Is this a precedent that will force banks to negotiate settlements with delinquent homeowners, or will it cause the further weakening of the banking system? What does this mean with regards to contracts in a larger context? Should judges have the power to cancel contracts and award property to one party to the detriment of the other?
Personally, I support such sanctions in extreme cases like this, where the bank makes absolutely no effort to comply with mediation. I think it is not a dangerous precedent, and banks need to be reminded that they are not omnipotent. In the case, the bank’s actions were egregious, and the bar is set pretty high for anyone else to try to get their mortgage set aside. However, I do expect more judgements like this before the banks get the message, and are forced to negotiate with distressed borrowers.