Archive for July, 2010
In recent weeks, an increasing number of prospective clients have met with Stopa Law Firm for an initial consultation about foreclosure even though they haven’t missed a mortgage payment. A few years ago, that would have sounded crazy. Nowadays, though, millions of Florida homeowners are tired of making payments on a home worth a fraction of what they owe. Generally, these homeowners fall into two categories – those considering a “strategic default,” i.e. intentionally stopping payments even though they can afford to pay, and those homeowners who can afford to pay but are slowly depleting their savings or retirement accounts to do so. It’s time that I blog about both scenarios.
First off, everyone’s situation is different, and it’s hard to make blanket statements in a blog that apply to everyone. That said, if you’ve been depleting your savings or retirement account(s) to pay your mortgage, then, unless you expect your finances to improve in the near future, it’s probably time that you re-evaluate your situation.
For example, suppose you had $70,000 in savings/retirement in July, 2009, but in your ongoing attempt to pay your mortgage (and other necessary expenses), that number is down to $35,000. If that sounds like you, then the first question I’d ask is this:
Do you expect your situation to improve in the near future?
If the answer is “no,” and you’re going to continue depleting your savings/retirement at a rate of roughly $35,000 per year, then my next question would be:
What are you going to do when your savings/retirement runs out?
Many smart, hard-working, well-intentioned clients have no answer to this question. For most people, there is no answer. What can you do when you run out of money and can’t pay your mortgage? The next question I’d ask is:
Would it be better to stop paying your mortgage, and face a foreclosure lawsuit, now, with $35,000 in your pocket, or to continue paying your mortgage for another year, run out of money, and then face foreclosure?
For most people, the answer to this question is clear. I mean, if you’re going to (possibly) get foreclosed, isn’t it better to do so with $35,000 than with zero? Heck, for that matter, wouldn’t it have been better to do so with that original $70,000? Generally, the way I’d characterize it is this:
if you realize a foreclosure lawsuit is inevitable, and it’s just a matter of when (not if) it comes, it may be better to stop paying your mortgage now, and face the problem sooner, with money in your pocket, rather than later, with no money in your pocket.
After all, if you choose to give all the money to the bank in the future, you certainly can, but if you give the bank all your money and then get foreclosed, you’re never going to get that money back.
At Stopa Law Firm, we’ve been giving advice like this for a long time. In fact, I was in the news with this as far back as October, 2009 – here. (While I don’t agree with everything that reporter wrote in that story, the point is clear – for some people, stopping payments is the right option.) Anyway, now that Stopa Law Firm has hundreds of clients, I can’t tell you how many homeowners are thrilled with their decision to stop paying, save their money, and defend their foreclosure. In fact, many clients have told us they wish they had stopped paying sooner. Does that mean everyone should stop paying? Of course not. But:
if you realize you’re slowly depleting your savings, and you’re going to soon be out of money, what are you supposed to do – give your last dime to the bank and then get sued for foreclosure anyway?
If you can accept the premise that some people should stop paying, the logical question becomes “why shouldn’t everyone?” Many Florida homeowners are, in fact, considering a “strategic default” – intentionally withholding mortgage payments even though they can afford to pay because their house is worth so much less than what they owe. The rationale is clear:
Why pay $250,000 for something worth $150,000?
At the outset, let me be clear. Nothing in this blog is intended to encourage anyone to stop paying on their mortgage, particularly if they can afford to do so. The decision to strategically default is complicated and must be evaluated on a case-by-case basis.
That said, I can totally understand if, after consultation with an attorney, a homeowner were to make the conscious decision to withhold mortgage payments on a home worth $150,000 with a mortgage balance of $250,000. For many homeowners, this is a perfectly leigitmate business decision.
Contrary to what the banks want you to believe, there’s nothing immoral, unethical, or slimy about a strategic default. A strategic default is, quite simply, a business decision – no different than those made by the banks every day. Some people may disagree, but it’s not my job to enforce someone else’s version of morality – it’s my job to represent Florida homeowners.
If you’re wrestling with the ethics of strategic default, consider two real-world world comparisons – one big, one small.
