AMERICAN PREDATORY LENDING AND THE
GLOBAL FINANCIAL CRISIS
ORAL HISTORY PROJECT
Interview with
Lynn Drysdale
Bass Connections
Duke University
2020
PREFACE
The following Oral History is the result of a recorded
interview with Lynn Drysdale conducted by Andrew O’Shaughnessy on July 16, 2020. This interview is part of the
Bass Connections American Predatory Lending and the Global Financial Crisis
Project.
Readers
are asked to bear in mind that they are reading a transcript of spoken word,
rather than written prose. The transcript has been reviewed and approved by the
interviewee.
Transcriber: Sherry Zhang Session:
1
Interviewee: Lynn Drysdale Location:
By Zoom
Interviewer: Andrew O’Shaughnessy Date:
7/16/20
Andrew
O’Shaughnessy: My
name is Andrew O'Shaughnessy. I am a J.D. candidate at the Duke University School
of Law. I'm also a research assistant for the Global Financial Market Center’s
American Predatory Lending Project. It is Thursday, July 16th, 2020. I'm
speaking remotely with Lynn Drysdale to conduct an oral history interview. Ms.
Drysdale, thank you for joining me today.
Lynn
Drysdale: Oh,
sure. Thank you for asking.
Andrew
O’Shaughnessy: So we'd like to start [by] establishing [a little bit about]
your background. I understand you got your J.D. from the University of Florida.
Are you from Florida originally?
Lynn
Drysdale: No,
North Carolina actually, originally. High Point, which if you're at Duke,
you're familiar with High Point… if for no other reason than the barbecue[.] I've
been in Florida since ‘73, so that's quite a bit of time.
Andrew
O’Shaughnessy: So what led you from law school to a career in Legal Aid?
Lynn
Drysdale: I
don't even know how I ended up in law school, quite honestly. I just graduated
with a psychology degree, undergraduate, and didn't have any passion to do
anything in particular. My roommate was going to go take a prep course for the
LSAT and she didn't want to do it by herself…. [L]ong
story short, I just landed at law school
because I thought, ”Well, I did okay on the LSATS; I'll apply for law school.
And if I get in, I'll go, if not, I'll do something else.” And so that's the
way it happened.…
Andrew
O’Shaughnessy: Can
you connect the dots between law school and the Legal Aid Society?
Lynn
Drysdale: The
same sort of serendipitous situation. I was not the brightest bulb in law
school. And so I got a low-level, personal-injury-type
job that I hated straight out. [I] lasted there a year and I moved onto
something where I thought I'd be doing more corporate law. And then within a
year of going there, the firm split up. So I had
nowhere to go. I had been volunteering at Legal Aid. [T]he receptionist there
said, “Well, why don't you apply for a job here?” And so
I thought, “Well, why not? I need a job.” And they hired me in 1988 on a six-month
contract at Legal Aid. And then I just found my passion, but it was all
completely serendipitous. There was no plan at all.
Andrew
O’Shaughnessy: In
the context of your professional life, once you started at Legal Aid, when and
how did you first become involved in issues related to residential mortgage
lending?
Lynn
Drysdale: Right
away.… At that time, anybody that worked at legal services handled divorces,
and then you branched out into other areas. Because the person whose place I
was taking did bankruptcy cases and real property cases, I just took them over.
I was finding that I was having some
really interesting cases relating to residential mortgages, and it was an area
of the law that not many people were involved in. So
it felt like we were getting involved at the ground level. And I just got a lot
of support from the National Consumer Law Center. I have always been a proponent of trying to figure
out who else might be able to come up with a better plan than me and enlisting
others. So when I came across something in a case that
seemed interesting to me, I just picked up the phone and called the National
Consumer Law Center, just thinking, “What's the worst they could do?” And the
answer was, to not take my call.
So they did take the call. And they found that… a couple [of
the cases] that I was bringing to them [were ones] involving elderly ladies
that were part of my “grandma cases” —
so this is late ‘90s, early 2000s — real
property was appreciating in value. There were a lot of elderly people — you
know, widows, widowers — on their own, and they were cash poor, but they were
house rich; they had a lot of equity.
