The Wizard Behind the Curtain
Through my experience litigating foreclosure cases, I’ve become convinced that the plaintiffs prosecuting foreclosure lawsuits often don’t even realize those lawsuits are pending. Let’s say that again:
The Plaintiffs who have filed suit don’t even realize a lawsuit is pending.
How can that be? Simple. Third-party servicers retain a foreclosure mill, a.k.a. a plaintiff’s lawyer, and, without actually appearing as a party in their own names, direct the foreclosure mill to file suit on behalf of the plaintiff, i.e. the owner of the Note and Mortgage. Does the servicer actually have authority to do so? Honestly, who the heck knows. This strange phenomenon is something I’ve started to call the “Wizard Behind the Curtain.” The servicer isn’t named in the lawsuit, but it’s the one behind the scenes, calling all the shots, directing the foreclosure of thousands of homes throughout America.
I see a myriad of problems with this. In fact, just last month, I expressed my concerns when I saw a foreclosure mill’s written admission that it had no relationship whatsoever with the plaintiff it was purporting to represent. Think about that for a second:
The lawyer had no relationship whatsoever with the plaintiff it purported to represent.
Instead, the firm’s alleged authority to file the foreclosure lawsuit came from, you guessed it, the “servicer.”
I recently came across a document filed in a court case that sheds more light on this troubling phenomenon, and this document will provide a useful example to illustrate the problem.
Take a look for yourself … what do you see?
Obviously this document, which Shapiro & Fishman calls a “Non-Title Document Review,” is a checklist used prior to filing a foreclosure complaint. What really strikes me about this document (which Shapiro filed with the Complaint in this case and is a matter of public record) is that it has one box for the “Plaintiff” and the heading/style of the case, and an entirely separate box for the “Client.” Here, for instance, the “Plaintiff” is U.S. Bank, National Association, but the “client” is “Bank of America, N.A.”
Call me crazy, but shouldn’t the “client” and the “plaintiff” be the same? How can Shapiro & Fishman be filing a lawsuit on behalf of U.S. Bank when its “client” is Bank of America?
This may sound technical, and perhaps it is. But think about how this “wizard behind the curtain” phenomenon will play out in a foreclosure case. I see four huge problems.
First, the Florida Supreme Court requires via Fla.R.Civ.P. 1.110(b) that the Plaintiff verify its Complaint in all residential foreclosure cases. Given the relationship between the foreclosure mills and the servicers, it seems clear the required verifications aren’t being done by the plaintiffs, but by the servicers. Many learned judges in Florida before whom I appear have made it clear that verification by a servicer is insufficient – the complaints are supposed to be verified by the “plaintiff.” Remember, the Rule doesn’t permit verification by a third party, but by “the plaintiff.” In fact, Shapiro & Fishman moved for rehearing of the Florida Supreme Court’s ruling on this precise issue, and the Court rejected its motion.
This prompts a significant question – if verification is required by the plaintiff, and the attorneys representing the plaintiff have no relationship with the plaintiff, how on earth can they get the required verification? Undoubtedly, this is why the mills ask for 90 days or 120 days to get the requisite verification (when complaints are dismissed with leave to amend), as they often don’t even represent the plaintiff prosecuting the foreclosure case! Literally, the mills are in the position of calling up an entity who they don’t represent and saying “You don’t know me, but I’m representing you in this foreclosure case, and I need you to verify under penalty of perjury that the allegations we’ve raised are correct.”
A bit awkward, eh? Yet that’s the position in which the mills have put themselves (in a large percentage of foreclosure cases in Florida).
Second, I struggle to see how the mills can prosecute lawsuits on behalf of plaintiffs without the plaintiffs’ knowledge or consent in a manner consistent with The Rules Regulating The Florida Bar. I’ve spoken with the Bar on this, and given our conversation, I’m not prepared to say it’s impossible, but I will say this. Personally, I couldn’t imagine appearing as counsel for a party in any lawsuit without that party’s knowledge or consent, much less doing so on a widespread, systematic basis.
