I recently had occasion to observe a terribly sad sight in foreclosure court, one that has me urging everyone not to make the same mistake this homeowner did.
As I waited for my case to be called, I watched a pro se homeowner attended a bank’s summary judgment hearing. The homeowner explained to the court how he had retained an attorney from another state and paid that attorney $3,500 to get him a loan modification. However, that lawyer never appeared as counsel in the pending foreclosure lawsuit, never filed any papers on the homeowner’s behalf, and did not attend the hearing. By the time that hearing arrived, of course, the loan modification was nowhere to be found.
Obviously incredulous why a lawyer would collect $3,500 and not do anything, the judge asked this homeowner for more specific information. The homeowner explained that this law firm had been “recommended” on the Florida’s Hardest Hit website.
Everyone in the room, including the judge and yours truly, felt awful. This man tried to be diligent in protecting his interests. But he got screwed. His lawyer filed nothing on his behalf, and the homeowner presented no viable defenses to foreclosure, the judge begrudgingly entered the final judgment of foreclosure.
Folks, don’t make the same mistake this homeowner did. I don’t care how reputable a company looks on-line. I don’t care who recommends that lawyer or law firm. If that lawyer/firm does not practice law in the state where your property is located, they cannot help you!
Always, always, always make sure, if you’re retaining counsel to defend a foreclosure case, that said attorney is licensed to practice law in the state where your property is located. Otherwise, they cannot help you, and any money you’ll have paid them will have been flushed down the drain.
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I’ve blogged about a bank’s obligation to provide face-to-face counseling in an FHA Mortgage a couple of times now, introducing the concept here and providing a detailed appellate brief with many case citations here. Those banksters, though … they’re good. And they won’t go down without a fight. Just take a look at what they did in Real Estate Mortgage Network, Inc. v. Knight, Case No. 4D13-1880 (Fla. 4th DCA 2014).
In that case, the lower court granted summary judgment in the homeowner’s favor based on the bank’s failure to comply with HUD Regulations, essentially adopting the argument I’ve set forth in these blogs. Unfortunately, that ruling was incorrect for procedural reasons. As the Fourth District explained, where the homeowner introduced evidence at the summary judgment hearing that the bank did not comply with HUD Regulations, but the bank introduced evidence it did comply, the court should have denied summary judgment and allowed the case to go to trial. You see, at the summary judgment stage, the court cannot resolve conflict evidence, as that is the purpose of trial. That’s basically what the Fourth District ruled in Knight.
The banksters, though, they didn’t want to win merely on the procedural issue. They wanted the whole shebang. They wrote a brief – a really good brief, actually - and asked the appellate court to rule the HUD Regulations don’t apply at all. If this were a baseball game, the banksters were swinging for the fences – and they picked a good pitch to do it on, too. After all, the opinion doesn’t reflect it, but if you look at the Fourth District’s docket, you’ll see the homeowner’s lawyer did not even write a brief. Yes, the banksters pushed a case to the appellate courts – a significant appeal, challenging an issue for which there is little precedent – in a case where the homeowner’s lawyer did not even file a brief!! What a scary thought, to ponder the possibility that a Florida appellate court could have ruled that HUD Regulations do not apply to banks even in FHA Mortgages based on one appeal where the homeowner’s lawyer didn’t even present an argument!
Anyway, we’re all fortunate the Fourth District did not buy what the banksters were selling – at least not all of it. Yes, the bank won Knight on the procedural issue. But the question of whether the HUD Regulations apply in an FHA Mortgage – that’s the big question, the legal issue that affects the entire industry. On that point, here’s what the Fourth District ruled:
REMN argues on appeal that the court erred in applying the HUD Regulations and finding they were a mandatory condition precedent. We have held that non-compliance with HUD Regulations may be asserted as an equitable defense in mortgage foreclosure proceedings. Cross v. Fed. Nat’l Mortg. Ass’n, 369 So. 2d 464, 465 (Fla. 4th DCA 1978).
As I read that, the Fourth District is clearly saying that HUD Regulations may be used as a defense to foreclosure of an FHA mortgage, i.e., yes, this is a defense. As a result, even though Knight ruled in favor of the bank, I’ll be using it to support my arguments for consumers in FHA cases.
