A ‘Little Judge’ Who Rejects Foreclosures, Brooklyn Style: Judge Arthur Schack

If other judges knew more of what really is than whats not perhaps they would also know the fraud that is being played in their court rooms.

By MICHAEL POWELL Published: August 30, 2009

The judge waves you into his chambers in the State Supreme Court building in Brooklyn, past the caveat taped to his wall — “Be sure brain in gear before engaging mouth” — and into his inner office, where foreclosure motions are piled high enough to form a minor Alpine chain.

 Nicole Bengiveno/The New York Times

“I don’t want to put a family on the street unless it’s legitimate,” Justice Arthur M. Schack said.

Every week, the nation’s mightiest banks come to his court seeking to take the homes of New Yorkers who cannot pay their mortgages. And nearly as often, the judge says, they file foreclosure papers speckled with errors.

He plucks out one motion and leafs through: a Deutsche Bank representative signed an affidavit claiming to be the vice president of two different banks. His office was in Kansas City, Mo., but the signature was notarized in Texas. And the bank did not even own the mortgage when it began to foreclose on the homeowner.

The judge’s lips pucker as if he had inhaled a pickle; he rejected this one.

“I’m a little guy in Brooklyn who doesn’t belong to their country clubs, what can I tell you?” he says, adding a shrug for punctuation. “I won’t accept their comedy of errors.”

The judge, Arthur M. Schack, 64, fashions himself a judicial Don Quixote, tilting at the phalanxes of bankers, foreclosure facilitators and lawyers who file motions by the bale. While national debate focuses on bank bailouts and federal aid for homeowners that has been slow in coming, the hard reckonings of the foreclosure crisis are being made in courts like his, and Justice Schack’s sympathies are clear.

He has tossed out 46 of the 102 foreclosure motions that have come before him in the last two years. And his often scathing decisions, peppered with allusions to the Croesus-like wealth of bank presidents, have attracted the respectful attention of judges and lawyers from Florida to Ohio to California. At recent judicial conferences in Chicago and Arizona, several panelists praised his rulings as a possible national model.

His opinions, too, have been greeted by a cry of affront from a bank official or two, who say this judge stands in the way of what is rightfully theirs. HSBC bank appealed a recent ruling, saying he had set a “dangerous precedent” by acting as “both judge and jury,” throwing out cases even when homeowners had not responded to foreclosure motions.

Justice Schack, like a handful of state and federal judges, has taken a magnifying glass to the mortgage industry. In the gilded haste of the past decade, bankers handed out millions of mortgages — with terms good, bad and exotically ugly — then repackaged those loans for sale to investors from Connecticut to Singapore. Sloppiness reigned. So many papers have been lost, signatures misplaced and documents dated inaccurately that it is often not clear which bank owns the mortgage.

Justice Schack’s take is straightforward, and sends a tremor through some bank suites: If a bank cannot prove ownership, it cannot foreclose.

“If you are going to take away someone’s house, everything should be legal and correct,” he said. “I’m a strange guy — I don’t want to put a family on the street unless it’s legitimate.”

Justice Schack has small jowls and big black glasses, a thin mustache and not so many hairs combed across his scalp. He has the impish eyes of the high school social studies teacher he once was, aware that something untoward is probably going on at the back of his classroom.

He is Brooklyn born and bred, with a master’s degree in history and an office loaded with autographed baseballs and photographs of the Brooklyn Dodgers. His written decisions are a free-associative trip through popular, legal and literary culture, with a sideways glance at the business pages.

Confronted with a case in which Deutsche Bank and Goldman Sachs passed a defaulted mortgage back and forth and lost track of the documents, the judge made reference to the film classic “It’s a Wonderful Life” and the evil banker played by Lionel Barrymore.