First, suppose you buy a new, two-year cellphone plan with unlimited minutes, 24/7/365, for $100/month. In so doing, you’re entering a contract, “promising” to pay $100/month for two years. Now suppose in two months, a different cellphone provider offers the same plan for $50/month. If you could get out of the first contract by paying a $200 cancellation fee, wouldn’t it make sense to do so, even though you’d be going back on your “promise”? I think so, and I suspect most people would agree. (After all, you’d have saved the $200 cancellation fee after four months with the new plan and every month thereafter would entail $50/month in your pocket.) A situation like that is not driven by ethics or morality – you’re making a business decision – doing what’s best from a financial perspective. How is that wrong?
If that example is too simplistic for you, let’s look at a big-business example of “strategic default” transpiring now, right in our own backyard. The Tampa Bay Rays play their home games at Tropicana Field in downtown St. Petersburg. They have a contract with the City of St. Petersburg to remain at that stadium through 2027. The Rays owners, though, are frustrated with low attendance rates and want the team to move to Tampa. (Anyone who knows the Tampa/St. Pete area knows the best place for a stadium would be in western Tampa – near where Stopa Law Firm has its Tampa office, actually, and not downtown St. Pete). Moving to Tampa, though, would breach the Rays’ agreement with the City of St. Pete.
Gee, does this sound familiar? A decision about whether to breach a contract for business purposes … that’s precisely the situation so many Florida homeowners are facing. What’s fascinating to me, though, is that when the media talks about the Rays, it does so purely from a business perspective, yet when the same discussion is about homeowners, morality somehow enters the picture. Why? I realize some homeowners have a sentimental attachment to their home, and that’s their prerogative. Aside from that, though, I see no reason why strategic default should not be viewed any differently than the cellphone example or the Rays’ stadium example. The decision to initiate a strategic default is complicated, yes, but if it makes sense from a business perspective, why not? That’s why I’d be shocked if the Rays are still in St. Pete as of 2027 – once the business dynamics get this awry, something has to give.
For an interesting take on strategic default, check out this well-written article.
It’s unfortunate that our society is at the point where homeowners must decide whether to stop paying on a mortgage, whether it’s because they are slowly depleting their savings or owe more than the house is worth (or both). That said, when banks took billions of dollars in bailout money, they did what was in their own best interests (by putting the money in their pockets and not giving loan modifications as was intended). With that in mind, the question for me becomes:
If the banks can do what’s in their best interests, why can’t homeowners?
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In recent weeks, I’ve noticed two things out of Palm Beach County that really concern me. First, I saw this article in the Palm Beach Post, where Chief Judge Blanc discussed the backlog in foreclosure cases and his belief that “it is important to clear the foreclosure cases so that vacant and dilapidated homes can go back on the market, presumably increasing neighborhood property values.” As I explained in my blog entitled “Who is Harming the Economy – BANKS, Not My Clients” (below), it’s clear that banks are the reason for these abandoned homes, not homeowners, and pushing foreclosure cases through will only make things worse in that regard, not better.
Then, just yesterday, I saw this 103-page (103 page!!) Palm Beach foreclosure docket set for August 2, 2010 (h/t Lisa Epstein of foreclosure hamlet). At that point, I felt compelled to write an
Open Letter to Chief Judge Blanc
In so doing, I am really trying to be respectful and not be critical. That said, I am going to keep writing letters like this, just as I’ve done to Chief Judge McGrady in Pinellas and Chief Judge Menendez in Hillsborough, in the hopes that Florida judges will realize there are more important concerns than the backlog in their cases. With billions of dollars changing hands via foreclosure judgments, isn’t it time that judges take a long and hard look at the environment they’re creating by “pushing through” foreclosure cases? As I explain in the letter, there are a lot of far-reaching consequences of these foreclosure cases, and it’s time that everyone take stock of the situation. Continuing to “push through” foreclosure cases, hundreds at a time, is simply not the answer.
