July 2, 2013
The Future of Foreclosure
Professor Roger Bernhardt (Golden Gate University School of Law) has posted The Future of Foreclosure to SSRN. This short article is ostensibly about a few recent California foreclosure decisions but I was more intrigued by its “case for going back to the courthouses” and its rejection of nonjudicial foreclosure. (2) Bernhardt makes the common argument that for debtors, “judicial foreclosure would give them the opportunity to have their defenses heard before their property is taken away by foreclosure . . ..” (3) But he also argues that lenders would benefit from a judicial-foreclosure-only regime because it could “effectively eliminate the risks and consequences that a challenged conduct will later be determined to have amounted to a fatal error.” (3)
Bernhardt does note that
National reform movements have always gone in the opposite direction: attempting to improve the nonjudicial foreclosure procedure in ways to eliminate its deficiencies (e.g., the Uniform Land Transactions Act, the Uniform Land Security Interests Act, the Uniform Nonjudicial Foreclosure Act, and now the (draft) Residential Real Estate Mortgage Foreclosure and Protections Act). But those approaches all concede a premise that may no longer be tenable—that the foreclosure process can be safely or efficiently run without contemporaneous judicial supervision. After-the-fact oversight is too time consuming and too late. (3)
I have not heard any lenders advocate for such a solution and would be curious to hear what they would have to say. My sense is that they would not agree that they would benefit from such a regime, but it would be interesting to know if I am wrong.
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