Consumer Law

Brooklyn Judge Rejects Foreclosures

By M. Stan Herring

The Consumerist.com has posted an article that discusses how a Brooklyn judge has tossed out roughly half of the foreclosure suits brought to him over the last two years because the lending companies and banks had such disorganized paper trails...to the extent of not being able to prove ownership.

The Consumerist references the original New York Times article that goes into more detail of Judge Schack's reasoning.

Justice Schack, like a handful of state and federal judges, has taken a magnifying glass to the mortgage industry. In the gilded haste of the past decade, bankers handed out millions of mortgages ? with terms good, bad and exotically ugly ? then repackaged those loans for sale to investors from Connecticut to Singapore. Sloppiness reigned. So many papers have been lost, signatures misplaced and documents dated inaccurately that it is often not clear which bank owns the mortgage.

Justice Schack?s take is straightforward, and sends a tremor through some bank suites: If a bank cannot prove ownership, it cannot foreclose.

?If you are going to take away someone?s house, everything should be legal and correct,? he said. ?I?m a strange guy ? I don?t want to put a family on the street unless it?s legitimate.?

Schack's rulings have prompted others in the legal profession to take a hard look at why judges don't hold banks to higher standards. He isn't "coming up with novel readings of the law," but only forcing lenders to obey the rules and making protecting the consumer and their rights a priority.

He also rules against inaccurate and unfair mortgages filing for foreclosure.

I?m a guy from the streets of Brooklyn who happens to become a judge,? he said. ?I see a bank giving a $500,000 mortgage on a building worth $300,000 and the interest rate is 20 percent and I ask questions, what can I tell you??

If you have questions regarding foreclosure and your rights, feel free to contact us. We are going to conduct a free foreclosure seminar in early October at our Birmingham office - if you would like to attend let us know so we can reserve a spot for you. We'll have more details coming soon. The first place we will announce it is in our Consumer Power email newsletter that goes out every Thursday. Drop us a line if you would like to start receiving this newsletter free of charge.

Full post as published by Alabama Consumer Blog on September 09, 2009 (boomark / email).