The 'Judicial Don Quixote' on the Foreclosure Frontlines
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…
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.
“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.
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.
this thread is gonna get expensive.
it looks to have been hijacked by actual lawyers.
i wonder who’s getting billed?
😉
“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?
“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.
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.
@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.
“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.
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.