News

 

Archive for February, 2011

Be Afraid. Be Very Afraid. Then Fight Back.

As far as Florida’s foreclosure crisis goes, I don’t consider myself an alarmist.  Yes, the court system is far from perfect, and yes, I’ve discussed examples of such on this blog.  But as flawed as the system may be, if we’re being honest, Florida homeowners have it better than those in other states, many of whom have no judicial oversight whatsoever.  Let’s put it this way – until now, only one thing has really scared me in my ongoing defense of Florida homeowners – the prospect of Florida changing to a non-judicial foreclosure state. 

Today, a second fear has emerged, and while this isn’t on the same level of non-judicial foreclosures, it has the potential to be.  Apparently, a proposed amendment to Florida’s Constitution is under consideration in the legislature.  The amendment would take away the exclusive power of the Florida Supreme Court to envoke rules of practice and procedure in all courts and place that power with the Florida legislature.

What, exactly, does this mean?  Well, for many years, the Florida Supreme Court has created and enforced rules of procedure, to be used by all courts in all lawsuits, an authority granted to it by Article V, Section II of the Florida Constitution.  These procedural rules have a drastic impact on how all lawsuits, including foreclosure cases, are litigated.  For instance, the Florida Supreme Court created Florida Rule of Civil Procedure 1.510, commonly known as the summary judgment rule.  This is the rule that has created so much attention about foreclosure fraud, as banks “robo-signed” affidavits supporting summary judgment without the affiants having personal knowledge of what they were signing and without attaching the documents upon which they based their knowledge.  This is the rule of procedure (essentially the only procedure) for how a bank can win a lawsuit without the need for a trial.  Lose at summary judgment, and the bank must go to trial.  Suffice it to say this rule has a huge impact on how foreclosure cases are litigated.

We all know how much influence the banks and their lobbyists have over the legislature.  Frankly, I shudder at the thought of what the legislature could do if it had the ability to create/change rules of practice and procedure in Florida courts.  Theoretically, the possibilities are endless.  The verification requirement (created by the Florida Supreme Court via Rule 1.110)?  Poof, gone.  The obligation to attach documents to an affidavit supporting summary judgment when the affiant lacks personal knowledge (via 1.510(e)?  Eliminated. 

But it’s worse than that.  Who’s to say the legislature wouldn’t change dozens of years of legal precedent by creating some new way for a plaintiff/bank, other than summary judgment, to win a foreclosure lawsuit?  Maybe they put the burden of proof onto the defendant to come into court with some sort of evidence, failing which final judgment is entered.  I’m almost afraid to speculate on the possibilities – I don’t want to give anyone any ideas. 

For me, what it boils down to is this.  As flawed as the court system sometimes is, judges are in a much, much better position to implement rules of practice and procedure in Florida courts than the legislature.  Respectfully, this is what we (and I say “we” as I’m part of the judicial system) do for a living.  You want to pass laws?  Fine.  You want to change laws?  Fine.  But stay out of our court system.  These are our courts, and we’re going to fight for them. 

If you don’t want the bankers and their lobbyists getting their greedy, grubby hands on our laws and our courts any more than they already have, please join me and countless other Freedom Fighters in Tallahassee on March 9 for the Rally in Tally II.  Just as we did last year, we’re going to do everything we can to make our legislature listen to us.  We don’t have rich banking institutions with powerful lobbyists backing us – it’s up to us to get the job done ourselves. 

I’m afraid.  But I’m fighting back.  Are you?

Mark Stopa

www.stayinmyhome.com

Posted in Main | 5 Comments »

Strategic Default – Why Not?

More and more Florida homeowners are choosing to default on their mortgage even though they have the ability to pay.  Here’s an article from the Palm Beach Post discussing the phenomenon. 

By Christine Stapleton

Palm Beach Post Staff Writer

She has a sales job with a six-figure salary. He owns a successful tech company. And they are in foreclosure.  But unlike countless other Americans faced with losing their homes, this couple could make the $5,200 monthly mortgage on the waterfront property in Pompano Beach that they bought for $585,000 in 2004. Foreclosure was their decision – not the bank’s. 