Think about it this way. An attorney is able to act on behalf of a client because the attorney’s actions bind the client. Stipulations, representations, court filings, etc. … we as attorneys are, quite literally, agents for our clients. If a client is going to be bound in this manner, the attorney’s authority to represent/bind the client must be clearly established. This is why, for example, there are strict rules about how an attorney may appear as counsel, failing which the attorney’s actions don’t bind the client. See Pasco County v. Quail Hollow Props., Inc., 693 So. 2d 92 (Fla. 2d DCA 1997).
If these foreclosure attorneys don’t have an attorney-client relationship with the plaintiff, it seems to me they cannot represent the plaintiff at all and should be disqualified from doing so. After all, how can an attorney bind the plaintiff when the attorney has no relationship with the plaintiff? Why should any court accept the representations or stipulations of a plaintiff’s attorney when that attorney has no relationship with the plaintiff?
There must be a better answer than “there are lots of foreclosure cases in Florida, and this is just how it’s done.”
Third, you want to know why the Florida Supreme Court’s mediation program failed? How can anyone expect to get a binding agreement with U.S. Bank when the attorneys prosecuting this foreclosure case don’t even represent U.S. Bank? Remember, Shapiro & Fishman’s client is Bank of America, so the contact person for Shapiro & Fishman on this file is undoubtedly an agent of Bank of America, not U.S. Bank. Again, how can anyone expect to get a loan modification under these circumstances, i.e. the appropriate parties aren’t even at the bargaining table.
Fourth, when the plaintiff alleges in the complaint that it is the owner and holder of the Note and Mortgage, what exactly does that mean? Taking plaintiff’s allegations literally, the plaintiff is the owner/holder. But in all of these cases where the entity driving the suit is actually the servicer, it seems that the servicer is the “holder” of the Note, not the Plaintiff. Remember, to be the holder, the “plaintiff” must be in “possession” of the Note. See Fla. Stat. 671.201(21). However, are these plaintiffs really in possession when they don’t even know a case has been filed? I suppose it’s possible, but when the Note is subsequently put into the court file, how did it get there? If it’s from the servicer, as I’d think it must since the servicer is the only one who knows about the case, then doesn’t that show the servicer was in possession, not the Plaintiff? And that the servicer was the “holder,” not the Plaintiff? Actually, no – where the Note is specifically indorsed to the plaintiff, the servicer isn’t the holder, either. In that situation, the servicer has possession, but the plaintiff has the indorsement, so neither one is the “holder.”
So what’s the solution to all of this madness? It’s two-fold: (1) Require verifications by the plaintiff (not the servicer, the plaintiff) and dismiss all cases without it; and (2) Require the foreclosure mills to have attorney-client relationships with the plaintiff (not the servicer, the plaintiff prosecuting the case) and disqualify all attorneys who lack such a relationship. That sounds harsh, but it’s ridiculous to inundate our courts with garbage pleadings that languish for years without a resolution when the parties prosecuting them don’t even know they’ve been filed.
Mark Stopawww.stayinmyhome.com
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That has to be a large part of the motivation behind the un-fair foreclosure act the banks are trying to get passed in Florida. If they can get a Final Judgment on bad documents submitted by a servicer, who is not the real party of interest (if the real party of interest even exists) then “game over”!
Are you getting any of the Judges to respond favorably to this argument?
It’s an ongoing fight, Wally. Some yes, a lot no.
I’m hopeful we will keep turning the tide.
Mark what does it mean when your mortgage is owned by and I quote from mortgage company “Investment Pool owned by U S Bank” is that helpful in foreclosure case??
Laura,
I typically don’t see it worded that way, but that likely means it’s securitized.
Let me know if your property is in Florida and you want a consult.
888-450-1549.
Mark
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Dear Sir,
I have been defending a foreclosure brought against my fiance’ and myself in 2001 in Illinois’ 12th Judicial Circuit, Will Co., Il. brought by MERS as a sole party plaintiff.
We have certfied sworn deposition testimony and documentation from MERS’ own counsel as to the fact that MERS did not know of the existence of a Florida company named National Americas Investment, Inc. that had logged into the MERS database and told MERS that a foreclosure had been instituted in MERS’ name about 2 weeks before a suit of foreclosure was filed by the law firm of Shapiro and Kreisman, who is now Fisher and Shapiro.
