Archive for June, 2013

Paragraph 22 … Briefing an Appeal in the 2DCA

Those in the foreclosure industry know I’ve been able to get a lot of foreclosure cases dismissed where the bank did not comply with the conditions precedent in paragraph 22.  Not all, of course, but a lot.

For a long time, the banks have been unwilling, unable, or just plain scared to appeal any of the cases where I prevailed.  Recently, however, they appealed one.

Here is the Order Granting Summary Judgment entered by a circuit judge in Tampa.

Here is the bank’s Initial Brief

Here is my Answer Brief.

I’m not going to elaborate too much, as the Answer Brief says it all.  48 pages.  50(+) legal citations.  Read it.  Understand the arguments/issues.  That said, here are a few thoughts:

The more I dug into this project, the more I realized … Substantial compliance is a joke.  It’s not defined anywhere in Florida law, and the cases make it clear “substantial compliance” is really no different than “compliance.”

Banks want courts to believe there’s a difference so they can win foreclosure cases easier.  But when it comes time to writing a brief and defining “substantial compliance” or citing cases that explain what it means, they can’t.  Tellingly, the bank doesn’t cite a single case which articulates any difference between “compliance” and “substantial compliance.”  And they can’t cite a single appellate decision in Florida which employs a “substantial compliance” standard in the paragraph 22 context.

I’m very confident the Second District won’t employ some nebulous concept of “that’s close enough.”  That’s what the banks want judges to do – look at a defective paragraph 22 letter and conclude “yeah, that’s defective, but it’s close enough.”  There’s no case law that employs such a standard.  None.  That’s a big part of what my Answer Brief tries to accomplish – beat the bank over the head with the concept that there’s no legal authority for its position.

As I’ve explained in recent blogs, the Second District has already made it clear that “compliance” is the standard when adjudicating an acceleration letter under paragraph 22 of a mortgage, not substantial compliance.  After this appeal, I’m confident that will be even more clear.

Mark Stopa

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Foreclosure Filings About to Drastically Decrease … The Irony of it All

As I recently explained in this blog post, the signing of HB87 into law creates a whole new list of requirements which foreclosure plaintiffs must follow, effective July 1, 2013.  No longer can the banks file a boilerplate, cut-and-paste complaint for foreclosure; they must now specify certain information in each complaint, as set forth in Fla. Stat. 702.015.

I was sitting in court today, June 25, 2013, and several plaintiffs’ attorneys made it clear that the banks are rushing to file as many foreclosure complaints as possible before July 1, before these new pleading requirements take effect.  They likewise made it clear that, once July 1 comes, there will be a significant decrease in filings, as the banks are unwilling and/or unable to comply with the requirements of the statute, at least in the short term.  As a result, it’s clear to me that Florida will see a significant reduction in foreclosure lawsuits being filed, starting on July 1 and continuing, I suspect, through the rest of the summer.

Ironic, isn’t it?  The legislature creates a new law intended to push foreclosures through the system faster, yet the law is so poorly-drafted and ill-conceived it actually has precisely the opposite effect.

You mean we have to include information in our Complaints showing we are entitled to foreclose?  Under oath?  We can’t possibly do that.  It’s time to stop filing cases. 


Mark Stopa

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A Brilliant Move by the Bank – Dismissal

I  had a foreclosure trial today, and the bank’s attorney made a brilliant strategic move.  He dismissed the bank’s lawsuit before trial began.

Why was that brilliant, you wonder?  Why would the bank choosing to lose their case be a good move?  Simple.  By dismissing the bank’s foreclosure lawsuit before trial began, that lawyer prevented me from making arguments that the judge and several other defense lawyers in the courtroom had never heard before.

You see, I came to court with a box of case law.  I left my house at 5:30 a.m., I arrived early, and I watched several trials before mine.  I’m very confident the judge had never heard some of the arguments I was going to make. and had never been shown some of the case law I brought with me.  If the bank allowed trial to go forward today against my client, he would have allowed me to educate the judge – and all of the other foreclosure defense attorneys in the courtroom – with novel arguments and case law.  Once the judge realized that was the law, and he was bound to follow it – not just in my case but in many other cases with those same issues – that bank and its lawyer would have had problems in many other cases.  And once the other defense attorneys realized what they should argue, they’d parrot those arguments in future cases.  So the bank and its lawyer made the only smart move they could make.  They gave up.

