Posted on May 12th, 2012 by Mark Stopa
Am I the only one who finds it absolutely insane that I have to read Rolling Stone – a rock and roll magazine – to understand just how badly Wall Street Killed Financial Reform. Why is nobody else, particularly in the mainstream media, talking about this? Why do I have to read a friggin’ rock magazine to get this sort of analysis … in an election year, no less?
The answer to these questions, in my eyes, is a telling indication of how our country is circling the drain. When nobody wants to even discuss the problems, we sure as heck aren’t likely to get a solution any time soon. That’s okay, I suppose … so long as you’re fine with the too big to fail banks continuing to lose billions of dollars and future generations paying off the trillions in debt incurred from the incessant bailouts of the financial industry.
Mark Stopa
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Posted on May 11th, 2012 by Mark Stopa
I had a Case Management Conference in a foreclosure case back in April. The Court scheduled the CMC and warned the Plaintiff, in its Order, that its failure to attend “will” result in dismissal of the pending foreclosure lawsuit. The CMC proceeded as scheduled (along with many others that same time) and despite the court’s warning, and despite the hearing lasting for an hour, nobody attended for the Plaintiff. As such, the court entered an Order dismissing the case. All is good, right?
Well, four days later, a different judge signed an Order vacating that Order of Dismissal, sua sponte, without notice, without hearing, and without evidence, making a “finding” that “local counsel was tied up in a different courtroom,” as if to justify the plaintiff’s failure to appear. I respectfully but firmly disagree with this ruling, so I’ve filed an appeal of this Order vacating the dismissal. Here is the Initial Brief.
I think it’s clear that a court cannot make a factual “finding” that “local counsel was tied up in a different courtroom” without evidence and without affording me notice and an opportunity to be heard. For instance, who was this “local counsel”? How could he/she have been “tied up” for over an hour without anyone knowing it? Why did he/she not advice court personnel of his/her alleged conflict? If there was an attorney who was truly “tied up,” why didn’t the Order identify this attorney and the nature of the conflict? These are all questions that I could and should have been afforded the opportunity to ask before the court sua sponte vacated its Order of dismissal. In other words, how could the court have concluded this “local counsel” was “tied up” without a hearing and without any evidence? In my view, it could not.
I also believe the Order setting aside the dismissal was improper because it was entered by a different judge than the one who dismissed the case and because, even if “local counsel” was “tied up,” the actions of any attorney who is not counsel of record are a nullity. The Initial Brief spells out these arguments, with case law.
Perhaps the biggest thing to take from this situation is to remember that, regardless of the type of case, judges can’t make findings without evidence. For example, if you’re at trial in a personal injury case, the defendant can’t argue in closing argument that the traffic light was red if there was not some testimony/evidence establishing such. In the foreclosure context, judges can’t find a homeowner defaulted on payments without proof in that regard.
Regardless of the type of case, the need for evidence also necessitates notice and an opportunity to be heard – a basic notion of due process. Without it, I’ll keep filing appeals like this one.
Mark Stopa
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Posted on May 11th, 2012 by Mark Stopa
I blogged previously about this transcript, where a pro se homeowner defended herself at trial but was smart enough to bring a court reporter. Well, I took her case for purposes of an appeal, and I loved her position so much that I’ve already drafted the Initial Brief for the Second District. The brief is not yet complete (as I can’t include the record cites – the parts where there are random “R”s in the brief - until the clerk finishes the record), but I found the argument so compelling that I decided to ask the trial court (the very court which entered the Final Judgment) to cancel the foreclosure sale and stay the foreclosure pending my prosecution of the appeal.
That may sound confusing, so let’s simplify. When a court grants a Final Judgment of Foreclosure, a foreclosure sale is set along with it – often as soon as 30 days later. As a result, the homeowner may think he/she has a meritorious appeal, but there is virtually no chance of an appeal being finished before the scheduled sale, no matter how meritorious the appeal might be. The briefing process alone takes months, sometimes more. Hence, unless something is done to stop the sale, the home will get sold – and the homeowner forced to move – before the appeal can be completed.
This is where Fla.R.App.Pro. 9.310 comes into play. Under that Rule, the trial court judge has the discretion to basically say “I know I granted a Final Judgment of Foreclosure against you, and I know I scheduled a foreclosure sale, but I think your chances of winning on appeal are strong enough that I’m going to cancel the foreclosure sale to allow you to bring the appeal.” Then, if the trial court judge denies that motion, the Second District can entertain such a motion as well.