Could the opinion be clearer in that regard? Certainly. It could be better. It could say that the HUD Regulations are a mandatory condition precedent in an FHA Mortgage. But think of it this way … if the banksters couldn’t get what they wanted out of the appellate courts despite a well-written brief in a case where the homeowner did not even present any arguments, they’re certainly not going to get what they want in the future (particularly now that I’ve laid the arguments and case law out there for all to see).
The banks’ failure to comply with HUD compliance with HUD Regulations is a viable defense to foreclosure of an FHA Mortgage, and I’m confident the defense is here to stay.
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Newsweek did a story recently about “Florida’s Foreclosure Nightmare.” I was quoted the story, and it was a national story, but I didn’t even blog about it. You see, the story was so darn depressing. Frankly, I’m tired of talking about how hard it is to defend foreclosure cases in the Florida court system. Yes, it’s hard, and yes, the system is stacked against us. We all know this. Truth be told, though, it is certainly possible to fight foreclosure. Yes, it’s hard, but it’s possible. And yes, like the Newsweek article suggests, there are times I feel like I’m battling the judge/court system rather than the bank or its counsel. But there are plenty of judges in Florida who are fair and who try to follow the law. Today, it’s time to mention some of them, and to unveil a defense I’ve been using regularly to help Florida homeowners but which I have yet to mention on this blog.
Take a look at Florida Statute 559.715. It provides: “…the assignee must give the debtor written notice of such assignment as soon as practical after the assignment is made, but at least 30 days before any action to collect the debt.” This statute is part of Florida’s Consumer Collection Practices Act (“FCCPA”), Florida’s version of the Fair Debt Collection Practices Act (“FDCPA”). While the statute is a Florida statute (and I’m only licensed to practice law in Florida), the FDCPA applies everywhere, and most states have some statutory scheme similar to the FCCPA. Hence, I see no reason the argument I’m raising here can’t work everywhere – at least sometimes.
In layman’s terms, the argument is simple. If the bank filing the foreclosure lawsuit is not the original creditor, that bank has to give the homeowner written notice of the assignment of the debt at least 30 days before filing that suit. Where the notice is not given, the plaintiff has not complied with the statute, so the case should be dismissed. Such a dismissal would not be a judgment on the merits and would not give rise to a free house, but, similar to the result on the paragraph 22 dismissals I’ve spoken of so many times, where a plaintiff fails to comply with this condition precedent, the case should be dismissed without prejudice.
I’ve made this argument hundreds of times (yes, hundreds) over the last couple of years. The argument the banks regularly make against me is that mortgage foreclosure is not an “action to collect the debt,” as it is merely a foreclosure action, not a suit for money. For the reasons set forth in this Answer Brief, I think that argument is wrong. In fact, I believe Florida’s Second District Court of Appeal explicitly held it is wrong in a decision issued on August 15, 2014. See Gann v. BAC Home Loans Servicing, LLP, Case No. 2D12-6271 (Fla. 2d DCA 2014).
Check out the Answer Brief. This is the argument I’ve been making across Florida courts over the last two years. And as I say in the brief (see Issue IV), I’ve prevailed on this 559.715 argument before thirty (yes, 30) different Florida circuit court judges.
At present, there is not a published Florida decision which says a foreclosure lawsuit should be dismissed for failure to give the notice set forth in Fla. Stat. 559.715. But since this issue is now in the appellate courts, I think that decision is coming. In the meantime, I want to take note of the judges who have followed the law (or what they believe the law to be) and dismissed at least one case based on a foreclosure plaintiff’s failure to give the notice required by Fla. Stat. 559.715. If you’re before these judges with this fact pattern, you should at least have a fighting chance. And if your judge isn’t listed here, maybe I just haven’t had a chance to argue this precise before him or her yet (or maybe, candidly, I have so many of these Orders I inadvertently left a few off the list). Regardless, at a time when Newsweek is criticizing Florida judges, I’d like to note a few who try their best to follow the law, despite a system that’s rigged against consumers:
Pinellas: Hon. Mark Shames, Hon, Pamela Campbell, Hon. John Schaefer, Hon. Bruce Boyer, Hon. David Demers, Hon. Jack Day, Hon. Walt Logan, Hon. Thomas Minkoff, Hon. Amy Williams
Hillsborough: Hon. Sandra Taylor, Hon. Perry Little, Hon. Donald Evans, Hon. Christine Vogel, Hon. Raul Palomino, Hon. Judy Biebel, Hon. J. Rodgers Padgett, Hon. Frank Gomez
Pasco: Hon. Ray Ulmer
Orange: Hon. Alice Blackwell, Hon. Donald A. Myers, Jr., Hon. Lisa Munyon, Hon. Emerson Thompson, Hon. John Adams
Marion: Hon. Carven Angel
Brevard: Hon. W. David Dugan, Hon. Lisa Davidson
Seminole: Hon. Carmine Bravo, Hon. Alan Dickey
You’ll note my Answer Brief also sets forth another defense – the bank’s obligation to give the face-to-face counseling set forth in 24 C.F.R. 203.604 on an FHA mortgage. I’ve blogged about this issue previously, but the write-up and case law citations are much more comprehensive in the brief. Oh, and note all the out-of-state cases? I’m extremely confident this argument should work any and everywhere, so long as you have an FHA mortgage. But while we’re naming judges, let’s mention those who have dismissed at least one of my cases based on failure to give face-to-face counseling (understanding that FHA mortgages are far less common than the mortgages with paragraph 22, so the issue does not come up nearly as frequently):
Pinellas: Hon. Jack Hellinger, Hon. Walt Logan, Hon. Pamela Campbell, Hon. Walter Schafer, Hon. John Schaefer
Hillsborough: Hon. Sandra Taylor, Hon. Perry Little, Hon. Donald Evans, Hon. Christine Vogel, Hon. Judy Biebel, Hon. J. Rodgers Padgett
Orange: Hon. Emerson Thompson
Lee: Hon. James Thompson
Polk: Hon. Randall McDonald, Hon. Cecilia Wilhite
So when you’re reading the Newsweek article, know that, yes, the system of fighting foreclosures in Florida is hard, but it is possible, and there are many circuit judges – many of them named herein – who do try their best to follow the law.
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I made the news today. Twice, actually. Two completely different stories, too – one where I was mentioned in a way that most would view as positive, the other in a way that probably makes you think “why on earth is Stopa broadcasting that?” For me, though, the stories are inter-related and merit discussion, as they shine a spotlight on how the foreclosure process is supposed to work.
In 2010 (I think it was 2010 – it was a long time ago), I was working on a foreclosure case – nothing out of the ordinary – when I asked a foreclosure judge to allow me to amend my client’s pro se Answer to the Complaint. Leave to amend is freely granted, yet the judge denied the motion on the basis that delays in the adjudication of the case would not be tolerated. Wow. Having to defend the case with the client’s pro se answer made the case a virtual slam-dunk for the bank; we had no defenses! Yet as the banks are prone to do, they still managed to screw it up, showing up at trial without the original note and without a single witness – none of the proof needed to win.
I believe the judge should have dismissed the case, particularly when the bank had no excuse for its failure to bring a witness. (Years later, the excuse still annoys me – the witness “didn’t feel like coming.” Wow.) But instead of dismissing, the same judge who denied leave to amend (to avoid delay) granted a continuance … creating, yes, a delay. I was quite disappointed. As I saw it, a delay was okay when it was the bank that needed one, but impermissible for the homeowner, even for something as simple as leave to amend. I viewed it as a wrong ruling, and I set up a motion for rehearing saying so.
The intent behind that motion is a huge part of my persona in foreclosure-world. It’s the battle I’ve waged every day … every hour of every day … for the last five-plus years – trying to get a court system adamant about pushing foreclosures through the system to follow the law and be fair. By and large, I think I’ve succeeded. Today I got my 670th foreclosure case dismissed. Not with leave to amend, outright over, homeowner wins. 670! Numbers aside, I now believe most judges before I appear regularly are very fair and strive to follow the law … and I’d like to think my efforts over the last several years have had something to do with that, not just for my clients, but throughout Florida.
This motion, though, was worded in a way that was too over-the-top. It angered the judge, who forwarded it to the Florida Bar. I didn’t even sign the motion, and firmly believe I could have fought the process and avoided punishment. But rather than engaging an expensive, time-consuming battle when I’d rather be defending homeowners, I settled the dispute by accepting a reprimand (basically a warning) and moved on. Today, the Tampa Bay Times wrote an article about it. And while I don’t think I was quoted correctly, the point is basically right – that I’m going to keep striving to help homeowners, but do so in a way that keeps me out of hot water.