They crunched the numbers: $525,000 outstanding on their first mortgage and a $245,000 second mortgage on a home now worth about $319,000. His business was way down, her company was laying off workers and other investments had tanked. It made no sense to hang on to their underwater home. So they stopped paying their mortgage and waited for the foreclosure notice. It came in October.

It is called strategic default – borrowers who have enough money to make their mortgage payments but do not. They owe so much on a home that is now worth so little, that they decide to walk away.  It is not an easy decision. But it is not the inevitable blow to their credit score that troubles some strategic defaulters. It is the ethical dilemma of refusing to repay a loan when they are able to and worrying about what the neighbors will think.

“It felt like such an awful thing to do,” the woman said, who spoke on the condition of anonymity. “I got a car loan at 14 and paid $35 a week until I paid it off when I was 16. ”

Ethicist OK with decision

How prevalent are strategic defaults?  Although the exact number is unknown, half the homeowners in a study conducted by the Federal Reserve Board walked away when they owed twice what their home was worth. A Palm Beach Post analysis of foreclosed homes purchased since 2006 found 72 percent – about 4,124 homes – are worth less than half of the original loan.

In the business world, strategic default is a common tactic – considered a savvy move for financially troubled companies. However, “consumers have been browbeaten and trained to believe that it’s not honorable to not pay your debts,” said Margery Golant, a Boca Raton attorney who represents the Pompano Beach couple in default. “Why should it be any different for consumers?”

Last year, Morgan Stanley walked away from a $1.5 billion mortgage on five buildings in San Francisco despite record-breaking profits in 2009. Real estate giant Tishman Speyer Properties strategically defaulted on $4.4 billion in loans on two housing developments in New York after the properties lost $2.2 billion in value. The company had billions of dollars in assets, including Rockefeller Center and the Chrysler Building, which it could have leveraged to meet its loan obligations.

Even the Mortgage Bankers Association, whose president chastised homeowners who strategically default for the “message” it would send to their “family, kids and friends,” dumped its Washington headquarters in a short sale. After working out a deal with its lender, the MBA sold the building for $41.3 million last year. In 2007, the group purchased it for $79 million .

“No, it’s not wrong,” said Randy Cohen, author of the weekly Ethicist column in The New York Times. Although homeowners are emotionally attached to their property, a house is still an investment.  “I don’t understand why you would be asked to make a decision on this investment any differently than you would on any other,” Cohen said. “Why should homeowners be held to a higher ethical standard?”

In many strategic default cases, the moral imperative is self-imposed. Among the arguments: Walking away from a mortgage will depreciate your neighbors’ property values. If all underwater homeowners walked away, the housing market would crash.

“Most people considering strategic default come to me and want my permission,” said Ronald Kaniuk, a Boca Raton foreclosure defense lawyer. “People who cannot pay their mortgage are apologetic. For people who can afford their mortgage or can just barely afford their mortgage and see it as a losing investment, they want absolution.”

They should not get it, according to Luigi Zingales, an economist and professor at the University of Chicago’s Booth School of Business, who became embroiled last year in a debate over the morality of strategic default.

“When you borrow money you make a commitment to pay it back,” Zingales said. “If you walk away because it’s in your interest to do so, you are violating the letter and the spirit of the law.”

Zingales wanted to know why it had become so easy for upside down homeowners to walk away. The answer was simple.  “The stigma is very much a function of how many people do it,” Zingales said. “Once you think it’s socially acceptable, it becomes easier to do.”

Expect more defaults

But there are consequences, including the long-term health of the housing market, Zingales said. Zingales predicts we will reach a tipping point where getting rid of a bad investment outweighs the damage to neighbors’ property values and the borrower’s reputation. In other words, expect more defaults.

“We’re not there yet,” Zingales said. “Clearly this creates a tension in society.”

On one side are homeowners who did not lose their jobs or live beyond their means and are now struggling to make their mortgage payment. Next door are neighbors who have stopped paying their mortgages and are living largely free until they are booted from their homes. “It’s a legitimate resentment,” Zingales said.

“We never bought cars or jewelry,” the Pompano Beach woman said. The second mortgage they took out on their home went toward purchasing and renovating a condominium as an investment rental property. When her husband’s business lost its best client and her company began layoffs, they decided to get out from under all their debt.