I could literally see the logic in their thought process as it happened.  “If we dismiss Stopa’s case, we can get him out of this courtroom, prevent him from sharing those cases with the judge, and prevent him from showing the local defense attorneys the arguments he raises and the objections he makes.  If we proceed with trial, even if we somehow win, Stopa will have spread his information to everyone.”

That sounds arrogant, I realize.  But at my last trial, that’s just what happened.  Trial went on for four hours, and the judge commented how nobody had ever presented him with the cases I showed him, and he felt he was obligated to sustain an evidentiary objection I made and prevent the plaintiff from introducing critical evidence in that case.  The judge clearly didn’t like that result – openly wondering how foreclosure plaintiffs would be able to prevail whenever that objection is made.  Ironically, I lost that trial.  But I can’t help but think the bank’s lawyers made a mistake by going forward that day.  Yes, they won that case.  But that judge now realizes I was right on that critical evidentiary issue, and he’ll be constrained to rule that way in hundreds of foreclosure trials in the future … not just mine, but everyone’s.  That’s literally what the judge was saying in open court that day … how are the plaintiffs going to prove this issue in light of this objection?

From the bank’s perspective, you tell me … who won?  Who did better?  The plaintiff’s lawyer who dismissed the bank’s case today before trial started, losing that case but preventing me from unleashing my box-full of arguments in an open courtroom?  Or the plaintiff’s lawyer who won the case against me a few days ago (subject to my pending appeal, of course), but who allowed me to convince the judge that homeowners must prevail on a significant evidentiary issue that arises in hundreds, even thousands of foreclosure cases?

Plaintiffs’ lawyers, if you truly, sincerely think about it, you’ll realize I’m right on this one.  So when our case is set for trial, give me a call and let me know that you’ll dismiss the case and prevent me from sharing my box-full of arguments with judges and other defense attorneys.  We both know that’s the smart move for you.


Mark Stopa

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Earning Respect from the Judiciary

My last post, entitled Attorneys’ Fees in Foreclosure Cases, has garnered some disagreement amongst my colleagues.  Some foreclosure defense attorneys insist that the systematic fairness exhibited by judges in the Tampa/St. Pete area, as opposed to some of the systems employed in other parts of Florida, is purely a function of luck.  They insist the fees they charge and the business models they employ have nothing to do with it.

I beg to differ.

Honorable Thomas McGrady is the Chief Judge for Florida’s Sixth Judicial Circuit, covering Pinellas and Pasco Counties.  When my foreclosure defense concepts first hit the local media back in 2009, Judge McGrady did not seem to like it.  His comments to a reporter at the time, according to the reporter, were that foreclosure cases are “rarely dismissed,” defense tactics have “little chance of succeeding,” and that foreclosure defense is “just a stall.”

A lot has changed since that time.  To illustrate, just last week Judge McGrady held a conference in Clearwater with attorneys for banks AND homeowners – plaintiffs’ attorneys AND defense counsel – explaining how the court was changing its procedures for the adjudication of foreclosure cases in Pinellas County.  Judge McGrady invited everyone, took questions, and was open to input/suggestions from both sides.  It was tremendously professional and respectful to everyone involved in foreclosure-world.  That wasn’t the first time Judge McGrady had held such a conference, either.

Maybe I’ve missed something, but I don’t see conferences like that happening in other parts of Florida.  Do you?  Does the Chief Judge in other parts of Florida accept input from attorneys on both sides, in an open forum, regarding procedural/administrative issues?  If so, then I’m not aware of it.  That’s not a criticism of them, of course … it’s a compliment to what we have in this area.  Conferences like this are a reflection of a court system going above and beyond the call of duty, striving to ensure fairness.  So … you tell me.  What do you think changed from that first article in 2009 to today?

In my opinion, the answer is clear.  There are a handful of defense attorneys in this area – not just me, but a handful – who have earned the respect of the judiciary.  (I’m not going to name names, but if you’re reading this, you know who they are.)  We work hard for homeowners.  We care about our clients and our community.  We come to court prepared, and we make legitimate, bona-fide arguments.  We charge reasonable fees, not trying to bilk homeowners out of their last dollar in their time of need.

When we act in these ways, over and over again, how can any judge do anything but respect our efforts?  It doesn’t mean we’re always right, and it certainly doesn’t mean we’ll always win, but we will have earned respect.

There are good attorneys in other parts of the state, of course.  As I indicated in my prior blog post, though, I can’t help but wonder if the dynamics in other parts of Florida aren’t different because judges are turned off at the fees being charged by some of these firms.