As you could imagine, this creates a pretty awkward dynamic. Essentially, it’s like saying “Judge, I know you just ruled against me, but I think you were wrong, and I want you to admit you may have been wrong and allow me to appeal your ruling.” For obvious reasons, stays pending appeal are often denied, putting homeowners in the unenviable position of trying to prosecute an appeal even after a foreclosure sale is over.
I’m thrilled to say, though, that when I gave the lower court judge this Emergency Motion for Stay Pending Appeal, he granted it, cancelling the scheduled foreclosure sale and allowing me to finish the appeal without risk of my client being dispossessed in the meantime. The motion was pretty straightforward - I basically said the appeal was meritorious and attached the Initial Brief so the judge could see for himself.
If you can bear a bit of legal jargon, I think the Initial Brief is worth the read. It discusses what’s necessary to re-establish a lost note under Fla. Stat. 673.3091 and the procedure for setting trial under Rule 1.440. There’s also a lengthy discussion about why this plaintiff should suffer an adverse judgment, as opposed to getting a new trial, given the unconscionable fact-pattern with which we have all become far too accustomed in foreclosure-world (nearly five years of delays in prosecution by the plaintiff despite going against a pro se homeowner, numerous continuances given for the bank despite its apathetic prosecution of its own case, and the judge sua sponte prosecuting the case and helping the plaintiff along, etc.).
Two other things to keep in mind here – if you’re thinking about an appeal, make sure you keep Rule 9.310 in mind. A meritorious appeal may not mean a lot if you’re forced to move in the meantime. And if your case isn’t over and you think you might want to appeal, make sure you get a transcript of the trial – none of this is possible without a trial transcript.
Mark Stopa
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Posted on May 10th, 2012 by Mark Stopa
I’ve spent a fair amount of time discussing what should happen differently in foreclosure cases. Today, let’s change gears and applaud one circuit which, in my view, is unparalleled in its efforts to adjudicate foreclosure cases fairly – Florida’s Sixth Judicial Circuit.
To be clear, I’m not about to say every ruling in that court has been correct or that homeowners always win. It doesn’t work like that, nor should it. Judges are human, just like you and me, and, frankly, sometimes homeowners are going to get foreclosed. However, if you ever feel like you’ve been treated unfairly in a foreclosure case, walk into court in St. Petersburg, Florida and check out what’s happening.
Let’s start with what you won’t see. If you observe court proceedings in foreclosure cases in St. Petersburg, you won’t see (unelected) senior judges adjudicating contested foreclosure cases. Yes, there are senior judges, but their role is to handle uncontested cases – the contested foreclosures are left to the presiding circuit judges. Candidly, I love this distinction and I love the message it sends to the people of Pinellas County. It’s literally as if the court is saying “we care enough to have an elected circuit judge adjudicate a foreclosure case if it is being defended by a homeowner. If you care about your house, we care enough about you to have a presiding, elected circuit judge handle your case.” I’ve seen some people complain about senior judges handling uncontested cases, but, as I see it, who cares? If a homeowner doesn’t care enough about his/her house to defend the case, let that case be handled by a senior judge. Let the senior judges push through the slop on uncontested files. Contested files – cases where homeowners care about their homes – are handled by elected, presiding circuit court judges.
Who created this distinction? As far as I can tell, it’s Chief Judge Thomas McGrady. Of course, he’s the same judge who has periodically conducted meetings with foreclosure lawyers from both sides - the banks and the homeowners – to openly discuss ideas on how to best handle foreclosure cases going forward. It should be no surprise the foreclosure process is adjudicated as well in the Sixth Circuit as it is anywhere in Florida when the Chief Judge cares enough to procure input from both sides – and to implement those ideas going forward.
The fair adjudication of foreclosure cases in the Sixth Judicial Circuit goes beyond an administrative level.
