Eugene Robinson: Lawyers got it right on the foreclosure mess

[tridim]

By Eugene Robinson
Friday, October 22, 2010

Don't blame the lawyers. The crisis over faulty or fraudulent paperwork in mortgage foreclosures -- which is either a big deal or a humongous deal, depending on which experts you believe -- is the fault of arrogant, greedy lenders who played fast and loose with the basic property rights of homeowners.

Banks and other lenders, it seems, made statements in courts of law that turned out not to be true. Because judges have such an underdeveloped sense of humor when it comes to prevarication, this mess may be with us for a while.

The mortgage industry would love to blame the whole thing on predatory, opportunistic lawyers who are seizing on mere technicalities to forestall untold numbers of foreclosures that should legitimately proceed. The bankers are right when they complain that the delays are gumming up the housing market, as potential buyers for soon-to-be-foreclosed properties are forced to bide their time until all the questions about documentation and proper title are answered.

But it's the bankers' fault that there are so many instances of foreclosure documentation with legal loopholes big enough to drive a moving van through. During the years of the real estate boom, lenders cut corners with paperwork to make as many loans -- and sell them to other lenders, which often sliced and diced them into securities that were then sold to investors -- as quickly as possible. This haste and inattention to detail, now coming to light, are partly responsible for the current crisis.

More: http://www.washingtonpost.com/wp-dyn/content/article/2010/10/21/AR2010102104846.html

Naysayers, do you not believe Eugene?

[Warpy]

1. You had to know something was up a year or so ago

when the first few stories about people who owned their houses outright being forced to fight foreclosure came out. You had to know somebody along the line was being very, very sloppy with paperwork and that probably a lot of people along the line were not doing their jobs.

It seems there is an entire workforce in the financial sector that is not doing its job all the way along the line.

[tridim]

3. Oh , they're were doing their job.

At least they were doing exactly what their bosses told them to do, commit systemic fraud against borrowers, and in the process make loads of dirty money.

None of this stuff coming out now is a mistake, it was (and still is) business as usual.

[EFerrari]

6. I think this was the plan. They cashed in on predatory lending

and now they're cashing in on predatory loan servicing.

[ljm2002]

2. Mr. Robinson went too easy on the banks...

...he did not even mention the many forged signatures and fake notarizations, which are absolutely and unequivocally FRAUD. He dwelled mostly on the fact that the paperwork was not properly reviewed, which is true, but not as blatant as actively faking signatures and improperly notarizing documents without authorization to do so.

In my opinion, any discovery of a forged signature or a fake notarization should bust the contract right there. Then, once title is properly documented and the owner of the note established, said owner would have to renegotiate the contract in light of today's prices and interest rates.

That would be a fair approach to the crisis IMO.

[tridim]

4. That would be fair.

Unfortunately many people facing foreclosure are broke and/or live in states that foreclose out of court.

In that case, the borrower has no opportunity to present evidence or defend themselves in any way. I have contacted my AG regarding this specific fact.

Justice, American style. That is, no justice.

[ljm2002]

7. Well no approach is perfect...

...and it is impossible to make it fair to everyone. In my view, "fair" would include appropriate punishment for those who committed the fraud, for example, and restitution to those harmed by their actions.

It could be done, we just need the will to do it. Instead of propping up a corrupt system that now has zero credibility: they just change the rules at will these days.

[Junkdrawer]

5. There are also systemic problems with the chain of title....

Details here:

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x9363964