Law Blog

LegalMatch data is continuing to shed light on startling facts about the United States Housing Crisis. In the past year thousands of customers from around the country have come to LegalMatch seeking foreclosure attorneys. I decided to look at how much these clients reported owing on their mortgages. Based on analysis of these responses, between now and March 2008, the median amount owed in a foreclosure action was $200,000.

That’s a lot of money to owe on your house. It might also give us a clue at the depth of the current financial crisis.

“Toxic Assets” have become the new buzzword during this financial crunch, just like “weapons of mass destruction” started rolling off everyone’s tongues in 2003. What are these toxic assets? Most of them are convoluted investment packages that represent a hodge-podge of upside down mortgages from around the country. In other words, big mixed-up sacks of worthless investments that no one wants. The total “value” of these toxic assets is unknown, and probably never will be known. (Part of the whole problem was they were never actually worth what everyone thought they were.)

What can be guessed at, however, is how much money mortgagors were owed in 2008, and how much they are now looking at as potential losses before recouping anything in foreclosure sales. (I.e. the loss these toxic assets might represent on balance sheets). To do so we can use two rather modest assumptions: $200,000 median debt-per-household based on LegalMatch data, and the (low-end) estimated total number of foreclosures in the US in 2008, which was 2 million according to CNN. Putting these numbers together, we get a staggering $400 billion in total outstanding debt in the U.S. housing market. That’s quite a lot of money, and that is probably an estimate on the low end.

However, haven’t we spent something like $10 trillion in bailout money so far? Or at least promised that much? Even if my estimate is off by a magnitude of 5, we’ve still spent more than that already. What if we had spent a few trillion simply paying off overdue mortgages? A “trickle-up” economy, as opposed to the old “$@*# rolls down-hill” approach. Almost every day we are bombarded with news about bailout this, bailout that, trillion dollars here, hundreds of billions of dollars there. I haven’t seen any of this money, have you? (Well maybe if you work for AIG).

Now before someone says that is just rewarding people for their own shoddy financial planning, what are we doing for the banks and firms such as AIG? Banks and their enabling financial partners created an artificial market where risky mortgages not worth the paper they were printed on were sold off as if they were written in gold-ink. How is it somehow more appropriate to reward them for their misdeeds and not the taxpayers who are footing the bill anyway? These are the institutions that invested your 401K in your neighbor’s upside-down $1 million McMansion mortgage. If your neighbor stays in his home for the same inflated price he mortgaged it for, at least your home price won’t plummet due to a cramdown or foreclosure sale.

I’m not a financial expert, but I like to play one online. Where am I going wrong with my populist approach?

Methamphetamines have become the most commonly abused drug in California according to LegalMatch.com case statistics.  Since 2005, 55% of LegalMatch customers seeking drug defense attorneys in California have been accused of possessing or distributing methamphetamines.  Marijuana only makes up 26%, and Cocaine 10%.  These statistics match 2007 stats released by the California Attorney General showing that “dangerous drugs” (methamphetamines and barbiturates) made up 49.5% of all arrests in the state.

There has been a lot of talk recently about the legalization of drugs as a means of saving tax dollars and cracking down on crime. At last week’s “Internet Town Hall,” President Obama was asked whether he thought legalizing marijuana could help improve the economy and create jobs. He responded with a blunt “no” while the audience laughed and applauded the President’s ability to be the same as everyone else.

Of course, no one is seriously considering legalizing meth as a means of dealing with the problem of methamphetamine abuse. But could legalizing other drugs such as marijuana help law enforcement and drug treatment professionals concentrate on this more dangerous drug? After all, statistics (and health concerns) prove it is clearly California’s biggest drug problem.

I have previously opined on the likelihood of marijuana legalization saving us billions of dollars, but what about this other possible side benefit? California Judges, Probation Officers, and Diversion Programs will similarly be able to concentrate more of their efforts on dealing with the startling fact that 50% of drug charges in California now deal with methamphetamines. By freeing up resources to better treat meth abusers and reduce recidivism and future abuse, we may also reduce incarceration rates and save the state even more money.

In a sense, legalization of one drug could have a domino effect on our state’s treatment of other, more serious drugs. Perhaps if President Obama had decided to answer a more serious question, we may have gotten something more than derisive laughter.

The collapse of the United States housing market was a crucial part of our recent economic downturn. According to LegalMatch data compiled since 2005, foreclosure rates (compared to the past three years) skyrocketed during 2008. This massive upswing in foreclosures may have been the shock that caused the global economic house of cards to tumble in 2008 and 2009.

According to LegalMatch statistics, foreclosure rates from 2007 to 2008 jumped by over 150%. This staggering increase closely mirrors the precipitous drop off of home prices in the US during 2008, when the median value of an American home dropped by 18% in twelve months.

LegalMatch data correlates with national statistics compiled by industry experts showing a 76% increase in foreclosure rates between 2006 and 2008. Are house prices to blame for this huge downturn? Partially. A number of home owners and home speculators alike took advantage of a lull in interest rates between 2000 and 2005 when introductory interest rates on adjustable rate mortgages dropped to the 4-6% range. During this time housing prices were also artificially high and seemingly rising without end, so buyers saw a potential win-win situation. Sub-Prime Adjustable Rate Mortgages ( ARM) fueled the flames of the bubble and allowed speculators and new home buyers alike to enter the market at cut-rate introductory rates that jumped massively one or two years down the road.

