The Right and Wrong of the Foreclosure Mess

By Megan McArdle

Karl Smith writes:



I don't know about the Reason guys but I can say that I was more or less hoping the whole thing would blow over and that in the wake of it we could get serious about electronic documents and get rid of the paper crap all together.

The reason I'm not more outraged is that I have seen little evidence that actual property rights were infringed. Property rights are often represented by pieces of paper but they are not created by pieces of paper. They are created by mutual consent and a meeting of minds. To my knowledge almost all of these cases involve people who believed that they were taking out a mortgage and banks who believed that they were providing a mortgage. That's a solid transaction.


I think the paperwork matters, for the same reason that "they got Al Capone for tax evasion" does not fill my heart with glee. And we certainly can't have people thinking that the way to get around paperwork errors is to submit doctored documents to the court. But I admit, I am less outraged by this abuses than I could be, if I were convinced that many of the homeowners involved were actually not in default. But as far as I can tell, except for a couple of aberrant accidents, no one is disputing that the homeowner borrowed a lot of money, and have stopped trying to repay it; the dispute is only over who has the right to do something about that. That dispute matters, but not in the same way.

This article available online at:

http://www.theatlantic.com/business/archive/2011/01/the-right-and-wrong-of-the-foreclosure-mess/69565/