Contents: 1.) Recording of Fake Foreclosure Court Session (see button above) 2.) Letter to Governors, and Attorneys General (6 pages) 3.) Anatomy of an Anti- Foreclosure Case (essay/report, 16 pages) 4.) Brick City Housing Development Program (17 pages) 5.) In Defense of Free Houses (8 pages)
Everett A. Jackson
May 23, 2018 A.D.
Governor Phil Murphy
Lt. Governor Sheila Oliver
Office of the Governor
PO Box 001
Trenton, NJ 08625
Attorney General Gurbir S. Grewal
Office of The Attorney General
Richard J. Hughes Justice Complex
25 Market Street, Box 080
Trenton, NJ 08625-0080
Attorney General Elie Honig
Division of Criminal Justice
Richard J. Hughes Justice Complex
25 Market Street, Box 085
Trenton, NJ 08625-0085
Dear Governors and Attorney Generals:
This letter is for Governor Murphy, Lt. Governor Oliver, Attorney General Grewal, and Attorney General Honig. It is also for activists, journalists, lawyers, other elected officials, fraternities, sororities, private citizens and the public.
Listen to the attached recording of Superior Court Judge Walter Koprowski. In this recording, you will hear Judge Koprowski dodging the law and allowing a bank to steal my family’s house. The recording is a copy of official audio from a court session held on April 26, 2013. This dramatic evidence also shows my lawyer (rest his soul) acting in collusion with Judge Koprowski. Listeners will hear the bank’s lawyers as they make fraudulent statements in an official proceeding of New Jersey Courts.
Judge Koprowski is heard dishonestly addressing foreclosure rules. The law says that the original note must be in possession of any entity claiming to own the loan. Without the original note, they have no standing to foreclose. I repeatedly reminded the court of this fact as I battled the subprime attack on a brick two-family home that has been in my family since the 1970s.
Judge Koprowski acted on the side of the bank. He conducted his criminal charade in court, on the record. He used his courtroom powers to bypass the law and allowed the banks to proceed in a powerful theft. For my lawyer to go along with this scenario was misrepresentation. For Judge Koprowski to pull this stunt could be fraud, conspiracy, larceny, aiding and abetting, or other charges. Any charges would be for Attorney Generals Grewal and Honig to assess and, if warranted, to press.
If not for the corrupt courtroom actions of Judge Koprowski I would not have had to sign another loan or been in any mediation process. The foreclosure would rightly have been dismissed. The court conspiracy prevented me from getting a free house and gave the bank my property in a fake foreclosure.
I told my lawyer to present strong defenses, including that neither the bank nor its lawyers had ever shown they had the original note. My lawyer said, “I have to work with this judge.” That means my lawyer had to ply his trade dependent on Judge Walter Koprowski. My lawyer also said, “I have a boat and a house at the shore.” Which means that my lawyer was afraid to offend the judge with the truth. My lawyer was worried about his material belongings more than fully representing his client in front of a forcefully corrupt, bullying judge. My lawyer died about six weeks after this traumatizing experience.
Early in the recording, you will hear Judge Koprowski lead the lawyers into making false statements about the original note. You will hear my lawyer say he was shown the original note, supposedly when the judge “stepped away from the bench.” You will hear the bank’s lawyer say that she showed my lawyer the original note and she had it with her. After that, there is legal discussion as if the original note issue was settled.
At about five seconds from the very end of the recording, you will hear me dramatically clear my throat. That’s when, in a loud and clear voice, I asked the judge, “Can I see the original note, since it’s my house?” But you won’t hear that question on the recording. And you won’t hear the judge’s arrogant, aggressive, sneering response that he himself had seen the original note. Judge Koprowski sputtered, stuttered, sat up straight, swaggered his shoulders and said, “I’VE seen it!”
You won’t hear those final comments because that part of the recording was cut out. This intentional omission could be evidence of tampering by an employee of the court. Why wouldn’t Judge Koprowski allow me the courtesy of seeing the original note? Even after I clearly and loudly asked to see it? After the bank’s lawyer claimed she had the original note right there with her? And most importantly: if the original document wasn’t essential to the foreclosure, why would the judge bother to ask the lawyers for confirmation that it had been shown in some off-the-record moment when I wasn’t around and he wasn’t either? Because the original was not really in the courtroom, that’s why!
Two reasons for this travesty are judicial self-preservation and greed. The judges’ pension system in New Jersey is connected to mortgage-backed securities. If the banks lose money on foreclosures, the judges’ pension fund is threatened. The judges’ pension fund is already underfunded. We have to eliminate the financial conflict of interest that realistically might occur when judges think their retirement payments won’t be there if they don’t get some houses for the banks.
The lawyers colluding with the bank barons and their judicial gatekeepers want to make money. Some lawyers get paid even if they have to break the law or be unethical. Apparently corrupt lawyers cooperate in the fake foreclosure system like gang members follow their peers. They act in unison for fear of breaking a code. They want to be “down” with the others. What New Jersey lawyer is courageous and real enough to break ranks in a groupthink situation like that?
In the fortress of New Jersey foreclosure court, the old redline and the new subprime are working hand in hand. Fake foreclosure is working against today’s citizens of New Jersey. Our legal system is not sufficiently preventing the devastating effects of this practice. Fake foreclosure is a throwback to earlier times, tinged with good old “Up North” skin-color subjugation. This is another genocidal attack that must be beaten back.
Allowing fake foreclosure is a modern version of the same kind of thinking that had slavery as a part of New Jersey life for many years. It was quite late in the chattel industry when New Jersey abolished slavery! So let’s acknowledge the cruel depths of this terror chamber.
Some people who work within the fortress are afflicted by the mental illness of racism. They might think fake foreclosure is revenge. They may see it as payback for the rebellions and riots that chased European-American homeowners from the urban scene, generations ago. It could at the same time be a desperate defense of the judge’s pension fund: a castle-keep to turn back the violent invasion of neighborhoods and properties.
The Essex County Chancery Division is a fortress of fake foreclosure. This stereotypically corrupt addition to the history of New Jersey affects so-called “Black” and “Latino” homeowners disproportionally. The fortress of fake foreclosure is complete with its own domestic military command, known as the sheriff’s department. That Essex County police force is thus used as a weapon of genocide and colonialism. By ordering the sheriff’s department to seize homes deemed targets under edicts of the fake foreclosure court, county officers are employed against the citizenry with distinct elements of class warfare and racism.
The building blocks of this fortress are foreclosures formed by real estate tricks and traps causing people to be “in default.” This loan trip-up strategy happens even when the consumer is making all payments.
The cement of this citadel is the collusion that takes place between the bank’s lawyers, the victim’s lawyer, and the judges. Their team scheme causes the building blocks of this strange structure to stick together.
The force behind this fraudulent fortress is the financial power of bank overlords whose money keeps the judges and lawyers in line. The gatekeeper of this garrison is any judge that ignores, downplays, circumvents, or otherwise obstructs the original note law, which is clearly designed to benefit the consumer. Any judge must be prosecuted who acts in court to impose a corrupted process for banks to profit, thereby helping the judges’ pension to be so sadly and unreasonably funded.
The judge and lawyers heard on the recording are engaged in corruption. They used a New Jersey courtroom as a place to commit financial crimes against the people of this state. My case isn’t the only one that has been conducted in bad faith by banks, court officials, and by those who work under their control. That’s how we got so many boarded-up houses in our communities.
I got into foreclosure after taking a loan from Countrywide. I hadn’t missed a single payment. Countrywide caused a default through one of the fake foreclosure industry’s ways of making loans fail. Their business model allows them to profit from failed loans so they and their partners can make even more money. If Judge Koprowski had handled the first fake foreclosure ethically, I would not have had to play their game by taking the modification. I signed only under duress.
I cooperated with the bank and the court orders, knowing full well that I was being robbed by the power of law. This theft of our home is thoroughly detailed in my attached essay titled “Anatomy of an Anti- s Foreclosure Case” so I won’t go deep into detail with this letter. To summarize “Anatomy of an Anti-Foreclosure Case”: I was making all my payments despite a tight budget. The bank used their Nazi-like detailed knowledge of my finances to make me choose between paying the mortgage or paying a tax fee that was supposed to already be paid at closing. The notice from the city said if the tax fee wasn’t paid the house would be sold at the end of the month.
I contacted the bank and the bank did not respond to my numerous attempts to contact them. These bad faith bankers left me on my own. I paid the tax fee with mortgage money to avoid the imminent sale of the house and that’s how I fell behind. I wanted to find out what happened with the bank not making the payment at closing. Would the money be refunded to me? Should I send a short mortgage payment to cover the unexpected expense? After ignoring me for two months they started the foreclosure process. They used this trick and many other tactics to use defaults against other victims who otherwise had not missed any payments.
My second foreclosure was a result of that first house robbery. The banks put me into a game, as they did other consumers. I went through mediation, which I shouldn’t have had to. I should have had a free house as explained in the attached “In Defense of Free Homes” paper from the Yale Law Journal. A free house, especially after successive account-flipping banks eagerly joined the Countrywide crime. Because of this illegal lineage, my neighbors and I around the state should own homes free and clear.
Soon after mediation the bank offered me to skip a month’s payment and I took advantage of it. My memory is that they used the skipped payment as a missed payment. I saw this as the bank continuing the assault to steal my home no matter what I did. In July, having already received notices from the bank that I was behind in payments when I wasn’t, I made a business investment by publishing some Brick City books and did not pay the mortgage. I also kept the payment in my pocket to make sure I had enough cash to take my daughter back to college.
I continued to make payments every month after that including late fees and caught up with two payments in November. The bank refused one of those checks.
In the first place, I should not owe the bank any money because they do not have the original note. In the second place, it is unfair for me to miss one payment for several months and have the bank send back the check that catches up the account, then come after my home. At the end of the day the only way they can claim to be owed by me and have standing to foreclose is through a process that was fraudulently given to them in a circumvention of law by Judge Koprowski.
