Did anyone get the point of the Globe article this morning on Deval’s mortgage?
I guess they are attempting to import a whiff of impropriety relating to the bank’s failure to timely record the mortgage on Deval’s property. However, isn’t that the Bank’s problem?
Plus, contrary to what the Globe article suggests, the bank would have legal recourse in the event of default, since the mortgage’s only legal effect is to secure the note. The bank could sue under the note. (which is usually not the preferrred way to sue, especially against persons with modest incomes-not an issue with Deval)
Perhaps, much ado about nothing.
Please share widely!
From February, 2006:
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Not sure what revived the issue. The only difference now appears to be that Mr. Patrick wants the matter investigated.
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Because the mortgage wasn’t recorded, it was at worst an unsecurted loan, then later became a second mortgage, all the while bearing a great (4.875%) rate! A great rate that no ordinary borrower could have gotten on an unsecured loan.
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It certainly doesn’t relate to anything Deval did or didn’t do. As one who works in the mortgage lending industry, I highly doubt that the lender would some how agree not to record it just so Deval could receive some sort of unsecured loan that he could feel free to default on and not be foreclosed.
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Why would you doubt it? Faith in banks?
Answer: nothing. That’s why there’s no “there there” on this story. No banker in his right mind would agree to this.
This is just Frank Phillips trying to justify his ridiculous article back in February about this unrecorded mortgage.
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Come on, people. It’s the bank’s fault. Full stop. They screwed up on recording the mortgage. Patrick didn’t default on the mortgage, so the failure to record appears to have had no real-world impact. Big freakin’ deal. Why the Globe saw fit to devote as many column-inches to this non-story again — and to put it on the front page of the Metro section, no less — is completely beyond me. No one cares.
But, it’s entirely possible that:
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1: Coca-cola had an existing tradition of lending money to execs as a perk in certain situations (i.e. to finance their personal tax liabilities on stock option exercise, to assist in relocation). This is fact.
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2: Sarbane-Oxley effectively put an end to the exec lending practice at July 30, 2002. Also, fact.
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3: Mr. Patrick started work, when? Sometime in 2003, I recall. In order to continue its executive perk policy, it arranged for Suntrust (not Employer Coke) to advance money to Mr. Patrick. Coke could simply guaranteed the loan. That would explain why Suntrust didn’t record the mortgage. i.e. it should not perfect the mortgage when it already had Coke’s guarantee.
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No proof, but it’s entirely plausible. Hopefully, Mr. Patrick’s requested investigation will shed light.
If that had been the point or even implication of the article, it would have said something about those “facts” above. given they didn’t, the story has no point at all, what was it doing on the front of the Metro City and Region section of the Globe? There’s no story here, only vague whiffs of impropriety.
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Personally I think they just needed some nominal story to make the point “Patrick is rich! Look, he has a mortgage for a house that costs more than most of you will make in a lifetime!”
Mr. Patrick started work, when? Sometime in 2003, I recall. In order to continue its executive perk policy, it arranged for Suntrust (not Employer Coke) to advance money to Mr. Patrick. Coke could simply guaranteed the loan. That would explain why Suntrust didn’t record the mortgage. i.e. it should not perfect the mortgage when it already had Coke’s guarantee.
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Then why give a mortgage at all? The recording or lack thereof does not destroy what is a conveyance in favor of the bank, it merely relates to establishing priority of interests. The bank could still foreclose (unless there was a subsequent purchaser who took without knowledge . . .) Plus, the bank could still sue on the note.
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In sum, you’re reaching with this one. It would be an awfully convoluted way of giving an unsecured low interest loan. Why bother incurring the closing and title costs and whatnot? If Coke guaranteed the loan, presumably, it would be on the hook to the IRS regardless of whether the mortgage was recorded.
Then why give a mortgage at all?
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The mortgage must be executed upfront and held in escrow in the event that the employee is terminated. Which is what happened. Upon termination, Coke pulls the guarantee; Bank perfects security in mortgage to replace guarantee.
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Note that the recording and subsequent refinancing (with another bank) occured as Patrick was leaving Coke.
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Closing and title costs is peanuts. The whole structure seems to work to 1) provide financing to a relocating employee and 2) technically meet Sarbane Oxley.
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Pure speculation of course, but structurally, it works. It certainly all fits.
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I have no idea what that means. What’s IRS got to do with this?
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However, I will say that in the absence of recording the Bank still has the right to enforce the mortgage.
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Whether the bank would want to pull this sort of sophistry to help Coke get around Sarbanes-Oxley, I don’t know. I do not know enough about Sarbanes-Oxley to know whether witholding the recording of the mortgage in and of itself would accomplish what you say. Presumably, the mortgage still exists outside of whether it is recorded, and outside of any guarantees on the note.
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But I see what you’re getting at. I hope it’s not that simple.
Of course you’re correct: A mortgage doesn’t have to be recorded. But, the holder may have agreed not to record.
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I’m purely guessing with the Sarbane-Oxley explanation. All I’m trying to do is come up with some scenario to explain the failure to record, until the time that Patrick left Coke.
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David has ask (upthread) why would a bank do such a thing? Well, for the money of course. Coke paid Suntrust over $2 million in fees. Don’t you figure they’d go the extra mile for such a client?
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Failure to record a mortgage is an agrecious act of malpractice. NO conveyancing attorney would ‘forget’ to do something so simple, particularly with so large a transaction.
Frank Phillips writes nothing but negative articles about Deval. Despite the fact that Phillips’ February article noted, some 4 or 5 paragraphs into, that Deval had done nothing wrong and that everyone does it, it resonated strongly with people who knew nothing about Deval until that article appeared. They also read nothing more than the headline.
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I believe many racists in this state don’t like even the idea of a wealthy African-American man. A Globe article today (http://www.boston.co…)
notes that Deval has “weathered criticism of a rich lifestyle without raising a racial complaint,” but is that because a lot of people don’t want to admit to others that they are, in fact, racists?
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Also, why has Deval raised this issue with his bank now? Unless the campaign believes the opposition plans to use it against him (even though he’s done nothing wrong, see above), it seems not a good time for the Patrick campaign to raise anything that the Republicans could somehow use as negative-ad fodder.
Not sure I agree with you, though, about the wisdom of raising the issue. My view is, get it out of the way now and let’s go on to stuff that matters.
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The racist issue is another story. That has lurked in the background of this campaign from the get-go. Why all this attention to “Taj Deval” and whether the Patricks really know how to handle their finances? What about the Healeys? Nary a mention of their sumptuous estate in Beverly Farms or their ability to make the mortgage payments. A little one-sided, to say the least.
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Here in the Berkshires, we’re a little defensive when our favorite son is attacked for building a house in our neck of the woods. We view the Patricks’ decision to locate here as the ultimate sign of good taste and sound judgment.
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When the Glob first published its “exposé” about the Berkshire construction site, the Patrick supporters here discussed how to respond to such ridiculousness. I remember the meeting very well. One of the local black ministers chimed in with, “I don’t know what the problem is here — in the minority community, we think that being rich is a good thing!”