Sparks of justice still live in America – cherish them and perhaps they’ll spread

These are nothing but tiny sparks.  But if encourage them, perhaps they will grow into something larger.  The first shows justice at work, for there are consequences to bank scofflaws.  The second shows a more typical situation.

  1. A ‘Little Judge’ Who Rejects Foreclosures, Brooklyn Style“, New York Times, 30 August 2009
  2. Judges’ Frustration Grows With Mortgage Servicers“, New York Times, 4 September 2009

Excerpts

(1)   “A ‘Little Judge’ Who Rejects Foreclosures, Brooklyn Style“, New York Times, 30 August 2009 — Excerpt:

Every week, the nation’s mightiest banks come to his court seeking to take the homes of New Yorkers who cannot pay their mortgages. And nearly as often, the judge says, they file foreclosure papers speckled with errors.

He plucks out one motion and leafs through: a Deutsche Bank representative signed an affidavit claiming to be the vice president of two different banks. His office was in Kansas City, Mo., but the signature was notarized in Texas. And the bank did not even own the mortgage when it began to foreclose on the homeowner. The judge’s lips pucker as if he had inhaled a pickle; he rejected this one.

“I’m a little guy in Brooklyn who doesn’t belong to their country clubs, what can I tell you?” he says, adding a shrug for punctuation. “I won’t accept their comedy of errors.”

The judge, Arthur M. Schack, 64, fashions himself a judicial Don Quixote, tilting at the phalanxes of bankers, foreclosure facilitators and lawyers who file motions by the bale. While national debate focuses on bank bailouts and federal aid for homeowners that has been slow in coming, the hard reckonings of the foreclosure crisis are being made in courts like his, and Justice Schack’s sympathies are clear.

He has tossed out 46 of the 102 foreclosure motions that have come before him in the last two years. And his often scathing decisions, peppered with allusions to the Croesus-like wealth of bank presidents, have attracted the respectful attention of judges and lawyers from Florida to Ohio to California. At recent judicial conferences in Chicago and Arizona, several panelists praised his rulings as a possible national model.

His opinions, too, have been greeted by a cry of affront from a bank official or two, who say this judge stands in the way of what is rightfully theirs. 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.

… Justice Schack’s take is straightforward, and sends a tremor through some bank suites: If a bank cannot prove ownership, it cannot foreclose.

(2)  “Judges’ Frustration Grows With Mortgage Servicers“, New York Times, 4 September 2009 — The last paragraph shows why banks can flout the law:  there are no consequences.  Excerpt:

Bobbi Giguere had no luck in securing a loan modification from her mortgage servicer, Wells Fargo. For months, she had sent the bank the financial documents it requested to process her modification. But each time she called to check on the request, she was told to send her paperwork again. I submitted the paperwork three times, and nothing happened,” said Mrs. Giguere, 41, who has a high school education and worked as restaurant manager before losing her job.

On Thursday, something happened. She questioned a Wells Fargo official about the bank’s lack of response — under oath.

The spectacle of a high-ranking banking executive being grilled by an ordinary homeowner was the result of an unusual decision by Judge Randolph J. Haines of the United States Bankruptcy Court to summon a senior executive from Wells Fargo to appear in Mrs. Giguere’s bankruptcy case.

At the hearing, Judge Haines made it clear that he was acting out of concerns about Wells Fargo’s mortgage modification practices generally. “This is certainly not an isolated case,” he said. “The kind of story I hear from this debtor is one that I and other bankruptcy judges around the country are hearing over and over and over again.”

… Under preliminary questioning by one of the bank’s lawyers, Mr. Ohayon stated that Mrs. Giguere had repeatedly failed to provide a financial worksheet, a critical document in processing a loan modification.

Under cross-examination by Mrs. Giguere (who had a little assistance from Judge Haines), the bank’s defense withered. From her files, Mrs. Giguere produced a letter from Wells Fargo describing the paperwork that she needed to file for a loan modification. In the witness chair, Mr. Ohayon read the letter. “Mrs. Giguere is right,” Mr. Ohayon concluded. “The letter did not ask for a financial worksheet.”

