brokedickdog
Posts: 114
Joined: 8/13/2010
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Tazzy,
My contacts and I do discuss this. We have not come up with an answer, much less "the" answer. There are problems on multiple levels. And I want to say that while the illegal and unlawful foreclosure problem is large in the extreme there is an even bigger problem and that is the failure of our judicial system to function properly. Our courts are our last resort to obtain justice, or protection, and when they fail us the options quickly become limited, and ugly. One of my Florida legal contacts, Matt Weidner, has been writing on this issue in the past several months.
To try and answer a bit more directly consider this:
Properties that have been involved in these fraudulent foreclosure actions are typically sold at auction. The purchaser is usually either the bank that claims to hold the note and mortgage (in which case they aren't purchasing, rather repossessing with no money expended), or a real estate investor. The properties are usually sold to an end consumer within 12 months. The end purchaser has no idea of the fraud involved in the foreclosure, or the fatal title defects that exist as a result. He/she is in essence an "innocent purchaser."
Mr Johnson lost his home to a fraudulent foreclosure.
12 months later Mr. Stevenson innocently purchases the home.
When the fraud is discovered and the improper summary judgment granting a judgment and order of sale to the bank is overturned the knee jerk reaction is to simply give the home back to Johnson in order to make him whole. But this would now dispossess, make homeless and injure Stevenson.
Which of these parties, inclusive of families and pets, should be awarded the home? It was stolen from Johnson, but Stevenson purchased it without knowledge of the theft. Maybe the best thing is to let Stevenson keep it and to make the bank give money to Johnson so he and his can start over. Another problem begins at this point.
In whose name was the foreclosure filed? It could have been the originating lender, the original servicer, the current servicer, the trustee, the trust, etc. I know that foreclosures are still being filed in the name of entities that are no longer in existence. IndyMac, New Century, FairBanks, Option One Mortgage.... The list of no longer existent entities still having foreclosures filed in their names is pretty long. So Stevenson keeps the house and Johnson is awarded damages and punitive damages from Option One, but Option One no longer exists so Johnson is still screwed. Trying to collect money from a dead corporation is like shooting spit wads at a battleship.
The above scenario is played out on many levels in this game. Corporations have either failed, been sold (maybe multiple times) and have generally made themselves so bankruptcy remote that there is no party, or no place, from which to extract the funds to make Johnson whole.
This doesn't change much if we let Johnson keep the house and have Stevenson look to collect from any of these BK remote or no longer existent Corps.
The first thing that would need to happen though is for the victim to become aware that he or she has been victimized. Most people rendered homeless through a foreclosure have more important things to worry about than trying to discover frauds and pursue legal remedies through costly and protracted litigation. Think a roof over their heads, food on the table, securing their other possessions, enrolling children in new schools, all of which is having to be dealt with in an extremely destabilizing situation. Daunting to impossible.
I really don't know how the injured are going to be made whole. Victims of fraud are rarely made whole. So much of the profits made have been put out of reach that there isn't much, or anything, left to make them whole.
I know we have a combination of problems that are going to continue reverberating for decades. As an example properties involved in foreclosures are going to be rendered unsaleable. Due to the fatal title defects title insurance companies will not insure them. Now who in their right mind is going to buy property without title insurance? I wouldn't, as that would leave my liable to a claim from virtually anyone, and that virtually forever. They also go much deeper into our society than being merely financial.
Among my fears is that our legislatures, in not wanting to confront realities and the powerful players involved, will simply pass new laws that render old laws (the ones that are being broken now) without effect. This will allow the perps to simply walk away having enriched themselves many times over and in the process will have destroyed our economic stability, our judicial system and our social and familial fabrics.
Did I answer your question? I tried to keep it short.
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NYT on the Florida foreclosure "Rocket Docket" - 
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