Archive for September, 2011
Cost of accessing cash you keep at home – ZERO
Cost of accessing cash via a debit card at an account with a credit union – ZERO
Cost of accessing cash via a debit card at Bank of America – $5/month
Seriously, five dollars a month to use a debit card? Why would anyone pay that when there are alternatives which are FREE? And don’t these idiot bankers realize consumers are going to boycott the big banks when free alternatives are available?
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I’ve been an avid sports fan all of my life, and the thing I like most about sports is the feeling that, on any given day, anything is possible. It’s a feeling that we should all grab ahold of and carry with us throughout life. If you don’t know what I’m talking about, let me explain.
Last night was the final game of the regular season in Major League Baseball. The Boston Red Sox – with their $160 million dollar payroll (third highest in MLB) – and the Tampa Bay Rays – with their $42 million dollar payroll (second lowest in MLB) were tied in the standings, 90 wins and 71 losses, going into the final game of the season. After 161 games, with just one remaining, one would make the playoffs, and compete for the championship, while the other’s season would end.
The Rays have built their team internally, “the right way,” some would say – by drafting and developing their own players. The Sox built their team by spending money, including, this past offseason, with a 7-year, $142 million contract to former Rays’ star and fan favorite Carl Crawford.
Most would not dispute the Red Sox have far more talent. Having a payroll more than triple that of the Rays enabled them to get better, more-established players (e.g. Crawford), hence the “Big Money.” But here were the Rays, 9 games behind in early September yet tied with Big Money after 161 games, still fighting for the playoffs, hence the “Big Hearts.”
Last night, it looked like Big Money would prevail again (as, seemingly, usually happens in life), as the Rays were losing 7-0 to the Yankees through seven innings, while the Red Sox were beating the Orioles 3-2. Then, some crazy, unbelievable stuff started happening. It started raining in Baltimore, so the Red Sox game was delayed. Then, with the Red Sox watching on TV in their clubhouse, the Rays scored 6 runs against the Yankees in the eighth inning to pull within 7-6. Then, with 2 outs in the 9th inning and nobody on base, still losing 7-6 and one strike from what could have ended their season, Dan Johnson, who had one home run all season and hadn’t gotten a hit since April, hit a home run that barely stayed fair and barely cleared the fence, tying the game. One strike away from what looked to be the end of their season, the Big Hearts tied the game, improbably clawing their way back.
Meanwhile, in Baltimore, the rain delay was over. Big Money, having watched Big Hearts come back from 7-0 down to tie it at 7-7, had to finish their game. Two innings later, Big Money’s best pitcher was one out away from preserving a 3-2 Red Sox win. He had failed in this situation only twice all year (161 games). It was the bottom of the ninth, two outs, and the Orioles had nobody on base. Big Money looked assured of a win. Yet one Oriole got a double and the next, with two strikes against him, doubled in that runner to tie the score.
Meanwhile, the scoreboard in Tampa showed that the Orioles tied the Red Sox and the Tampa fans erupted, right as Big Hearts’ star hitter, Evan Longoria, approached the plate, the Rays still tied 7-7.
Meanwhile, back in Baltimore, the next Orioles’ batter hit a liner into left field, where Big Money’s Carl Crawford, the former Ray who left the Big Hearts for Big Money, came close but couldn’t quite catch the ball, allowing the winning run to score. Improbably, one out from victory, Big Money lost. Meanwhile, just minutes later in Tampa, Longoria hit a low line drive that barely stayed fair and barely cleared the fence, giving Big Hearts an 8-7 win.
Big Hearts were 9 games behind in the standings in September – an insurmountable obstacle, based on history, and down 7-0 in the final game and one strike from defeat, yet won, and Big Money was one strike from victory, yet lost.
For you non-sports fans, many analysts immediately started calling this the most captivating day in baseball history. Personally, I can scarcely recall anything as unbelievable in all my years of being a sports fan.
