The tale of the foreclosure is complicated and vexing. So many plots and subplots exist that it’s hard to figure out “who dunnit.” But, there’s plenty of blame to go around. Let’s just say that Wall Street Bankers and mortgage brokers like Countrywide, figured out a way to bundle home mortgages, called them securities, and sold them to trust funds and other investor funds.
The housing boom was on and investors were eager to get in on the action. The banks and the brokers were doing a land office business (sorry) selling and profiting from these securities. So much so that they were handing out mortgages to just about anyone who could by a pack of smokes or a six-pack. We now refer to that sort of ruse as predatory lending.
To speed the processing of mortgages through the system, so-called robo-signers were employed to rubber stamp mortgage documents, often without knowing what kind of documents they were signing. From the bankers and the brokers until the mortgages were bundled, losing track of ownership or illegally transferring property rights in so many thousands of mortgages was bound to happen, and it did. Now lawyers from so-called foreclosure mills are attempting to foreclose on home loans, and in many instances they have no idea who really owns the property.
Judges abdicating responsibilities of jurisprudence
Our judges and our courts are faced with an unprecedented amount of foreclosures. According to various statistics, and the numbers can vary dramatically, there are about 2 million foreclosures being processed now and about 2 million are waiting in the wings. That’s a lot of foreclosures --and a lot of judges, a lot of courtroom time.
Weary judges are starting to abdicate their jurisprudence responsibilities and have drawn a rather severe, and often unfair, line in the sand. If a home buyer has missed mortgage payments, the foreclosure is allowed to proceed, simple as that. No thought given to whom the rightful owner of the property happens to be, to the fact that the home buyer was looking for ways to pay what was due, or to the fact that a financially unsophisticated person has been put in the position of finding their mortgage payments twice what they were the year before.
American property rights and ownership laws are part of the civil code that has made our nation great. Yet banks, brokers, and other lenders have sullied those laws at many and varied times during the process of bundling mortgages as securities for sale to investors. Many investors are beginning to realize that the property mortgages they have bought may not even be legally theirs.
The investor fund attorneys are suing the lenders, the attorneys general of several states are suing the lenders, and finger pointing and blame laying have run amok. The situation is so screwy that in some situations prosecutors can’t prosecute, and defenders can’t defend; the facts are that ragged.
Funny situations and strange solutions
One news journal presented a case that is by no means atypical. A gentleman was behind in his mortgage payments and a foreclosure ensued. But, the man’s mortgage had been bought and sold and repackaged so many times, scooted along by robo-signers, that eventually nobody really owned the place on paper. Either the documents were fraudulent, or just did not exist anymore. The gentleman had wanted to sell the house to get out from under the mortgage, but even that was no longer possible.
Intellectually lazy, socially unresponsive, or just plain weary judges have taken the no-payment-no-house rule a step further. They figure that just about anybody who comes in as a defendant in a foreclosure case is just a deadbeat looking for a free house – taking advantage of the mortgage debacle to get free property. Looking a little further, judges would probably discover that most of the people in foreclosure cases are responsible and productive members of their communities who are just looking for relief due to joblessness, a poorly executed mortgage, or some other financial catastrophe.
To add to the bizarre circumstance of the foreclosure scene, it is not unusual for a homebuyer to be negotiating a refinance with one hand of the lending institution, yet being pursued for foreclosure by the other hand of the same institution. Even instances of two lending institutions suing for foreclosure on the same property have cropped up, as well as two lenders willing to refinance on the same property.
Judges not being creative
Today the foreclosure process is just a big financial and social mess. And judges aren’t being creative enough or thoughtful enough to handle the situation. The foremost thought in any foreclosure case should be to keep the home buyer on the property. When a judge decides purely on the basis of no-payment-no-home, he or she is releasing another piece of property onto the market. This increases the inventory of homes for sale and therefore lowers market rates. The property stands boarded up with the lawn not mowed for months, a blight on the neighborhood, bringing down property values in the area and promoting local crime. And one more family is homeless. Judges need to step up and show some social responsibility in these home ownership cases.
It seems the ultimate penalty comes down to the little people who, financially unsophisticated, were suckered into sub-prime home loans; to the little people who lost jobs because of financial institutions run amok and Wall Street greed that led to this Great Recession; to the little people who have mortgages worth more than their homes.
Too often foreclosure judges just don’t seem to give a damn. To them it’s only obvious that these little people have missed their mortgage payments and that they just want a free house. Judges don’t need to legislate from the bench, but they should take a good look at the complicated facts behind each case and use the power of the bench to inject some social justice into the messy foreclosure procedures that are crippling the court system and putting strains on our financial and social systems.
Meanwhile, all the big people (JP Morgan Chase, Wells Fargo, GMAC, et al.) are whistling by the courthouse, rolling their thumbs, one over the other, eyes looking the other way. Their pockets are stuffed with bailout funds and obscene profits from selling faulty bundled mortgages.
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Lazaro Law Group, Professional Corporation represents immigrants all over the United States and the US Embassy in Manila. The firm’s offices are located in San Francisco, Fremont/Newark/Union City, and Sacramento, California. Attorney Johnson Lazaro can be reached at (415) 800-5775 or toll free at (855) 4-LAZARO. His email is This e-mail address is being protected from spambots. You need JavaScript enabled to view it .
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This article should not be taken as legal advice for any individual case or situation. The information is intended to be general and should not be relied upon for any specific situation. This is not meant to create a lawyer-client relationship.
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