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Archive for January, 2011

Mediation in Foreclosure Cases

Mark Puente of the St. Pete Times has a nice write-up on what he calls Problems with Foreclosure Mediation.  The article is here and is quoted, below. 

I’m quoted in the article, essentially agreeing there are problems with the mediation process, and I stand behind that.  However, for me, the problem is far more than the banks’ informational advantage through document production and file access (or lack thereof).  In my view, the mediation process does not work in foreclosure cases because mediations take place too soon. 

The mediation process works (in non-foreclosure cases) because both sides fear a risk of losing the case if it goes to trial.  This is why every mediator says “you never know what the judge/jury will do” – and it’s true.  We don’t know.  In your typical case, either side could win.  But in foreclosure cases, the dynamic is totally different.  When mediation takes place, banks think they will win the case (at summary judgment, just like they usually do).  As a result, they perceive no risk of losing the case and have little to no incentive to settle at mediation. 

The problem is largely in the timing.  In foreclosure cases, the mediation process is designed to take place within the first 60 days.  In non-foreclosure cases, mediation usually takes place much later; often just before trial.  By mediating right before trial, the parties all realize that if they don’t settle, they will go to trial (and face the risks associated with losing).  This “all or nothing” proposition is scary for most litigants, encouraging settlements.  Until the mediation process is set up that way in foreclosure cases, I fear it will continue to be a process that does little more than frustrate and disappoint well-intentioned homeowners.  

Here is the article …

A program set up to prevent foreclosures provides greater access to financial records for bank attorneys than defense lawyers in Pinellas and Pasco counties, those defending homeowners say.  Since the mediation program started in August, defense attorneys say they haven’t had electronic access to the records even after their clients provided the court-ordered information to mediators. That has put them at an unfair disadvantage.  Defense attorneys also say banks are dictating the dates and times of the mediation sessions without checking the schedules of opposing counsel and homeowners.

Mark Stopa, a St. Petersburg foreclosure defense attorney, said the lack of access to records gives banks an upper hand in the process.

“It is a problem,” he said. “The whole process is inequitable and not doing what it was intended. I am not happy or excited about the process.”

In Hillsborough County, defense attorneys receive access to the case information once they prove representation.

Ron Stuart, spokesman for the Pinellas-Pasco judicial circuit, said the access issue is being remedied. He urged patience as the remaining glitches are being resolved. He acknowledged that court officials knew about the different levels of access when the program started. Clearwater-based Mediation Managers Inc. operates the program in Pinellas and Pasco counties.

“We were going into an avenue that was all new to us,” Stuart said. “It’s in the hands of Mediation Managers. They’re trying to get it solved as quickly as they can.”

The high court ordered the state’s 20 judicial circuits in late 2009 to sponsor mediation sessions between homeowners and lenders to reduce foreclosures. The program applies to owner-occupied, residential properties and aims for a quick resolution.  Lenders pay a $750 fee for each case. A successful mediation could lead to a modification of the mortgage loan, such as a lower interest rate or a time extension for the borrower. Some people still will lose their homes.

Mediation Managers immediately notified court officials about the access problem when defense attorneys complained last month, said Dick Rahter, the nonprofit’s president. The technology needs to be improved so defense attorneys can get access to information about their cases, but not private records in all cases, he added.

Nobody, Rahter said, anticipated this problem.  “The policy is being looked at and may change in the near future,” he said. “I was always concerned about that from the beginning.”

Bank attorneys, he said, are not controlling the scheduling process. Some problems developed when defense lawyers didn’t notify the mediation program about representing a client, Rahter said.  He acknowledged that some scheduling conflicts have slipped through the cracks.  “It’s kind of like a juggling act,” Rahter stressed. “We’re doing our best.”

Mark Stopa

www.stayinmyhome.com

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Refusal to Verify Means Dismissal – Without Leave to Amend

One of my ongoing frustrations as a foreclosure defense attorney is seeing banks and their lawyers repeatedly and systematically refuse to comply with basic rules of procedure and/or Florida law.  One common example is their repeated refusal to verify their Complaints in residential foreclosure cases, as required by Fla.R.Civ.P. 1.110(b).  This is a really simple thing to do (or, at least it should be, if banks are acting appropriately), yet banks and their lawyers routinely file foreclosure lawsuits on residential property without a verification.  Respectfully, there is absolutely no excuse for this. 

