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August 31, 2009

The 'Judicial Don Quixote' on the Foreclosure Frontlines

gavel%20082009.jpg This morning the Times ran a profile of Brooklyn State Supreme Court Judge Arthur M. Schack, who "fashions himself a judicial Don Quixote, tilting at the phalanxes of bankers, foreclosure facilitators, and lawyers who file motions by the bale." Schack is known for tossing out foreclosure motions on technicalities: "Justice Schack, like a handful of state and federal judges, has taken a magnifying glass to the mortgage industry. In the gilded haste of the past decade, bankers handed out millions of mortgages—with terms good, bad and exotically ugly—then repackaged those loans for sale to investors from Connecticut to Singapore. Sloppiness reigned. So many papers have been lost, signatures misplaced and documents dated inaccurately that it is often not clear which bank owns the mortgage. Justice Schack’s take is straightforward, and sends a tremor through some bank suites: If a bank cannot prove ownership, it cannot foreclose." Schack, who is Brooklyn born and bred, began crossing swords with banks over foreclosures in 2007, when they started to spike here. "Banks had given out loans structured to fail," he says.
A ‘Little Judge’ Who Rejects Foreclosures, Brooklyn Style [NY Times]
Photo by steakpinball.

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Comments

This is why foreclosure data in Brooklyn is drastically misleading. What does the pre-foreclosure graph look like?

***Bid half off peak comps***

Posted by: Brownstones Half Off at August 31, 2009 11:38 AM

from yesterdays NYTimes (maybe later Brownstoner will thread the entire article) - which maybe why foreclosure rate is low in NewYork:
"In New York, the average loan-to-value ratio (the amount owed on the mortgage, divided by the home’s value) is 56 percent, the company said. In Connecticut, it is 63 percent, and in New Jersey, the figure is 70 percent. By contrast, the nation’s average loan-to-value ratio is 78 percent."

Posted by: Petebklyn at August 31, 2009 11:47 AM

This is the best news I've heard on this subject in some time.

Posted by: East New York at August 31, 2009 11:48 AM

What a bunch of folksy populist garbage. Quick poll - which reaction do you have to this piece?

1. Wow, now here is a judge that wants to fight for the little guy. That's great! Little guys need this kind of protection against big bad money firms that just sit around taking advantage of people all day. [hint: if this is your reaction, stop reading - you are a dipshit and I'm not interested in your opinion]

2. Are you fucking kidding me? If there is any sure way to screw the little guy, it's by making poorly considered policy decisions that smell like socialism and will inevitably backfire. When mortgage closing costs are five times what they are now, and fewer people are eligible for mortgages, we can blame this dipshit in a robe.

Meeting. Gotta run. More ranting later.

Posted by: lechacal at August 31, 2009 11:56 AM

Snapshot, Petebklyn. Values in Brooklyn are plummeting while refi's are rising. You know what happens when the denominator gets smaller and smaller and the numerator gets bigger and bigger?

***Bid half off peak comps***

Posted by: Brownstones Half Off at August 31, 2009 12:09 PM

lechacal - i think you'd have to read all of his decisions before making your determination that they are "policy" decisions as opposed to sound exercises of a judge's discretion. have you done that? if not, then all the article says is that he's holding the corporations to the same procedural requirements that individuals are ordinarily held to. dismissing petitions based on procedural defect happens all the time - what's good for the goose is good for the gander, is it not?

Posted by: i disagree at August 31, 2009 12:22 PM

I have to support the judge's position. If a bank wants to foreclose, it should get the paperwork correct. If the home owner in default is not in court, the court needs to be particularly careful that the home owner was correctly served the foreclosure papers, and that there is not some serious error.

Posted by: bohuma at August 31, 2009 12:35 PM

It's completely unsurprising that the same banks which were so completely reckless with their investors' capital also failed to keep decent records. And now their contracts are legally unenforceable.

Well, too bad for them. This judge is doing a very good thing, and it would be better for the market if every other judge also held banks to the proper legal standard of proving ownership before they take possession of someone else's property. I mean, that's capitalism 101.

And there's no reason this would justify an increase in mortgage closing costs. What it would justify is a lot less re-selling of mortgages to third parties. Which, um, given the role of CDOs in this catastrophe seems like it's a good thing.

I mean, it's a lot less profitable to sell a schmuck a mortgage he can't afford to pay back on an overvalued home if you're the one left holding the bag when he defaults!

Posted by: bkrules at August 31, 2009 12:41 PM

The funny thing is that in a few years when your closing costs have skyrocketed and you have to jump through a hundred extra hoops to get a mortgage, you will probably act like it's the bank's fault.

If you can't see why this judge's populist crusade is a bad idea for borrowers, you deserve to pay more for your mortgage. Try to think four or five moves ahead.