I want to refrain from discussing specific rulings in specific cases, as that’s not the point. That said, if you walked into one St. Pete courtroom on May 8, 2012, you’d have seen the judge take a break from a medical malpractice trial to conduct an emergency hearing in two foreclosure cases. (The Florida legislature might not care enough about the court system to fund our courts appropriately, but the judges in St. Petersburg care.) If you were present on May 8, 2012, you’d have heard the judge disagree with my argument that a judge cannot set a case for trial where one of the parties had not noticed it for trial, but that she had read my memorandum of law on the issue, printed out the case law, read those cases on her own, personal time, and encouraged me to appeal since the Second District has not ruled on the issue. In foreclosure court, it’s not just about winning or losing - it’s about knowing the judge is giving you a chance to be heard, is listening, and is reading your case law. Once that hearing was over, you’d have seen the judge immediately return to her malpractice trial. (Break? What break? It’s enough to make anyone seethe at the apathy the legislature has shown for our courts.)
If you walk into another judge’s courtroom for a hearing on a motion to dismiss for lack of prosecution, you’ll likely hear that judge say that he has “no discretion” to deny the motion where the plaintiff has filed no record activity and there is no good cause to keep the case pending. I’m not sure if that judge agrees that should be the law, but he knows that is the law, and he strives to follow the law whether he agrees or not. Again, win or lose, knowing the judge will follow the law is half the battle in foreclosure-world.
If you walk into the courtroom of other judges in St. Pete, you’ll see them act in the manner I think a judge should act – like an umpire at a baseball game. The umpire doesn’t decide when the game will played, nor does he/she predetermine who will win – the ump just calls balls as strikes as the game is played. The attitude of “let me know when you need me” is precisely the role of a neutral and detached judge. If you’ve ever experienced a different dynamic, let me assure you … it’s really refreshing to go before these judges and know they’re going to call balls and strikes, not act like a second prosecutor of foreclosure cases and not do the job of plaintiff’s counsel from the bench where counsel is lax in prosecuting the case. For these judges, it’s about judging fairly, not about meeting a quota or disposing of a certain number of cases in a certain time period.
Our courts are overburdened, understaffed, and underpaid. And while I’m sometimes the first to point out procedures that aren’t up to snuff, let’s make sure we give credit to those many judges who are doing it the right way, especially in the Sixth Judicial Circuit.
Mark Stopa
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Posted on May 10th, 2012 by Mark Stopa
We all see the term “verified” in residential foreclosure lawsuits on a regular basis … but what, exactly, does it mean? Years ago, there wouldn’t have been a question in this regard. In years past, “verified” meant under oath, or under penalty of perjury, as provided under Fla. Stat. 92.525 … the equivalent of live testimony in open court. Now? The law is much less clear, so much so that plaintiffs’ lawyers are making arguments that are contrary to law.
The ambiguity began in February, 2010, when the Florida Supreme Court, in response to widespread robo-signing, began requiring that all plaintiffs in residential foreclosure cases verify the foreclosure complaints they file. The intent was raise the bar … to create an additional hurdle for plaintiffs to follow to ensure they would investigate their lawsuits before filing them (and to eliminate garbage pleadings).
The problem is that the verification required under Rule 1.110(b) is not a normal verification, but a special one created just for purposes of residential foreclosure complaints. To illustrate, Fla. Stat. 92.525 requires a verification be made under penalty of perjury, i.e. sworn to be “true and correct,” whereas Rule 1.110(b) permits a lesser verification, i.e. “true and correct” to the best of one’s “knowledge and belief.”
The question hence becomes … in what contexts is a verification sufficient if done “to the best of one’s knowledge and belief,” and when is the normal verification under Fla. Stat. 92.525 required? Two specific situations come to mind – Summary Judgments, and Orders to Show Cause.
Plaintiffs’ attorneys will undoubtedly point to a recent decision from Florida’s Second District, which ruled that verifications on “knowledge and belief” are sufficient in a residential foreclosure complaint, in support of their position that verifications on “knowledge and belief” are satisfactory. See Trucap Grantor Trust 2010-1 v. Pelt, 37 Fla. L. Weekly D 622 (Fla. 2d DCA 2012). However, Trucap merely says a verification on “knowledge and belief” is sufficient in the run-of-the mill foreclosure pleading. It sheds no light whatsoever on the question of whether this type of verification is authorized in other contexts, i.e. Summary Judgment or an Order to Show Cause.
For instance, when a foreclosure case goes to summary judgment, is this type of equivocal verification allowed? And what about when a plaintiff seeks an Order to Show Cause under Fla. Stat. 702.10 – is the qualified verification under Trucap sufficient?
