a common problem that bad news travels faster than good news,
and gets treated as more important by us media types. So,
having devoted a number of columns to the mind- bending ways
in which the bankers who trashed the country have been rescued
more quickly and more dramatically than anyone else suffering
the consequences of our collective delusions about the benefits
of unfettered predatory capitalism (yes, that’s right), I
figure it’s only fair to share some small news of just deserts
in the same vein.
To wit: Increasingly, courts are canceling foreclosures because
the banks can’t prove that they own the loans. Bless the gutsy
Legal Aid lawyers who have been spearheading this technique.
The Kansas Supreme Court even upheld a case like this recently.
Sounds like the kind of hellish Kafkaesque thing that usually
happens to individuals up against an implacable bureaucracy,
but in this case the tables are turned.
It can work in a few ways, mostly related to the madcap environment
of slicing and dicing loans into various securities and operating
them through other entities. Sometimes lenders initiate foreclosure
on something they haven’t bought yet. Or just can’t figure
out their own byzantine paper trail.
Also, it appears that to increase profits in the housing bubble’s
sky’s-the-limit frenzy, lenders created an electronic registry
for tracking property transfers.
Now that’s all well and good—I’m for using the power of technology
for better, faster, more transparent record keeping. In fact,
if the philanthropic arms of these companies, back when they
were flush, had embarked on a campaign to help local governments
upgrade and digitize their record- keeping, that would’ve
helped everyone: the lenders who would’ve saved a ton of money
in recording liens and the governments themselves, not to
mention all the communities served by advocates and neighborhood
leaders who could have more accurate information about where
foreclosures were rising and which mortgages might be in trouble
in time to act faster and in a more targeted fashion with
prevention and recovery work.
But of course that’s not what happened. The too-big-to-care
financial institutions merely decided that as long as they
could keep track they didn’t have to, oh, register property
sales at the local level at all. They decided they could supersede
local law because it was annoying.
Given the attitude behind this, I suppose it’s not surprising
that I find it satisfying that some of these lenders are getting
told, “Nope. You didn’t file the paperwork. We have no record
that you own that loan/lien. Get lost.”
Now, I recognize that this satisfaction is only marginally
productive. I recognize that this legal strategy does not
distinguish between helping homeowners who were hoodwinked
and speculators who lied on their paperwork (though hopefully
the latter could be prosecuted for that, along with the brokers
who set them up to do so and the appraisers who collaborated,
And it’s true that I have, in this very space, cautioned against
letting vengeance drive policymaking. I wouldn’t advocate
for every mortgage in the country to just vaporize. But I
am human, and if leveling the legal playing field comes with
a garnish of barbecued chicken-come-home-to-roost, I admit
to finding it tasty.
There is a larger takeaway lesson though to this legal turn
of events. As a former Ayn Rand supporter I know and love
once said: The arguments made against utopian forms of communism
are that they rely on people to be selfless and not game the
system, which is an unreasonable expectation. However, unregulated
capitalism relies on businesspeople/corporate organizations
to do the same thing—an even less likely proposition, given
the larger profits involved and the way large organizations
can distance individuals from the consequences of their actions.
Since I view one of the most difficult fights before us (amazingly,
given the events of the past few years) to be establishing
the principle that unfettered corporate-welfare capitalism
doesn’t actually make for a good, or even efficient and advanced,
society, symbolic acts might actually be fairly useful. Anything
that reminds not only those “businesspeople” who prefer to
pilfer the government rather than conduct their business in
a competitive, customer-driven fashion, but the rest of us,
that businesses of all sizes can and should be subject to
the same kinds of laws and for-the-common-good restrictions
as the rest of us, is a good thing in my book.
Scramble to register those deeds folks. Hey—that even ought
to create a few jobs.