1. Judge imposes hyper-technical hurdle to bank getting its money back (let's not lose sight of the fact that this is the bank's money we're talking about - people aren't allowed to just borrow money and not repay it).

2. Yay! Go judge! Little guy keeps his house for a while longer.

3. [?] You fill in the blanks. How do you think banks are going to react to this? How do you think this will affect their willingness to lend money to people with bad credit in the future? There will always be clerical errors in paperwork, unless of course the banks want to spend much much more than they do producing perfect mortgage papers. If judges aren't willing to give the parties what they so very obviously bargained for (if you don't repay, I get your house), what happens to mortgage lending in the future?

A couple of other observations:

-- IT'S NOT YOUR MONEY. IT'S THE BANK'S MONEY.

-- YOU AGREED THAT IF YOU DIDN'T PAY THE BANK BACK THEY GOT TO TAKE YOUR HOUSE. YOU DIDN'T PAY THE BANK BACK. NOW YOU'RE BITCHING THAT THE BANK IS HERE TO TAKE AWAY YOUR HOUSE?

I think I'm going to spend the rest of the day talking to people who have a better understanding of cause and effect and are capable of abstract thought. Bye.

Posted by: lechacal at August 31, 2009 12:54 PM

i disagree - I don't have to read all of the judge's decisions to know they are infected by policy making. "I'm just a little guy from Brooklyn... I don't belong to the country clubs.... etc. etc." I don't have to waste my time reading his decisions to know to a certainty that he lacks impartiality.

Posted by: lechacal at August 31, 2009 1:00 PM

NEWS FLASH: Your inability to understand Goldman Sachs does not make them evil. It makes you stupid.

Posted by: lechacal at August 31, 2009 1:01 PM

"IT'S THE BANK'S MONEY."

Correct. And, if the bank isn't careful enough with its own money to compose a valid contract that accurately represents its rights and responsibilities, then that contract should not be upheld in a court of law. It's really pretty simple.

Posted by: East New York at August 31, 2009 1:07 PM

ENY: Really? How many contracts have you written? If you think you are capable of sitting down and writing an error-free contract, I can only respond that either:

1. you have never in your life attempted to do so, or

2. no one competent checked your work.

Mortgage papers will have errors. Multi-billion dollar merger agreements drafted by the best legal minds in the city have errors. All the time, in fact. And good judges don't impose hyper-technical requirements in pursuit of a transparent social agenda. They determine the intent of the parties and give them the benefit of their bargain.

If you don't pay back the money, they get your house. Period. If you stopped paying, pack up your shit and get out.

Posted by: lechacal at August 31, 2009 1:12 PM

Bye!
Pls don't break your promise.

Posted by: antidope at August 31, 2009 1:12 PM

antidope - too late, already did. In a super pissy mood today and this is a subject I feel pretty strongly about (could you tell?). A volatile combination.

Posted by: lechacal at August 31, 2009 1:14 PM

Lechacal - I don't think this judge's decision can make lending standards any tighter or more expensive. The papertrails to nowhere came with the territory of the cheap/easy mortgage spigot. Since all that is history for another century, the airtight standards of today have completely annhilated that ambiguity in ownership. I don't see a risk on the part of banks that has to be passed on to future buyers via closing costs. Is this something that has happened in the past? It seems that this problem is unprecedented and would automatically be solved with the near extinction of hot potato MBS's.

***Bid half off peak comps***

Posted by: Brownstones Half Off at August 31, 2009 1:17 PM

"When mortgage closing costs are five times what they are now, and fewer people are eligible for mortgages, we can blame this dipshit in a robe."

My credit rating is 850+ so I'll always be eligible; the real issue no one wants to talk about is the people who knew they couldn't afford their homes. Abusing stupid people is politically incorrect however. you're supposed to feel sorry for them.

Posted by: infinitejester at August 31, 2009 1:18 PM

"I don't see a risk on the part of banks that has to be passed on to future buyers via closing costs"

How about interest rates?

Posted by: jessibaby at August 31, 2009 1:20 PM

"ENY: Really? How many contracts have you written?"

None. I'm not a lawyer. I HIRE GOOD lawyers.

If their contract stinks, too bad. I'm not impressed. Also, you need to calm down before you blow a fuse.

Posted by: East New York at August 31, 2009 1:21 PM

Also, lech, I did'nt read the link but might it be more an issue of "who actually own's the mortgate?" than keeping the owner in their house. Maybe these technicalities are just being exploited and celebrated by tenant groups, no?