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With Florida facing unprecedented numbers of foreclosures (and no end in sight), an incredible number of lawyers, and even some non-lawyers, have thrown their hats into the “foreclosure defense” arena in Florida. Whether it’s Tampa, Miami, Jacksonville, Orlando, or somewhere in between, experienced attorneys such as those at Stopa Law Firm are available to assist homeowners through the foreclosure process. The problem, though, is this –
with all of the choices available, how can the average homeowner tell the difference between an experienced attorney, who is likely to help, and a “johnny come lately” who is not?
In recent weeks, I’ve seen my fair share of pleadings and court filings from other foreclosure defense attorneys (usually because a client started out with a different lawyer and changed to Stopa Law Firm). Without naming names, I must say – some of the pleadings and court filings I’ve read are absolutely awful. Don’t get me wrong -there are a fair number of reputable attorneys who can capably defend foreclosure cases. In my view, though, many are inept. How can you tell the difference?
Here are some “red flags” I’d keep in mind:
1. Up-front money to a non-lawyer. It’s against the law for a non-lawyer to charge an up-front fee for a loan modification or foreclosure defense work. A non-lawyer can’t defend a foreclosure case anyway (that’s called the unlicensed practice of law – it’s a criminal offense, actually), so if you’re seeking help with foreclosure, I’d be exceptionally careful about retaining any non-lawyer, especially with up-front money.
2. Realtors pushing a short sale. Look, I don’t want to badmouth realtors. But there’s an inescapable problem with putting your trust in a realtor (instead of a lawyer). Typically, all realtors care about is selling the house – after all, that’s the only way they get paid. Realtors may want you to believe a short sale will solve all your problems, but often, that’s not so. Usually, when the bank agrees to a short sale, the homeowner remains liable for the deficiency (the difference between what you owe on the house and the short sale price). Often, the amount of this deficiency can be tens or even hundreds of thousands of dollars. And if this deficiency is reduced to judgment, that judgment remains for twenty years, meaning the bank may pursue payment of these monies from you (e.g. garnishing wages) for up to twenty years.
Time and time again, I’ve seen realtors either fail to disclose these facts or actively mislead homeowners about their liability for a deficiency. Don’t make that mistake. No matter what your realtor may tell you, the standard short sale contract does not include a waiver of deficiency. Just because a short sale contract says it requires the bank’s approval, that does not mean the bank is waiving the deficiency. Accepting a short sale and waiving a deficiency are not the same thing.
If you’re thinking about a short sale on your home, ask yourself this – what am I gaining out of this? How does this help me? If the bank is putting, in writing, that it is waiving the deficiency, and accepting the short sale price as full payment of the Note and Mortgage, then a short sale may make sense, as you’d be eliminating a big liability (the deficiency). However, if the bank isn’t waiving the deficiency, how does it help you to do a short sale? I’d argue, in this scenario, that a short sale hurts most homeowners, for two reasons. First, instead of continuing to live in the home while the foreclosure case is pending, that homeowner must move out and find a new place to live. Isn’t it better to keep living in your house? Second, by agreeing to sell the home, and vacate possession, that homeowner has lost virtually all leverage with the bank. If that doesn’t make sense, pretend you’re the bank for a moment (scary thought, I know). Why would any bank agree to waive the deficiency if the house is already sold and you’ve moved out? What would the bank gain by doing that? Arguably, nothing, and that’s precisely the problem.
This is where, in my opinion, a lawyer is so much more valuable than a realtor. By defending your foreclosure case, while you live in your home, lawyers can try to point out technical problems with the lawsuit against you. Realtors can’t. Hopefully, the lawyer is good enough that the bank prefers to work out a settlement with you (i.e. a short sale as full payment, with a full waiver of the deficiency, or a loan modification) instead of continuing with the foreclosure case. In that scenario (unlike the prior example, where you’ve already sold the home, moved out and lost all leverage), the bank would have a reason to waive the deficiency – you’d be moving out and agreeing to sell the house as part of the settlement. Again, I’m not trying to badmouth realtors, but this is something I’d consider before I put all my trust in a realtor.
