Zywicki in WSJ: Judicial Role in Foreclosure Challenges

Professor Todd Zywicki's comments were cited in a Wall Street Journal article that looked at the issue of judicial impartiality in cases where state and federal judges are ruling against lenders' claims in foreclosures.

To some, the growing number of cases of this type appear to be a method of punishing mortgage companies for paperwork mistakes and perceived mistreatment of borrowers.

"The question is whether judges are changing the rules in the middle of the game...just because there is a financial crisis," said Zywicki, who is critical of policy initiatives designed to curtail lenders' ability to foreclose on borrowers.

Complicating matters is the common practice of mortgage companies in filing foreclosure claims without providing proof of ownership of the mortgages. This practice is the result of mortgages changing hands repeatedly without commensurate alterations to reflect changes in ownership. In some cases, judges are refusing to recognize ownership without legal assignment of the mortgages in question.

Foreclosure Challenges Raise Questions About Judicial Role, The Wall Street Journal, December 24, 2009. By Amir Efrati.


"Now, after the country has been mired in a housing crisis for more than two years, more judges are calling these companies on their paperwork glitches, and in some cases going much further in their efforts to help homeowners.

"It makes sense for judges to demand that mortgage companies follow the rules to the letter if they want to win foreclosure cases in court, says Raymond Brescia, an assistant professor at Albany Law School who has written about the role of the courts in the financial crisis. 'I don't think that's a crazy idea,' he says. 'To expect plaintiffs to prove their case is what the judicial system is founded on.'

"But if judges decide to help borrowers in ways that overlook the merits of individual cases, Mr. Brescia adds, that would 'undermine the integrity of the judiciary, and that's not going to help anybody.' Instead, he says, it might trigger a backlash from legislators or regulators to rein in activist jurists."