And so these companies — I'm afraid to say the names of these
places because I might be butchering the names. [T]his is 20, 25 years ago. So
anyway, I think it was Associates[1] — that was doing a lot of
the flipping, where you give somebody a loan and then you refinance it a year
later and you throw in all these crap charges, the worthless insurance and the
broker fee comprised about half of the
cash-out of the loan… [These were r]eally loans just
to make loans, because the lender was having promotions and that sort of thing.
If they could originate a lot of loans — “they” meaning
the loan originators or brokers or lenders — the more loans they could
originate, the better prizes they got, like trips to the Bahamas or a bonus or
whatever.]
But the end result of
that was that a lot of these people — I had a couple of clients who had
Alzheimer’s, were just happy to have somebody come and visit with them — they
didn't know they were signing loans. And then the next thing they knew, the — [the]
loan spiraled out of control, they didn't get any benefit from it. They weren't
getting really any cash-out from the loan.
[So on these cases,] I just took a flyer and called [the National
Consumer Law Center. They thought the cases were pretty interesting and helped
me out. And… from then and on I think I had the fever. I did a lot of the title loan cases where
they were — the lenders were providing loans with… triple- or quadruple-digit
interest rates that were fully secured by the free and clear title to an
automobile. One of my neighbors was one of the guys that was doing thousand-dollar
interest rate loans. That's another whole wild story, but anyway, I got a lot
of satisfaction and a lot of help from getting the state interested…. There was
always some way to make what I was working on bigger, not because [of] what I
was doing, but because I [got] other people interested in the issues as well.
And I just really liked that. And I liked the collegiality of the consumer bar.
Andrew
O’Shaughnessy: [At]
what point in [your clients’] experience did they come to you?
Lynn
Drysdale: [Usually]
an adult child would come in with them with a big old grocery bag stuffed full
of papers and say, “We don't know what's going on with our mother’s or our
father's house, but… there was a process server here,” or “there are
threatening phone calls,” all of that sort of thing.
Andrew
O’Shaughnessy: [What]
sort of resolution were you trying to get for your
clients at that point?
Lynn
Drysdale: Generally,
I was trying to defend them in a foreclosure and then [I was] bringing
affirmative claims as counterclaims. And quite honestly, several of those cases
ended up with a mortgage’s note just being “satisfied and canceled” because the
[lender or broker’s] behavior was so egregious. [It] kind of reminds me now of
the reverse mortgage cases that I've seen. Just a pattern of lenders finding a
vulnerable population and exploiting them.
Andrew
O’Shaughnessy: [W]hat
sort of counterclaims would you bring?
Lynn
Drysdale: Generally
speaking that would be claims under the… Florida Unfair
and Deceptive Trade Practices Act. Back then we used very, very simple claims, common law claims. Just
as simple as FDUPTA claims. But anyway, probably staying away from [bringing
counterclaims of] fraud and things like that, just because it made the case so
much more difficult.
Andrew
O’Shaughnessy: So,
the people trying to foreclose, [who were they]?
Lynn
Drysdale: A
lot of times it was the originating lender, but usually it was a downstream
lender or servicer [or] owner[.] They all kind of start running together.
Andrew
O’Shaughnessy: [You]
mentioned that you often got other parties involved, other organizations, NCLC
and you mentioned the state [of Florida]. So what
other organizations were you enlisting and how did they collaborate with you
during this time?
Lynn
Drysdale: Well,
on the title loans, [one organization involved was] the Department of Agriculture
and Consumer Services[. T]here's probably that type of office in every state,
but that's just what it's called here in Florida…. I contacted them because I
thought these three- and four-digit interest rates can't possibly be legal and…
the lenders were using a loophole in the pawnbroker statute to do that type of
lending until they got caught. And we had to go through the legislature [to] close
the loophole. The attorney general got involved, et cetera, et cetera.
[S]o
I just happened to call the Department of Agriculture and Consumer Services
when they were wanting to start focusing a little more on the consumer services
and not just the agriculture. They had… one of their senior attorneys get
involved in one of the title loan cases. And I think we represented about 40 or
50 people in that case. I became in the background, just providing information
and the clients and everything to the attorney for the State. And then in
another case, the title loan case involving my neighbor… one of the claims I'd
filed against him was a count questioning the constitutionality of the law they
were using, the loophole they were using to do the title loans. He hired an
attorney that was also our across-the-street neighbor who came in and moved to
dismiss the claims because you have to include the Attorney General as a party
if you're raising the constitutionality of a law.”
