The Massachusetts Supreme Judicial Court has unanimously upheld a lower court ruling saying, in effect, that if banks don’t have their paperwork in order at the time of foreclosure, then a foreclosure sale does not convey clear title to the property. The effect of the Court’s decision remains to be seen, but it could be substantial – according to the Globe, thousands of foreclosures may have been thrown into question, with doubts arising as to who actually owns the property.
I think the case is very well summed up by the opening of Justice Cordy’s concurring opinion:
I concur fully in the opinion of the court, and write separately only to underscore that what is surprising about these cases is not the statement of principles articulated by the court regarding title law and the law of foreclosure in Massachusetts, but rather the utter carelessness with which the plaintiff banks documented the titles to their assets…. Although there was no apparent actual unfairness here to the mortgagors, that is not the point. Foreclosure is a powerful act with significant consequences, and Massachusetts law has always required that it proceed strictly in accord with the statutes that govern it.
Hear hear. I would simply add that there’s one more thing that is surprising about this case, which is that banks have been allowed to get away with this kind of behavior for as long as they have. Cheers to the SJC for putting a stop to it in our fair state.
We continue to suffer from the fallout of the lending crisis.
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p>There are thousands of people in our state who have lost their homes and many more still in danger of losing them.
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p>This decision affirms our belief that the onus should be on the banks and other holders of notes to follow proper procedures before initiating foreclosure on any Massachusetts homeowner.
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p>In their careless and hasty stampede to securitize loans, the banks moved at their own peril. Whether by robo-signing or failing to properly transfer title, these financial institutions created this real estate chaos.
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p>They should bear the brunt and the cost of the remedy.
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p>NOTE TO BMGers: The words are Martha’s, but staff are posting at her request.
The word I did not see in your response is: FRAUD. Criminality. It seems like a fair bit of this is going on – doesn’t it require some prosecutions? If only as a deterrent to causing all this chaos?
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p>And secondly, what resources are you going to bring to bear to clear up this chaos as soon as possible? It is causing real harm to the economy. The sooner it’s cleaned up, the better the economy will be.
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p>But you have to go after the miscreant bankers criminality, if only to make sure they don’t continue the behavior.
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p>Good luck! (Meant sincerely, not sarcastically)
Thank you for being one of the few with power who believes that the bankers need to play by the same set of rules as the rest of us do.
Let’s hope this happens in more states across the country.
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p>My question, though: What happens to people who have already been foreclosed if the banks never had proper documentation? If they can’t provide those docs, restitution of some kind is in order — esp given the dubious nature many of these foreclosures have taken place (ie banks foreclosing on people who were completely current with their mortgage, etc.).
how many banks have foreclosed on homeowners who were “completely current with their mortgage”? Is that really a common problem?
There have been quite a few news reports of exactly that happening. Very surprising, but true.
HuffPo:
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I’m asking if it is true about people who are not late having their house foreclosed?
In a Sign of Foreclosure Flaws, Suits Claim Break-Ins by Banks
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p>Bank of America forecloses on house that couple had paid cash for
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p>Repossession hell: 6 extremely ‘wrongful’ foreclosures
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p>There are dozens more stories like those. Try doing some investigations before you insert your fact-free opinion-based questions into a discussion sometime. (I know this request is waste of bandwidth.)
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p>It might also help if you educated yourself on how foreclosures are supposed to work, and on what the banks are doing to people who try to get their mortgages restructured, as they are supposed to be able to.
Banks are stealing property, and getting the courts to allow it. A better question is why are you not angry?
It looks like in each of these cases they will get it right and probably get some damages as well. That sound like the way it should work when any company makes mistakes. I also think these cases all would be fixed regardless of this new ruling.
including family photo albums and other irreplaceable items, you’d be happy with some cash? I doubt it, and I do not believe court settlements assign any monetary value to such things.
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p>Why am I angry? I’m not – I’m just very tired of your endless comments devoid of any thought for victims of the corporate oligarchy. Your immediate reaction seems to always be either “they deserved it,” or “surely it can’t be that bad,” or both – when you never check whether they did or it is.
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p>Also, 3,000,000 foreclosures a year is a mistake. It should not be happening, and that nothing is being done by elected officeholders to stop it is a national disgrace.