When any party in a Florida lawsuit fails to comply with a rule of procedure or an Order of the Court, e.g. the requirement in 1.110(b) to verify foreclosure complaints, dismissal is an authorized remedy.  See Fla.R.Civ.P. 1.420(b).  Unfortunately, all too often, when banks fail to include the requisite verification, judges give them a second chance, giving them leave to file an Amended Complaint.  Essentially, this means the bank can fix the problem within the confines of the pending lawsuit. 

Respectfully, this drives me nuts.  Banks and their lawyers are willfully and intentionally violating a rule of the Florida Supreme Court on a routine, systematic basis.  Why is there no sanction for this?  Why should they get a “do-over”? 

When this happens, I believe dismissal with prejudice is an appropriate sanction.  At minimum, the dismissal should be without prejudice but without leave to amend.  This way, the banks will have to re-file a new lawsuit, with a new case number, and pay a new filing fee.  If more judges ruled this way, like this judge just did, then banks and their lawyers would learn their lesson (presumably) and stop refusing to comply with basic rules of procedure. 

The judge’s Final Order of Dismissal sets forth this precise rationale.  I’ve been waiting for a ruling like this for months – what a joy to read.  After months of watching banks’ willful misconduct go unpunished, it’s great to see a Florida judge enter a sanction for such obvious misconduct.

Mark Stopa

www.stayinmyhome.com

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The solution to the courts’ funding problems

Charles Canady, the Chief Justice of the Florida Supreme Court, is concerned about the lack of sufficient funds for Florida courts.  He’s quoted as saying:

We’ve seen a drop in the filings. It relates to these (robo-signing) problems. That has affected our revenue and it’s something that’s very much a concern.

Maybe I’m reading that wrong, but is the Chief Judge somehow suggesting the “robo-signing problem” was a good thing, as it resulted in more foreclosure filings and the fees resulting from them? 

Anyway, I think the solution for the courts is simple – when appropriate, dismiss cases! 

When a bank lacks standing at the inception of a foreclosure lawsuit, dismiss the case! 

When a bank files fraudulent foreclosure affidavits, dismiss the case! 

When a bank fails to state a cause of action, then fails to amend within the time limits permitted, dismiss the case!

When a bank fails to properly verify a complaint, dismiss the case! 

If Florida judges started dismissing foreclosure lawsuits (when permitted by law, of course), and forced banks to re-file, then the increased filing fees would help fix these budgetary concerns.  Oh, and it would keep homeowners in their homes, help prevent foreclosures, and show Americans that judges are willing to follow the law and not just “push through” foreclosure judgments.

Mark Stopa

www.stayinmyhome.com

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Attorneys’ Fees for Homeowners

Attached is an Order Granting Attorneys’ Fees in favor of a client I represented in a foreclosure case.  The fact pattern here was not terribly uncommon – bank files foreclosure lawsuit, we defend it, bank files voluntary dismissal. 

I’ve blogged previously about a homeowner’s entitlement to fees, so I won’t belabor the point.  Instead, let this be a reminder that when a homeowner gets a lawsuit dismissed without leave to amend (either by court order or voluntary dismissal), the homeowner is deemed the “prevailing party” in that lawsuit and is, generally speaking, entitled to attorneys’ fees from the bank.

Mark Stopa

www.stayinmyhome.com

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Lee County, Florida – Where Anarchy Reigns

Webster’s Dictionary defines anarchy as “absence or denial of any authority or established order.”  When I see the most recent Order out of Lee County, Florida, I can’t help but opine that’s what the courts in Lee County have become – anarchy.  Yes, there are rules in place, i.e. the Florida Rules of Civil Procedure, as promulgated by the Florida Supreme Court.  However, the Lee County judges have repeatedly denied such rules apply, at least to them, particularly in foreclosure cases. 

