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Saturday, October 17, 2009

A Bow To Land Court Judge Keith Long

In general, I approach matters such as foreclosures from a banking point of view, albeit a community banking point of view (which, as long-time readers may have gathered, tends to differ from the reckless-too-big-to-fail-bank point of view). And in truth, I do not see that the praiseworthy judge's decision in this case is injurious to the interests of decent banks. But regardless, he is doing the right thing, and it is such a rare action in today's world that he deserves great honor for it.

Also I would like to point out that it is only the action of individual judges in individual states that have imposed any checks and balances on this whole mess; if we left it to the federal government, a few wacky Congress Critters would believe whatever Citibank and BofA lobbyists told them. Therefore if anyone suggests that somehow the federal government should "take over" or "overrule" the state requirements for foreclosures, you should fight it with fury.

Here is a link to the text of the decision, which was released yesterday. I will be updating this post with an explanation and summary, because the weird rumors are already flying over this.

Update1: This is laugh-out-loud funny. Even if you have never read such a document before, I believe you would be able to absorb the humor. My eyes are streaming from laughing so much.

"Lawsuits are a serious matter and are not a place for 'do-overs.'"

Now that's comedy. I wonder what the plaintiffs did to piss him off so badly, other than the obvious incompetance.

Maybe it's just me, but the concept of a "payable to bearer" mortgage note is just scary. Was this any kind of normal, or did these folks just cut all the corners?
They cut all the corners, but I think what blew the judge's mind was their outrage that he wasn't Mr. Fixit for them.

I went back and found the original ruling, and also the REBA guidelines for Mass, and it appears that the common legal understanding was that an assignment executed after a foreclosure was okay. To which the judge said he paid due deference, but no court had ever held it.

The bottom line is that the original three cases came to him in a suit to clear title because the title insurers weren't going to take the risk. He allowed one, in which they had an executed assignment before the foreclosure. However the two cases in which the assignment wasn't executed he disallowed.

The original ruling was calm - it appears that plaintiffs' counsel spent the intervening months in a froth of righteous outrage which resulted in this very funny decision.
Oh, and no. This shouldn't be common. Normally you'd pull the file, execute everything and check the paperwork.

It would appear that these guys responded with a claim that they are too big to fail, and the judge gave them the legal finger.
Haven't read the decision yet. And I don't object to state regulation. But I do oppose duplicative and potentially inconsistent oversight of multi-state financial companies by multiple regulators (with some exceptions like usery and non-financial laws). Agreeing on whether the Feds are worse than the states isn't necessary to settling this question.
Ahh, I love footnotes.

Yeah, I think the banks are so used to rules being for little people they don't know how else to act. What's good for TBTF is good for America.
Also, any other Big Lebowski fans out there?

Judge to plaintiffs: "This ain't Vietnam. There are rules!"
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