But this wasn’t just about sports. This was about how Big Hearts could prevail over Big Money. This was about how the underdog, the team with the low payroll and the less-established players, could find a way to win despite being behind in the standings all season, then behind on the scoreboard 7-0 in the final game.
This was about the magic of Big Hearts – the game-tying HR from a little-used, no-name player with 2 outs and 2 strikes in the bottom of the ninth, which barely cleared the fence and barely stayed fair, followed by the winning home run which barely cleared the fence and barely stayed fair.
This was about the indescrible irony of Big Money’s Carl Crawford, signed away from Big Hearts in the offseason, just missing the final catch on the final play, sealing Big Money’s loss and the end of their season.
This was about the feeling that a higher power caused the rain delay in Baltimore, forcing Big Money to watch Big Hearts’ improbable comeback on TV, then forcing Big Money to resume their game knowing Big Hearts had tied the score.
Most of all, this was about the feeling that anything was possible – that it was possible for Big Hearts to defeat Big Money. This was about the realization that it’s not always about money – it’s about grit, determination, desire, karma, and heart.
Everyone needs to feel this feeling. Everyone needs to believe Big Hearts can beat Big Money. And I’m not just talking about sports. This is about life. This is about our country. Our economy. Our financial system. Big Hearts can beat Big Money. It may seem improbable, it may seem a fairy tale, but it can happen, and we can’t ever give up.
Of course, one of the reasons Big Hearts beat Big Money was the umpires were fair. They called balls and strikes fairly and objectively. They weren’t bought off. As much money as Big Money had, the umpires weren’t letting them stuff that money into their pockets to influence the outcome. The commissioner of Major League Baseball, who oversees those commissioners, was ensuring fair play. He wasn’t threatening the umpires with their jobs or salaries if they didn’t make certain rulings. He let the games play out fairly, enabling the best teams to win, assuring the right result.
The moral here is that Big Hearts can beat Big Money, but the playing field has to be level. Right now, in our financial system, it’s not. Big Money has a huge advantage. No matter their grit, no matter their determination, it’s hard for consumers to match up. However, we cannot give up. We must all keep fighting to ensure/create a level playing field. We must all realize the joy of watching the Big Hearts beat Big Money is indescribable, and we must keep fighting to ensure it happens.
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This Video with Dylan Ratigan contains an awesome explanation on how Obama failed America by letting Wall Street walk all over him, precipitating the decline of his Presidency and the continued failure of America’s economy.
There’s really nothing to elaborate about here – just watch the video. Trust me.
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Today’s Palm Beach Post reports here that the Florida Supreme Court is reconsidering the mediation program it implemented in foreclosure cases throughout Florida because so few mediations between homeowners and banks have resulted in a settlement.
Under the Court’s program, banks are forced to participate in a settlement conference with homeowners and an indepedent third party, called a mediator, before proceeding with their foreclosure lawsuit. The problem, quite simply, is that while the Florida Supreme Court can force banks to attend mediation, they can’t force banks to settle, as less than 4% of foreclosure lawsuits have settled at mediation.
I hate to say “I told you so,” but the failure of the Court’s mediation program is hardly a surprise to me. I wrote on this blog, here, on July 5, 2010 “the mediation process, no matter how well-intentioned, just won’t work.” As I explained in this letter to Pinellas County’s Chief Judge, Thomas McGrady, the problem with these mediations is that banks have no incentive to settle because they perceive no risk that they would lose the case as it proceeded forward on the merits.
On January 28, 2011, in conjunction with this article appearing in the St. Pete Times, I explained in this blog that the problem was partly one of timing. In most lawsuits, mediation happens right before trial, and both sides have an incentive to settle to avoid trial and the expense and uncertainty associated with it. In foreclosure cases, by contrast, mediations are set up within the first 60 days – a totally different dynamic, one that does not lend itself to resolutions. Quite frankly, it’s common for parties in lawsuits to be entrenched in their positions early on; it’s only through the passage of time, and staring at a trial, that they soften in their positions. By mediating in the first 60 days, the Court hence requires mediations at the wrong time.
