In the legal equivalent of an atomic bomb dropped on the mortgage securities industry last week, the Massachusetts Supreme Judicial Court sent banking behemoths Wells Fargo and U.S. Bancorp a very simple, but powerful, message: If you’re going to do a job, you’d better make sure to do it right.
In a clear, relatively concise and often scathing judgment upholding the controversial Ibanez decision, the SJC convincingly de-bunked the banks’ arguments that they had a clear right to foreclose on two Springfield properties with a simple counter-argument. The banks may have had a right to foreclose, the court said, but securing that right was their job – a straightforward job nonetheless executed poorly and inadequately.
“The legal principles and requirements we set forth are well established in our case law and our statutes,” the court argued in its decision. “All that has changed is the plaintiffs’ apparent failure to abide by those principles and requirements in the rush to sell mortgage-backed securities.”
In other words: Massachusetts foreclosure law has been the same for decades, and it’s not our fault you stopped obeying it in your own rush to make a buck.
And we couldn’t agree more.
At issue here, in a case that clearly goes beyond Massachusetts, is the notion that laws can potentially be bent or broken to be made more convenient. Allowing the practice of filing assignments after a foreclosure action to continue was akin to turning a blind eye while vigilantes shoot first and ask questions later.
“Foreclosure is a powerful act with significant consequences, and Massachusetts law has always required that it proceed strictly in accord with the statutes that govern it,” Justice Cordy wrote in a concurring opinion.
In their haste, Wells and U.S. Bancorp must have forgotten the stakes in these foreclosure cases – these are peoples’ homes on the line, with all that entails in terms of family, neighborhood and social dynamics.
A home deserves care, just as the process by which that home is taken – however legal – deserves similar care. Wells and U.S. Bancorp abused that simple notion to serve their own desire for speed and convenience. The expedient path is often not the legal path, and for good reason. That was too easily forgotten here – and has too easily been forgotten nationwide as we come to grips with robo-signers and their associates.
“What is surprising about these cases is not the statement of principles articulated by the court regarding title law and the law of foreclosure in Massachusetts, but rather the utter carelessness with which the plaintiff banks documented the titles to their assets,” Cordy wrote.
We would only add that not only were they careless with their assets, they were careless, period. Careless to the stakes, careless to the legal process, careless to their own customers. They not only did a poor job following the rules, they did a poor job running their businesses.
But just as we condemn Wells and U.S. Bancorp for failing to do their jobs, we must praise the Supreme Judicial Court for admirably doing its own.
This case is bloated with potentially game-changing consequences in terms of foreclosure validations past, present and future. Expect to see much more in these pages on its ramifications in coming weeks.
Surely, the court recognized this, but rather than try to do too much, we applaud their efforts at ruling on only this one case – despite pleas from the plaintiffs to append some kind of prospective lens to future cases, and despite ample retroactive effects. Let future cases be handled as they come, we say.
The door is open for subsequent challenges, debates and policy. When it comes time for those in charge of determining a course of action to make decisions, we can only hope they will follow the SJC’s lead, and do their job simply, and well.
