![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-1208456-100x100.png\")
Excellent! It's only right that the banks should have their act together and paperwork in order before they try to kick someone out their home.
If the bank has proof they own the home and the current homeowners aren't paying, only then can they foreclose.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-543146-100x100.png\")
Dangerous rogue in the eyes of lenders? Rarely holding large corporations to the rules? Since when are they exempt from the law?
We need more judges like this one to remind corporations that they are beholden to legal obligations as well.
![\"user-pic\"](\"/css/images/default.gif\")
@RecordStoreToughGuy_Has$240WorthOfPuddin':
Well it really says a about most judges. They are letting foreclosures go though improperly. This isn't a wake-up call for corporations. It's a wake-up call for judges.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-226755-100x100.png\")
@RecordStoreToughGuy_Has$240WorthOfPuddin':
Indeed. There was some discussion earlier about how corporations are effectivly treated as legal people under the law.
...I wonder how you go about putting a corporation in jail.
You can't put the corporation in jail, but the \"death penalty\" is used a lot more for corporations, especially smaller ones, so that kind of evens it out. Kind of.
Not really. Look at Pfizer. They made a dummy corporation and let it take the fall so they wouldn't be ineligible to collect money from medicaid and medicare.
![\"user-pic\"](\"/mt-static/support/assets_c/userpics/userpic-1223549-100x100.png\")
@sinfonian94:
If you're talking about corporate charter revocation, it's true that's a rare occurence. However, litigation, both civil and criminal, destroys corporations all the time. Daily, in fact.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-436259-100x100.png\")
@RecordStoreToughGuy_Has$240WorthOfPuddin': I know right! Its like doing the normal course of your duty now apparently puts you in the \"above and beyond\" category.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-6170-100x100.png\")
If the Defendant doesn't respond to a lawsuit in time, the Plaintiff may obtain a \"default judgment\" since the Defendant is in default. The amount of delving into the records that's done is up to the judge. They can't do an independent, in-depth investigation on every motion for default judgment they hear.
Further, I hope this judge sleeps with a gun under his pillow. Or has a few bodyguards. And food tasters.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-19238-100x100.png\")
@Sheogorath: Believe it or not, most judges don't take anymore precautions that most people. They consider it a point of pride not to change their lifestyle. I bet you didn't know judges are such bad asses.
@kingofmars:
Well, I knew about Judge Dredd. I bet he could sort this situation out pretty damn easily.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-379029-100x100.png\")
@kingofmars: I know a judge that wears only bow ties & uses an electric scooter (like, a razor or whatever with a motor) to get around the judicial building.
Bad asses indeed.
@merely_a_muse: Wow...I read that as \"wears ONLY bow ties\" and was imagining a little old geezer riding a scooter around a courthouse wearing just a bowtie and his birthday suit.
You just made my morning.
Awesome. Throughout this whole debacle I haven't really shed a tear for people losing their homes, but this is awesome. Everyone has to play by the rules, including the big banks.
It's amazing how his requirement that the foreclosures are \"legal and correct\" is newsworthy. Don't get me wrong, I think it is a great story and I am grateful that there are people in positions of power who are doing the \"legal and correct\" thing. It's just that this should always be the 'boring, seen it a million times' story...that it is newsworthy is a sad commentary on the state of the US power structure (political, corporate and legal).
The Consumer Warning Network people have a \"Produce the Note\" how to that is related to this idea. Same principle, they insist whoever is foreclosing have their paperwork in order.
I am not sure how this applies to 'non-judicial' states where the banks don't need a court order to foreclose. I don't know how that is allowed.
@TacoChuck: Here, in California, a non-judicial foreclosure state, the current beneficiary only needs to have an assignment of the deed of trust in question. My office sees a lot of the \"produce the note\" crap, which is inapplicable.
I've periodically seen stories like this in the local news where people having their homes foreclosed upon are able to \"beat it\" because the banks don't have the right documents.
It has made me wonder if it would be possible for somebody who is NOT being foreclosed upon could file some sort of declaratory judgment action basically to get the court to declare that you don't owe the bank any more money because they don't have the right documents.
![\"user-pic\"](\"/mt-static/support/assets_c/userpics/userpic-86968-100x100.png\")
@leftturnonred: There is a broad legal principle that prevents tricks like that. It is that 'the law (or sometimes the constitution) is a shield, not a sword?'