There was a court session held this year for the second foreclosure, with another judge. I was there, but neither the judge nor the bank’s lawyer showed up. That morning I got up, got dressed in shirt and tie, parked my van uptown, and rode my bicycle downtown to the courthouse. I was on time. The judge and the bank’s lawyer did not even bother to notify me they wouldn’t be there.
They are acting like this foreclosure is legitimate, as if forgetting all about the fact that the banks don’t have standing. But they’ve got fake foreclosure standing, and they are holding the fort.
Hopefully our governor, lieutenant governor, and the attorney generals will institute a moratorium on foreclosures in New Jersey and use it to investigate these very serious charges of black robe corruption, conspiracy, and economy-shaking genocidal banking practices.
This house robbery has adversely affected my health and numerous other aspects of my life. I have heard of other foreclosure victims who’ve had strokes. There was testimony given before the Assembly committee about a distraught homeowner who even attempted suicide when faced with the unfair use of force in this huge, court-sanctioned fraud. I am fighting fake foreclosure for myself and for all the other victims. We can correct this situation. I offer some solutions at the end of this letter and have attached a few more.
To correct these problems, I strongly support and urgently request enactment of the Essex County Moratorium on Foreclosures Bill advocated by the Hearing of Citizens Coalition, an organization chaired by Fredrica Bey. The passing of this bill is an absolute necessity. The victims of fake foreclosure and other people of New Jersey need this bill and its functioning aftermath.
Only with time and attention can we do more than simply extend the dates when citizen’s homes would be illegally confiscated. We need to put this legislation in full effect so we can work together to investigate and prosecute this human rights violation committed by organized legalized crime. Fake foreclosure is a racket. If this genocidal behavior continues in our courts it would exacerbate a very bad case of taxation without representation.
Solutions: reverse-engineer the whole fake foreclosure system, returning property to people who’ve had their homes illegally taken. Use eminent domain and other methods to control the banks. They might be “too big to fail” but crooked bankers, judges, and lawyers shouldn’t be too big to jail. The banks are not too big to be nationalized. Employ honest lawyers and judges to turn this huge situation around.
We can use the attached Brick City Housing Development Plan in which homeowners use what would be mortgage payments to buy and develop neighborhood properties in an organized manner. The Brick City Housing Development Plan would also use fines taken from the banks, which should be hundreds of billions of dollars.
I ask the United States government and the State of New Jersey to prosecute the criminal banks and their co-conspirators. They should be treated like other groups of racketeers. Give amnesty to whistle-blowers and then prosecute those responsible for running a fortress of fake foreclosure.
Everett A. Jackson
Anatomy of an Anti- Foreclosure Case: A Lesson in Consumer Consciousness about Fake Estate
By E. Adam Jackson
Countrywide Mortgage sent numerous advertisements to consumer Everett Adam Jackson, promoting equity loans. In July 2006 AD the consumer needed money. He was involved in a custody case.
Everett Adam Jackson wrote a letter at the lender’s request stating that he was reluctantly but necessarily borrowing funds. The loan came at a momentous time in not only the consumer’s life, but in the financial history of the nation.
The early “2000s” was an era of economic downturn where the collapse was due not only to the following three reasons, given by an online source:
- a credit crunch,
- declines in house prices, and
- less consumer spending.
The core reasons were really corruption and greed. The results of this core pair of corporate problems devastated the home ownership of Everett Adam Jackson and others throughout the Brick City Newark community.
The devastation in this case started with a dirty loan: a financial discourtesy delivered in bias and designed to self-destruct. It is in this atmosphere that the situation began: the birth point of our narrative about not a real estate, but a fake estate scandal.
This negative environment, initiated by Countrywide, led Everett Adam Jackson to recognize what really caused the ever-growing proliferation of boarded-up houses in his community. He already knew that the racist history of neighborhood housing policies carried on by bankers in U.S. urban communities was a powerful factor.
Bank of America’s managers also know the racist history. That’s why in 2011AD they agreed to pay $335 million for illegal discrimination in lending. The United States Attorneys General must have had some idea that the bankers were negligent and fraudulent in their paperwork. That’s why they looked into banking abuses. And the bankers themselves know that their business was dirty because also in 2011 AD, their own employees blew the whistle on them. The bankers were ordered to cough up more than $900,000 for that.
The loan in this case was about banker’s dirty tricks. First of all I insisted on a fixed rate while the bank tried to trap me into an adjustable loan. The banks repeatedly sent papers for adjustable loans that had balloon payments. This was one of the financial destruction tools that bankers used on my neighbors and I.
The sneaky deal included the broker, answering an inquiry about what happens when the balloon payment comes due with, “You will have refinanced by then.” That is another sophisticated usury tool of the bankers. Because in reality, by the time the banks got through with homeowners, borrowing was more difficult. People with adjustable mortgages were stuck. Everett Adam Jackson did not fall for the adjustable strongarm game so the bankers had to employ another tactic to make the loan fail as they designed it to.
In July 2007 AD, Everett Adam Jackson got a letter from the City of Newark saying that a tax payment was overdue and, if not paid by the end of the month, the house would go up for tax sale.
Everett Adam Jackson called and emailed Countrywide to find out what was going on. He could not get an answer. On September 4, 2007 AD the consumer wrote a postal mail letter to Countrywide requesting they contact him. The bankers did not respond to the concerns of Everett Adam Jackson until 7 months later, a telling delay that exposes the smoking gun of Countrywide’s corruption.
The trail left by corrupt bankers and their destructive products was a major mess. The Associated Press reported that a lending drought was part of that toxic atmosphere. In January of 2008 AD, Everett Adam Jackson wrote a letter complaining about the sabotage and criminality of the bankers. He also proposed remedies to his bank-caused problem.
By August 2009 AD Everett Adam Jackson clearly overstood the predatory nature of the bankers’ behavior and took action. Holding a posture of respect toward the moneyed marauders, yet challenging their position, he wrote a letter to Bank of America.
The letter requested direct human communication and explained the situation while including a serious reminder that the bank’s partner, Countrywide, caused the problem. The letter asked that bankers at Bank of America show responsibility by participating in radical, innovative, yet fair solutions such as the Brick City Housing Development Plan. It also requested that the bankers provide copies of the original loan papers, which they have not done to this day.
In June 2009 AD Everett Adam Jackson wrote a hardship letter at the bankers’ request. In it, the ever-awakening consumer not only explained some of the reasons for his financial condition, he pointed out accounting discrepancies within the banks’ own system, numbers that not only disagreed with each other but also with the factual truth.
The hardship letter again pointed out that Countrywide caused the problem and also proposed drastic solutions to rectify the issue. But, there was more. The letter additionally groveled before the bankers whom Everett Adam Jackson once saw as somewhat reputable institutions under the law. The awakening of Everett Adam Jackson was rising, a radical realization and overstanding as a consumer of the bad banking products at issue.
Now the mortgagee was becoming more aware of how the corruption of the banks was affecting not only his personal economy, but also that of his neighborhood and the nation’s. Around this time, 2009 AD, the economic depression caused by the banker’s mortgage attack on U.S. citizens was hurting workers. The U.S. economy had been so injured, it was reported that economic growth would not quickly lower the rate of unemployment in the country. Only once since World War 2 had the unemployment rate been reported so high.
With things like this happening in context with his own loan, it was interesting to see that also in 2009 AD, the State of New Jersey entered into an agreement with Bank of America subsidiary Countrywide Financial “to resolve subprime mortgage complaints.” So there was widespread wrongdoing wrangled in the courts, but no resolution was in sight for Everett Adam Jackson or his neighbors. That is especially because money from that settlement, earmarked for programs of mediation and modification, became yet another example of the bad intentions and unreformed corruption of the banks.
The aggressively unethical foreclosure attempt was delivered to Everett Adam Jackson. He wrote another letter to resolve the situation. This letter shows the posture of subservience that some bank consumers have to this ill-established institution of society. There was a mistaken intention to resume the usurious payment system the bank had sabotaged for Everett Adam Jackson and many others. Most importantly, the letter yet again accused Countrywide’s corruption for the situation. He wrote a Qualified Written Request in November 2009.
Everett A. Jackson
May 18, 2010 A.D.
Re: Account ((NUMBER))
The reason my loan went into default was because Countrywide the mortgage company or their associates failed to make a tax payment at the time of the refinancing. That sophisticated form of financial crime caused me detriment.
After that the big banks one of which is party in this action caused an economic downturn affecting millions like me to lose their bill-paying ability.
I am no longer in hardship. I recently got a job in pharmaceutical copywriting. The proposal tendered by Citizen’s Action on my behalf is now affordable.
With that in mind, Bank of America has not fairly addressed the sabotage to the loan committed by Countrywide and/or their associates. I have not received the Truth in Lending Statement per my Qualified Written Request to Bank of America.
I hope we can find a fair way for me to keep my house.
Everett A. Jackson
The next letter from Everett Adam Jackson to the bankers showed an overstanding of the true nature of the banks’ behaviors. That letter is included below in its entirety.
Memo: To All Concerned
From: Everett Jackson ((ADDRESS))
Re: Bank of America Loan Number ((NUMBER))
Date: July 26, 2010 A.D.
I made a Qualified Written Request for the Truth in Lending Statement more than a year ago and to date I have not received the Truth in Lending Statement from BOA or any of their associates. I have received a notice demanding $50,000 for me to be “reinstated.” This shortly after the bank’s lawyer, Parker McKay, failed to show up for the mortgage negotiation.
This after the cover-up crony to Bank of America, Countrywide, committed acts that tripped up my on-time mortgage payments. It was a Countrywide agent that told me not to worry about a balloon payment because “you will have refinanced by then.” I would like to find out how many people were told that. I refused the balloon payment so Countrywide sent up another balloon to cause problems.
It is now known the banks bet against the success of housing loans and hedged their bets. There are laws against stealing by pistol or pen, and this perspective must be pursued against these bold plunderers. The larcenous acts were subsequent to sabotage of the U.S. economy and real estate attacks by banks against U.S. American people, especially African-Americans and Latinos. This human rights violation is reminiscent of the old redlining tactic used to segregate citizens.