Lynn
Drysdale: So I said, “Okay… I'll serve these papers on the Attorney
General that I served on your clients to sue him.” And when the Attorney General
Office read the complaint and saw what the lender was doing, then the Attorney
General and the Florida Department of Law Enforcement came and arrested the
guy. We had him come to my — he had to bring some documents to me for the
litigation. So when he brought the documents to drop
them off, and was leaving… law enforcement picked him up and threw him in jail,
where he stayed because he was too cheap to post bail…. [L]ong
story short, he got convicted, mainly got away with time served because he'd
been in jail for about a year by the time he went to trial.
Andrew
O’Shaughnessy: Was
that kind of the tenor of your relationship with state prosecutors and
regulators with your mortgage cases? [Y]ou would
bring cases to their attention, you would refer sort of criminal-seeming
activity to the prosecutors?
Lynn
Drysdale: Generally… with the Department of Agriculture and Consumer Services…
they brought the case and I just did the background work. With the Attorney
General's office on that one case, it was pretty much the same, but that was — those
were early 2000s cases. Late 1990s, early 2000s. I've found that the problems
with mortgages and debt collection — all of these automobile sales and
financing, title loans, payday loans — all of these have caused a much bigger
of a problem. Or maybe it's just the politics of our state, but we don't really
see much of… the Attorney General getting involved in our cases. Now, I did
have a situation where a mortgage rescue scam company was pursued by the Attorney
General after we brought it to their
attention, but that doesn't happen as frequently.
[W]hen…
the Big Five entered into the mortgage settlement in the late 2000s,[2] one of the Assistant
Attorney Generals that I know pretty well was deeply involved in the
negotiations for the agreement with the five big mortgage lenders in the 49 states.[3] [Subsequent to that, the alliance
of intrastate prosecutors and regulators] started up an intrastate task force. They
asked me to get involved, because I had been in legal services for so long,
they knew I could get a bunch of legal services folks together to attend a
meeting with… Attorney General Bondi… [and the National Settlement Monitor.] The[ Attorney General] had a person that we
could all call, that would individually intervene in our cases [if the
servicers were not complying with the terms of Troubled Asset Relief Program] disbursements.
The [Attorney General was working with the] Monitor [to oversee] how those five
servicers were doing what they were supposed to under the settlement [if they
received] TARP money.
Andrew
O’Shaughnessy: So
that sounds like 2008, 2010 or so.
Lynn
Drysdale: Right.
Andrew
O’Shaughnessy: … [Y]ou just described the interest of the state falling off in
terms of prosecuting some of these lenders. When and… why did you think that
enthusiasm waned?
Lynn
Drysdale: Well,
Pam Bondi actually was pretty good [at digging into consumer and mortgage
issues]. A lot of the Assistant Attorney
Generals that worked for her were people that were longtime staff members and were
really good attorneys, kind of like with the [Consumer Financial Protection
Bureau]. [T]he ground workers are really
good. Leadership – [AG] Bondi started getting into [prosecuting] some of the
gun [and other non-consumer] issues, … the Oxy[Contin] issues, — a little more
political stuff. But I can tell you, she was a lot more aggressive in going
after banks — it just may have been the timing with 2008 and [the nationwide
focus on mortgage company] wrongdoers — than Attorney General [Ashley] Moody,
in my opinion.
Andrew
O’Shaughnessy: So over the 2000 – 2010 period, how did the legal problems
you were dealing with evolve as they relate to mortgages? ….
Lynn
Drysdale: [T]hat
was back in the “show me the note” days…. There was an explosion of
foreclosures being filed. And because of the securitization and the sale of the
underlying mortgages [and notes, servicing rights] and bundling [of loans], [separating
the ownership from the paper] and that whole [securitization] process [and the
extreme] volume of foreclosures that were being filed, [and] you combine the
fact that only a few players were actually filing them…. [T]hey were dealing in
huge volumes and the way the securitization separated ownership from the paper….
In any case that we got involved in – in other words, if there was any defense
– then it was likely to go poorly [for the bank trying to bring the
foreclosure] because of those three factors…. If it was uncontested, then it
would just sail through [the “rocket docket.”] … In other words, the lawsuits
were just widgets that just got put thrown together [like on an assembly line] and
then filed.
