Under Every Rock

In explaining the labyrinthine world of foreclosures to new clients, I always find myself explaining that “Under every rock you turn over (in mortgage foreclosures), you will find a snake.”

And just about everyone (on the plaintiff’s side of foreclosures) gets to play the part of the snake.  The big Wall Street bankers played that role all along, in fact, it obviously comes quite naturally to them.  The bank’s lawyers also seem to find it easy to “slip that skin on.”  We’ll talk more about their contributions in another post.


The loan servicers represent a very big snake, and are perhaps the best example of what I’m talking about.  They don’t own the loans, they don’t have “skin in the game,” as they say, but they drive the bus.  All their decisions while doing that “driving” are influenced by their own narrow, selfish interests.  This is what we call a conflict of interest.  They abound in foreclosures.

Here’s a small example of that.  Most homeowners complain about the behavior of the banks, whether it be the handling of homeowner payments and escrows, in filing a foreclosure in the first place, and, of course, their decisions in the course of modification negotiations.

Even when they’re losing in Court, the banks are reckless, seemingly oblivious to reality.  Part of the reason for that is that they are insulated from reality.  The banks (and their servicers) tend to “award” foreclosure cases to their law firms in huge lots, typically hundreds or even thousands of cases at a time.  Those lawyers lives are literally changed by this “windfall” of business, and if they do it right, they can get rich off those cases.  So, they tend to live in fear of losing them.  As a result, they try very hard not to give their clients any bad news which they can possibly avoid.  To do so would be to risk having all their cases pulled out, and assigned to another law firm (and that law firm get rich…).  So, even if they’re losing in Court, they don’t necessarily share that information with the bank

The lack of that “feedback” mechanism that most people have with their lawyers permits them, even causes them to act just the same as ever, without regard for what is going on in the case.  So, they don’t act in a business-like fashion like most litigants would, instead they are essentially schizophrenic.

Just my opinion…

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