Home owners who saw low rates and rising prices in 2005 and 2006 took the bait, thinking things would continue to get better. When interest rates continued to rise and these so called “exploding” ARM loans almost doubled between 2006 and 2007, owners who failed to sell prior to 2008 saw the value of their homes plummet to prices far below the amount owed on their mortgage. Unable to keep their heads above water, homeowners with upside-down mortgages in 2007 and early 2008 faced foreclosure judgments in mid-2008 and 2009, as shown by the LegalMatch stats above.

This enormous well of unpaid debt coincided with the breaking news of financial collapse of some of the nation’s biggest financial firms such as Bear Sterns, Lehman Brothers, and the now infamous AIG. It is no coincidence that trillions of dollars in investments insured and managed by these firms was inextricably tied into these bad loans and defaulting homeowners. Securities backed by these worthless mortgages are the kinds of things people are referring to when they talk about “toxic assets.”

Although it was not the sole cause, the housing crisis has a tremendous impact on the financial health of this country. When it dramatically explodes like it did in 2008, the shockwaves spread everywhere throughout our economy. As these trends continue to shake out we will be watching the data, so stay tuned for more updates on where the housing market, and our economy, may be headed.

Almost every drunk driving stop involves a test designed to show intoxication, or the lack thereof. According to data compiled from clients looking for legal help on LegalMatch.com, the top tests administered in the past 12 months to drivers suspected of drunk driving are as follows:

1. Field sobriety tests (walking a straight line, balancing, reciting the alphabet, etc.): 39%
2. Breathalyzer or breath test at the scene: 31%
3. Blood, breath or urine sample at the police station: 25%
4. I don’t know: 5%

According to these statistics, the vast majority of tests administered are the tests you don’t have to do. Considering how little most people know about their rights this is not surprising.

Blood, breath, or urine samples at the station or local hospital are generally the only tests required in a drunk driving arrest. A small sample of states penalize drivers for failing to perform tests at the scene, but usually no driver can be compelled to do anything until after they are arrested. If the 70% of people who willingly performed tests at the scene knew how rigged these tests were in favor of the police, perhaps they would join the 25% of people who refused to do anything until they were arrested and dragged downtown?

Consider: a professor at Seton Hall made his sober students perform a set of field sobriety tests commonly used in drunk driving stops. (Tests such as walking in a straight line, counting with your fingertips, etc.) He showed a video of these tests to a group of police officers.  They said they would arrest more than half of the students.

Furthermore the National Highway Traffic Safety Administration recognizes only three field sobriety tests as scientifically valid in showing that someone is above a certain blood alcohol limit. (The NHTSA does not actually say these tests show someone is too drunk to drive; only that there is a probability that the person is above a certain blood alcohol level). None of the probabilities for accuracy in these tests rises above 77%.

To muddy the issue further, police officers routinely use other tests not sanctioned as “standardized” by the NHTSA, or render the tests completely useless by flouting the rules for conducting them altogether.

Now don’t take this the wrong way. No one should be looking for ways to get out of a drunk driving charge, and no one should really be getting behind the wheel if they’ve been drinking. On the contrary, people who never get behind the wheel after drinking are the ones who should be extremely cautious about doing field sobriety tests. As the above data shows, sobriety is no guarantee that you will actually “pass” any of these tests.

In sum, there is another maxim people should remember besides the sage advice of “Don’t drink and drive.” If you are sober, don’t perform field sobriety tests!

Over 2 million restraining orders are issued in the United States each year. In the past 12 months several hundred customers logged onto LegalMatch.com seeking legal help in obtaining restraining orders.  The table below shows the top targets:

• Someone I date or used to date: 44%
• My spouse or former spouse: 31%
• Family member: 17%
• Neighbor: 5%
• My co-worker or former co-worker: 3%

LegalMatch data correlates with statistics from the Department of Justice showing that spouses, family members, and intimate partners make up the vast majority of victims of violent crimes, rapes, and stalking. DOJ statistics also show that 25% of women and 7% of men were raped and/or physically assaulted by a current or former spouse, cohabiting partner, or dating acquaintance at some time in their lifetime. It makes sense that 92% of LegalMatch.com clients seeking restraining orders come from one of these groups.

In some cases after restraining orders are issued, however, startling studies indicate that the risk of physical violence to partners increases. How is this possible? 

In the past decade a variety of states enacted laws mandating that police arrest anyone suspected of violating domestic violence-related restraining orders. This was contrary to many prior policies stating that arresting a misdemeanant was discretionary. Unfortunately, a Harvard study indicated that the risk of partner-homicide in 15 of these states increased by 60% after implementation of the new laws. Why? Victims that did not want their significant other arrested simply didn’t call the police.

Rather than learn from their mistakes, several states have also instituted “no-drop” policies. Similar to mandatory arrest, these states do not allow prosecutors to drop charges against a partner accused of violating a restraining order, as would be customary with other charges. Just like mandatory arrest, policies such as this discourage people from calling the police, since more often than not victims do not want their significant others arrested.

What can be done? Regardless of mandatory arrest or no-drop policies, it is always risky to call the cops into your home to solve a domestic dispute. Since their only tool is a rather blunt hammer, the police tend to see every problem as a nail. Perhaps a mixture of better training for cops dealing with domestic violence disputes plus increased discretion for prosecutors and police officers would help, but ultimately domestic violence is not something that our government, or any government, can really stop via law enforcement. Whatever the solution, tying the hands of law enforcement does not appear to be working.