Andrew
O’Shaughnessy: You
mentioned the phrase, “’show me the note’ period.” Could you elaborate a little
bit on what you mean by that?
Lynn
Drysdale: ….
[Because] you've got too many foreclosures and too few [firms filing] them, and
you've got massive volume and you've got notes and mortgages where the
ownership and the servicing have been separated. [T]hen there's… servicing and
transfers of the ownership and all of this[, which created evidentiary problems
for the banks.] Either they didn't take the time… to show that the entity that
was bringing the lawsuit had the right to [bring it or the documentation never
existed.] [T]here were missing links in the chain of assignments or in the
chain of endorsements. I was going and taking depositions of paralegals and law
firms that were just creating fake assignments, attorneys that were creating
fake assignments and forging signatures. I even went to one place that was
basically a document mill and their affidavits and assignments were never
touched by human hand.
I wanted to take the
person who signed their documents – I wanted to take his deposition. And his
boss said that I couldn't because he was too essential to the process of —
their work of creating assignments. And she then described it. She said, “It's
kind of like McDonald's. You've got this whole assembly line and you've got… somebody
puts a patty on, somebody puts the lettuce on somebody puts the tomato on, then
you've got to wrap it up….” So she was talking about
these legal documents that have legal effect in court proceedings [as] being
just like hamburgers. And so… when I finally got to depose them, I asked them
how many documents they signed a day. And he said, “Oh, it was probably a one
or two thousand.” …. He said, “Oh, no, we don't actually touch [the documents].
We just stand by the machine and the machine pumps him out.” So
I said, “Okay, so a machine is also pumping out a notary signature of someone
who's signing an affidavit that's going to be used as proof in a foreclosure
summary judgment hearing?” And they said, “Yeah.” So
these documents have never been touched by human hand.
Andrew
O’Shaughnessy: Isn't
that fraudulent? Did anyone go to jail for that?
Lynn
Drysdale: Oh,
no. I think it's fraudulent.… Anyway, nobody ever got in trouble for it, even
the law firms that were having their paralegals sign the… sixty, seventy affidavits
a day, [or even] hundreds of affidavits a day, [even for] the attorneys who
forged signatures on assignments. I sent that information to the Florida Bar. [I
was finding evidence that] documents that were being filed in support of
foreclosures…. [The fraud] didn't seem to matter.
Andrew
O’Shaughnessy: So the ABA [American Bar Association] is one thing. When
you're raising the issue in court, were there legal justifications for not doing
anything about it?
Lynn
Drysdale: Yeah.
The judge just found out that these issues that were being raised were just not
that big of a deal. That your [borrower client] didn't make [their] mortgage
payments and so somebody was entitled to a foreclosure. It might as well be
this bank.
Andrew
O’Shaughnessy: So when you are present and you do mount a defense, and you
highlight these inconsistencies in the chain of title or assignment, when you
show that those inconsistencies existed, did the claim get dismissed?
Lynn
Drysdale: No,
most of the time the judgment was entered in favor of the bank [despite the
fraud]. Now, [in] some [cases] we were able to settle because I guess the bank
had concerns about their documentation. But… [even when] I've had these cases…
go up to the appellate level and… I would say [that] the trial court made some
errors in either allowing evidence in or [in] not recognizing the significance
of false evidence, nobody seemed to really care. ….
Andrew
O’Shaughnessy: So did there end up being any sort of appellate or
legislative conclusion to these chain-of-title questions? Or did the courts just… decide [on an ad
hoc basis] that it wasn't worth getting excited over?
Lynn
Drysdale: …
[I]t's situational because… you have one judge that just decides that they're
not going to overlook the evidence code, and then there's some judges, even at
the appellate level, that seem to me to be [interpreting] the rules to make the
evidentiary code be more user friendly [for the banks]. I have to be very
careful here. It just depends on the case and the judge, I guess, is the best
way to short circuit all that.
Andrew
O’Shaughnessy: In
addition to representing clients, you've done a great deal of advocacy work and
you've testified in front of the Florida legislature and Congress. During this
period, what were you advocating for?