There will be consequences. They will lose the $65,000 in loan payments. The lender could get a “deficiency judgment” to go after the couple for repayment of the defaulted loan.

Their credit score will take a hit, but at least with a strategic default they won’t be homeless.

After liquidating some assets and scraping together what they could, the couple bought a new house – down the street and nearly identical to the old house – for $353,000. They walked away from $770,000 in debt.

“It felt like such an awful thing to do,” she said. “When this is all over I’ll feel like I made a good choice.”

Mark Stopa

www.stayinmyhome.com

Posted in Main | 69 Comments »

Foreclosure Judgment after Service by Publication – VACATED

All defendants, even homeowners facing foreclosure, are entitled to due process of law before their property can be taken.  (Many people even know the phrase in the constitution – “cannot be deprived of life, liberty, or property … without due process of law.”). 

One of the most basic elements of due process is ensuring a defendant is aware of a lawsuit, and given the chance to defend, before that lawsuit is adjudicated.  This is accomplished, of course, by ensuring valid service of process.  Specifically, all plaintiffs are required to ensure defendants are served by a process server or sheriff with a Summons and Complaint.  There are exceptions to this, i.e. service by publication, but its requirements are technical and, hence, are strictly construed.

I currently have a client who owns a home in Jacksonville.  He was sued for foreclosure but he lives in New York.  Instead of serving him in New York, as required, the bank’s lawyers served him by publication.  Unaware of the lawsuit, he did not defend it, resulting in a Final Judgment of Foreclosure and a foreclosure sale (at which the bank was the high bidder). 

This homeowner retained Stopa Law Firm, and I moved to vacate the Final Judgment, cancel the Foreclosure Sale, and Quash Service.  Initially, the bank’s lawyers opposed the motion, arguing at a brief, 15-minute hearing that service was appropriate and the Final Judgment should stand.  The Jacksonville court ruled, however, that my client was entitled to an evidentiary hearing on whether service was valid.  That hearing was supposed to take place on Monday.  However, I got a call this week, out of the blue, whereby opposing counsel stipulated to Vacate the Foreclosure Judgment and to the entry of this Order Vacating Foreclosure Judgment, Cancelling the Foreclosure Sale, and Quashing Service – all we had to do was cancel the hearing and accept service. 

This is quite a good result, obviously.  The client gets the foreclosure judgment vacated and the bank has to, essentially, start the case from scratch.  And we essentially give up nothing in return.  This raises the question, of course – why would the bank do this? 

As I see it, there is only one explanation – the bank feared the evidentiary hearing, specifically the evidence that would have been presented if the hearing had gone forward.  In particular, it seems clear to me that the bank knows there are many cases where service of process has been done improperly and it doesn’t want to shed a spotlight on that fact any more than necessary. 

Let this serve as a reminder – if you’re being sued for foreclosure (or anything else, for that matter), you are absolutely entitled to force the plaintiff to serve you, with a process server, with a Summons and Complaint.  Service of process by publication is possible, but the banks often do it incorrectly, meaning you could, like in this case, get a foreclosure judgment vacated (even months or years after the fact) if you were not served properly. 

The banks’ failure/refusal to effectuate service properly is just one example of how they cut corners and violate the law in their ongoing attempt to push through foreclosures as quickly as possible.  Don’t let them get away with it!  Make sure you and your family and friends are aware of the requirement to effectuate service of process properly.

Mark Stopa

www.stayinmyhome.com

Posted in Main | 11 Comments »

Foreclosure Outlook Grim – a Tsunami coming

By: Gulf Coast Business Review

Lisa Goodner, Florida courts administrator, says residential mortgage foreclosures in Florida will double to roughly 365,000 in state fiscal year 2011-12, which begins July 1.  Another expert predicts “a tsunami” of commercial foreclosures.

The residential mortgage numbers are expected to fall to 170,000 this year, as lenders have put a hold on many foreclosure holdings, what Goodner says amounts to a moratorium on filings.  Goodner, and representatives from the attorney general’s office and the Florida Bankers Association, testified Feb. 24 to the Florida House insurance and banking subcommittee.

According to Goodner’s presentation, as of last June 30, the number of residential mortgage foreclosures reached 462,339. At year-end, the backlog dropped to 351,768. 