3. Any type of guarantee. Lots of prospective clients want guarantees. “Can you guarantee me a loan modification?” “Can you guarantee me that I can live in my home for X months?” No matter what, I never provide guarantees. In fact, my standard fee agreement clearly indicates there are no guarantees. Make no mistake – this is not because I question my abilities. Guarantees have no place in foreclosure defense because (i) The Rules Regulating The Florida Bar prohibit a lawyer from giving a client any sort of guarantee on the outcome of a lawsuit; and (ii) there is never a way to know, for sure, how a case is going to play out, especially a foreclosure case. Even if I think the law is on my client’s side, the judge may disagree. Even if I think a loan modification should happen, the bank may disagree. There are, quite simply no guarantees in foreclosure defense.
With this backdrop, it’s troubling that I’ve seen and heard of instances where clients facing foreclosure have been given a guarantee. If you’re been given a guarantee, I’d question not just the validity of the guarantee, but the reputation of the person providing it to you. If that sounds harsh, check out R.Reg.Fla.Bar. 4-7.2(c)(1)(g).
4. Pushing bankruptcy at the initial consultation. There’s no easy way to say this, so I’ll just say it. A fair number of bankruptcy firms have expanded their practice into foreclosure defense, but these firms don’t necessarily know how to properly defend a foreclosure case. Bear in mind, bankruptcy law and foreclosure defense may seem similar, but they’re drastically different – different courts (federal vs. state) with entirely different sets of rules (Federal Rules of Civil Procedure vs. Florida Rules of Civil Procedure). Many bankruptcy firms sell themselves as “full service” firms, but they’re really just bankruptcy firms that do a “bare bones” foreclosure defense, which (once they lose the foreclosure case) dovetails into a bankruptcy. This sounds harsh, and I typically don’t like to talk about other lawyers in this tone, but I’ve seen too many instances where bankruptcy firms did not interpose legitimate defenses for a foreclosure client, then pushed that client into bankruptcy.
Make no mistake – bankruptcy is a perfectly useful tool for many clients. However, if a lawyer is trying to sell you on a bankruptcy in your initial consultation, and your foreclosure lawsuit was just filed, I’d be skeptical of his/her ability to competently represent you in that foreclosure case (particularly if you don’t have other debts). Quite simply, for most clients I’ve seen, bankruptcy is a last resort. Many homeowners don’t realize – it’s entirely possible that a foreclosure case can be resolved without resorting to bankruptcy. For instance, one benefit of bankruptcy – eliminating the deficiency – could be accomplished (remember, no guarantees) without a bankruptcy, merely by defending the foreclosure case and entering a settlement with the bank. And even if a settlement doesn’t transpire, there is typically nothing stopping you from filing a bankruptcy as your foreclosure lawsuit nears a conclusion. In essence, I suggest ensuring you get the best of both worlds – a competent foreclosure defense attorney and, if and when necessary, a competent bankruptcy attorney.
Nothing in this post was directed at anyone in particular, and, as always, these are just my opinions. That said, I thought my views on these issues may help homeowners sift through the sea of foreclosure attorneys in Florida so as to make an informed decision.
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Facing a foreclosure is hard enough. For members of the military, it’s even harder. How can anyone be expected to deal with an impending foreclosure while being deployed overseas in service of our country? It’s bad enough having to worry about your spouse and children being evicted from the home in which they live – imagine having to do so while you’re risking life and limb overseas.
Fortunately, laws exist to prevent our servicemembers from confronting this nightmare. The Servicemembers Civil Relief Act, 50 U.S.C. Sections 501-596, is, by its very terms, intended to enable the brave men and women of our military to “devote their entire energy to the needs of the nation” by requiring that lawsuits, including foreclosure lawsuits, be stayed while the servicemember is deployed. There are exceptions, of course (just like most things in the law), but the way I read the statute, it would be hard for any judge to allow a foreclosure to proceed against a homeowner who is overseas on active military duty. See Coburn v. Coburn, 412 So. 2d 947 (Fla. 3d DCA 1982). Significantly, there is no distinction even if the servicemember has an able-bodied spouse home to defend the foreclosure case – the entire lawsuit is still stayed.