***Bid half off peak comps***

Posted by: Brownstones Half Off at August 31, 2009 1:28 PM

infinitejester - Yup, renting is always a perfectly viable option. No reason everyone needs to be an owner. If you can't comfortably afford to buy, then rent. And if you don't heed that advice and you get in trouble by taking on more mortgage than you could afford - don't blame someone else for the outcome.

BHO: An anti-lender judiciary will increase borrowing costs.

ENY: Name one lawyer who writes a perfect contract every time. I work with and across the table from some pretty damn good lawyers, and I don't know any.

Posted by: lechacal at August 31, 2009 1:29 PM

But I'm arguing that the risk is not there, jessibaby. What risk? Lending standards are so tight right now - how could you not know who owns what? I just think these technicalities are limited to the credit giveaway and not what's being lent today.

***Bid half off peak comps***

Posted by: Brownstones Half Off at August 31, 2009 1:30 PM

BHO - I'm sure the judge comes to the right decision in some cases. The point isn't that he is wrong all the time, but that he has such a clear bias that seems to infect his decisionmaking in favor of one party.

Posted by: lechacal at August 31, 2009 1:31 PM

"ENY: Name one lawyer who writes a perfect contract every time. I work with and across the table from some pretty damn good lawyers, and I don't know any."

Good for you. Want a parade? I don't know any professional who does anything 100%, OK? But in every field, the cream rises to the top. Some are better than others and the best are the best for a reason.

What's wrong with you anyway? You think need to get a grip on yourself. I my business, you'd be called an "apologist."

Posted by: East New York at August 31, 2009 1:34 PM

BHO: If lenders fear that judges will take a hypertechnical approach and penalize them for any errors (even if the intent of the parties can clearly be discerned and there really isn't any question as to who should be entitled to what), I would think the obvious way to protect themselves would be to eliminate errors. And while that sounds pretty simple - and probably sounds perfectly fair to a lot of people - the reality is that it is very difficult and very expensive to write perfect documents. Any additional costs will be passed on to borrowers.

Posted by: lechacal at August 31, 2009 1:35 PM

"BHO: An anti-lender judiciary will increase borrowing costs."

True, but I think this is more anti-bullshit-ass-documentation than anti-lender. But you're the lawyer. You know your judiciaries. Who the hell is this Don Quixote anyway? Is his legacy a dead giveaway of Hon. Schack's motives?

***Bid half off peak comps***

Posted by: Brownstones Half Off at August 31, 2009 1:37 PM

ENY: I can't even tell what you are trying to say. First you say you hire good lawyers (suggesting that all it takes is a "good" lawyert to make sure a lender's documents are error-free). Then you say no one does anything 100% (ok, that's not error-free), and then you say something about the cream rising to the top (WTF does this have to do with the price of tea in China?). Are you attempting to refute something I have said or are you just generally expressing displeasure with my views? I just can't tell.

Posted by: lechacal at August 31, 2009 1:41 PM

investors will think hard about buying mbs again. in the future it will be with higher first loss pieces, which will have an end result that the originators of the loans will actually take care of the collateral paperwork. my view is that in the end this will be less about the technicalities that are driving lechacal crazy since they will only serve to delay ultimate judgement (which by the way is the administration's public policy: ex1 see bank bailout plan) and will prove to be more of a "where the heck is the actual underlying documentation?" story. banks and brokers created so much of this paper so fast and always had ready buyers with virtually no recourse, so they never thought about what happens when the music stops and a few chairs get taken away. it was a volume business, hence the errors on the paperwork. we'll see a lot fewer in the next round.

Posted by: antidope at August 31, 2009 1:42 PM

OK ENY: truce. I get pretty worked up about judges like this. My issue is with the judge, not with you.

Posted by: lechacal at August 31, 2009 1:50 PM

As an attorney who has written and fought against many contracts, I'm gonna have to agree with Lechacal here. Yeah, it's nice that the judge sees himself as holding the banks' feet to the fire in regards to their paperwork, but in the law we always worry about what we call the public policy effect. You have to be concerned about what will happen when judges start ignoring the plain intent of the parties as evidenced by their contracts. This is not to say that more care shouldn't be taken when drafting said agreements, but in contract law, the intent of the parties as defined by the four corners of the contract is king. Always has been, always will be. What this judge is doing is, in effect, ignoring the clear intent of the parties. That's a dangerous slope to start sliding down for all the reasons said by other posters.

Posted by: InsertSnappyNameHere at August 31, 2009 1:54 PM

"ENY: I can't even tell what you are trying to say."

Join the club. I can't believe you have the nerve to say professional attorneys can't be expected to create accurate, representative contracts, and because of that, judges should not uphold contracts terms, because to do so would ultimately drive up costs.

You're telling me it's too difficult for a good lawyer representing a major bank to write an accurate, factual contract for a home purchase? We're talking about buying a house, not exactly the most complicated financial transaction that takes place in today's world! If the contract language for a home purchase is vague or unclear, it's the fault of the parties that agreed to the contract. Case closed.