Anyway, my point is that I’m terribly disappointed by all of this. I mean, I knew, without any doubt, that the Florida Supreme Court’s mediation program wasn’t going to work. I said as much, on this blog, explaining the problems with the program in detail. Yet here we are, more than a year later, and the Florida Supreme Court is just now evaluating what to do about the failure of the mediation program in foreclosure lawsuits.
If I could point out these flaws, over a year ago, why is the program just now being re-evaluated? Why wasn’t the program changed months ago, before thousands more Floridians were foreclosed? Why hasn’t anyone in Tallahassee been more proactive about creating a program that keeps homeowners in their homes? Does anyone care? Don’t Floridians deserve better?
Here’s the article from the Palm Beach Post…
The Florida Supreme Court ordered a review Monday of its landmark foreclosure mediation program which has shown limited success in finding alternatives for struggling homeowners.
The mandatory program for all homesteaded properties was ordered by the court in Dec. 2009 in an effort to reduce judicial caseloads and help borrowers avoid foreclosure with options that can include a loan modification, deed-in-lieu of foreclosure or a short sale.
Statewide, 3.6 percent of all cases referred to mediation in a yearlong period beginning in March 2010 ended in a written agreement between the lender and homeowner. In Palm Beach County, 1.6 percent of the 4,632 referrals made ended in a written agreement.
In Monday’s administrative order, the Supreme Court appointed five judges and one court administrator to evaluate the success of the program and recommend whether it should be continued, changed or eliminated.
Judge Burton Conner, who sits on the 4th District Court of Appeal and served on a statewide foreclosure task force that recommended mediation, was appointed to the committee.
Conner said last week that the program has experienced growing pains, but that he believes banks will increasingly see the benefit of going to mediation.
“There has been institutional resistance because it is such a new tool,” Conner said. “With anything new it takes a while to figure out how it works and how you can benefit.”
The program has had more success if only homeowners choosing to participate are considered. Under that benchmark there was a 25 percent success rate statewide and 18 percent in Palm Beach County.
Proponents also argue that results gathered by the state don’t include agreements that occur outside of mediation.
The committee has until Oct. 21 to submit its evaluation to the court. Public comments may be submitted to the committee through Oct. 3 at www.floridasupremecourt.org.
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Stopa Law Firm receives many heartbreaking emails from prospective clients in truly desperate situations, but the one I just received is beyond heartbreaking. This man, a single father, got hurt on the job, had to take time off work after back surgery, then was terminated because his employer didn’t want to accommodate him through his injury (even though it was an on-the-job injury). Perhaps worse yet, he hasn’t been able to get a new job because his former employer is telling prospective employers he had surgery and can’t work.
Not surprisingly, this father has been unable to pay his mortgage and, even less surprisingly, the bank has been unwilling to help him. The situation is so bad for this man and his son that he concluded his email to me by saying:
I’m considering suicide so my kids have some money and my life insurance is being cancelled in 3 weeks … big decisions to make.
Horrifying. I worked hard in law school, but trust me – I’ve never been trained on how to deal with a situation like this … not from anything I learned in law school or as a lawyer, anyway.
I just finished talking with this gentleman (who consented to me discussing his situation here) and I think/hope I was able to make him realize suicide is not an option, that there is help available. For some people, that’s essential to hear:
The bank isn’t going to kick you out of your home tonight or any time soon.
The bank has to win a foreclosure lawsuit to evict you, and you’re entitled to have a lawyer like me defend the lawsuit each step of the way.
Suicide is not the answer; help is available.
On a day like today, a rainy Monday when I, quite candidly, would have just as soon not worked, this was a glaring illustration of why I do what I do. There are countless homeowners in Florida and throughout the country who are desperate, hopeless and, yes, even suicidal. It is incumbent upon all of us, as people and as Americans, to make people in these types of situations realize that there is hope, there is help, and suicide is not the answer.
