Wow, the WSJ really seems to be on my Thursday S^%$ list:

“It was a first step in the growth of a legal sub-specialty called foreclosure defense that has sown confusion and turmoil in the housing market. Lawyers in the field now commonly use a technique more identified with corporate litigation: probing depositions, designed to uncover any lapses in judgment, flaws in a process or wrongdoing. In the 23 states where foreclosures entail a court hearing, the bank may be ordered to pay the homeowner’s legal bill if a lawyer can convince a judge that the bank has submitted false documents, such as affidavits saying employees personally reviewed the details of loans when they didn’t.”

Excuse me, but why would you write that the identification of fraud and perjury has sown confusion; Isn’t it the fraud and perjury that is to blame?

Its like an episode of Scooby Doo: “And old man Kowalksi would have gotten away with it, if it wasn’t for those meddling kids!”

You see, according to the article, it was not GMAC that caused the problem, by failing to discharge its legal obligations and committing mass perjury — it is the defense lawyers. Apparently, vigorous defense is appropriate when its for a corporate litigant, but when some poor schmuck is losing his house and exercises his legal rights, it is merely an annoyance.

And that is the our Dumb Article of the Day, from the former best paper in America.


Niche Lawyers Spawned Housing Fracas
WSJ, OCTOBER 21, 2010

Category: Financial Press, Foreclosures, Legal

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

29 Responses to “Dumb Article of the Day: “Niche Lawyers Spawned Housing Fracas””

  1. People should remember this when they hear of Politicians, and other Flacks, speaking of ‘Tort Reform’..

    (lack of redress, to a legitimate, responsive, Judiciary, decreases ‘Operating Costs’)

  2. GreenTom says:

    Well, it would be fair to say “Scooby and the gang have sown confusion and turmoil in the fake ghost/real-estate scam market.” With a slight change in tone, this becomes an article about heroic underdog lawyers bucking the system.

    Still, this is about people not paying their mortgages. Fighting a loan default by criticizing the lender’s paperwork seems like a delaying tactic at best.

  3. rktbrkr says:

    Fighting a loan default by criticizing the lender’s paperwork seems like a delaying tactic at best.

    With an enormous backlog already and the prospects of do-overs and heightened scrutiny of all mortgage documents then a delaying tactic could be very effective – good for a few years maybe.

  4. louiswi says:

    It seems the “poor smuck losing his house” although a catchy phrase is the biggest part of the puzzle. He can’t/won’t live up to his obligation. (key word-obligation). It’s time to review the sanctity of contract law as it seems to be in jeprody. The facts of not crossing the ts or dotting the is irrelevant except to serve to fuzzy things up.

  5. BennyProfane says:

    Somebody should e-mail this article to all in England who think that Murdoch won’t destroy BskyB. He’s pretty much trashed everything else he’s touched. I mean, can you stand to watch FBN for more than five minutes?

  6. wunsacon says:

    >> Fighting a loan default by criticizing the lender’s paperwork seems like a delaying tactic at best.

    I will not risk buying a house from a lender that didn’t have to prove in court that it “really does own the property”. Therefore, as much as it annoys me to see deadbeats beat the system (even if “beat” merely means “live rent-free another few more months”), I prefer it over letting the system become even less reliable. (This is a consequentialist argument, similar to the rationale that says it’s better to let criminals go free when the State fails to follow proper criminal procedure.)

  7. Mannwich says:

    Because to the WSJ fraud perpetrated by the elites has another name, “business”.

    For everyone else, it’s plain old “fraud” and punishable by prison.

  8. dss says:


    You are right about that. There is a totally different set of rules depending upon where you stand in life. I think this is at the root core why people are so angry at the government, we mere citizens get hosed and banksters, politicians, CEO’s, get rich. CEO’s and executives being put on trial probably might total 20, the rest get a spanking, and get to keep most of their money. Except for Martha Stuart.

  9. AHodge says:

    on the topic of servicers and foreclosing, from todays FT quoting Structured Financed News and the new Sarbanes Oxley signing for servicers

    “Servicing executives were required by the Treasury Department to sign Sarbanes-Oxley-type agreements by Sept. 30 certifying they were in compliance with the Making Home Affordable Program. Some servicing executives initially balked at signing personal requirements akin to the Sarbanes-Oxley Act of 2002, which required that executives take personal responsibility for the accuracy and completeness of a company’s financial statements.