Scott Palmer, chief of the mortgage fraud task force in the state attorney general office, testified that, “Florida leads the nation in the percentage of homeowners who are delinquent on their loans.” Palmer also told the committee, “The foreclosure process is really in complete disarray.” Palmer called for simplifying the loan modification process.

Virginia Townes, general counsel to the Florida Bankers Association, also testified that community banks will bear the brunt of commercial foreclosures. She says commercial mortgage loans have “layers of complexity” compared to the relatively straightforward nature of residential mortgage foreclosures.

“We are seeing a tsunami of commercial foreclosures that will take up three to four times the time it takes court to process a residential mortgage foreclosure,” Townes told the committee. “It may spell the death knell of our community banks.”

Townes added that she anticipates that commercial foreclosures will be, “ … incredibly more damaging to our recovery than the severe impacts of the residential mortgage foreclosure crisis.”

To deal with the problem, Townes suggested legislators focus on incentives to work out commercial loans, saying, “We need to be very careful as a government … to not to over-regulate this area.”

Mark Stopa

www.stayinmyhome.com

Posted in Main | No Comments »

More Perverse Procedure in Ft. Myers

Below is a good article about the ongoing, perverse procedures being employed by judges in foreclosure cases in Lee County.  What jumps out at me about this article is how a homeowner’s trial was continued, apparently because there were so many other cases to be tried that the court didn’t have time for that trial, so it continued the trial for a future date.

What the article doesn’t say is something I know by handling these cases – that 83 trials were scheduled today – 83!!   Obviously, it wasn’t possible for these cases to all be tried.  Unfortunately, the judges know this; they just don’t care.  They don’t care that both sides incur expenses by traveling to court to wait for several hours for a trial that will never happen.  They don’t care that homeowners (and, for that matter, banks) are paying lawyers to attend a trial that isn’t going to proceed. 

Lee County judges set docket soundings and trial dates over and over again, as a matter of routine.  They do so even when neither side wants a trial; often when both sides are objecting.  This makes it all the more disgraceful that, when trial day arrives, contested trials cannot possibly take place because the judges have set too many of them.  Sure, the judges can quickly adjudicate the cases where one side or the other doesn’t show up.  But there’s no way they can have legitimate trials in this setting, and they know it.    

As I see it, this is a total lack of respect for the parties and their lawyers.  I hate to say that; there’s just, in my view, no other way to characterize it.  These judges have elevated their own desire to clear the dockets above all else. 

Senior Judge Starnes loves to talk about how the foreclosure crisis has forced courts to employ procedures like this.  Really, judge?  Then why is Lee County the only county in Florida, to my knowledge, that does this?  Isn’t the more plausible explanation that Lee County is doing it wrong and that the other counties are doing it right? 

Here’s the article. 

LEE COUNTY — For the past few years, Lee County’s busiest court docket has also been the most notorious in the state.  Dubbed the ‘rocket docket’, the county’s foreclosure track cruises through several hundred cases daily, many ending in judgments for the lender and the subsequent scheduling of a foreclosure sale.

In the process, critics say, the docket tramples basic rules of civil procedure and due process. They point to the speed with which judges move cases along, and the emphasis on an expedited trial or summary judgment versus discovery.  “It’s just a lack of, I don’t know, respect for the defendant by the court,” Naples attorney Todd Allen said.

Fittingly, a Tuesday morning docket session in which Allen and his client, Estero condo-owner Scott Shinneman, were to go to trial in Shinneman’s foreclosure, turned into a three-and-a-half hour wait that ended with disappointment — a continued trial date that may benefit the lender.  “So much for our day in court, huh?” Shinneman quipped.

His case turned heads last year after a clever order drafted by Allen made local news and several foreclosure blogs. Frustrated when Lee Senior Judge James Thompson rejected a motion in December to toss what Allen considered a flawed affidavit by a bank employee, the attorney drafted the resulting order to explicitly state what he says Thompson told him — that Lee County does not comply with Florida Rules of Civil Procedure.  The attorney for lender HSBC signed off on the draft, Allen said, and it went to Thompson’s office.

