Mike the Mad Biologist

While conservatives still blather on about ‘judicial activism’ whenever a federal judge decides that they’ve gone too far in cramming their theopolitical crap down our throats, the ongoing housing crisis*, aka Big Shitpile, could result in some honest-to-Intelligent Designer judicial activism. How?

I’ve discussed previously how the poor, or even non-existent, paper trail for many foreclosed mortgages that were bundled together and then traded multiple times has led to judges preventing foreclosure proceedings to continue. There are legitimate legal grounds for doing so:

The issues in this case are not merely problems with paperwork or a matter of dotting i’s and crossing t’s. Instead, they lie at the heart of the protections given to homeowners and borrowers by the Massachusetts legislature. To accept the plaintiffs’ arguments is to allow them to take someone’s home without any demonstrable right to do so… The law recognizes the troubling nature of these assumptions, the harm caused if those assumptions prove erroneous, and commands otherwise.


Judges typically take legal processes very seriously: no matter how imperfect the system might be, most of them believe very strongly that, overall, it works. So this is a good way to piss off judges.

But we also have to remember that judges are human beings, and some of them, especially if they deal with a lot of foreclosure cases, appear to be disgusted by the foreclosing parties (italics mine):

Second, at least in some jurisdictions, judges may be of the view that banks are foreclosing (and clogging up their courts) rather than work with borrowers (for most other legal matters, judges like to see that the parties have made a good faith effort to resolve their dispute before going to court). There is evidence to support that; foreclosure rates are lower on bank-owned mortgages (where there are incentives to reduce losses and take half a loaf by doing a mod) than on securitized mortgages (where the servicer is paid to foreclose and is not paid to mod, except when bribed to do so by special Treasury programs). Normally, you’d expect judges to favor banks over deadbeats, so the fact that that increasing numbers are deciding against them says they are troubled by the legal issues (abuse of process) and/or the lack of good faith dealing (efforts to remedy the situation by taking a meaningful haircut, as opposed to a mere catch up plan, which includes paying back late fees, usually charged in violation of Federal law so as to produce more compounding of fees).

I think we’ll start to see more and more judges coming down on this like a ton of bricks. Some judges have to be bothered by crap loans: one in New York certainly is.

Keep in mind, the inability to clean this mess up is a huge drag on the economy; families in foreclosure typically don’t live high on the hog, bankster propaganda notwithstanding.

Of course, maybe if we had used to HAMP funds to partially subsidize forced cramdowns, some of this mess wouldn’t be happening. We also could have passed emergency legislation telling banks that foreclose on homeowners who have a history of making payments on time will have to rent (or make a good-faith offer) the home to the former household for a lengthy period of time (five to ten years).

Instead we get the bankster bust out, and all of the ensuing chaos and disruption. And this one can’t be laid at the feet of Co-Presidents Snowe and Nelson.

*That this problem was not dealt with quickly and decisively is shameful in its own right.