Now the old real estate racists seem to be at work in a new generation that has delivered an undeniable devastation of neighborhoods. It’s as if we are in a war with our own people instead of the Afghans and Iraqis. Yet this is our fellow citizen treating us with criminal impunity and bullying. All under the threat of foreclosure by entities that have not proved their standing to assume any such posture in the greatest transfer of wealth from the rich to the poor in U.S. history.
There is nothing I signed in my mortgage documents that accepts victimization by sophisticated financial schemes. I never agreed to any bank betting against their own loans, in effect sabotaging citizen’s loans for bank profit. Interestingly, those profits would come from a fraudulent reservoir of money to lend in the first place.
While these shadowy banks and their lawyers kick up dust to cloud the issue, there has been no delivery of the truth in lending statement. Please do not use any more scare tactics nor proceed in the unethical and illegal actions previously committed. Please address the missing document and the corrupt business practices of your company and associates before causing distress among those in need of the bailout plundered by banks.
Your entity rejected a deal proposed by NJ Citizen’s Action. Such greed should be rewarded with a zero balance on my mortgage where I owe nothing, and your next negotiation would be how to plead in court for your robber-baron crimes against the people. Hopefully we will arrive at a fair way for me to keep my house and to restore its value by restoring the real estate stock in my neighborhood.
Bank of America
David M Lambropoulos, Parker McKay
Abbot Goran, Essex-Newark Legal Services
Judy Bruskiewicz, NJ Citizen’s Action
Mark S. Cherry, Attorney-at-Law
Dave Hungerford, People’s Organization for Progress, Foreclosure and Eviction Committee
Christopher G. Jackson, Attorney-at-Law
Everett Adam Jackson then wrote another Qualified Written Request in June 2011 AD. He was involved with the mediation program, which provided an opportunity for the bankers to delay and call shots while the perfunctory courthouse personnel that were hired into the system basically tipped the slope and made it slippery for consumers in favor of the banks.
After the bankers had Everett Adam Jackson removed from the mediation program ironically for alleged non-participation, the case went to court. At one point Everett Adam Jackson requested an extension for a December 2011 AD hearing date. When a hearing took place the behavior of the bankers through their lawyers showed an abandonment of ethics. The lenders’ reliance on triggering financial and regulatory mishaps to set off failure of the loan caused hardship in a stunning absence of fair play.
There was false documentation provided by the law firm the bankers hired, a telling attitude in the genocidal actions they took. The shadow companies and the switching corporate roles in the framework of this case provided cover-up deniability for the corruptorations. This component of the massive attack enabled the wretched success of their schemes to make pre-Holocaust-level hardship of the so-called American Dream.
The word “Holocaust” is not used lightly. Consider that in 1933 Nazis prohibited Jewish people from being landowners – just before they began sending panhandlers, alcohol addicts, homeless people, and unemployed people to concentration camps. That’s a stretch but the attitude and power of the corporations is the same and similar conditions exist where there are large and vulnerable numbers of those populations in U.S. society today.
Examination of the Nazi system’s escalation reveals other similarities to today: Jewish people were denied national health insurance in 1934; two years later the Gestapo was placed above the law. So the corporate structure was against the rights of the masses. Government insiders and some other valued lackeys were beyond prosecution.
Two years later Germany’s Jewish folk had to register their wealth and property, a scrutiny almost mimicked by the bankers’ stratification and increased concern and control over the finances of minorities. In 1939 Jewish tenants lost their rights and were forcibly moved out, like the evictions that the bankers have been conducting in Brick Cities around the USA.
The bankers’ admitted biased actions toward so-called African-Americans and Latino-Americans is not antithetical to the hateful statement published that same year by Julius Streicher in the Nazi newspaper, Der Stürmer: “The Jewish people ought to be exterminated root and branch. Then the plague of pests would have disappeared in Poland at one stroke.” Substitute the words “African-American” and “Latino-American” for “Jewish” and substitute the words “inner cities” with “Poland” and the actions of the banks in this case speak louder than those horrible words or any denials of the similarities.
“Those who forget history are doomed to repeat it.” Anyone who believes the Final Solution practitioners are all gone forever may not have considered the repetitive familiarity of history in this case, in this time.
Bank of America and their consorts are creating a war-torn ghetto in Brick City. They have for years controlled this ghettoization through divisive means such as redlining. Now they destroy with sub-priming. Everett Adam Jackson was not going to wait to see if today’s ghettoes would end up like the Warsaw Ghetto in 1940. The time to resist and challenge the intentions of these bankers is now.
Everett Adam Jackson believes there are still people around in banking today who hold sentiments similar to those uttered by Hans Frank, Gauleiter of Poland: “I ask nothing of the Jews except that they should disappear.” Substitute the word “niggers” for “Jews” and it’s not hard to see this housing attack by the banks as a genocidal action leading to no good for brownfolk as well as many European citizens who would merely be collateral damage.
Resistance to today’s banker destruction of communities has taken form in nationwide protests by the Occupy Movement. The demonstrations of this pressure group are like the mass rally held at Madison Square Garden in March 1943 to force the US government into assisting Jewish people in Europe.
In November 1943 the Congress of the United States heard the cry and held hearings about the State Department’s lack of action on the situation. Meanwhile the Nazis carried on with the development and murder of the ghettoes with wicked intention and discreet cover-up. The bankers in this case are engaged in the earlier stages of a modern version of Nazism. Everett Adam Jackson heard a mantra from numerous sources: “the banks don’t want your house.” But with overstanding came the realization that the banks just don’t want you to have your house.
The anti-foreclosure action in this case will continue to Newark City Hall, the NJ State Legislature, and the US Congress as the banker’s bad behavior degrades to its inevitable conclusion. That is, if good people do not act with awareness.
An associate introduced Everett Adam Jackson to the document “What Banks Don’t Want You To Know”, which educated him to another aspect of the case: that the banks have no law or statute justifying their loan operations creating money from nothing. Around this time, another document emerged called “Avoiding Foreclosure,” which offered nine different ways. None of them included “fight back against the bankers.” Everett Adam Jackson knew he must fight back because of the genocide and fraud conducted by the bankers on his family home.
An anti-foreclosure strategy was contemplated along with tactics that included negotiating from a position of strength. Some of the solutions Everett Adam Jackson came up with in this period included:
- Dealing with unpaid taxes
- Correcting late payment
- Adjusting new loan for unpaid taxes and absorbing any late fee
- Creating new loan with home insurance in both parties’ interests
- Rewriting the rules
- Correcting errors on credit report
- Considering that Everett Adam Jackson had been a customer of Countrywide long enough for the most stringent of underwriters to recognize his application is qualified
- Refinancing at lowest available rate
- Rewriting the bulk of mortgages to give rates people can afford
- Investigating if there is some intention to take a whole lot of people’s homes
- Getting payments significantly down in a program that fits the consumer, whether or not one currently exists
Also in January, Everett Adam Jackson wrote a letter to Judith Bruskiewicz of NJ
Citizen’s Action along with items requested for negotiation. The purpose of involving Judith Bruskiewicz was to have a witness that the materials were timely sent. That’s because the bankers and their lawyers could not be trusted.
It was widely known by then that concerns like those expressed by Everett Adam Jackson were legitimate. A broad spectrum of communications agreed about lawless recalcitrance by the bankers as reported by the consumer in this case. The sentiment was growing that their housing chaos must not be allowed to continue under the false pretense of free enterprise. People were on the same page in knowing that the banks ruined the system and then got paid for wreaking havoc on others — with impunity.
The banks compelled us to confess all financial sins and pledge to their assumed lofty status. The consumer was required to write:
“I, Everett Jackson, ((SOCIAL SECURITY NUMBER AND ADDRESS)), have not applied for or received any loans, financing, etc. for the past 90 (ninety) days.
It would be interesting to have a banker in this case sign a statement that they know of no law or statute allowing them to make money out of nothing. The foreclosure attack in this case by the corrupt Countrywide/ Bank of America/ Bank of New York triumvirate reached another progressive point. That is when the hardship letter of February 3, 2011 AD synthesized the growing knowledge and experience in the case that inspired Everett Adam Jackson to:
- Declare undelivered the Truth in Lending Statement
- List the items the banks requested that were contained in the package
- Highlight the failure of the bank to negotiate fairly in mediation
- Describe the mysterious and treacherous circumstances surrounding the loan
- Have the banker admit or deny the bank made up the money credit
- Eradicate victimizing practices of the banks
- Deal with the sabotage
- Document and detail of the destruction perpetuated by the bankers
- Present a negotiation offer from a position of strength-in-knowledge
The consumer said the hardship was caused by:
- The banking system with its illegitimate transfers of proxy wealth
- The admission of Countrywide’s president to damaging the economy and a preponderance of evidence proving the same
- The continued historical genocide on African-Americans through fake estate injustices: from the red line to the sub-prime
- The carnage in neighborhood fake estate resulting from systemic sabotage tactics coinciding with corporate bets for the failure of many mortgages
- The continued failure of Plaintiff to produce the Truth-in-Lending statement
- Job loss in an economy spoiled by the very bankers trying to foreclose on the consumer’s home
It is with this consciousness that Everett Adam Jackson submitted a Motion to Dismiss the Foreclosure. In opposing the fraudulent and genocidal acts of the bankers, a packet of supplemental information was also offered to the Court in October 2011 AD.
The Motion packet gave evidence and explanation on fraud and neglect that would justify a dismissal of the foreclosure. It explained the layers of corruption made up of Countrywide, Bank of America, the Bank of New York, and their lawyers. It contrasted simple mistakes by the banks with harmful intentional actions they made and the mistake of Everett Adam Jackson in not timely answering the foreclosure.
The packet made clear Everett Adam Jackson’s immediate and continuous opposition to a foreclosure. It also blamed any default on the unethical behavior and biases of the bankers. Their failure to timely produce the Truth-in-Lending statement was again reported by the consumer as well as the lawyer’s attempt to fool the Court into thinking they had done so – thus committing fraud upon fraud.