Lynn
Drysdale: Different
things…. On the title loans, [I was advocating for] getting reasonable interest
rates on [title and then] payday loans …. [T]hey were
trying to basically make Florida a non-judicial state.[4] [T]hey were saying that it
takes too long for the mortgage foreclosures to go through the process. But the
problem was the legislature was trying to fix [on the backs of borrowers] an
issue that was caused squarely by the banks, because the banks [could not] dot
their i's and cross their t's. And so a mortgage
foreclosure would be filed, and then, a year later nothing would have happened
on it because [the banks] were still trying to get their documents together. …
[B]asically what the banks were saying is, “Yeah,
because we can't just throw any slop on the table and win [we need the
legislature to change the law]. It takes us a year or two to navigate through
the system because they're making us produce actual evidence and that's getting
in the way of our being able to, ‘rocket docket’ these cases through.” … [A]t
one point there was a situation where they were scheduling thirty foreclosure
trials in thirty minutes. And then rolling over in the next thirty minutes, you
have thirty more in the next thirty minutes…. That was back when they had the
meltdown after the mortgage crisis and there were so many foreclosures.
Andrew
O’Shaughnessy: Just
to clarify, what sort of changes were you advocating for as they related to
that?
Lynn
Drysdale: Well,
we were trying to keep foreclosures judicial. Not make it easier for the cases
just to be fast-tracked through the courts [with no due process].
Andrew
O’Shaughnessy: Were
there other legal tools that you tried to get through advocacy or that you wish
you had had?
Lynn
Drysdale: Not
really. I mean, we did the legislative [advocacy], we do class litigation at
times [and we] would take cases and try to get a regulator involved. Maybe
co-counsel with private attorneys to get them up to speed on these types of
consumer issues. I did a little teaching at [law] school[s], and then a lot of
training. I did one last week on how to protect stimulus money… through the CARES
Act from garnishment. And then I think next week I'm doing one on reverse
mortgages. Then I did something for the Bar on what small claims court is going
to look like in this new age where… attorneys are used to using Zoom for this,
that, and the other thing, but for your average person, it's a bit overwhelming
to think about court at all. ….
Andrew
O’Shaughnessy: So during this 2000 to 2010 period, when you're doing, like
you said, a ton of training – and I think you have also contributed to NCLC
practice guides [and done] other things that are focused on practitioners….
Where did you feel like the advice or training you were providing was most
helpful?
Lynn
Drysdale: My
boss and I crisscrossed Florida, we went up from Miami to Key West, to
Pensacola, to Jacksonville, to Daytona, to Tampa, to everywhere in between. We
did three levels of training specifically on mortgage foreclosure defense,
which included discussion about affirmative cases/claims and the necessity of
getting a housing counselor involved early and often, particularly after they
enacted the [Real Estate Settlement Procedures Act] reg[ulation]s,
the loss mitigation and all of that.
Andrew
O’Shaughnessy: I'm
not familiar with those. Could you elaborate on them?
Lynn
Drysdale: Right.
So… when the Big Five paid in after the big mortgage crisis [and settlement],
one of the big problems was that the servicers were supposed to be providing
what's called “loss mitigation.” In other words, offering loan modifications,
short sales, deeds in lieu…. And that process was just chaotic with [the five
major servicers] — Bank of America, Countrywide, [GMAC/Ally, and JP Morgan
Chase]. The borrowers would submit their documents to be considered for a loan
modification, and then inevitably [the servicers] would lose their documents…. It
was just this year-long quest to be able to get all the documents in. So Congress, in the Dodd-Frank Act, came up with this system
so that if… somebody submits an application [for loss mitigation], you've got
to acknowledge it within five days, [and then] you've got to give a thumbs up
or thumbs down within thirty days. And there's this whole process. There's a
private right of action if the servicer drops the ball and starts losing papers
and stuff like that. … [Y]ou can send a notice of
error, or you can send a request for information. I think that's from January
the 10th of 2014. So it took a while to get through
Congress after the actual events of [the financial crisis and foreclosure
crisis.]
Andrew
O’Shaughnessy: You
were saying that you were doing these trainings and one of the things you were
advising was to have a housing counselor involved early on. And so the counselor’s job, legally speaking, was what exactly? They
would help sort of certify that the process was not effectuated properly by the
servicer?
Lynn
Drysdale: No.