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According to Housing Wire, 10 million mortgages are set to default. I found the article interesting in a couple of respects.
First, it discouraged the U.S. Government from getting involved in the rental of foreclosed properties, arguing that the only aspect of the real estate market that’s working right now is investors renting out foreclosed properties.
Second, after crunching the numbers and analyzing the data, the proposed solution to the housing crisis was to “create 4.1 million to 6.2 million units of housing demand over the next six years.”
Think about that for a minute. The solution isn’t pushing through foreclosure cases quicker or doing foreclosures out of court. In fact, the foreclosure process isn’t tied to the housing recovery in any way. After all, whether the current homeowner is foreclosed now or in two years, through a court case or out of court, as far as the housing market goes, it doesn’t matter; what matters is whether there’s demand for that home. Ultimately, that’s the problem right now – there are a glut of homes for which there is no demand because our economy is in the toilet.
Hence, the question becomes, which is better? To have a homeowner in a home, or to foreclose quickly and have it vacant because nobody else wants it? For me, the answer is obvious, and that’s why I have no qualms doing what I do.
Here’s the article. …
Roughly 10.4 million mortgages, or one in five outstanding home loans in the U.S., will likely default if Congress refuses to implement new policy changes to prevent and sell more foreclosures, according to analyst Laurie Goodman from Amherst Securities Group.
At the end of the second quarter, more than 2.7 million long-delinquent loans, others in foreclosure and REO properties sat in the shadow inventory, more than double what it was in the first quarter of 2010 (Click to expand the chart below). With the market averaging roughly 90,000 loan liquidations per month, it would take 32 months, nearly three years, to move through the overhang.
And that number is contingent on no other loans going into default.
“Many analysts looking at the housing problem mistakenly assume it is limited to loans that are currently non-performing (or 60-plus days past due). Such borrowers have a high probability of eventually losing their homes. However, the problem also includes loans with a compromised pay history; these are re-defaulting at a rapid rate,” Goodman told a Senate subcommittee Tuesday.
Under a reasonable estimate, which is calculated with more conservative market conditions than what is currently being experienced, Goodman found nearly 2 million re-performing mortgages would default again and another 3.6 million already troubled loans to default as well.
The rest of the 10.4 million estimate is made of always-performing loans at various stages of negative equity. Of the 2.5 million always-performing mortgages with loan-to-value ratios above 120%, nearly half will default. Even 5% of the always-performing mortgages that have some equity left will default, as well, Goodman said.
In August, the Obama administration asked the housing industry for ideas on how to more efficiently sell or unload this overhang, and the Senate heard testimony from various housing players Tuesday. Each, including Goodman, said the government should target private investors.
Robert Nielsen, chairman of the National Association of Homebuilders, said government programs should be revamped to assist small and local businesses in rehabbing and unloading these properties.
Nielsen said Fannie, Freddie and the FHA should avoid bulk sales to large investors that have no stake in the neighborhoods in which these properties are located.
“Local and small businesses that have a stake in the future of the affected communities should be the driving force behind the disposition of the REO inventory. This will result in the creation of jobs and the stabilization of neighborhoods,” Nielsen said.
NAHB also urged Congress to extend the current conforming loan limits for Fannie Mae, Freddie Mac and the FHA, which are due to be lowered on Oct. 1.
Stan Humphries, chief economist for Zillow, said the rental market is currently booming and would be able to handle a mass conversion of foreclosures into rentals by investors, but the government, he said, would be wrong in upsetting this dynamic.
“Investors smell a distinct opportunity in this situation: The chance to buy an asset cheaply and rent it out dearly. In fact, close to one-third of the purchases of existing homes this year have gone to all-cash buyers, the bulk of whom are real estate investors,” Humphries said. “Any plan that may upset this balance – such as Fannie and Freddie getting into the rental market and creating competition – will have a chilling effect on private investment in the one segment of the housing market that is performing well.”
But with a Congress currently gridlocked on nearly every issue, none of the panelists so clearly described the looming housing problem and the consequences of continued inaction like Goodman.