The packet reported that bankers did not comply with regulations yet moved with intent to illegally take a citizen’s property. That the bankers’ products delivered devastation with no rhyme or reason except dastardly destruction. The packet also mentioned that the bankers never contested that there was no law or statute justifying their malicious moves. This fact invalidates the foreclosure and the contract.
That and the fact that the bankers never provided the Truth-in-Lending-Statement are significant or they would not have tried to fool the Court into believing they had complied. The packet finally stated that, when the loan is dirty, judges should not fall prey to faulty precedent in granting banks unlawful powers.
The packet additionally detailed the attempted fraud that the banker’s lawyers put into a Court of Law. Everett Adam Jackson made sure the Court knew that he did not miss a payment until the sophisticated financial set-up kicked in. The missed tax payment was leveraged sabotage in the banker’s bet against our mortgage deal.
The packet showed a preponderance of clear and convincing evidence that the bankers were in control of a rigged and unfair genocidal operation. The bankers did not participate fairly in mediation. They denied Everett Adam Jackson the ability to pay his mortgage. His documentation was not good enough after the deal was made but his credentials were sufficient at the start of the process to get the appraiser and title company selected by the banker to run their money game on the system.
The packet supported the Motion to Dismiss with 24 accompanying documents including explanations of each one’s meaning to the case.
A Motion to Re-enter Mediation was submitted in February 2012 AD and was denied. Another Hardship Letter was sent in May 2012 AD illustrating the level of consumer consciousness Everett Adam Jackson had reached. He wrote to the bankers “I would like to resolve this matter in a manner that is fair and recognizes the excesses committed by a banking system gone classically corrupt. After all, the bankers set up the loans to fail, bet on the loans to fail, and then caused the loans to fail.”
The bankers’ bogus complaint against Everett Adam Jackson never claimed that he agreed to any contract accepting fraud and sabotage. The bias-laced subprime attacks of the bankers are truly reminiscent of their redlining tactics, where bankers do engage in discriminatory practices that stratify and deny entire neighborhoods.
The above facts of this case may indicate fraud, genocide, larceny, and more, perpetrated by a financial debt-creating entity whose agents know they have no legitimate standing to negotiate. Their failure to produce the Truth-in-Lending statement during the required time period negates any claim the bankers have to foreclosure. Everett Adam Jackson is now of the mind that if the marauding bankers in this case do not agree to implement and fulfill the Brick City Housing Development Plan, then we must sue the bankers.
But before any further action could take place, the foreclosure had to be dismissed and negotiations would have to be continued. That state of affairs in this case was achieved through the addition of Denbeaux & Denbeaux law firm. Adam Deutsch delivered a masterful and inspired motion that got results.
The desired outcome is for the house and land of Everett Adam Jackson to be declared his property free and clear, as in a land patent. Everett Adam Jackson will owe no banker or bank any money. He will be responsible for taxes and insurance from the acquisition day forward.
The property at was purchased in the 1970s by the father of Everett Adam Jackson. Everett Alonza Jackson was a pharmacist who moved in when the Vailsburg part of town was experiencing a shift in ethnic composition. He left the home behind for his children as we will leave it for ours. The bankers must not be allowed to continue their genocidal ways; they have to benefit the people in the neighborhoods.
In a micro-fulfillment of the Brick City Housing Development Plan, rental income of the home could be used to acquire and renovate boarded-up houses in need of repair. On a larger scale, the bankers can participate willingly by matching funds or generously creating a reservoir of resources for renovation and rehabilitation of devastated neighborhoods. Another option is for the bankers to be sued by Everett Adam Jackson and other consumers who now know the fake estate industry’s true structure.
This case shows the banking system is sick and must radically change for the good of “we the people.” The bankers’ stubborn corruption could cause their dinosaurification if they fail to treat consumers right.
End of document
Everett Adam Jackson
Updated March 14, 2013 AD
Updated March 1, 2014 AD
Brick City Housing Development Plan
A grassroots proposal for community elevation in culture
Imagine that boarded-up eyesore as a safe, decent, home
with a safe, decent, family living inside.
Originally submitted as part of mortgage foreclosure mediation proceedings
Countrywide, Bank of America, Bank of New York, et al.
Everett Adam Jackson of Newark, NJ
Officials, Bankers, and General Public
February 13, 2013 A.D.
August 10, 2017 A.D.
I. THE INDUSTRY, THE COMPANY, AND ITS PRODUCTS AND SERVICES
The current housing-mortgage-banking system leaves the Newark area in a devastating situation of real estate chaos. The state of affairs in the residential mortgage and other banking areas has fallen far below standard if the goal is to help USA families to have decent housing. The system could be said to have succeeded if the goal is to make potential homebuyers and fellow citizens with mortgages jump to reach insurmountable heights to be homeowners while holding them down with the weight of unethical rates.
Criminalizing that situation even more clearly is evidence that banks bet against the success of the faulty loans they issued to people with dreams in their eyes. The mortgage tricksters – not every good banker – even sabotaged loans to profit from the loan’s failure and even to cause harm by some traditional practice of holding others back and practicing racism through real estate.
Whether or not that is the situation here, certainly there is evidence that the banks and big financial institutions caused the economic downturn, got bailouts, bet against their clients’ investments, and spent energy in planning and allowing the distress of loans as well as the consumers who were forced by market conditions to take losses for the profit of the corporation.
That is how the industry stands today as it affects our environment in the Newark, New Jersey area. We call Newark by the nickname of Brick City. This is a place where the industry as well as social service organizations and the government have allowed a severe shortage of shelter services. The housing powers that be, which includes Bank of America, have allowed and even caused many people to lose their homes.
How bad is the problem, one may ask? On a daily basis, an average of 938 homeless people struggle to find food and shelter in Newark’s streets, making up more than 90 percent of Essex County’s homeless population. The City of Newark has a Commission on the Homeless. A formerly homeless man who lives in Newark’s North Ward and in January was sworn in as a member of the Commission said, “In the late 80s early 90s I was homeless in the City of Newark and I lived in several shelters and ate at various soup kitchens. From this personal experience, I have a special interest in trying to get hope for the homeless. The problem is worse than it was before. People who you never expected to see homeless are now without a home. The numbers have especially grown due to the economic downturn and increasing job loss. Most people are one or two checks away from being homeless so it’s an issue which concern everyone.”1
That statement also says a lot about the lists of abandoned and foreclosed homes in the Newark area. The lists are disturbingly long. An Internet search for “foreclosed homes in Newark NJ” calls up more than 2 million items. The problem is huge and growing.
In 2005, Newark had more than 600 homes in foreclosure. In the first eight months of 2008, the city had more than 1,800 according to an analysis by The Times of foreclosure data.
Despite the existence of some shelters in Newark, the long-standing problem of low-income housing shortages still exists. Thousands of families line the waiting lists for affordable housing, both of an emergency nature and for long-term residence.
The devastating dwindling of existing local housing stock is due largely to national economic turmoil. Neighborhoods are going down because more and more buildings are being boarded up.
The homeless and underhoused — victims of fires or financial disaster, low income families, people with mental illness, victims of fake foreclosure, and those transitioning from corrections facilities — make up a large potential clientele for which a high-quality living environment can make the difference between surviving, or succumbing to disaster and unfortunate circumstances.
Brick City Housing Development (BCHD) will provide hope for the homeless and potential homebuyers. Brick City Housing Development is designed to be a non-profit company that provides shelter to people in need of emergency, short-term, or long-term permanent housing. We have a two-pronged approach to providing shelter and housing: an Emergency Plan and a Residential Plan.
Both plans will involve the acquirement of houses and appropriate larger buildings that are now devaluing around the Newark neighborhoods. Buildings will be acquired through gift, purchase or other legal and ethical means. We will completely rehab our buildings and bring them up to code with use of green engineering wherever possible.
The Emergency Plan, to be known as Brick City Shelters, will provide temporary and longer-term shelter for people facing extreme loss due to disastrous circumstances. The Emergency Plan will use larger buildings with existing multiple units or space that can legally be portioned into units suitable for comfortable, functional yet shorter-term human habitation.
Emergency shelters will be made of multiple separate spaces, not warehousing, where each family unit will have at least a studio and full lavatory, with food provided.
The Residential Plan is designed to provide home ownership opportunities by fixing up currently boarded-up four-family-or-less houses. Brick City Housing Development will offer financial terms designed to provide fair prices for real people who are decent, deserving, and able to afford the home.
Funding will come from grants, private contributions, resident payments, and other legal and ethical means. The main immediate source of funding would be the $1,000 per month contribution from the mortgage payment agreed upon through this negotiation offer.
This grassroots payment will be made by means of the mortgage monies Everett Adam Jackson would direct to this community improvement project rather than to any for-profit bank. For-profit banks such as Bank of America could agree to make matching or vastly exceeding payments to accelerate the rehabilitation of housing stock decline.
The residents and staff of Brick City Shelters as well as clients who buy homes through us will keep hope alive and keep our eyes on the prize by emphasizing the mantra of Safety, Responsibility, and Respect. Within that mantra we encourage our clients and indeed all around us to make ourselves the best human beings and thus the best communities we can be.
PRODUCTS AND SERVICES
Safety, Responsibility, and Respect will be a foundation of our efficient operation providing decent, safe and sanitary housing. Our products and services will:
- Increase the supply of affordable housing
- Preserve existing housing
- Advocate preservation of existing public housing
- Work with public housing tenants and tenant associations to help tenants maximize income
Since shelter is a basic human need, it is a crucial priority that U.S. citizens utilize all resources to provide suitable housing where it’s needed. Whether the reason for homelessness may be fire, financially related, or otherwise, we must promote the understanding that housing is a right and do all we can to provide it in abundance to demand.
Again, we will also promote the mantra of “Safety, Responsibility, and Respect.” We promote behavior and activities that will keep the neighborhood on an even emotional keel with educational aspirations and cultural awareness to realize what we must do to make our community prosper. It will be a source of community pride to know that we have an important part of economic viability in our hands, under our control. Community consciousness is a product that we will create to serve the neighborhood.