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p>Those were the numbers for 2009 in the US. Why didn’t your party do something about it since you ran the shop?
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p>Of course I’d be mad. Mistakes happen everyday in every aspect of life. Doctors operate on the wrong knee, trash guys miss my house, cops pull me over for speeding when I’m not, SS sends out checks to dead people, RMV loses people’s paperwork… shit happens! If you want a system which works perfectly, then get ready for mortgages to cost borrowers a lot more and loans to take 6 months to be approved.
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p>And you are angry, it’s impossible to hide.
The party running the country isn’t “my party,” as you would know if you paid any attention. I have been complaining about Obama and the Dems rewarding the looters for a long, long time.
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p>’Mistakes’ happen when people don’t take the consequences seriously, and they happen a lot more when there are no consequences to the people making the mistakes. What consequences do you advocate for those ‘mistake’ makers?
I think any bank making an honest mistake should make it right with the home owners. If they mistakenly throw someone from their house then they should be let back i their house and pay some nominal amount for pain and suffering. How would we handle it if a car crashed into a house and caused it to burn down thus causing the homeowners to lose their possessions?
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p>For banks who intentionally make these “mistakes”, back in the house but pay treble damages for pain and suffering. In other words, handle it like we would any other civil matter.
“For banks who intentionally make these “mistakes”, back in the house but pay treble damages for pain and suffering. In other words, handle it like we would any other civil matter.”
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p>I’d hope that you’d understand that ‘intentionally’ making these mistakes makes it fraud… a felony. Criminal not civil.
Although in hindsight, doing it “intentionally” may not be the right phrase. There are mistakes and then there are mistakes which “could have been avoided”. Ya, that’s what I meant.
…but as I recall you didn’t accept that excuse when some of us were arguing for public health care.
I want foreclosures to slow down or stop, but I want it to happen due to people paying their bills or a new program being created to help home owners.
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p>I don’t want nor do I think it is right for a home owner who is seriously delinquent with their mortgage to be living in homes for free due to “clerical issues”. Sure, if there is a mistake concerning a mortgage then that should be addressed, but the blanket protection of homeowners who are not following their obligations is wrong and will not help the housing market either.
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p>Of course the upside to this decision is banks will at least have to do a proper job of presenting the trail of the initial mortgage through all the mortgage transfers, but it should not change the outcome at all.
because we have laws for a reason.
Yes, I think it’s good news that a court has maintained that a bank just can’t come along and assert ownership of your house.
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p>BUT, if it’s true that there are many properties without clear title – that’s a nightmare! People acting in good faith may be thinking they own their house, but there are other people who’ve been foreclosed upon that may have some claim to the same property.
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p>This may cause a fair bit of chaos. Yes, it’s good that the bankers who caused the chaos may be punished (or at least inconvenienced), but we (as a society) have to muster resources to clear this up as soon as possible!
As far as I’m concerned in times like these with a lot of people hurting who didn’t think they’d be hurting when they signed the mortgage, and banks rolling in dough, much of it courtesy of taxpayers, foreclosures should be brought to a screeching halt just ’cause. Another aspect of this that hadn’t occured to me until some pointed it out the other day is that there are rental tenants being forced out of their abodes despite being timely with rent because their landlord is being foreclosed on. I realize just saying never mind may not be technically fair to the banks in the legal sense, but it is manifestly just in a broader sense. Shelter is a basic human need and therefore a basic human right. At the end of the day allowing a foreclosure could put someone out on the street, but not allowing one will not render a bank executive homeless.
or that he doesn’t have or need a job.
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p>This is why I think that the phrase “human right” has been drained of nearly all meaning.
What does my situation matter? BECAUSE I’ve been chronically underemployed I personally would be very reluctant to sign a mortgage for the long term and I’m happy to rent anyway. Shelter is basic to health. I’ve heard since as long as I can remember that the very top of the hierarchy of human need are food, water, clothing, and shelter. I certainly didn’t pull that out of my sleeve.
I should tell my son to get on a plane and head to San Diego. When he gets there, demand of them “Where’s my house?”. After they find him some “shelter” , he can demand (since it is a right), some food. Then he can tell them he needs full medical exams for himself and his family (for free of course) and then demand top notch education for all his children. Of course, I haven’t mentioned anything about him paying for any of this, so I guess we’ll leave that up to the people who are working for a living and paying taxes to cover all these “basic human rights”.