    The agreements make it a federal crime to provide false or misleading information to Fannie Mae or Freddie Mac.

    While the issue of robo-signing foreclosure documents is not addressed specifically in the 17-page servicer participation agreement, it does state that the “servicer is in material compliance with, and certifies that all services have been materially performed in compliance with all applicable federal, state and local laws, regulations, regulatory guidance, statutes, ordinances codes and requirements.”

    While Sarbox a total flop to date in getting CEO’s. they all testify my (lying) auditor accountants certified this (crap). Get a pass

    the servicers and lower level compliance signers, whoever signed the SARBOX for Fannie, may be in trouble this time. accountants cant lie for the execs here? I dont count on it, may be some creative new business for the lawyers here?. but always hope.

  10. Petey Wheatstraw says:


    This goes far beyond mere paperwork shuffling. The securitization process was fraudulent at every step. The result is either a legal/financial dead-end for the banks, or a bankrupting and self-incriminating attempt to back out of their self-created dark alley.

    The only chance that the banks have to come out of this (and in a more important sense, the only chance that the American citizen has to come out of this) unscathed, is if the Corporatist elements of Congress and the Judiciary retroactively immunize those responsible. Unfortunately, the likelihood of this happening is greater than the likelihood that it won’t.

  11. Mike in Nola says:

    The owners of the WSJ are not the first fascists to try this tactic.

    “I shall not rest until every German sees that it is a shameful thing to be a lawyer.”
    —Adolf Hitler, speech before theReichstag, April 26, 1942

  12. bergsten says:

    You missed Tuesday’s Dumb Article: Firm says foreclosure letters ‘mistake’.

    An East Bay law firm says it mistakenly sent out thousands of letters to San Francisco homeowners earlier this month warning them that their houses were in default — even though the loans weren’t delinquent.

    The letters were sent out by Provident & Associates, a Pleasanton-based law firm that is attempting to help people with loan modifications.

    “I screwed up,” said Corey Hill, a marketing executive with Provident & Associates. “I made a mistake that scared the wits out of some people.”

    Provident sent out what it estimated to be 2,000 letters to people telling them that they faced foreclosure on their mortgage. The letters went primarily to homeowners in San Francisco.

    The error serves as a cautionary tale about the potential for mistakes at a time when record numbers of mortgage defaults have been filed against homes engulfed by one of the worst economic meltdowns ever.

    Well, shucks. “I” file this under “sheesh, everybody makes mistakes” propaganda.

  13. Mannwich says:

    @bergie: Grasping at straws, perhaps? How can this happen? How can anyone be THAT incompetent? Wait, don’t answer that question.

  14. Wouldn’t this be ironic if the massive quantitative easing proposed by the Fed ended up improving the housing stock: money flows to bank, bank has to give money investors or advance new mortgage money on old housing that the bank lost the note to.

    Probably not what Lord Keynes or Lord Krugman had in mind.

  15. Bokolis says:

    The priority seems to be on keeping the violator whole and, for the victimized to come out ahead is viewed as unjust. Small wonder that the corporate media is more focused on lamenting the disruption of business as usual than it is on tracing to the roots of that disrpution. As ever, the message is that everything would be sooo much easier if the complainers would just STFU and let the market handle it.

    A more proper Scooby Doo ending would have a chinese bird drop some cultures on the head of the cuffed perpetrators.

  16. dss says:


    But, but, but, I thought that this was just isolated to just a few bad borrowers who were already in indefault. How many other thousands of “mistakes” were made?

  17. daf48 says:


    The ‘poor shmuck” bamboozeled the Big Banks and mortgage sharks and convinced them they could pay the mortgage by not submitting any evidence. Now on the other side oof the scheme, you say it’s about dotting the I’s. Right. What is amazing is the totalitarianism created by the Financial sector that goes unrecognized by so many. Not one criminal indict by Holder? Is that right? Good luck America. How’s that justice thing workin out for you?

  18. Mannwich says:

    @Denise: On that very theme – So much for the “corporate taxes are too high” meme.

    Google Avoids Taxes, Uses Scheme That Costs U.S. $60 Billion

  19. RadioFlyer says:

    @Bergsten, RE: post at 10:56, and DSS at 11:35:

    Grasping at straws, aren’t we? The “incident” in this article has NOTHING to do with either the lender or the borrower – it’s a mix-up by an apparently unrelated third party that did a mass mailing trying to drum up mortgage modification business. There’s nothing in the article you linked to (or anything I could find online) that says that Provident was either the loan servicer, or the mortgage originator of their loan – and even if they were, so what? They sent out a letter that was wrong – even if they did do it intentionally, which is preposterous, what could they hope to gain by telling people that are current on their loan that they are in default? 2,000 angry phone calls? Yeah, I’m sure that’s what they were going for.