All of the attorneys who didn’t like my last post should think about this.  Think about how the dynamic with Chief Judge McGrady has evolved since 2009.  Read what he said in 2009, and look at how things operate now.  Think about that the next time you feel like you got railroaded in court, the next time you felt disrespected.  Like it or not, in this area of law in particular, respect is earned.

Mark Stopa

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Attorneys’ Fees in Foreclosure Cases

In November of 2010, the New York Times did a story about how some Florida foreclosure defense attorneys charge homeowners facing foreclosure.  I was troubled by the fees being charged by some of my colleagues, and it prompted me to write this blog.  After inquiry from a Florida homeowner today, I’m fired up about this issue again, so it’s time to circle back and talk about the fees that defense attorneys charge homeowners.

First off, I realize there are different ways to skin a cat, particularly in the foreclosure defense industry.  It’s not my prerogative to say that I’m right and the fees everyone else charges are wrong or unreasonable.  That said, I have seen instances where the fees being charged by some foreclosure defense attorneys are just patently ridiculous, totally unreasonable, and offensive.

Consider today’s inquiry.  A Florida homeowner contacted me by email, indicating he had retained a well-known Florida defense firm to fight his foreclosure case.  He made it clear he wanted a loan modification, and after years of trying, he was able to obtain a permanent modification.  He obtained the modification all on his own – his lawyers didn’t even realize he was doing so, and the modification was obtained through his own persistence.  To this homeowner’s surprise, however, his lawyers then told him that he owed them a contingent fee equal to 10% of the amount that the bank had sued him for.  In fact, it seems that is this firm standard fee arrangement – to obtain a 10% “contingent fee” whenever a foreclosure case is dismissed (regardless of the reason for the dismissal).

With this homeowner’s consent, I am posting a redacted copy of that firm’s fee agreement.  Do you see the language, entitling the firm to 10% of the amount demanded by the bank in the complaint if the case is dismissed?  Notice that this contingent fee seems to apply regardless of the reason the case was dismissed and even if the bank is able to immediately turn around again and file a new lawsuit.

Suppose the amount being sought in the foreclosure complaint is $500,000.  Do you seriously mean to tell me that a lawyer can charge $50,000 (10% of $500,000 = $50,000) to that homeowner where that case was dismissed even though the bank can turn right around again and re-file a new lawsuit?  That’s insanity, in my eyes.  Equally unreasonable, in my view, is a lawyer telling a client to pony up the 10% contingent fee where the foreclosure case was dismissed because the homeowner was able to procure a modification through his own efforts.

I can already see that attorney’s justifications.  “But the homeowner never would have been able to get the modification if we weren’t defending the foreclosure case and preventing the bank from foreclosing.”  I suppose that argument isn’t totally frivolous.  After all, that’s part of what we do as defense counsel – defend cases long enough that, hopefully, the parties can reach a resolution in lieu of a foreclosure.  However, just because the lawyer defended the foreclosure case, does that really mean he should get a windfall at his own client’s expense, particularly where the net result to the client is in no way commensurate with the contingent fee owed?  Personally, I don’t think so.  The fees lawyers charge should bear a reasonable relationship to the work performed and the result obtained for the client.  Standard fee agreements shouldn’t have catchalls that enable lawyers to recoup windfalls, particularly where the client may face another foreclosure suit on that same property.

In fairness, I can envision circumstances where a contingent fee like this is authorized.  For instance, if the lawyer is able to help his client obtain eliminate a mortgage and keep title to the property free and clear, then that is an extraorindary result that can arguably justify a contingent fee.  That’s not how my firm’s standard fee agreements are set up, but I can at least understand a contingent fee in that scenario.  However, that result is extremely rare, so that type of fee arrangement would be rare to even discuss, much less enter.

If you’re a homeowner facing foreclosure, and you’re deciding which counsel to retain, I urge you to think about these issues.  Ask yourself “is this lawyer trying to charge a fair amount in order to stay in business and keep the office lights on?  Or is this lawyer trying to obtain a windfall even though he really didn’t obtain a result that changed my life?”