Posted by: East New York at August 31, 2009 1:58 PM

@lechacal - your entire argument seems to condense to this -

Bank Official/Lawyers, being human, screw up all of the time, so it makes sense that a lot of their documents are screwy. Since that's the case, activist judges shouldn't penalize the Banks for any incorrect documents, even if said doucments ultimately lead to someone being thrown out of their house.

Addendum to the above - if you want these Bank Officials/Lawyers to do their job well (no errors in the documentation), rather than half-assing it (business as usual), you're just going to have to pay the Bank Officials/lawyers even more money. That expense will be passed on to the buyer.

Does that sort of logic fly at big banks? It'd be like me telling my boss - "Sure I'm screwing up a lot on the job, but if you pay me more I'll shape up and do well."

I expect I'd be fired.

Posted by: crazypants at August 31, 2009 1:59 PM

Jackal,

I think there are two questions. One is whether the judge is actually making legally incorrect decisions. I don't think you can tell from the article. Some examples read one way, some the other. Clearly, if there is bad claim to title or a legally deficient affidavit supporting the foreclosure motion, an unbiased judge would appear to have some basis for denying the motion. The bank has to meet its proof obligations that it is entitled to the foreclosure. The other is whether there is a problem either with actual or perceived bias. I have to say I am more in agreement with you on the second point. I see nothing wrong with rigorous review of foreclosure motions, but decisions denying the motions should be grounded in black letter law and be free of grandstanding rhetoric precisely so that they will have more legitimacy.

Away from the white show world, there is a lot of sloppy practice in many areas, particualrly in state court, and I have no problem with a judge who demands more. Get your case on all fours and only then march into court.

Posted by: slopefarm at August 31, 2009 2:00 PM

"Clearly, if there is bad claim to title or a legally deficient affidavit supporting the foreclosure motion, an unbiased judge would appear to have some basis for denying the motion."

Absolutely...I guess we'd need to see his official decisions to know what's going on here.

Posted by: InsertSnappyNameHere at August 31, 2009 2:06 PM

"the intent of the parties as defined by the four corners of the contract is king."

Then, shouldn't the INTENT be carefully reflected in the contract language? Are these principles in conflict somehow?

Posted by: East New York at August 31, 2009 2:08 PM

this thread is gonna get expensive.
it looks to have been hijacked by actual lawyers.
i wonder who's getting billed?

;)

Posted by: antidope at August 31, 2009 2:09 PM

ENY and Crazypants - If your position is that a clerical error should be penalized with a loss of security on a several hundred thousand dollar mortgage, my response is that (1) the penalty is enormously disproportionate to the error, (2) there simply isn't any need for it if it is completely obvious what the parties intended and (3) again, as I have said several times and I think is irrefutably true, future borrowers are ultimately going to pay for this. If in the future you want to effectively pay an insurance premium for other people who win the mortgage lottery because there is a clerical error in their documents - if that really strikes you as an intelligent social policy, then by all means don't let me stop you.

What people fail to understand, time and time again, is that businesses pass these kinds of costs along to consumers. I suppose we could make a policy that if there is an error in someone's bank statement they automatically get $1,000 from the bank, but that would come out of your pocket in the form of lower interest or higher fees. There really isn't a meaningful difference where there is some clerical error in a mortgage document that simply doesn't harm anyone and doesn't change the obvious intent of the parties - you can give a windfall to the borrower for that the borrower never bargained for, but trust me, you are the one who is going to pay for it in the end.

Posted by: lechacal at August 31, 2009 2:11 PM

"Then, shouldn't the INTENT be carefully reflected in the contract language? Are these principles in conflict somehow?"

Yes, of course it *should* be. But you are proposing a jail sentence for an illegal right on red. Perversely, you are letting the party that actually did something "wrong" - i.e. the defaulting borrower - off the hook, while you penalize the lender (whose money it is after all) for a potentially meaningless clerical error. I don't see how you can argue so forcefully for punishing lawyers who don't get a contract perfect while you seem perfectly happy to let deadbeat borrowers of the hook.

Posted by: lechacal at August 31, 2009 2:15 PM

I hate to agree with lechacal. The use of the language is wrong but he speaks the truth. I love to get free things, don't get me wrong, but there is a difference between a hand lotion and a house... If we agree in no paying and not going to foreclosure, basically your agree with looting or invasion of private property...if you don't pay for something, then is not yours to keep...Tomorrow the same people who are here talking about these issue in favor of the people who are in foreclosure to keep their houses w/out paying...will be paying the price of bank collecting their loses in other ways....after all...is their money.

