naked capitalism

Transor Z says:

One thing that legal commenters on this subject have not done very well for the benefit of the general public is explain a basic tenet of property law: there is no such thing as absolute ownership of property in American law.

“A man’s home is his castle” is qualified by the man’s obligations to the bank, the IRS, the water & sewer company, the contractor who added a bedroom, and the lurking possibility that the State might decide it wants to build an expressway or sports stadium on his land. Most people understand that much. But what they don’t necessarily get, and that lawyers have drilled into their heads from moment one of law school, is that everything about property is relative. When someone has title to a house or a boat or a diamond ring, the legal question is always “superior title against whom?” Everything is relative.

Recording statutes establish priority among mortgage holders and protect one buyer against a subsequent buyer or even someone who claims to have bought the property earlier but never bothered to record. Everything about property ownership is relative. “I have superior title to the house as against A, but if B comes calling I might be screwed.”

So right now, the home owner in the case in the OP has superior title against this bank and any claims that might run through the bank. But the order to post the bond was to also protect the borrower against claims from third parties who might have superior title to the bank — not a trivial possibility given the chaotic state of the bank’s paperwork.

But if and when the bank goes belly up and it no longer exists to indemnify the home owner, what then? In all likelihood, we’re talking about a judicial resolution of this dispute that will apply to a finite window of time.

Last point: I guarantee that Attorney Huffman was absolutely shitting bricks when the judge had him sworn in to testify for HSBC and his professional life flashed in front of his eyes.

GeneH3 says:

“…in a growing number of cases judges are awarding homeowners their homes free and clear after finding fraud upon the court …”

I have been waiting for this.  Almost all judges recognize fraud on the court as a most serious offense against the rule of law and gross disrespect of the courts — they take it personally.  That sanctions were not imposed beginning with the first foreclosure case, or at least after robosigning became known as an industry practice, is mystifying.  It can only be explained by judicial complicity, not requiring that a plaintiff establish it’s standing or proving it’s case, and overlooking fraud in the interest of efficiency.

Last year I wrote to the Inspector General of the Florida Courts voicing my displeasure with what was happening in Florida:

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Ladies and Gentlemen:
 
I expect that you might already be aware of Matt Taibbi’s article in the November 25 issue of Rolling Stone magazine, which hit the newsstands today.  The article, which is linked here (http://www.rollingstone.com/politics/news/17390/232611?RS_show_page=0), asserts that Florida judges are flagrantly ignoring the rule of law for the sake of efficiency.  Inasmuch as your office appears to be responsible for both efficiency and adherence to the rule of law, this now very public matter should be commanding your immediate attention and full application of your resources.  Rolling Stone is no longer viewed as a bunch of potheads.  It has proved itself to be (more than occasionally) a good source of investigative journalism and it has no small amount of public credibility.  You should not dismiss this article out of hand.
 
I am a retired corporate lawyer and an inactive member of the Florida Bar.  My family has been practicing law in the United States for at least 100 years.  So my pride in the integrity of the profession is intensely personal – to the extent that when my friends complain about the McDonald’s coffee case or the O.J. verdict, I patiently explain how our legal system works and, on balance, delivers a just result.   But for the past two years, my firm belief in the American system of justice has been shaken.  The people who have shaken it the most are in Washington.  And the people that appear most ready to defend it are state attorneys general.  I trust that you are also among those who consider it your personal mission to validate public confidence in our courts.
 
Lately, it appears that the foreclosure mess has overwhelmed many state judicial systems.  And because Florida seems to be the state where most foreclosures are taking place, Florida’s judicial system has been extraordinarily stressed. 
 
I have followed in the Bar News how the Florida system has dealt with this huge challenge, and I must say that I have been impressed that the court system has responded appropriately by providing judges to accelerate foreclosure proceedings and that the Bar has worked hard to provide pro bono legal services to homeowners.  It is no doubt extraordinarily taxing and our lawyers and the court system have done well even though it appears that many homeowners remain unrepresented.  But if the Florida judges assigned to these matters are ignoring the rule of law and are not requiring plaintiffs to prove their cases, they are undermining the trust that the entire U.S. population places in them and the rule of law.  And as the Rolling Stone article illustrates, Florida judges themselves are being judged.
 
Of course, the basic issue is whether the plaintiff in a foreclosure action has the right, or standing, to bring the foreclosure action.  For goodness sake, how in the world does a judge allow a stranger to take someone’s home – even if the homeowner is a deadbeat?  Whose burden of proof is it?  The plaintiff, at a minimum, should have the papers to establish its standing, its right to be in court in the first place.  And judges are empowered to dismiss a suit sua sponte for lack of jurisdiction if the plaintiff has no standing.  Thus, it seems, judges at a minimum, even in a default judgment, need to consider whether the plaintiff has a right to take someone’s home.  As burdensome as it may seem to the system, even in the absence of challenge, judges need to consider and rule on what the plaintiff has proffered to prove its entitlement to take someone’s home, especially in Florida where home ownership can arise to a constitutional issue.
 
The Florida judicial system is not operating under the radar.  The world is watching how the Florida courts are responding to this complex and difficult situation.  And it is a very skeptical world. 
 
The financial cognoscenti – people who evaluate, understand and discuss the daily developments in the financial world – are very, very cynical, and unhappy, about what they perceive as financial risk-taking at the expense of the public and the complicity of the “system” in concealing outright fraud.  Please consider, for example (and the examples are vast), http://www.oftwominds.com/blognov10/fraud-is-lifeblood11-10.html and the opinions linked therein.   There are a vast number of reports, articles and opinions that illustrate how upset the members of the investing public are at Florida’s seeming abandonment of the rule of law.
 
This is not a matter of winners and losers (we all know that foreclosure is the appropriate remedy against people who don’t pay their mortgages).  It is about the neutrality of the courts and their vigilant adherence to the common assumption that a judge will require proof.
 
Attitudinal changes throughout the United States will ensue from the public performance of the Florida courts and how we respond to this terribly troublesome matter.  The IG’s role must – must – be to publicly validate the integrity and efficiency of our judicial system and to recommend any remedial action necessary to assure that justice is done.  As the first step, it is most important that plaintiffs be required without exception to establish their standing on the record.
 
If you have not already done so (and I expect that you have), please take appropriate action to commence an investigation to verify (or re-establish) that the Florida courts will require proof (if challenged) that a foreclosure plaintiff is entitled to foreclose.

Thank you for your service and your commitment to the common principles that we hold dear.  
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There is no good solution overall to the fix the many dimensions of the foreclosure mess. It will take years to unravel the tangled web woven by the bankers and their agents. “Efforts to achieve a global settlement that would validate the flawed system, pardon the frauds, and compensate the States, investors, CDS counterparties and banks for their losses, will be very difficult if not impossible to achieve.” See http://thematrixnot.blogspot.com/2010/12/perspective-on-mortgage-mess.html. But heavy-handed judges who uphold the rule of law and impose significant sanctions can have an immediate effect to end the use of criminal behavior to take people’s homes.

Anonymous Comment says:

+1