- MARKET RESEARCH AND ANALYSIS
The clients served by Brick City Shelters and those in long-term situations will be accessed through correctional facilities, homeless agencies, foreclosure lists, activist agencies, unions, emergency organizations and self-activated applications.
Our emergency clients will be people who need time to develop their plan to reach another level of existence. They’ll be folks who need a hand up in society. The poor, the unfortunate, the evolving people in transition that want to change their position and are likely to with some help.
We will also get people who are interested in buying their first home who have a job and solid background. Such a family or individual might find it easier and more preferable to find shelter or purchase a home from a forward-looking group within the community and connecting and controlling the Brick City brand.
- Market Size and Trends
In 2005, Newark had more than 600 homes in foreclosure. In the first eight months of 2008, the city had more than 1,800 according to an analysis by The Times of foreclosure data.
At least 60 homes on Seymour Avenue have been in some stage of foreclosure since 2005, according to an analysis of foreclosure data across the region by The New York Times.
There is a grassroots movement to make the situation better. Donald A. Baldyga Jr., director of real estate development for Episcopal Community Development, has applied to receive “some of the” $3.4 million to buy and repair foreclosed homes. He is using other funds to repair two foreclosed homes in the Clinton Hill section.
Norwood Street, in Newark’s Vailsburg section where I live, was reported to have the highest rate of foreclosures per capita in the county. Unfortunately, the market for affordable housing and the need for emergency shelter in these turbulent times are huge. Fortunately, Brick City Shelters will provide more opportunities for homeless people and the true middle class to have a great roof over their heads.
A new entity is needed to provide a helpful housing vision for the Brick City neighborhood. The banks’ overriding desire for dollars may destroy the value of their products for real people. Predatory slickness against US Americans who inhabit mortgage properties increases bank jeopardy for investigation. Prosecution is appropriate for what amounts to one partner in the loan transaction making it their business to violate the agreement by conspiring or effecting to make the other party commit default. We need a force of reform to this negative systemic trend and Brick City Housing Development is that entity.
Other entities that provide housing and shelter in the Newark area include:
- New Community Corporation
- Goodwill Rescue Mission Inc. (973) 621-9560
79 University Avenue Newark, NJ 07107
- New Community Corporation (973) 623-2800
233 West Market Street Newark, NJ 07103
- Newark Emergency Services for Families Inc (973) 643-5727
982 Broad Street Newark, NJ 07102
- Helping the Homeless, Inc 973-483-9377
269 Mount Prospect Avenue Newark, NJ 07104
Another competitor, if you can call co-existing agencies that, would be the United Vailsburg Services Organization, with whom we have worked before doing children’s poetry workshops.
Our mission is to continue to facilitate social and economic self-sufficiency, and to promote civic participation in community development. Competing agencies or those in the same noble field of human uplift perform similar functions, but by providing exemplary services in education, employment and technological training, social services, physical and mental health care, goal setting, and property maintenance, Brick City Housing Development will uniquely fulfill its mission.
Brick City Shelters is designed to be a revolutionary enterprise. We will meet the sheltering needs for individuals and families in Newark, East Orange, Irvington and surrounding New Jersey communities, using out-of-the-box thinking. We will put a dent in the long waiting lists for shelter and in the number of folks who need more knowledge and incentive for taking care of home. The elimination of poverty is our ultimate goal for serving a housing-starved population. Education is the key ingredient to feeding residents with information. We will maintain a bulletin board and reference file in every shelter or household, using the Internet.
Libraries will be encouraged as a place to go for the Internet and other sources of culture. We will leverage our focused support of these supplemental public education institutions into increased funding for libraries and simultaneously for Brick City Housing Development.
African–American men especially must supplement our education because our communities are in trouble. Our families must be educated to compete and change society to suit them and their neighbors. A stable, educated home is fundamental to getting out of negative conditions. We want to be an institution in the community that carries on through the years in a form that serves all our neighbors in need. Perhaps the desperate needs for shelter and affordable quality housing will be relieved in the future. However, as long as there is a need, Brick City Housing Development will be among the entities serving our community, both for short-term and traditional home residencies.
- Estimated Market Share and Sales
The market available for providers of shelter is enormous in the Newark area. The need for shelter is great every day in the Brick City. Our goal is to help eliminate the shelter-needy market by participating in the ongoing process to provide a home for everyone who wants and needs one.
The traditional home-buying general real estate sector will be shaken to a higher level of profitability and societal value by the trendsetting shape-up expected to occur from such an innovative plan as this. The Brick City Housing Development Plan will improve the housing stock and create new sources of funding.
- Ongoing Market Evaluation
Brick City Housing Development will conduct a constant exercise of learning and addressing best practices in the shelter-and-housing-provision industries. By doing so, we can best assess client needs and how we are meeting them. Through the use of client surveys, agency surveys, and consultation sessions BCHD will guide our ongoing improvement.
Agency websites and other literature and trade magazines are other tools we will monitor to stay abreast of industry news. We will study, analyze, and report on continuance of our plan through the use of our own website, newspaper publication, and press releases.
III. MARKETING PLAN
- Overall Marketing Strategy
The overall marketing strategy of Brick City Housing Development will be to promote our services in context with the cultural movement that Brick City is. The unique offerings we promise to our potential clients will attract those who want more than the basics offered by the shelter and housing status quo. The Brick City motif adds to the excellent facilities we will provide. People who want to make a serious transition in their lives will have a built-in purpose to elevate their condition to a higher level of existence. Because going beyond the basics to the empirical level of Brick City automatically puts our association at the apex of human aspiration. Our marketing strategy is one that promotes a disciplined transformation in quality environment to involve the higher consciousness of those who are in need of shelter and affordable housing.
We will market ourselves as the non-profit community bank. The potential savings and the public, positive nature of the institution will attract people.
Because Brick City Housing Development will be non-profit, our prices will be among the lowest.
The price of being sheltered in a Brick City facility will begin with adherence to our principles and purposes. To use education, safety and responsibility as a collective springboard into the Brick City pool of culture is the cost our clients will pay to experience our shelter environment. The actual costs will be paid by the funding sources and the actual price will vary according to the financial services that can be applied to any particular account. If we enter into a sheltering contract with any government or private source to house clients, we will charge market rate.
The price of buying one of our renovated homes will be based on a non-profit schedule and will be low compared to for-profit lenders. We cannot put an actual price on the human reformation that will result from efforts of all parties involved in this basic-and-beyond-enterprise of BCHD. Operating as a non-profit mortgage funding institution will help us to maximize property and human value.
- Sales Tactics
Our sales tactics are actually identifying with superior clients by appealing to their higher nature. They will hear about Brick City Housing Development from the various social services bridges that help folk in need of shelter access services. They will hear about us through word of mouth, our website, realtors, and the media.
Purchase of a utility vehicle that will provide cargo space for bulk food delivery and equipment transportation, painted with the Brick City Housing Development logo, will advertise the agency everywhere the truck goes.
Food preparation will be another powerful component. The food we serve our shelter clients will set the culture for them. Our cuisine will take clients from the dietary level they are on and allow them to improve their food intake habits.
Our food will be sensitive to religious mandates. This will make some clients more comfortable that they can eat the way they are acclimated. We will offer healthy and simple food like beans and rice and fresh vegetables.
Our properties must have enough appropriate land to plant a sizable garden in which we will encourage and instruct growing organic vegetables.
We would like to organize freshwater and saltwater fishing trips to literally illustrate the principle of teaching a person to fish. For there is no stronger image of how to make a person self-sufficient then the lesson learned in how to fish.
We will also have an exercise room in each facility or property. This provides an opportunity and incentive for all of our clients to maximize their physical component.
- Service and Warranty Policies
Our shelter system promises a level of service that complies with or exceeds legal regulations and as well as common expectations. If our offering does not meet its advertised value then clients and vendors have all legal options available to address discrepancies.
- Advertising and Promotion
BCHD will, from the start, establish that we practice “quality in simple living.” Our communications will consciously promote the ideas of housing for all in need and extol the movement for the end of poverty.
Creating a foundation for word-of-mouth endorsements is essential. We will do that by marking one dozen appropriate locations to engage discussions on shelter and affordable housing, through media communication including press releases, interviews, targeted letter writing, and promotion through social service organizations.
Our utility vehicle will be painted with the Brick City Housing Development logo to advertise the agency everywhere we go. Flyers will be distributed to church and other social services groups.
- DESIGN AND DEVELOPMENT PLANS
- Development Status and Tasks
Our initial task will be to identify suitable properties to target. For shelter needs we will look at buildings in places that allow for a sheltering facility to be incorporated into their neighborhood. Then we can assess the properties for each repair and renovation that must be made to prepare a building for inclusion on the BCHD roster. We will get connected to section 8 housing.
We want to provide free or low-cost housing to families and individuals who can make their lives progress more rapidly without the budget obstacle of rent or mortgage. We want to give families who want to buy a house who may be threatened by unfair predatory terms a chance to responsibly own a quality structure.
- Difficulties and Risks
Working with persons of deprived social status can be risky business. Emergency situations must be planned for as part of our offering. Other difficulties may emerge from any unwelcomeness in the neighborhood. Everyone may not be pleased to have a shelter on his or her block. Our strength will be in our design and in the value added to the community by our sense of mission. Other difficulties and risks could be buyers defaulting on loans. We will deal with each situation with ethical behavior and correction in mind.
- Product Improvements and New Products
We will advocate and implement new programs for affordable energy. The 145,000 terminations of service per year demonstrate that existing energy programs are inadequate.
The required payments that attach to this enterprise include the price of buying and the expense of renovating buildings up to and sometimes beyond codified standards.
The core renovation crew will be initially paid through the grassroots payment funded by Everett Adam Jackson. Further accumulated funds such as bank fines or contributions will be designated for additional union workers. A substantial early purchase category will be repair supplies and house appliances and fixtures.
The cost of buying a utility vehicle will figure in, along with equipment and supplies. Office and residential furniture will be costs. So will legal and consultation fees as well as journal subscriptions, organizational dues, insurances, and salaries.