The hearing with Wells Fargo did not result in any sanctions against the bank for its failure to provide timely information to Mrs. Giguere about her mortgage modification application. But the bank did pledge to improve its communications with customers and to explore avenues for increasing the ease with which homeowners can seek loan modifications.

Other posts about the housing crisis on the FM website

  1. Diagnosing the eagle, chapter I — the housing bust, 6 December 2007
  2. A vital but widely misunderstood aspect of our financial crisis, 18 September 2008 — Too many homes.
  3. Destroying houses in order to boost home prices, 16 December 2008
  4. The housing crisis allows America to look in the mirror. What do we see?, 9 March 2009
  5. Another step to solving the housing crisis: downsize cities by destroying neighborhoods, 2 April 2009

Afterword

Please share your comments by posting below.  Per the FM site’s Comment Policy, please make them brief (250 words max), civil, and relevant to this post.  Or email me at fabmaximus at hotmail dot com (note the spam-protected spelling).

For information about this site see the About page, at the top of the right-side menu bar.

For more information from the FM site

To read other articles about these things, see the FM reference page on the right side menu bar.  Of esp interest are:

About the American spirit, the American soul:

  1. America’s Most Dangerous Enemy, 1 March 2006
  2. Diagnosing the eagle, chapter IV – Alienation, 13 January 2008
  3. Americans, now a subservient people (listen to the Founders sigh in disappointment), 20 July 2008
  4. de Tocqueville warns us not to become weak and servile, 21 July 2008
  5. A philosphical basis for the Batman saga, 23 July 2008
  6. The American spirit speaks: “Baa, Baa, Baa”, 5 August 2008
  7. We’re Americans, hear us yell: “baa, baa, baa”, 6 August 2008
  8. The intelligentsia takes easy steps to abandoning America, 19 August 2008
  9. Symptoms of a fever afflicting America’s culture, 5 November 2008
  10. All we have to fear is our optimism, 12 November 2008
  11. The corruption of a nation is usually hidden, but sometimes becomes visible, 21 November 2008
  12. The war for America’s soul, 23 December 2008 — Our changing attitudes to “It’s a Wonderful Life”
  13. This crisis will prove that Americans are not sheep (unless we are), 8 January 2008
  14. About security theater, a daily demonstration that Americans are sheep, 25 January 2009
  15. We close our eyes to torture by our government. The Brits are stronger., 9 April 2009
  16. Sources of inspiration for America’s renewal, 23 April 2009
  17. Are we citizens? Or peasants?, 21 May 2009
  18. A famous guest speaker visits the FM site to tell us that we are not weak — we are strong, 8 June 2008
  19. A great artist died today. We can gain inspiration from his words., 26 June 2009
  20. A wonderful and important speech about liberty, 23 July 2009
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2 thoughts on “Sparks of justice still live in America – cherish them and perhaps they’ll spread

  1. “Justice Schack’s take is straightforward, and sends a tremor through some bank suites: If a bank cannot prove ownership, it cannot foreclose.”

    Please tell me that this is just hyperbole or shoddy journalism. Please. Because if the standard for being a beacon of justice in the US is ‘not letting someone take your house unless they can prove they own it’… well Canada and Mexico need to figure out how they’re going to seal the borders when the whole thing goes tits up in the Lower 48.

    This may actually be one of the benefits of securitized mortgages traded on the open market. If your mortgage is part of a security bundle that’s been traded, re-mixed, sold, re-re-mixed, sold to the US treasury under TARP, and is now owned by a combination of the AFL-CIO Pension fund, Credit Suisse and the Duchy of Grand Fenwig International Soverign Wealth Fund, unwinding that so that someone has clear title to foreclose could be problematic.
    .
    .
    Fabius Maximus replies: This makes no sense to me. Can I take your home, since you appear to believe I need not “prove that I own it.” Also, I doubt that the lack of a document trail is so widespread that the US will go “tits up.”

    Like

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