Randomly Distributed Trial Court Justice: A Case Study and Siren from the Consumer Bankruptcy World Forthcoming in American Bankruptcy Institute Law Review by Gary Neustadter*
“Between February 24, 2010 and April 23, 2012, Heritage Pacific Financial, L.L.C. (“Heritage”), a debt buyer, mass produced and filed 218 essentially identical adversary proceedings in California bankruptcy courts against makers of promissory notes who had filed Chapter 7 or Chapter 13 bankruptcy petitions. Each complaint alleged Heritage’s acquisition of the notes in the secondary market and alleged the outstanding obligations on the notes to be nondischargeable under the Bankruptcy Code’s fraud exception to the bankruptcy discharge. The notes evidenced loans to California residents, made in 2005 and 2006, which helped finance the purchase, refinancing, or improvement of California residential real property. When issued, the notes were secured by junior consensual liens on the real property, but subsequent foreclosure of senior consensual liens, precipitated by the mid-decade burst of the housing bubble, left the notes unsecured.
This article reports an empirical study of these bankruptcy adversary proceedings. Continue reading →
“The rich and powerful, they take what they want. We steal it back for you. Sometimes bad guys make the best good guys. We provide… “leverage”.” — Nathan Ford
In terms simple enough for even a circuit court judge to understand, Nathan Ford explains the mortgage-backed securitization scheme. When the wife of a missing mortgage banking executive said, “Alan said they were seizing properties they didn’t even own and signing foreclosure forms without even reading them…” Ford replied, “Oh yeah, robo-signing… yeah, that’s what they call it. What they do is they sign a thousand foreclosures and they bet that the homeowners don’t have the money to fight the case. Now the courts, they’ll stop it if your husband had proof…”
New York Times Opinion Pages printed an article by Joseph E. Stiglitz, a professor of economics at Columbia and Mark Zandi who is the chief economist at Moody’s Analytics. The story, “The One Housing Solution Left: Mass Mortgage Refinancing” started out by stating:
“MORE than four million Americans have lost their homes since the housing bubble began bursting six years ago. [Ed. note: On what planet have these fellas been living over the past 6 years?!] Continue reading →