- MANUFACTURING AND OPERATIONS PLAN
- Geographic location
The place where Brick City Housing Development will plant and blossom a new growth of housing opportunities is in Brick City itself. Newark—and cities like Newark —can put people in clean and safe living conditions while stimulating the housing stock within urban environments all over.
The West Newark neighborhood known as Vailsburg is our home ground. The vast and multiplying number of boarded-up houses in this neighborhood make an innovative housing solution a serious need.
The heart of the Brick City hometowns is where the movement will meet the masses. Where the battleground is real estate devastation, is also where Brick City Housing Development will take root.
- Facilities and Improvements
The boarded-up building pictured below is located at 326 S. 11th St. in Newark.
The asking price for this single family home is $9,900. The estimated monthly payment would be $43 for this 4-bedroom (or three bedrooms with an exercise room/office) townhouse but we would buy buildings like this for cash. We would save the $1,000 grassroots payment for 10 months and then make our first purchase even if no additional funding was to be had.
The Vailsburg area of Newark, like other urban areas, has many similarly boarded-up houses that make neighborhoods suffer. There are large abandoned buildings that used to be apartments, manufacturing houses, office buildings, projects, etc. There is a dwindling of existing local housing stock due largely to national economic turmoil. The resources and properties available will determine how we approach the renovation. As long as the property is or will be appropriately zoned, its type will determine how we fashion it for our purpose to serve clients needing a good quality place to live temporarily, long term, or permanently.
Any property we purchase or lease must be at code or be brought up to code or better than code. We will work with local authorities to determine that our shelters meet or exceed legal requirements. The quality resulting from our “beyond basics” approach will be an end product of our ability to manufacture quality space out of existing but legally unused structures.
Any rehabilitation that needs to be done will be approached from a “green” perspective. Large-scale and small-scale environmentally friendly improvements will be considered. If any repair or renovation can be completed in a way that will save energy and money, or utilize natural resources to improve the property environment without losing money, then that is what we will do.
We will also purposefully seek to recycle rainwater, use wind power, solar power, and thermal power. If any boiler needs to be replaced we will favor a trash-burning type. We will collect mulch and compost to use within our gardens. Brick City Housing Development will provide a community model for consciously living a modern life.
- Strategy and Plans
Our strategy is to achieve a non-profit status by establishing ourselves as a 5013c entity. We will begin operations in our hometown neighborhood of Vailsburg and surrounding neighborhoods where affordable buildings present. We will provide food and shelter to address social concerns that traditionally hamper human development. There is also a dwindling of existing local housing stock due largely to national economic turmoil, and this will be turned into a win by rebuilding the community.
We will employ a rehabilitative force with licensed expertise in carpentry, electricity, masonry, painting, roofing, plumbing etc. We will we call this force our Renovation Squad. We will use graduates and students from Brand New Day/YouthBuild, my current employer, as much as possible.
Focus will be placed on drug abuse prevention and rehabilitation, religion of various types, safety, job training, recreation, and employable skills connecting with established organizations as well as referring clients to agencies that can further the aims of Brick City Housing Development.
We will pay attention to mental health and utilize the social service milieu at 60 Evergreen Place in East Orange to maximize the benefits available to our clients in need.
- Labor Force
Our President and Vice-President may act as property managers, role models, secretaries, receptionists, cooks, janitors, bookkeepers, and case monitors who will refer clients to agencies outside of Brick City Housing Development who work as partners to fulfill the promise of the brand.
The basic renovation/maintenance team will be made up of a carpenter, plumber, electrician, mason, air conditioning/refrigeration technician, wall prep/painter, roofer, and helpers — all union workers. They will be employed in the clearing, repairing, reconstruction, decoration, greening, and maintenance of purchased structures. They will work in cooperation with government monitors and with other building professionals as needed.
Clients will be encouraged and motivated to act as labor within the facilities. Client labor will be voluntary but can evolve into paid maintenance positions. The option to volunteer for working within the shelter environment will be detailed in the initial training and skills assessment. The labor will include anything beyond basic household chores to include gardening and landscaping. This property maintenance and household training component is another feature of Brick City Housing Development that will distinguish us.
Eventually we will hire on clerks, drivers, managers, social workers, medical personnel, and other skilled employees and consultants to assist our project.
- MANAGEMENT TEAM
The company will initially be comprised of a president, vice-president, and skilled labor force. To keeps costs in check the staff will perform multiple functions until funds are abundantly available to hire other workers. Volunteers will be solicited and welcomed.
- Key Management Personnel
The key managers will be the president and vice president along with department heads of the carpentry, masonry, wall repair/painting, plumbing, roofing, and electrical divisions. The vice-president will be a key person with knowledge, skills, and experience in accounting, real estate, architecture/design, home maintenance, writing, and hard work; a mover and shaker with a valid driver’s license who is dedicated to cultural elevation and community improvement.
- Management Compensation and Ownership
Brick City Housing Development will be a non-profit enterprise. The community will own it. Management will be a part of that community and compensated with a professional salary and benefits. Hopefully those benefits will include free single-payer health care.
- Board of Directors
The Board of Directors will be attracted from the real estate industry, government housing concerns, social service agencies, church-affiliated housing entities, all facets of law enforcement, code enforcement, homeless groups, media companies, and philanthropic organizations.
The management will identify and formally approach community leaders to help guide Brick City Housing Development to maximum community service.
- Management Assistance and Training Needs
A multi-skilled Renovation Team also known as our department heads will assist the management of Brick City Housing Development.
Contacting and registering with agencies that guide people in need of shelter will assist us. We must continue being aware and in full current understanding of all issues and responsibilities of managing shelters and rebuilding houses. We will update our members about developing situations. We will maintain a state of updatedness by consulting with state and local agencies.
Brick City Housing Development will hire role model employees who can train residents and new hires in relevant occupations such as secretarial, legal, maintenance, renovation, construction, gardening/farming, painting, electrical, carpentry, air conditioning and refrigeration, etc. we will also work as much as possible with Brand New Day/YouthBuild and other organizations that train workers.
- Supporting Professional Services
The Department of Economic and Housing Development includes the following divisions:
- Planning and Community Development, which guides the growth and preservation of the city through informed and thoughtful regulation and analysis of land use, economic and social conditions, and transportation, infrastructure, and environmental systems to ensure appropriate development, protect historic and cultural assets, and engage all stakeholders in an open and transparent process.
- Director’s Office, which provides leadership in the effort to achieve the various goals and objectives of the department.
- Housing Assistance, which administers the new construction and rehabilitation/renovation of safe, affordable housing and public facilities and nonprofit owned, non-residential facilities
- Logistics and Industrial Opportunities, which provides Newark residents with business and workforce development opportunities at the Newark Liberty International Airport, Port Newark, and the surrounding area.
- Office of Boards and Commissions, which provides guidance to property owners and developers regarding the use and physical development of land, as well as the regulation of residential rents.
- Property Management, which provides real estate management services for properties acquired by the City of Newark until they can be returned to the city tax rolls.
- Green environmental engineering agencies will be utilized for partnering and assistance
VII. OVERALL SCHEDULE
((TO BE COMPLETED))
Save grassroots payment for $10,000 or less property purchase
Recruit and assemble Renovation Team
Solicit Board Members
Write and submit grants, proposals, and requests for funds
Identify threatened buildings in target area
Prepare communications for clients, associated agencies, and media
Identify threatened buildings in target area
Write and submit grants, proposals, and requests for funds
Identify threatened buildings in target area
Apply for all certifications and permits
Assess repair needs to bring site to code or beyond
Create renovation plan
Prepare repair and renovation schedule
Hire additional workers as needed
Monitor and report on repairs through completion
Purchase or lease buildings/space
Receive all certifications and permits
Establish relationship with relevant, appropriate City Hall departments
Develop staff job descriptions
Issue staff job descriptions
Receive base funds
Shop for and order furniture, fixtures, appliances
Incorporate client recruitment agencies
Develop master menu
Develop and place advertisements
Solicit media coverage of program
Solicit media coverage of program’s unique qualities
Solicit media coverage of greening aspect of program
Solicit media coverage of program success stories
Develop and place follow-up advertisements
Receive additional funding
Take applications for residential habitation & home purchase
Select and purchase utility vehicle (cargo van)
VIII. CRITICAL RISKS AND PROBLEMS
There is a possibility that all people may not immediately find the Brick City Housing Development Plan to be in their interests, whether it is or not. That could mean attack from outside status quo forces in media, politics, law, etc. we will counteract any such resistance by creating and maintaining networks in those crucial disciplines to protect and further our cause. Good relations with the outside communities will be important to success.
As a wealth of evidence shows, bank workers sometimes sabotage financial deals even after the agreement. The BCHD must be prepared for withstanding any perfidy.
Another critical risk and potential problem could be the negative effect of newfound power in the hands of community members. Power can be abused, and avoidance of such should be anticipated, highlighted, and guided to influence positive human behavior regarding ethics, accounting, dutifulness, and continued motivation for the greater good as well as personal professional goals.
If any of the principal leaders are unable to continue for any reason, the enterprise must be set up to function smoothly in reaching goals to any desired end, which could include having no end.
Accurate accounting of funds is the standard of money operations we will plan for, adhere to, and regularly confirm at monthly organizational meetings. Those meetings will include a Safety and Security Committee report.
Various levels of exposure to positive cultural images will prevent domestic and community violence. Violence will be treated through development and maintenance of a Brick City Safety and Security Force and close community interaction with local police and other appropriate agencies. Emergency situations will be handled by local authorities and services, with the elements of safety emphasis, equipment, and training adding more value and protection within the BCHD.
- COMMUNITY BENEFITS
- Economic Development
The economic environment in Newark is dire. This city of great potential has a history of colonialism, slavery, discrimination, and class inequities. These factors combine with our current worldwide financial crisis to create an atmosphere in Newark of poverty, high unemployment, and desperation for many. Despite magnificent gains downtown, the neighborhoods are still suffering.
The dwindling of local housing stock is largely due to the national economic turmoil. In the neighborhoods, home ownership is devastated by a sophisticated attack on real estate. This devastation manifests in a growing number of boarded up homes. These shuttered buildings represent numerous forced-out families and workers.