Judges look -very- unfavorably upon attempts to be litigious in order to harm others for your own gain, and they're generally found to be illegal. Further, in a civil case, the burden of proof is on the plaintiff. So when you sue someone, you have to provide proof that your claim is valid, before the defense would have to come up with a scrap of paper. When you're being foreclosed upon, you're the defendant, so the bank has to come up with the documents as its their burden of proof.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-103878-100x100.png\")
@huadpe: Except that in the intial stages of a case, the burden of proof can be low. The plaintiff just needs to prove a prima facie case. Meaning, it seems like there might be a case. If the defendent doesn't show up, then a default judgement is entered in favor of the plaintiff and that's generally the end of it.
It appears that most judges don't bother looking at the documents to see if the plaintiff really has a prima facie case and just assume that they do since they're producing all sorts of financial documents.
@ARP:
It's actually a great deal lower than that--at the pleading stage, you don't \"prove\" anything. Making a prima facie complaint simply means that you properly allege those elements that, if they were to be proved at a trial, entitle you to the relief sought.
@leftturnonred: I think (I'm not a lawyer, nor do I play one on the Internet) that the issue of foreclosure and a mortgage loan are separate in some ways. It is not all that different from the issue of a car loan and a car title. If there is any question as to who is actually holding the rights to foreclose and who you have been paying a substantial amount of money to each month, I think it is appropriate to demand that the company you are paying produce ownership of the mortgage or at least proof of acting as legal agent on behalf of the mortgage owner. What would happen if you decide to refinance and Joe's Megabank can't produce the necessary paperwork to show ownership of the mortgage? Worse yet...Bill's Super Duper Investment service sends you a demand for payment because they actually own the mortgage but don't show a payment for the last 5 years?
Banks and other financial institutions have got themselves into this mess by pursuing the fast buck and worrying more about meeting revenue predictions/goals.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-384699-100x100.png\")
@leftturnonred: I wouldn't say that, the bank has numerous documents signed by you stating that you owe them money for the home. What this judge is demanding proof of is that the bank in fact \"owns\" the house by having possession of the title to the home. Something most banks don't keep track of all that well. Taking possession of property they don't inhabit requires at least that. Proving that someone owes the bank money likely has less of a required paper trail.
Yes, making regular payments without complaint is a good start to proving the loan exists.
If you don't lose the house, though, you'll end up bankrupt. If you were living where I do (which you American's don't), that means you are likely to lose the house anyway. Of course, that's expected, since no banks will sign a no-recourse mortgage up here.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-54890-100x100.png\")
@logicalnoise: Also the paper trail spans all the way across the country. When this whole debacle got started loan officers, banks and everyone in between were passing around these notes like crazy. If you had a house loan it's hard to tell who owns the actual deed now.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-1814-100x100.png\")
Wha? Making corporations support their case in court? What kind of madness is this?
I applaud the judge, but I have a bad feeling banks will soon be pressuring Congress to hurriedly pass some emergency bill granting them the right to do foreclose no matter what.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-87429-100x100.png\")
Hmm so....if the banks can't prove they own the house, do these people get free houses? How do they prove they own the house either? It seems like the house would be in limbo...or either some kind of squatters rights would apply.
@Saboth: Usually it just buys the owner a few extra weeks/months to come up with mortgage payments while the bank scrambles to find proof of title.
So no, they're not getting a free house, but it might delay a foreclosure long enough for them to get their poo together.
@Saboth: It would only be in limbo until the banks' lawyers earned their pay and got the paperwork right.
This isn't the first time this kind of thing has happened, there was that one sheriff that refused to serve eviction notices for foreclosure on renters unless the bank could demonstrate that it had met its legal obligation of advance notice to the tenants of rental units. I'm sure this decision will be met with equal amounts of confused vitriol and ignorant flaming.
Clearly this is one of those \"activist\" judges that I hear people complaining about. How dare he apply the law as it is written. Won't somebody think of the corporations?
Disclaimer: The above should be read as sarcasm.
Experience has taught me I must explain this for the humor impaired.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-227489-100x100.png\")
@G00MAN:
You god-forsaken SOCIALIST!!! Do you want the terrorists to win?!?!? Why do you hate 'Murica!?!?!
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-929652-100x100.png\")
@G00MAN: Wait, do you mean to tell me that sometimes newbies mistake sarcasm for serious statements and start flamewars over it on Consumerist??? Nooooooooo. You speak liiiiiiiiies.
![\"user-pic\"](\"/mt-static/support/assets_c/userpics/userpic-349596-100x100.png\")
@MostlyHarmless: HOW DARE YOU IMPLY SUCH NONSENSE? You consumer hater! Take your non branded, menial statements elsewhere!
