Obamacare, the Foreclosure Crisis and the Rule of Law

This commentary was originally published on Yahoo! Homes and is being redistributed on South Florida Law Blog with their permission.

Huh? What do “Obamacare” and the foreclosure crisis have to do with each other?

Simply put, the legal debate over Obamacare largely centered on the individual mandate, a law that would require people to buy health insurance whether they wanted to or not.

A little to my surprise, the Supreme Court did uphold it, although as a tax.

During the passing of the healthcare law, it seemed that the president assumed that the government had the ability to force people to buy a product from a private company that they did not necessarily want.

The mandate’s survival in the Supreme Court on a much narrower standard apparently leaves the question far from settled.

I felt that there was little, if any, constitutional analysis done by the president and his team when they decided to pass the mandate, except for the fact that they perceived a compelling need for it.

And that’s how the debate over the healthcare law reminded me of the legal debate during the foreclosure crisis.

Back when I started defending homeowners, the judges took a simple view: You borrowed the money, therefore you owe the money, so you have to pay it back.

No one stopped to think whether the banks bringing these foreclosures had the constitutional right to do so.

No one.

No one asked whether the banks had fulfilled their legal requirements before filing suit, such as properly assigning notes and knowing who owned the mortgage.

Instead, there was a preference for expediency. Since the homeowner borrowed the money and owed the money, the homeowner had to pay. The banks would be able to sort out who actually owned anything among themselves, and the most important thing was to get the home away from the homeowner.

In both the healthcare and foreclosure crises, the central question for me has always been: How do you solve the problems of the masses without trampling over the rights of the individual?

While it is necessary to nurse the housing market back to health and to avoid creating moral hazard by rewarding those people who did not pay their mortgage, it seems to me that too often the “solutions” violate the rights of the individual.

Personal rights have always been a central pillar of this country, even when it would have been easier to do otherwise. This has always been a country that did what was right, not what was easy.

To protect personal rights, we must follow the rule of law. Otherwise, civilization runs amok.

Take the original O.J. Simpson verdict. We can debate the facts ad nauseam, but he was acquitted in part because the police, through their own conduct, violated O.J.’s constitutional rights.

Many argued that he should have been convicted anyway, but as we all learned in fourth-grade civics, it is the responsibility of the judiciary to maintain the rule of law above all else in order to protect the system and the next guy.

Otherwise, those who have power, like the police, the government, or the banks, will be able to take advantage of those who do not.

In the foreclosure crisis, this means throwing out foreclosure suits that do not have all of the legal requirements fulfilled. It is a form of penalization to make sure that people get things right.

When the foreclosure crisis began, that penalization was sorely missing. Thankfully, we are now starting to see that push back from the judges and lawyers, who are saying:

“Wait a minute! Maybe the banks did overreach, and maybe they did take people’s homes away from them illegally. Maybe they even denied people their constitutional rights.”

The important thing now is that the right people in the right places are starting to ask the right questions. We are beginning to see a convergence of the political process, economic expediency and the legal system.

Legislation that would prohibit “fraudclosure” is making its way down the pipeline in New York, and we are finally starting to see bankers being indicted for mortgage fraud.

Yes, these are baby steps. But everyone crawls before they walk, and everyone walks before they run. We are starting to see that the legal system has recognized that it was played for a patsy by the banks.

So what does this have to do with Obamacare? Simple: The Supreme Court put the rule of law above all else, including politics and expediency.

The foreclosure courts are finally starting to do the same.

In The Trenches

Roy Oppenheim