By Arnold Kling
If the shoe were on the other foot, if people who had obviously paid their mortgages were being thrown out of their homes because of some trivial defect in the loan documentation, would these same commenters be arguing in favor of it? I doubt it. It would be seen as Kafkaesque, and with good reason.
Exactly. Consider these situations:
1. The borrower is paying the mortgage, but the borrower did not properly sign some document at settlement.
2. The borrower is not paying the mortgage, but the lender did not properly sign some document.
Your response can be.
a) The bank has a right to foreclose and take possession in (1), and the borrower has a right to remain in his home in (2). That is nitpicky, but consistent.
b) The borrower has a right to keep his home in (1) and the bank has a right to foreclose in (2). That is what I think of as a reasonable point of view.
c) The borrower keeps his home in both cases. The bank should know better, but the borrower should be let off the hook. I think this is a popular position to take, because people love to treat banks as villains and borrowers as victims, but I think it amounts to mob rule rather than the rule of law.
Speaking of mob rule, Neil Munro writes,
Five big banks have agreed to give twenty-three Democratic attorneys general more than a billion dollars that can be distributed to housing groups and community organizers in the months prior to the 2012 election.
That is part of the “settlement” for the foreclosure paperwork foulups.
Have a nice day.