/flamewar
![\"user-pic\"](\"/mt-static/support/assets_c/userpics/userpic-469349-100x100.png\")
Those crazy activist judges! How dare he follow the law instead of helping big business?
I'd buy him a drink if I could.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-738213-100x100.png\")
I got a tax note from the county because Chase had been paying my escrow on the wrong address(! - they only got 2 digits wrong out of 6...)
Took a couple months to clear up.
Now imagine if I weren't current with my mortgage- I bet, given what I faced at Chase, that they couldn't produce the right documents.
You know-- all it would take is for a few states to pass \"truth in foreclosure\" laws requiring banks to do some local paperwork to foreclose, and said local paperwork would require all the documentation be in order.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-316976-100x100.png\")
@JGKojak: Chase \"forgot\" to pay my property taxes one year recently. I learned about it when friends told me they saw my name published in the list of tax delinquencies. When I contacted Chase, their response was to tell me it is my responsibility to make sure they pay my taxes like they're supposed to.
*bangs head on table*
@JGKojak: But then all the corporations would leave their state and settle somewhere else. They would try to get their home state law to apply. If they can't do that, corporations threaten to pull out of the state. Law makers freak out because they won't get anymore campaign financing or perks. So, lawmakers relax the standards and it goes back to business as usual. The only thing is that its pretty likely you can out-bluff a corporation if you're big enough (sorry North Dakota). Their desire for contstant double digit growth will force them back into the state eventually.
@ARP: But to pull out of the state, they would have to abandon all current loans and debts owed to them.
![\"user-pic\"](\"/mt-static/support/assets_c/userpics/userpic-837501-100x100.png\")
While I admire the attention to detail and agree that proper documentation must be held, this result doesn't fill my heart with joy either. I am glad that those people whose genuinely well-laid plans have gone to muck due to factors truly beyond their control will be able to stay in their homes for at least a while, I can't help but feel that there are more people who borrowed irresponsibly and are (once again) being propped up on someone else's dollar.
@Wuhao: Yes, but would you rather let someone whose plans came apart stay in their house for a few extra days, or would you rather have the wrong person foreclosed upon? And we have seen already that this has happened.
@MostlyHarmless: I'm not saying \"overturn the ruling.\" As I've said, I think it's the right call. But, this isn't exactly cause for me to break out the champagne, either. We have people who are essentially legally squatting in houses under cover of law, who aren't demanding documentation because there's actually a dispute about whether they owe the money or not -- they're just looking for a stall, and they're getting it.
@Wuhao: That's a fair point, but obviously the burden rests upon the lenders to have their act together if they want to kick someone out of a house. If the lenders don't want to give anyone a free ride, it's entirely within their power not to -- they just shouldn't be allowed to take shortcuts.
As you said, in many cases it's not exactly cause for celebration. But it also seems appalling to me that this is an exception and not the norm.
@Wuhao: And they deserve the stall. If they can get in legal trouble for not showing their papers (I.e. money) then the same should be true for the loan owner. It should affect both of them equally. They should both have the same burden under the law.
@Wuhao: This is what I was thinking. Most people who are having trouble right now are in trouble becasue of their mistakes. I just cant decide how many irresponsible people im ok with helping to make sure the ones who really need help are helped.
@xtc46 - thinksmarter on twitter: Yep, Its there fault the Banks screwed the economy, so they lost there jobs....
If the Banks did not make the mess in the first place, many of the beople that are behind, would not be behind.
@xtc46 - thinksmarter on twitter: These people aren't getting 'help' - their rights under the law are being protected.
@Wuhao: They're only propped up until the banks get their documentation in order. They aren't being given free housing forever. These corporations need to get their paperwork in order.
See, now THIS is the kind of Judge I wouldn't mind giving a pair of pants to.
@GitEmSteveDave_HasAFrenchLoaf: I'm not sure the judge would want them, seeing as you haven't exactly stated where this French loaf is...
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-1251980-100x100.png\")
Many mortgage loans are packaged as mortgage backed securities and sold to investors.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-25844-100x100.png\")
@Mr.Duke: Yes, but once again as a few folks here have stated, it's not about the loan, it's about the lien. A mortgage backed security is just a claim against the payments, not the underlying property. Ultimately the property remains as collateral in a default but the bondholders have simply bought the right to receive payments. In a default situation where property is collateral, the mortgage servicer would be responsible for selling the collateral and then forwarding any recovered funds to the bondholders, the same as normal payments.