In each case, I think the answer is “no” – the verification must be unequivocal, i.e. under oath, as set forth in Fla. Stat. 92.525. Here’s why.
Fla. Stat. 702.10 has been in existence for a long time – long before Rule 1.110(b) was ever created. In my view, the law clearly requires, to obtain an Order to Show Cause in a residential foreclosure case, that a plaintiff verify the complaint consistent with Fla. Stat. 92.525, not the lesser verification under Rule 1.110(b). In fact, at least one Florida decision has specifically ruled that the verification must be done in this manner. See Muss v. Lennar Fla. Partners I, L.P., 673 So. 2d 84 (Fla. 4th DCA 1996) (not allowing verifications “on information and belief” in the context of an Order to Show Cause).
Plaintiffs’ attorneys will argue Muss was decided before Rule 1.110(b), and that is true. However, the entire purpose of Rule 1.110(b) was to raise the bar for plaintiffs in foreclosure cases – not to lower it. Hence, to argue 1.110(b) allows a qualified verification in the context of an Order to Show Cause, you’d necessarily be arguing that the Florida Supreme Court lowered the bar via Rule 1.110(b) for Orders to Show Cause without mentioning Orders to Show Cause at all. In my view, there is no way the Florida Supreme Court changed the requirements of Fla. Stat. 702.10 or overruled Muss without explicitly stating so. Rule 1.110(b) requires the verification set forth in Trucap without changing the verification requirements of Fla. Stat. 702.10 and Muss.
So what does this mean? If you’re facing an Order to Show Cause in a residential foreclosure case, make sure you argue that Rule 1.110(b) might be sufficient for a run-of-the-mill foreclosure complaint, but it’s not sufficient to enable a plaintiff to obtain an Order to Show Cause. For that, an unequivocal verification, as set forth in Fla. Stat. 92.525, is required – not merely one on “knowledge and belief.” At this point, there is not a written opinion from a Florida district court which makes this distinction. Trust me, though – it will happen at some point.
A similar clarification is important when dealing with motions for summary judgment. After all, long-standing Florida precedent requires that the verifications used for purposes of summary judgment be unequivocal. Quite simply, it is not sufficient for a plaintiff or a defendant to give an affidavit “on information and belief,” or “on knowledge and belief” – the affidavit must be verified under oath.
To illustrate, in Ballinger v. Bay Gulf Credit Union, 51 So. 2d 528 (Fla. 2d DCA 2010), the Second District reversed a summary judgment because it was based on a verification done “on knowledge and belief.” In other words, the court ruled the evidence supporting summary judgment was not sufficient because it was not “evidence” at all given the qualified verification.
As such, if you’re dealing with a motion for summary judgment in a mortgage foreclosure case, don’t allow the bank’s attorney to argue they’ve proven their right to summary judgment (or proven you’re not entitled to summary judgment) because their complaint is verified. After all, that complaint is probably verified “on knowledge and belief,” and that type of verification is simply not allowed in the summary judgment context.
Again, there is not yet a Florida case which makes this distinction, but I assure you – it’s coming.
Mark Stopa
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Posted on May 4th, 2012 by Mark Stopa
Those damn zealots at www.4closurefraud.org and www.foreclosurehamlet.com, they’re always screaming about fraud in foreclosure cases. We all know the cries of fraud are overblown, something asserted by deadbeat homeowners as an excuse to not pay their mortgages … right?
I’m going to have to exercise some restraint on this one and save the commentary. Instead, take a look at this document and compare it to this document. Notice any differences? You won’t at first – the distinction is subtle. Before I point out the difference, a little background.
I’ve been defending this foreclosure lawsuit for some time, and the plaintiff chose to voluntarily dismiss it, entitling me to seek prevailing party attorneys’ fees. Under Rule 1.525, that motion has to be filed within 30 days of the dismissal. This document was served upon my office, and it reflects the case was dismissed on January 17, 2012. As a result, I did a motion for fees on February 16, 2012 – within 30 days. (Usually I don’t wait until the last day, but that’s what happened here.)
A hearing on this motion is scheduled for Monday, and plaintiff’s counsel just called my office, arguing the motion should be denied because the dismissal was done on January 13, 2012 (so the February 16, 2012 motion was beyond 30 days). I took another look at this document, the one served upon me, and it seemed clear to me that she was blowing smoke.
