Due process does not disappear merely upon the assertion by one party that the other is clearly liable. The allegations of problems in mortgage servicing should, if anything, only heighten the due process requirements on consumers. For example, in light of the lack of verification procedures for affidavits to support requests for judgments in judicial foreclosures, it may be reasonable to be concerned that there is absolutely no verification of the facts in the non-judicial foreclosure context. Thus, we might argue that states or the federal government ought to increase the legal requirements for foreclosures across the board, at least for loans initiated in the last five to ten years when widespread allegations of paperwork and procedural problems have existed. The banks’ arguments that we can ignore possible systemic wrongdoing by the banks because as a systemic matter, homeowners are in default on their loans, is unpersuasive. Indeed, it seems to reflect a fundamental misunderstanding of the obligations of any party wishing to invoke the aid of the law in enforcing its rights.
For example, Brian Moynihan, the CEO of Bank of America, said on October 14, shortly before Bank of America reinitiate foreclosures in some states, that about a third of the homes Bank of America seizes are vacant, and that borrowers in foreclosed homes typically haven’t made payments for 15 to 24 months.16 Mr. Moynihan’s statement is likely correct; there are thousands of homeowners in America who cannot pay their mortgages and for whom the foreclosure mitigation options are failing. But Mr. Moynihan’s facts are also completely irrelevant to the concerns about foreclosure process. As I have explained recently: