A ‘Little Judge’ Who Rejects Foreclosures, Brooklyn St yle

[Cees Binkhorst]

REPLY TO: D66 at nic.surfnet.nl

In ieder geval één rechter die bij zijn verstand is.

Een hypotheek van $500.000 voor een gebouw van $300.000 tegen 20% rente,
moet toch kunnen?

De Deutsche Bank vindt van wel, of was Goldman Sachs nou de eigenaar?
Zelf weten ze het niet meer ;)

Groet / Cees

http://www.nytimes.com/2009/08/31/nyregion/31judge.html
August 31, 2009
A ‘Little Judge’ Who Rejects Foreclosures, Brooklyn Style
By MICHAEL POWELL

The judge waves you into his chambers in the State Supreme Court building
in Brooklyn, past the caveat taped to his wall — “Be sure brain in gear
before engaging mouth” — and into his inner office, where foreclosure
motions are piled high enough to form a minor Alpine chain.

Every week, the nation’s mightiest banks come to his court seeking to take
the homes of New Yorkers who cannot pay their mortgages. And nearly as
often, the judge says, they file foreclosure papers speckled with errors.

He plucks out one motion and leafs through: a Deutsche Bank representative
signed an affidavit claiming to be the vice president of two different
banks. His office was in Kansas City, Mo., but the signature was notarized
in Texas. And the bank did not even own the mortgage when it began to
foreclose on the homeowner.

The judge’s lips pucker as if he had inhaled a pickle; he rejected this one.

“I’m a little guy in Brooklyn who doesn’t belong to their country clubs,
what can I tell you?” he says, adding a shrug for punctuation. “I won’t
accept their comedy of errors.”

The judge, Arthur M. Schack, 64, fashions himself a judicial Don Quixote,
tilting at the phalanxes of bankers, foreclosure facilitators and lawyers
who file motions by the bale. While national debate focuses on bank
bailouts and federal aid for homeowners that has been slow in coming, the
hard reckonings of the foreclosure crisis are being made in courts like
his, and Justice Schack’s sympathies are clear.

He has tossed out 46 of the 102 foreclosure motions that have come before
him in the last two years. And his often scathing decisions, peppered with
allusions to the Croesus-like wealth of bank presidents, have attracted
the respectful attention of judges and lawyers from Florida to Ohio to
California. At recent judicial conferences in Chicago and Arizona, several
panelists praised his rulings as a possible national model.

His opinions, too, have been greeted by a cry of affront from a bank
official or two, who say this judge stands in the way of what is
rightfully theirs. HSBC bank appealed a recent ruling, saying he had set a
“dangerous precedent” by acting as “both judge and jury,” throwing out
cases even when homeowners had not responded to foreclosure motions.

Justice Schack, like a handful of state and federal judges, has taken a
magnifying glass to the mortgage industry. In the gilded haste of the past
decade, bankers handed out millions of mortgages — with terms good, bad
and exotically ugly — then repackaged those loans for sale to investors
from Connecticut to Singapore. Sloppiness reigned. So many papers have
been lost, signatures misplaced and documents dated inaccurately that it
is often not clear which bank owns the mortgage.

Justice Schack’s take is straightforward, and sends a tremor through some
bank suites: If a bank cannot prove ownership, it cannot foreclose.

“If you are going to take away someone’s house, everything should be legal
and correct,” he said. “I’m a strange guy — I don’t want to put a family
on the street unless it’s legitimate.”

Justice Schack has small jowls and big black glasses, a thin mustache and
not so many hairs combed across his scalp. He has the impish eyes of the
high school social studies teacher he once was, aware that something
untoward is probably going on at the back of his classroom.

He is Brooklyn born and bred, with a master’s degree in history and an
office loaded with autographed baseballs and photographs of the Brooklyn
Dodgers. His written decisions are a free-associative trip through
popular, legal and literary culture, with a sideways glance at the
business pages.

Confronted with a case in which Deutsche Bank and Goldman Sachs passed a
defaulted mortgage back and forth and lost track of the documents, the
judge made reference to the film classic “It’s a Wonderful Life” and the
evil banker played by Lionel Barrymore.

