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Badass Judge Fights The Man, One Foreclosure At A Time
AngelHedgie
Registered User regular
Registered User regular
Awesome judge, or awesomest judge?
This is what it looks like when government sticks up for the little guy.
One of the scariest and most disturbing parts of the story is how badly formed the foreclosure proceedings the banks present are. And they expect these to pass legal muster. The scary art is that in a lot of cases, they do. This is what has to stop - if the banks can't clearly present that a debt is owed, then the courts need to start tossing the cases out. At least we have one judge with the guts to do it.
We need more judges like Mr. Schack. Desperately.
The Grey Lady wrote:August 31, 2009
A ‘Little Judge’ Who Rejects Foreclosures, Brooklyn Style
By MICHAEL POWELL
The judge waves you into his chambers in the State Supreme Court building in Brooklyn, past the caveat taped to his wall — “Be sure brain in gear before engaging mouth” — and into his inner office, where foreclosure motions are piled high enough to form a minor Alpine chain.
Every week, the nation’s mightiest banks come to his court seeking to take the homes of New Yorkers who cannot pay their mortgages. And nearly as often, the judge says, they file foreclosure papers speckled with errors.
He plucks out one motion and leafs through: a Deutsche Bank representative signed an affidavit claiming to be the vice president of two different banks. His office was in Kansas City, Mo., but the signature was notarized in Texas. And the bank did not even own the mortgage when it began to foreclose on the homeowner.
The judge’s lips pucker as if he had inhaled a pickle; he rejected this one.
“I’m a little guy in Brooklyn who doesn’t belong to their country clubs, what can I tell you?” he says, adding a shrug for punctuation. “I won’t accept their comedy of errors.”
The judge, Arthur M. Schack, 64, fashions himself a judicial Don Quixote, tilting at the phalanxes of bankers, foreclosure facilitators and lawyers who file motions by the bale. While national debate focuses on bank bailouts and federal aid for homeowners that has been slow in coming, the hard reckonings of the foreclosure crisis are being made in courts like his, and Justice Schack’s sympathies are clear.
He has tossed out 46 of the 102 foreclosure motions that have come before him in the last two years. And his often scathing decisions, peppered with allusions to the Croesus-like wealth of bank presidents, have attracted the respectful attention of judges and lawyers from Florida to Ohio to California. At recent judicial conferences in Chicago and Arizona, several panelists praised his rulings as a possible national model.
His opinions, too, have been greeted by a cry of affront from a bank official or two, who say this judge stands in the way of what is rightfully theirs. HSBC bank appealed a recent ruling, saying he had set a “dangerous precedent” by acting as “both judge and jury,” throwing out cases even when homeowners had not responded to foreclosure motions.
Justice Schack, like a handful of state and federal judges, has taken a magnifying glass to the mortgage industry. In the gilded haste of the past decade, bankers handed out millions of mortgages — with terms good, bad and exotically ugly — then repackaged those loans for sale to investors from Connecticut to Singapore. Sloppiness reigned. So many papers have been lost, signatures misplaced and documents dated inaccurately that it is often not clear which bank owns the mortgage.
Justice Schack’s take is straightforward, and sends a tremor through some bank suites: If a bank cannot prove ownership, it cannot foreclose.
“If you are going to take away someone’s house, everything should be legal and correct,” he said. “I’m a strange guy — I don’t want to put a family on the street unless it’s legitimate.”
Justice Schack has small jowls and big black glasses, a thin mustache and not so many hairs combed across his scalp. He has the impish eyes of the high school social studies teacher he once was, aware that something untoward is probably going on at the back of his classroom.
He is Brooklyn born and bred, with a master’s degree in history and an office loaded with autographed baseballs and photographs of the Brooklyn Dodgers. His written decisions are a free-associative trip through popular, legal and literary culture, with a sideways glance at the business pages.
Confronted with a case in which Deutsche Bank and Goldman Sachs passed a defaulted mortgage back and forth and lost track of the documents, the judge made reference to the film classic “It’s a Wonderful Life” and the evil banker played by Lionel Barrymore.
“Lenders should not lose sight,” Justice Schack wrote in that 2007 case, “that they are dealing with humanity, not with Mr. Potter’s ‘rabble’ and ‘cattle.’ Multibillion-dollar corporations must follow the same rules in the foreclosure actions as the local banks, savings and loan associations or credit unions, or else they have become the Mr. Potters of the 21st century.”
Last year, he chastised Wells Fargo for filing error-filled papers. “The court,” the judge wrote, “reminds Wells Fargo of Cassius’s advice to Brutus in Act 1, Scene 2 of William Shakespeare’s ‘Julius Caesar’: ‘The fault, dear Brutus, is not in our stars, but in ourselves.’ ”
Then there is a Deutsche Bank case from 2008, the juicy part of which he reads aloud:
“The court wonders if the instant foreclosure action is a corporate ‘Kansas City Shuffle,’ a complex confidence game,” he reads. “In the 2006 film ‘Lucky Number Slevin,’ Mr. Goodkat, a hit man played by Bruce Willis, explains: ‘A Kansas City Shuffle is when everybody looks right, you go left.’ ”
The banks’ reaction? Justice Schack shrugs. “They probably curse at me,” he says, “but no one is interested in some little judge.”
Little drama attends the release of his decisions. Beaten-down homeowners rarely show up to contest foreclosure actions, and the judge scrutinizes the banks’ papers in his chambers. But at legal conferences, judges and lawyers have wondered aloud why more judges do not hold banks to tougher standards.
