The New York Times reports that the 23 states where GMAC suspended evictions, cash for keys and resale of foreclosed homes are all “judicial foreclosure” states. A judicial foreclosure is when a bank has to sue you in court in order to foreclose on your house. In non-judicial foreclosure states, the bank usually has to comply with all sorts of notice requirements and then gets an order of eviction — no lawsuit required. In order to get in front of a judge, the homeowner has to sue the bank to stop the foreclosure.
This is significant because in judicial foreclosure states, the bank is the plaintiff and bears the burden of proof. In self-help states, the homeowner trying to stop the foreclosure would bear the burden of proof. This makes it harder especially since the bank has the records and the homeowner often does not.
It also means that in judicial foreclosure states, a judge can (and in the case of Judge Shack in Brooklyn really does) take it upon himself to scrutinize the plaintiff’s bank’s filings to see if they meet the burden of proof. In all other instances the burden would fall on the homeowner, who often can’t afford a lawyer, to ferret out the technical problems with the bank’s filings and point them out to the court.
Which means that GMAC is not afraid that it has done something wrong; GMAC’s only concern is that judges will catch it in the act. This is not just a problem with GMAC, either; they are only the first to admit it. This forged document and perjury problem exists across the board.
This is why every state attorney general and United States Attorney in the country ought to be opening investigations into foreclosure fraud.
Justice should not be little more than a roll of the dice depending on whether or not you happen to live in a judicial foreclosure state. And the merits of the case should not merely be heard in those cases where both sides have a lawyer.