“To solve the housing crisis you must create 4.1 million to 6.2 million units of housing demand over the next six years,” she said.
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Today’s St. Pete Times discusses how Florida Governor Rick Scott and various members of the Florida legislature are considering whether to convert foreclosure lawsuits in Florida to non-judicial proceedings. This would mean, essentially, that instead of having to prevail in court to be entitled to a foreclosure, a bank could obtain a foreclosure without any court involvement, essentially by declaring its right to foreclose on its own.
First off, any existing clients of Stopa Law Firm should not be worried. While I can’t predict the actions of our idiot governor or the legislators who may or may not be paid off by bank lobbyists, I cannot imagine any circumstance in which existing lawsuits which are currently pending in our courts would somehow be removed from the court process. In other words, no matter what, this proposed legislation should not impact pending cases.
That said, this entire concept is so absolutely ridiculous – pending cases or not – that it’s hard to know where to begin.
We’ve all seen, over the course of the past year, how the foreclosure process is filled with fraud. We’ve seen banks knowingly create false evidence and try to use that evidence to procure a foreclosure. We’ve seen banks foreclose on the wrong home, sue people who were current on their payments, lie about the amounts owed, and take countless other nefarious acts. Anyone lobbying for non-judicial foreclosure has to realize:
if banks are willing to commit such awful acts of fraud when foreclosures are supervised by courts, what would they do without supervision?
And what would it say about you to bless this misconduct, to the detriment of Florida homeowners?
I trust most people reading this don’t need me to point out the ridiculousness of non-judicial foreclosures given what we now know about bank misconduct.
Banksters like to retort by saying “pushing through foreclosures faster will help the economy?” Oh, really? Banks aren’t taking title to properties now, even after obtaining foreclosure judgments (as seen by the incredibly frequency with which foreclosure sales are cancelled), because they can’t handle or don’t want these homes. That’s why countless properties remain vacant, uninhabited and dilapidated – banks don’t want them, even at the slow pace at which foreclosures are being processed. Hence, what will happen if all of these properties are thrown onto the market, all at once, accelerating the process? Who’s going to buy, or live in, 100,000 homes? 500,000 homes? 1,000,000 homes?
Again, I’m confident most of you reading this realize the absurdity of the bankers’ position. Hence, let me address the issue that you may not have realized – what I deem the insurmoutable obstacle to any proposed legislation for non-judicial foreclosures.
Quite simply, most mortgages entered in Florida require banks to foreclose via a court proceeding. If you’re not sure what I mean, read your mortgage. It probably contains a clause similar to the following:
Mortgagee, at its option, may [upon default in payments] elect to require immediate payment in full of all sums secured by this Mortgage without notice or demand and may, at its option, foreclose this mortgage by judicial proceeding.
Did you catch the key language? By judicial proceeding. You see, most Florida mortgages explicitly require that banks foreclose by a judicial proceeding.
Do you think Florida’s governor or the legislature can override that requirement? I sure don’t. This term of the mortgage is part of a contract between the bank and the homeowner. The governor and the legislature are strangers to that contract. Hence, they have no right whatsoever to change the terms of that contract.
By way of example, most people know that most foreclosure lawsuits, when they go to trial, are tried by a judge, not a jury. This is because most mortgages have a clause wherein the homeowner agreed to waive any right he/she had to a jury trial. Generally speaking, courts enforce this provision because the parties agreed to it, and no matter how inequitable it may seem, the parties are free to contract to whatever terms they choose, and those contract terms must be honored. In other words, no matter how unfair or inequitable we may think these jury trial waivers are, courts honor them because the parties agreed to them.
With this in mind, I cannot fathom how Florida’s governor or legislature could create a law (even if they were so inclined) that removes foreclosures from the court system. Where a homeowner and a bank agreed that the bank had to obtain a foreclosure via a judicial proceeding, this contractual obligation cannot be changed by a third party. It simply can’t, any more than the jury trial waiver can.
