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Where the American Dream Goes to Die... the Basement. - Blather. Rants. Repeat.
A Møøse once bit my sister ...
captainsblog
captainsblog
Where the American Dream Goes to Die... the Basement.
I needed to attend an actual foreclosure sale in Rochester a few weeks ago. It had been a while. This time, it was just to be sure that a scheduled sale of some clients' property had been postponed. Yes, it was; but it gave me a window on one of the seamiest sides of the legal, banking and realty professions- which, for years before, on that day and until just recently, had been conducted in one of the most ornate places of honor in the entire county:

On Independence Day, 1894, community leaders, responding to the continued tremendous growth in Monroe County, laid the cornerstone for the current Monroe County Office Building. Two years and $881,000 later, the four-story granite and marble courthouse was complete. Designed by J. Foster Warner in the style of the Italian Renaissance, the newest County Office Building set the trend for much of the development in Downtown Rochester that would follow. Never content with the building, a decision was made to construct a rear addition to the building in 1924, upping its total cost to $1,201,000.

It is built from granite and filled with marble, but the two platforms adjoining its inside central stairs have been, for decades, the home of the end of homeownership:



That's to the right as you walk up the stairs to the county clerk, executive, elections commissioners and other offices; there's a corresponding platform on the left. It has counterparts in other similar cities; losing title to your home often conjures images of "the courthouse steps," and  in this place there literally are stairs, if inside and covered. In other places, though, they occupy similar corners and keeps; Erie County's is famously known as the "foreclosure alcove," which, like Buffalo, is more pedestrian but just as final to the sense of loss you experience when your home goes there.

Mortgage foreclosure in New York is complex, picky and utterly impersonal.  The few firms that do 90-plus percent of them all do them in the same robotic, locked-down way.  I know, because I helped found the practice in one of them over 20 years ago. (Story for another day.)  Because of the nature of the mortgages and the utter insanity of their ownership- go rent The Big Short if you want to understand THAT- all these firms can do is proceed until they're forced to stop. The legislature and the court systems- state and bankruptcy- can put some controls and brakes in the process, but they can do very little to help a borrower in the face of the endless parade to those very steps or their equivalent.  Once a court-appointed referee announces "SOLD," there is virtually nothing any judge can do that will undo it.

I've trod only rarely on those steps since leaving the firm that became one of the state's leading foreclosure mills. Until recently, there was still an air of decorum over there.  But when I wandered over in June to make sure that my clients' sale had been properly postponed- a needed step, since foreclosure mills rarely accept phone calls, much less return them- I saw that this stately place of history had been turned into something out of the Wild Wild West.

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By 9:50 or so on the supposedly appointed day, the platforms on both corners of the steps were full with judicial process gone wild.  At least four referees- each a private lawyer appointed by a judge out of some random sort of respect or repayment for a campaign donation- were doing their statutory duty and reading aloud the Terms of Sale for their respective properties.

Simultaneously.

Our state Bar Association (a private organization to which most state lawyers belong- I don't- but which has great influence over the practice) helpfully puts out guides for these things.  You can fill in the blanks and read along with these recitations right here. Now imagine four or more lawyers blabbing this shit out loud all at once.  Each  referee was accompanied on his (mostly) platform by an entourage: a representative of the foreclosure mill lawfirm who has the final figures needed to evaluate how much would be required to outbid the bank; a representative of the bank itself who in theory is the one who should be making the bid; and sometimes other minions to process and deliver documents on the spot if needed.

In between their platforms lay the mosh pit- of vultures and possibly victims.  Occasionally but not often, the soon to be former homeowner shows up in forlorn hopes of saving their home or, more likely, saying goodbye to it. (That process will still take weeks if not months or more from this occasion, but usually they don't know that.)  The rest are the speculators, the bottom feeders, the fans of Flip this House who show up with their freshly-minted Limited Liability Company entities to take title to these properties away from their owners.  Sometimes they compete against each other in something resembling actual auctions; other times, they're there to collude with each other, or blackmail the owners who do show up with some modest amount of cash to entice their bank into not bidding their full "upset price" to take a property back; I've witnessed vultures demanding pounds of flesh from these homeowners so that they won't try to outbid them for their own homes.

The vultures on the day I was there weren't paying attention to which Terms of Sale affected which property. All they cared about was where their portfolios would stand when the bidding was done.  I milled around all of them, and up and down the platforms, to ensure that my clients' property wasn't being mistakenly sold that day- and left, disgusted that this is what our legislators and judges have done to the dream of home ownership.

Not that they haven't tried. There have been well-intentioned efforts.  A foreclosing lender in New York is now required to put extensive warnings and disclosures into their legal documents to give borrowers some information about the process; in general, though, they do not stop or slow down the process and merely add to the fees (for drafting them) and costs (for publishing them) that they will be required to pay if they even get a chance to save the property through payoff or bankruptcy.  New York also added a mandatory "foreclosure conference" process to most routine residential foreclosures, but their court officials have no power to impose anything on lenders; they can only delay the process while they consider "modification" proposals that are Sisyphusian in their demands for information from unsophisticated consumers.

What they haven't done is substantially change the game, to use the booming real estate market to work in borrowers' favor. A law professor I knew at Cornell ages go came up with a proposal to do just that all the way back in 1985, to require banks to expose foreclosed properties to something similar to the Multiple Listing Service before they went up for forced sale.  Pages 892-93 of that article (Fuck the Bluebook Cornell L. Rev) contrasts the actual blinding black type notice of an actual 1979 foreclosure sale notice-







with what would be a far more effective method of maximizing the value and exposure of the property if this kind of notice was published instead:



But that would upset the applecart, which a handful of foreclosure mills and post-sale realtors are making a whole lot of applejack off of.

Apparently, though, the hue and cry of these recent crazy sale dates did get the attention of the Powers That Be.  I went over there again today to file some unrelated documents, but I was mindful of the same clients; they'd put substantial effort and money into getting a modification of their mortgage approved, but they'd received a notice that their house was rescheduled for auction.  I later found out this has again been postponed, but it reminded me of this previous trip and of how unsettling it all seemed. I wanted to get an establishing shot of the ornate foreclosure platform for this very post, and possibly to encourage some media to head over there some morning to expose the cockroaches to some light.  It was mid-afternoon, so no sales would have been scheduled, but I saw new signs surrounding the two traditional platforms, and this is what they said:



My guesses for the reasoning behind this covered the following:

(a) One of the vultures tripped and fell on the stairs and is trying to sue the county for personal injury;

(b) A fight broke out among the vultures, or with a former homeowner involved, and the county decided to minimize the potential for this (Buffalo has had experience with this, too; bailbondsmen trawling the floors of Buffalo City Court came to blows over who was going to bail out a potential criminal defendant, and the courts responded by kicking them all out, resulting in them all bringing 24/7 vans which now hog prime parking spaces around the building all day);

(c) Some high-power county official got tired of the yelling and screaming and wanted it out of his (likely) sight; or

(d) A borrower actually questioned the decorum, and protocol, and outright fairness of a system in which title to a lifelong home can be extinguished in under 20 minutes of yelling and screaming and possibly collusive/extortionate bidding.

I was just kidding about the last one; it's one of the first three.  So now it's down in the basement. Out of sight, out of their fucking minds.
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