Archive for December, 2010
Posted on December 16th, 2010 by Mark Stopa
I had a hearing today on a Motion for Summary Judgment. I’m pleased to say the judge denied the Motion for Summary Judgment, but not without a number of events worthy of discussion.
As the hearing began, it was odd from the start. Instead of asking the plaintiff/movant to explain why summary judgment was appropriate (as is standard in virtually any non-foreclosure case), the judge asked me to explain why summary judgment was inappropriate. I began my arguments, and the judge (who happens to be a senior judge) was unbelievably disrespectful.
As I handed him case law during my argument (as I typically do in any hearing), the judge refused to look at the cases. Unfortunately, that’s not uncommon in foreclosure cases, but what really irked me was how the judge immediately threw each case into the trash can as I handed them to him. Could you be more disrespectful, judge? It’s bad enough that you blatantly refuse to read the cases, but to throw them in the trash the very second I hand them to you? Come on.
Before I was finished with my argument, the judge cut me off, telling me “I don’t want to make a career out of this case” and directed plaintiff’s counsel to respond. Seriously? I would have been more upset if I didn’t notice the judge write “denied” on his note pad during my argument, making it obvious he was denying the motion. (Incidentally, he did so before the plaintiff’s lawyer began her argument.)
Anyway, as he announced his ruling (denying the motion), the judge had a lengthy rant about how unfortunate it is that any bright foreclosure defense attorney can stave off foreclosure for a long time, letting homeowners live in their homes without paying. He made a point of saying he was “offended” that my clients have been living in the home since March, 2010 (saying the date as he looked at the Complaint) without paying their mortgage. He even said, if it had been a final hearing, that he would have ordered a foreclosure, at which time he would have told “Mr. and Mrs. Gray” to leave the home, but since it was a summary judgment motion, he was denying the motion.
Respectfully, judge, the party offended at that conduct was me. I’m offended that you would prejudge the merits of my client’s case – even announcing you would rule against them at trial (if you were the presiding judge) – without hearing any evidence. I’m offended that you wanted to tell Mr. Gray that he would be foreclosed when Mr. Gray has been dead for three years – a fact you would have known had you read my affidavit or not cut off my argument (which asserted you could not foreclose because, among other reasons, the appropriate parties had not been named since Mr. Gray was deceased). Is that what foreclosure cases have come to – judges are so quick to foreclose that they’re willing to do so on dead people?
Respectfully, if you’re that bored with foreclosure defense that you are going to prejudge every case and not let the parties be heard – telling parties that you don’t “want to make a career” out of that case because the hearing lasts more than 2 minutes, throwing case law in the trash without reading it, etc. – then maybe you should reconsider being a senior judge. Seriously. If you’re that bored, that unwilling to listen, and have prejudged the cases that badly, maybe you should just go back into retirement.
Some lawyers would say that since the judge ruled in my favor that I should have just smiled and left. Maybe so, but I’m tired of being mistreated like that, and I’m tired of judges prejudging cases. As I see it, that’s judicial misconduct, pure and simple. Hence, I felt compelled to interject, explaining that my client was current on all payments, and not even in default, when the bank put forced place insurance on the home even though my client had a homeowner’s insurance policy in place. In fact, the bank sued my client for foreclosure, even though she was current on all other payments, because she refused to make payments on the second (unnecessary) insurance policy. I even noted that the judge would have known these facts if he had reviewed the affidavit or not cut off my argument, so I took exception with him assuming the bank would win at final hearing.
The judge was taken aback, saying only “that could be an arguable affirmative defense.”
Gee, you think, Judge? My client isn’t even in default and that could be an “arguable” affirmative defense?
Hopefully, next time, you won’t prejudge my cases. Hopefully, next time, you’ll let the parties be heard. After all, you may be “offended” when homeowners stay in their homes without paying their mortgages, but I’m equally offended when judges throw my case law in the trash right in front of me, refuse to let me finish my argument, openly prejudge the case, and openly announce that they’d rule against my clients at a final hearing (without hearing any evidence). Respectfully, perhaps if you removed your biases and listened to what homeowners have to say, you’d realize that many of them have valid defenses to foreclosure.
Mark Stopa
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Posted on December 16th, 2010 by Mark Stopa
This would be more funny – if it weren’t true.
