Do You Seek Justice?
Posted by kevin on June 29, 2013 under Foreclosure Blog | 
Comments are off for this article
In the 1970’s, there was a comedian named David Frye who was famous for his Richard Nixon impersonation. One of his famous skits was Nixon meets the Godfather. Nixon is attending the wedding of Don Corleone’s daughter. He is meeting in private with the Godfather to ask for a favor. The Godfather thanks Nixon for the lovely present that he brought- a blender. He asks Nixon if he could do anything for him. Nixon says that he has to get out of the Watergate mess. The Godfather says, “Do you seek justice.” Nixon replies, “Not necessarily, I just need to get out of this Watergate mess.”
For the last 4 years, I have been involved in the foreclosure crisis representing homeowners. I know that the courts have been overwhelmed by these cases. Yes, it is true that borrowers agreed to pay their mortgage and have not done so. They are in default. But for the lender (and sometimes the court) to hit borrowers and their counsel with the mantra, “you took the money, you didn’t pay it back, you are liable” does not tell the whole story- does not do justice.
Why? Because it overlooks what the lending industry did. In order to make billions of dollars in profits, the lending industry threw out underwriting standards, and sold toxic loans to millions of people who not only did not understand the transaction but could not afford the mortgage. People with under 500 FICO scores and $30,000 annual income were given mortgages for $400-500,000. A disaster waiting to happen. When the bottom fell out, Wall St and the big banks (referred to hereinafter as “bansksters”) went running to the federal government for a bailout . The banksters got their bail out on the backs of the US taxpayers, but the homeowners did not. Finally, over the last few years, the banksters and their servicers have been jerking around homeowners and the courts on loan modifications.
Not only did the banksters get a bail out, they wanted all the properties back. But they had major problems on their end. Predatory loans. Bad paperwork. Failure to provide discovery. Robosigning. False or improper certifications. Failure to mitigate damages in good faith. Usually, if you cannot prove your case, you make a deal with the other side. But, the banksters wanted their cake and eat it too. How do you do that? Ignore your problems and just repeat the mantra to the courts that the borrower took the money and didn’t pay it back. The banksters want the courts to overlook all of the lenders bad acts, all of their proof problems. The banksters say they want justice; but all they really want is to get out of the mess that they created.
The position of the courts should be that if you want justice, you have to do justice. Lenders are licensed either by the federal government or the State of New Jersey, and have certain obligations to borrowers and the society in general. They have to play by the rules- rules about who qualifies for a mortgage, rules about transferring interests in the notes and mortgages, rules about disclosure of future interest rates, and rules about modifying delinquent or underwater mortgages. Those rules were accepted by the lenders as a pre-requisite to doing business in New Jersey.
So, I have this novel idea. Why don’t the courts hold the banksters to the legal standards the banksters accepted when they were licensed to do business in NJ. But many judges act like they do not have that power. Wrong. Under the Guillaume decision handed down by the NJ Supreme Court a little over a year ago, it was recognized that foreclosure courts, as courts of equity, have the power to mold a decision in accord with justice and the facts of the case.
On a practical level, we believe that the trial courts should be pro-active on two levels. First, if the banksters come into court with deficient proofs, improper notices, questionable documents and certifications that strain credulity, courts should call them on it. Second, the trial courts should get actively involved in settlement negotiations. Right now, the courts have abdicated that role ( based on the fact that they are overworked) to mediation or the HAMP modification process. Both of these process are failures because the banksters run them.
I have practiced law for over 30 years. I have seen effective judges wield power to effect meaningful settlement. What is needed here is a group of tough minded judges who will jump into the settlement fray the old fashion way- evaluate each side’s case, expose weaknesses, twist arms. It works in every other area of the law- why not in foreclosure. The banksters will not like this because they will not be in control anymore. But, by putting the onus on the judge, there is an opportunity to do justice while at the same time, moving cases and saving homes that can be saved.
