The Importance of Paperwork

The American Bankruptcy Institute covered this story from New York concerning foreclosures:

While the nation’s largest banks come to his court seeking to take the homes of New Yorkers who cannot pay their mortgages, New York State Supreme Court Justice Arthur M. Schack rejects nearly half of the banks’ motions because the foreclosure papers contain errors, the New York Times reported yesterday. Justice Schack has tossed out 46 of the 102 foreclosure motions that have come before him in the last two years. His duels with the banks started in 2007 as foreclosures spiked sharply, particularly affecting working-class black precincts in Brooklyn. “Banks had given out loans structured to fail,” he said. As banks and mortgage brokers repackaged mortgage loans for sale to investors, creating a confusing array of paperwork, Justice Schack maintains the view that if a bank cannot prove ownership, it cannot foreclose. “Multibillion-dollar corporations must follow the same rules in the foreclosure actions as the local banks, savings and loan associations or credit unions,” Schack wrote in a 2007 ruling.

Debtor lesson: never assume a creditor has properly prepared its legal case against you.

Creditor lesson: don’t let legal/administrative details stand between you and a successful collections effort.