Can Homeowners Win Foreclosure Cases?

This is an excerpt from an article in the East Bay Express by By , with the full article at the title link:

Are Foreclosure Cases Rigged?  

The Gaines case was one of thousands of similar losses by California homeowners in state courts during the past several years. The legal setbacks have demoralized homeowners and their attorneys and caused them to question the integrity of California’s justice system. Some attorneys who have sparred with the giants of the real estate industry say California’s courts exhibit an institutional bias in favor of the banks: The banks are said to be too big to fail and too big to jail.

Adams believes that the deference most judges have shown to the banks has done enormous damage to the economy. “Had courts enforced the law against the lenders the Great Recession did not have to occur,” he said. “Many of us were after the New Centurys, the Ameriquests, and Countrywides well before the collapse. Even after the economy imploded, most judges did their best to protect the business interests of the predatory lenders by cynically not wanting to let the consumers off the hook” for taking out loans they had trouble paying back.

Homeowners, of course, weren’t the only parties in court looking out for their economic interests. The banks have resisted lawsuits brought under state consumer protection laws in order to maximize their profits from the foreclosure crisis.

But there’s also the issue of the potential economic motives of the judges themselves. For example, the two appellate court judges who dismissed the Gaines case had significant personal financial investments in banks and mortgage lending companies, public records show.

Judge Elizabeth Grimes, who voted against the Gaineses, owned between $100,000 and $1 million worth of stock in Bank of America, according to official records maintained by the state Fair Political Practices Commission. Bank of America purchased Countrywide in 2008. According to the state Code of Judicial Ethics, judges are required to disqualify themselves from any case in which they own stock or bonds with a fair market value exceeding $1,500.

“By the time the case came up for appeal, Countrywide was no longer a party to the action,” Joseph Lane, clerk of the Court of Appeal for the Second Appellate District, wrote in an email, explaining why it wasn’t considered a conflict of interest for Grimes to be involved in the appellate ruling.

But records show that Bank of America wasn’t Grimes’ only large investment in the banking sector. She also owns between $100,000 and $1 million of stock in Wells Fargo and US Bank, and between $10,000 and $100,000 in Citibank, giving her potentially a multimillion-dollar interest in the profitability of the mortgage lending industry.

In addition, Judge Patricia Bigelow, who wrote the majority opinion against the Gaineses, owned possibly as much as $10,000 worth of stock in Bear Stearns, an investment bank that was responsible for securitizing trillions in mortgage loans in the 2000s. Bear Stearns was bought by JPMorgan Chase in 2008. Even the dissenting judge, Rubin, had a stake in the mortgage industry, owning thousands of dollars worth of Wells Fargo stock. And the Los Angeles County Superior Court judge who originally dismissed the case, Rolf Treu, owned as much as $10,000 worth of stock in Citibank.

. . .

Patricia Rodriguez, an attorney who has brought homeowner lawsuits in multiple counties, said judge ownership of financial company stocks is just more evidence of the broader justice system bias in favor of banks and against homeowners. “In general, the judges are unfair to borrowers,” she said. “I’ve seen cases where the judge made a prejudiced statement before trial, saying of a plaintiff, she’s ‘trying to get a free house.'”

. . .

But attorney Patricia Rodriguez said the fact that so many judges have significant financial investments in the banking and mortgage industry means that they’re inclined to rule against homeowners because a string of cases against the banks could reduce the profitability of the entire sector. “They don’t want to be the judge that allows forty million mortgages to go back to the borrowers,” Rodriguez continued. “They don’t want to possibly set a precedent.”

. . .

“It was very clear that there is one form of justice for the small borrower and another form of justice for the moneyed interests,” said attorney Adams, who is retired and who, as a result, says he is now free to state these things publicly without fear. “It pains me to say that, but having seen the real estate debacle and the judiciary’s protection of these fraudulent practices, I have reluctantly come to that conclusion.”

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