Come on. Give it up already. Seriously.
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p>However, in the interest of giving a totally silly comment an actual serious response, housing IS a basic human right and we recognize this. For people who are under the poverty level, housing assistance. For the homeless, at least the attempt to rehouse them somehow. Or give them a bed at least when it’s cold.
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p>Yeesh.
to people being under the poverty level, then we NEED a progressive tax that falls heavier on the wealthy, well funded education (read: quality and free, and higher ed within actual reach of all), AND we need a fair minimum wage that actually delivers a living wage, along with curbing CEO pay so they don’t make 500x the average worker and suck up a vast majority of the economy.
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p>But conservatives, they hate all those things, then want to turn people out of their homes who are poor.
If the Dem House, Senate and POTUS couldn’t do it, then it will never happen. The Obama tax cuts did nothing about progressive taxes on the rich. I don’t suppose the new WH Chief of Staff will be recommending any of the sort.
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p>We have a free society where you can make as much a you can. I like it and so do many Americans.
…housing is subsidized if needbe, food is relatively cheap and there are food stamps, and yes, there should be single-payer healthcare and universal excellence in education at public expense – so there! Remember, I was talking about people who WERE responsible, but could never have forseen our dire straits. Once again as long as things are great for you too bad about everyone else – social Darwinism at it’s finest:(
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p>This is the fly in the ointment. I mentioned this on another comment that “we all” want to help people who are “responsible” but unfortunately, we have people who will abuse the system and break it for everyone else. This aspect of our society is what is ruining it.
Unfortunately, none of the bankers who have been abusing the system and ruining our society are being held accountable.
And can you tell me why President Obama (through Eric Holder…) is not holding them accountable? Is he complicit?
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p>Is it possible, just possible… that many, maybe even the majority of bankers have been legally and ethically selling mortgages to people but the economy has removed these people’s ability to pay for their homes and the bankers are simply following the rules? The money which was lent to mortgagees has to be repaid to someone (us). Right?
…as have others, but like I say now is not the time for strict adherence to rules when the result could be homelessness. As for Obama, many would argue that his administration IS a bit too cozy with Wall Street.
when anyone critiquing any social program is accused of ” as long as things are great for you too bad about everyone else” or “you got yours so the hell with everyone else…”. Stop it.
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p>The Republican landslide that just rocked the Congress in November was accomplished by getting the support of plenty of poor people. Many many conservatives have not “gotten theirs” yet. We believe in things because we believe in them, not simply because it benefits us. That’s why we won. There are so many millions of Americans who believe in working for things and not getting “handouts”, even if they could use a handout!
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p>So if somebody is critical of food stamps, subsidized housing or any other social program, don’t jump to the conclusion that they are “rich” and their only motivation is irascibility towards those in need.
You wrote:
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p>That support was certainly aided by the avalanche of lies and misinformation promoted by right-wing media such as Fox.
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p>Yes, it certainly is getting old.
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p>Let’s not forget that you are apparently arguing that it’s ok for corporations to steal homes they don’t own and have no legal right to. Please spare me your uninformed whining about how the victims of this fraud must somehow be responsible.
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p>The principle that a person’s home is their castle is among the oldest foundations of the western legal system. Your attack on that principle appears to reveal much about how “conservative” you really are.
I won’t blame others, just you here… when you lose you always claim lies. Why? If the voters weren’t lied to… then the voters were stupid. Why can’t you ever consider that YOU might be wrong? You are so full of hatred and anger that it blurrs your views on much.
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p>Bull! I never said a bank should have any right to a home which they have no legal right to. If people do not pay their mortgages in a timely manner then I believe the bank has the right to foreclose on the house, just as they have done for many many decades. If a bank makes a mistake and forecloses on something they shouldn’t have, then the homeowners have our legal system for remedy.
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p>You’re simply against the banks, admit it. If there were 100,000 foreclosures in MA and every single one of them was completely legal and every procedure was followed “by the book”, you would still call them evil and insist they were stealing people’s homes.
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p>Luckily Obama is finally getting it that he “needs” the banks and he “needs” Wall St if he wants this economy to recover. He’ll demonize them to the masses but his hiring of Daley as WH COS indicates he’s kissing butts. Hopefully he’ll continue replacing his “wet behind the ears” “never had a real job in their lives” experts who have been advising him.
This case was about banks who foreclosed on properties that they did not have a right to act on. You seem to be objecting because these victims have properly exercised their legal remedy in this system.
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p>I don’t think it will be constructive to respond to the rest of your rant.
“on time” “up-to-date” home owners who are being victims of greedy banks when the reality seems to be these are people who stopped paying their payments, didn’t respond to notifications and should have their houses foreclosed but there is a “paperwork” problem. Somewhere in the shuffling of the mortgage from company “A” to “B” to “C”… forms weren’t signed properly. The issue is a paperwork malfeasance but it is being presented as some abhorrent incident of banks screwing the little guy.
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p>Why is it that when people write about how they feel which others disagree with, it’s a “rant”?
I encourage you to read the opinion of the SJC.
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p>This was no “paperwork malfeasance.”
I want to know why JohnD feels so sure all these people simply decided one day to not make good on their payments. My experience is that most people WANT to be responsible, WANT to hold up their end of the bargain, etc. and feel embarrassed or inadequate when they find they can’t do it.
“simply decided one day to not make good on their payments.” The only relevant fact is that they “didn’t make their payments”. The actions of the banks have nothing to do with the home owner’s motive. If you and I have cars with car loans and you lose your job and can’t make the payments, the bank will ask you to make the payments and if you still don’t pay then they’ll repossess your car. We all take chances and sometimes we lose. You buy stock in a company and it goes down or goes out of business… you took a chance and lost.
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p>I would imagine that the vast majority of homeowners would have liked to make payments but they couldn’t (lost job, mortgage payment amount spiked…). That’s the gamble the bank took when they gave the home owner a mortgage. That’s the way it works. That’s life! They may not have shown it in the movie but I’ll bet the “Baily Building and Loan” had to foreclose on home owners to stay in business from time to time.
If an individual or company hauled away your car when they did not own the financing, they would be charged with theft.
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p>If a company was shown to make enormous profits by creating an entire business of hauling away cars they did not own the financing of, they would be properly charged with criminal behavior.
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p>If you want to live in a society that allows such abuse by corporations, that is your choice. The SJC ruled differently.
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p>Banks are not making “enormous profits” off houses which “they do not own”. Nor did the case you cite show that. They are screwing us in other ways and making money in other ways but I’m sure foreclosing it not something they want to do, unless they have to.
Now you argue that the robosigning that led to this fiasco wasn’t profitable? The creative instruments based on all these bogus mortgages weren’t used to pump up the bubble that eventually popped?
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p>Open your eyes, John.
The last time I went to “challenge” a speeding ticket, I found out the police officer doesn’t have to be there. Instead, they have a State Trooper who stands in for the Trooper who wrote the ticket. They are just trying to save money and it’s not a bad idea. Probably not perfect and there will be the occasional error.
..so why is the bank not made to suck it up? A home should not be something you can possibly lose because you took a chance. Repossessing a car is horribly inconvenient, but not denying a fundamental right, nor is losing in the stock market. We need to consider that these are extraordinary times which require a fundamental shift in our thinking.
…but lawmaking takes time. For now we need an executive or judicial fiat suspending the enforcement of these laws during these times, IMO.
If anything those people are also less likely to vote, and if they are less likely to vote in general they are even moreso in midterms. The only way the poor might have indirectly contributed to a GOP victory was by staying home. Of course, some people just penalize the party in power in bad times whether that’s logical or not. The implication that the GOP has the active support of the poor is laughable, not to mention disprovable by polls.
you know the banks would be making out. You see this in all the ways people get screwed in the fine print. If the banks can’t get their ‘fine print’ sorted out, screw them.
…both figuratively and literally. Require that all terms be at least x point size, and that fine print cannot override absolute terms in the ad campaign.
Individuals shouldn’t be allowed to just seize the property of others, why should banks?
I’m very pleased with this ruling-our system of property rights is one of the pillars of the rule of law, and is at the core of the market economy. I’m concerned, though, about people who have bought homes out of foreclosure. I would think they would no longer have good title, and might well find themselves unable to sell their homes to others in the future.
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p>I hope there’s some kind of legislative or other action that can help current and future homeowners who have bought what might be improperly foreclosed homes. I’d hate to create a new real estate crisis in the process of fixing up the old one.