If you’re a member of the military, are about to be deployed overseas, and are facing foreclosure, make sure the judge handling your case knows about your deployment. That’s what I just did for one client in a case before Judge Levens in Tampa, and the court entered an Order Staying The Case until his deployment ends. This means, in essence, that no activity can happen in the case until my client returns from his deployment, ensuring that there will be no foreclosure, if at all, until after my client’s deployment is over. Banks may think this is unfair, but The Servicemembers Civil Relief Act is specifically designed to ensure that servicemembers can “devote their entire energy to the needs of the nation” and not have to worry about pending foreclosure lawsuits.
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On July 19, 2010, foreclosure defense attorney Mark Stopa defended a homeowner at trial in a foreclosure case in St. Petersburg, Florida.
Every case is different, and there is no way to know whether other foreclosure cases will play out the same way. That said, my experience at trial reinforced two of my long-standing beliefs about the foreclosure process. Specifically:
1. If you’re facing foreclosure, don’t give up. If you give up, and don’t defend the case, the bank can obtain a foreclosure against you by default, often in just a matter of months. Conversely, if you have an attorney defend your case, you may induce the bank to enter a settlement it otherwise would have been unwilling to enter. To illustrate, as I was in trial yesterday, I found myself telling the bank’s attorney that they should settle the case because there was a real risk the bank would lose the trial or, even if it won, a real risk that the appellate court would reverse that decision on appeal. If you fight, and defend your foreclosure case, you give yourself leverage to settle. If you give up, you lose all leverage, enabling the bank to foreclose without opposition. Admittedly, defending your foreclosure case does not guarantee a settlement, but at least you give yourself a chance.
2. When hiring a lawyer to defend your foreclosure lawsuit, it’s important that you retain someone with experience in court. As a result of the struggling economy, lots of Florida attorneys have begun representing homeowners facing foreclosure. Before retaining a lawyer, make sure you question that lawyer’s experience, and not just as a lawyer, but his/her experience in court. How many foreclosure cases has he/she handled? How many trial has he/she conducted? How many appeals has he/she handled? The Rules Regulating The Florida Bar prohibit lawyers from discussing the results of their prior cases, but lawyers are permitted to discuss their experience. Choosing a lawyer to defend your foreclosure case is a critically important decision – gather as much information as possible so as to make an informed decision.
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When I see judges (some, not all) doing everything possible to “push through” foreclosure cases – often on behalf of a plaintiff nobody can identify – I often wonder:
Who do you think you’re helping, judge?
This is more than an esoteric, equitable concern. Many times, the plaintiff filing the mortgage foreclosure lawsuit is not a Florida corporation (which are required to be registered on the Florida Department of State, Division of Corporations, and can be found at www.sunbiz.org), a foreign corporation, or a national banking association. Often, the plaintiff seeking foreclosure of our neighbor’s home is not an entity that exists in a way that the laws of the State of Florida require. In these cases, the plaintiff lacks the capacity to sue and the Complaint should be dismissed, as one Florida judge recently ruled in this Order granting the Motion to Dismiss
Candidly, though, it’s the equity of it all that really bothers me. Remember, mortgage foreclosure is supposed to be an equitable remedy, not an action at law. With that in mind:
What is equitable about hundreds of Florida homeowners being foreclosed EVERY DAY?
Why should a small handful of rich and powerful bankers benefit so tremendously when so many of our neighbors are thrown on the streets?
Today’s St. Pete Times provides a glaring illustration of how foreclosure is harming thousands for the benefit of a select few. http://www.tampabay.com/news/foreclosures-bring-wealth-rebukes-for-florida-lawyer/1109664 As the story details, David J. Stern, whose south Florida law firm handles approximately 20% of all foreclosure cases in Florida, recently raked in 58.4 million dollars via the sale of his back-office operations to an overseas company in which he is a significant shareholder. In fact, Stern lives in a mortgage-free, 16,500 square foot house in Fort Lauderdale, with a tennis court and five yachts.