We also have obtained from the U.S. Comptroller of the Currency certified documentation that showed that the entity that had entered into evidence at trial the purported original note (signed in blank, which did not match the original note filed with the complaint) had ceased to exist by merger in July of 2001, the complaint was originally filed in August of 2001. The fraudulent note was entered into evidence at trial in May of 2006.
No attorney or law firm that we know in Illinois is willing to represent us. What advice could you offer us to obtain legal counsel that will not “sell us out” to have the judgment of foreclosure and all related orders of the court nullified. A Petition to nullify is pending in the court by my fiance’ pro se. She is terrified to appear there as the judge that she presented the certified documentation to in 2006 of the non-existence of the blank endorser of the note in May of 2007. The judge threatened both her and me with jail for “criminal abuse of the court system” and he did concoct a false accusation of my “disruption of court proceedings” and did throw me in jail in May of 2007 without a trial or due process. I have a civil rights case pending in the U.S. District Court of Northern Illinois in the matter of Schneider v. County of Will, Sheriff Kaupas et al. 08 cv 3054.
http://www.ilnd.uscourts.gov 1:08-cv-3054 if you have a PACER account. (I just recently filed my response to the defendants’ motion for Summary Judgment in that matter.
Michael,
Geez…. this is tough.
I don’t have a law license in Illinois and I don’t have a referral to give you.
The best I know to say is to keep searching for an attorney who can help you. If you truly can’t find one, keep fighting yourself, as that’s certainly better than giving up.
Good luck
Mark
I recorded a Deutsche Bank employee in CA and she stated that DB was simply the Trustee and they had no financial interest in any foreclosure. Following is from this conversation:
CONVERSATION WITH SUZANNE PATTEN
DEUTSCHE BANK TRUST DEPARTMENT
October 10, 2008
2:45 PM
SP – Suzanne Patten
BS – Bob Schmidt
SP- Your mortgage belongs to one of the trusts that is administered by Deutsche Bank. The mortgage company will foreclose in the name of Deutsche Bank but its Deutsche Bank as a trustee. That whole process is handled by your mortgage company, it’s not actually handled by Deutsche Bank. So, I think the entity that could answer that question for you as to who the counsel is for your mortgage company because they are the one that actually hire the counsel. It’s not Deutsche Bank hiring counsel
BS- OK
SP- It’s not Deutsche Bank hiring counsel.
BS- So Deutsche Bank is wouldn’t be directly involved.
SP- That is correct.
BS- OK, Alrighty, like are you, do you have a legal department?
SP- We really don’t have a legal department here, this is the trust office. Our only legal department, we only have a corporate legal department in New York but they’re not really involved with mortgage foreclosures, per se
BS- Well, Deutsche Bank is named in my suit.
SP- Because we’re probably like I say, the mortgage on the property was probably in a trust that was administered by Deutsche Bank.
BS- So Deutsche Bank—
SP- I mean, the court, I mean will have the record of who counsel is. You can get that information from the court.
BS- So, Deutsche Bank is the trustee but doesn’t own it or anything.
SP- Right. We don’t have any equitable title in these properties; we don’t have any financial interest in them we just hold, we’re just basically holding the paper as a trustee.
BS- OK alright, but you foreclosed on me.
SP- Well it’s, OK like I say, it’s foreclosed by your mortgage company, in other words, you’re not making your payments to Deutsche Bank, and right you’re making your payments to your mortgage company.
BS- OK or to a servicer.
SP- You’re making your payments to a servicer.
BS- Which, I’m guessing it’s Litton Loan.
SP- OK yeah, that’s who you’re making your loan payments to, that’s your loan servicer.
BS- OK
SP- When the payments, um when you cease to make payments or whatever the issue is, and Litton makes the determination that the property needs to be foreclosed on, like I say, they handle that process from start to finish. Even though they will foreclose in the name of Deutsche Bank because Deutsche Bank is holding the paper. Deutsche Bank like I say, as a trustee doesn’t actually have a financial interest in your property, it’s the difference between having legal title to a property and having equitable title. We have no equitable title in
these properties.
BS- Yes Mamm, but they said that Deutsche Bank was the owner and holder of the note and that’s why I called ya’ll.