That may sound harsh, but look at this Order.  The judge acknowledges the case is not “at issue” under Rule 1.440; in fact a motion to dismiss was outstanding, so, by definition, the case could not have been “at issue.”  In fact, the bank’s lawyers had not prosecuted the case for 10 months (not uncommon for the Marshall Watson law firm), so clearly the plaintiff didn’t care.  Yet the judge was so intent on pushing the case towards trial, he ruled that the motion to dismiss was “waived,” ordered the Defendant to answer, and set trial for less than two months out. 

Trying to justify this ruling, the judge said the Motion to Dismiss was “waived” because it had not been set for hearing.  Respectfully, this is preposterous.  There is absolutely no legal authority for the proposition that a defendant “waives” a motion to dismiss by not setting it for hearing.  If a defendant files a motion to dismiss, and the plaintiff chooses not to prosecute its case by setting that motion for hearing, then the case languishes.  This may sound odd, but it’s actually quite common in litigation.  As I’ve said before, I represent plaintiffs in lawsuits against insurance companies, and when they file motions to dismiss, it’s my job, as plaintiff’s counsel, to set that motion for hearing.  It’s really not a big deal, actually.  I’m the plaintiff.  I’m the party seeking relief in the court system.  If I want relief, I need to set a hearing.  If I don’t set a hearing, my client gets no relief.  In any event, there is absolutely no legal authority for the proposition that a motion to dismiss is “waived” because it is not set for hearing.

The judge tried to justify setting the case for trial, even though it is not at issue, by saying “Lee County is not requiring compliance with Fla.R.Civ.P. 1.440” and that controlling case law requiring a case be “at issue” before being set for trial is not “controlling in foreclosure cases.”  To illustrate the absurdity of this ruling, please look closely at two appellate court decisions on this issue. 

In Bennett v. Continental Chemicals, Inc., 492 So. 2d 724 (Fla. 1st DCA 1986), an en banc First District (en banc means that every judge in the First District joined in the decision, instead of just a three-judge panel as usual) held:

A notice for trial is properly filed when the action is ready for trial.  Rule 1.440 is very clear as to when the action is ready for trial.  Leaving little room for improvisation, it provides: (a) An action is at issue after any motions directed to the last pleading served have been disposed of or, if no such motions are served, 20 days after service of the last pleading. … (b) Thereafter, any party may file and serve a notice that the action is at issue and ready to be set for trial. … [In this case,] at the time of the hearing, there were pending at least appellant’s motion to dissolve the temporary injunction, if not his original motion to dismiss the complaint, as well as appellee’s motion to dismiss the counterclaim.  With those motions pending, we hold that the action was not at issue as contemplated by rule 1.440(a). … [S]trict compliance with rule 1.440 is mandatory. … In our concluding that failure to conform with rule 1.440 is reversible error … we are adopting the bright line approach so as to avoid appeals, such as this, that would not or should not have materialized if the rule had been strictly observed.

See also Precision Constructors, Inc. v. Valtec Construction Corp., 825 So. 2d 1062 (Fla. 3d DCA 2002) (“Failure to adhere strictly to the mandates of Rule 1.440 is reversible error.  Accordingly, the judgment is vacated and the cause is remanded for a new trial.”). 

In setting the case for trial even though it was not “at issue” under 1.440, the Lee County judge ruled that 1.440 is not “controlling” in foreclosure matters.  Of course, the judge cited no legal authority for such a proposition, as none exists.  Hence, as I see it, the judge was basically saying “I know Rule 1.440 requires that a case be “at issue” before being set for trial, but this is a foreclosure case, so I don’t care – I’m setting trial anyway.”   

This is what the court system has become in Lee County.  There are rules of procedure in place, implemented by the highest court in the state.  Lee County judges know about these rules, as foreclosure defense attorneys regularly point to these rules in court hearings.  Yet judges ignore these rules, conclude they somehow don’t apply, and forge ahead anyway, even when the plaintiff has done nothing in the case for nearly a year. It really makes you wonder – who is prosecuting foreclosure cases?  Banks?  Or judges?  In this case, the plaintiff’s firm had done nothing in the case for nearly a year – nothing at all – yet the judge denied the defendant’s motion to dismiss (without a hearing, without reviewing the motion on the merits, and without argument from plaintiff) and set trial.  Does that seem reasonable to you? 

If this is how the courts are going to operate, why even have rules?  Let’s just let all of the judges on a particular file make up the law as he/she sees fit.  At least that way litigants and their attorneys won’t be constantly frustrated when judges refuse to apply the rules. 

