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