ADAM LEVITIN | The Value of Rule of Law: 20 Basis Points


ADAM LEVITIN | The Value of Rule of Law: 20 Basis Points

ADAM LEVITIN | The Value of Rule of Law: 20 Basis Points


The rule of law is not even worth 20 basis points.  That’s the ultimate message in a recent paper by Charles Calomiris, Eric Higgins, and Joseph Mason evaluating the proposed AG mortgage servicing settlement. Calomiris et al. estimate that the settlement will raise mortgage costs at least 20bps, and they think that’s too much.

Recognize what they’re really saying:  that 20-45bps is too high a price to pay for the rule of law. They value the rule of law at less than 20bps. At present conversion rates, that’s about 30 shekels of silver.

The whole Calomiris et al. document is rather strange, as it’s hard to do any serious evaluation of the settlement without knowing the terms. We’ve seen a proposed servicing standards term sheet from the AGs and we’ve seen a CFPB analysis of disgorgement of wrongful profits and the costs of potential principal reductions, but it’s way premature to attempt any sort of real evaluation of a settlement. Unless, of course, the goal is not a serious evaluation of a settlement, but an attempt to forestall a settlement. Which is what this paper is.

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



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