“I knew one of two things was going to happen,” Allen said. “Either he was going to read it and sign it, which is bad because it means it was policy, or he wasn’t going to read it and sign it, which is even worse.”  Instead, the other senior judge on the docket, Hugh E. Starnes, signed the order.  “Blown away,” is how Allen described his reaction.

Thompson entered a corrective order nearly a month later. It read, in part, “(t)hat statement does not reflect the court’s ruling or the court’s position.”

Tuesday brought the next battle in Shinneman’s case. Scheduled for a trial that Allen initially hoped to postpone, Shinneman and the attorney actually hoped it would go forward. The HSBC attorney had filed his exhibit and witness lists on Monday, a move that left Allen little preparation time, he said.

If the trial went forward, he suspected the presiding magistrate, Amy Hawthorne, would either dismiss the case or prohibit testimony from anyone on the lists, including the bank employee.  The attorney for HSBC instead objected to the magistrate hearing the case, putting the trial back on the foreclosure docket and in front of Starnes.

Allen suspects the objection came after Hawthorne dismissed several cases in similar shape. Efforts to reach the HSBC attorney, Travis Harvey of the Florida Default Law Group in Tampa, were not immediately successful on Tuesday afternoon.  After the move, Allen, Shinneman and Harvey waited several hours as Starnes’ docket cleared.

The cases marched before the judge were short, and most were continued to an April docket sounding.  Starnes, a retired judge returned to the courtroom to handle foreclosures, attempted to explain the process to confused homeowners. In some cases, he recommended they look for an attorney.

Homeowner Joseph Canete asked for mediation, a rare request in the morning session.  “I would just say we have a solid 10 years of making mortgage payments,” Canete told Starnes. “When we did have problems, the bank’s suggestion was we couldn’t be helped until we were behind. Once we were behind, it was too late.”

Another woman told the judge she still lacked her bank’s acknowledgement of a $4,600 lump sum it requested to reinstate her loan. The lender’s attorney said she had no knowledge of the payment but offered to inquire about it.  Some homeowners told Starnes they were still hashing out short sales. Other cases were aligned for summary judgment at the next docket sounding.

Around 11:40 a.m., Starnes completed the docket, more than 100 cases by his count. With another 104 slated for the afternoon session and little time for lunch, he postponed Shinneman’s trial.  “I’ve got to object,” Allen protested. “That’s completely prejudicing my client.”  “I understand,” Starnes replied.

Outside the courtroom, Allen and his client said they were disappointed by the decision, which removes the late-filing issue.  “We could have essentially settled this today,” Allen said.

The case goes next to a re-hearing on the bank employee’s affidavit on March 21, followed by a trial on the 22nd.  The trial is scheduled to be heard by Hawthorne.

Mark Stopa

www.stayinmyhome.com

Posted in Main | 7 Comments »

There are no Mulligans for Fraud

Recently, I’ve received a number of “Re-Verified Affidavits” in foreclosure cases with Florida Default Law Group.  The fact-pattern goes like this.  Bank files fraudulent affidavit.  Bank’s lawyers realize it.  Bank files “re-verified affidavit,” asking the Court to ignore the first affidavit, use the second affidavit, and proceed with the foreclosure lawsuit as normal. 

Does anyone else find this to be an insult to the homeowners, the courts, the justice system, and the public as a whole?  The banks are essentially saying “yes, I committed fraud, but I want the court to ignore that, sweep the fraud under the rug, and proceed with foreclosure.” 

Luckily, in Florida, the courts have a legal doctrine called fraud on the court.  The concept, essentially, is that when a party, particularly a plaintiff, commits a fraud in the perpetuation of a lawsuit, that party should not be able to use the court system (upon which it just committed a fraud) to obtain relief.  Essentially, the party is slapping the court in the face with one hand while sticking out the other hand asking for relief – and that’s not allowed.  As I see it, this is totally reprehensible and should never be permitted.  That’s why, when I see these “re-verified affidavits,” I’ve started filing motions for sanctions for fraud on the court, including the one here.

Mark Stopa

www.stayinmyhome.com

Posted in Main | 4 Comments »

Does Mediation Stop Foreclosure?

