We have witnessed half a dozen years of judicial foreclosure battles in Florida that made no sense at all and that monumentally wasted public and private resources.
At first, the foreclosure defense industry had no clue what to do. But it always had the choice of attacking the mortgage's certain causes of action like appraisal and loan application fraud, or of attacking the foreclosure itself. Lawyers quickly learned the benefit of keeping the client in the house a while longer for a small retainer and monthly payments that the client should have kept for the eventual move out of the house. Meanwhile, the foreclosure industry developed virtually no skill at fighting the lender over the causes underlying the mortgage itself.
It took a few years of court rulings to wake people up to the reality of FAILING arguments like produce the note, robo-signing, securitization, etc. At best they only postponed the inevitable at great cost to both parties. The smart foreclosure victims did a keys for cash deal and moved on. The rest just wasted public and private resources and eventually lost the house anyway. In the end, the note holder or holder's agent can foreclose a defaulted note.
The article linked above brings this point home in spades as it lobbies for a non-judicial foreclosure process for states like Florida. As a law philosopher, I see the arguments on all sides of the issue. I look at the typical foreclosure defense as a form of guerrilla war against lenders. Borrowers never bother fighting the more legitimate, political, battle against the government and lending industry for their roles in the predatory lending that collapsed jobs and homeowner equities, as documented in the Financial Crisis Inquiry Commission Report of 2011.
How can they fight such a battle? First of all they remain preoccupied with living their lives and have no time or interest in the battle. Until they face foreclosure. Then they haven't the peace of mind or financial means for the battle. And they haven't the legal education. And they cannot prove the connection between behavior identified in the report and their particular lender in their particular loan - in other words, they cannot prove their loan's role in the conspiracy. And of course, no law firm will take up such a gauntlet without certainty of winning the battle against the lending industry and government combined.
Borrowers cannot win the political battle either. They haven't the resources to support a political action committey (PAC) that stands a chance against the PACS of the banks, and our stubborn, stodgy, corrupted Congress.
So, I don't see the point of fighting such a battle at all, not through political action, class action lawsuits, or individual foreclosure defense. After all, if the borrower cannot prove the lender's role in that FCIC conspiracy, and the borrower has a valid loan, then the borrower must forfeit the house for defaulting on the loan. It's that simple.
And a protracted judicial foreclosure battle unfairly penalizes honest lenders. Why should such a lender have to spend tens of thousands of dollars to foreclose a loan on a house that's worth half of the loan balance? By what right should a lender have to forfeit a judgment lien for a related deficiency just to get the defaulted borrower out of the house without a court battle?
As I see it, the non-judicial foreclosure cuts right to the heart of the matter. It avoids a costly legal battle UNLESS the borrower has the pluck and resources to file a lawsuit against the lender for torts, contract breaches, or legal errors. NOTHING ELSE justifies dragging out the foreclosure process in court. Many state legislatures have already come to this conclusion, and that's why they embrace only non-judicial foreclosures.
Florida's Constitution, Article I Section 10 provides "No law shall... impair the obligation of contracts." I believe Florida's long, drawn-out judicial foreclosure process does exactly that. At the same time, Florida Statute 90.953 provides that the court cannot admit into evidence a copy of a negotiable instrument (like a mortgage note). For this reason, I believe the court should require the original for all foreclosures unless the lender can provide proof of destruction by fire, or loss to theft, etc., as required by the UCC in Florida Statute 673.3091. The law should require courts to sanction foreclosers who repeatedly allege they lost or destroyed the note.
I personally believe the law should require every forecloser to appear in person or through counsel with the original note with all allonges, and the records of payment history, servicer correspondence, and notice of default, and submit them for forensic examination if desired by the borrower, prior to non-judicial foreclosure. If the forecloser cannot do that, the law should require a judicial process in which the borrower can challenge the validity of the note and payment history. After all, the note is both the contract and the ultimate proof of indebtedness.