Archive for November, 2011
A shocking report from Bloomberg reveals the amount of money given to big banks as part of the bailout in 2008 and 2009 was nowhere near what we thought – it was far, far greater.
Apparently, the Federal Reserve committed 7.7 trillion dollars – that’s trillion with a T – as of March, 2009 to rescuing the financial system. To put that number in perspective, it’s half of America’s Gross Domestic Product and half of everything America produced for the entire year.
The extent of the bailout wasn’t known until just recently, as the Federal Reserve and the big banks had been fighting to keep it a secret. Now we all know.
I’m so outraged by this I can barely draft a coherent blog. This is thoroughly disgusting stuff. Our country absolutely killed itself financially to help the banks – in ways we didn’t even realize until just now – and what did it accomplish? How are we better than we were in 2008 or 2009?
For those who want to act like everything here was above board, then you tell me – why was there so much effort to keep this a secret? The failure/refusal to communicate all of this to the American public is truly disgusting and, to me, perhaps the most glaring sign yet that our government and political system needs a complete overhaul. The Fed and the big banks used our money like a game of Monopoly, with no accountability and no strings attached. Everyone – from President Obama to the unemployed and everyone in between – should be outraged and demand widespread change, starting immediately.
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The Sun Sentinel just posted a terrific article about loss-share agreements, which goes a long way to explaining why loan modifications so rarely happen for deserving homeowners.
This is a concept I’ve discussed previously, most recently when BB&T pursued foreclosure on a Mobil gas station owner who was one day late in his monthly mortgage payment.
The Sun Sentinel explains the phenomenon very well with an example.
Suppose the FDIC transfers a $350,000 home loan to Big Bank at a 30% discount ($245,000) with a 90-percent loss-share guarantee. Big Bank then sells the home after a foreclosure for $150,000. According to the FDIC, Big Bank’s “loss” is $200,000 ($350,000 minus $150,000), and a check for $180,000 is sent to cover 90% of the “loss.”
With sale proceeds of $150,000 and loss reimbursement of $180,000, Big Bank just made $85,000 by foreclosing on an American family. Perhaps worse yet, since the FDIC is run by the U.S. Government, it’s American taxpayers who are footing the bill for these “losses.”
So if you’re wondering why loan modifications are so hard to come by, wonder no more. Big Banks profit by foreclosure, and the U.S. Government is largely to blame.
Here is the rest of the article.
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One of the most basic elements of any lawsuit, including a foreclosure lawsuit, is a plaintiff’s obligation to effectuate service of process on a defendant. Service of process is a fundamental tenant of a defendant’s right to due process, as it ensures a defendant knows about a lawsuit and is given an opportunity to defend.
Florida Statutes govern the manner in which service of process must be effectuated. There are many different statutes, and many of them are quite technical, but the most common method of service is set forth in Florida Statute 48.031(1). If you don’t remember anything else about service of process, remember this:
Service of process is made by delivering a copy of it to the person to be served with a copy of the complaint, petition, or other initial pleading or paper or by leaving the copies at his or her usual place of abode with any person residing therein who is 15 years of age or older and informing the person of their contents.
This one sentence sets forth at least three ways in which a defendant can challenge the manner in which service of process is effectuated (in a typical situation). Specifically:
- The process server cannot merely hand-deliver the Summons/Complaint – he/she must also inform the defendant of their contents. (See below for how I utilized this requirement in a pending foreclosure case.)
- The process server cannot give the Summons/Complaint to a child – the person to whom the paperwork is given must be 15 or older.
- If the process server does not serve the defendant personally, then the paperwork must be given to someone who resides at the home where that defendant resides. Service on an overnight guest of the defendant is insufficient. Likewise, if a husband and wife are not living together, then service on one spouse does not constitute service on the other. If the lawsuit is a foreclosure lawsuit, and the property is a rental property, service on the tenants at the property does not constitute valid service against the homeowner.
These requirements sound quite basic, but process servers screw them up all of the time. To illustrate, I had a hearing scheduled for tomorrow in a foreclosure lawsuit on a Motion to Quash Service. My argument was that service should be quashed because the process server did not inform the defendant of the content of the documents when he effectuated service. I wasn’t denying my client received the Summons/Complaint, but that’s not enough – the process server was required to inform my client of the contents.
I can only presume the plaintiff’s lawyer realized my motion was well-taken, because he just cancelled the hearing. Bear in mind – it doesn’t matter that this homeowner was behind on mortgage payments or had been personally served – the fact that the process server failed to inform him of the contents of the documents invalidates the service.