To clarify, I suppose it’s possible (idiotic, but possible) to allow non-judicial foreclosures on mortgages that have not yet been entered/signed (presuming those mortgages are written in a way that allow non-judicial foreclosures). In that circumstance, the legislature would not be enacting a requirement that is contrary to the express terms of the parties’ agreement. However, the legislature simply cannot allow non-judicial foreclosures on existing mortgages given how mortgages in Florida are presently written. This is, quite clearly, an insurmountable obstacle to non-judicial foreclosures in Florida.
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I spend a lot of time on this blog expressing concerns about foreclosure-related procedures in various courts throughout Florida. Candidly, I haven’t done a good enough job of pointing out those policies and procedures that are fair and comport with due process. The foreclosure crisis is a nightmare for everyone involved, including our judges, and quite simply, we should all give praise where it’s due.
For instance, remember this recent blog, where I lamented the entry of a Final Judgment of Foreclosure in a Broward County case, ex parte, without notice, and without hearing? Apparently, Judge Marina Garcia-Wood, who presides over all foreclosure cases in Broward County (and who entered an Order vacating that Final Judgment), has realized the problem with ex parte Orders being submitted and signed in foreclosure cases (without notice or hearing to homeowners or their counsel). In fact, she has created a new procedure to prevent this problem. In Judge Garcia-Woods’ words:
EX PARTE / AGREED ORDERS
A copy of the motion must accompany any Order (ex-parte, stipulations, agreed Orders, etc.) submitted for the Judge’s signature along with enough copies of “proposed” order(s) for all parties with self-addressed stamped envelopes. All parties must be copied on all correspondence and pleadings. THERE WILL BE NO ENTRY OF EX PARTE ORDERS REGARDING FINAL JUDGMENT OF FORECLOSURE, MOTION FOR DEFAULT, MOTION FOR SUBSTITUTION OF PARTIES, ETC. ALL MOTIONS FOR SUMMARY JUDGMENT, MOTION FOR DEFAULT, MOTION FOR SUBSTITUTION OF PARTIES, ETC. SHALL BE SET FOR HEARING USING THE ON-LINE SCHEDULING SYSTEM AND IN COMPLIANCE WITH FLORIDA RULES OF CIVIL PROCEDURE.
It’s worth noting the bold and ALL CAPS are in the Judge’s preferences; they’re not something I added.
I cannot begin to say how much I respect this judge for implementing this procedure on a circuit-wide basis in Broward County. It would be easy for the judge to take the approach of “there’s too much paperwork, I have to sign things ex parte” or “I can’t have hearings on everything; there’s too much of a backlog.”
Broward County has as many foreclosure cases as any county in Florida, if not more. Judge Garcia-Wood is the only judge handling these cases in Broward County. Hence, even though it’s undoubtedly difficult, and even though it’s undoubtedly more work, this Judge is showing that it’s certainly possible to do the job the right way.
In Broward County, gone are the days where Orders are signed ex parte in foreclosure cases, preventing homeowners and their lawyers from presenting bona-fide arguments in opposition. Gone are the days where plaintiffs’ lawyers think they can “slip one past” a judge via an ex parte Order. I can’t begin to say what a breath of fresh air this is.
Aside from being thrilled about this change in procedure, I have two lingering thoughts here:
1. If Broward County is able to implement this procedure, and it has as many foreclosure cases as any county in Florida, then undoubtedly every county can adopt this same approach. The integrity of our profession mandates as much.
2. Even though it’s sometimes awkward and uncomfortable, we have to make the courts realize when their procedures have run astray. Here, for example, this judge realized the impropriety and basic unfairness of Orders being entered ex parte and without notice or hearing (even though she wasn’t the one who signed the ex parte Final Judgment), and she was willing to do something about it. Most judges do care, so I can’t help but think if we make them realize their procedures are astray, they’ll care enough to change them.