Why on earth would I willingly talk about this in an open forum (under no obligation to do so)? Well, that story today came out the very same day as this other story, where I was published in Naked Capitalism. The arguments I raised for one homeowner in a foreclosure case before Palm Beach County before Judge Diana Lewis were used to support the author’s view that said judge was not being fair to homeowners. That’s a big story this week because Judge Lewis will no longer be a judge coming November, as she lost the election to Jessica Ticktin.
Frankly, I haven’t appeared before Judge Lewis too many times. That said, I’ve talked to my colleagues and I’ve read what the Palm Beach Post and other papers in South Florida had to say about her as election day approached. Virtually everywhere I looked, the newspapers were endorsing her competitor, Jessica Ticktin, and not Judge Lewis in the recent judicial election. From what I’m told, Judge Lewis often told homeowners who were foreclosed, during court proceedings in open court, to “start packing.” And as the transcript from my hearing reflects, Judge Lewis said her “job” was to move foreclosure cases.
While I have nothing bad at all to say about Judge Lewis, I can’t help but feel like the process worked here. The motion that I filed in that case, above … the one that got the Bar mad at me … was never going to have terribly much impact on the process as a whole. Yes, it was part of what I do, but I could have accomplished the same result without words that were that inflammatory. The judicial election, on the other hand … that’s the way to really make an impact. So if you think a judge is unfair in foreclosure cases or, frankly, any type of case, guess what? Judges are elected officials. If it’s really that bad, then gather up public support, wait for the next election, and vote for the competitor! That’s basically what happened in the Ticktin/Lewis race, and that’s probably why Ticktin won.
I’d like to think the Ticktin/Lewis outcome also serves as a subtle reminder to all Florida judges that “yes, we have a job to do, and yes, that sometimes include foreclosing on homeowners in our county, but we still have to answer to these homeowners, so we have to be fair about the way in which the foreclosures are done.”
In this same vein, judicial accountability to the public is a significant reason why many lawyers believe the senior judge system in Florida doesn’t work. You see, unlike normal, sitting circuit judges, senior judges do not get (re-)elected and, hence (at least arguably), have no accountability to the public at all. In other words, the senior judges have no fear of what happened to Judge Lewis, as they aren’t elected. That’s no disrespect to any particular senior judges whatsoever – I appear before senior judges nearly every day, and most try very hard to be fair and follow the law. That said, I think the results in Ticktin/Lewis reveal the importance of all judges, particularly in foreclosure court, being subject to re-election by the Florida public. So all of you who complain about judges, remember election day – that’s where you can make a difference.
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Florida’s Fifth District Court of Appeal just issued this decision in Garcia v. BAC Home Loans, reversing a Final Judgment of Foreclosure because the trial court improperly denied a motion to dismiss for lack of prosecution. I always enjoy appellate decisions which rule in favor of homeowners, and I’m particularly biased to the ones where I’m counsel. So what can we learn from today’s decision?
Florida Rule of Civil Procedure 1.420(e) sets forth a two-step process by which courts must dismiss a lawsuit (any civil lawsuit, not just a foreclosure case) where the plaintiff has not been diligently prosecuting the case. I’ve blogged about lack of prosecution in the past, and the Rule is pretty straightforward. If nothing at all is filed for a 10-month period in a civil lawsuit, a defendant can file/serve a notice reflecting the lack of record activity. If nothing is filed in the 60 days thereafter, the defendant can seek dismissal of the case, without prejudice, for failure to prosecute. At that point, the plaintiff’s burden to keep the case pending is pretty high – it requires a showing of “good cause,” which case law loosely defines as a “really darn good reason why they didn’t do anything to prosecute the case for a year.”
I recently brought one of these motions in a foreclosure case in Marion County. The judge declined to dismiss the case and, oddly, would not even give me a hearing on the motion. Today, the appellate court reversed that ruling, explaining that a hearing is required and if the bank cannot show the requisite “good cause” then the case must be dismissed.
Here’s my Initial Brief, the bank’s Answer Brief, and my Reply Brief … and here’s the full text of the Fifth District’s decision:
On May 25, 2007, Appellants gave a note and mortgage in the amount of $156,000 to Appellees. The mortgage went into default on October 1, 2009, and on March 5, 2010, foreclosure was filed. Appellees sought to foreclose on the Garcias’ property. For several months, litigation proceeded as normal and then, suddenly, all activity ceased. Nothing transpired between November 12, 2010, and November 7, 2011, when Appellants filed a notice of intent to dismiss for lack of prosecution, which was mailed to Appellees on November 4, 2011. Nothing more was filed in the sixty days following the notice of intent until January 6, 2012, when Appellants filed their motion to dismiss for lack of prosecution, which was mailed to Appellees on January 4, 2012. On January 17, 2012, Appellees filed a motion to amend their complaint. On February 13, 2012, the court entered its order dismissing Appellee’s complaint “without prejudice” and, in the same order, granting Appellee’s motion to amend. On June 7, 2012, the court acknowledged in its order that Appellee’s complaint had been dismissed for failure to prosecute.
The issue on appeal is whether the court erred in granting the leave to amend. Florida Rule of Civil Procedure 1.420(e) reads:
In all actions in which it appears on the face of the record that no activity by filing of pleadings, order of court, or otherwise has occurred for a period of 10 months, and no order staying the action has been issued nor stipulation for stay approved by the court, any interested person, whether a party to the action or not, the court, or the clerk of the court may serve notice to all parties that no such activity has occurred. If no such record activity has occurred within the 10 months immediately preceding the service of such notice, and no record activity occurs within the 60 days immediately following the service of such notice, and if no stay was issued or approved prior to the expiration of such 60-day period, the action shall be dismissed by the court on its own motion or on the motion of any interested person, whether a party to the action or not, after reasonable notice to the parties, unless a party shows good cause in writing at least 5 days before the hearing on the motion why the action should remain pending. Mere inaction for a period of less than 1 year shall not be sufficient cause for dismissal for failure to prosecute.
Clearly, Appellees filed nothing within a ten-month period. After they received notice from Appellants, they filed nothing within the sixty-day period. The court, apparently acting on its own, dismissed Appellees’ complaint without prejudice and granted Appellees’ motion to amend. There was, therefore, no noticed hearing to start the five-day clock to show cause. Appellees’ only issue is whether the court properly granted the motion to amend. We hold, however, that during the throes of rule 1.420(e), when it is time to show cause, rule 1.190(a), authorizing amendment of pleadings, is inapplicable. In any event, the court misinterpreted the rule. Rule 1.420(e) does not authorize the dismissal of a complaint; it requires the dismissal of the action. Our only appropriate action is to reverse and remand with instructions for the court to conduct a good-cause hearing, and if none can be shown, dismiss the action. Appellees’ remedy then will be to file a new action for those claims not barred by the statute of limitations. See Singleton v. Greymar Assocs., 882 So. 2d 1004 (Fla. 2004); U.S. Bank Nat’l Ass’n v. Bartram, 140 So. 3d 1007 (Fla. 5th DCA 2014).
REVERSED and REMANDED with instructions.
ORFINGER, LAWSON, JJ., and HARRIS, C.M., Senior Judge, concur.
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The Palm Beach Post just endorsed Jessica Ticktin for judge over incumbent judge Diana Lewis. (I’ve copied and pasted the article, below.) This is a significant step in Ticktin’s campaign to unseat Judge Lewis. Lest you think this matters only to those consumers in Palm Beach County, think again. Jessica Ticktin winning this election will make a *huge* statement to all judges throughout Florida. Everyone will realize homeowners and consumer advocates have a voice. We matter. We will be heard. We cannot be ignored. We are force to be reckoned with.
Here’s the article …
August 11, 2014
Florida’s 15th Judicial Circuit — encompassing Palm Beach County — has become one of the state’s busiest over the past few years, led largely by messy foreclosures and family court issues. In Group 14, the battle is over whether Palm Beach County Circuit Judge Diana Lewis deserves a third term. Challenger Jessica Ticktin, a partner at the Ticktin Law Group, says no. And we agree.
Ticktin, unlike Lewis, says she would relish the opportunity to work in foreclosure and family law — both divisions of judicial need. She’s been a practicing attorney for more than 10 years. Before she became a partner in her father’s Deerfield Beach law firm, Ticktin was the firm’s managing partner, overseeing 24 attorneys and 4,500 cases in 10 offices statewide.
Before the past 12 years on the bench, Lewis had been practicing mostly as a corporate defense attorney for about 20 years. But the judge’s issues are not about her experience. The Post, in 2008, recommended the then-one-term jurist have another six years to change what local lawyers described as a condescending and hostile courtroom demeanor. According to a 2013 poll by the Palm Beach County Bar Association, little has changed. In fact, it appears her courtroom reputation is worse.
