What has emerged in recent weeks as "the foreclosure scandal" represents the collision of this 21st-century computerized, global financial system with an 18th-century legal process for obtaining ownership rights to buildings and land. Indeed, the United States has one of the most backward land-title systems in the industrial world.
So my solution going forward would be to modernize the land-title system. My hope is that would achieve a libertarian's goal of clarifying property rights and reducing the costs involved with the transfer of property.
For the current situation, however, the issues are quite difficult. When I was in Boston, I used to joke about why they needed no-fault auto insurance. The way they drive up there, a typical accident is going to have both parties at fault. When a guy going the wrong way down a one-way street hits a guy making an illegal left turn, who do you blame?
Now, you have borrowers who may have committed fraud to obtain a mortgage and are no longer paying the mortgage. You have servicers who did not properly file documents with the record office to update the noteholder of record. Which side deserves the right to the property?
When it comes to law, I am a big believer in common law and somewhat of a skeptic about strict letter-of-the-law. I think that with the foreclosure mess, judges (and juries, where applicable) should do their best to adapt precedents to the current situation in the most sensible way. I am not a lawyer or a legal scholar. I know that my proposed approach to the law will drive some people nuts, but that is the best I can come up with.