Morning Report: Forbearance requests increase slightly

Vital Statistics:

 

Last Change
S&P futures 3062 8.1
Oil (WTI) 35.84 0.39
10 year government bond yield 0.67%
30 year fixed rate mortgage 3.28%

 

Stocks are flattish this morning as riots continued overnight. Bonds and MBS are flat as well.

 

The share of loans in forbearance rose slightly to 8.46%, according to the MBA. “MBA’s survey continues to indicate that fewer homeowners are seeking forbearance as more states across the country reopen their economies and prospects begin to improve,” said Mike Fratantoni, MBA Senior Vice President and Chief Economist. “The share of loans in forbearance increased by only 10 basis points over the week of May 24. Policy support for households, including expanded unemployment insurance benefits and other transfers, have helped many stay on their feet during this crisis. With 11.82 percent of Ginnie Mae loans currently in forbearance, FHA and VA borrowers are struggling the most.”

 

For what its worth, housing seems to be picking up more or less right where it left off. Homebuilder Taylor Morrison said that home sales picked up significantly in May, and traffic was 3 times higher than it was in early April, the height of the pandemic. Note that Toll Brothers said that deposit activity (which is a leading indicator of signed contracts) was up on a YOY basis in May.

 

Despite COVID, construction spending did exceed last year’s numbers by 3%, which is impressive in of itself. Residential construction was up 6.3% on a YOY basis.

 

Home prices rose 5.4% YOY in April, according to CoreLogic. Inventory remains tight, especially for entry-level homes, which fell 25%.

 

The Congressional Budget Office says it will take 10 years for the economy to reach the levels it was forecasting in January. FWIW, I am skeptical that a 3 month lockdown will reverberate for a decade.

40 Responses

  1. Scott – there was no apparent reason to question Flynn except to find out if someone higher up in the Trump campaign, or Trump, was using him to interfere in FP, all of which is essentially Intel, and at that level, legit.

    Then you question him, and if he tells the truth, follow up with asking who told him to do that. I do think the decision not to tell him they knew what he said was a bad one, made so they would have the option of turning the Intel case into a criminal one, so they could turn Flynn into a cooperating witness. But even that is a judgment call.

    A mandamus is an extraordinary proceeding in equity filed against the Judge. Typically, the prosecutor represents the judge on appeal. The most common examples of mandamus in my life were against state court judges in civil cases who took them under advisement and two years [once, in a case in which my firm was involved, five years] later had not ruled. This happens! Then the County Attorney in Texas reps the Judge on the mandamus. Filing a mandamus against a judge is quirky because of the likelihood you won’t be remembered kindly.

    The Judge never represents himself.

    Here, we can expect the mandamus to be denied because it asks for relief the judge has it in his power to grant. We don’t try cases in appellate courts. If either party doesn’t like Sullivan’s final ruling an appeal will lie.

    Now we get to what I have written before. Flynn has been convicted, as far as I can tell. If so, then I take the dismissal, if permitted, to mean that he cannot be sentenced, as he has not been sentenced yet. I think that is one likely ultimate result, frankly, for Flynn. Of course, if that happens, Flynn as a first time offender would move to expunge the record of conviction and assuming Justice agrees the expunction would end the matter in the correct procedural order.

    If Sullivan does not allow the dismissal that matter will likely go to the appellate court really as a case of first impression, as no other case that is cited by the parties seems truly square with this on the facts.

    I think if Sullivan pursues perjury and/or subornation of perjury a whole new set of circumstances will arise.

    What happens to his various defense counsel, prosecutors, and especially the FBI agents will be interesting to watch.

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    • Mark, is there a technical distinction between being convicted and having entered a plea? I.e. is sentencing required first?

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      • The Fed Ct rule used to be Rule 33(b)(2) required the defendant to move for a new trial within seven days after the verdict or the finding of guilty verdict, before sentencing. I don’t think there was a MFNT here at all, and I do think he was found guilty. But I have not read the transcript. The Texas rule was ten days and a lot of Texas lawyers who did not practice usually in Fed Ct fucked up. Meanwhile, I who did no crim work but had to do ct apptments in Fed Court to keep my Fed license knew that 7 day rule.

        You get the problem. It is a procedural knot.

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        • Correct me if I’m wrong, but the time line was Flynn entered a guilty plea, and then sentencing was deferred as a cooperating witness until the other proceedings were done?

          So he was considered convicted when the plea was originally accepted before being withdrawn?

          Not sure how withdrawing a plea works in general.

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        • I think that’s what I am reading, Joe. The cooperation clause goes to sentencing in the bifurcated system not to conviction.

          In general, withdrawing a plea happens before the MFNT trial 7 day timeline runs and is in conjunction with the MFNT. But a fed ct can allow it later, I think, for extenuating circumstances. I forgot that possibility. My recollection is that the allefed Brady violation could have let him withdraw his plea at that second hearing where he refused to do so even when Sullivan dangled the chance, repeatedly. Scott is up on that second hearing, I think.

