Is it time to sue the system?
A Federal lawsuit against the State for systemic violations of due process is long over due.
The current system in most states includes some version of the rocket docket. Even without that the bias is clearly there, but with the “expediting” of claims due process is clearly the loser as the banks get richer on the misery of homeowners who legally have every right to win their cases.
The current thinking amongst court administrators and the judges who preside is the presumption that the truth lies in the assertions of the party initiating foreclosures in both nonjudicial and judicial states and dilatory tactics amount to lies of the borrower. The opposite is true and if challenged, it could easily be proven that the rocket docket has resulted in millions of wrongful foreclosures by parties who were simply greedy intermediaries using foreclosures to get more and give less to the investors who thought they were buying mortgage bonds.
Weidner correctly summarizes the problem in his morning blog. I suggest that each of the leaders in foreclosure defense file joint or separate actions challenging the current systemic denial of due process. The excuse of expediency is just plain wrong. If it wasn’t for a presumption that the forecloser was and is generally right and the borrower is generally wrong, the push for expediency would have first challenged whether the foreclosers had their case in order.
Based upon the thousands of studies, investigations, cases, settlements, claims and defenses that are or at least were robustly reported in the public domain, the judicial systems and legislatures have been on notice for years that the fraud was at the top of the chain within a culture of corruption on Wall Street.
If the courts wanted to keep their dockets clear, all they needed to do was what they always did — make the foreclosing party prove the loan was made by the originator, prove the processing of payments and disbursements, and make assertions that the loans had a creditor to whom the money was owed, identify the creditor, and show how the creditor — that particular creditor — was protected by the note and mortgage.
And let’s not forget the fact that the investors, who are the real lenders are getting paid in settlements with broker dealers (investment banks), paid by loss sharing agreements, insurance, servicer advances (that are probably funded by broker dealers) other hedges and guarantees. Why are the states ignoring the fact that dozens of agencies and courts have determined that fraud lay at the heart of the the whole securitization process, that the securitization process was a ruse that never happened but merely threw up a smoke screen for the fraud committed on investors, the creation of unenforceable loan documents (according to the filings of investor complaints, the DOJ, Fannie, Freddie, insurers and other co-obligors never disclosed by the closing agent or the originator (an obvious violation of TILA, a federal law passed long ago to protect consumers from exactly this type of criminal behavior).
The circumstances are such that the statute of limitations runs out on the TILA claims because the borrower doesn’t usually find out that he was screwed until long after the loan “closing” and even then doesn’t quite understand it. If the courts really wanted to clear their dockets all they would need to do is follow the TILA statute as a guide and allow those actions where the discovery of the fraud did did not occur until long afterwards. Judge Hollowell in Arizona in a CLE seminar stated her concern for what was currently being done to tittle chains — that would result in a storm of problems in 10 or 20 years when people realize they can’t sell their homes or refinance because the problems with their title result from systemic problems caused by the intermediaries posing as real parties and the granting of foreclosures in cases where it is obvious that the chain of title is corrupted.
If criminal defendants were treated this way there would be no question that due process of it violated. Other courts have long stated that forfeiture and in particular foreclosure is an extreme remedy that should be closely scrutinized. I frankly don’t see what defense they would be by a state that was continuing to promote expediency over due process — especially where their basic premise is so wrong. It may have been true at one time that if a foreclosure was filed it would result in the entry of a foreclosure judgment or sale. Back in the day, that made sense because it really wasn’t any defense other than payment by the borrower. So foreclosures became mostly a clerical activity even for the judges, but the good ones still scrutinize the paperwork and ask some questions to make sure that the property wasn’t being improperly taken. Today the premise needs to be reversed. We know there was fraud on Wall Street, we know there was corruption, and we know it is continuing. Why should we not start off with the presumption that the foreclosures are simply wrong and illegal?
Filed under: foreclosure