Ed. #42: Ice fishing shanties and the slippery slope

It’s only a shanty in old shanty town

My last edition noted that this is a mortgage law blog, so I probably should have some mortgage law content. Ok, here’s a couple mortgage related thoughts: 1) it is a bad idea to make loan secured by a mortgage on an ice fishing shanty (and shanties are not a solution to affordable housing problems),[1]and 2) the loan officers who cheated on continuing education (CE) requirements in the REES CE scandal might have trouble keeping their jobs after they return from suspension. I’ll circle back to that CE issue later, but first, let’s get to that all important ice fishing shanty/slippery slope issue.

The slippery slope and prostitution

Apparently, prostitution comes up frequently in slippery slope arguments. Usually, the analysis begins with something like; ‘legalizing prostitution is bad because it will lead to divorce and the general breakdown of the family and continues down the slippery slope to the destruction of civilization entirely if it is legalized’. I don’t know about that, but if you’re going to claim that ‘permitting ice fishing leads to ice shanties which then leads to prostitution’ as the Mayor of Hudson, Ohio recently did at a city council meeting, you’ll need to connect the dots for me. As one full-blooded Wisconsinite[2]asked about it, “seriously, dude, what kind of bait are you usin’?!! Personally, I think that Mayor guy was just confused about what it means to be a “hooker”.

The slippery slope to existential threats

Anyway, the slippery slope argument is regularly used to claim that the path from one thing or event to some existentially threatening outcome is inevitable. But is it? When I was growing up, teachers, parents and other adults cautioned cold war kids about calamitous existential threats that never coalesced. For example, we were continually warned that nuclear weapons inevitably will lead to nuclear holocaust. Similarly, I specifically remember hearing during the Carter administration’s “energy crisis” that we were “going to run out of oil by the 1990’s”. Don’t even get me started on the Ozone hole caused by chlorofluorocarbons or the Population Bomb concerns of world-wide famine due to overpopulation. Fact-check: none of these dire predictions panned out[3]and standards of living worldwide have continued to improve throughout this time. History has showed time and time again that the alleged existential threat supposed a linear relationship that was interrupted by human invention, creativity, resilience, or behavior alteration such that the threat did not materialize.

Swimming and stomach cramps

The spectre of nuclear holocaust or no gas for cars,[4]however, were not the only things I had to worry about growing up. Even more ominous than that was the summertime scourge of drowning due to stomach cramps caused by eating before going in the pool. Back then, it was a virtual certainty that if you didn’t wait at least an hour after eating before swimming in a pool[5]that you would have massive crippling stomach cramps that would cause you to drown. Even putting your legs in the pool was forbidden for an hour[6]and posters were hung at every pool showing a cartooned person doubled over with cramps as a dire warning about this horrible inevitability. Bad parents let their kids swim after only 30 minutes. Fast forward to today: the CDC has a webpage on drowning facts and it doesn’t mention anything about eating prior to swimming. In fact, the CDC’s fact sheet now advises that the biggest risk for drowning today is…., (survey says!) …., people who don’t know how to swim. Oh, the lost minutes of fun in the pool time that I will never get back thanks to that stupid childhood safety advice.[7]

Slippery (s)LO(pes)

I’ll admit, however, that even I can fall victim to slippery slope thinking when it comes to the mortgage business.[8]Lawmakers and regulators succumb as well. Take for example, the concerns arising from the meltdown era that consumers needed protection from mortgage originators who were untrained, unethical and unaccountable. The SAFE Act, along with the LO Compensation Rule of TILA were enacted to require LO background checks, state licensing, examination and similar requirements.[9]So, the regulatory slippery slope thinking was that consumer harm is inevitable without CE, background checks and the like protecting them from unethical and/or untrained LOs.