          George, I think mandamus will not lie and Sullivan will get to rule. That is normal procedure.

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        • jnc:

          Correct me if I’m wrong, but the time line was Flynn entered a guilty plea, and then sentencing was deferred as a cooperating witness until the other proceedings were done?

          That is part of the timeline, but not all of it. In the midst of still cooperating, Flynn went to court for sentencing, but while there was essentially talked into requesting yet another delay by Sullivan himself who basically indicated to Flynn that he was likely to get jail time if sentenced that day, and that the sentence might be lighter if he delayed until after his cooperation was fully complete. I believe that was also the same day that Sullivan accused Flynn of committing treason.

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    • What I’m reading from you Mark is that you think the Writ will be denied and they’ll keep the case with Sullivan, is that right?

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    • Mark:

      …there was no apparent reason to question Flynn except to find out if someone higher up in the Trump campaign, or Trump, was using him to interfere in FP, all of which is essentially Intel, and at that level, legit.

      You still seem to presume that there was indeed something wrong or nefarious about the phone call. Now that we can actually see the transcript, I need to ask what about the phone call suggests to you an “interference in FP”. Second, I need to ask whether you think that any contact with a foreign official by an incoming admin official between an election and an inauguration is a “legit” cause for an FBI intel investigation of that administration? Do you think that is done as a matter of course? For example, do you think that the FBI investigated all Obama admin members who had contact with foreign officials between November 2008 and January 2009?

      Also, the investigation under which the interview took place was not (officially) about the Trump campaign or Trump. It was ostensibly about whether or not Flynn was a Russian asset. So I don’t think your justification qualifies as material to the investigation that was ostensibly taking place. There is literally nothing about that phone call to suggest that Flynn or anyone else was a Russian asset.

      Then you question him, and if he tells the truth, follow up with asking who told him to do that.

      If your goal was someone higher up in the Trump campaign, why in the world wouldn’t you simply say “We know that you said X. Who told you to say that?”

      I do think the decision not to tell him they knew what he said was a bad one, made so they would have the option of turning the Intel case into a criminal one, so they could turn Flynn into a cooperating witness.

      Which again suggests that the target of the investigation was not, in fact, Flynn, but someone else. But that is not what the FBI has said. The interview of Flynn was ostensibly an extension of the investigation of Flynn himself, an investigation that had already admittedly turned up exactly nothing on Flynn.

      The Judge never represents himself.

      That is interesting. I didn’t know that.

      Here, we can expect the mandamus to be denied because it asks for relief the judge has it in his power to grant.

      But the appeals court didn’t need to demand that the judge respond in order to understand that. That it is in the power of the judge to grant the motion was perfectly clear, so if the court was going to rule on that basis, it never would have asked, nay ordered, Sullivan to respond. The question raised in the mandamus is whether or not he must grant it, and so by deciding to take an entirely different course, he has failed in his obligations. The fact that the appeals court has required the judge to defend his actions suggest to me that it has already moved beyond the idea that relief should be denied simply because the judge might still grant the dismissal (which, it seems to me, is basically all that Sullivan’s defense boiled down to).

      I am willing to make a friendly bet that the writ is granted. It is definitely no sure thing, but given that Sullivan was required to defend himself, and basically defended himself by saying nothing more than what the appeals court would have already known without the defense, I think odds are that it is granted.

      Now we get to what I have written before. Flynn has been convicted, as far as I can tell. If so, then I take the dismissal, if permitted, to mean that he cannot be sentenced, as he has not been sentenced yet.

      The DOJ has moved to “dismiss with prejudice the criminal information filed against Michael T. Flynn”. Is there significance to the fact that they say “criminal information” as opposed to “criminal charges”? I obviously don’t know the procedural ins and outs, but I haven’t heard anyone except you suggest that, if the DOJ’s motion is granted, Flynn will remain convicted, and it seems that there would not be nearly as much hulabaloo around this motion if that is indeed all it meant. After all, the original deal was for no prison time anyway, so a dismissal under your understanding would result in exactly that.

      What type of dismissal is requested when a prosecutor decides that a person currently serving a sentence has in fact been wrongly convicted and should be released from prison?

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      • What type of dismissal is requested when a prosecutor decides that a person currently serving a sentence has in fact been wrongly convicted and should be released from prison?

        Release happens. You would think expungement or expunction would be automatic, but it certainly wasn’t when I was practicing, especially not in federal court. I got an arrest buried, but not expunged, in Fed Court, with the direction of our local USD Ct. Buried in that my judge ordered J Edgar Hoover to write me a letter saying the FBI would never tell an employer that my court appointed client had been arrested. I got the letter but never believed the FBI would do what it said. However, the letter was good enough for my guy to regain his security clearance at Texas Instruments.