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Ever since the senior judge system ended in Hillsborough County, I’ve had some frustrating experiences in Tampa courts. It’s gotten so pervasive recently that I’ve wondered “what matters more, expediency or accuracy?” I hate to say that, and I hate feeling that way, but I know I’m not the only one with concerns about the system.
Today, for example, I received an Order denying a Motion to Dismiss and Motion to Quash Service without notice and without hearing. Unfortunately, these types of Orders have become common in recent weeks, at least so far as Motions to Dismiss go. What particularly frustrated me about this one, though, was the judge’s ruling that:
Defendant’s Motion to Quash is denied. Defendant submitted himself to the jurisdiction of the Court by filing a Motion for Extension of Time, before filing the Motion to Quash.
In layman’s terms, the Court denied my client’s Motion to Quash Service, not because it lacked merit, but because the Court thought my client waived that argument by first filing a Motion for Extension of Time. This was hence a very narrow legal issue – does a Motion for Extension of Time waive a Motion to Quash Service?
Notably, the Court cited no case citations in its Order for the proposition that a Motion for Extension of Time is a waiver of a Motion to Quash Service. After some quick research, I confirmed what I already believed – a defendant does not waive a Motion to Quash Service by first filing a Motion for Extension of Time. To illustrate, the Third District has ruled:
The single issue presented by this appeal is whether the filing by Barrios’ attorney of a Motion for Enlargement of Time constituted a general appearance and hence a waiver of Barrios defense of lack of personal jurisdiction and insufficiency of service of process. It does not.
Barrios v. Sunshine State Bank, 456 So. 2d 590 (Fla. 3d DCA 1984).
Unfortunately, the Court ruled against me on this issue without a hearing, without notice, and without asking or allowing the parties to provide case citations in written format before making a ruling. In my opinion, this ruling was legal error, and I saw no alternative but to draft this Motion for Rehearing.
I’m hopeful the Court will change its ruling. However, even if it does, I have greater concerns.
Most significantly, while I disagree with the process of denying motions to dismiss without hearings, it’s clear to me that this procedure should be employed, at worst, only to those motions that judges see on a regular basis. In this case, this motion clearly wasn’t one of them.
In a situation like this, where the Court had before it a motion that is not boilerplate and contained a relatively novel issue (i.e. whether challenges to service of process are waived by a motion for extension of time), the Court should conduct a hearing and give both sides a chance to be heard. Otherwise, when the Court rules in the banks’ favor and its ruling appears to be erroneous, as here, it creates the strong impression, rightly or wrongly, that the Court cares more about expediency, not accuracy. That impression, respectfully, is one which the Courts must strive to avoid.
I’m not perfect, and I don’t expect the Courts to be, either. However, I do expect that the Courts won’t have the attitude of “this is just another foreclosure case; I’m ruling against the defendant.” I’m not saying that’s what happened here, but the dynamics create a reasonable fear among my clients that it could be.
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Many homeowners wonder how a foreclosure defense attorney can help when they’re behind on monthly mortgage payments. If I had to explain what I do, and how I help, in just one sentence, it would be this:
I force the banks to prove their case.
That may sound simple, but if it were, then why are banks so reluctant to go to trial? Why do contested cases take so long for banks to prosecute? And when these cases do approach trial, why do banks often dismiss them voluntarily?
Many consumer advocates think the banks are trying to hide something truly nefarious, and in some cases, that may be. More often, though, I think the explanation is more simple – banks struggle to prove an entitlement to foreclose because they lack the requisite evidence.
A wonderful illustration of this is seen in the recent decision by Florida’s Fourth District Court of Appeal in Glarum v. LaSalle Bank. In that case, the homeowner admitted he was in default on mortgage payments but disputed the amount owed. As so frequently happens in foreclosure lawsuits throughout Florida, the bank filed an affidavit in support of a motion for summary judgment, asserting the amount owed exceeded $340,000 (based on data entries in the bank’s computer system). The lower court granted that motion, agreeing the bank was entitled to foreclosure. The appellate court (the Fourth District) reversed, ruling the bank’s evidence – the affidavit – was insufficient to establish a right to foreclose as a matter of law.
