Are the big banks simply immune from the law, despite all the robo-signing fraudulent foreclosures that have rocked New Jersey's real estate markets and forced thousands out of their homes?
While the jury is still out on that question, the evidence is piling up that if not beyond from the reach of the law, the banks are not subject to the same legal norms that apply to everyone else. (Full disclosure: The author participated in a recent foreclosure case in the New Jersey court system.)
Consider that if you or I lied on a loan application or signed for a deed we didn't own, we would be guilty of fraud. We could be sued under the Consumer Fraud Act and made to pay treble damages plus attorney's fees. We could be sentenced to some hard time in a very bad place.
But none of that apparently applies to the big banks and the millionaire bankers who run them. Their risky machinations came close to tipping the global economy into the worst depression since the 1930s. Only because you and I, and millions of other taxpayers were made to bail out the banks did we avoid economic meltdown.
Then why isn't anyone going to take on the banks and hold them accountable?
On December 20 of last year it appeared that the courts of New Jersey were about to do so. Chief Justice William Rabner issued a series of powerful orders directing the six biggest foreclosure mills (I mean, banks) to "show cause" why they should not be stopped from doing more uncontested foreclosures until they cleaned up their acts.
It seemed too good to be true. Even if the Attorney General and the Division of Consumer Affairs had washed their hands of enforcement actions -- despite undisputed evidence that thousands of Garden State homes were fraudulently seized in recent years -- the court would step in and fill the gap.
And maybe it was too good to be true.
On March 29, the judge assigned to remedy the tide of robo-signings -- in which low-level employees falsely assert the bank's ownership of the deed to the house being taken -- approved without change a "stipulation" negotiated behind closed doors by the court's special counsel with the Big Six foreclosure banks.
The main problem with the court's order is that it's prospective, it does nothing to address the phony foreclosures that have already taken place. The judge reasoned -- mistakenly, I believe --that imposing "sanctions" was beyond the scope of the proceeding. This despite the fact that penalties are listed among the issues to be addressed by Edward Dauber, the prominent private attorney the Supreme Court appointed to "respond to submissions" from the banks.
The court order was vigorously opposed by Legal Services of New Jersey, the Seton Hall Justice Center and by this attorney. I was representing at no charge a jobless woman who had her condo fraudulently taken and sold for $100 to another unit of the foreclosing bank (later set aside).
Still the court order does promise reform. It names a retired judge, Richard Williams, to serve as a Special Master. He has the power to review the banks' foreclosure procedures and documentation in the thousands of uncontested actions that make up some 94 percent of all foreclosures.
Simply said, Williams can help people recover their homes. This is critical, since few unemployed residents can afford an attorney, and Legal Services -- having lost much of its funding -- is stretched too thin to provide much assistance.
But what seemed to carry the day with the court was Dauber's plea that delays in getting home foreclosures rolling again was causing "blight" in neighborhoods across New Jersey.
Never mind the absence of any evidence to support that claim. And never mind that many communities -- especially in urban areas -- have suffered blight precisely because the assembly-line of foreclosures and sheriff's sales has shuttered homes and closed businesses while driving down the value of remaining properties.
Perhaps most disturbing to this lawyer was the remark that the best remedy for the people we were seeking to represent -- the many who cannot afford attorneys -- was for lawyers to proceed to represent them, so their cases would not be uncontested.
How this welcome state of affairs could be made to happen was unanswered. That's why the issue of sanctions and penalties" was so important. If the robo-banks were told to pay into a trust fund before the court would allow more foreclosures, funds would be available to provide legal help for homeowners.
Ah, but penalizing the banks -- no matter how egregious their misconduct -- is out of the question. Let them take their bailouts and their bonuses, but never hold them accountable.