Indeed, poll after biannual poll of local lawyers shows Lewis scoring poorly in various areas. For example, that 2013 poll has 46 percent of 216 county Bar attorneys giving Lewis a “needs improvement” in the area of impartiality. In 2007, that number was 34 percent. Lewis writes the poll results off as a small sample of some 6,500 attorneys in the county, and the fact that in any case “you can only make 50 percent of the people happy.” And, just as Lewis’ challenger did in 2008, Ticktin raises the issue of the judge’s reversals on appeal. According to legal research firm Westlaw, Lewis’ reversal rate is about 41 percent on 165 cases that were appealed.
To be sure, working the court’s foreclosure division can tax any jurist’s patience. Frustrated homeowners can cycle through as many as three times a year, and judges are under pressure to clear cases in two years. Moreover, Lewis makes no secret of the fact that she’d like to get out of the high-octane division as soon as possible.
However, a judge has to be able to work with attorneys to get the best outcome for people who come before them. And while polls and opinions may be subjective and anecdotal, the sheer volume is too much to ignore. Another six years isn’t likely to change that. Ticktin’s experience and demeanor make her a more than capable replacement.
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I’m rarely the type to get too political or call others to action – I generally leave that stuff to my friend and colleague, Matt Weidner. As a result, my willingness to write this blog should tell you this is important to me.
Jessica Ticktin is running for judge in Palm Beach County, trying to unseat incumbent Judge Diana Lewis. Now … Florida Bar rules prohibit me from disparaging Judge Lewis, and I’m not about to go there. Nothing here is intended to disparage Judge Lewis in any way. So let’s be clear: I have absolutely nothing bad to say about Judge Lewis. Rather, quite simply, I very much – *very much* – want Jessica Ticktin to win this race, defeat Judge Lewis at the polls, and become judge.
Homeowners, consumer advocates, and anyone else who resides in Palm Beach County … if my opinion matters to you at all, heed my advice on this one … vote for Jessica Ticktin. http://ticktinforjudge.com/ Tell your friends, neighbors, family members, whoever – just go vote. I truly believe Jessica Ticktin is the best choice for Palm Beach County.
Lest you think this doesn’t matter because you’re not in Palm Beach, think again. This is our chance to show *everyone* that our voices will be heard. Think of it this way … you don’t think every judge in Florida will take notice if Judge Lewis is unseated (with the help of a push from consumer advocates)?
While you’re at it, my Pinellas County friends can go ahead and vote for Judge Bruce Boyer, Ken Lark, and Brian Battaglia.
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Ever wonder what it’s like to be a foreclosure defense lawyer? My experience this morning sums it up rather well.
I argued a homeowner’s motion for summary judgment. It have the first case on the docket, so the courtroom is packed. The judge (before whom I’ve never appeared) denies my motion (a motion I’ve won many other times in other cases) without explanation. I ask the judge to identify the facts in dispute for trial, which is perfectly appropriate to do, since Fla.R.Civ.P. 1.510 contemplates that as a way to narrow the issues for trial, (but I’m really doing so partly to let the judge know that I know he knows there are no facts in dispute (and my motion should have been granted)).
The judge threatens to hold me in contempt and pushes the rest of my hearings to the end of the docket. Whoah. (Admittedly, I might sometimes deserve that, but I didn’t this morning) …
The end of the docket arrives. I’m up. The judge apologizes, explains at length, in open court, how “brilliant” I am and how I remind him of his own son. The judge then makes it clear he will take whatever time is necessary for the arguments. Wow. Complete 180, totally unsolicited. So I argue the motions in the rest of my cases. The judge denies them all, again with no explanation.
I know I post about the victories sometimes, but this, more than anything, is what my life is like as a foreclosure defense lawyer. You’re always teetering on the edge of contempt (even when you feel like you’ve done nothing wrong), and when you don’t win – even on arguments you’ve won many other times - there’s often no explanation why.
It doesn’t have to be this way, folks. Part of the problem is that this judge had never heard any of my arguments before, since nobody else had ever made them. Keep pushing. Keep fighting. We have to keep spreading the word on the many, viable defenses that exist to foreclosure.
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Do you know how and when to make legal arguments in such a way that those arguments are preserved for appeal and not deemed waived? It’s not nearly as easy as you might think.