“To the extent that judges examine these papers, they find exactly the same errors that Judge Schack does,” said Katherine M. Porter, a visiting professor at the School of Law at the University of California, Berkeley, and a national expert in consumer credit law. “His rulings are hardly revolutionary; it’s unusual only because we so rarely hold large corporations to the rules.”
Banks and the cottage industry of mortgage service companies and foreclosure lawyers also pay rather close attention.
A spokeswoman for OneWest Bank acknowledged that an official, confronted with a ream of foreclosure papers, had mistakenly signed for two different banks — just as the Deutsche Bank official did. Deutsche Bank, which declined to let an attorney speak on the record about any of its cases before Justice Schack, e-mailed a PDF of a three-page pamphlet in which it claimed little responsibility for foreclosures, even though the bank’s name is affixed to tens of thousands of such motions. The bank described itself as simply a trustee for investors.
Justice Schack came to his recent prominence by a circuitous path, having worked for 14 years as public school teacher in Brooklyn. He was a union representative and once walked a picket line with his wife, Dilia, who was a teacher, too. All was well until the fiscal crisis of the 1970s.
“Why’d I go to law school?” he said. “Thank Mayor Abe Beame, who froze teacher salaries.”
He was counsel for the Major League Baseball Players Association in the 1980s and ’90s, when it was on a long winning streak against team owners. “It was the millionaires versus the billionaires,” he says. “After a while, I’m sitting there thinking, ‘He’s making $4 million, he’s making $5 million, and I’m worth about $1.98.’ ”
So he dived into a judicial race. He was elected to the Civil Court in 1998 and to the Supreme Court for Brooklyn and Staten Island in 2003. His wife is a Democratic district leader; their daughter, Elaine, is a lawyer and their son, Douglas, a police officer.
Justice Schack’s duels with the banks started in 2007 as foreclosures spiked sharply. He saw a plague falling on Brooklyn, particularly its working-class black precincts. “Banks had given out loans structured to fail,” he said.
The judge burrowed into property record databases. He found banks without clear title, and a giant foreclosure law firm, Steven J. Baum, representing two sides in a dispute. He noted that Wells Fargo’s chief executive, John G. Stumpf, made more than $11 million in 2007 while the company’s total returns fell 12 percent.
“Maybe,” he advised the bank, “counsel should wonder, like the court, if Mr. Stumpf was unjustly enriched at the expense of W.F.’s stockholders.”
He was, how to say it, mildly appalled.
“I’m a guy from the streets of Brooklyn who happens to become a judge,” he said. “I see a bank giving a $500,000 mortgage on a building worth $300,000 and the interest rate is 20 percent and I ask questions, what can I tell you?”
This is what it looks like when government sticks up for the little guy.
One of the scariest and most disturbing parts of the story is how badly formed the foreclosure proceedings the banks present are. And they expect these to pass legal muster. The scary art is that in a lot of cases, they do. This is what has to stop - if the banks can't clearly present that a debt is owed, then the courts need to start tossing the cases out. At least we have one judge with the guts to do it.
We need more judges like Mr. Schack. Desperately.
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AngelHedgie on
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Which doesn't seem like it should be unusual.
Because they're riddled with legal errors, and don't show that the bank clearly and unequivocally owns the mortgage. The banks are walking in, assuming that because they're MegaBank, Inc., the judge is just going to assume that they are right. Schack is showing them that what counts is legal proof - and if they don't have it, he's not going to let them foreclose.
Which is how it should be.
In the second and third paragraphs?
Shoddy legal work. Not really seeing how this is 'sticking up for the little guy' so much as 'holding lawyers to a professional standard' since he isn't doing cramdowns or anything. They'll just refile again weeks later without fucking up the form.
Yeah, that's the part that should terrify you.
I feel muddled.
I'm chalking this up to more frivelous court cases for the most part, with shoddy evidence being played. Only now a judge is getting recognition for doing his job.
Fucking hell.
Fuck.
Goddamn it.
The only reason he's not doing cramdowns is because he has no legal authority to do so. The banks lobbied long and hard to kill that provision in the stimulus bill.
And they're not always able to refile. A large number of these rejections are due to the promissory note - the thing that makes the mortgage exist in the first place - being lost or no longer having a clear chain of ownership. In those cases, it's like the mortgage doesn't even exist - and the only thing the bank can do is write off the remaining amount as a loss.
The judge, instead of allowing the foreclosure, instead rewrites the terms to something more inline with the current value of the house and the owner's ability to pay. It's good for society because it keeps a family in the house and prevents foreclosures from causing a neighborhood to degrade and decay. Banks hate it because it forces them to eat some losses.
Wow, and they actually got this removed from the stimulus package stipulations?
Yes. Yes, they did.
It's amazing how much leverage people have when you're trying to give them huge sums of money so they don't go out of business.
Wait...
Well, one can see some reasons for not wanting to give individual judges that kind of power, especially in areas where judges are elected. God knows what would happen if one big bank started giving large campaign contributions to less than honest judges.
We give them that authority in corporate bankruptcy and even in personal bankruptcy for other kinds of loans...
People giving out legal advice have been yelling this at the top of their lungs for months and months now.
If someones trying to foreclose your house, demand the paperwork. ALOT of the time right now, the bank doesn't even really know if they own your mortgage or not. You are perfectly within your legal rights to tell the bank to fuck off if they can't produce the proper documentation.
This is "Standing up for the little guy" because it's the banks and such trying to use their size and professional credentials to skate by on these foreclosures without even knowing if it's legal.
Judge Awesome, you are technically correct. The best kind of correct.
As long as he's not sticking it to banks just because he doesn't like the idea of foreclosure, go him.
There should be little tolerance for institutions like banks, all lawyer-ed up to fuck people over, when they can't even prove ownership.