By now, the clusterf–k in America’s housing market has been pretty thoroughly documented. Thanks to the quick thinking of a Maine public interest lawyer, the country discovered that mortgage companies had been cooking the books in order to push tens of thousands of families out of their homes.

But the most interesting twist in this story is not the companies’ contempt for due diligence; it is what they did after their negligence was exposed. First GMAC, then the other banks caught with their pants down, put a hold on foreclosures. But they did not do so everywhere. Instead, they stopped foreclosures in the 23 states with judicial foreclosure. To translate into plain English: the companies knew they had goofed, so they stopped foreclosures in those states where they might get caught. In states where no judge stands between families and foreclosure–including Massachusetts–the companies initially stuck with the status quo.

The companies’ actions can be described as many things. Perhaps most clearly, they are a strong argument for judicial foreclosure–rules that would require mortgage holders to show that they have the right to foreclose before they initiate a process that can end with families out on the street. The current process allows private companies–and from all accounts not the most ethical private companies on earth–to be prosecutor, judge and jury.   Mortgage companies have every incentive to cut corners, yet they have effectively been given the power to determine whether families deserve to stay in their homes. Now that it is clear just how badly they have abused that power, it’s time to think whether we should have let them have it in the first place.