Take a look at this Initial Brief. This appeal emanated from an Order granting summary judgment in one of my cases. I won, and the foreclosure case was dismissed. The bank appealed, raising, essentially, two arguments. First, the bank contends summary judgment was improper because the hearing took place with less than 20 days’ notice, in violation of Fla.R.Civ.P. 1.510. Second, it asserts summary judgment should not have been granted because the basis for the judge’s ruling, a defective paragraph 22 letter, was not specified in the written motion, another violation of Fla.R.Civ.P. 1.510.
In many ways, the bank is probably right. I certainly agree the two legal propositions it makes are an accurate representation of the law. Summary judgment motions can’t be heard without 20 days’ notice, and the motion must specifically set forth the grounds therefor. See Fla.R.Civ.P. 1.510. Nonetheless, I’m confident I’m going to win this appeal because the bank waived these arguments and did not preserve them. In other words, the bank can’t win an appeal based on these alleged procedural irregularities when it did not assert those arguments at the right time, in the right way.
Here, check out this Answer Brief. Do you see all of the procedural traps? All of the nuanced ways a litigant can lose a case by not presenting an argument at the right time or in the right way? Bear in mind – this bank had lawyers, and, in my view, they still did it wrong. Do you really think you could avoid these pitfalls on your own?
Finding a competent counsel to help in cases like this – as opposed to handling it yourself – is really no different than hiring a doctor to perform surgery on your broken arm. You’d never even think of operating on yourself. Make sure you have that same mentality with your foreclosure case. And if you don’t live near me (or in Florida at all), there are competent counsel out there – you just have to find them.
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This one’s for you, Tony – and for everyone else trying to find ways to beat those evil banksters.
Homeowners can win a foreclosure trial in a variety of ways. One of my favorites is when the bank is unable to prove its case because it is unable to get information from the prior servicer into evidence. Let me explain.
By the time a foreclosure case gets to trial, it’s rare that the plaintiff prosecuting the case was the same bank that loaned the money. Typically, these loans have changed hands many times by the time trial rolls around. Often, the servicer of the loans change even from the time the foreclosure lawsuit was first filed. Even if you have no legal training, it’s not hard to imagine the evidentiary problems this poses for plaintiffs at a foreclosure trial.
For example, suppose Bank of America was the servicer at the time the paragraph 22 letter was sent, but Nationstar is the servicer at the time of trial. In a normal lawsuit, when the plaintiff goes to trial, it would subpoena any third-party witnesses to trial (e.g. a records custodian or employee of Bank of America) to ensure they can testify. In foreclosure-world, though, that virtually never happens. If Nationstar is the Plaintiff/servicer, you can almost rest assured that one witness will come to trial – an employee of Nationstar (and by “employee,” I mean someone whose sole job entails robo-perjuring, I mean testifying, at foreclosure trials). Well, just think about it. If the only witness at trial is from Nationstar, but Bank of America is the company that allegedly sent the paragraph 22 letter, then how can the employee of Nationstar testify that the paragraph 22 letter was sent? “I work for Nationstar, and I’ve never worked for Bank of America, but I’m here today under oath to say that Bank of America sent this letter.” Huh?
Likewise, if the payment history was a Bank of America payment history up until the time the loan was service transferred to Nationstar, then how can the Nationstar witness testify about the payment history for a company that he/she never worked for?