Or we can all realize that judges are elected officials and it is our right, if we so choose, to elect not to retain those judges for another term in office.  I’m not recommending that anyone do that with the judges in Lee County.  However, I can’t help but wonder – if this isn’t a reason to decide not to retain a judge, then what is?

Mark Stopa

www.stayinmyhome.com

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How the U.S. Government Has Corrupted the Banking Industry and the Foreclosure System

A few years ago, if I came across a blog titled “How the U.S. Government has Corrupted the Banking Industry and the Foreclosure System,” I’d have thought the author was paranoid, crazy, or both.  Now?  After years of defending Florida homeowners facing foreclosure, I wholeheartedly believe it.  In fact, my conviction that the system is totally perverse – beyond description, really – is what motivates me to forge ahead with the foreclosure fight. 

To get an idea of what I’m talking about, take a minute to watch this video.  I saw the video a long time ago, but several clients have emailed it to me recently, so it’s worth sharing. 

As you watch the video, bear in mind – the FDIC is owned by the U.S. Government.  Hence, when the FDIC is shelling out hundreds of thousands of dollars to banks (per mortgage, as discussed in the video), it’s you and me that are footing the bill.  We’re paying for rich bankers to get even richer. 

Also, if you’ve ever wondered why you can’t get a loan modification, watch the video.  Only then will you begin to understand the perverse incentives the banks have to foreclose on homeowners rather than modify mortgages.

Mark Stopa

www.stayinmyhome.com

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How Civil Procedure Impacts Florida Homeowners Facing Foreclosure

It’s sometimes difficult to explain, in layman’s terms, how a foreclosure defense attorney can assist homeowners who are behind on their mortgage.  Sure, most Americans are aware, at this point, how attorneys such as myself force the bank that is suing to prove it is the “right” bank, i.e. force the bank to prove it owns and holds the original note and mortgage.  As I see it, though, a better explanation of how I help my clients comes through an understanding of the Florida Rules of Civil Procedure. 

Generally speaking, there are only two ways a bank can “win” a foreclosure lawsuit in Florida (as required to foreclose on a Florida homeowner).  First, the bank can prevail on a motion for summary judgment.  This is when there are no material facts in dispute and the bank is entitled to judgment as a matter of law.  Nearly 100% of foreclosure cases are adjudicated this way, typically after a bank presents an affidavit supporting its position and the homeowner presents no conflicting affidavits.  

Second, the bank can win at trial.

When a competent foreclosure defense attorney handles a file, it is often, quite candidly, not terribly difficult to defeat a motion for summary judgment brought by the bank.  Yes, some cases are harder to defend than others, and no, I’m not saying summary judgment is impossible.  However, in my experience, most homeowners have sufficient defenses to preclude a foreclosure via a motion for summary judgment.  To understand why that is so, try not to get bogged down in legal jargon.  Instead, think about it like this.  For a bank to obtain a foreclosure via summary judgment, the judge must accept all facts asserted by the homeowner as true (even if the bank disagrees with those facts) and, based on the homeowner’s version of the evidence, must conclude whether the bank is entitled to a foreclosure.  See Fla.R.Civ.P. 1.510.   

To explain how this standard works, I like to use a traffic light analogy.  Suppose it’s a personal injury case and the plaintiff’s lawyers line up 10 witnesses, all of whom say the traffic light was red at the time of the accident.  Now suppose the defendant presents one witness, himself, who says the light was green.  Even though the plaintiff has many more witnesses, the judge is required, at summary judgment, to accept what the defendant says – the light was green – and to rule accordingly.  This is a high legal standard, and it’s a big reason why it’s so hard for banks to obtain a foreclosure via summary judgment when the homeowner retains counsel.  Essentially, the homeowner just needs to find one material fact in the bank’s case with which it disagrees to prevent summary judgment.   When that happens, the bank is left with just one option – trial. 