I realize banks are entitled to representation by an attorney just like homeowners are. That said, am I the only one who views this as excessive? Why should Stern rake in millions of dollars while his neighbors get foreclosed? Worse yet, why should he get to do so as a result of outright fraud (as outlined in the article)?
Judges, the next time you have a foreclosure case in front of you, I hope you’ll ask yourself “who am I helping here?” This is a key question not just on the issue of capacity, above, but in evaluating the equities of the foreclosure cases before you. Remember, foreclosure cases are proceedings in equity, and there has to come a point when we stop throwing more homeowners on the street for the benefit of a select few.
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As a foreclosure defense attorney for hundreds of homeowners throughout Florida, we at Stopa Law Firm see fraud committed by banks in foreclosure lawsuits on a daily basis. Let me say that again –
Every day, throughout Florida, banks commit fraud against unsuspecting homeowners
I know that’s hard for some people to believe. Candidly, before I started handling these cases, it would have been hard for me to believe, too. In a way, I feel like Jose Canseco, when he first made those steroid allegations (against prominent baseball players) – he knew what he was saying was true, but it took a while for everyone to believe him. So if you’re a skeptic, I’m going to do everything I can to show you how things work on the front lines of foreclosure defense in Florida.
Anyway, one of the frauds that I see banks commit on a daily basis is when they tell homeowners – “Don’t worry about that foreclosure suit we just filed; we are evaluating your loan modification.”
If you’ve been sued for foreclosure, and the bank is telling you not to worry about the lawsuit, DON’T BELIEVE IT. It’s not true. At worst, it’s a lie, and at best, it’s a low-level employee of the bank who is woefully uninformed. Either way, it’s not true. If you’ve been sued for foreclosure, and were served with a Summons and Complaint, you have 20 days after service in which to file a written response to the Complaint. Nothing the bank tells you on the phone changes that. The fact that you’re in negotiations with the bank for a loan modification doesn’t change that, either. If you’ve been sued, you must respond to the lawsuit or you risk losing your home to foreclosure (long before any decision about a loan modification).
Time and time again, I’ve seen homeowners fall into this trap. If I’ve seen it once, I’ve seen it 100 times. Homeowners don’t respond to the lawsuit, thinking a loan modification is coming, but then they lose the lawsuit, and get foreclosed, before any decision about a modification is ever made … then they’re left wondering “what happened?” What’s particularly egregious about these situations is that banks aren’t giving modifications anyway, especially when they believe they can foreclose easily – so homeowners are choosing not to respond to a lawsuit because they’re waiting for something that’s never going to happen. It’s like getting fired from a job and choosing not to look for a new job because you’re planning on winning the lottery – or banking on Santa Claus bringing you a bag of cash. Loan modifications aren’t happening – don’t ignore your lawsuit because you’re waiting for one. If your bank tells you otherwise, don’t believe it. Don’t be the next victim of the bank’s fraud. Remember:
Your bank is suing you; you can’t trust them.
You’d think, when banks actively mislead homeowners like this, that the homeowner would get to defend the foreclosure suit. But the law isn’t that simple. If the bank has already won the case, and the homeowner chose not to defend – even if it’s because the homeowner believed he/she did not need to, or even if the bank lied – the homeowner has to file a motion to vacate the final judgment, then convince the judge to grant it. From a lawyer’s perspective, I assure you – this is a far, far worse situation to be in than to be defending a foreclosure lawsuit from the outset. Sure, you could win that motion, and get to defend the case, but instead of starting out on a level playing field, you’re coming into the game in the fourth quarter and your team is losing by two touchdowns. And it will probably cost you more in fees than it would have had you retained counsel from the beginning. Don’t fall into this trap –
fight your foreclosure case from the start!
What’s the moral here? I’d say there are two – protect your rights, and don’t believe what the banks are telling you, especially if they’ve sued you.
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Never let it be said that foreclosure defense attorney Mark Stopa backs down from a challenge.
In my first post on this blog, below, I described in detail my argument in a Motion to Disqualify Counsel in a foreclosure case. Now, I’m attaching a Petition for Writ of Certiorari to the Second District after a Tampa judge denied a similar motion.