There is no easy answer to these questions. This is, frankly, one of the most hotly-contested legal issues in foreclosure-world nowadays. To illustrate, take a look at Hunter v. Aurora Loan Svcs., LLC, 137 So. 3d 570 (Fla. 1st DCA 2014). In that case, Florida’s First District Court of Appeal reversed a final judgment of foreclosure, finding the bank was unable to properly admit into evidence business records from the prior servicer. Here’s the portion of that decision I highlight for judges when I take this case to trial:
Here, Mr. Martin’s testimony failed to establish the necessary foundation for admitting the Account Balance Report and the consolidated notes log into evidence under the business records exception. Mr. Martin was neither a current nor former employee of MortgageIT, and otherwise lacked particular knowledge of MortgageIT’s record-keeping procedures. Absent such personal knowledge, he was unable to substantiate when the records were made, whether the information they contain derived from a person with knowledge, whether MortgageIT regularly made such records, or, indeed, whether the records belonged to MortgageIT in the first place. His testimony about standard mortgage industry practice only arguably established that such records are generated and kept in the ordinary course of mortgage loan servicing. … The Account Balance Report and consolidated notes log Aurora relied on were incorrectly admitted into evidence as business records, and therefore, could not serve to establish Aurora’s standing to sue Mr. Hunter in foreclosure
I recently prevailed at a foreclosure trial with precisely this argument. The witness was a records custodian for Cenlar, the plaintiff, and never worked for the prior servicer. When Cenlar tried to introduce the loan history of that prior servicer into evidence, the judge did not allow it. As a result, Cenlar was unable to prove the amount due – an essential requirement for banks in foreclosure cases in Florida – and ultimately entered judgment for my client. If that sounds odd, just think about it. Without the prior servicer’s loan history in evidence, how could Cenlar prove the principal balance owed on the Note? It couldn’t. Sure, Cenlar’s payment history had a principal balance listed on it. But that principal balance was taken from the prior servicer’s records, which were excluded from evidence. Unable to prove the amount due, Cenlar lost that trial.
Cenlar tried to argue otherwise in this Motion for Rehearing, but my response to that motion prompted the Court to enter this Order Denying Rehearing.
This sounds foolproof, right? If the plaintiff/servicer changes in most foreclosure cases, and the banks only bring one witness to trial, i.e. a corporate representative for the current plaintiff/servicer, then banks are systematically unable to prove their cases … so homeowners should win all the time, right? Just think about it. If the Paragraph 22 letter is on Bank of America letterhead and the witness is from Nationstar – ha! Nationstar can’t prove the letter was sent; homeowner wins. The first half of the payment history was maintained by Bank of America, but the witness at trial is from Nationstar – ha! Nationstar can’t prove the amount due. This sounds great, but, unfortunately, it’s not that simple.
In Wamco XXVIII, Ltd. v. Integrated Electronic Environments, Inc., Florida’s Second District Court of Appeal allowed a current servicer to testify about the prior servicer’s business records. 903 So. 2d 230 (Fla. 2d DCA 2014). In my everyday foreclosure practice, banks regularly cite this case in conjunction with testimony about the “boarding process.” According to these robo-perjurers (I’m sorry, I mean persons whose sole job it is to testify at foreclosure trials), the current bank/servicer has a process where they “verify” the accuracy of the information from the prior servicer’s records. And since that information has been “verified,” the current servicer can incorporate that information into its records, adopting it as its own, and use that information to testify at trial. Hence, the information might be generated by a different company, but the current plaintiff can testify about it. Nationstar has an employee at trial with a Bank of America payment history in hand? That’s just fine – Nationstar incorporated that payment history into its records via a “boarding process,” ensuring the accuracy of that information before doing so. Never mind, of course, that it is necessarily impossible for Nationstar to actually verify any of that information without actually talking to Bank of America and/or obtaining the underlying information … but I digress. That’s the bag of rocks the banks are regularly selling our courts … and as we saw in Wamco, it sometimes works.
So how do I handle this situation? Which case is right, Hunter or Wamco? Are those decisions in conflict? Personally, I show judges Hunter, and I distinguish Wamco because the witness in that case personally “overs[aw] collections” of loans and was “personally involved” in the servicing of the loans. In my trials, the witnesses almost never fit the criteria in Wamco, so Hunter is more analogous, I argue.
Some judges don’t like this argument. They don’t want homeowners who haven’t paid their mortgage to win on “technicalities” like this. My response? The evidence code is not a technicality, and the rules aren’t different for foreclosure cases. In fact, I rarely give an opening statement in foreclosure trials, but when I do, it’s usually that. “Judge, I simply remind the court that the rules of evidence are not different just because this is a foreclosure case.” Plus, I find little reason to cater to banks on evidentiary issues when they could issue subpoenas to these third-party witnesses; they just systematically refuse to do so. Why? In my view, it’s because they know the court system is, more often than not, going to bail them out, allowing them to get away with bending the rules to facilitate their foreclosures. Rules be damned – we’ve got foreclosures to process!
Like most things in foreclosure-world, my evidentiary objections on issues like this sometimes work and sometimes don’t. But hey, we’re talking about homeowners in foreclosure. Anything that works even some of the time is another tool for the toolbox. And if your judge doesn’t like it, make sure you remind the Court. ”The rules of evidence aren’t different just because this is a foreclosure case.”
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