If you’ve watched Law and Order or a similar lawyer show on TV, a trial may not seem like a big deal.  Let me assure you – trials don’t happen like you see on TV.  In fact, in my experience, banks don’t like to go to trial in foreclosure cases, even if that’s the only way they can get a foreclosure.  I won’t speculate about banks’ motives too much, but I strongly suspect the banks are afraid of losing at trial and the precedent/fallout that would ensue.  With media coverage of foreclosure cases how it is, can you imagine if a big bank like Bank of America went to trial against a homeowner who hadn’t paid his/her mortgage in two years and lost?  Homeowners throughout the country would be emboldened not to pay their mortgages and to push cases to trial.  To put it differently (and forgive me if this sounds sexist, but it’s a comparison with which I can related since I have a little sister) … going to trial for a bank is like a big brother getting into a fight with his little sister.  Why do it?  If you win, you’re supposed to win – you’re bigger, and she’s a girl.  If you lose, then, good grief!  You lost a fight to a girl!  Rather than risking that humiliation, isn’t it better to avoid the possibility altogether? 

Hence, there are only two ways a bank can “win” a foreclosure case – summary judgment and trial – but summary judgment is hard to get and banks typically don’t want trials.  So what happens?  Foreclosure cases often languish.  Banks file them, but when homeowners defend those cases with an experienced foreclosure attorney, the cases often progress at a slow rate.  The banks’ lawyers have so many other cases, it’s easy for them to ignore these cases and work on others. 

Personally, I don’t see anything wrong with this dynamic.  When I represent plaintiffs in lawsuits against insurance companies, I have to work to push the case towards judgment, and if I don’t, the case languishes.  Do you think anybody is helping me move the case forward if I don’t work on that file?  Heck no!  That’s just how it works – when you’re the plaintiff, and you want a remedy through the court system, it’s your burden to prosecute your case towards judgment; if you don’t, you don’t get that remedy.  Foreclosure cases operate the same way – the banks want relief, so they must prosecute their cases towards judgment; if they don’t, then they don’t get a foreclosure (and the homeowner remains in his/her home while the case is pending).     

Many Florida judges don’t like this dynamic.   They see cases languishing and, in an ongoing effort to reduce the backlog of cases from their docket, they sometimes take actions to advance cases towards judgment.   Lee County in particular is notorious for this, setting cases for trial right after they are filed.  I’ve already expressed my dislike for judges acting in this manner at length, so instead of rehashing that, let’s evaluate this issue from a procedural perspective. 

Under established law, a case can only be set for trial (in a foreclosure lawsuit or any other type of case) if it is “at issue.”  This means, in layman’s terms, that all motions to dismiss filed by the homeowner have been denied and the homeowner has filed an Answer to the Complaint.  (It’s more complicated than that, but that’s the simple explanation.)  See Fla.R.Civ.P. 1.440. 

If a foreclosure case has not progressed to that point, i.e. where it is “at issue,” yet the judge sets it for trial anyway, then the judge is committing legal error that should be reversed on appeal.  It may seem hard to believe, but if a judge sets a foreclosure lawsuit for trial prematurely, and the bank wins at trial, the appellate court would/should reverse that foreclosure.  It doesn’t matter if, substantively, the bank was perfectly entitled to foreclosure – from a procedural perspective, the trial was set prematurely and should not have taken place.  See Bennett v. Continental Chemicals, Inc., 492 So. 2d 724 (Fla. 1st DCA 1986) (en banc); Precision Constructors, Inc. v. Valtec Construction Corp., 825 So. 2d 1062 (Fla. 3d DCA 2002).

If you’re defending a foreclosure lawsuit and the bank or the judge is trying to set it for trial prematurely, make sure you cite Rule 1.440, Bennett, and Precision Constructors.  Respectfully let the judge know that he/she will be reversed on appeal, even if the bank is otherwise entitled to foreclosure.  That may sound harsh, but these rules of procedure are in place for a reason, and it’s incumbent on everyone to follow these rules in all lawsuits, including foreclosure cases.

Mark Stopa

www.stayinmyhome.com

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Foreclosure Doesn’t Necessarily Mean Out of a Home

Foreclosure defense attorney Mark Stopa and a client of the firm were profiled today on Bay News 9 (Tampa’s NBC affiliate).  Here is a video version of the story; the written version is below. 

What should you take from this?  Easy.  Fight your foreclosure.  Don’t give up.   You may be able to improve your situation drastically if you retain a competent foreclosure defense lawyer to defend your foreclosure case. 