Then I decided to check the Official Records to see what was filed there. To my surprise, what did I find? This document appears to be the same as what was provided to me, but it reflects the case was dismissed on January 13, 2012.
Look at the Certificate of Service. Notice the handwritten “3″ on the version filed with the Court? And how that “3″ isn’t on the version sent to me? In my view, these lawyers gave me a document dated the 17th, yet filed a document dated the 13th, then tried to use the fact that they sent me a different document as an excuse for arguing the motion for fees wasn’t timely served.
Again, I’ll save the commentary for those zealots at www.foreclosurehamlet.com and www.4closurefraud.org. They sure are nuts, eh?
Mark Stopa
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Posted on May 1st, 2012 by Mark Stopa
I’ve often wondered - sometimes silently, sometimes loudly - what those persons who are adamant about pushing foreclosures through the court system think they are accomplishing. Who does it help when foreclosure judgments are prosecuted faster? What is the objective here, exactly?
Proponents argue this helps the economy. I’ve heard one local judge say it is the court’s “duty” to taxpayers. Respectfully, you tell me … how does it help to throw homeowners onto the streets only to have those homes be uninhabited? After all, it’s well-established at this point that banks are usually the high bidders at foreclosure sales, not third parties. Of course, that’s when the banks actually care enough about taking title to properties to schedule the sales (as opposed to the countless cases where the banks have already prevailed, and the homeowner has moved on, yet the sales keep getting cancelled ad infinitum, for no apparent reason).
Today, I encountered a perfect example of my frustration at the foreclosure process.
Recently, the homeowner, who was trying to defend his foreclosure lawsuit on his own (a mistake, obviously, but that’s a different story), asked the judge to deny summary judgment. He told the court he wanted to work something out with the bank. The judge entered summary judgment anyway. I suppose that’s understandable, if not ideal, as there was nothing filed in the case to stop the judge from entering summary judgment.
But then it got really bizarre. After the Final Judgment was entered, and the foreclosure sale scheduled, the homeowner submitted paperwork to the bank to try to reach a resolution. The bank agreed, and filed this this motion, asking the court to cancel the foreclosure sale. As the motion reflected, the bank was trying to work something out with this homeowner to avoid foreclosing on this homeowner. That’s obviously what the homeowner wanted, too, so at that point, both the bank (the plaintiff in the case) and the homeowner (the defendant in the case) were telling the court that they did not want the foreclosure sale to proceed because they wanted to reach a resolution.
So what happens? The court issues an Order denying the motion, directing that the foreclosure sale proceed anyway.
Look, I understand the arguments about improving the economy and wrapping up old foreclosure cases. I get it. I might not agree, but I get it. That said, with all due respect, I will never understand why a court will insist on a foreclosure sale going forward when the plaintiff AND the defendant agree the sale should not proceed.
If the plaintiff doesn’t want the foreclosure sale, and the defendant doesn’t want the foreclosure sale, then whose interests are being served by forcing the foreclosure sale to proceed?
I suppose I could understand this a bit better if the house was abandoned and the bank had cancelled the sale repeatedly. In that situation, I could see an argument for forcing the sale to go forward anyway … that could be said to help the economy, forcing that house to be sold to someone else.
Here, though, the Final Judgment had just been entered, and both sides were trying to reach a resolution to keep this homeowner in his home. With all due respect, I fail to see how anyone could think it equitable or just to require the foreclosure sale to go forward on those facts.
I just talked to Matt Weidner about this, and he raised a great point … Can you imagine this in any other context? Husband and wife file for divorce. The case proceeds, and the husband and wife decide they want to stay married. Can you imagine a judge saying “no, I’m requiring you to get divorced.”? Can you fathom that ever happening? I doubt anyone can … so why is it acceptable in the context of foreclosure?
That really makes me wonder … why? Why? Why? What are foreclosure judgments accomplishing, exactly? And what is the court’s role in these cases? Should the court really have the power to require a foreclosure sale when both sides are saying they don’t want the sale to proceed? If you think so, then why? Whose interests are being served by doing so? What, exactly, is the point here?
Mark Stopa
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Posted on April 29th, 2012 by Mark Stopa
“Always bring a court reporter to every hearing.” If I’ve heard that advice once, I’ve heard it 1,000 times in the foreclosure context. Proponents argue homeowners “need a transcript to bring an appeal.” But is that advice correct? Frankly, I’d say no, not always.