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p>Does anyone know if this future problem is real, and if so, what might be done to resolve it?
It seems that the Court thinks there’s no simple answer to it.
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p>The concurring opinion (which David usefully quoted to summarize the case) has this to say:
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p>We’ll all be staying tuned.
It isn’t just property rights.
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p>One of the oldest principles of common law (inherited by the colonies from England), specifically regarding real estate, is “specific performance”. This recognizes that each item of real estate is unique, and cannot be adequately compensated with mere money.
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p>This problem is very real, and I’m not sure it’s a “future” problem.
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p>I want to emphasis that this decision is most certainly not creating a new real estate crisis. In fact, this is one of the worst aspects of the original crisis and was created by allowing finance companies to commit widespread fraud. This crisis has been lurking all along — sadly, few officials have been willing to talk about it.
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p>Each purchaser of one of these properties is, arguably, an innocent party. The fraud was committed by whatever institution sold them the property. A purchaser of one of these, in my view, has every right to demand that they be allowed to keep the home. I do wonder what role title insurers play in all this. The last time I bought a house (in 1986), I had purchase title insurance to protect the mortgagor from exposure if the title turned out to be invalid. It sounds like this is precisely the kind of loss that title insurance is designed to protect against.
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p>It seems clear enough to me that the original homeowner, whose property was fraudulently and illegally confiscated, has a similarly strong argument for having the property returned. Since a property can only have one owner, somebody is entitled to receive significant compensation — over and above the value of the property — from the institution(s) that committed the fraud.
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p>Since several of those institutions are now swimming in cash, perhaps this provides a mechanism to recapture some of that cash and return it to victims of this fraud. Perhaps this might also help sell off some of the excess housing inventory that is depressing home prices.
Purchasers can and should also buy title insurance for themselves. In that event, if the title was found not to be free and clear the insurance would pay out to the policy holder.
The primary result of this ruling will be quite a few years of lawyer’s bills. Based on anecdotal evidence, this will call into question a very significant fraction of residential foreclosures over the last ten years. At tens of thousands of foreclosures a year, and $2-600K on average per property, that gets into a multi-billion dollar hole in a hurry.
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p>Every one of those sales will have title insurance coverage; the litigation will hit the title insurance companies like a hurricane hits casualty underwriters, because title insurance was long considered to be a low-risk venture.
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p>In the short term, I suspect that the result will be that some of those title insurers may go bust, which means that the guy who bought the foreclosed property would be doubly screwed; that it will be harder to get new title insurance written in Massachusetts, especially on foreclosed property, and that it will therefore be harder to get a mortgage in Massachusetts. This, I think, will put significant downward pressure on home values, the recovery and stabilization of which are essential to economic recovery and the reduction of unemployment.
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p>I can’t really quibble with the SJC on the law; they’re right. But this decision nevertheless will be the source of significant economic uncertainty, isolated in Massachusetts, which is the very last thing we need. One hopes that the problem can be remedied by legislation, ASAP.
I’ve heard of similar cases and similar decisions in other states as well. Don’t recall the details.
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p>I’m also not sure about the chain of conclusions you draw. For future mortgages, you can be dang sure that both the banks and the insurers will have a revised chain of procedures to ensure this problem doesn’t propagate to new mortgages. If the insurers/banks try to overcharge to make up for past losses, it seems that a insurer or bank not encumbered by past MA losses will be able to come in, offer the same product more cheaply, and keep the prices as low as they are now.
I agree that this will not be limited to MA and that the nightmare caused by sloppiness, laziness, greed, etc. on the part of the banks will spread to other states making this a much larger problem.
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p>I do not agree totally when you state
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p>I agree that there will be new entrants to the market. However, I do not think that they will charge the same prices as today. If the current banks need to raise their rates from X to 2X to make up for past losses then all a new entrant needs to do to capture the majority of the business is charge less than 2X (say 1.75X for example sake). If their costs were relatively similar to the previous participants when they were charging X then the new entrants will make larger profits. This would continue until there were enough new entrants to cause the competition to between themselves which would drive down prices presumably to the old level of X. The question would be, then, how long this would take. And to that there is no good answer.
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p>But in the end it is those who played and play be the rules who pay the price for the banks and borrowers who did not.
