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.
NEWS FLASH: Your inability to understand Goldman Sachs does not make them evil. It makes you stupid.
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.
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.
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!
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.
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?
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***
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.
This is the best news I’ve heard on this subject in some time.