Denial of Motion to DQ – Cert Petition
My argument, essentially, is that my Motion to Disqualify Counsel presented a prima facie case of disqualification given counsel’s conflict of interest under 4-1.7 and the bank’s commission of a fraud under 4-1.16, and the judge was required to grant the motion in the absence of any record evidence to the contrary. Alternatively, at minimum, the judge was required to grant an evidentiary hearing in the face of the disputed factual issues. Of course, the Petition also contains numerous real-world arguments on why this is a big issue in the Florida court system and why the Second District should stop allowing the systemic fraud being perpetuated by banks in cases throughout our courts.
I welcome any feedback or dialogue about this issue. Any lawyers out there, have you had any experiences with these types of motions?
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With all the recent media attention that Stopa Law Firm has received, I’ve gotten a TON of positive feedback from clients and prospective clients in Florida and many other states. Thank you to everyone who has encouraged the fight against the systemic fraud being perpetuated by banks every day.
I’ve also gotten some criticism, too, allegedly because what I’m doing by defending homeowners facing foreclosure is “harming the economy.” The criticism typically goes something like this: “Your clients are living for free, dragging down the value of my property, and you’re helping them do it.”
Respectfully, people who say things like this are wrong. It’s not a matter of opinion – they’re wrong. And I can prove it.
First off, my clients care about their homes. Whether they’re living in them or renting them out, my clients haven’t abandoned their homes – they’re maintaining them. My clients’ homes aren’t the vacant houses you see with foot-high grass that haven’t been inhabited in a year. My clients are living in their houses (or, in some instances, renting them out), and actively trying to keep their houses via a loan modification. I dare anyone to explain, in any intelligent way, how the economy is harmed when people live in their homes, maintain their homes, and try to enter a loan modification. Who is harmed here? Some CEO at a bank who gets an $800,000 bonus instead of $850,000? Please.
Nothing my clients are doing reduces the value of their neighbors’ houses. You know what affects that value of these homes? Abandoned houses. And why are houses abandoned? Because banks scare people into leaving their homes, making it easy for them to obtain a foreclosure judgment, but then banks don’t schedule a foreclosure sale because they don’t actually want the home. What results is the property sits in limbo – the homeowner stopped paying and abandoned it long ago, but the bank won’t set the foreclosure sale, so nobody else can buy the property, either. The homeowner is not living in it, and the bank doesn’t own it … the property just sits, empty, abandoned, for months, even years.
Don’t believe me? Go check the public records. I’ve been doing that recently in Pinellas County, and it’s scary what I’ve found.
For instance, there was a foreclosure sale scheduled tomorrow, July 13, 2010, in Case No. 08-2426-CI-08. But the sale isn’t going forward because the bank cancelled the sale – for the third time. In fact, the Court entered final judgment in September, 2009, yet the foreclosure sale has still not taken place. It’s not because the homeowner has put up a fight, either – the homeowner never appeared in the case and lost by default – the bank just refuses to proceed with the foreclosure sale. Sound impossible to believe? Don’t take my word for it – here’s a cut-and-paste of the docket, from the clerk’s website:
Lest you think this is an aberration, it’s not. Check for yourselves. Every day, whether it’s in Tampa, Orlando, Jacksonville, Miami, or anywhere in between, banks are obtaining foreclosure judgments throughout Florida, then refusing to set the foreclosure sales. This is what causes houses to remain abandoned and not maintained. This is what drags down property values and harms the economy, not my clients. The banks are causing houses to be abandoned, not my clients. So next time you see a house that’s abandoned, don’t blame me. And certainly don’t blame my clients. Chances are, the bank owns the property – or scared the owner into moving out, got a foreclosure judgment, but doesn’t want to set a foreclosure sale, so the remains abandoned indefinitely.