Banks have whole departments of educated, experienced people. Yet we are led to believe that they did not know the risks inherent in their financial strategies. We are told they did not know of the fraud they were perpetrating on the courts. We’re to understand that they would be able to ignore the states laws with a federal law to dupe state courts. That, too, failed when it passed the House and Senate and got to the Whitehouse and someone realized what it was.
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p>History has many stories of proud, bloated, businesses, governments and military empires collapsing in their own ineptitude. Are the executives so insulated from the world, so surrounded by fawning Ivy League educated yes people as to have no respect for law?
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p>Or are they just too big to succeed?
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p>Three cheers for the courts, the only defense the people have!
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You wrote (emphasis mine):
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p>The source of this problem is the fraud committed by these lenders, not the decision naming it what it is. Surely you don’t mean that “the rule of law” only applies when little guys break the law.
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p>These companies committed massive fraud. Just how would legislation “remedy” this problem?
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p>The remedy is to clawback the billions of dollars of fraudulently obtained cash that the perpetrators are sitting on and return it to the thousands (or millions!) of poor schmucks who are the victims of their crimes.
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p>We are never going to put this culture back on track if corporate criminals are excused, coddled, and protected each and every time they are literally caught in the act.
Not the Corporations themselves.
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p>The continuing notion that by fining the company you put an end to wrong doing is foolhardy at best. It continues a trend where the corporate executives get wealthier while the corporation (shareholders) pay fines for what the executives did to the shareholders (see B of A and Merrill acquisition) or to others. Yet, the executives get off largely untouched and remarkably wealthy.
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p>It has been said before and hopefully will be said again, start sending CEOs to jail and you will see changes in behavior. Not until their arse is on the line will they actually focus on the impacts to others.
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p>The way we are doing it now with having them pay with other people’s money won’t work because ITS OTHER PEOPLE”S MONEY!
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p>To paraphrase from Rambo – ‘You know they’re out there, You know where they are, Now go out there and bring them back.’
I certainly agree that the executives who perpetrated this fraud should be held personally accountable for their crimes.
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p>Nevertheless, the Supreme Court just ruled in Citizens United that corporations are persons when it comes to their right to spend money. Accountability for corporate crimes surely comes along with the right of “free speech”.
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p>Yes, it is other people’s money. It’s other people’s money when they pay the fines they are due and it’s other people’s money when they spend enormous amounts of money to buy elections. They have the rights of “persons” — they surely must also have the responsibilities.
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p>The two remedies are not mutually exclusive. We should hold executives criminally responsible and we should hold these corporations criminally responsible. Perhaps if the financial industry is on the hook for filling the “multi-billion dollar hole” they dug, they will have less money to spend on their “speech”.
Will have to rethink the impact of Citizens United on corporate misdeeds. It does raise a very difficult issue with me which is – How do you penalize a company, other than financially, in such a way as to induce it not to “misbehave” again without putting them out of business? Deferred prosecution agreements have been used in certain cases, but is there any other remedy. I do have vivid memories of Arthur Anderson and the criminal charges that they faced coming out of Enron and the death sentence that befell the company which had ramifications on 1,000’s of people who were not involved in the alleged illegal activities yet lost their jobs just the same. Maybe there is no way around it, but need some way to have “punishment” between slap on the wrist and death penalty.
I’ve been in the corporate world since 1974, in one form or another, including stints at major players (IBM, for one) and tiny startups (where the founder paid salaries with hand-drawn checks from his personal checkbook).
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p>I think those “1,000’s of people who were not involved in the alleged illegal activities” do bear some responsibility, just as every citizen and voter of a nation bears some responsibility when that nation commits crimes against humanity.
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p>Too many employees see illegal and unethical behavior around them, shrug, and say “it’s not my problem.” Corporate cultures are built from the ground up, and too many corporations have cultures that excuse literally any behavior as “just business.”
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p>It seems to me that a real threat of job loss resulting from corporate criminality provides at least some incentive for employees to pay a bit more attention to illegal activities going on around them. Are we to believe that no employees knew about the robosigners? I don’t think so.
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p>I think we must find a way to somehow turn around a corporate culture that shields or all to often rewards illegal behavior.
This is very well said
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p>To which I would add, a political culture as well.