Mark Stopa
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Posted on December 12th, 2010 by Mark Stopa
David Bornstein of the New York Times penned a nice article today called When Lenders Won’t Listen. Here’s the part that really jumped off the page at me…
After describing the injustices experienced by several homeowners in their experiences with lenders, a competing view was presented:
There are those of us who were raised with the idea that if you make a bargain you keep it. If you say you will return something you have borrowed, whether it is a lawnmower from next door or a bank loan, then you do what you have said. … But then I was raised in a different America.
Unfortunately, I fear too many Americans, who remain unfamiliar with the foreclosure process, feel this way (presuming, of course, that position is from a homeowner and not a bank crony who is paid by the banks to sway public opinion by submitting such posts). Anyway, I loved the response of David Bornstein, the author of the article, who wrote:
Not all bargains are made in good faith, however. Borrowers and lenders, it turns out, did not share equal information in many cases. … It was predatory lending that decimated inner city neighborhoods — not anything that resembled fair deals. … [M]any homeowners across the nation did understand what they were signing even if they failed to appreciate the real risks. The difference was that the borrowers made their mistakes one house at a time, effectively as amateurs. The lenders made these mistakes as professionals, dealing with hundreds of thousands of borrowers, and they concealed the cumulative problem even as it was metastasizing. So now we have millions of homeowners who wouldn’t be in distress if not for the fact that they lost their jobs as a result of a recession that was precipitated by the very bankers who are now threatening to foreclose on them.
Wow. What a truly awesome way to describe the impetus for the problems we’re facing.
I urge all of you to forward that paragraph to your family, friends, and neighbors – unless, of course, you just want to forward this entire blog. 😉 From the words of a New York Times columnist, let’s make everyone realize the banks are the bad actors in the foreclosure crisis. After all, the first step to a solution is recognizing the problem – and clearly the greed of the Wall Street Fat Cats was and is the problem.
Mark Stopa
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Posted on December 11th, 2010 by Mark Stopa
Nationwide Title Clearing is making headlines. First, it obtained an injunction against fellow foreclosure defense attorney Christopher Forest, requiring him to remove video depositions of three of its employees from youtube. Why, exactly? Well, from what I can tell, NTC doesn’t want the public to be able to see video depositions of its employees, who apparently testified that they executed hundreds of foreclosure-related documents without reading them and without knowing their contents. How does that give rise to a right to injunctive relief? Honestly, it beats the heck out of me. My best guess, from what I’ve read in the media, is that the employees who testified in these depositions had their personal lives disrupted because of the high level of public outrage at the content of the depositions.
Meanwhile, NTC has sued my friend and foreclosure defense lawyer Matt Weidner for libel, asserting he damaged its business reputation by blogging that NTC employees are “robo-signers” that “manufacture evidence” to facilitate foreclosures.
Am I crazy, or does anyone else see the hypocrisy here? Think about it.
On the one hand, NTC wants to sue Matt Weidner for damaging its business reputation by using terms like “robo-signer.” In doing so, NTC wants to take the position that everything is on the “up and up” with how it does business (and it was “defamed” by Matt’s suggestions otherwise).
Meanwhile, NTC is fighting vigorously to shield depositions of its employees from the public, pushing for an injunction requiring Christopher Forrest to remove the video depositions from youtube.
As I see it, if everything is on the “up and up” at NTC, as it wants to allege in the suit against Matt, why is it going to such efforts to shield its the public from learning about its operations? In other words, if NTC is being “defamed” by use of the term “robo-signer,” then why is it unwilling to let the public see testimony from its employees about the manner in which they execute documents?
Let’s put it this way. I don’t know what’s going on behind closed doors at Nationwide Title. It seems to me, though, that if everything were up on the “up and up,” as it wants to contend in the suit with Matt, then it wouldn’t be so hesitant to let everyone see and hear what’s going on at NTC from the mouths of its own employees. Show us the depositions. Explain it to us. If you’re an upstanding, reputable company, open your doors and prove it.
Maybe I’m naive. If it were me, though, and somebody was falsely accusing me and/or my company of “manufacturing evidence” or doing something illegal, I’d do whatever I could to prove my innocence. I’d be talkiing to the media, opening my books and records, explaining my company’s operations – doing whatever I could to reveal the truth. I certainly wouldn’t be going to court to try to shield evidence of my conduct.