 

ST. PETERSBURG — 

Susan Reboyras has lived in her St. Petersburg home for nearly eight years but she hasn’t paid her mortgage in nearly two.  “When the boom was high, we thought it was going to stay high, and we pulled equity out,” Reboyras said.

Reboyras and her fiancé run A-Plus Restorations out of the home. When the economy stalled, they made a decision.  “We had to decide were we going to make the payments,” Reboyras said, “or were we going to continue with advertising to bring money in the door to keep the business going so we could make payments.”

Many are in the same situation all across the state. According to data from LPS Applied Analytics, the average is 677 days before a house in foreclosure is sold and the homeowners kicked out. It’s one of the highest totals in the country.

Foreclosure defense attorney Mark Stopa said more homeowners in foreclosure should fight it.  “Don’t just give up and walk away. Defend and fight your case and save up your money,” Stopa said.

Stopa said foreclosed homeowners staying in their home benefits the community more than if the bank was in control of the home.

“Time and time again, these banks, even when they get that foreclosure judgment, they don’t actually set the sale,” Stopa said. “What results is this lengthy period of limbo where the homeowner has lost and they’re scared into leaving, but the bank doesn’t take the title, so the property sits vacant for months, sometimes years.”

In Reboyras’s case, she believes she made the right decision for her family.  “Right now, we’re self-sustaining, she said. “Yeah, we’re not making the mortgage payments but it’s going to a means that keeps us from the government supporting us.”

Mark Stopa

www.stayinmyhome.com

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No Response from Florida to Foreclosure Chaos

Kim Miller of the Palm beach Post openly wonders, in this article, why nobody in Florida is doing anything in response to documented problems in the foreclosure process.  To illustrate, we’re all familiar with the Florida Attorney General’s power point presentation, appropriately titled “Unfair, Deceptive, and Unconscionable Acts in Foreclosure Cases.”  The problem, of course, is that if the foreclosure fraud is this well-documented, why aren’t there any negative repercussions for anyone?  Unfortunately, as I see it, nobody will do anything.  The AG, despite its investigation into the foreclosure mills, has done nothing.  The Florida Bar has done nothing. 

But don’t take my word for it – read the article. 

By Kimberly Miller, Palm Beach Post Staff Writer

Fed up with the foreclosure chaos, the New Jersey courts demanded that banks prove the integrity of their home repossession systems or face shutdown.  To demonstrate the need for the Dec. 20 order, New Jersey cited flaws in six Florida foreclosure cases, including three in Palm Beach County, as examples.

In Nevada and Arizona, attorneys general last month sued Bank of America for a dual-track foreclosure system that offers homeowners hope with a loan modification, while at the same time taking away the home in court. Called deceptive and labeled consumer fraud in the lawsuits, the practice is also prevalent in the Sunshine State.  And on Friday, the Massachusetts Supreme Court issued a bombshell ruling against banks’ ability to foreclose on homes – a decision could reverberate nationwide.

The moves by other states to address the foreclosure morass has Florida homeowner advocates and defense attorneys asking why more isn’t being done here.  The Florida Attorney General’s Office is investigating four so-called “foreclosure mill” law firms and is part of a 50-state coalition trying to work out solutions with the banks. Also, the Florida Supreme Court assembled a foreclosure task force in 2009 and requires mediation in all homesteaded foreclosures – a program that has logged minimal success in the year since it became mandatory.  But as hundreds of homes continue to sell at auction each day and the variations of alleged malpractice mount, critics charge that Florida is burying its head in its sandy beaches, waiting for an ocean breeze to blow the whole thing over.

“This collective turning of our backs and shutting of our eyes is not working,” said St. Petersburg defense attorney Matt Weidner. “I think there is widespread delusional behavior to pretend nothing is wrong.”

And it appears clear something is wrong.  Although few dispute that the vast majority of foreclosures are on homes where the borrower has stopped paying the mortgage, a comprehensive presentation given last month by investigators in the Florida attorney general’s economic crimes division meticulously outlines problems in how banks went about taking back those homes.

The report includes pages of allegedly forged signatures, false notarizations, bogus witnesses and improper mortgage assignments. It implicates the banks, their servicers and law firms for contributing to the foreclosure conundrum.