There are many cases regarding these propositions of law. For a flavor, check out Bache, Halsey, Stuart, Shields, Inc. v. Mendoza, 400 So. 2d 558 (Fla. 3d DCA 1981) (service quashed where defendant was not informed of contents), and Johnston v. Halliday, 516 So. 2d 84 (Fla. 3d DCA 1987) (service quashed where the defendant’s son did not reside with her and was under 15 years of age).
I raise this issue, of course, because this is yet another argument that homeowners can raise when defending a foreclosure case.
The banks have done many things wrong in recent years. Let’s at least make them effectuate service of process the right way.
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One of the biggest reasons for America’s economic plight is the incestuous relationship between American politicians and corporations.
At present, banks, insurance companies, and other corporations influence political elections with their vast financial resources. They spend millions … billions … that American people simply cannot. Politicians want to win future elections, so they succomb to the whims of these corporate entities. And hence the cycle continues – affluent corporations have a voice in politics, while typical Americans are ignored.
This is, for example, one reason bank misconduct has gone unpunished. Too many politicians lack the guts to stand up to the banks because their financial resources have so much impact on future elections.
Florida Congressman Ted Deutch is working to change this. He’s proposing a constitutional amendment, i.e. the “Occupied Amendment,” which would:
– ban the ability of corporations to use their financial resources to influence elections
– clarify that corporations are not people and don’t have rights protected by the U.S. Constitution, but are regulated by the laws of this country.
Take a look at the proposed amendment, and sign the petition. It’s time we put banks, insurance companies, and other rich corporations in their place and help give people more input on the future of this country.
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Florida’s Fourth District Court of Appeal issued two wonderful opinions today, just in time for Thanksgiving.
In Duke v. HSBC Mortgage Services, LLC, the court reversed an order granting a bank’s motion for summary judgment. The facts in that case were like those I see in many foreclosure cases: the note did not have an indorsement, and was apparently lost, so HSBC relied on an Assignment of Mortgage for the requisite standing. But the assignment post-dated the filing of the complaint. In reversing the summary judgment, the Fourth District explained:
genuine issues of material fact remain in dispute regarding the owner and holder of the note and mortgage at the time the complaint was filed.
This is yet another illustration of how foreclosure defense attorneys can appropriately defend foreclosure cases. The issue in this case wasn’t whether the homeowner was behind on mortgage payments. The issue was HSBC’s ability to prove its entitlement to foreclosure. This is not an anomaly, folks – fact-patterns like this exist in countless foreclosure cases throughout Florida.
A second case from the Fourth District is perhaps even more powerful. In Venture Holdings & Acquisitions Group, LLC v. A.I.M. Funding Group, LLC, the Fourth District not only reversed a summary judgment of foreclosure, it directed the lower court to dismiss the case outright! As the court explained:
An assignment of a promissory note or mortgage, or the right to enforce such, must pre-date the filing of a foreclosure action. Jeff-Ray Corp. v. Jacobson, 566 So. 2d 885, 856 (Fla. 4th DCA 1990). A party must have standing to file suit at its inception and may not remedy this defect by subsequently obtaining standing. … Here, before A.I.M. filed any of the foreclosure actions below, A.I.M. assigned the promissory note and mortgage to a third party as collateral for a loan. Thus, A.I.M. did not have standing to foreclose on any of the properties at the time it filed suit.
In so ruling, the Fourth District distinguished those defendants who had properly defended the case (and were entitled to be dismissed as defendants) from those who did not properly defend, (were defaulted, and were not entitled to be dismissed). This ruling, of course, again illustrates the importance of defending a foreclosure suit from its inception.
The moral of these two decisions? The bank’s obligation to prove its standing to foreclose is well-established in Florida law. And even if the bank appears to be the “right” bank to sue, that’s not the end of the inquiry – the bank had to be the “right” bank to sue as of the date the foreclosure lawsuit was filed.
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“Those who cannot remember the past are condemned to repeat it.” – George Santayana
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I had a case today where the fact-pattern may seem unique, but I suspect it’s not. My client hired an attorney to represent her in a foreclosure case. For whatever reason, the lawyer withdrew as counsel. Thereafter, the bank procured a Final Judgment of Foreclosure.
Here was the problem. Fla.R.Jud.Admin. 2.505(f) sets forth the procedure that must be followed when an attorney withdraws. Essentially, the lawyer must file a motion to withdraw and certify service of a copy of the motion, as well as the Notice of Hearing on the motion, to his/her client. That way, the client knows the attorney is withdrawing as counsel and can make other arrangements to defend the case.