As I assess this issue, I can’t help but wonder if this issue has much larger, far-reaching consequences than any of us realize.  As I say this, I acknowledge I’m speculating a bit, but I think it’s fair to wonder …

Many in the foreclosure defense industry have commented, particularly in recent months, that judges in the Tampa/St. Pete area (and, frankly, most of the area that constitutes Florida’s Second District Court of Appeal) tend to rule in favor of homeowners more frequently than the judges in other parts of Florida.  I’ve seen – and experienced – horror stories in other parts of the state.  Rocket dockets.  Judges setting trials en masse and never ruling for homeowners, even where the evidence and the law required such.  As I assess these stories, and think about the fees being charged by some other attorneys, I can’t help but wonder “are those judges turned off by the defense industry because they realize how much some defense lawyers are charging?”

I have no documents to show you and no evidence to which I can point to support my beliefs in this regard.  However, I can’t help but believe that one of the reasons I’ve been able to enjoy the successes that I have defending homeowners is that the judges who know me respect the job that I do.  They know, if I get a case dismissed, that I’m not bilking my client for a 10% contingent fee.  They know I’m not asking the bank to pay a $20-$40K fee, either.  Rather, they know that I ask for two or three grand – sometimes more, sometimes less – and I move on to the next file, trying my darndest to help as many other homeowners as possible.  I’d like to believe that’s what garners respect from the judiciary – when you show up in court, time after time, making legitimate arguments, with case law, taking reasonable positions, and show you’re performing a service for your clients and the community, not just trying to get rich.  I’d like to think, if you do that long enough, that it makes judges realize, no matter the pressures they face to move cases, that they should, where the facts and the law justify it, rule for homeowners.

Think about it from a judge’s perspective.  Florida judges make, what, $125,000 a year?  (I’m guessing, but I suspect that’s not too far off.)  If you were a judge, would you want to see a defense attorney recover a $40,000 fee from a bank on one file merely because the case was dismissed without prejudice?  That’s a third of what the judge makes in an entire year!  Should an attorney really get that on one file where the bank can turn right around and file a new lawsuit?  Even if the law says “yes,” and it sometimes does, if you were the judge, how would you feel about entering that fee award?  Would you, perhaps, be a little more hesitant to dismiss a case the next time that lawyer was in front of you?  Or how about if you knew the lawyer charged his clients a contingent fee?  Would that lawyer garner the same level of respect?  Somehow, I think not.

I realize this blog may irritate some of my colleagues.  That’s regrettable, but I’m confident I’m on the right side of the fence on this one.
Mark Stopa

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Not Substantial Compliance. “Compliance.”

Virtually every day in Florida courtrooms, I’m arguing that the letters banks send under paragraph 22 of most mortgages must comply with the specific terms set forth in paragraph 22.  Not “substantially comply,” but “comply.”

Today, the Second District issued yet another decision which supports my interpretation.  The case of DiSalvo v. Suntrust Mortgage, Inc. isn’t directly on point, as the decision turned on the bank’s failure to prove it sent the letter at all, not the content of the letter.  But take a look at this sentence of the opinion:

“First, a mortgagee’s right to the security for a mortgage is dependent upon its compliance with the terms of the mortgage contract, and it cannot foreclose until it has proven compliance.  See F.A. Chastain Constr., Inc. v. Pratt, 146 So. 2d 910 (Fla. 3d DCA 1962).”

Notice the term “compliance” – not once, but twice?  Not “substantial compliance,” but “compliance”?

This decision is yet another instance, along with the many other cases in which I’ve set forth on this blog, where a Florida appellate court had a chance to say the standard for the paragraph 22 letter is “substantial compliance” but declined to do so.  Hence, it seems clear that “compliance” is the standard here.

With each new decision that comes out, the argument that the banks need only “substantially comply” with paragraph 22 gets weaker and weaker.

Mark Stopa

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A Whole New Round of Motions to Dismiss

As we all know by this point, Florida Governor Rick Scott has signed HB87 into law.  There are aspects of the bill that I, as a consumer advocate and foreclosure defense attorney, don’t like.  Portions of the bill, however, are quite favorable for consumers.  In fact, this new law gives Florida homeowners a whole new round of defenses, effective immediately.

Under Fla. Stat. 702.015, if a foreclosure plaintiff files a complaint after July 1, 2013 and is the “holder” of the original promissory Note, that plaintiff is required to certify under penalty of perjury that it is in possession of the Note, the name and title of the individual giving the certification, the name of the person who verified the plaintiff’s possession, and the date on which possession was verified.

