Oppenheim Law’s South Florida Law Blog shares a letter Roy Oppenheim wrote in response to an editorial piece published on October 9th called The Politics of Foreclosure:
Your editorial “The Politics of Foreclosure” (October 9) misses a number of significant legal as well as macro economic issues. In fact the editorial’s latent sarcasm (i.e., “the affidavit was supposed to be signed by the nameless, faceless employee in the back office who reviewed the file, not the other nameless, faceless employee who sits in the front”), suggests a clear lack of respect for (i) the protections afforded to all of us by the United States Constitution, (ii) State Rights and (iii) how the real property recordation systems throughout the US have played a critical role in capital formation for 150 years.
As a real estate attorney in Florida who previously practiced on Wall Street, I personally know of countless cases where the bank sues the wrong homeowner for foreclosure or where two banks claim to own the same mortgage. It seems that you are significantly discounting the importance of procedural due process that requires that an affidavit be sworn under oath and that an individual has personal knowledge of the amounts owed by a borrower. Further, you are making undue light of notary fraud and perjury (both criminal acts) when an individual attests to another’s signature with knowledge that such attestation is false. Such conduct is not only a violation of state law but also of various federal laws such as The Fair Debt Collection Practices Act, violations under the Federal Trade Commission for Unfair and Deceptive Trade Practices, mail fraud, wire fraud, and possibly racketeering. These “mistakes” are not mere technical issues but go to the core of our legal system.
Your editorial completely disregards an important constitutional concept of legal standing. Standing is the substantive due process notion of what a party must do in order to have the legal right to bring a legal action through our judicial system. Without the protective concept of standing, anyone could sue anyone at any time, ultimately causing legal anarchy. To fabricate standing, the banks used fraudulent assignments, bad notaries, and allowed for perjured documents to be presented to judges. The banks were forced to engage in such conduct because just like Humpty Dumpy the banks broke the mortgage into different parts, splitting the Note from the Mortgage by assigning the Mortgages to a third party (MERS) and selling the Notes to another entity. The Notes were then further sold off in traunches. However, to put the “egg” back together again in order to foreclose and have standing required a whole lot of bogus documents that were never anticipated by Wall Street.
As for State Rights, had President Obama not vetoed a bill that required each state to require the other to respect the other’s notary requirements, the banks’ would have run off to the state that has the least protective and most flimsy notary rules. We have seen this script before when South Dakota became the home of choice for almost all credit card issuers; residents in other states wound up with usurious interest rates sometimes in excess of 30 percent a year. It seems that your editorial board is not consistent when it comes to advocating for the rights of States to protect its own citizens in the manner such states deem most appropriate.
Finally, had mortgages not been permitted to be assigned behind a black veil of MERS where the assignments are not made public as with a formal state-run recordation system, most of the problems we are now addressing could have been avoided. In his acclaimed book The Mystery of Capital, Why Capitalism Triumphs in the West and Fails Everywhere Else, Hernando de Soto articulates clearly that America’s and the West’s protection of property rights and its open and transparent recordation system has been the true engine of inbound capital flows that allowed America to go from a developing nation 150 years to one where the dollar, at least for now, is the world’s reserve currency.
Let me be absolutely clear: Your editorial will make future investors of real property, particularly foreigners, think twice about our entire real property system. Questions will be asked for a generation how banks literally hijacked the judicial system turning it into their own collection system while dispensing with the rules of law that have protected property right owners from the day our great nation was founded. Had we just let our legal system do its job we would have made it out of this mess. Next time, please think twice about throwing the baby out with the bath water just because you think you know who the real culprit is here. Remember, had this whole house of cards that started on Wall Street not come tumbling down: Humpty Dumpy would still be perched on his wall today and homeowners would not be struggling to pay their mortgage because they lost their livelihoods. Maybe, just maybe, the banks are now getting their just desserts.
And if you believe the latest news that Bank of America is not too worried about the looming tsunami of mortgage repurchases because it is socking away tons of cash, think again.
From the trenches
PS: In case you missed it, here’s a link to Roy Oppenheim’s interview with the BBC about the foreclosure fraud scandal.