Filing false documents with the court. Contracting with paper creation mills to support the fraud. If we commoners blatantly pushed fraudulent documents to a court we’d be on the inside looking out.
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p>Here in Massachusetts we have a Board of Bar Overseers. Should they not be looking into judicial and non-judicial fraud in the foreclosure boom as an ethics problem?
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p>“Lawyer, n. One skilled in circumvention of the law.”
–Ambrose Bierce
At least not by any definition I know.
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p>Executing an assignment “in blank” to be recorded post-foreclosure was a long standing and widely accepted practice. It is generally a very bad thing when the “magic words” aspect of law runs squarely contrary to established commercial practice, which is why the UCC was created.
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p>What our courts have done is to allow a commercial practice to become established and widespread, for years, and then belatedly pulling the rug out from underneath. That is a pretty lousy habit if one really expects the remaining solvent title insurance companies to service the Massachusetts market: what other accepted practices are likely to be undone, post hoc?
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p>I will state again that I hope the legislature finds a way to undo this decision, post haste. Maybe they will take the opportunity to completely redo the archaic real estate records system presently extant.
This sounds a lot like the “I stole it fair and square” defense.
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p>Look, the reality is that U. S. Bank and Wells Fargo did not hold the mortgages that they foreclosed on. Did you actually read the ruling that you object to?
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p>How can you read this and argue that these practices are not fraudulent? They are surely farcical.
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p>And just how do you propose to “undo” this decision? Since there is no way to turn back the clock and have these documents actually be signed before the foreclosure, what would you have the court or legislature do?
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p>Whether you call it “fraud”, “farce”, or just plain theft, these banks have put billions of dollars in limbo by fabricating documentation trails. The proceeds of those fabricated documentation trails are, of course, safe and sound (for now) in their wallets. I grant you that this is an enormous problem.
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p>It is an enormous problem for these banks and their executives. As far as I’m concerned, so long as any executive, director, or officer of any of these banks continues to hold any real property, that individual should be personally responsible until every penny of this theft is returned to the victims of the theft.
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p>When I see these corporate scumbags standing at traffic lights begging for handouts, then I’ll consider finding a way to absorb whatever losses remain. We are a very long way from that state of affairs.
Mortgage assignment is effective upon recordation, and make the statue retroactive.
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p>If they are feeling modern, they could abolish the deed registries and recognize an electronic system–they might call it the Mortgage Electronic Registration System–to track the interest at a faction of the cost.
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p>”Correct” though this decision might be, there is only one group that will pay the price: anyone who now owns or may one day own real estate in Massachusetts.
All due respect, that is simply not what happened here. The MA laws on foreclosure are pretty clear, as the court’s opinion outlined; if practice has evolved to the contrary, it did so without regard to clear, existing law, and it never should have gotten as far as it did. And Justice Cordy is no bleeding-heart, little-guy-always-wins kind of judge. He seems completely untroubled by asking the banks to adhere to what has been the law in MA for decades, if not centuries. Good enough for me.
Respectfully. Edwin Smith’s life work has been to emphasize the importance of making commercial law conform to commercial practice; this is why.
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p>Nor did I say that this is a liberal, bleeding heart decision– crowing about evil corporate scumbags aside. If anything, this is an “activist” decision, by which I mean a decision with which I disagree on policy, rather than legal, grounds.
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p>I don’t even think it is neccessarily the SJC’s job to fix the problem I identify, which seems to be something that is properly for the legislature.
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p>In any event, I wonder if Harmon and Ablitt have their policies paid up?
I take it that your “activist” comment is meant facetiously. Fair enough. But it does seem clear that this decision is about as far from “activist” as one can get. The court basically said that “the duly-enacted laws of Massachusetts are very clear on this point” – and nobody seems to disagree with that – and then enforced them. That is exactly what courts are supposed to do. If there’s a problem with that, it’s the legislature’s job to fix it. I take it we agree on that as well. The truly “activist” thing to do would have been to say, well, we understand what the laws say, but that doesn’t reflect what’s really going on in the world, so we’re going to rewrite the laws. Good on the SJC for not going there.
