New York Judge Jeffrey Spinner's decision in the Suffolk County Supreme Court on November 19, 2009, reciting standards reported more than 100 years ago, denied access to foreclose to a lender. This ruling is not the typical solution banks currently offer to borrowers in trouble. It’s not a 3 month trial plan, not a series of unanswered phone calls, or discussions with lender representatives who don’t have a last name, or a phone number that rings at their desk. The ruling was made because the bank in question failed its responsibility to know its clients and act in good faith.
This ruling says categorically, "Come to court with knowledge of the families and clients you have permitted to borrow money against their homes, and in each case, work in "good conscience and justice."
But this is far from an isolated case. Recently, headlines have screamed about the United States Treasury Department's Assistant Secretary for Financial Institutions opinion that "The banks are not doing a good enough job" and that “some of the firms ought to be embarrassed, and they will be."
But current data bear out the good secretary’s accusations. Out of 500,000 loan modifications, less than 2000 have secured "permanent" status under the Obama Administration loan modification policies and regulations. Based on those odds, about one in 250, you’d have a greater chance of success at the roulette tables in Vegas.
Why should we be so pessimistic? After all, the White House, Secretaries of our Federal Government and chief financial officers and economists are all in agreement that these results are not acceptable. Since we have this consensus and agreement, where is the mandate to modify these loans and stop foreclosure? The answer it seems lies in our own backyard.
An old saw says "If wishes were horses, beggars would ride." Harsh sentiments indeed, but that statement describes nicely how federally mandated orders for banks to modify loans and reduce foreclosures have been ignored. Imagine if only the elected officials in the highest offices throughout our land read this decision? Maybe this wish will be granted and we should all learn to ride.From the author: Richard Rubin is a Foreclosure Attorney practicing in New York