We’re considering this issue today, among ourselves, and soon will call in the jury.
It’s getting pretty tough to be a giant multimillion dollar mortgage servicer these days. There are apparently a lot of errors being made by their computers, and each error potentially leads to a pissed off client, and even worse a (multi)million dollar fine, or (unthinkably) a short stay in the GrayBar Hotel. With modern technology, even federal prosecutors can delve into your computers and print out Electronically Stored Information of each fraudulent act. When all these acts are printed out, the defense has to turn to issues. Current leading edge economic theory is that, in such cases, should you hold 1,250,968 mortgages, theoretically your computers might commit about 1.25% errors, or 15,637. You might inadvertently repo a house with people still living in it, possibly as many as 15,637 of them, each house being worth a median of $138,625, or $2,167,692,987.50 total erroneous income. The issue might be that this many errors of relative insignificance should not be considered criminal, just an unfortunate consequence of the Economic Law of Large Numbers. It’s unfortunate for the people who used to live there, but within acceptable limits for the banks. On the other hand, by way of risk mitigation, the banks might accidentally give away 15,637 properties, and post a loss of $2,167,692,987.50. This situation would definitely require an explanatory footnote in the quarterly report.
We’re considering this issue today, among ourselves, and soon will call in the jury.
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