If a foreclosure plaintiff is seeking to re-establish a lost Note, the obligations are even more onerous.  In that event, an affidavit under penalty of perjury must be attached to the Complaint, and that affidavit must: (a) detail a clear chain of all assignments, transfers, or assignments of the Note; (b) set forth facts showing the plaintiff is entitled to enforce the lost Note; and (c) attach documents to the affidavit which support the plaintiff’s claims.

I’m very confident the banks are unprepared to comply with these requirements.  From what I know of the banking industry, the foreclosure complaints they’re filing now were drafted months ago – before this new law came into effect.  Hence, it’s likely that many if not most of the foreclosure complaints filed in Florida since June 7, 2013 will be subject to dismissal for failure to comply with these new requirements.

From what I know of the banking industry, I suspect it will take many weeks, perhaps months, before the Complaints the banks file comply with these requirements in Fla. Stat. 702.015.  As a result, so long as these complaints are deficient, Florida judges will be obligated to grant motions to dismiss these complaints.

HB87 isn’t all bad, folks.  This is obviously good news.

To answer some obvious questions …

These requirements apply to complaints filed after July 1, 2013.  If your complaint was filed before then, these aspects of 702.015 don’t apply.

If a foreclosure lawsuit was filed before July 1, 2013 but the plaintiff files an Amended Complaint after that date, do these portions of 702.015 apply?  The statute doesn’t specify, but I think so.  The statute is remedial in nature, so I’d think most judges will require that amended complaints filed after July 1, 2013 include these pleading requirements – just as most judges I know required Amended Complaints filed after the verification requirement in Rule 1.110(b) be verified.

Is the “certification” and “affidavit” required by Fla. Stat. 702.015 different than the verification requirement of Fla.R.Civ.P. 1.110(b)?  Absolutely.  The verification requirement of Rule 1.110(b) is quite vanilla.  The statutory requirements here are much more onerous.  Plus, while the Rule allows verifications on “knowledge and belief,” the statute requires unequivocal verifications.  This is, truly, an obligation to sign under penalty of perjury.

The banks don’t like signing under penalty of perjury (crooks never do), so we’ll see how they handle these new requirements.  Eventually, I suspect they’ll start complying with the new certification and affidavit requirements.  Until they do, however, make sure you’re asking that foreclosure complaints be dismissed for failure to comply with the new requirements of Fla. Stat. 702.015.



Mark Stopa

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Representing Plaintiffs AND Defendants

I see all sorts of bizarre and unethical conduct in foreclosure-world on a regular basis.  This one, though, might just take the cake.

Apparently, some attorneys are representing plaintiffs AND defendants in foreclosure cases.  Yes, there are lawyers in Florida who act as counsel for banks while also acting as counsel for homeowners.  Once I realized this was happening, I did some digging.  Incredibly, it seems this is a regular occurrence in Florida courtrooms.

I know this is really taking a trip into bizarro-world, but try to imagine it.  You’re a homeowner, and your lawyer is helping you fight foreclosure in a lawsuit filed by Bank of America.  Yet that same attorney is also going to court on behalf of Bank of America, trying to help it foreclose on homeowners.

Can you imagine that?  Until recently, the thought of doing this would have never occurred to me.  Seriously, how can anyone have the passion and zeal necessary to represent homeowners in one instant, yet in the next breath help Bank of America try to foreclose on a homeowner?  In my view, they can’t.  It’s just not possible.

Apparently, though, it happens all the time, often in the context of “local counsel.”

In many parts of Florida, judges don’t allow telephone hearings.  Orange County, Brevard County, and Manatee County are but a few examples.  As a result, instead of traveling to these courthouses for in-person hearings, the banks and their lawyers hire “local counsel,” i.e. attorneys who reside close to those courthouses.  These local attorneys often don’t formally appear as counsel of record in a case, they just show up to court and argue for the banks.

From what I’m told, the banks don’t pay these “local counsel” much money.  As a result, these attorneys are left searching for more work.  So what do they do?  Often, they act as counsel for homeowners in foreclosure cases.  Yes, even though these attorneys regularly go to court for banks, they simultaneously represent homeowners.

The problem here is worse than a moral dilemma.  There’s more going on here than the appearance of impropriety when an attorney represents both sides simultaneously.  You see, all Florida Bar attorneys are bound by Rule 4-1.7 of the Rules Regulating The Florida Bar, which provides:

(a)  Representing Adverse Interests.  Except as provided in subdivision (b), a lawyer shall not represent a client if:

(1)  the representation of 1 client will be directly adverse to another client; or
(2)  there is a substantial risk that the representation of 1 or more clients will be materially limited by the lawyer’s responsibilities to another client, a former client or a third person or by a personal interest of the lawyer.