“Lenders should not lose sight,” Justice Schack wrote in that 2007 case,
“that they are dealing with humanity, not with Mr. Potter’s ‘rabble’ and
‘cattle.’ Multibillion-dollar corporations must follow the same rules in
the foreclosure actions as the local banks, savings and loan associations
or credit unions, or else they have become the Mr. Potters of the 21st
century.”

Last year, he chastised Wells Fargo for filing error-filled papers. “The
court,” the judge wrote, “reminds Wells Fargo of Cassius’s advice to
Brutus in Act 1, Scene 2 of William Shakespeare’s ‘Julius Caesar’: ‘The
fault, dear Brutus, is not in our stars, but in ourselves.’ ”

Then there is a Deutsche Bank case from 2008, the juicy part of which he
reads aloud:

“The court wonders if the instant foreclosure action is a corporate
‘Kansas City Shuffle,’ a complex confidence game,” he reads. “In the 2006
film ‘Lucky Number Slevin,’ Mr. Goodkat, a hit man played by Bruce Willis,
explains: ‘A Kansas City Shuffle is when everybody looks right, you go
left.’ ”

The banks’ reaction? Justice Schack shrugs. “They probably curse at me,”
he says, “but no one is interested in some little judge.”

Little drama attends the release of his decisions. Beaten-down homeowners
rarely show up to contest foreclosure actions, and the judge scrutinizes
the banks’ papers in his chambers. But at legal conferences, judges and
lawyers have wondered aloud why more judges do not hold banks to tougher
standards.

“To the extent that judges examine these papers, they find exactly the
same errors that Judge Schack does,” said Katherine M. Porter, a visiting
professor at the School of Law at the University of California, Berkeley,
and a national expert in consumer credit law. “His rulings are hardly
revolutionary; it’s unusual only because we so rarely hold large
corporations to the rules.”

Banks and the cottage industry of mortgage service companies and
foreclosure lawyers also pay rather close attention.

A spokeswoman for OneWest Bank acknowledged that an official, confronted
with a ream of foreclosure papers, had mistakenly signed for two different
banks — just as the Deutsche Bank official did. Deutsche Bank, which
declined to let an attorney speak on the record about any of its cases
before Justice Schack, e-mailed a PDF of a three-page pamphlet in which it
claimed little responsibility for foreclosures, even though the bank’s
name is affixed to tens of thousands of such motions. The bank described
itself as simply a trustee for investors.

Justice Schack came to his recent prominence by a circuitous path, having
worked for 14 years as public school teacher in Brooklyn. He was a union
representative and once walked a picket line with his wife, Dilia, who was
a teacher, too. All was well until the fiscal crisis of the 1970s.

“Why’d I go to law school?” he said. “Thank Mayor Abe Beame, who froze
teacher salaries.”

He was counsel for the Major League Baseball Players Association in the
1980s and ’90s, when it was on a long winning streak against team owners.
“It was the millionaires versus the billionaires,” he says. “After a
while, I’m sitting there thinking, ‘He’s making $4 million, he’s making $5
million, and I’m worth about $1.98.’ ”

So he dived into a judicial race. He was elected to the Civil Court in
1998 and to the Supreme Court for Brooklyn and Staten Island in 2003. His
wife is a Democratic district leader; their daughter, Elaine, is a lawyer
and their son, Douglas, a police officer.

Justice Schack’s duels with the banks started in 2007 as foreclosures
spiked sharply. He saw a plague falling on Brooklyn, particularly its
working-class black precincts. “Banks had given out loans structured to
fail,” he said.

The judge burrowed into property record databases. He found banks without
clear title, and a giant foreclosure law firm, Steven J. Baum,
representing two sides in a dispute. He noted that Wells Fargo’s chief
executive, John G. Stumpf, made more than $11 million in 2007 while the
company’s total returns fell 12 percent.

“Maybe,” he advised the bank, “counsel should wonder, like the court, if
Mr. Stumpf was unjustly enriched at the expense of W.F.’s stockholders.”

He was, how to say it, mildly appalled.

“I’m a guy from the streets of Brooklyn who happens to become a judge,” he
said. “I see a bank giving a $500,000 mortgage on a building worth
$300,000 and the interest rate is 20 percent and I ask questions, what can
I tell you?”

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