a black-and-white photo of himself, with only his name and start and quit dates written beneath “as if it was a tombstone,” says John E. Stephenson, a partner in Atlanta who has been keeping a “Dead Soldiers” file of his colleagues’ goodbye notes for 27 years. “It caused a firestorm because people thought he had died.” The associate had to follow up with another email saying, “I’m not dead. I’m sorry to have concerned so many of you,” Mr. Stephenson says.

I like this parody farewell email from Chris Kula:

For nearly as long as I’ve worked here, I’ve hoped that I might one day leave this company,” he began. “I have been fortunate enough to work with some absolutely interchangeable supervisors on a wide variety of seemingly identical projects—an invaluable lesson in overcoming daily tedium in overcoming daily tedium in overcoming daily tedium.

But the best way to get someone’s attention? Write an email with the subject line “FREE FOOD.”

Virtual Reality and Pain Relief

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In “Burning Man,” Jay Kirk tells the incredible story of Sam Brown, who was set on fire by an improvised explosive device while on tour in Afghanistan. He survived, only to find himself doomed to a post-traumatic life of unbearable pain. When hallucinogen-grade drugs offered little relief, he turned to virtual reality. And partaking in a video game called SnowWorld helped Sam Brown cope with pain more than anything else he tried:

Last July, Maani and Hoffman published the results of the study in which Sam Brown had participated. Echoing the civilian studies, soldiers reported significant drops in pain while immersed in SnowWorld. Time spent thinking about pain, which is an inextricable contributor to actual pain, dropped from 76 percent without SnowWorld to 22 percent with SnowWorld. Amazingly, some of the biggest drops were for the most severe levels of pain, which went against every previous expectation. Since then, SnowWorld has received a good deal of enthusiasm from several well-lit corners of the Pentagon. At least one four-star general, after seeing the results from the ISR study, has gone so far as to say that he foresees a day coming soon when VR pain distraction might become standard care. There is nearly equal excitement about Hoffman’s other applications, including one called IraqWorld, a virtual-reality exposure therapy he built to treat soldiers with PTSD.

Hoffman knows that more studies need to be done before VR becomes a regular part of a medic’s field kit. To that end, he and his colleagues at HITLab are now using $7.5 million in NIH grants to further investigate how VR affects the mind and how better to apply it in clinical situations. One part of the study is looking at using small doses of ketamine to enhance the sense of presence. But he is confident that eventually, as the technology becomes more sophisticated, VR will be exponentially more effective. Soon, he predicts, VR worlds will be customized, personally tailored, and as in social networks or Second Life, they’ll allow patients to bring along other people—a vet’s mother, girlfriend, buddies. Hoffman imagines programs that will tap into a patient’s happy memories—of a ski vacation or a honeymoon or a morning rowing on a river, sunlight dripping from the oars.

Hoffman can also see battlefield applications. Customized VR worlds will be pre-programmed right into the soldier’s eye gear. He’s already experimenting with piezoelectric crystals to that end. It doesn’t seem like much of a stretch to imagine a near future in which combat patients could simultaneously distract themselves from their own pain while inflicting it on a virtual and remote enemy. A soldier could put his mind inside a drone instead of watching as a medic changed his bandages. In such a future of techno-utopian warfare, at least for those combatants equipped to fight outside the pain matrix, victory will indeed belong to those who have rid themselves of the inconvenience of being men and who, for all we know, may as well bleed snow.

An incredible story.

Gaming the College Rankings

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In education news this week, there’s a big story on an administrator at Claremont McKenna College who admitted to falsely reporting SAT statistics since 2005. The scores for each fall’s freshman class were generally inflated by an average of 10-20 points each. While seemingly insignificant, these scores most likely affected Claremont McKenna’s overall rankings in the U.S. News & World Report for best colleges.

The New York Times notes that in recent years, colleges have been gaming the system by twisting the meanings of rules, cherry-picking data, or simply lying:

In one recent example, Iona College in New Rochelle, north of New York City, acknowledged last fall that its employees had lied for years not only about test scores, but also about graduation rates, freshman retention, student-faculty ratio, acceptance rates and alumni giving.

Other institutions have found ways to manipulate the data without outright dishonesty.

In 2008, Baylor University offered financial rewards to admitted students to retake the SAT in hopes of increasing its average score. Admissions directors say that some colleges delay admission of low-scoring students until January, excluding them from averages for the class admitted in September, while other colleges seek more applications to report a lower percentage of students accepted.

What I don’t understand is why there isn’t some standardized system for colleges to report their scores, admissions statistics, and the like. For example, when I take the SAT or the GRE, the company who administers the tests forwards my scores on my behalf. There is no ambiguity that these are my scores, and they are valid. I understand that colleges aren’t obligated to report their figures, but I think some kind of verification process would be helpful for millions of students that rely on this kind of data as they are (supposedly) making an informed decision about which college they want to attend.