Posted by: diablorojo at August 31, 2009 2:16 PM

"Perversely, you are letting the party that actually did something "wrong" - i.e. the defaulting borrower - off the hook, while you penalize the lender (whose money it is after all) for a potentially meaningless clerical error."

I'm not talking about borrowers who defaulted through their own negligence. I do not believe the judge should use inaccurately written contract to "award" a home to a defaulter. I believe that if the ban was dumb enough to write a bad contract that can't stand the light of day, why should the judge uphold that contract? The bank is the one lending the money. In my opinion it is incumbent on the bank, in particular, to ensure the contract is accurate, legal and able to withstand legal review. In the end, we can only rely on what's in the contract. That's why we HAVE contracts!

Posted by: East New York at August 31, 2009 2:25 PM

Let's run with the idea of 'too bad for the bank and their shoddy lawyers' for a second. All right then. The banks lose in court with these contracts. These owners who have failed to pay their mortgage are now free from the fear that they will lose their homes or even the obligation to pay the mortgage payments in the future. Do you have any idea how many homes and contracts that would apply to? We attorneys don't re-invent the wheel when it comes to contracts. That minor mistake or two you find in Joe Schmoe's contract likely exists in several hundred other contracts. So, no Joe and his similarly situated co-horts are no longer paying the bank and there's not a damned thing the bank can do about it. Millions of dollars of the bank's money lost. Burned. Down the drain. However you wish to put it. Do you *really* think that will have no affect on you and other homebuyers in the future?

Posted by: InsertSnappyNameHere at August 31, 2009 2:26 PM

I don't know what effect it will have Snappy, but I can't imagine it would be good. But if the price of doing the opposite is that lawyers will no longer be expected to craft accurate contracts that are clear and can withstand legal review, then in my opinion, we will have to go there and take whatever happens are a consequence.

Posted by: East New York at August 31, 2009 2:30 PM

Interesting. A bunch of lawyers arguing with a bunch of non-lawyers.

I am actually in agreement with diablorojo here and in some sense Lechacal. If you took out a mortgage, be responsible enough to know what you can and cannot afford. If you stop paying, don't count on mortgage clerical errors to keep your house. You deserve to be evicted whether anyone made and error or not. You knew the ramifications when you signed on the dotted line. No one handed you the money for free.

Posted by: Kensingtonian at August 31, 2009 2:30 PM

ENY, I think that on some level you and I are in agreement with respect to the bank and their attys stepping up their game in contract drafting. They absolutely should be required to get their proverbial poop in a group and get the stuff done right. However, I just don't think that the fallout of rejecting hundreds of contracts over clerical errors is something we ever really want to see/experience.

Posted by: InsertSnappyNameHere at August 31, 2009 2:34 PM

OK, cool.

Posted by: East New York at August 31, 2009 2:36 PM

Also, there's a concept called scrivener's error. Excerpt from Wikipedia (master source) below:

There is a considerable body of case law concerning the proper treatment of a scrivener's error.For examples, where the parties to a contract make an oral agreement that, when reduced to a writing, is mis-transcribed, the aggrieved party is entitled to reformation so that the writing corresponds to the oral agreement.

Posted by: jessibaby at August 31, 2009 2:40 PM

However, there are also cases (and one was in the NYT the other week), where the ownership chain is so screwed up that no one really knows who owns the mortgage, and servicers file for foreclosure against people that have missed a payment and who then have been able to bring the mortgage current again, but there's no one to talk to.

Jackal et al, I could swear I've read a lot of abuse like this, especially down South. The judge is just not supposed to be a rubber stamp.

Posted by: denton at August 31, 2009 3:02 PM

"i wonder who's getting billed?"

LOL

***Bid half off peak comps***

Posted by: Brownstones Half Off at August 31, 2009 3:03 PM

"Law is philosophy carried into the marketplace."

--Robert Bork

Posted by: infinitejester at August 31, 2009 3:06 PM

That's the kind of thinking that kept him off the Supreme Court.

Posted by: East New York at August 31, 2009 3:18 PM

You don't instinctively think that is an accurate appraisal of law? That's what makes it such a great quote.

"Theodore is in the ground"
--first line of "The Alienist" by Caleb Carr

I read online on redstate.com that Teddy's legacy is the partisan Supreme Court nomination process, brought on by his leading the fight against Bork.

