The Wall Street Journal editorial page, defenders of capitalism and rule of law, along with the mortgage industry’s spinmeisters would have you believe that this bank foreclosure fiasco and the robo-signing controversy is just a matter of some paperwork filing errors.
What they underestimate (or intentionally misrepresent, depending on who you think they’re working for) is the significance of documents in real estate transactions throughout U.S. legal history as well as that of England.
Property rights are the underpinning of our capitalistic democracy. And in particular land rights are considered so important that we want to make sure there’s no confusion about who owns what. As anyone who has ever bought a home can tell you, our society requires written documentation along with various other hoops to jump through before land can be transferred.
The Statute of Frauds (which, fyi, has little to do with fraud) espouses the principle that real estate transactions must be in writing. If you want to make a contract to sell your computer to someone else, a verbal contract is legally binding. However, when it comes to real estate, it’s got to be in writing or it’s essentially not enforceable.
The paperwork problems that Bank of America, GMAC, JPMorgan Chase, et al. have struggled with are very much apart of the important paper trail involved in real estate transactions in our society. To suddenly try to spin these as insignificant clerical errors, to say that it’s ok that bank employees didn’t follow proper procedures, might be akin to the banks saying that their employees don’t need to obey traffic signals. A minor offense in the grand scheme, but a requirement for our society to function well in the big picture.
If you’re dealing with New York foreclosure issues and have questions about how the current foreclosure fiasco might affect you, please feel free to contact me for a free initial consultation.
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