Here's the essence of contract law.
Two parties come to an agreement and sign a piece of paper.
A loan is a contract.
If the owner of a loan wants to enforce it (including predatory conditions), it
has to do two simple things:
1. Produce the paperwork
2. Prove it owns the loan, Guess what?
In their brilliant financial machinations, the "Masters of the Universe" on Wall Street forgot these two simple laws.
Result: There are a lot of houses in foreclosure where:
1. The paperwork can't be found
2. No one is able to figure out who actually owns the loan because it's
been sold, resold, packaged and repackaged so often.
One Ohio Congresswoman has a word of advice for the thousands of people in her district now in foreclosure:
"Stay put" and when the sheriff comes, tell him to "Show me the paper."
You know, it sometimes takes a very, very long time, but there often is justice in
Produce the note
Follow the law
Wall Street and its co-conspirators on Main Street had a great plan.
Step 1: Ram predatory loans down the market with fraud and deceptive marketing.
Step 2: Some of the loans will blow up, but in the aggregate it will all work out and besides, the loans will be bundled and sold off to investors (spreading the toxic waste), so who cares?
Great plan, but it had a few problems.
Problem #1: It destroyed the world financial system (minor detail)
Problem #2 (And he's where it get VERY interesting...) For a loan to be valid, the lender needs to be able to produce the paperwork.
In their mad greed to screw the American people and line their own pockets, Wall Street forgot that little detail.
Many of these loans and been sliced and diced and sold and re-sold so many times that not only is the paperwork not easy to lay hands on, in some cases, it's not clear who actually owns the loan.
Here's where property law comes in.
If the bank can't produce the documents and the real owner of the loan can't be identified, the contract is null and void.
You've got to hand it to Congresswoman Marcy Kaptur (and Ohio which produces a lot of great Congresspeople.)
By telling a bank to "produce the note," a homeowner can delay foreclosure by forcing the lender to prove the suing institution is actually the same which owns the debt.
Now, the banks own sloth and disorganization (and inherent dishonesty) can be used against it.
Final word: The media (and Wall Street and its criminal partners in Congress and the former Bush White House) love to call these loans sup-prime.
Here's the old fashioned word: predatory.
Many of the loans that were made in the past five years that have created so many problems would have been illegal until Bush & Co not only gutted lending laws, but also literally sued states to stop them from enforcing their own lending laws.
Former governor Elliott Spitzer was the ring leader of the state movement to enforce local lending laws...and you saw what happened to him.
He's no saint (and truth be told, he's kind of a jerk) but if every politician who went to hookers was busted, Washington and all the state capitals would be ghost towns
Why Elliot Spitzer was assassinated