Posted by: infinitejester at August 31, 2009 3:24 PM

this guy is actually "taking away" banks' securities. he's making them prove they have such a security interest in the first place, as he ought to do, and demanding that the banks meet the procedural rigors that apply to anyone. in other words, he's probably not even getting to the point of interpreting the contract (as fascinating as this 1L discussion of contract interpretation has been).

are you telling me that it would somehow be more fair to take away someone's home (and give it to some bank, who then sells it to some bargain hunter, at which point it can't be clawed back) when it's not clear who's actually entitled to it, rather than to force the bank to do the work to show it has standing, or a prima facie case, or a valid claim? if the banks are afraid of a "jail sentence for an illegal right on red," perhaps they, like all civil litigants, ought to wait until they have a clear case before they file. or are you suggesting that we ought just to take away the house from the individual, since we know he can't afford it, just to punish him for his misdeeds, even in the absence of proof? sorry, but that's not how civil law works.

keep in mind that this problem is, as antidope says, a direct symptom of the sloppy securitization of mortgages, and if banks haven't figured out they need to fix that, then they deserve the "jail sentences" they're getting.

setting that aside, what's the inherent problem with the notion that businesses should be run correctly, as defined by the law, and that costs of running them correctly are passed on to consumers? and won't those banks that can do this most efficiently be able to offer lower rates, and thus competition thrives? and isn't this how a (regulated) capitalist system ought to work? isn't it, in fact, MORE activist, more socialist, to suggest that we ought to rubber stamp banks' mistakes in favor of what some brownstoner posters have deemed is the greater good?

agree with the general point about perceived bias, though. this judge just bought himself a recusal motion in all of his mortgage cases.

Posted by: i disagree at August 31, 2009 3:41 PM

I'm not a lawyer but I do think the judge has been misconstrued. I don't think he's an activist in the sense that lechacal seems to think- but having seen how banks and mortgage lenders have jerked around people, why shouldn't he question shoddy paperwork? There have been instances of people being foreclosed on- and it was the wrong person. There are people who have sold houses out from under rightful owners who get their first clue when the marshall shows up. He's right to question and the point is, all the bank has to do is come back with corrected paperwork. The guy actually reads this stuff- I love him for not being a rubberstamper. We let murderers off on technicalities- and rapists and thieves. I have more outrage over that than I do over a judge who expects a certain standard of proof in a contract. My 2 cents.

Posted by: bxgrl at August 31, 2009 3:53 PM

"You don't instinctively think that is an accurate appraisal of law?"

No, I don't.

"I read online on redstate.com..."

You may as well have just stopped typing there.

Posted by: East New York at August 31, 2009 3:54 PM

"what's the inherent problem with the notion that businesses should be run correctly, as defined by the law, and that costs of running them correctly are passed on to consumers? and won't those banks that can do this most efficiently be able to offer lower rates, and thus competition thrives? and isn't this how a (regulated) capitalist system ought to work? isn't it, in fact, MORE activist, more socialist, to suggest that we ought to rubber stamp banks' mistakes in favor of what some brownstoner posters have deemed is the greater good?"

I couldn't agree more, i disagree. Thank you very much. I was beginning to wonder if it was me or if everyone else (excluding bxgrl and crazypants) had gone slightly loco.

Posted by: East New York at August 31, 2009 3:59 PM

There are sure some lazy lawyers on this site. If you read the article, you will see the judge's quote to the effect that he wants to make sure the bank owns the property before it forecloses. This is basic jurisprudence. The bank has the burden of demonstrating a right to the relief sought. Only the lazy and privileged would bemoan having to satisfy their burden of proof. And to claim this judge is biased for this reason is beyond chutzpah. Try to think about the people who have had their rights infringed because of shenanigans by banks and mortgage companies.

Posted by: orestes at August 31, 2009 4:04 PM

I'm no lawyer (I am actually) but to the extent that many homeowners of limited English or limited education were misled and bamboozled (by mortgage brokers/agents/the What) about what they could afford, and what they would be paying in two and three year's time after their rates reset (that they didn't know about), their "intent" should be qualified.

Posted by: dittoburg at August 31, 2009 4:08 PM

ENY -- Did you lump me in the crazy group? Perhaps it was my lawyerly tone that threw you off.

I agreed with the judge putting banks to the test on foreclosures. I agreed with lechacal on the judge's rhetoric, but only because it opens the judge up to accusations of bias and undermines the legitimacy of what might otherwise be sound decisions. I would rather the judge write decisions to which a politically conservative lawyer like lechacal would react along the lines of "I would have come out with a different result, but given the recited facts of the case, the outcome is consistent with existing law."

BTW, I meant to write "white shoe" at 2:00. Sorry for any confusion.

Posted by: slopefarm at August 31, 2009 4:10 PM

Got it, slopefarm - and I agree. You're also in the non-crazy group.

Posted by: East New York at August 31, 2009 4:13 PM

I have difficulty with someone getting their facts form "redstate.com." And for the record, if it were "Bluestate.com" I'd feel the same way.

Posted by: bxgrl at August 31, 2009 4:17 PM

what if said "facts" are from brownstoner.com?