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p>I agree, up to a point, that commercial law should reflect commercial practice. But only up to a point. Commercial practice is generally shaped by one side of the transaction – the big guys. It is the job of the legislature to be sure that “commercial practice” does not run roughshod over the legitimate interests of consumers, homeowners, and other little guys who have far less ability to affect how business is carried out in practice. As you know, if you want a loan, you play by the bank’s rules, or you don’t play at all. Strikes me as only fair that the bank, in turn, must play by rules set by the duly elected representatives of the people in whose state the bank chooses to do business. To the extent that “commercial practice” has evolved in a manner inconsistent with those laws, I’m not interested.
Although it does fit my definition.
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p>The recording of a mortgage assignment is not a “consumer protection” measure. You borrow the money, you owe the money. Whether you owe the money to the guy in the charcoal suit or the guy in the navy blue suit is immaterial.
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p>The requirement protects the holder of the mortgage– another “big guy” as you put it. If these guys want to record the mortgage in “street name” as securities are, and then track the beneficial owner by computer, I have a hard time seeing why the statute shouldn’t permit that, explicitly, and retroactively.
I think I’ll call it:
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p>An Act Relative to the Creation of the Bank of Massachusetts
Perhaps it is finally time to update Massachusetts property laws to something that makes sense. Currently, when you buy a house, somebody has to go through the property records back to the first time the property was acquired (possibly as much as 400 years ago) and then trace through every sale to make sure that the property was actually sold by the owner each time. If this check misses anything (such as if somebody in 1730 managed to sell their house twice), then you can pay for a house and not actually own it. This is what title insurance is for. The company goes through and verifies the records, then for a modest fee agrees to pay you back the purchase price if they missed anything.
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p>I find this to be a really screwed up system for managing property ownership. Particularly since somebody has to pay property taxes on the property every year, there is never really any question of who owns a given piece of real estate. We could do away with title insurance entirely if we allowed people to just buy a clear title each time the property is sold (with some reasonable statute of limitations to deal with fraud). This is how most of the world manages real estate transactions.
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p>In this case, if somebody bought the house out of foreclosure, it isn’t fair to let the previous owner just seize it. If they put a lot of time and money into repairing or upgrading the property, refunding the purchase price is also not fair. If someone bought the property out of foreclosure and then sold it, the new owner might not even know the property had ever been in foreclosure. You can’t just go around returning houses to previous owners years after the fact. It seems like a more reasonable settlement would be for the bank to be treated as having stolen the house from the previous owner and forced to compensate them in some way. Unless the house hasn’t actually been sold again, in which case it should just be returned.
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p>Under current law, somebody could come back 50 years from now and claim a house that their parents owned that was improperly foreclosed on because nobody after the foreclosure will actually acquire the title to the house. This decision basically makes foreclosures illegal in this state (nobody who understands the risks would ever buy a house after it has been foreclosed on because it will be too difficult to determine if the foreclosure had any flaws). No bank will grant a mortgage if they can’t foreclose. So this creates some very serious legal problems. If the banks actually realize what just happened, nobody will be able to buy a house in Massachusetts until this is resolved (except for cash buyers).
I concur with David and Justice Cordy about the banks being required to follow the specific legal procedures and statutory demands of foreclosure proceeding in the state.
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p>Nevertheless, other recent scandalous behavior by the nation’s bank in connection with the home mortgage crisis has fallen under the media radar, with the exception of Pro Publica which continues to highlight how the major banks continue to stiff home owners and the Obama administration by failing to participate and collaborate, in good faith, with distressed homeowners in the federal government’s failing loan mortgage workout program.
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p>Nice to learn AG Martha Coakley has become a poster and a reader of Blue Mass Group…Too bad her interest in our views and suggestions occur about a year after the U.S. Senate Special Election debacle. In any case, welcome to Blue Mass Group, Ms. Coakley. We hope you will become a frequent participant in our discourse on the site.
I don’t care about the Senate election. It’s past. Let it go.
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p>I care about Attorney General Coakley doing her present job. And I wish her the best of luck in doing it.
Sarbanes Oxley came out of the Enron accounting and internal control fiasco. It required, among many other things, that corporate executives attest to the sufficiency of their financial controls. If a bank is in the business of issuing, owning and selling loans I would think that knowing which loans you do or do not own is a major control point covered by Sarbanes Oxley and its various requirements.
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p>Violations of SOx carry both civil and criminal penalties for the executives responsible. So why aren’t these blatant failure of financial controls being pursued against the responsible executives?