A Sigh -- Hang in there, borrowers.
I am a solo practitioner who decided, when no other options presented themselves for my clients in foreclosure, to take on big banks on behalf of borrowers. Two recent losses in federal court -- Pennington v. Wells Fargo and Sims v. Carrington Mortgage Services -- are a reminder that seeking to un-do events from the 2007 mortgage meltdown faces enormous hurdles. Unprecedented events in the world at large combine with a lack of precedent in the legal arena to make it hard to fight lending practices that seem outrageous and unfair but find no clear prohibition in the law. Courts are being asked to hold banks accountable for actions done on a system-wide basis, the financial consequences of which could be colossal. The banks bring great resources to bear in fighting borrowers and solo lawyers. While I am hopeful that the Carrington federal district court dismissal will be reversed, the reality is that modifications like the ones in that case (where loan principal was increased without formalities) are everywhere, systemic, and simply assumed by many to be valid if for no other reason than the fact that they were done. The banks argue, in essence, that their lending practices have to be allowed even if they violate the Texas Constitution since forbidding them would benefit undeserving borrowers who defaulted -- never mind that these practices benefitted the banks by keeping loans on devalued assets performing and generating cash at some baseline level that they otherwise would not have. At the same time, the banks argue that they must be free to offer the same sorts of deals to other borrowers in financial distress. Borrowers are either ungrateful freeloaders or the lucky future beneficiaries of bank beneficence, depending on what level of the inferno they occupy. From recordings, we now know that the banks have announced policies of not modifying any Texas home equity loans, in any way. That, too, is wrong on the law, and directly in conflict with the banks' position that the Texas Constitution Section 50 was written to give banks the freedom to do more or less as they wish. It puts me in mind of Lance Armstrong and the overwhelming evidence that has come out against him. At what point do the wealthy and powerful finally give in and admit they were wrong?