Tuesday, December 9, 2008

SJC Rules On Subprime Mortgage Chaos

One of the mortgage implosion's interesting characteristics is how commentators have found it difficult to allocate blame. Some blame the borrowers, since they should have known better. Some blame the lenders, since they should have known better. And some blame real estate agents for marketing properties to people who couldn't afford to buy them.

Today the SJC adventures into this murk in Commonwealth v. Fremont Investment & Loan, No. SJC 10258. The decision is long-ish. The facts are complicated. The procedural elements are a bit different, since this an enforcement action by the Commonwealth.

But everything flows from this conclusion by the Court: "it was unreasonable, and unfair to the borrower, for Fremont to structure its loans on . . . unsupportable optimism."

Expect much animated debate -- about personal responsibility, unfair business practices, and the propriety of hope -- to ensue.

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