Judges, Lawyers and Bank Fraud

Recently, the New York Times reported on “Two Judges Who Get It About Banks“.  Decisions by the two judges addressed unscrupulous and illegal bank practices, in these cases by Wells Fargo, that led to wrongful foreclosure.  The cases are demonstrative of the deceit and fraud that caused much of the mortgage foreclosure crisis. 

The first case involved a wrongful foreclosure against Mr. and Mrs. Holms.  They were told that a payment of  $10,000.00 would stop the foreclosure and if they faxed a copy of the check to Wells Fargo that the foreclosure scheduled for the next day would be cancelled.  The couple managed to raise the funds, faxed the check copy and Wells Fargo proceeded anyway.  The couple learned as soon as a lawyer was retained that they had a viable defense to the original foreclosure.  

“Defendant Wells Fargo’s deceptive and intentional conduct displayed a complete and total disregard for the rights of David and Crystal Holm,” wrote Judge R. Brent Elliott, a circuit judge in Missouri’s 43rd Judicial District, in his Jan. 26 opinion. “Wells Fargo took its money and moved on, with complete disregard to the human damage left in its wake.”  The court awarded the Holms $200,000.00 in actual damages, attorney’s fees and nearly $3,000,000.00 in punitive damages.

In the second case, New York Bankruptcy Judge Drain, heard a separate case involving Wells Fargo.  In that case it became clear that Wells Fargo had manufactured evidence purporting to make the bank the legitimate owner of the debt at issue. The testimony, Judge Drain noted, shows “a general willingness and practice on Wells Fargo’s part to create documentary evidence, after the fact, when enforcing its claims, WHICH IS EXTRAORDINARY.” (Original emphasis)

The White Plains lawyer who represented the debtors, Linda Terelli, commented:  “I very respectfully disagree that this is extraordinary…This is business as usual, not just at Wells Fargo.”

So the question arises why are these cases newsworthy?  The judges are to be applauded for their findings.  Some might call this courageous judging.  Their findings certainly were unusual and welcomed. But these judges were simply doing their jobs well.   Without regard to clearing dockets and other administrative considerations, these judges listened and weighed the evidence, made findings and took offense at the bank’s disregard for the law and process.  

There have, however, been thousands of similar foreclosure cases across the nation.  Why now are we hearing of cases addressing bank fraud and assessing penalties against those institutions who engaged in fraud?  Why haven’t judges made these findings before?  Is it poor lawyering? The inability of debtors to hire counsel?  Are the attorneys retained by debtors quickly overwhelmed by the aggressive tactics of the bank attorneys?    We may not have the answers to those questions although it seems implausible that so many years after the foreclosure crisis started debtors are only now presenting evidence of fraud and forgery.   The sad stories of those who lost their homes, of broken families and dreams, reinforce the need for Civil Gideon statutes.  Appointment of competent counsel in civil cases that so fundamentally alter people’s lives must be viewed as a right and not as a privilege that the state cannot afford.