In 2009, Florida had 399,128 foreclosures filed. Between January and October 2010, 224,400 more Floridians received foreclosure notices.  The numbers consistently ranked the state in the nation’s top three for foreclosures for much of 2009 and 2010.

“The best thing the state can do to address the foreclosure issue is to create more jobs, put people back to work so they can get back on schedule and pay their mortgage,” said Sen. Garrett Richter, R-­Naples, who heard a lengthy foreclosure presentation during a December meeting of the Senate Banking and Insurance Committee, which he chairs.

He empathizes with both struggling borrowers and homeowner associations trying to collect delinquent fees, and believes employment, more than legislation, is the answer to the foreclosure dilemma.  “I don’t think we have a massive problem with fraud in the banking industry,” he said. 

A spokeswoman for new Attorney General Pam Bondi said the office will wait to see what its law firm investigations find before making a move.  But in Florida, even the attorney general’s power to investigate is in question.

A Palm Beach County judge ruled in October that the attorney general’s office doesn’t have the authority under the Florida Deceptive and Unfair Trade Practices Act to investigate law firms . The state has appealed the ruling.

“They all say they are impotent to do anything,” said Mark Stopa, a Tampa-based defense attorney. “Part of why this whole thing has been allowed to continue is because there is very little negative repercussions.”

The Florida Bar says it can investigate individual attorneys only when a specific complaint is lodged, and has no authority to initiate its own query.

Judges are hesitant to point out flaws in foreclosure filings on their own because they say it mars their impartiality, making them an advocate for the homeowner.

Florida’s clerk of court offices are barred from policing the content of the foreclosure cases filed with them, said Sharon Bock, Palm Beach County’s clerk and comptroller.

And in the fall, as bank after bank acknowledged errors, the Florida Supreme Court said it has no power to freeze foreclosures under the state constitution or court rules.

New Jersey has not frozen foreclosures, but six of the nation’s largest lenders are expected at a Jan. 19 hearing to show proof why the courts should not stop their foreclosures.

Florida does not have the ability to follow New Jersey’s lead, said State Courts Administrator Lisa Goodner.

New Jersey’s court administrator is a sitting judge who can issue orders, while Goodner is not a judge and has no such power.

“In Florida, contested and uncontested mortgage foreclosure proceedings must be resolved in the individual trial courts through the normal litigation process,” Goodner said.

Attorney Tom Ice, of Royal Palm Beach-based Ice Legal, said the question isn’t whether Florida can use the exact same mechanism as New Jersey, but whether it can do something to address the problem. He believes it can.  “They’ve taken the position that it’s out of their hands,” Ice said of Florida’s Supreme Court. “They don’t have to sit idly by while people make a mockery of the system.”

Mark Stopa

www.stayinmyhome.com

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Florida’s Foreclosure Process

Shannon Boehnken discusses some eye-opening statistics on Florida’s foreclosure process in today’s Tampa Tribune. According to LPS Applied Analytics, it takes, on average, 673 days for a foreclosure sale to take place in Florida after a homeowner stops paying his/her mortgage.  That means, on average, Florida homeowners can stay in their homes for 673 days after they stop paying their mortgage.  A few things jump out at me about this. 

First, this figure is the average of all foreclosures, including uncontested cases.  For those homeowners who fight their foreclosure lawsuit with an experienced foreclosure defense lawyer, that number is sure to be higher.  Consider this another reason to fight your foreclosure!

Second, one big reason the number is so high – 673 days! – is because banks take so long, even after a foreclosure judgment is entered, to set the foreclosure sale.  There is absolutely no excuse for this delay, and that’s the point I tried to get across via my comments to Shannon. 

Bankers like to argue that the real estate market would improve if foreclosures were processed quicker (hence the quotes in the article).  It sounds like a reasonable position – prosecute foreclosures quicker, sell homes faster.  Unfortunately, that position sounds reasonable, but it’s 100% spin and is totally untrue.  The reality is that banks aren’t setting foreclosure sales on cases they’ve already won because they don’t want title to these properties.