“Lenders should not lose sight,” Justice Schack wrote in that 2007 case, “that they are dealing with humanity, not with Mr. Potter’s ‘rabble’ and ‘cattle.’ Multibillion-dollar corporations must follow the same rules in the foreclosure actions as the local banks,savings and loan associations or credit unions, or else they have become the Mr. Potters of the 21st century.”

Last year, he chastised Wells Fargo for filing error-filled papers. “The court,” the judge wrote, “reminds Wells Fargo of Cassius’s advice to Brutus in Act 1, Scene 2 of William Shakespeare’s ‘Julius Caesar’: ‘The fault, dear Brutus, is not in our stars, but in ourselves.’ ”

Then there is a Deutsche Bank case from 2008, the juicy part of which he reads aloud:

“The court wonders if the instant foreclosure action is a corporate ‘Kansas City Shuffle,’ a complex confidence game,” he reads. “In the 2006 film ‘Lucky Number Slevin,’ Mr. Goodkat, a hit man played by Bruce Willis, explains: ‘A Kansas City Shuffle is when everybody looks right, you go left.’ ”

The banks’ reaction? Justice Schack shrugs. “They probably curse at me,” he says, “but no one is interested in some little judge.”

Little drama attends the release of his decisions. Beaten-down homeowners rarely show up to contest foreclosure actions, and the judge scrutinizes the banks’ papers in his chambers. But at legal conferences, judges and lawyers have wondered aloud why more judges do not hold banks to tougher standards.

“To the extent that judges examine these papers, they find exactly the same errors that Judge Schack does,” said Katherine M. Porter, a visiting professor at the School of Law at the University of California, Berkeley, and a national expert in consumer credit law. “His rulings are hardly revolutionary; it’s unusual only because we so rarely hold large corporations to the rules.”

Banks and the cottage industry of mortgage service companies and foreclosure lawyers also pay rather close attention.

A spokeswoman for OneWest Bank acknowledged that an official, confronted with a ream of foreclosure papers, had mistakenly signed for two different banks — just as the Deutsche Bank official did. Deutsche Bank, which declined to let an attorney speak on the record about any of its cases before Justice Schack, e-mailed a PDF of a three-page pamphlet in which it claimed little responsibility for foreclosures, even though the bank’s name is affixed to tens of thousands of such motions. The bank described itself as simply a trustee for investors.

Justice Schack came to his recent prominence by a circuitous path, having worked for 14 years as public school teacher in Brooklyn. He was a union representative and once walked a picket line with his wife, Dilia, who was a teacher, too. All was well until the fiscal crisis of the 1970s.

“Why’d I go to law school?” he said. “Thank Mayor Abe Beame, who froze teacher salaries.”

He was counsel for the Major League Baseball Players Association in the 1980s and ’90s, when it was on a long winning streak against team owners. “It was the millionaires versus the billionaires,” he says. “After a while, I’m sitting there thinking, ‘He’s making $4 million, he’s making $5 million, and I’m worth about $1.98.’ ”

So he dived into a judicial race. He was elected to the Civil Court in 1998 and to the Supreme Court for Brooklyn and Staten Island in 2003. His wife is a Democratic district leader; their daughter, Elaine, is a lawyer and their son, Douglas, a police officer.

Justice Schack’s duels with the banks started in 2007 as foreclosures spiked sharply. He saw a plague falling on Brooklyn, particularly its working-class black precincts. “Banks had given out loans structured to fail,” he said.

The judge burrowed into property record databases. He found banks without clear title, and a giant foreclosure law firm, Steven J. Baum, representing two sides in a dispute. He noted that Wells Fargo’s chief executive, John G. Stumpf, made more than $11 million in 2007 while the company’s total returns fell 12 percent.

“Maybe,” he advised the bank, “counsel should wonder, like the court, if Mr. Stumpf was unjustly enriched at the expense of W.F.’s stockholders.”

He was, how to say it, mildly appalled.