(b)  Notwithstanding the existence of a conflict of interest under subdivision (a), a lawyer may represent a client if:

(1)  the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client;
(2) the representation is not prohibited by law;
(3) the representation does not involve the assertion of a position adverse to another client when the lawyer represents both clients in the same proceeding before a tribunal; and
(4) each affected client gives informed consent, confirmed in writing or clearly stated on the record at a hearing.

You read the rule, and you tell me.  Can an attorney act as counsel for Wells Fargo in one case and simultaneously act as counsel for a homeowner, adverse to Wells Fargo, in another?

Under subsection (b), it’s theoretically possible, I suppose, but as a practical matter, it’s virtually impossible.  After all, there’s no dang way any bank is going to give informed consent, in writing, to the attorney acting in this manner, and I can’t imagine any homeowner doing so, either.

It’s past time that the foreclosure industry clean up this mess.  Lawyers shouldn’t be able to flaunt the Bar Rules in this regard.  Hence, if you see anyone representing banks and lawyers at the same time, tell them about Rule 4-1.7.  Ask to see the “informed consent” required by subsection (b)(4).  File motions to disqualify counsel, where appropriate.  Object to appearances by “local counsel.”

Foreclosure-world has enough problems already.  It’s an uphill climb as it is.  Homeowners shouldn’t have to worry if their attorney moonlights as an attorney for the banks.  And, as much as I might dislike the banks, even the banks shouldn’t have to wonder if their attorneys do double-duty as counsel for homeowners.  Rule 4-1.7 exists for a reason, and everyone should be following it.


Mark Stopa

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Hearsay Objections in Foreclosure Trials

Do you understand when it is appropriate to interpose a hearsay objection in a foreclosure trial?  I watched numerous foreclosure trials in Sarasota today, and I’m convinced most of the foreclosure industry doesn’t know when/how to make a hearsay objection.  Heck, most homeowners don’t even defend their own foreclosure case at trial, much less retain counsel who understands the evidentiary issues at trial.

Explaining all of the circumstances where hearsay applies, as well as its exceptions, is beyond the scope of this blog.  After all, “hearsay” could be an entire class in law school.  That said, there are a few examples worth mentioning, particularly in the context of foreclosure trials.

When you think of a “trial,” you probably think of testimony.  What does “testimony” mean to you?  If you’re like me, when you think of testimony, you probably think of something tangible … something a witness saw with his eyes or heard with his ears.  Perhaps it’s an eyewitness to a car accident explaining “I saw the traffic light; it was red.”  Or perhaps it’s a jailhouse informant in a criminal case testifying “I spoke to the defendant in prison.  He told me he stabbed the victim in the chest.”

This is the classic way testimony is presented at trial – when the witness explains something he saw with his eyes or heard with his ears.  That’s what makes one a “witness” – when he hears something or sees something.

I lay that backdrop because that’s virtually never how it happens at foreclosure trials.  Foreclosure plaintiffs almost always brings one witness to trial, and that witness is almost never a “witness” to anything.  That person didn’t see anything, and that person didn’t hear anything.  Rather, that person typically does little more than act as a records custodian, introducing business records of the plaintiff into evidence.  The plaintiff tries to use these “business records” to prove their entitlement to foreclose.

For example, do you think the witness who comes to trial ever has any personal knowledge of the homeowner being in default?  Or of the amounts allegedly owed?  Of course not.  That witness’s knowledge is based solely on his/her review of the plaintiff’s business records.  Hence, the plaintiff’s ability to prove these issues is predicated on its ability to introduce those business records into evidence.

The Second District explained this concept quite clearly in its May 17, 2013 decision in Sas v. Fannie Mae, Case No. 2D11-6327 (Fla. 2d DCA 2013).  There, the lower court allowed the bank’s witness to testify about the amounts allegedly owed where the witness was testifying not from business records that were admitted into evidence, but from “notes.”  In Sas, the Second District reversed the Final Judgment, explaining “the trial court abused its discretion in allowing Greenlee to testify over objection about the contents of Fannie Mae’s business records to prove the amount of the debt without having first admitted those business records.”