So, what do we make of the following news in connection with over 400 LO settlements with state regulators in connection with that REES continuing education scandal[10]recently announced,

Although the loan officers who settled with state regulators face a three month “cooling off” period, the mortgages the LOs have already originated are not in question. State regulators said the loans were “valid,” because the LOs had valid NMLS licenses at the time. Officials stated there was “no indication of consumer harm ….. No action is being taken against the companies that employed the LOs.”[11]

If there is no observed consumer harm from over 400 LOs who cheated to get their CE, perhaps the real point of requiring LO CE is just to identify the kind of unethical folks who probably shouldn’t be in a business that demands high professionalism and integrity generally.[12]On that score, the regulatory punishment seems rather light, but I’m curious to see what mortgage employers do with these people.

Worry can lead to despair

Meanwhile, I couldn’t have a discussion about the slippery slope without touching on global warming. Global warming is real, and we need to do something about it, but it shouldn’t be something you worry about to the point that makes you despair. Almost incredibly, two writers I follow closely, Matt Yglesias and Jonah Goldberg wrote virtually the same article on almost the same day last week about global warming induced depression. Considering that Yglesias and Goldberg come from basically opposite political perspectives, the issue really hit home for me and inspired this Musings reminder that the slippery slope is often a logical fallacy, not a certainty. Remember, humans can adapt, invent, create and change behaviors. The course of the future is not yet written.

Closer to the mortgage business, Rob Chrisman also recently lamented about worrying too much about things that you can’t control saying, “Maybe some people would rather worry about the potential for conflict abroad and Federal Reserve missteps at home after having to worry about Covid the last two years. Worry, worry, worry. What a fun life.” I agree with Rob that worrying is unproductive and depressing. While we should not ignore potentially existential problems, we should also have faith that everything is going to get better eventually.

[1]You can, however, take a security interest in a shanty with a security agreement and UCC filing, but a mortgage wouldn’t work unless the shanty were somehow permanently affixed to some land that you can also take an interest in with the mortgage. Of course, it’s hard to fish on land and it is also extremely difficult to get your collateral back from the bottom of a lake.

[2] You can tell he's from WI by the “OPE” ski hat, don’t cha know?

[3] As with many slippery slope arguments, folks can say well, it just hasn’t happened yet. Nuclear holocaust could still happen, but I think most people are significantly less worried about that than before, and, as for running out of oil, well, wouldn’t that be great for global warming?

[4]This was the era of “gas guzzling” cars, we didn’t have any electric options, but that should emphasize the point of this Musings about existentially threatening slippery slopes.

[5] It was unclear if this rule also applied to swimming in lakes, rivers or ponds, but it somehow applied to the ocean for sure. Also, Jaws made swimming in the ocean much scarier to kids (my wife in particular) than nuclear holocaust, so most kids were alot less enthusiastic about swimming in the ocean and whined less about having to wait on the beach.

[6]Parents would say, “What if you fall in, huh, what then?” Yeah, what then?

[7]Public health officials in the US have made kids (and other adults) do a lot of stupid things over the years based on bad science. It’s one thing if you don’t know what causes something. It’s another if you are making people do something just because someone thought it was a good public health idea, but later evidence doesn’t support it.

[8] I too can claim it (massive repurchase liability) just hasn’t happened yet, but I now think the market dynamics of home price appreciation, housing supply shortages, and foreclosure discouragement will not result in the losses I anticipated in the early pandemic stages of 2020.

[9]The summer camp industry, by contrast, arguably has much higher stakes for its workers who care for children for weeks away from their parents, yet has virtually no legally mandated education, testing or background requirements. That said, in my experience, camp owners are meticulously careful about their hiring and training of staff lest one bad apple could ruin a camp’s reputation. Zero tolerance for impropriety is enforced universally. That’s how you keep regulators out of your business (and reduce legal liability).

[10] https://www.nationalmortgagenews.com/news/mortgage-education-fraud-case-settled-in-3-states

[11] https://www.housingwire.com/articles/regulators-slap-mortgage-los-with-fines-for-skipping-class/

[12]Perhaps the same could be said for attorney and other professional CE.