“I’m a guy from the streets of Brooklyn who happens to become a judge,” he said. “I see a bank giving a $500,000 mortgage on a building worth $300,000 and the interest rate is 20 percent and I ask questions, what can I tell you?”

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IndyMac got IndySMACK Down via Hon. Samuel J. Bufford!

From BMcDonald

This is a bankruptcy case in which IndyMac Bank wanted relief of stay so they could proceed with a foreclosure. The judge ordered them to produce the original note and deed, which they did but ended up having to admit they didn’t own them. This judge Bufford goes into great detail about the issues of “party in interest” and “real party in interest” and who has the right to foreclose. Only a party with a real investment in the property has a right to collect on the debt.

Freedom of Information Act Requests Show OneWest Bank Misrepresentation

When will ALL this Bull Shit come to an END? Everything is a stage and all these “Non-Bank’s” are characters!

 Freedom of Information Act Requests Show OneWest Bank Misrepresentation
Posted on March 17, 2010 by Neil Garfield

Submitted by BMcDonald

Most of us are trying to get the info from the banks, which they will not do unless forced. Well, now many of us can walk right in through the back door. FOIA requests! I fought for 7 months to get the bank to cough up the info and it only took 6 days by going through the FDIC. So now I’m in the drivers seat. This damned bank has been lying from day one claiming they are the sole beneficiary of my loan. Now they have committed the fraud and done the crime by illegally selling my home. They are now in deep, deep, trouble.

I’ve been fighting OneWest Bank since August of last year here in Colorado. In Colorado they have nonjudicial foreclosures and the laws as so totally banker-biased it’s insane. All the bank has to do is go to the public trustee with a note from an attorney who “certifies” that the bank is the owner of the loan. What they don’t tell you is the bank has to go before a judge and get an order for sale in a 120 hearing. Most only find out about it at the last minute and don’t even show up because the only issue discussed is whether a default has occurred or not.

I discovered however that if you raise the question of whether the foreclosing party is a true party in interest or not, the court has to hear that as well. I raised that issue and demanded the bank produce the original documents and endorsements or assignements. The judge only ordered them to produce originals, which they did.

Long story short, I managed to hold them off for seven months after hiring an attorney. I found a bankruptcy case from CA in 2008 in which IndyMac produced original documents and ended up having to admit they didn’t own them. I had a letter from OneWest that only stated they purchased servicing rights. I had admissions from the bank’s attorney that there were no endorsements. And at the last minute I discovered the FDIC issued a press release in response to a YouTube video that went viral over the sweetheart deal OneWest did with the FDIC. The FDIC stated in their press release that OneWest only owned 7% of the loans they service. I presented all this to the judge but he ended up ignoring it all and gave OneWest an order to sell my home, which they did on the 4th.

About a week before the sale I went directly to the FDIC and filed a FOIA request for any and all records indicating ownership rights and servicing rights related to my loans and gave them my loan numbers. I managed to get the info in about 6 days. I got PROOF from the FDIC that OneWest did not own my loan. Fredie Mac did. And the info came directly from OneWest systems. And just last Friday I got a letter from IndyMac Mortgage services, obviously in compliance with the FOIA request that Freddie Mac owned the loan. So I now have a confession from OneWest themselves that they have been lying all along! I have a motion in to have the sale set aside and once that’s done I’m going to sue the hell out of them and their attorneys in Federal court.

So I found a wonderful little back door to the proof most of us need. If the FDIC is involved, you can do a FOIA request for the info. I don’t know if it applies to all banks since they are all involved in the FDIC. You all should try it to see.

Most of us are trying to get the info from the banks, which they will not do unless forced. Well, now many of us can walk right in through the back door. FOIA requests! I fought for 7 months to get the bank to cough up the info and it only took 6 days by going through the FDIC. So now I’m in the drivers seat. This damned bank has been lying from day one claiming they are the sole beneficiary of my loan. Now they have committed the fraud and done the crime by illegally selling my home. They are now in deep, deep, trouble.