Posted by: antidope at August 31, 2009 4:28 PM

brownstoner "facts" = "opinion" and that's a fact.

Posted by: bxgrl at August 31, 2009 4:34 PM

Late to the party here, but I'm in agreement with I disagree, and therefore in the same camp with ENY, bxgrl, slopey, etc. (no surprise there) I thought he/she gave a concise and reasoned explanation to the judge's rulings. The law should apply equally to the bank as well as the mortgage holder. Cases where mortgages are traded like popular baseball cards to the point where the mortgage holder has no clue who even hold their paper are designed to obfuscate, mystify and otherwise result in providing maximum profit for each successive holder, forgetting that people's lives are involved. Everyone seems to have forgotten that we are not trading stock, or even playing 3 card monte. Real people's homes are on the line. The difference between being a productive member of a community, or homeless with your family in the street,is something more of these bankers need to be aware of, it isn't just about money. Every care should be taken to make sure that every last resort has been taken, every avenue explored before a property is foreclosed upon.

That is very different from rendering decisions from the bench that will be overturned in appeal. The judge would be doing no one a favor there, and I agree that that is not helping anyone in the long run. I'm not a lawyer, I just ate at the law school dining hall occasionally in college. That taught me that I did not have the argumentative personality necessary for courtroom success.

Posted by: Montrose Morris at August 31, 2009 4:39 PM

Back from meetings. This debate lost its logical integrity a few hours ago. I can no longer articulate the opposite position, and I doubt that's a failure of my reading comprehension.

ENY: As I said earlier my problem is with the judge, not you, so I'm happy to bury the hatchet on this. That being said, if you are saying I am in some kind of a "crazy" group you can go fuck yourself.

Posted by: lechacal at August 31, 2009 5:01 PM

Its not rocket science. You have NO proof you own the mortgage (re;sloppy, shoddy, unprofessional, unethical, reckless book-keeping) and you still want to step up and take a persons home??? Why should a home owner pay a bank that can't even prove it owns the loan? Perhaps thay don't. Pay the person with the paperwork. It's the law. This judge is upholding the LAW. Any bank stepping up to the plate without proper standing should be slapped with a frivilious lawsuit charge. And they had the legal guns to file proper paperwork, they just got greedy.

Posted by: lowelisamarie at August 31, 2009 5:04 PM

wow lechacal- what got you in such a bad mood?

Posted by: bxgrl at August 31, 2009 5:06 PM

Its not rocket science. You have NO proof you own the mortgage (re;sloppy, shoddy, unprofessional, unethical, reckless book-keeping) and you still want to step up and take a persons home??? Why should a home owner pay a bank that can't even prove it owns the loan? Perhaps they don't.You pay the person with the paperwork. It's the law. This judge is upholding the LAW. Any bank stepping up to the plate without proper standing should be slapped with a frivilious lawsuit charge. And they had the legal guns to file proper paperwork, they just got greedy.

Posted by: lowelisamarie at August 31, 2009 5:07 PM

"That taught me that I did not have the argumentative personality necessary for courtroom success."

I don't know, MM. You've made some good arguments around here :-)

Posted by: denton at August 31, 2009 5:07 PM

just to be totally clear, in my 3:41 post i meant to type "this guy isN'T actually 'taking away' banks' securities..." and also, with respect to bias, the judge was pretty careful to avoid suggesting he was biased, but it's clear where his sympathies lie, in general. "sophisticated" litigants will take any possible thread they can to claim bias, and the rules on recusal can be a little circular, so unfortunately this kind of publicity will make it harder for him to do his work (and, perhaps, create headaches for some appellate judges). on the other hand, a quick web search makes it clear that this judge has been making these kinds of decisions for a while now, and is pretty well known for it. my guess is that, for him, getting the word out is worth denying a few recusal motions and putting up with a few more meritless appeals.

Posted by: i disagree at August 31, 2009 5:09 PM

Does someone else have the energy to respond to lowelisamarie? I feel like I'm arguing with one of my kids.

Posted by: lechacal at August 31, 2009 5:10 PM

bxgrl - not sure. Just in a wicked pissy mood today, and this is a subject that can get me in a bad mood even when I'm otherwise chirpy.

Posted by: lechacal at August 31, 2009 5:11 PM

Do you people even get what the Judge is saying?
He's not saying "Don't pay your mortgage". He's saying " pay the proper entity". Simple.

Posted by: lowelisamarie at August 31, 2009 5:15 PM

Well, your resorting to profanity in a harmless blog discussion certainly doesn't give you the appearance of rationality, lechacal. That said, I thought your opinion was crazy, not you in particular. I don't know you well enough to determine if you're really crazy. But based on your posts, I wouldn't put it past you.