    So how does some idiot in a marketing department of a mortgage broker/debt restructurer screwing up his cut and paste have anything to do with the “massive systemic fraud” that so many are upset about?

    Provident & Associates my very well be a firm full of ambulance chasing dirtbags, but this is yet another tenuous (at best) example of “fraudclosure”. The Crowd Query from last week turned up maybe a dozen examples, many of which didn’t even stand up to the smell test.

  20. farmera1 says:

    The two largest share holders in News Corp (Murdock and Alwaleed the biggest Saudi on the block) have almost completed their job Foxification of the WSJ. It will only get better.

  21. Julia Chestnut says:

    See, I’ve completely stopped reading the WSJ for this very reason. It’s just flat-out someone’s mouthpiece these days – there isn’t even anything usable in there.
    There are still lawyers who stand up for people’s rights, although they are getting a bit few and far between. And I’m glad that someone above has already called out tort reform for what it is: a way to strip YOU of YOU’RE right to sue, but not those who wrote the contract, operated on you drunk, dumped the poison in your water, invoked the “deemed insufficient” clause when the value of the underlying asset rose, etc. etc. etc. etc. etc. I know what those in government who want this imposed are doing, but why do so many ordinary people not get it?

  22. nemo says:

    I’m sure Rupert Murdoch’s ownership of the Wall Street Journal has absolutely nothing to do with the recent dumbing down and editorial corruption of the WSJ. It must be just a coincidence.

    The op-ed page of the WSJ has always been dumb and corrupt for as long as anyone can remember. The op-ed page has always been a big fat dumb corrupt parasite enjoying a free ride on the back of a first-class news organization. The recent spread of dumbness and corruption to the news pages, well, Rupert Murdoch couldn’t possibly have anything to do with that.

  23. txbankruptcynerd says:

    “Today, the WSJ balked at the idea of the ‘private attorney general’ righting wrongs of the foreclosure fraud / backdoor bailout process. I guess, this means it wants the only other alternative – more governmental regulation?? Beware the law of unintended consequences!”

    P.S. “Any lawyer will tell you that procedural due process demands a fair, accurate system, and the only available legal remedy in the criminal adjudication system – even for a technicality – is total relief, given the way the American legal system has developed. Love it or leave it.”

    So why shouldn’t foreclosure defendants whose notes were misplaced get the same treatment – rent-free living?

  24. Transor Z says:

    Yeah, but unlike the end of every Scooby Doo episode, I don’t think we’ll be standing around in a circle laughing hysterically at some inane joke.

  25. In each case, the borrowers are still in the house, years after having ceased paying. And the Jackson’s case says it all–they want to wipe the slate clean, and get a new mortgage. Well, of course they do.

    I wish someone could tell me how the filing of a faulty affidavit, stating in error that you reviewed a mortgage file when you didn’t, has anything substantive to do with the relationship of borrower to lender? Does if matter if the affidavit stating the file had been reviewed is false if the information in the file is correct?

    Nowhere in any of the cases in this article is the substantive information in the relationship between the borrower and lender questioned. Just whether a file had been properly reviewed or not. Isn’t the purpose of a proper review to ascertain whether the file has errors? If the file turns out not to have any errors, then how does it matter what an affidavit about its review says?

    But I get it. It’s one of only a few ways to get out of paying your mortgage obligation while keeping the house. It’s the poor man’s version of having cake, and eating it too. I think I want to go buy a new house in Florida. And get mortgage money to do so. And quit paying. And dare the fuckers to come take it. Florida swampland: a more attractive investment vehicle than you might have imagined. If I get an FHA loan on a $300,000 house, I can turn a $4,500 investment into about 60 times that. Wow. I need to start a hedge fund.

  26. formerlawyer says:

    To The Curmudgeon:

    “I wish someone could tell me how the filing of a faulty affidavit, stating in error that you reviewed a mortgage file when you didn’t, has anything substantive to do with the relationship of borrower to lender? Does if matter if the affidavit stating the file had been reviewed is false if the information in the file is correct?”

    I will try.

