That’s an observation by the esteemed Supreme Court jurist, Oliver Wendell Holmes, Jr. It means that outlier cases do not provide much in the way of guidance so far as revealing what the policy should be. But the outliers make for so much better copy.
So it is with Jason Grodensky whose house was sold at auction a few months after he paid cash for it. Ann Woolner of Bloomberg News made Grodensky’s unfortunate situation her lead-in to justify the public flogging banks and mortgage companies have lately been receiving over mistakes made in the conduct of foreclosures:
Jason Grodensky paid cash for a South Florida home last December. With no mortgage and full ownership, he had no fear of foreclosure.
And yet, Bank of America foreclosed on the house seven months later, according to the South Florida Sun Sentinel. The court-ordered foreclosure took place July 15.
Grodensky tried for months to get answers from the lawyers and lenders involved. He got nowhere until he contacted the newspaper which started poking around. Now, Bank of America says it will straighten out the mess at its own cost, the Sun Sentinel reports.
Banks that are suspending foreclosures in much of the country call mistakes in paperwork mere technical errors. This implies that the foreclosures, or most of them, were otherwise on solid legal ground and that any mistakes were the unintended result of trying to handle too many cases in too little time.
No harm. No foul, right?
Not true. A great deal of harm has been inflicted, and not just on the rare homeowner wrongly judged to be delinquent.
Here’s a principle of journalism, even of opinion journalism: It’s possible that your readers are not as stupid as you think. Be careful how contemptibly you treat them.
Mr. Grodensky’s case is an unfortunate anomaly. He bought the house in a short sale after the foreclosure process had been initiated. A short sale is where the lender agrees to take less than is owed on the outstanding mortgage. Mr. Grodensky knew full well the existing mortgage on the house was in default, and should have known that a foreclosure had been initiated on it. He wouldn’t have been getting the property for less than was owed otherwise. Read the article in the Sun Sentinel and you find out that he bought the house as an investment with some other family members. In other words, Mr. Grodensky was what the business rags like to call a “vulture investor”. Now vultures play a valuable role in both nature and markets by picking carcasses of dead animals clean, but please don’t make him out to be a victim that stood to lose his home without recourse to the bank because of its ineptitude in signing foreclosure affidavits. According to the Sun Sentinel article, Mr. Grodensky didn’t even live in the house. So much for the attractiveness of his victimhood.
Additionally, Mr. Grodensky was never “wrongly judged to be delinquent” as Ms. Woolner claims. A mortgage that Mr. Grodensky never signed, against a home that he didn’t own when it was signed, happened to be errantly foreclosed against property he had recently purchased. It had nothing to do with him or with his interest in the property. So far as the foreclosed mortgage is concerned, Mr. Grodensky’s name would never have come up. He was not judged delinquent. He was not judged at all.
It’s not clear whether Mr. Grodensky purchased an owner’s policy of title insurance with his purchase of the home. An owner’s policy protects the owner from title defects, such as the cloud on title that an errantly-foreclosed mortgage would constitute. If he did purchase an owner’s policy, then the problem belongs to the title company. If he tried to close on the cheap and didn’t get an owner’s policy, he still can get at the offending party (i.e., the bank), but he’ll have to do it himself. Or, apparently, get the newspaper to do it for him.
But really, while this sounds bad, it is a readily-fixable problem, with at least a couple of options for curing title: The foreclosing bank can cancel its deed (not the best option), or the entity that received the house in foreclosure (Fannie Mae) can simply convey its interest to Mr. Grodensky (the better solution). No problem. I’ve fixed titles with similar problems for years, and curiously enough, none made national headlines.
This problem is not the result of some overbearing, rapacious foreclosure mill that cares not a whit about the damages it inflicts upon the borrowers as it wretches property titles from their hands. This is a simple mistake, bureaucratic in nature, most likely attributable to a failure in communication between the department at the bank that handle foreclosures and the one handling short sales. Bank bureaucracies may seem evil, but mostly they’re just stupid.
Mr. Grodensky’s case does not bolster the arguments being made for foreclosure moratorium, as recently initiated by Bank of America, the successor in interest to the foreclosed mortgage in question (the original loan was with Countrywide Home Loans, Inc., which was bought by Bank of America shortly after the foreclosure was filed in court). It is irrelevant, providing no useful guidance for either policy or law in its resolution. But I get it. While hard cases make bad law, they do make good copy.