In an ideal world, I’d agree it’s probably best to have a transcript of every hearing. It would be great to memorialize everything, to make the presiding judge realize we’re serious about the defense of that case. But we don’t live in an ideal world. Banks may be able to afford court reporters for every hearing in every case, but most homeowners I know can’t. Let’s face it – bringing a court reporter to every hearing, and having each such hearing transcribed, can be expensive. For many homeowners, it’s simply not cost-effective.
Fortunately, there are certain types of hearings for which having a court reporter is critical, whereas there are others for which court reporters aren’t necessary. How can one know the difference? It’s really not that complicated. The key is understanding when a transcript is necessary for an appellate court to adjudicate an appeal and when such a transcript is unnecessary.
At most hearings in foreclosure cases, the trial court judge makes a ruling based not on any testimony or anything that anyone says at the hearing, but based merely on the paperwork filed in the case. When this happens, like at a hearing on a motion to dismiss or a motion for summary judgment, there is almost never a need for a transcript. For these types of hearings, the written papers either reflect that the judge got it right or got it wrong. What was said at the hearing changes nothing, so the existence or absence of a transcript changes nothing.
To use a fancier term, the appellate court’s review of the trial court’s ruling in these situations is de novo. This means the appellate court gives no deference whatsoever to the trial court’s ruling, nor should it. This may sound confusing, but just think about it. If a legal ruling is based only on paperwork contained in a court file, then an appellate court can review the court file and the papers therein just as easily as the trial court. As such, in these situations, there is no reason to defer to the trial judge’s ruling, no reason for a transcript, and de novo review.
If a transcript isn’t necessary at hearings where a judge’s ruling is based solely on the content of papers in a court file, when is it necessary? Well, rather obviously, when the judge’s ruling is based on things other than the content of written papers in the court file … like a trial, or any other hearing where evidence will be presented. Quite simply, if a court hearing is scheduled and testimony is being submitted, e.g. at trial, it is imperative that the homeowner bring a court reporter and have a transcript of the trial. Otherwise, the homeowner cannot show the appellate court what happened at trial and, hence, cannot possibly show the appellate court that the lower court erred in its ruling.
Think of it this way … An appellate court exists as a forum for litigants to prove the trial court ruled incorrectly. If you can’t show what happened at trial, i.e. what testimony the bank presented at trial, you can’t possibly prove the trial court ruled incorrectly by foreclosing against you. You need the transcript to prove what happened and to prove why the trial court erred.
Unlike rulings on motions to dismiss or motions for summary judgment, where appellate courts confine their analysis to the court file and, hence, given no deference to the trial judge’s ruling, appellate courts typically give deference to a judge’s ruling at trial. After all, unlike the appellate judge, the trial judge is physically present in court and has the opportunity to observe the witnesses as they testify. This puts trial judges in a better position than appellate judges to weigh the evidence and make a ruling. As a result, (and I realize I’m generalizing a bit here, and there are exceptions, but) it is basically impossible to win an appeal of a judge’s ruling at trial in a foreclosure case without a trial transcript. The appellate judges defer to the lower court’s ruling, and homeowners can’t show a reason for the appellate court not to defer when they can’t show what happened.
Hence, in my view, it’s important for homeowners to bring a court reporter to trial (or any other hearing where testimony/evidence will be presented) but generally unnecessary to do so at hearings where no evidence will be submitted.
One significant thing to keep in mind when discussing foreclosure trials is Florida Rule of Civil Procedure 1.530(e), which provides:
When an action has been tried by the court without a jury, the sufficiency of the evidence to support the judgment may be raised on appeal whether or ot the party raising the question has made any objection thereto in the trial court or made a motion for rehearing, for new trial, or to alter or amend judgment.
In layman’s terms, this means that if a homeowner loses at trial in a foreclosure case, then he/she can bring an appeal if the bank did not prove its case at trial. Even if the homeowner did not object to the sufficiency of the evidence, and even if the homeowner did not have a lawyer, the homeowner can still bring an appeal if the bank didn’t prove its entitlement to foreclose. The key, of course, is having a transcript of the trial – and pursuing the appeal in a timely fashion.