Posted by: East New York at August 31, 2009 5:20 PM

bxgrl, just thought it was an interesting take.

People, don't mind ENY, he thinks Eli Manning is a manly football player. Psych!

Posted by: infinitejester at August 31, 2009 5:23 PM

No, actually I think Eli Manning is a Super Bowl MVP.

Posted by: East New York at August 31, 2009 5:26 PM

The article says that the judge has rejected 46 of the 102 foreclosure motions that have come before him in the last two years. Because this article is a blowjob piece and not real journalism, the author did not actually read these decisions to see whether the judge was being tough but fair in holding the mortgage companies to the letter of the law, or if he was just pushing his own agenda. I strongly suspect he was pushing his own agenda. No matter how you feel about "predatory" lending or big corporations in general, it is not a judge's business to make policy decisions.

It's been dropped for a while, but the idea that any legal document will be 100% correct is an absolute fantasy. Does signing in the wrong place really justify letting somebody keep hundreds of thousands of dollars without having to pay it back? Think about that one.

Posted by: Jail_Bait at August 31, 2009 5:32 PM

ENY, lechacal's opinion isn't crazy. Lawyers make mistakes very often and opposing counsel generally will let you fix your mistake/ re-execute a document because we all understand that mistakes happen when your job is so incredibly tedious.

Posted by: jessibaby at August 31, 2009 5:47 PM

this is not about fixing a little mistake between friendly opposing counsel. in this country, in order to force a change from the status quo, generally speak, the person who is trying to force that change is the one with the burden of proving he's entitled to it. if you can't provie it, then you are out of luck. what is so hard about that to understand? it is no more of a "policy decision" to uphold the law against a corporation than it is to uphold the law against an individual.

jail bait, have YOU read the opinions? if no, have at it. link here: http://homeequitytheft.blogspot.com/2008/07/brooklyn-trial-judge-nixes-rubber-stamp.html

Posted by: i disagree at August 31, 2009 6:39 PM

No, I have not read the opinions, and I don't care to. I also did not write a potentially misleading piece of populist nonsense in a large national newspaper.

Posted by: Jail_Bait at August 31, 2009 6:57 PM

Denton, if we could argue a case through dueling keyboards, I might stand a chance. Otherwise.....

Posted by: Montrose Morris at August 31, 2009 8:13 PM

I lookd through a lot of these rulings on the link that i disagree gave us. a lot of them were dismissed without prejudice, I think that means that the bank can file again when they have the paperwork THEY WERE PAID TO DO IN THE FIRST PLACE in order. In a couple of cases he dismissed the default petition because there was NO RECORD THAST THE BANK EVER OWNED THE MORTGAGE. What's he supposed to do, say OHHHHHH you're a BIGGGGGG BANK that peed a lot of government money down the toilet, so we HAVE TO believe what you say over the word of some schmo....of course we should...banks and their lawyers should be paid hundreds of millions of dollars in servicing fees and legal fees so that when they don't bother to do their jobs we get the taxpayer to cover their losses and giver their lawyers a free ride in court....please...where's What when you need him???!!!

Posted by: bklyn_rntr at August 31, 2009 10:21 PM

hmmm.

It's perfectly reasonable to say that everyone should honor their obligations all the time, but it doesnt always work that way.

I've actually been in front of J. Schack (albeit a few years ago) and have read a good number of decisions. For some mortgages, it's not even clear who has the authority to make a deal. His decisions force the banks to figure out those issues. I wouldnt be surprised if he is using his authority to force banks to make a deal. I doubt the mortgages will go away entirely, but the uncertainty he has created forces banks to re-evaluate their positions. Likewise, if any homeowner goes for the grand prize of a free house, I expect he or she will end up disappointed.

Posted by: slick at August 31, 2009 11:46 PM

It might be wrong to talk about "the bank" here.

The Times links to Schack's decisions didn't show a bank filing against a deadbeat borrower. The loans were originated by a subprime lender notorious for falsifying documents (using the Coke machine as a light table) that has since gone out of business.

The loans were securitized by Citigroup and Merrill Lynch. Two years later, the delinquent loans were sold to Goldman Sachs.

When the trustee, Deutsche Bank, filed for foreclosure, Schack noted that Goldman Sachs should be filing instead. He also pointed out that all parties to the transfer using the same address in Florida could be a sign of fraud.

It's not clear that the borrower ever made a payment on the mortgage. It's not clear that the borrower ever even existed. Fraud was endemic to subprime mortgages. Do we really miss the "banks" that originated $1 trillion subprime loans?

Posted by: mtg_alert at September 1, 2009 12:08 PM

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August 31, 2009

The 'Judicial Don Quixote' on the Foreclosure Frontlines

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