        Here is a LR article:

        https://scholarlycommons.law.northwestern.edu/cgi/viewcontent.cgi?referer=&httpsredir=1&article=7478&context=jclc

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        • A criminal information is an equivalent procedure to an indictment and is not a mere charge. Why the agents chose not to tell Flynn what they already knew is unimportant, as police are allowed to lie to witnesses and suspects alike. Witnesses and suspects are not allowed to lie to police about the subject matter of an interview. The materiality is determined in the first instance by the interrogator. I agree with you that a court might find the subject matter of the interview to have so little import that a lie about it might be immaterial. That may turn out to be the case when the dust clears which I think will be after an appeal. And that will require slapping down an FBI agent or two. But that doesn’t solve the procedural dilemma of the guilty plea, a judicial verdict of guilty, and no MFNT. That just doesn’t go away by itself unless there is some new statute creating expungement on a dismissal after verdict.

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        • Mark:

          A criminal information is an equivalent procedure to an indictment and is not a mere charge

          According to Wikipedia, it substitutes for an indictment in situations where a defendant pleads guilty. So if that is correct, then wouldn’t a dismissal of it necessarily have implications for the the plea itself? How would a criminal information be dismissed without the underlying plea that necessitated it also being dismissed?

          Why the agents chose not to tell Flynn what they already knew is unimportant, as police are allowed to lie to witnesses and suspects alike.

          The question isn’t what they are allowed to do in pursuit of a legitimate goal. The question is what the goal was in the first place, and whether it was legitimate. And to the question of their motive or goal, why they chose not to tell him is of immense importance.

          I agree with you that a court might find the subject matter of the interview to have so little import that a lie about it might be immaterial. That may turn out to be the case when the dust clears which I think will be after an appeal.

          The dust is pretty cleared now. We know what was said on the phone call. We know what the investigation under which the interview took place was ostensibly about. We know that, but for the incompetence of the FBI, the investigation would have already been closed. We know even the DOJ has determined that it wasn’t material. What exactly is obscuring a reasonable conclusion?

          But that doesn’t solve the procedural dilemma of the guilty plea, a judicial verdict of guilty, and no MFNT. That just doesn’t go away by itself unless there is some new statute creating expungement on a dismissal after verdict.

          You could be right, but it seems odd to me that literally no one else on either side seems to see it as a dilemma. Everyone, from the defense, to the prosecution, to the judge himself, seems to be acting as though granting the DOJ’s requested dismissal would result in no conviction. Clearly the DOJ does not think that Flynn should be convicted of anything. If that is the case, why would it request something that would leave the conviction in place?

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        • I’ll bet the writ is granted and that they’ll reassign the case to another judge. I’ll also say the 3 judge panel will be unanimous.

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        • I’ll be slightly more conservative and call the vote to be 2-1, in favor of Flynn. And the prosecution. (It’s not often you get to make that call!)

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        • Mark:

          Another interesting question that just occurred to me. In addition to the DOJ’s motion to dismiss, there is also a defense motion to withdraw the plea still outstanding, which was filed even before the DOJ’s motion to dismiss. If it were the case that, by virtue of his existing plea, Flynn was already officially convicted, such that he would remain convicted even if the DOJ’s motion were granted, what was the purpose of the motion to withdraw the plea, and why is Sullivan even considering it rather than dismissing it out of hand? If Flynn has, in fact already been convicted, how could Sullivan ever possibly grant a motion to withdraw the plea?

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        • Mark:

          Here is a LR article:

          Thanks for the article, but that is about expungement which I think is different. I thought expungement meant simply that all records relating to the entire process were disappeared, making it seem as if no legal process had ever taken place. That is different from a person being convicted, imprisoned, and subsequently determined to be innocent and released. My question is simply what type of motion does a prosecutor make if he wishes to vacate a conviction for being in error? A convicted person can be subsequently deemed officially innocent without the entire record being expunged, can’t they?

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  2. NoVA, are you still on the community policing board for your locality?

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  3. As God is my witness, I thought a political coalition of fashionista climate activists in $3 million apartments and minimum wage service workers would flyhttps://t.co/mAGNTpKlTB— David Burge (@iowahawkblog) June 3, 2020

    Liked by 1 person

  4. Sometimes I love Jacobin:

    “Pringles Chips went dark on Twitter for #BlackOutTuesday. The official Star Wars account released a short statement in support of black employees and artists. @Barbie pledged to champion diversity and declared her solidarity with the entire black community. Toronto-based restaurant GarfieldEATS, meanwhile, tweeted an image of the eponymous cat’s sullen eyeballs accompanied by the hashtag #BlackLivesMatter, as if to suggest that the infamously lazy and glutinous feline dislikes discrimination almost as much as he hates Mondays.”

    https://www.jacobinmag.com/2020/06/brands-corporate-publicity-racial-justice

    Liked by 1 person

    • good writing is good writing.

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      • I also appreciate the woke corporation BS being called out.

        Liked by 1 person

        • it is so weird.
          but, i never sought validation from my brand of soda. or thought it said anything about me.

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        • I think they get hassled a lot by ESG investors. Actually, i saw something about ESG investors trying to tell the banks to suspend their dividends. These are investors who have zero interest in doing right by shareholders.

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    • I am sure corporate PR departments are wringing their hands over when to switch to the rainbow logo.

      Like

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