    To begin with, there are no “faulty affidavits”. A faulty affidavit is perjured testimony. It may be misleading, it may be de minimis or it may be substantively in error. The Courts take perjury very and I mean very seriously. Any party that knowingly advances or even permits perjured testimony is guilty of contempt of Court. So yes, even if the affidavit stating the file was reviewed was false but contents were true – that is perjured testimony. It is possible contempt of court and sanctionable conduct for the attorneys who knowing participated or turned a blind eye to it.

    Secondly, foreclosure law is a matter governed by equitable principles. While the Courts no long have a separate Chancery Division (a feature of historical English Law – abolished by the Judicature Act in the 1880s) the laws in effect at the time set for the “reception” of English Law in the American colonies (and subsequent States) included a component of equity law. Most American Courts (Louisiana being the exception) continue to apply both legal and equitable principals. One of those principles is that of clean hands – namely that anyone seeking to invoke equity must do equity.

    The traditional method of obtaining a loan on property in the 19th century basically involved legally transferring the property by deed in return for a sum of money. The sum would be repaid over time with interest and the legal owner would, after receiving all of the money reconvey the deed back to you. This could result in a number of permutations:

    1. After the sum was repaid – the legal owner might not re-convey title back to the borrower or even have conveyed the deed to another person. For various arcane reasons the borrower was not entitled at law to obtain any resolution.
    2. The payment terms would and usually were very strict. Payment had to be made at a specific place, in a specific manner, to a specific person and at a specific time. If you had faithfully made payments on time fore a number of years but failed for whatever reason to make the second last payment you would, at law, lose your property. Again the borrower would, at law, not have any recourse.

    This was not fair.

    Equity provided a solution. The purpose of equity was to temper the harsh “black letter law” by, for example: directing the lender to transfer the deed to the borrower, establishing days of grace respecting payment methods, creating an “equity of redemption” in the second scenario where a borrower could, if they complied with the terms of the mortgage ie. paid it our in full within a reasonable time would be entitled to their deed. Equity prevailed over the black letter law.

    These principles have, in many jurisdictions, been statutorily codified but the origin remains.

    Taking this in hand, one can understand how equity works in the context of foreclosures. If a bank advances perjured testimony it does not have clean hands. Indeed if the perjury is so egregious a court may, although I am aware of only a few cases, allow the borrower to remain in the home and remove the mortgage.

    By the same token however, if the borrower deliberately stops payments when they had the ability to do so (the strategic default scenario) the borrower will not come to court with clean hands. The equities will balance and the borrower can only live in the home for either the statutory redemption period or some limited time.

    This of course presumes that the bank will get its stuff together to establish a proper case. Until then the borrower is usually allowed to live in the home. This occupation would effectively be “rent-free” in no-recourse jurisdictions or at the fair-market valuation in power of sale or judicial sale jurisdictions. To this various curliques of attorney fees being deducted/added etc, would also be factored in.

    By the way, to my recollection New Hampshire is the only state with the strict mortgage procedure (but I may be mistaken).

  27. stopGOVTwaste says:

    WSJ: Read here (… so you can learn!

    I found this comment posted on from administrator of the forum;

    “The MERS® System is a tracking system that follows the changes in servicing rights (a non-recordable contract right) and changes in the promissory note ownership (a negotiable instrument which can only be transferred by endorsement and delivery of the note). Nothing is transferred on MERS. There simply are no events taking place when using the MERS® System that triggers the need for an assignment.

    *OKAY – so if MERS has NO PECUNIARY INTEREST IN ANY MORTGAGE OR NOTE – WTF are they doing executing DISCHARGE OF MORTGAGES (en masse?) Notice in this example that MERS discharges the Mortgage yet DOES NOT APPEAR on the complaint. Additionally, Indymac states THEY and the Defendant are the ONLY parties known to have an interest in the re-establishment of the “Mortgage Note.” Wait till you see the ending on this case!

    [scribd id=39056847 key=key-iybdkd7lg63bipjmqm8 mode=list]

  28. contrabandista13 says:

    “….And that is the our Dumb Article of the Day, from the former best paper in America….”

    By “former”, I presume that you mean like some time back in the late eighteen hundreds…. right…..?

  29. FrancoisT says:

    “Still, this is about people not paying their mortgages. ”
    Still this is about corporations not giving a shit about the rule of law.

    You tell us what matters most to the country: Rule of Law? Or beat the shit out of these evil deadbeats?