I was on NBC’s 11:00 news last night (Tampa market), helping to explain an all-too-common problem.  Two well-intentioned homeowners were promised a mediation, but the bank didn’t care; they were going forward with foreclosure anyway.  Shannon Behnken of NBC deserves a lot of credit for helping (albeit indirectly) one Dade City couple get their mediation before the judge signed a Final Judgment of Foreclosure, but the media can’t intervene for everyone.  Homeowners need to realize that mediation isn’t a cure-all; they must defend their foreclosure lawsuit.   

Here’s a link to the video of the story.

Mark Stopa

www.stayinmyhome.com

Posted in Main | No Comments »

Why Isn’t Wall Street in Jail?

In his most recent epistle, Matt Taibbi of Rolling Stone investigates why none of the crooks on Wall Street have been imprisoned for their criminality.  In his words:

Nobody goes to jail. This is the mantra of the financial-crisis era, one that saw virtually every major bank and financial company on Wall Street embroiled in obscene criminal scandals that impoverished millions and collectively destroyed hundreds of billions, in fact, trillions of dollars of the world’s wealth — and nobody went to jail. 

How could this be?  Matt explains, in detail, the incestuous relationships between Wall Street bankers and the agencies in charge of policing them.  This incest goes as high up the pyramid as possible, from the SEC to the Department of Justice and even President Obama:

As for President Obama, what is there to be said? Goldman Sachs was his number-one private campaign contributor. He put a Citigroup executive in charge of his economic transition team, and he just named an executive of JP Morgan Chase, the proud owner of $7.7 million in Chase stock, his new chief of staff. “The betrayal that this represents by Obama to everybody is just — we’re not ready to believe it,” says Budde, a classmate of the president from their Columbia days. “He’s really fucking us over like that? Really? That’s really a JP Morgan guy, really?”

This article is a must-read.  It’s a bit dense, but it will help you understand what has caused the problems we’re now facing and why nobody in a position of authority is doing anything about it. 

Why isn’t Wall Street in Jail?

Mark Stopa

www.stayinmyhome.com

Posted in Main | No Comments »

NY Providing Lawyers for all Homeowners in all Foreclosure Cases

For many years, the right to counsel has existed only for defendants in criminal cases.  The logic, essentially, is that criminal cases are important enough that everyone should get a lawyer, even if he/she cannot afford one, because a person’s freedom is at stake.  Civil lawsuits, by contrast, are important, but not important enough that the government is going to foot the bill for an attorney. 

This week, though, New York took the unprecedented step of ensuring that all homeowners facing foreclosure have legal representation.  In my view, this move is an implicit yet glaring illustration of how foreclosure defense attorneys are critical to protecting the rights of homeowners facing foreclosure.  Essentially, it’s like saying “losing your home is as important as losing your freedom.” 

If you disagree, think about it like this.  Do you think New York would bear the expense of ensuring all homeowners have counsel if there wasn’t an overwhelming need for those homeowners to have an attorney?  In that same vein, isn’t New York’s willingness to incur this expense, for the benefit of homeowners and the system as a whole, a pretty obvious admission that the banks’ widespread fraud cannot go uncontested any longer?  It sure seems that way.   

If you’re in Florida, or any other state besides New York, and you’re wondering whether an attorney is necessary for your foreclosure case, remember what New York is doing.  New York sees such an overwhelming need for homeowners to have attorneys that they’re requiring it – even at their own expense.  To my knowledge, never before in the history of America have attorneys been required in non-criminal cases… until now.   

Here’s the entire article, courtesy of David Streitfeld of the New York Times.

New York court officials outlined procedures Tuesday aimed at assuring that all homeowners facing foreclosure were represented by a lawyer, a shift that could give tens of thousands of families a better chance at saving their homes.  Criminal defendants are guaranteed a lawyer, but New York will be the first state to try to extend that pledge to foreclosures, which are civil matters. There are about 80,000 active foreclosure cases in New York courts. In more than half of them, only the banks have lawyers.

“It’s such an uneven playing field,” said the state’s chief judge, Jonathan Lippman. “Banks wind up with the property and the homeowner winds up over the cliff, on the street. It doesn’t serve anyone’s interest, including the banks.”  A lawyer for every defendant will also serve the courts’ interests, the judge said, by making proceedings more efficient.