Am I the only one who thinks this is absurd? How can banks get away with this? Why are judges so quick to enter foreclosure judgments, and throw their neighbors on the streets, when banks are so slow to set foreclosure sales? Why do my clients get cricitized in the media (which refuses to report about banks’ refusals to enter loan modifications), yet banks cause properties to be abandoned all over Florida and get off scot-free? This is yet another illustration of how banks are harming the economy to help themselves. Banks don’t care if the property is abandoned – if they don’t want to pay the insurance or property taxes, they won’t set the foreclosure sale.
Here’s an idea for you, banks: if you don’t want the properties, I’ve got 400(+) clients who will take them, maintain them, and make good use of them. Better yet, if you’re not going to set the foreclosure sale, don’t scare away the homeowner. Let the homeowner continue living in the home, maintaining the home, taking care of the home – just as my clients are doing.
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On July 10, 2010 (after two, last-minute scheduling changes), foreclosure defense attorney Mark Stopa and three clients of Stopa Law Firm were profiled nationally on NBC Nightly News with Brian Williams, reported by award-winning journalist Mike Taibbi. The story can be found here:
Having just watched the story, here’s my reaction.
Having done a few stories like this with the media, I’ve learned you never really know how the media will convey the story, i.e. what that particular reporter/editor will find newsworthy, until it airs. This was no different. In our interview, Mike Taibbi and I talked a lot about the foreclosure process in Florida. We talked about struggling homeowners trying without success to get loan modifications, getting sued, and feeling like they have no choice but to hire a lawyer like me to defend the foreclosure lawsuit. We talked about legitimate defenses that homeowners have in these cases and the systemic fraud committed by banks in the foreclosure process. Unfortunately, none of this made it into the story (which I understand, at least from the perspective that this is the NBC Nightly News, and it’s just a 30 minute program). As you saw, NBC chose to focus on how homeowners can live in their homes for free, without paying their mortgage, while the case is pending.
I know much of the public finds this controversial, but I’m glad this message is getting out on a widespread, national level. Florida homeowners need to understand their rights through the foreclosure process. Like it or not, this is one of the rights that homeowners enjoy – even if you’re behind on your mortgage, you don’t have to leave your home unless and until the bank *wins* a foreclosure suit.
That said, I don’t agree with NBC’s portrayal that Alex, Susan, and my other clients have engaged in a “strategic default.” As I see it, a “strategic default” is when a homeowner can afford to make the monthly mortgage payments but chooses not to do so for “strategic” reasons, e.g. because the home is significantly underwater (and the homeowner hopes that if he/she defaults, the bank will take back the house as full payment, waiving any claim for a deficiency). The vast majority of my clients, if not all of them, stopped paying their mortgage because they couldn’t afford the monthly payments, then hired me because the bank filed a foreclosure lawsuit. In my view, there’s a big difference between choosing not to pay when you’re able and not paying because you can’t afford it.
Obviously I’m not the editor at NBC. Had I been, I would have shown clips from my interview with Mike about how homeowners can’t make monthly payments after they’ve been sued because the banks won’t accept them. Respectfully, there’s nothing “strategic” about that. If anything, it’s the banks that are making the “strategic” decision not to accept payments because they’d rather foreclose. That’s why many thousands of people are getting foreclosed, day after day – banks would rather foreclose than enter loan modifications. That’s where the process is broken, and that’s what I’m trying to help fix. Yes, a byproduct of what I’m doing is that people live for free. But what else are they supposed to do? Banks have filed suit for foreclosure and won’t accept any payments. As I see it, Florida homeowners have no choice but to hire a lawyer like me to defend the foreclosure lawsuit and try to force the bank to negotiate. The only alternative – walking away and accepting a foreclosure – is simply not a viable option for most people.
During our interview, Mike Taibbi seemed interested in how banks often induce homeowners to stop paying (by telling them that they had to be in default to be considered for a modification), then filed suit for foreclosure and rejected any modification. We also discussed how many of my clients have legitimate defenses – typically because of the bank’s inability to prove that it (as opposed to a different bank) owns the Note. I really wish this had aired, and I really wish the media was willing to discuss the fraud that banks perpetuate throughout the foreclosure process. For now, it’s one step at a time, and it’s good that we’re getting the word out, on a national level, that it’s possible to defend foreclosure cases.
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