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The Court and the Subprime Mortgage Crisis

Robers v. United States is one of the few cases that came out of the subprime mortgage crisis to make it to the Supreme Court. The outcome will determine how much restitution is due from the defendant who is convicted of wire fraud related to a home mortgage loan.

The issue comes down to statutory interpretation. Robers was part of a mortgage-fraud scheme. He submitted for multiple loan applications for mortgages that he had no intention of repaying. After they realized he wasn’t going to pay, the lenders held foreclosure sales, where they bought the homes that the fraudulent loans purchased. Because of a statute, Robers has to pay restitution for the difference between the property value he “returned” to the lenders and the money he borrowed. Robers case is that the homes lost value in the time that they foreclosed and the lenders actually sold them. So the case stands whether Robers should be credited for the value of the homes when foreclosure occurred or what price they sold for.

This case could be hard for Robers to win. Throughout the statute, it refers to “property.” In this case, the property that was stolen is the money that Robers fraudulently borrowed. Although, Robers argues that the property, indicating the homes were returned at the time of foreclosure, he will not be able to convince the justices he returned the borrowed money at that time. The justices will try to read the statute in a way that will allow them to rule against the malfeasor. Since the decision of the court already seems to be in the bag, it is curious that the Court took the case at all since they are most likely to agree with the ruling of the Seventh Circuit. In the Ninth Circuit this case would have squarely conflicted with previous verdicts. It may be that the Supreme Court wanted to resolve it before it made its way into the Ninth.

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