Renovation of these shut-down buildings can help to redeem the community’s economic condition. By sheltering displaced people in newly renovated homes, or by giving folks a habitat in which they can elevate themselves through affordable quality housing, the economic environment changes. Instead of emptying neighborhoods out, the atmosphere is enriched by an optimistic and principled program that provides housing and repairs lives.
The fixed-up homes that Brick City Housing Development will open bring hopeful neighbors who contribute to the cash flow of the community by patronizing local businesses. They will spend money that recuperates the tired economic condition of the neighborhood. The fixed-up, inhabited houses will raise the spirits of people who grow used to the unhealthy atmosphere of poverty and desolation. The renovated larger buildings would be put into use, discouraging squatters and other societal ills that bring economic conditions down.
The financial standing of Brick City communities will be made independent by the development of new money that will be under self-control.
Poor economic conditions in Newark threaten neighborhoods. The entire community is brought down by the worldwide and most importantly nationwide economic meltdown.
The practice and promotion of things green will stimulate the economy and elevate community consciousness. Solar panels, wind generation, exercycle generation, thermal warmth, gravity generators, energy-saving windows, garbage burning furnaces, etc. are all being investigated to be installed where feasible in our facilities.
Over the past fifty years, Vailsburg has been a neighborhood of changing ethnic make-up, from Italian and Irish to African-American, Caribbean, and Latino. This neighborhood of passing ethnic generations can become greener for the future benefit of all. Brick City Housing Development will assist the Vailsburg state of mind.
- Human Development
Our shelters will provide at least two meals per day. The foods we provide to shelter residents and long-term buyers will come from gardens and perhaps in a co-op for long-term and permanent residents. It will be a healthy diet. Changing the common diets of Brick City dwellers will increase our health.
In the neighborhoods, those who litter and show uncaring behavior multiply housing stock loss. We will teach property management skills that are needed in some segments of the community. Brick City Housing Development will work to make sure our residents know how to take care of where they live.
The atmosphere in our properties will be pro-education. Knowledge will be provided and enabled from pre-natal and infant education to the highest levels of university experience.
- THE FINANCIAL PLAN
- Profit and Loss Forecasts
As a non-profit organization, our purpose is not to grow rich. We want to build resources to do increasingly more for the people who live within the BCHD.
B. Desired Financing
To conduct our Scenario A in which we will purchase and prepare a larger size property for shelter services, we will require $((TBD)).
For Scenario B, in which a two, three, or four family residential home will be purchased, we will require $((TBD)).
For Scenario C, in which we will have a vast commitment from the banks and the courts to compensate communities for decades of racist behavior, we will require $((TBD)).
Use of Funds
The $1,000 per month mortgage redirection payment would go to saving for and purchasing our first house. This would go for every redirected mortgage as anchor homes to community development. We would buy homes for $10,000 or less and build from there. The acquisition of bigger amounts of funds into the billions of dollars will be responsibly distributed to further organizational goals.
- There is also a shortage of student housing in the Newark area http://asumag.com/dailynews/njdorms1013/
- 326 S. 11th St., Newark, NJ 07103 http://www.homefinder.com/NJ/Newark/59828819d_326_S_11th_St
XII. CHARTS: PROFIT AND LOSS/ BREAK-EVEN/ CASH FLOW
((TO BE DEVELOPED))
((TO BE DEVELOPED))
In Defense of “Free Houses”
Eight years after the start of America’s housing crisis, state courts are increasingly confronting an unanticipated consequence: what happens when a bank brings a foreclosure suit and loses? Well-established legal principles seem to provide a clear answer: the homeowner keeps her house, and res judicata bars any future suit to foreclose on the home. Yet state courts around the country resist this outcome.
Banks have lost many foreclosure cases for two reasons, both resulting from recent changes in the mortgage market. First, securitization has created widespread errors in mortgage notes’ chains of assignment, making it difficult for banks to prove that they in fact own any particular mortgage. Second, securitization contracts incentivize banks to use “foreclosure mill” law firms to keep up with the flood of defaults, despite the fact that these firms are unable and sometimes unwilling to detect and rectify basic legal errors.
When addressing faulty foreclosures, courts are afraid to bar future attempts to foreclose—that is, afraid of giving borrowers “free houses.” While courts rarely explain the reasoning behind this aversion, it seems to arise from a reflexive belief that such an outcome would be unjust.1 Courts are therefore quick to sidestep well-established principles of res judicata in favor of ad hoc measures meant to protect banks against the specter of “free houses.”
This Comment argues that this approach is misguided; courts should issue final judgments in favor of homeowners in cases where banks fail to prove the elements required for foreclosure. Furthermore, these judgments should have res judicata effect—thus giving homeowners “free houses.” This approach has several benefits: it is consistent with longstanding res judicata principles in other forms of civil litigation, it provides a necessary market-correcting incentive to promote greater responsibility among foreclosure litigators, and it alleviates the tremendous costs of successive foreclosure proceedings.
This Comment proceeds as follows. Part I explains basic foreclosure and mortgage-acceleration law. Part II describes how systemic banking behaviors and market forces have resulted in banks increasingly losing foreclosure suits after the 2008 financial crisis. Part III then describes how state courts have struggled to develop their jurisprudence on “free houses,” often ignoring these significant market problems. Finally, Part IV contends that the application of res judicata in foreclosure litigation is essential for two reasons: (1) it would uniformly apply civil rules of finality to foreclosure cases, and (2) it would have a much-needed positive behavioral effect on a mortgage-foreclosure market run amok.
- THE FORECLOSURE LAW BACKDROP
Foreclosures begin with a mortgage note’s “acceleration clause.” Under a mortgage note, the homeowner is required to make a certain payment every month for a fixed period.2 In judicial-foreclosure states, if the homeowner defaults on at least one payment for a specified amount of time,3 the bank has a choice: it can bring suit to recover just the missed payments,4 or it can exercise the acceleration clause5 in the note and bring the entire remaining loan balance due.6 Under the mortgage contract, only acceleration allows the bank to foreclose on the mortgage.7
In a foreclosure suit, the bank must generally prove the following: (1) the homeowner has signed both the note (the underlying loan) and the mortgage assigning the house as collateral for that note; (2) the bank owns the note and mortgage; (3) the homeowner still owes a debt to the bank; (4) the homeowner is behind on that debt; and (5) the bank has accelerated that remaining debt in accordance with the terms of the note itself.8 When a bank fails to prove these elements, a judge is legally required to rule in favor of the homeowner.
Recently, courts have been inundated with suits where homeowners question the bank’s ability to prove the second element. Litigation over “proof-of-ownership” issues in foreclosures is a growing nationwide problem; sampling suggests a ten-fold increase between the periods immediately preceding and following the 2007 collapse of the housing market.9 Cases addressing this kind of “failed foreclosure” have reached state supreme and appellate courts, including—recently—the Maine Supreme Court.10 In certain states, including Florida,11 New Jersey,12 and New York,13 courts have also been confronted with cases where, after accelerating the note and initiating a foreclosure proceeding, the bank abandons the proceeding and the statute of limitations on the accelerated debt expires, calling the third element into question.14
This massive increase in cases where banks’ prima faciecase is challenged or outright fails is not the product of novel foreclosure law or changes in its application. Rather, we argue, it is due to fundamental changes in how banks handle mortgages—the same changes that facilitated the financial crisis of 2008—and banks’ unwillingness to invest in sufficient legal services to adapt to these underlying structural changes when pursuing foreclosures.
- WHY HOMEOWNERS WIN THEIR FORECLOSURE CASES: SECURITIZATION AND ITS MARKET FAILURES
To successfully bring a foreclosure suit a bank must produce very little evidence. Why has this proven so difficult? The answer lies with banks’ own practices. In the last twenty years, banks have significantly altered how they profit from mortgages; however, they failed to adequately adapt their record keeping and customer-service practices.
In the 1990s, banks began to convert long-term mortgages, familiar to most Americans, into short-term financial commodities, a process called securitization. Rather than keep mortgages on the books, mortgagees (banks) sought to sell the mortgages immediately to financial entities that would transform thousands of individual mortgages into securities—financial instruments that entitled the bearer to homeowners’ mortgage payments and that could be arbitrarily restructured or resold.15After securitization, although a homeowner would continue to make mortgage payments to the originating bank, that bank ceased to have a financial interest in receiving these payments. Instead, a variety of investors owned an interest in the pool of mortgage payments of which the homeowner’s is a part.16
Securitization gave rise to widespread errors in the documentation of mortgage ownership. To allow a variety of investors to own portions of a mortgage pool, originating banks entered into pooling and servicing agreements, which authorized “servicers”—sometimes large commercial banks, but often companies who were primarily or exclusively engaged in servicing—to act as the diffuse investors’ agents in receiving payments from and pursuing foreclosures against homeowners. Because actual ownership of the mortgage note became independent of servicing and the relationship with the mortgagor, a loan, or the right to receive part of the payments on that loan, might be sold several times while the homeowner still interacted with the same servicer. Conversely, the servicer might change while the loan remained part of the same investment pool. Throughout this reshuffling of title ownership and servicing, banks frequently made errors in how they documented and recorded their ownership of mortgages.17
Common mortgage fee structures set up in pooling and servicing agreements also disincentivized servicers and their attorneys from devoting adequate resources to foreclosures. Each servicing agreement paid servicers a flat annual fee of around 0.25% of the loan’s total value (for example, $500 per year on a $200,000 loan), but the cost of pursuing a single foreclosure cost servicers around $2,500.18When foreclosures began climbing precipitously in 2007,19 servicers were unprepared to handle the sudden increase in volume and had no incentives to devote additional resources to prove their banks’ ownership over each mortgage.20 To demonstrate ownership without expending more resources than pooling and servicing agreements allotted, bank employees signed hundreds of thousands of affidavits asserting that they had seen and could attest to thev contents of original documents demonstrating ownership of the underlying mortgage. Although such affidavits were a legally acceptable means of demonstrating such ownership, a significant number of them were actually fraudulent.21
Similarly, servicers’ attorneys also relied on sloppy paperwork—and, at times, on fraudulent and unethical practices in foreclosure proceedings. For example, one New Jersey foreclosure law firm operated without any method of contacting its mortgage-servicer clients. Instead, the firm received all work orders through a one-way computer system, along with a requested timeline and documents the servicer had determined were necessary.22 This underresourcing and the resulting ethical transgressions have affected hundreds of thousands of foreclosures.23
The result of securitization contracts’ underresourcing of mortgage servicers and their attorneys has been a “factory-line approach to litigation,” rife with abuses.24In many individual cases, these litigation strategies have been unsuccessful. Homeowners, their attorneys, and sometimes judges have successfully prevented foreclosure by demonstrating the falsity of an affidavit or simply by forcing the mortgagee to produce actual documentation that it owned the mortgage.25 As an increasing number of foreclosure suits are lost on the merits for lack of documentation, or for failure to prosecute within the statute of limitations, courts face a new problem: what happens next?
