Just How Much Foreclosure Fraud Exists?

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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4 Responses to Just How Much Foreclosure Fraud Exists?

  1. Pingback: Just How Much Foreclosure Fraud Exists? Presenting the MBA’s Brief in the Florida Supreme Court Pino Case | Foreclosure Fraud - Fighting Foreclosure Fraud by Sharing the Knowledge

  2. Walter Trauth says:

    Beautiful deduction, Mark. Invaluable post. We used to exchange comments in the past. Glad to see you on such a strong tack. Question: What does your deduction do for those who have already lost their homes to foreclosure? If so much fraud exists(and I agree that it does), of what value is it’s discovery to those who have already lost their homes to foreclosure? This is very important to me. Thanks.

    • Mark Stopa Mark Stopa says:

      1.540(b) requires that a motion to vacate a judgment based on fraud be brought within 1 year after the judgment was entered or it’s barred … forever.
      Hence, unless you’re within that year, the extent of the fraud is irrelevant. Sigh.

  3. sheila ramos says:

    you must read the Great American Foreclosure Story by Paul Kiel of ProPublica it explaines why this is going on and how the banks profit from all the fraud!!

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