While this blog focuses primarily on foreclosures and legal issues, the fact of the matter is that the foreclosure crisis is a symptom of two pervasive wrongs that continue to lurk across this country. The first is widespread and institutionalized fraud. The Fat Cats and financial wizards, with the consent of our elected and appointed leaders, engineered a system that sucked billions of dollars in equity and wealth from the middle and lower class and concentrated that wealth in those at the top of the pyramid…and those in foreign countries. Now that the wealth and equity has been sucked out of private hands, our courts and our local elected judges are being used to wrestle away the private property rights that were secured by the former privately-held wealth.
Unemployment- The Rot That Threatens To Destroy This Country
The second major wrong that has this country in the death grip is pervasive unemployment and underemployment. The Wall Street Journal today reports that there are 14.6 million Americans looking for work, or 9.5% of the workforce. (See the full article here) Now I think that number dramatically understates the scope of the problem because the figure does not account for all those people who are actually out of work or working and earning far less than they need to survive. If those real numbers were factored in, the unemployment number would surge dramatically. For the underemployed, I’m talking about any family where both are working, but are not making enough to cover the reasonable expenses of daily life. Factor in the costs of the very basics…housing, food and medical care and the percentage of Americans who are not surviving is daunting.
Consider too the number of people employed by the US Military and the percentage of GDP attributable to that portion of our larger economy. As of December 31, 2009 1,421,668 people are on active duty in the military with an additional 848,000 people in the seven reserve components. The 2009 U.S. military budget is almost as much as the rest of the world’s defense spending combined and is over nine times larger than the military budge of China. For FY 2010, Department of Defense spending amounts to 4.7% of GDP. Now I’m a huge supporter of our military, but the point I’m making is that we cannot afford to stop any of our existing wars because we cannot have even a small percentage of unemployed combat trained veterans languishing stateside unemployed with nothing to do.
Foreclosures- What is the point?
Against this bleak background, the foreclosure crisis plays out. Americans are unemployed and underemployed. They’re being thrown out of their homes forcefully on the orders of circuit court judges. The beneficiaries of these forced dispossessions are large financial institutions, foreign investment interests and federal governments agencies that are the ultimate owners of the debt. We all acknowledge that most of these parties engaged in widespread and massive fraud in the creation and transfer of the debt obligations. Through depositions and discovery we’re increasingly aware that the foreclosure mills and institutions are engaging in fraud in the litigation of these cases. Even in those cases where there is not abject fraud, in some cases the legal standards applied to obtain foreclosure has been so diminished that it’s become a meaningless farce. (see foreclosure rocket dockets) Rewarding those who committed fraud and the law firms that continue to diminish the rules of law and evidence that should apply in our courtrooms deeply offends my sense of fair play and right and wrong. And against this background I ask, “Why are we permitting these foreclosures to continue?” What will these bad actors (the lenders and their attorneys) do with these properties when the take them back? Why are we not forcing these bad actors to permit homeowners to stay in their homes under terms that are reasonable under the circumstances? The current modification schemes are not working and the lenders and their attorneys are not engaging in good faith negotiations with homeowners. The point of foreclosure should be to return a non-performing and wasting asset into some better performing use….but in this economy and in this practical reality, the best performing use of residential property is to keep homeowners in their homes under terms that are fair and just.
Our Judges- The Only Hope We Have of Preserving What Liberties And Dignity Remain
People don’t want to be in foreclosure. It’s embarrassing. It’s painful. It’s gut wrenching. Homeowners who are in foreclosure are largely not in foreclosure because they were reckless or irresponsible. Naive, gullible, misinformed….perhaps, reckless and irresponsible….perhaps in some instances….but how does their unintended conduct compare with the intended conduct of the far more sophisticated party….the lenders that made the loans and the bag men that are now suing to foreclose? Our local judges are the last line of defense against the inequitable conduct that brought us all to this place. This is not just about foreclosure. It’s not just about borrowing money and paying it back. It’s very much about all the sophisticated shenanigans that was playing behind the scenes and continues to play out in courtrooms across this country. The judges sitting on circuit court benches are by and large some of the brightest, most dedicated and intelligent people you’ll ever meet. Some may have been a bit shell shocked as this crisis invaded their courtrooms, but I’m fairly certain that most now understand most of the issues that play out in this sordid foreclosure arena. For those that still do not, we all need to do our job of telling the story in their courtroom until they get it.