So it's not like the thousands of bondholders each have a slice of the title. One entity owns the title, it processes payments and pays the bondholders, and it (the mortgage servicer) is responsible for maintaining clean title.
Don't assume the folks getting foreclosed on are all deadbeats. As one of the links stated, attorneys are finding \"sloppiness, fraud and outright criminality in the nation's mortgage lending industry.\"
One of my favorites was the guy in Baltimore who'd made all of his payments on time to the right place. But his mortgage had been \"securitized\", and the people who took his payments didn't pass them on correctly. So some financial organization showed up out of the blue, foreclosed, kicked him out, and sold his house to somebody else. It took him years to get it sorted out. He was kind enough to just take the money and move elsewhere; he probably could have gotten the whole foreclosure and subsequent sale unwound by the court, but that would have booted out some other poor soul who had bought and moved into the foreclosed house in good faith.
There have even been cases where multiple institutions have claimed to own the same mortgage and tried to demand double mortgage payments.
There's a reason banks need to have their paperwork in order before filing for foreclosure. Without that, it's all to easy for incompetent or crooked institutions to screw over homeowners.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-887707-100x100.png\")
@bobert: Maybe these mortgaged backed securities need to be outlawed. Replace them with mortgage corporations structured similar to a mutual fund. Then all the authority is clearly in one place. Investors then simply own shares in the corporation just like any other. Give it a tax structure like a mutual fund. It can then own thousands to millions of mortgages, depending on how it will be marketed. Investors will still make money for performing mortgages, and lose for non-performing ones.
@Skaperen: Well, that was the theory behind banks and S&Ls back in the day. As in, you and lots of other people put money into savings accounts or CDs, and then they lent it out to people who wanted to buy houses at a higher rate. The bank/S&L really just acted as the kind of mortgage corporation you're describing, and took the difference in interest rates as their management fee. Banks and S&Ls also had an incentive not to make high-risk loans, because they guaranteed the depositors wouldn't lose their money, so any losses on loans came out of profits-cum-stockholders' equity.
My parents bought their first house under that system, in 1958. I'm not saying it was a perfect way to do things, but it was much simpler than today, and you sure didn't see the kinds of shenanigans we've seen over the last decade with things like ARMs with balloon payments, and bankers steering borrowers into loans they actually couldn't afford.
As far as outlawing mortgage-backed securities...
I'd be fine with any level of mortgage securitization, under two conditions:
1. With any given mortgage, only one clearly recognizable organization can manage it at any one time, the mortgage can't move more than, say, once every three years, and nobody else up the chain can even contact the borrower, let alone try to foreclose.
2. If anybody goes to foreclose or otherwise go to court against a borrower, they have to place 5% of the mortgage's principal balance in a court-controlled escrow account. If their paperwork isn't in order, the court immediately forks over that money to the borrower as recompense for hassling them.
People are living in a home they can't pay for anymore and we're supposed to be thrilled that they got over on a technicality? Remember how banks needed taxpayer bailouts? It's because of these deadbeats that our money has to cover for their spending problems.
Banks get your papers in order and get your stuff straight.
Folks, if you live in a house you can't afford, MOVE.
@tankertodd:Many of these \"Deadbeats\" would not be that way if they still had Jobs. Which they probably would still have if the Banks did not screw up the economy in the first place.
@tankertodd: My mortgage is with a bank that, in the last 24 years, has had exactly zero foreclosures. None, nada, zip.
That's because, while they are state-of-the-art around technology and have the best online banking system I've ever seen, they are a very conservative institution around money, and only lend to people who are not at risk of not being able to pay their mortgages.
They also have made steady profits all through this latest financial crisis.
Nobody put a gun to the banks' heads and made them lend money to deadbeats. Nobody made Wells Fargo steer people who qualified for affordable prime mortgages into unaffordable sub-prime mortgages. Nobody made Chase send out internal memos telling their reps how to lie to their own computers to put people into loans they didn't actually qualify for.
I have no sympathy for wrong-doers, but I believe most of the blame lies with greedy irresponsible financial institutions, not irresponsible deadbeat borrowers.
@bobert: I agree, except that the few banks that actually did things the right way have been marked as \"inadequate\" by the FDIC for failing to make ENOUGH loans to the community. (Community Reinvestment Act)
Dumb stuff like that is annoying; there is blame all around.
