Two of the nation's biggest lenders -- Bank of America and GMAC -- said they were resuming foreclosure actions this week. They had taken a break to review legal documents and procedures to ensure they were sound.
Now, the lenders have concluded that things are fine, and they are going back into court. But across the country many judges remain concerned that the documents and statements coming into their courtroom are tainted.
'Dig Deeper'
Jonathan Lippman is worried. The chief judge for New York state courts is troubled by reports of lenders who have cut corners and bent the rules in foreclosure cases. So this week he told lawyers they will have to sign an affidavit and personally vouch for any foreclosure-related documents submitted to the court. The rule applies to both new and pending cases.
It's not enough, he told the lawyers, to just read the documents -- they'll have to dig deeper, and "talk to their clients and people with knowledge of the facts in these cases and assure the court that the integrity of the court process is being upheld."
The key word here is "integrity," and Lippman wants to ensure that it's preserved in the courts. He believes an extra layer of scrutiny by attorneys will help. "Lawyers are going to be very, very careful," he said.
Their professional reputation, indeed their license to practice law, could be at stake.
Sympathy For The Homeowners
This week, courts in Maryland also adopted rules for additional document scrutiny, and now if there's a problem with the lender's paperwork, the lender has just 30 days to show why the foreclosure should not be dismissed.
"Judges do not react well to being lied to," says Minnesota Judge Kevin Burke, who is president-elect of the American Judges Association. Burke also says that in addition to disliking liars, judges don't like lenders who are arrogant in their dealings with the court.
Twenty-three states have so-called judicial foreclosures where lenders have to go to court to get a house back. The law is technical and relies largely on documents. And if the paperwork is accurate and complete, lenders almost always prevail, Burke says.
"I am aware of the pain that judges feel," Burke says. "Frequently, the law puts a judge in a position that you are really sympathetic to the person who's about to lose their house, but legally there is really not much you can do."
Sometimes judges can mandate or encourage settlement talks. But in the end, if homeowners don't have the money to pay for their house, the lenders will get it.
Most homeowners facing foreclosure don't show up in court. And when they do, Burke says, they often know they won't be able to keep their house.
"The person wants to get before you and say, 'Judge, I really tried to make all my payments -- I'm not a deadbeat,'" he says. "It's sad, and you want to say something. It's a little bit like a funeral."
Less Time And Manpower
Indeed, what Burke calls compassion fatigue can begin to set in among judges. It's a risk that's compounded by budget cuts and furlough days and the sheer volume of cases.
"Don't underestimate the effect of caseload," says Patrick Bauer, a law professor at the University of Iowa. Bauer isn't talking about the emotional toll here but pointing out that judges are swamped with foreclosure cases.
"It's one thing to be able to open up the file, look at it carefully and make sure everything is done right if you have 20 of those today," he says. But it's a lot harder, he says, if judges have 200 foreclosures. They may not have the time or the energy to go through every document.
And this takes us back to this week's judicial actions, which are aimed at ensuring the integrity and accuracy of court documents.
What's at stake is money, family homes and neighborhoods.
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