Posted on Wednesday, January 19, 2011
From a PR standpoint, the Mass ruling is further encouraging parties on both side to ‘dig’ in. It's being leveraged by everyone else to essentially further their own agendas. This is a situation where, in truth, very few folks are driven purely by the desire for an accurate and just foreclosure system. Lest we forget, even the judges are real people with real lives of their own. Few will deny the desire to get rid of some of the foreclosure cases loads - essentially extra work they have to do now for the same pay.
From a practical standpoint, there are particulars to the Mass cases and Mass law that will – eventually – distinguish it from becoming four-corners precedence for many other cases and states.
Obviously coming on the heels of the robo-signer debacle which itself has not yet ‘cooled,’ gives the Mass case much more perceived value. The fact is that nearly a ¼ million foreclosures have been delayed, dismissed, etc as a result of the robo-signer issue. Florida now ranks 3rd in the nation for foreclosures. Together with 5 other states, it accounts for half the cases. Yet foreclosure numbers in many areas went down at the end of 2010. Clearly this was a reflection of the robo signer delays, not the actual state of things. So we can assume these numbers will spike back up as the cases reappear. My own sources at the handful of law firms to which the Stern robo signer cases have been transferred tell me they are opening thousands of new files – none of which are yet appearing in foreclosure numbers.
The Mass case will likely have a similar impact – delaying and sometimes derailing cases and essentially dragging the uncertainty out longer. But at the end of the day, no one is contesting that the under lying loans are not in default, or that the money is not owed to someone. And at this point the number of cases are big enough that it is highly unlikely that banks will simply walk away from this money.
The purpose behind documenting the note holder is to insure that the proper lender gets paid and that the borrower is not subject to being collected upon twice. So it could be said that these laws being used against lenders are actually intended to protect lenders (this is not to say that sloppy work and even falsifying documents by banks and their lawyers is acceptable – it is not) I've been advocating a system by which lenders wishing to foreclose can publish notice for all mortgage lenders and investors who may have an interest in the lawsuit proceeds can be reached (not unlike the manner in which someone who cannot be properly served by a process server can be reached by publishing notice). And the creation of a court depository where funds can be held in cases where the current lender cannot document being the holder in due course in order to not delay the foreclosure case (which only increases damages to everyone – the longer the case is pending, the longer the borrower owes default interest, attorney fees, and the more the property deteriorates – the less it will eventually sell for, meaning bigger looses for all)