In my case, my client resided in Great Britain, but the address her prior attorney provided upon his withdrawal was the address of the property – in St. Petersburg. Hence, my client did not have notice of her attorney’s withdrawal or the summary judgment hearing that ensued, as those papers were sent to an address where she did not live.
Here’s the cool part. Established case law provides that since my client did not receive notice of the withdrawal of her counsel or the subsequent summary judgment hearing, the Final Judgment of Foreclosure must be vacated. See Coldiron v. Seminole County Sheriff’s Dept., 974 So. 2d 1199 (Fla. 5th DCA 2008) (reversing an order denying a 1.540 motion where appellant never received notice of the summary judgment hearing after her lawyer withdrew and the order permitting withdrawal did not contain appellant’s correct address); Saenz v. Pena, 754 So. 2d 826 (Fla. 3d DCA 2000) (“because the motion to withdraw was filed without notice to Saenz, in violation of the mandatory notice requirements of rule 2.060(j), Florida Rules of Judicial Administration [now Rule 2.505], the motion to set aside judgment should have been granted.”); Polani v. Payne, 654 So. 2d 202 (Fla. 4th DCA 1995) (requiring final judgment be vacated where appellants lived in a foreign country and their prior attorney did not provide correct address upon his withdrawal).
The logical argument in response to this is to assert the defendant failed to monitor the status of the case or waited too long to file the motion. However, the Polani court specifically rejected such arguments, finding the Final Judgment was void given the lack of notice.
As such, I filed this Motion to Vacate Final Judgment. Today, the Court granted that motion at an emergency hearing.
What’s notable about this issue? For me, it’s another reminder that homeowners facing foreclosure are entitled to due process. If your prior lawyer withdrew, you didn’t receive notice, and you thereafter lost the case, you may be able to get the foreclosure judgment vacated.
In fact, I’ll take it one step further. Because any Order entered without notice is “void,” per Polani, the homeowner would be entitled to ownership/possession of the home (and an Order vacating a Final Judgment of Foreclosure) even if the home had been sold to a third party purchaser. That would certainly be my argument, anyway.
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For years, I’ve known that banks robo-sign documents to facilitate their prosecution of foreclosure lawsuits. For years, I’ve lamented the absence of any sanction – criminal or otherwise – for this misconduct. Today, the sanction arrived. Sort of.
Nevada’s Attorney General has filed a criminal indictment against two supervisors of Lender Processing Services. You can read the indictment for yourself, but the misconduct is easy to understand – these LPS employees were executing and notarizing documents, then recording them in the Public records, yet the notary was not present when the documents were signed. That’s notary fraud, plain and simple, and it’s a crime.
Why Nevada, you ask? Well, that’s a darn good question. I have zero doubt – zero – that this misconduct has transpired on a widespread basis in Florida and many other states. So why aren’t there any criminal prosecutions in Florida, or anywhere besides Nevada?
The best way to answer that question is to explain how charges were filed in Nevada. In the eyes of Catherine Cortez Masto, Attorney General of the State of Nevada, the conduct by the LPS employees was criminal in nature and merited criminal prosecution. The Nevada AG had the discretion to file charges or not file charges and chose, obviously, to file charges.
In other states, like Florida, Attorneys General have chosen not to file charges. The conduct, undoubtedly, is the same, yet Pam Bondi and other Attorneys General have chosen to look the other way.
This is why the 99% are upset.
This is why people are Occupying Wall Street.
This is why Matt Taibbi laments the imprisonment of a woman for food stamp fraud but the absence of punishment for bank fraudsters.
This is why I write this blog.
Everyone needs to understand the widespread criminality transpiring in the foreclosure arena. And more people – far more people – need to act like Catherine Cortez Masto, Attorney General of the State of Nevada, and have the courage to do something about it.
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I don’t know who this is, but it doesn’t matter. This could be anyone.
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Stopa Law Firm gets referrals from all sorts of places, but this one made my day.
A prospective client came to my office today via a referral from an employee at one of the “foreclosure mills.” That alone brings a smile to my face, knowing the foreclosure mills are referring homeowners to my office. Better yet, according to the client (who graciously consented to me disclosing this), the foreclosure mill employee recommended that he come to us because we’re the firm that causes the employees at the foreclosure mill to “walk up and down the halls cursing” and because I’m a “pitbull.”
What fantastic news at the end of a long day’s work. I can hardly think of a better compliment, knowing I’ve frustrated the foreclosure mills so much that their employees are walking up and down the halls of their offices cursing.
If any such employees are reading this, I encourage them to stop cursing, pick up the phone, call me, and try to resolve some of these foreclosure lawsuits in the manner I’ve suggested.
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