An Oct. 9 editorial in The Wall Street Journal about the growing legal quagmire of shoddy foreclosure paperwork is raising hackles — and eyebrows — across the Internet. To give an idea of the level of fairness and intellectual rigor in the piece, here’s a choice line: “As far as we know, House Speaker Nancy Pelosi hasn’t compared any bank employees to Nazis.”
Nazi allusions aside, The Journal takes the position that the legal issues that are throwing countless foreclosures into legal limbo are mere technicalities. The main point, says the paper, is that people who failed to pay their mortgages deserve to lose their homes — they bought things they couldn’t afford, and that’s what happens. Plus, The Journal says, inventory needs to come to market for home prices to bottom. The legal wrangling promises to draw out this process and hurt the economy.
Barry Ritholz over at The Big Picture chafes at one particular paragraph concerning whether any of the poorly executed foreclosure documentation has actually harmed anyone. The Journal says:
We’re not aware of a single case so far of a substantive error. Out of tens of thousands of potentially affected borrowers, we’re still waiting for the first victim claiming that he was current on his mortgage when the bank seized the home. Even if such victims exist, the proper policy is to make them whole, not to let 100,000 other people keep homes for which they haven’t paid.
Ritholz’s conclusion: The editorial board at the WSJ comprises either a bunch of clueless dolts or a bunch of bald-faced liars. (In the spirit of fairness, he also floats the possibility that the editorial board is a group of “high functioning morons.”) He points out that Bank of Amerca foreclosed on a guy who didn’t have a mortgage. For many, the fact that a bank seized a home from a person who owned it outright would be enough to call the documentation process into question.