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Judicial Sentiment Against Foreclosing-Banks Reaching All-Time High

As mortgage defaults increase, and there is greater foreclosure activity in the courts, judges are becoming increasingly hostile towards lenders who make mistakes and mistreat homeowners [1]Written by Craig D. Robins, Esq.
 
Judges Have Had It with Foreclosing Mortgage Companies Who Skirt the Rules
 
When I discussed Judge Spinner’s recent case in the Suffolk County Supreme Court in which he canceled the IndyMac mortgage of a Long Island family, I indicated my opinion that the tides had changed in the way judges look at banks.  See Judge Cancels Mortgage Due to Mortgagee’s Shocking Behavior in Long Island Foreclosure Action [2].
 
Wall Street Journal [3]article on December 24, 2009, provided great support for this proposition.  The article mentioned the Judge Spinner decision and concluded that such cases demonstrate a new phase in the judiciary’s battle to stem the rising tide of foreclosures by punishing mortgage companies for paperwork mistakes and alleged mistreatment of borrowers.
 
The article highlighted a handful of cases in which state and federal judges presiding over foreclosures are going to the extraordinary lengths of wiping away borrowers’ mortgage debt, invalidating foreclosure sales and even barring some foreclosures outright.
 
The Current Economic Climate Is Adding to Judges’ Desires to Help the Homeowner, Thus Creating a New Breed of Activist Judges
 
Todd Zywicki, a law professor at George Mason University, who was interviewed for the article, questioned whether judges are changing the rules in the middle of the game . . .  just because there is a financial crisis.
 
Apparently, about a year and a half ago, judges in foreclosure cases would routinely dismiss foreclosure cases if they could find reason to do so. But those judges usually permitted the banks and mortgage companies to refile their foreclosure proceedings after correcting any paperwork mistakes that they previously made.
  
However, the times have changed. Now, after the country has been mired in a housing crisis for several years, more and more judges are penalizing lenders on their paperwork glitches, and in some cases going much further in their efforts to help homeowners.
 
It seems that the national housing problem has actually propelled some jurists to become activist judges who seek to protect the underdog homeowner from the evils of indifferent, careless and sloppy mortgage companies.
 
In my own Long Island foreclosure defense practice, this has become evident as we have been able to successfully persuade the court to dismiss foreclosure suits because we called attention to the lender’s defective paperwork. For example, in a recent case, the lender failed to demonstrate that they had legal standing. This is because the lender neglected to properly perfect some mortgage assignment documents with the County Clerk.
 
Mortgage Companies Have Not Been Filing Proper Documents and Are Now Paying the Price
 
The Wall Street Journal article commented that many of the recent foreclosure case decisions that punished the lender highlighted what became a common practice among mortgage companies: filing a foreclosure lawsuit without showing proof that they actually own the mortgage and have the right to foreclose. This occurs in large part because mortgages often change hands multiple times after the original mortgage loan is made; yet the mortgage transfer documents are never revised to reflect those changes. Consequently, years later, it can be difficult to verify who is the owner of the mortgage.
 
The article quoted Raymond Brescia, an assistant professor at Albany Law School, who said that it makes sense for judges to demand that mortgage companies follow the rules to the letter if they want to win foreclosure cases in court.
 
Massachusetts Judge Invalidates Foreclosure Sale Held Two Years Ago
 
There was another controversial ruling in October by Keith Long, a state-court judge in Massachusetts. Judge Long invalidated two foreclosure sales that had occurred more than two years ago because the mortgagees, U.S. Bancorp and Wells Fargo & Co., never had the right to sell the homes.
 
Judge Long ruled that even though the mortgage companies physically held the relevant mortgage documents, the mortgages were never legally assigned to them and recorded with the state. As such, they were selling something they don’t own, despite the fact that the mortgagees may have been operating in the same way they have done so for the past decade or two.
 
Most mortgage foreclosures continue to be routinely processed by the courts because the homeowners neglect to take steps to protect their rights. The proceedings go unchallenged. However, any Long Island homeowner who has fallen behind with their mortgage payments, and who has been served with foreclosure papers, should consider consulting with a Long Island foreclosure defense attorney to learn how to protect their rights.
 
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