Consumer lawyer Abigal Field had a field day today with the responses of the nation's six largest residential mortgage servicers to a New Jersey state court judge's order that the banks either convince the court that they knew their hind quarters from their elbows about following New Jersey foreclosure procedures or he'd shut their foreclosures down and appoint a special master to review their past foreclosure practices. The "show cause" hearing is scheduled for the 19th of this month, and the big banks have been filing their written responses. As expected, the banks have not taken the judge's threats well. As Abigail observes, all but Chase have contended that the judge simply doesn't have the power to do what he's doing (and threatening to do), "that the court doesn't have the power to impose a foreclosure moratorium or appoint a special master because that would break court rules, violate New Jersey's Constitution and the U.S. Constitution -- including the banks' due process rights -- and overstep the judiciary's role. They also claimed it was generally wrong because the banks were regulated federally..."
Personally, I think the banks may be right on some of their claims. On the other hand, I share Abigail's sense of bemusement.
However strong these challenges to a potential moratorium and special master may be, the irony of banks arguing that halting foreclosures would break court rules and violate their due process rights is richer than New York cheesecake. After all, the banks' actions in the foreclosure process have systematically involved documents that break court rules and violate homeowners' due process rights, which is what led New Jersey to act in the first place. Irony aside, the banks are essentially saying: If you suspend our foreclosures or appoint a special master to investigate us, we'll sue to stop you.
But, of course. The big boys employ legions of litigators and are making profits that would make Croesus green with envy, so they can afford to tie the state of New Jersey up in legal Gordian Knots that would thwart even the late, great Alexander. You think they're gonna' let some punk judge from New "Joisey" screw with them? Fuggedaboutit!
Abigail has some additional fun pointing out the less-than-stellar performance of the "Big Six" in recent foreclosure controversies. She has some special bon mots for Wells Fargo.
Wells Fargo was positively defiant: "Wells Fargo respectfully states that there is no basis for the Court to presume that the data in any, let alone all, the affidavits submitted by Wells Fargo are, or were, factually inaccurate." That's a very bold attitude for Wells to take, given that it has not only used robo-signers but also has failed to prove its standing to foreclose in ongoing court cases.
In one Connecticut case, the judge noted that questions kept "popping out" of Wells Fargo's documents and has demanded more evidence showing Wells really has the right to foreclose. In a Texas case, a Wells Fargo employee swore in a court filing that Wells owned the loan -- until the homeowner's attorney pointed out that Freddie Mac claimed ownership, at which point the Wells person swore that Freddie owned the loan, and Wells just serviced it. Ultimately, the judge concluded Wells could not prove the homeowner owed it anything.
When Wells makes its "respectful" statement to New Jersey, is it counting its affidavits and testimony in these cases as factually accurate? If not, is there some reason Wells thinks its New Jersey documents are so pristine that the court has "no basis" to question them?
Even I felt the sting of that one.
Abigail also cites previous academic studies that show that slipshod foreclosure practices by large servicers are not some recent problem, one that's arisen only since the economic collapse of the last couple of years. Those studies indicate that servicers have been having default and foreclosure servicing "issues" for years prior to the current crisis.
Although she doesn't say it, I'm sure Abigail knows what every lawyer knows: when it comes to trial work, "truth" is relative. It's all about the spin. Feigned outrage and "chutzpah" are par for the course.