… [I]t was generally a paralegal who just — all they did was deal with servicers.
They would look over [the loan] initially to see if a loan mod[ification] would be feasible given all of the numbers and
how far behind [the borrower was] and the monthly payment and the income and
all that. [Housing counselors are] the ones who just are dealing with the
servicers back and forth, back and forth. [When the] servicer says, “We need
this [document] signed,” [they] get this one signed. They do the manual labor
required in getting a complete loss mitigation packet and then getting the
response back [from the servicer]. And if the housing counselor sees that the home
doesn't fit the person, in other words, the person is just never going to be
able to afford it, unless there's been some servicer fraud or illegal activity,
then we probably wouldn't get involved in that case because it just doesn't
make sense. We've got limited resources, so we're not going to try to save a
home for somebody who can't afford it. Those are just the hard decisions you
have to make. But if a housing counselor says, “Yeah, they can afford this
home,” then we'll take it just to help facilitate the loss mitigation process.
And then the housing counselor might come to us and say, “Look, it's been forty-five
days and they still haven't given us an answer.” So
then I may send out a request for information or a notice of error. Or they may
say that they were turned down and they shouldn't have been, they said we
didn't send them all the documents and I've got proof we did… if there's
anything that goes off the rails, then an attorney will get involved and use
some of these legal tools from [RESPA] [to make sure] loss mitigation [is
handled properly]. So I think the big part was keeping,
in Florida, keeping foreclosures judicial, and also being able to utilize the
federal laws that were enacted in Dodd-Frank with RESPA.
Andrew
O’Shaughnessy: The
trainings you provided, were those to Legal Aid colleagues primarily? Or also
private attorneys?
Lynn
Drysdale: Primarily
Legal Aid…. [T]hey were done in conjunction with the local Legal Aid and then
the private attorneys would get involved and they would have to promise to take
a case from their local Legal Aid as “payment” [for getting] a training that people charge
hundreds or thousands of dollars for, for free. So
they had to agree to take a case from their local Legal Aid office.
Andrew
O’Shaughnessy: ….
Obviously [in the case of] Legal Aid, you're doing this work as sort of a
social service, but a lot of these borrowers had the problem in the first place
of being cash poor. So I was curious if you had any
friends or colleagues who were private attorneys and how they managed to
actually get paid to defend any of these foreclosures.
Lynn
Drysdale: Well,
there's a whole — you probably have heard of Max Gardner, particularly since you're
in North Carolina. If you haven't, you’ve got to Google his name. He's down in
Shelby. He’s got this whole army of private attorneys [that handle mortgage
foreclosure cases]. They mainly focus on bankruptcy, but they make a ton of
money litigating these [cases]. Our Legal Aid organization is a nonprofit, but
we don't get money from the federal government. Actually, we don't get money
from the city, the state, or the federal government [to litigate foreclosure
disputes]. We have to bring in fees to operate. Even though we're a social
service — we continue to do what we do unless we can fund the litigation
ourselves.
Andrew O’Shaughnessy: I
didn't realize that.
Lynn
Drysdale: There
are ones that are — this is way off topic, but — there's a federal governmental
agency called the Federal Legal Services Corporation, and they give Legal Aid offices
money. But the money comes with a lot of strings, like the federal government
telling you what you can and cannot do. Like, there used to be rules like we couldn’t
bring class action litigation; we couldn’t ask for attorney's fees. We have a
sister organization in town that is funded by the Feds and then there's us, and
we don't have as many rules.
Andrew
O’Shaughnessy: There
are a couple of questions that we usually conclude with and we are sure to ask
of everybody we talk to. [O]ne is, is there anything else I should have asked
about or that you think is important for us to capture?
Lynn
Drysdale: No.
This could sound horribly naïve… and this, I think, comes from being a part of
the Consumer Advisory Board to the CFPB and getting fired from that position [by
the Trump Administration] and just watching how the organization changed, and
based upon my state legislative work…. [I]t just seems like there's just really
no room for common sense in the legislative process. It's just very
disappointing to see all the changes that were made to the CFPB. I'm trying to
think of a nice way of saying this….
