This is a redo of my last blog. The reason I am re-writing it is because the link at the bottom is an order from the United States Bankruptcy Court or the District Of Maryland (Baltimore Division) approving SPS purchase of the servicing rights
I flew to Salt Lake City to take the deposition of the only witness Select Portfolio Servicing (SPS) intends to call at trial in an upcoming judicial foreclosure case in King County, Washington. The witness did not seem to know much about the facts. For example, the SPS witness (a lawyer) did not know SPS had purchased the “servicing rights” for my clients alleged “home loan” from a bankruptcy trustee for .077 of the unpaid principal plus all accounts receivable owe the note holder. That’s right the witness did not know SPS bought the servicing rights for less than a penny on the dollar or the terms regarding that purchase agreement. I have attached a link to the document below. Pay particular attention to paragraph 3.01 at page 5 of the agreement.
If SPS, allegedly suing on behalf of the trust and its certificate holders, wins the case against this borrower the trust and the certificate holders likely will get little, if anything, out of the lawsuit. SPS will have paid less than $15,000 in order to go after a once middle class American to collect a $1,500,000 + “judicial jackpot”. SPS’ low cost stake in pursuing this once middle class citizen, and others like him, is the process which is slowly destroying the fabric of America and causing many to appropriately question the fairness of our courts.
Does SPS pursuit of this man’s home seem equitable to you? It does not to me.
Ever wonder why modern day judges don’t want to know more about the equities of specific foreclosures? Ever wonder why judges don’t want to hear the facts before they give citizen’s houses to the banks and/or servicers?
Here is my take on one aspect of the problem; Courts ignore the equities.
In the Old Testament a Biblical judge was “a ruler or a military leader, as well as someone who presided over legal hearings.” During the English feudal system private disputes were resolved by the King’s Council. This Council had virtually unlimited jurisdiction over executive, judicial and legislative functions. Later the power to decide private disputes was given to a smaller curia, which was divided among different types of courts. Over time these courts evolved into the “law courts”. Because strictly following contracts and/or the law too often resulted in unjust decisions, chancery courts, were born. The chancery courts were under the jurisdiction of the Lord Chancellor and were designed to apply “equity” to ameliorate the harsh effects of simply applying the common law.
Equity has been described as that set of maxims that “reign over all the law” and “from which flow all civil laws”. Early chancery courts dealt with verbal contracts, matters of land law and matters of trusts. Chancery courts had a liberal view when setting aside complaints about the judgments of law courts; poverty, for example, was an acceptable reason to cancel a contract or obligation.
One of equity’s maxims which seems very applicable today is “equity will not allow a statute to be used as a cloak for fraud.” Isn’t this likely what has occurred here? SPS purchases the serving rights of a “mortgage loan” for less than a penny on the dollar and then simply collects and keeps all of the claimed amounts claimed to owed as if this debt was owed to SPS, not the MBS certificate holders. If this is what is happening (and I have every expectation that it is), why don’t courts in Modern day America care? Why don’t modern American courts use their equity jurisdiction to follow the money and arrive at a result which is fair?
Even England’s early feudal system understood that justice must be preferred over law. During the reign of Henry VI plaintiffs in the common-law courts could not execute judgments given by the common-law judges if the Lord Chancellor felt their claim was “against conscience”.
Of course, law courts did not like this and a rivalry developed, which came to a head in 1651, when it was alleged that a judgment of Chief Justice Coke was allegedly obtained by fraud. The Lord Chancellor, Lord Ellsmore, issued a common injunction from the Chancery prohibiting the enforcement of the common law order. The law court’s resisted and an appeal was taken to the King. The King referred the matter to attorney general for the Prince of Wales and Sir Francis Bacon, the attorney general for England and Wales. They decided, and the King accepted,
as mercy and justice be the true supports of our Royal Throne; and it properly belongeth to our princely office to take care and provide that our subjects have equal and indifferent justice ministered to them; and that when their case deserveth to be relieved in course of equity by suit in our Court of Chancery, they should not be abandoned and exposed to perish under the rigor and extremity of our laws, we … do approve, ratify and confirm, as well the practice of our Court of Chancery.
The Courts of America today appear more unfair than those which existed in English feudal times. In Washington state, for example, some judges will not even allow borrowers to discover facts with regard to whether servicers, like SPS, have followed statutes. Some federal judges will not even acknowledge that it is appropriate to use equity where strictly following the law results in an unfair result in violation of the maxims of equity.
The concerned citizen today can reasonably ponder why contemporary American courts ignore equity when deciding many of the foreclosure cases which come before them. Are courts in the 21st century less fair than those in feudal times?
Does justice for homeowners exist in America today? Some of us, who observe the process closely, think that more often not the answer to this question is “no”. Borrowers are all too often not afforded even their most basic constitutional rights.
#ScottStafne #Equities #equitable jurisdiction #unfair #Select Portfolio Servicing #thornberg trust