SP- Well, it’s as a trustee, it’s not Deutsche Bank owning the note like you and I own our own note, it’s not Deutsche Bank in its individual capacity as a bank, it’s Deutsche Bank as a trustee for the, ultimately for the investors that invest in these particular trusts or securitizations where they bundle up these mortgages and make an investment out of it.
BS- Yes Mamm,
SP- That’s why there’s a loan servicer involved.
BS- Very confusing.
SP- Yeah, it is, if you’re not in the business it is very confusing.
BS- Well, we had submitted for loan modification and then Litton came back and said, after three different financial submissions, and we would more than qualify, because our income has only gone up. But then they came back and said the Investor did not do loan modifications.
SP- Well, it’s really up to them, to make the decision, I mean if they feel the loan can be modified, again because Deutsche Bank has no idea what’s going on with these loans, we’re not collecting mortgage payments,
BS- Yes mamm, I understand.
SP- We don’t conduct the foreclosure procedure, we don’t make that decision to put the loan in foreclosure, um it’s really up to Litton.
BS- OK Well, Ms. Patten, I appreciate it, I apologize for maybe calling the wrong number or something mamm
SP- That’s okay
BS- I had spoken to a lady that I couldn’t pronounce her last name in New York and she had given me this number, but I do very much appreciate you calling me back. I’ll keep working.
SP- Yeah, and like I say, I know it is obviously if you’re not in this business it is rather confusing but if Litton was the one, if they are the one you were making your payments to, Litton is really the only one that can modify that loan for you, it’s and I’m I mean I’ve heard that before, the investor doesn’t modify loans but really it is in their hands, unless there is something specific in a document that says they’re not allowed to modify loans which I mean, there isn’t because they don’t put that in documents, so
BS- Yeah, the only document that we’ve got is the Deed of Trust, I went to the recorder’s office and got copies of that, and Litton’s not mentioned in there. They’re, you know best I could tell, they had nothing to do with our note
SP Well, who originated your loan.
BS- New Century
SP- New Century, okay New Century originated it but then they probably either sold the loan to Litton or they remain the originator but they’re having Litton a sub servicer, to service the loan. I’m not really sure what happened.
BS- Well, New Century, didn’t they go out of business?
SP- Uh yeah they did, they did uh huh but their loans are now serviced by um, I think they’re called American Homes, but in any case that doesn’t really matter. It’s whoever you’re making your payments to, so if it’s Litton, if Litton is your mortgage company, then they’re the one that you would be dealing with
BS- Okay, well we’ll keep trying Ms. Patten.
SP- Okay
BS- Again I appreciate very much, you taking your time mamm.
SP- Okay, no problem.
BS- Bye
Hello Mark,
I found your blog very interesting and information, as we are personally in an weird foreclosure situation. Our loan went from Counrtywide to BaA (then to “who knows but mers” and then to Freddie Mac). We got three months behind, then two more, because BoA (still our servicer)send our checks back.
We want to bring the mortgage back to current and finally got the “reinstatement” amount with contained over $ 5600.00 in attorney “fees” (for what since they have not even send a notice of default). We tried to negotiate but BoA claimed since they are only the servicer, there is nothing they could do.
Last week, I accidentally looked at our County court records and saw a brand new entry from Feb.7th: “Assignment of Mortgage” with a mers attachment dated 2/3/12. On the 9th I send a QWR and a complaint with the Consumer Protection Agency which prompted BoA to listen and call right back (that is a first). Still, they assured me my lender is Freddie. The Freddie Hope line and website also confirmed my loan is with Freddie? If that is the case, then why do my local court records tell me the “Assignment of Mortgage is with BANK OF AMERICA N.A.? Also I told BoA we doubt the attorney fees have not really occurred yet and we should not have to pay for them and BoA – again wrongly – assured me that our case went to the courts in December. Checking back with the County Clerk, I found out, there is absolutely NOTHING on record but the recent “Assignment of Mortgage” to BoA.
So we don’t really have a clue who we want to negotiate with, since obviously “Assignment of Notice to BoA” in our court records means ….Freddie Mac is the lender????
I hear you, GulfResident.
You want to pay but don’t know who to pay.
If you haven’t resolved this problem yet, feel free to contact us for a consult. 888-450-1549.
Mark