What is required for a foreclosure plaintiff to establish that documents are “business records” and are admissible into evidence?  Florida Statute 90.803(6)(a) sets forth the requirements:

A memorandum, report, record, or data compilation, in any form, of acts, events, conditions, opinion, or diagnosis, made at or near the time by, or from information transmitted by, a person with knowledge, if kept in the course of a regularly conducted business activity and if it was the regular practice of that business activity to make such memorandum, report, record, or data compilation, all as shown by the testimony of the custodian or other qualified witness, unless the sources of information or other circumstances show lack of trustworthiness.

If the plaintiff can’t satisfy all of these elements of the statute, the documents should not be admitted into evidence.  And as Sas explains, if the documents aren’t admitted, the witness can’t testify from them.  If that happens, guess what that means?  The plaintiff can’t prove its case at trial, and the homeowner prevails.

If you want a specific example, think about the paragraph 22 letters about which I’ve so frequently blogged.  At trial, do you think the witness ever testifies that he/she sent that letter to the homeowner?  Pfft.  Virtually never.  The witness relies on business records.

Typically, the plaintiff tries to establish the Paragraph 22 letter is a business record.  As I see it, though, establishing the letter is a business record under Fla. Stat. 90.803(6)(a) may prove that the letter exists in the plaintiff’s file, but it doesn’t prove the letter was sent.  Unless that witness actually sent the letter (very unlikely), then the witness should have to point to a business record, already admitted into evidence, establishing the letter was sent.   Otherwise, any testimony the letter was sent is inadmissible hearsay.

I realize this isn’t the most sexy or exciting topic.  Let’s be honest.  It’s boring, legal jargon.  But these are the types of arguments that need to be made at foreclosure trials.  Trust me – if we prevail on these arguments, and your foreclosure case is dismissed, they won’t appear quite so boring any more.

Mark Stopa

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Foreclosure-World, Where Bankrupt Creditors Don’t Exist

There are many aspects of foreclosure-world that are drastically different than other areas of law … things a lawyer would never see in any other practice area.  Rocket dockets.  Senior judges.  Two-minute trials.  But one aspect of foreclosures that nobody ever talks about is how the concept of a bankrupt creditor just doesn’t exist in foreclosure-world.

No, I’m not talking about bankrupt debtors.  We all know many homeowners facing foreclosure utilize Chapter 7 or Chapter 13 bankruptcy to get rid of debt and give themselves a fresh start.  I’m talking about bankrupt banks.

Yes, I know.  Many banks have gone bankrupt in recent years.  In fact, I’d say at least 90% of the lenders who issued the loans on the cases I defend no longer exist, so I’m quite familiar with the concept of banks going bankrupt.

What makes foreclosures so different than any other area of law, though, is that when a bank goes bankrupt, there’s seemingly always another bank which steps into the picture to claim ownership of that mortgage.

Do you think this concept exists in any other area of law?  Pfft.  No way.

Think about it.  Suppose you hire a roofer to put a new roof on your home, the roofer finishes the job, you don’t finish paying the bill, and the roofer goes out of business.  Do you think there’s another company who will chase you down for payment in the place of the first roofer?  Heck no.  That company is out of business, so you got lucky.  You don’t have to pay the debt.  It might still be owed, but as a practical matter, nobody is ever going to pursue payment.

This dynamic exists virtually any time you sign a contract with a company for any type of service and the company goes bankrupt and/or out of business.  You got lucky, and you don’t have to fulfill your contractual obligations.  Well, technically, I suppose you do, but nobody is ever going to call you out if you don’t.  The obligations are just … POOF.  Gone.  In the wind.

I see this dynamic all the time in normal lawsuits.  In recent months, for example, I’ve had clients go out of business.  No, not foreclosure clients; I’m talking in normal litigation cases.  These clients were owed money from various third parties and insurance companies, but they went out of business.  Do you think anyone is going to pursue payment from those insurance companies or third parties?  Heck no.  That’s the reality of the law … the reality except in foreclosure-world.

In the land of foreclosures, banks go bankrupt all the time.  We’ve all seen it.  Yet there always seems to be another, active bank claiming ownership of the bankrupt bank’s mortgages.  There’s seemingly never a time when some bank isn’t willing to say “yeah, that original lender might not exist any more, but we own that mortgage now.”

Some may argue it’s wrong to complain about this.  “You borrowed the money, you shouldn’t complain that you have to pay it back.”  I think that explanation is just wrong.  Sometimes, there absolutely should be a free house because the mortgage company went out of business.  It happens in other areas of law, why not foreclosures?



Mark Stopa

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