In the Sci-Fi classic The Matrix, Man is enslaved by a vast machine, which uses human beings as the energy source supporting its survival. Before Man could overcome the machines, their power had to be overthrown by a new force. So “Neo,” as Techno-Messiah, fought the machines and saved mankind.
The current foreclosure crisis has government, banking and Wall Street interests feeding on people, too. Families have been encased in cocoons of “bad paper,” created by bad (or no) government rules, and greed. Lenders have ignored the law, or paid it only lip service, and gotten away with it in the name of expedience. But a new way of looking at old rules in South Carolina will help consumers fight back.
A recent South Carolina case, Matrix Financial Services Corporation v. Frazerprovides common sense help. Matrix says, in effect, if lenders don’t follow South Carolina law when closing mortgage loans, they may not be able to foreclose their mortgage when the borrower defaults.
The South Carolina Supreme Court explained the problem lenders may face as follows:
[I]n this case Matrix comes to the court with unclean hands, and is thus barred from seeking equitable relief. Matrix hired LandAmerica OneStop to perform the title search, prepare the documents, and close the refinance loan–all admittedly without the supervision of a licensed attorney. Thus, Matrix has committed the unauthorized practice of law in closing the refinance mortgage, clearly violating South Carolina law. The dissent’s protestations aside, a party cannot violate the law and expect not to bear the consequences of its actions.This Court will not grant a discretionary, equitable remedy to a party who refused to follow the laws of this state. Therefore, even if Matrix were able to satisfy the requirements for equitable subrogation, Matrix would not be entitled to that equitable remedy because it has unclean hands.
For years, South Carolina courts have been telling lenders to follow the consumer protection rules in mortgage lending. The Matrix case is a new weapon to fight the foreclosure machine and help save homes.
Welcome to the real world.