III. THE COURTROOM SOLUTION: ANYTHING BUT “FREE HOUSES”
In many states, longstanding principles of res judicata, when taken with the state law’s treatment of acceleration clauses, require courts to grant homeowners “free houses” when banks lose their foreclosure cases. But many courts have declined to give these cases preclusive effect.
Whether servicers lose because they fail to prove ownership or because their lawyers simply stop litigating, the first choice courts face is whether to dismiss the case with prejudice. Typically, once parties have a full and fair opportunity to present their cases, failure to prove one’s case results in dismissal with prejudice.26 In addition, dismissal with prejudice can be used as a sanction. Judges in foreclosure cases have issued dismissals with prejudice due to a lender’s failure to appear at case-management conferences27 or mediation,28 lack of prosecution,29 or a lender’s failure to meet court-imposed deadlines.30 If banks attempt a subsequent foreclosure, courts must then determine whether that dismissal with prejudice bars only an attempt to collect on the particular missed payments that led to the initial foreclosure suit, or whether the dismissal bars a future attempt to collect on any default on the debt.
While the latter holding may seem extreme, it is in accordance with settled principles of lending law in many states. In these states, acceleration is irrevocable—exercising the acceleration clause in the mortgage note turns an obligation to make installment payments into an “indivisible” obligation.31 Logically, after acceleration, there are no more monthly payments. A foreclosure is an action to recover the entire loan balance, and a loss bars any future attempt to collect on the note. In effect, the borrower gets to keep his house without being subject to a continuing obligation on the mortgage—a “free house.”32 Courts in irrevocable acceleration states that considered the issue before the 2008 financial crisis applied res judicata to subsequent foreclosures in this way.33
Recently, however, judges have avoided applying res judicata to foreclosure cases and have bent the rules to favor banks. For example, in Maine, where longstanding precedent established that a failed foreclosure bars any future attempt to collect on the debt,34 two trial courts recently refused to dismiss cases with prejudice, even after the cases were tried to completion and the banks had lost. The judges in those cases were explicit that they did so to allow any subsequent actions the banks might want to bring and to avoid giving the homeowners a windfall.35
On appeals from those cases, the Maine Supreme Court went even further than the trial courts in changing the law to favor foreclosing banks. The court held that the bank’s ownership of the mortgage, which has long been recognized as an element of the bank’s prima facie case for foreclosure,36 is actually an element of standing.37 Thus, whenever a bank fails to prove ownership of the mortgage, even if that occurs after a full trial on the merits, the complaint must be dismissed without prejudice for lack of subject-matter jurisdiction.38 In other words, the court’s ruling granted banks potentially infinite bites at the apple in foreclosure proceedings.39
In Florida, where intermediate courts had similarly barred subsequent foreclosures on res judicata grounds,40 the state supreme court in 2004 determined that irrevocable accelerations did not bar subsequent foreclosures. Instead, in Singleton v. Greymar Associates, the court held that the second action could go forward because it was based on a “subsequent default.”41 In other words, despite the acceleration of the mortgage, the court presumed a continuing obligation by the homeowner to make monthly payments.42
In Singleton, the Florida Supreme Court declared without analysis that barring subsequent foreclosures would produce inequitable results.43 In the next Part, we argue that state courts like the Singleton court are wrong on this score. By focusing on the immediate consequence of a ruling for homeowners, the courts ignore perverse incentives created by allowing banks to continue to externalize the costs of their mistakes.
- THE CASE FOR “FREE HOUSES” AS MARKET CORRECTION
So what should courts do when banks lose their foreclosure cases? As described above, one approach—that taken by the Florida and Maine Supreme Courts—is to bend the rules of res judicata to avoid a windfall for homeowners. This approach creates few benefits and significant economic problems. In this Part, we argue that further subsidizing banks’ poor litigation practices results in deadweight loss by contributing to negative public-health outcomes and by disincentivizing banks from improving their servicing and litigation techniques. We also explain how granting winning homeowners “free houses” will not negatively affect the mortgage market.
First, giving systematic permission to mortgagees and their attorneys to engage in repeated attempts to foreclose upon properties results in a broader social subsidization of irresponsible behavior. And these subsidies are large. As economists recognize, prolonged foreclosure proceedings create negative social externalities, depressing surrounding homes’ resale value, reducing local governments’ tax revenues, and increasing criminal activity.44 Foreclosures also appear to have significant effects on community members’ physical and mental health, and correlate with increased rates of depression, anxiety, suicide, cardiovascular disease, and emergency-care treatment.45In fact, scholars who track the health effects of the 2008 crisis found that foreclosures might have even greater negative health effects than unemployment.46 Although these studies analyze the general phenomenon of foreclosures and do not specifically address how relitigation of foreclosures might impact homeowners or their neighbors, they make clear that prolonged foreclosures can have dire economic and social effects.
Second, the threat of a “free house” also provides leverage for homeowners to negotiate a voluntary settlement, whether through a modification or a “graceful exit” like a short sale.47 In a world where mortgagees truly risk forfeiting their claim by bringing illegitimate or rushed suits, homeowners will have more time up front to regain their financial footing and negotiate a modification or repayment plan. Enforcing finality rules may dissuade mortgagees “from filing until they have their paperwork ready” and encourage potential plaintiffs “to look favorably on loan renegotiation.”48Servicers of securitized loans typically believe mortgage foreclosures are faster and cheaper than loan renegotiation,49 yet securitized-loan investors suffer greater financial losses in foreclosures than in renegotiation and repayment.50 Courts’ adhesion to traditional res judicata principles in the foreclosure process has the added benefit of making negotiated settlements with borrowers more appealing to banks. By realigning incentives through the increased risk of failure, courts can induce banks to act in their own long-term interest.
Finally, although judges have expressed concern about homeowner windfalls,51 the alternative creates a windfall for banks that cut corners in managing and prosecuting foreclosures. The risk and costs of losing foreclosures should already be internalized in the price of current mortgages. Empirical studies suggest that greater protection for mortgagors historically corresponds to slightly higher mortgage rates among lenders.52These studies indicate that lenders adjust the price of mortgages based on what they anticipate the cost, and not just the likelihood, of foreclosures will be. In addition, lenders are more likely to extend subprime mortgages where there are fewer legal hurdles to foreclosure.53 Because the requirements to bring a successful foreclosure suit and the legal rules concerning acceleration were well established at the time banks priced the mortgages currently in foreclosure, the mortgage agreements already had a chance to incorporate both the costs of pursuing foreclosure under irrevocable acceleration laws and the risks of homeowners prevailing—even though they often failed to do so.
Although a full discussion of the relationship between foreclosure procedure and mortgage costs is beyond the scope of this Comment, we reject the suggestion that lower mortgage costs and looser markets are ultimately beneficial, for at least two reasons. First, as described above, a growing body of empirical evidence suggests that the public-health and social costs of foreclosure are as widespread as the benefits of lower mortgage prices, suggesting that broader social allocation of the risk of foreclosure is appropriate. Second, the 2008 crisis that gave rise to the very problem this Comment addresses was caused in significant part by the loosening of underwriting standards and an increase in subprime lending.54 In light of a crisis precipitated by precisely these lending practices, and given the link between the ease of foreclosures and lenders’ proclivity for subprime loans, there is good reason to increase the price of socially harmful lending practices.
Therefore, a liberalization of rules governing foreclosure after the relevant loans have been issued would result in a broad windfall for lenders. When courts bypass res judicata and allow mortgagees a second shot at foreclosure, they are facilitating a shift of the risk associated with foreclosures—a risk that banks had, or should have, already priced into the cost of the mortgages themselves—onto homeowners.
Res judicata is generally justified as promoting respect for law because it tends to reduce social conflict and uncertainty.55 These broader policy arguments for imposing claim preclusion are particularly strong in the foreclosure context, where banks have demonstrated a lack of respect for law through their reliance on “robo-signing” and where the economic, social, and public-health costs of legal uncertainty not only are especially dire for litigants but also extend well beyond the parties themselves.
Mortgagees, their servicers, and their attorneys currently face a crisis of their own making. They failed to allocate the necessary resources to maintain accurate records of homeowners’ indebtedness while pursuing the profits of securitization. Then they brought foreclosures in unprecedented numbers—on compressed timeframes and on the cheap—in an attempt to recover quickly their unanticipated losses. At trial, they received forgiveness for their mistakes and abuses, obtaining a highly unusual legal outcome: judgment or dismissal of a case, fully heard on its merits, without prejudice.
In asking courts to allow subsequent foreclosure attempts, banks ask states and homeowners to bear the psychological and economic costs of lenders’ self-interested behavior. But if state courts refused to create an exception to the rule of res judicata—that is, dismissed these cases with prejudice and enforced res judicata—they would do more than enforce the rule of law. They would also create a counterweight to current perverse incentives, encourage alternative dispute resolution where possible, reduce negative public-health consequences from prolonged foreclosure litigation, and ultimately promote greater social outcomes in future foreclosure suits.
MEGAN WACHSPRESS, JESSIE AGATSTEIN & CHRISTIAN MOTT*