Mark Stopa
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Posted on April 24th, 2012 by Mark Stopa
The Florida Supreme Court is currently deciding whether a plaintiff should be able to voluntarily dismiss a pending lawsuit when a defendant is seeking sanctions for fraud on the court. I’ve been following the arguments and the briefs being filed, and I’m struck by what I just read from The Mortgage Bankers Association.
In the first issue of its brief, MBA argues (stay with me, it’s important, so I’m quoting it):
Initiating radical change in the applications of Rule 1.420 and Rule 1.540(b) could convert the mortgage debacle, from which Florida is slowly recovering, into a widespread financial crisis. … [Not allowing a plaintiff to voluntarily dismiss a lawsuit in the face of a claim for sanctions for fraud on the court] would impact general credit and lending practices, just as the fragile real estate finance industry begins to rebound from a severe economic downturn. If the [banks] face potential revocation of voluntary dismissals, lending practices in Florida could come to a grinding halt. The threat of sanctions would force lenders either to prosecute technically infirm cases, rather than cure defects in a new proceeding, or risk being prohibited from re-filing, after faulty documents have been corrected. Such unduly harsh procedural impediments would deprive lenders of the ability to collect their loans or apply collateral to satisfy these obligations. Without the ability to collect on defaulted notes, lenders would be unable to make new loans and refinance indebtedness in this State. The economic impact could be devastating to the State of Florida.
Let me get this straight. According to the MBA, not allowing banks to dismiss foreclosure cases when a defendant is claiming “fraud on the court” would cause a “widespread financial crisis,” cause lending to come to a “grinding halt,” prevent lenders from collecting their loans or making new loans, and be “devastating” to Florida.
Those are some incredibly strong statements, so much so that I can’t help but wonder …
If those would be the consequences, just how pervasive must the foreclosure fraud be?
Think about it. If the fraud isn’t pervasive, there’s no way the Florida Supreme Court’s ruling (no matter which way it rules) could possibly have the consequences the MBA is suggesting. The fact that the MBA is this concerned should speak volumes about the magnitude of foreclosure fraud in Florida.
If you doubt the existence or pervasiveness of foreclosure fraud in Florida, don’t listen to me or a consumer advocate. Simply read the MBA’s own brief.
Mark Stopa
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Posted on April 24th, 2012 by Mark Stopa
I’m estatic. I just talked to a client who read this blog, followed my advice, and now owns a house outright. Sound too good to be true? I disagree. It’s been a while since I’ve discussed this issue, so let’s revisit the topic …
Through my years as a foreclosure defense attorney, I’ve encountered countless homeowners who share the same type of story. Unemployment or underemployment led to financial problems and a mortgage default. Not wanting to go into foreclosure, these homeowners pulled monies out of a 401(k), IRA, or savings account to stay current on the mortgage. Eventually, though, the savings were gone, yet the monthly mortgage payments still kept coming. As a result, the homeowner had no money, yet was still facing foreclosure anyway.
The client with whom I spoke today read this blog (which I wrote back in 2010), realized his savings were dwindling, and didn’t let himself fall into this trap. Instead, he took his remaining $50,000 in savings, saved money while he didn’t pay the mortgage on the house he was living in, and purchased a home, outright, for cash. He has now moved into that house and declared it his homestead. As a result, guess what? Even if the bank forecloses on his old house, and even if it gets a deficiency judgment, it can’t take his homestead, which he owns outright. In fact, even if he loses his job later on, and has to declare bankruptcy (to eliminate the deficiency), he can still keep his homestead, free and clear. All of the money remaining in his 401(k) and the college plans for his kids – that remains in place, too, safe from creditors.
In my view, this is the perfect way to handle this type of situation. Instead of spending all of his savings, having nothing, and getting sued for foreclosure on the house in which he’s living … basically, winding up with nothing … he used his savings (and the money saved while not making payments on his old house), bought a new house outright, moved in, and declared it his homestead. Instead of nothing, he has a house that he owns, free and clear.
Think about how much different this man’s financial future will be simply because he strategized in this manner. No matter what, he has a house. No matter what, he has money saved for retirement and his kids’ college. All it took was the realization that continuing to make monthly mortgage payments on a house he couldn’t afford was not a long-term solution.
If there was one thing I wish more homeowners realized, it was that this approach is almost always better than depleting savings accounts to make monthly mortgage payments the homeowner simply can’t afford.
Mark Stopa
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