Under the procedures, which will be put in place in Queens and Orange Counties in the next few weeks and across the state by the end of the year, any homeowner in foreclosure who does not have a lawyer will be supplied one by legal aid groups or other pro bono groups.  Legal aid groups are expected to have foreclosure offices in the courts to handle the influx.

After revelations last fall that several major banks had used improper methods to speed foreclosures, the courts are increasingly becoming a central battleground for people seeking to modify their loan and salvage their house. Simply responding to a foreclosure notice in court, homeowners have learned, can sharply delay the proceedings.

That is a change from when the foreclosure crisis began. A few years ago, most foreclosed owners in New York and everywhere else did not show up at court proceedings and simply abandoned their homes. It was a “paper process,” the New York court system concluded in a recent report, with lenders inevitably the winners. New York now mandates settlement meetings overseen by a judge and attended by the lender, a sort of court inside the court. Homeowners are participating in large numbers but most of those without lawyers have little idea how to defend themselves. The cases are also overwhelming the courts. In several counties, half of the civil cases in higher courts are foreclosures.

Legal aid groups will find the task of representing all foreclosure defendants easier if the State Legislature agrees to Judge Lippman’s request for a $100 million increase in legal services programs spread over the next four years. Current financing for legal services in New York is about $200 million a year drawn from a variety of public and private sources.

New York, which is one of the 23 states where foreclosures must be overseen by a judge, has been more aggressive than most in trying to reshape the flood of housing cases. Lawyers pursuing foreclosure in New York are personally liable for the accuracy of the documents they represent. It is a requirement that some lawyers find onerous, but has been credited with significantly slowing the pace of foreclosures in the state.

Legal aid organizations in the 23 states, which include Illinois, Florida and New Jersey, say that they do not have enough money or lawyers to help everyone who needs assistance. New Mexico and Connecticut have started classes to help train people to represent themselves. Legal aid groups in other states are forced to choose among families, helping some but not others.

New York’s action “will shift the debate,” said Donald Saunders, director of the civil division of the National Legal Aid and Defender Association. “Everything Judge Lippman is saying will be looked at closely elsewhere.”

Mr. Saunders added, however, that fiscal realities could trump other considerations.

Nationwide, 2.2 million households are in foreclosure, with another 2.1 million at least 90 days past due, according to LPS Applied Analytics. After the banks’ revelations about their procedures, the average number of days delinquent for a foreclosed property rose to 507 days in December, its first time above 500.

In New York, the two initial counties will serve as a model for the statewide program. Legal Services of the Hudson Valley will work with the court in Orange County to provide representation, while the Legal Aid Society, which assists people in New York City, will supply lawyers in Queens, a foreclosure hotbed.

According to court data, foreclosure filings in Queens have increased 217 percent, to 5,839 cases from 2005 to 2009.

“There’s a huge demand,” said Steven Banks, the society’s attorney in chief. While there are no specific statistics for foreclosure, he said that in general the group has been able to fulfill only one out of nine requests for help.

How then will it handle so many more foreclosures?

“Redeploying resources,” Mr. Banks said. It should help that the lawyers will “take more of an early intervention in the case rather than at the 11th hour when the sheriff is on the way,” he added.

Judge Lippman, who announced the new initiative in his annual State of the Judiciary address in Albany, said he hoped that the lawyers would reach out to defendants even before they appeared in court.

Citing the 1963 ruling by the Supreme Court that state courts are required by the Constitution to provide counsel in criminal cases to defendants who cannot afford their own, Judge Lippman said this was the right moment to extend that provision.

“Today it is an equally obvious truth that people in civil cases dealing with the necessities of life can’t get a fair day in court without a lawyer,” he said.

Mark Stopa

www.stayinmyhome.com

Posted in Main | No Comments »

Foreclosure Defense, in the Eyes of a Child

I was talking to my oldest daughter (age 7) tonight, and somehow the topic was raised about what I do for a living.  Her explanation?  “You help people stay in their homes.” 

If that’s what my kids think I do for a living, then I’m good with that. 

Meanwhile, I can’t help but wonder … what do the kids of the banks’ lawyers say … “You help throw people out of their homes.”

Mark Stopa

www.stayinmyhome.com

Posted in Main | No Comments »