It
just seems like too much of the policy that is made involving consumers is not
made on behalf of the consumers. It's being made on behalf of the banks and the
entities that we should be monitoring. I'm not saying that we should have some
sort of police state over businesses, but I just see too little accountability
on the side of lawmakers in protecting their consumer constituents. And this is
based on private conversations I've had and just observations I've made after being
sort of in the thick of it. Not based on any particular news outlets, because I
really don't watch either or any of them because you're going to get their
spin. So I just wish — and again, very naïve — but I
just wish that policymakers and legislators would just be more accountable to
consumers. It seems like the [only] time you can get a legislator’s
interested in a consumer issue is when that legislator’s mother, dad, son, or
daughter has experienced the same sort of negative behavior [from] a bank or a
payday lender or a title lender. I mean, who wakes up in the morning and
thinks, “It’s really a great idea for me to give these service members a loan
with a 500% interest rate.”
Andrew
O’Shaughnessy: Well,
you'd think… you could win some votes by dealing with that. What do you think
keeps a state legislator from being held accountable by voters for messing with
consumer protection laws?
Lynn
Drysdale: What
I have witnessed is that… what goes on in Tallahassee for Florida, or
[nationally,] where it goes on in Washington, nothing going on under true public
scrutiny. And so if anyone wants to follow the money
trail, you'll see that the payday lenders and the title lenders and the banks,
the insurance companies are very generous in giving to our legislators. And Joe
or Jill Public doesn't know that. They don't know to go and follow the money
trail and see why a legislature would vote for a product that was so not in the
interest of their constituents. Like these payday lenders right around the
military bases, or “buy here, pay here” car sales and finance right outside the
Navy bases. … [I]n the reverse mortgages, all of these widows and widowers
losing their homes, because they weren't told at the outset that when their
spouse died… not only were they going to lose their spouse, but they were going
to get kicked out the house, too. I know I'm jumping around, but it's just — if
you just follow the money it's very simple to do. I’d have to suspend belief
pretty wildly not to think there was a connection between the money being paid
and the votes being cast.
Andrew
O’Shaughnessy: … [W]hat
sorts of lessons do you think policymakers should take away from the mortgage
foreclosure crisis?
Lynn
Drysdale: The
policymakers create the problems. And I think the problem is — we're watching
history repeat itself a hundred percent. When the new administration came in
and just lifted all the consumer protections, we started seeing the no-doc
loans, the [no-income, no-asset] loans, all these crappy loan products and all
of the heightened securitization. Now, even student loans, second mortgages, deficiency judgments, all
of these products are being securitized, once you deregulate back to where we
were before the first meltdown you are not responsible if you think the result
will be different from all of the deregulation this go around. And I think
policymakers have to realize that if it happens once it's a mistake, if you do
the exact same thing again and expect a different result, then you're a
mistake. You know what I mean? It's just baffling to me that… we're just going
through the exact same thing again with irresponsible lending and servicing for
the exact same reasons and we're expecting the outcome to be different. Anybody
that expected any sort of other outcome and downturn in the economy was fooling
themselves. On that bright note! … [A]nd throw in a
pandemic!
Andrew
O’Shaughnessy: Well,
I really appreciate that. I really appreciate your time Lynn.
Lynn
Drysdale: Oh
no, thank you.
[END
OF SESSION]
[1]
Associates First Capital Corporation and Associates Corporation of North
America.
[2]
In 2012, 49 state Attorneys General, the District of Columbia, and the federal
government reached a settlement with Bank of America, GMAC (now Ally), Citi,
JPMorgan Chase, and Wells Fargo to resolve investigations into the companies’
improper mortgage servicing and foreclosure practices. In addition to $50
billion in financial provisions, the National Mortgage Settlement established
nationwide servicing standards. About the Settlement, Joint
State-Federal Nat’l Mortgage Servicing Settlements
www.nationalmortgagesettlement.com/about.html (last visited July 23, 2020).
[3]
Oklahoma Attorney General Scott Pruitt kept his state out of the National
Mortgage Settlement. Richard Mize, Oklahoma is lone maverick in national
mortgage settlement signed by 49 states, The Oklahoman www.oklahoman.com/article/3647630/oklahoma-is-lone-maverick-in-national-mortgage-settlement-signed-by-49-states
(Feb. 10, 2012).
[4] Florida
is a judicial foreclosure state, where foreclosure proceedings take place
through the court system. See Fla. Stat. § 702.01 (2019).