And when have you ever met a trial lawyer without anything to say?
According to the Wall Street Journal this week, blood is in the water in the foreclosure paperwork mess, and the sharks are already circling.
“There is a movement afoot by [state attorneys general] and private lawyers to use technical problems to avoid foreclosures where the borrower is in default and the foreclosure is in all respects substantively appropriate. These are lawyers where the best job they can do for their clients is to keep them in their houses without paying the mortgage,” said Andrew L. Sandler, a Washington securities lawyer who represents banks and firms that service mortgages.
Surprised? You shouldn’t be? What else do we do in America these days but sue everyone else for our own problems? Never mind how home owners get “into” a foreclosure mess in the first place:
Theystop paying their mortgages.
Sure, there are some exceptions, some paperwork mistakes, some people who have lost their homes because of clerical errors. Yet those are the exceptions – not the norms. Clearly there’s not a “class” of consumers who are losing their homes en masse due to robber barons, or even robo-barons for that matter.
The trial laywers smell a payday, though; Once they start putting sobbing victims on the television and in the courtrooms, they’ll have no problem putting together a class action lawsuit. Yes, your Honor, I spoked four packs of cigarettes a day, but it’s their fault that I got sick. Yes, your Honor, I put an uncovered cup of hot coffee between my thighs and sped away from the coffee shop, but who knew the coffee would be hot? Yes, your Honor, I stopped paying my mortgage, but I never read the clause that said I really had to pay it back…
Trial lawyers, with the cover of Congressional hearings, FBI investigations and attorneys general, are going after banks and their servicers, arguing they were acting like “robots” filing papers that would “steal” people’s homes from them. Do you know who coined the term “robo signers”? A lawyer, of course. That’s the first step in winning a class action lawsuit: demonize the defendant.
Make him inhuman. Like a robot.
The banks have already slowed or halted foreclosure proceedings nationwide – sensibly aware of the legal sharks circling – at a cost of about $1000 per foreclosure per month. Some problems are being uncovered; but certainly not in percentages to justify the moratorium – or a class action lawsuit. Remember, banks that lose money on real estate won’t be inclined to lend it to homeowners in the future. If they do, it will be at significantly higher interest rates to cover additional and new risks like trial lawyers.
As John Carney at CNBC points out, none of this excuses banks for their shoddy and possibly (technically) fraudulent paperwork. But unleashing the lawyers and letting non-paying borrowers remain in these homes at is almost “double jeopardy” for banks.
Banks can make money lots of ways. Lend to Treasury. Lend to Chinese manufacturers. Lend to technology companies. They don’t have to seek out homeowners who bail – then call lawyers to get out of jail – as soon as the market turns. At some point, we’re going to need good relationships with banks to help us restart the housing industry. I
f they’re tied up in court, they certainly won’t be sitting around home sale closing tables.
What a mess.