In support of its ruling, the Fourth District began with the basic proposition that affidavits and other information used for summary judgment must be admissible in evidence, just as if it were a trial. See Fla.R.Civ.P. 1.510(c). The court then concluded the affidavit was not admissible, and not a basis upon which to grant foreclosure, because, in its words:
[the person who signed the affidavit] did not know who, how or when the data entries were made into Home Loan Service’s computer system. He could not state if the records were made in the regular course of business. He relied on data supplied by Litton Loan Servicing, with whose procedures he was even less familiar. [The person who signed the affidavit] could state that the data in the affidavit was accurate only insofar as it replicated the numbers derived from the company’s computer system. Despite [his] knowledge of how his company’s computer system works, he had no knowledge of how that data was produced, and he was not competent to authenticate that data. Accordingly, [his] statements could not be admitted under section 90.803(6)(a) [the business records exception to the hearsay rule] and the affidavit of indebtedness constituted inadmissible hearsay.
Without an admissible affidavit, the Fourth District concluded the bank was not entitled to a foreclosure and reversed the lower court’s Final Judgment of Foreclosure.
If this sounds complicated, think about it this way. Courts don’t determine the outcome of lawsuits based on information from people who lack personal knowledge of the facts at issue in the lawsuit. For example, I couldn’t go testify as a witness at a trial and say “I didn’t see the car accident, but my friend told me the driver of the blue car ran the red light, and here are medical bills showing the amount of the victim’s medical expenses.” It simply doesn’t work that way. My friend would need to testify to what he saw at the accident scene, and the victim or his doctors would need to provide the proof of the medical expenses.
The situation in foreclosure cases is no different (and, fortunately, the Fourth District did not apply a different set of rules simply because this was a foreclosure case). To establish the amount owed on a note/mortgage, the bank must introduce admissible evidence. Again, this sounds easy, but Glarum shows how this can be a huge problem for banks.
Think about it this way. We all know that, in the vast majority of foreclosure cases, the bank that’s suing wasn’t the original owner/holder/servicer of the mortgage. Consequently, the bank that’s suing can’t simply go into court and say “this is how much the homeowner owes us” without relying on some sort of documents from the prior bank(s)/servicer(s). In other words, as Glarum explains, an employee of the current bank can’t just say “this is what the prior bank told us was owed” or “this is what our computer system says the prior bank was owed.” To prove its case, the current bank would need to introduce evidence from an employee of that prior bank (showing the amount owed), or, at minimum, introduce evidence from an employee of its current bank establishing some sort of legitimate procedure as to how the amount from the prior bank was input into its computer.
As a practical matter, this sort of thing never happens. Banks rely on their own employees to win a foreclosure case – they don’t want to have to track down information from employees of other banks. Heck, sometimes the banks can’t do this, even if they wanted to, because the prior bank(s) no longer exist and/or the current bank doesn’t even know who the prior bank(s) were. (Wouldn’t it be an awesome irony if the MERS system kept banks from proving their cases because they didn’t know which banks owned the notes/mortgages previously and didn’t know who to contact to obtain admissible evidence?)
Lest you doubt this is a huge problems for banks, check out this posting from one of Florida’s foreclosure mills. They’re running scared from the Glarum opinion, desperately trying to sway judges to change this decision due to the negative consequences it would have on banks’ ability to prosecute foreclosures. In other words, the banks want the courts to apply a different set of laws to foreclosure cases because if the law is followed, and banks are made to prove their entitlement to foreclosure with admissible evidence, they will struggle to do so.
Back to my original point. In its simplest form, foreclosure defense lawyers force banks to prove their case – to prove their entitlement to foreclosure. Often, as you’ve seen here, that’s harder to do than you’d think, and that’s why a competent defense lawyer, who is able to point out the flaws in the bank’s evidence at each stage of a foreclosure lawsuit, is so important.
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