Friday, January 06, 2012

Wall Street Journal on Mass AG Lawsuit

I don't subscribe to the Wall Street Journal in either paper or electronic form, but early this past Tuesday, my home delivery person inadvertently (I think) dropped a copy of that day's WSJ along with the Globe.  Flipping through the pages, I was surprised to come upon an editorial on the lawsuit recently filed by Massachusetts Attorney General Martha Coakley against a number of national banks for alleged improprieties arising out of the housing crash and its aftermath.  Not surprisingly, the piece takes a dim view of the suit (although you can only see the first couple of paragraphs if you're not a logged-in subscriber).  The paper cites Coakley's 2010 Senate loss and suggests this effort is merely an attempt to capitalize on anti-bank sentiment for public relations purposes.  The editorial focuses primarily on the MERS and robo-signer issues and says the former has already been validated by courts around the country and the latter is being corrected internally by these lenders.

I've previously gone on record stating I find nothing wrong with the organization and concept of MERS (although it, like every other lender, should not be permitted to cut corners without being penalized) and the issue of robo-signers, while improper, is a lot more complex than many want to believe given the reach of agency law.  Where the Journal completely misses the mark is the whole untimely assignment issue which flows from last January's SJC decision in Ibanez.  That case, in reiterating the law of Massachusetts for more than 300 years, made it clear that before a foreclosure could be commenced, the foreclosing party had to own the mortgage, otherwise the foreclosure would be void.  Because that seemingly self-evident proposition had been eroded away not by legislative or judicial acts but by persistently sloppy practices by national lenders, what should have been a footnote came as an devastating blow to the vitality of any quick recovery of our housing sector.  Notwithstanding the Wall Street Journal's belittling of the issues raised in the AG's lawsuit, the fact remains that many of those who have purchased previously foreclosed properties no longer own those homes right now and the process of rectifying that will be long and expensive.  We have to start fixing this problems somewhere and it seems that a lawsuit is an appropriate place to begin.

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