You see, when the bank sets a foreclosure sale, that means the bank must take title (unless a third party is the high bidder, which is rare).  But the banks don’t want to take title because they don’t want to pay taxes, insurance, and maintenance expenses.  So what happens?  The banks get a foreclosure judgment, and scare the homeowner into vacating, but they don’t set the sale.  Instead, they try to find a third party who will buy the house, ensuring there is immediately a buyer in place so the bank never holds title. 

So when bankers say “we’re trying to prosecute foreclosure cases quicker to get abandoned homes on the market,” don’t believe it.  Typically, homes are abandoned because banks won a foreclosure lawsuit, and scared the homeowner into vacating, but won’t set a foreclosure sale because they don’t want title to the property.  In the interim – the time between when the homeowner vacates and the bank sets the sale and sells the property – the home is vacant.  

If you disagree, think about it like this.  Most homeowners, and my clients in particular, want to stay in their homes.  My clients leave only when they are forced to leave.  If the banks would sell the homes immediately after homeowners are forced to leave, guess what?  There would be no abandoned homes.  That doesn’t happen because banks don’t want to own the properties upon which they are foreclosing. 

Here’s the article…

TAMPA – Tampa Bay homeowners can get away with not paying their mortgage payments for about 285 days before lenders even begin to take the house back.  And if you think that’s a long time, get this: it takes about 673 days before the house is sold and the homeowner kicked out, according to data compiled by LPS Applied Analytics, which provides technology and data to the mortgage industry.

That puts the Tampa-St. Petersburg-Clearwater metro area near the top of the list for states that are slow to initiate foreclose. The Bay area is behind Maryland, Massachusetts, New York and California.

It’s no secret that Florida is no where near emerging from the real estate downturn. But data like this show just how clogged local courts are. The data also bring up some thorny issues for economists and industry onlookers who say the market won’t recover until a bulk of the distressed homes are sold.

“This data reflects that our system is overwhelmed,” said Mike Larson, a real estate analyst with Weiss Research. “It also reflects the pressure from government and others to come up with foreclosure alternatives. That’s good or bad, depending on your perspective.”

One of the reasons why it takes so long to foreclosure on Florida homes is because a judge must sign off on foreclosures in the Sunshine State. Courts are working through a backlog of tens of thousands of pending foreclosures. Some lenders halted or dramatically slowed foreclosure proceedings, amid government programs to keep struggling Americans in their homes.

Some, such as the Florida Bankers Association, have tried in the past to change Florida’s foreclosure process so a judge doesn’t have to sign off on foreclosures. Supporters say it would help improve the economy faster.  However, that could create even more problems, say consumer groups, who point to recent cases involving sloppy practices, even fraud, by lenders. At least with a judge, they say, there is some opportunity for protection for struggling homeowners.

Alex Sanchez, president and chief executive for the Florida Bankers Association, supported a legislative bill last spring that would have allowed lenders to foreclose without judge approval.  “I have Floridians emailing me, asking that we foreclose on their neighbors’ empty home faster,” Sanchez said. “They don’t want to live by the eyesore. Being a non-judicial state would streamline the process.”

There are 30 states that have a non-judicial foreclosure process, allowing lenders to foreclose on properties in as little as a month.  Under Florida law, a lender can take back a home only if it files a foreclosure lawsuit and is granted one from a judge. Because of a backlog of nearly 500,000 foreclosures, the process can take several months to a year or longer.

The proposed bill, which was sponsored by Tom Grady, R-Naples, would have changed that by allowing lenders to skip legal proceedings unless the borrower requests the foreclosure go through the courts. Lenders could have foreclosed in as little as 90 days.

The controversial bill, however, hit such resistance from foreclosure defense attorneys and consumer groups that it didn’t get very far.  “The faster we can get these properties rehabilitated and sold to someone who will clean them up, the faster our economy will recover,” Sanchez said.

Lenders foreclosing faster wouldn’t help, said Mark Stopa, a Tampa foreclosure defense attorney

“Banks want to get the judgment so they can write it off their books, but they don’t want to take title and sell the home,” Stopa said. “The LPS data shows how long it takes before they sell homes.  “I’ve seen so many homeowners move out because they lose their case and then the bank cancels the sale, and the home stays empty.”

Mark Stopa

www.stayinmyhome.com

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