@tankertodd: Ultimately they will lose the home if they can't pay for it. It just shouldn't happen until the bank has their ducks in a row. One damned big reason is to be sure genuine errors are not made. And it does happen the people do get kicked out of homes they can afford and do pay for just because some financial institution the original home buyer didn't even know existed got sloppy with their paperwork. With so many of these going on, everyone is overloaded, and mixups are way too easy. Due diligence isn't just something to do when signing the papers to create the mortgage and buy the house. It is something that should happen all along the way with absolutely no exceptions whatsoever. I have a couple words for this: due process
@tankertodd: Oh please. The banks are the ones who control whether or not you get the loan, and you blame the little guy?
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-348208-100x100.png\")
@tankertodd: Don't believe the hype. Even at the height of the so called crisis, almost 94% of mortgages were current.
The crisis was due to bad financial gambling by the big banks and lack of liquidity.
Foreclosures were not the big bad sole bogeyman the financial industry made them out to be.
Understanding and utilizing Common Law allows this to be done in most jurisdictions, as long the motions are submitted properly and the judge will honor them. Jim Percy teaches people the techniques to do this and it seems to work about a 1/4 of the time. There is a technicality that will honor only the mortgage originator to foreclose upon a delinquent homeowner.
*sniff* *sniff* what's that smell. oh, it's tankertodd the troll.
...Confused at their treatment in the courtroom, the banks were forced to leave and take their briefcase full of cash to the judge next door.
HSBC bank appealed a recent ruling, saying he had set a \"dangerous precedent\" by acting as \"both judge and jury,\" throwing out cases even when homeowners had not responded to foreclosure motions.
I read this when it was originally in the NYT, and was happy to see it. Banks are appalling at recordkeeping. More times than I can count, when one of my clients has sold or refinanced their home, the bank we are paying off is not the one who has the mortgage. Generally not a big deal, but occasionally there is a problem when the other side looks at the title and asks what is going on.
I've also had banks call and ask me for the notes or mortgage deeds a year after the closing. Funny, as the notes go directly to the bank, and the deeds go to the town clerk, who is then instructed to send them directly to the bank after recording. I keep records of everything I send, including delivery confirmations. So when I see a bank employee's signature on the receipt for the package containing the note, it's clear they have just lost the document. It happens a lot more than you would think.
ANyone still seeing this as a pure democracy obviously never had to lock horn with the powerful and wealthy: There is a long history of holding them to different standards than those that apply to plain old working folks.
It would be unhealthy to see the pendulum swing too far the other way, but I don't think it is an extraordinary dream to wish for an even playing field.
As it is, even if you are right, and the company is wrong, and you suffered untold damage due to a large corporation's greed and corner-cutting, you can be litigated, postponed and delayed until Old Nick himself wins the gold medal in figure-skating.
This simple thing here, that corporations would be held to the same burden of proof as you and I when attempting to exercise their right, whatever they may be, should be regarded as a cornerstone of justice. That we would be so amazed by it sadly tells as lot about the way this nation has gone to the dogs.
There's another thing about those default judgments: \"sewer service.\"
The New York attorney general is going after process servers who decided that it was too much trouble to actually give the legal papers to the defendants. Much easier to just bill various law firms for lots of work (in some cases, literally impossible amounts--there are only 24 hours in a day), throw away the papers, and screw over the people being sued.
Thousands of legal judgments are being thrown out because the defendants had no chance to defend themselves. The first they knew of the case was when people grabbed money from their bank accounts, or showed up with legal judgments demanding they pay.
Is anyone here convinced that banks that can't bother to submit evidence that they really own the mortgage carefully vetted their process servers to be sure that all the papers were being served in the correct way, on the correct people?
in my post on cash4gold i commented how it is a sad commentary on our judicial system that lawyers have been able to bend the law and the system just goes with it. HAIL to this GREAT Judge! it is grand to see that he stands up for what is both Legal and Just. thank you for reporting on him and thank HIM for being a great fellow in his Court Room!
The process of not expecting large corporations to follow the rules needs to end now.
Mortgages need to be regulated. Heavily. When you are dealing with places with families living there, there is NO room for error.
Sure, there are deadbeats and people who got into mortgages they knew that they couldn't handle.
There are also plenty of people just being outright victimized by predatory lending and sloppy paperwork leading to erroneous foreclosures.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-488475-100x100.png\")
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-37033-100x100.png\")
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-314122-100x100.png\")
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-196563-100x100.png\")
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-131723-100x100.png\")
Go go super judge! Congrats to him for holding these big companies responsible.
@Atticka: I feel sorry for this judge. After this gets out, he's going to have to deal with happy constituents and being re-elected again and again.
@Atticka: he probably sleeps with that blindfolded lady next to his bed.