If you’re reading this, NTC, consider this a challenge. If your employees aren’t “robo-signers,” then terminate the injunction. Heck, give me consent to post the video depositions on this website. Let the public hear your employees testify – let the public be the judge. If everything is on the “up and up,” I’m sure you’ll have nothing to worry about. If you’re not willing to do that, as the injunction suggests, you can’t blame anyone for questioning exactly what’s going on behind closed doors at NTC.
Mark Stopa
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Posted on December 10th, 2010 by Mark Stopa
I’m pleased to read this decision from Florida’s First District Court of Appeal. The ruling says, essentially, that when banks mislead homowners into believing their foreclosure lawsuit will be “on hold” while their loan modification is being reviewed, then obtain a Final Judgment of Foreclosure anyway, the foreclosure should not stand. That seems fair – why should a bank be able to lie and say a foreclosure is “on hold” and get a foreclosure anyway? I see two lessons to be learned here: (1) if the bank tells you your foreclosure case is “on hold” while your modification is being reviewed, don’t believe it; and (2) banks cannot obtain a foreclosure judgment if they’ve misled you in this way, so if this happened to you – fight back!
Although the court’s ruling is largely good, I’m still a bit disappointed. This sounds technical, but you may notice how the Court reversed the foreclosure but “remanded” for an evidentiary hearing on the motion to vacate the foreclosure. This means that the appellate court directed the trial court to conduct an evidentiary hearing, i.e. a hearing with live testimony, to evaluate the merits of the motion. Unfortunately, this leaves open the possibility (as crazy as it sounds) that the lower court could deny the motion even after this appellate ruling, keeping the foreclosure judgment in place.
Respectfully, this aspect of the decision is just plain wrong. The court’s decision reveals that the bank presented no evidence in opposition to the motion. In other words, it was undisputed that the bank deceived the homeowner into believing the foreclosure would be “on hold” while the modification was being reviewed – the homeowner presented an affidavit establishing that fact and the bank presented nothing in opposition.
With respect to the judges who wrote this decision, the purpose of an evidentiary hearing is for courts to resolve disputes in the facts. Where only one side presents affidavits, there are no disputes in the facts, so there is no need for an evidentiary hearing. In other words, the homeowner’s affidavit was undisputed, so thoat affidavit should have carried the day, and the motion should have been granted, without the need for an evidentiary hearing (and without any possibility that the motion could be denied).
There are legions of cases about this. I’ve seen many lawyers, even judges, misunderstand this rule of law, but it’s not that complicated. When the bank and a homeowner present affidavits with conflicting facts, the judge must conduct an evidentiary hearing, i.e. a hearing with live testimony, and decide who he believes. If only one side presents an affidavit, however, that side’s affidavit controls and there is no reason for live testimony.
For example, if the homeowner signs an affidavit that the traffic light was red, and the bank signs an affidavit saying the traffic light was green, the judges must conduct an evidentiary hearing. But if the homeowner signs an affidavit that the traffic light was red, and the bank does not present an affidavit, the judge has to conclude the traffic light was red.
It works the same way with loan modifications. If the homeowner presents an affidavit that the bank deceived them into believing the foreclosure lawsuit was “on hold,” and the bank presents no affidavit, the judge must conclude that the bank deceived the homeowner.
Mark Stopa
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Posted on December 6th, 2010 by Mark Stopa
I am in receipt of a letter written by Honorable Peter Blanc, Chief Judge of Florida’s Fifteenth Judicial Circuit (Palm Beach County), wherein Judge Blanc asks bank lawyers to comply with an administrative order regarding the Cancellation of Foreclosure Sales. As Judge Blanc sees it, the problem is that his court system is burdened with administrative work caused by banks routinely cancelling foreclosure sales at the very last minute.
I read Judge Blanc’s letter, and, candidly, I am troubled – on a number of fronts. As such, I wrote a Response, which is found below.
My primary bone of contention is this – the eleventh-hour cancellation of foreclosure sales is a much, much bigger issue than the administrative work that results for the court system. I don’t want to sound disrespectful, but I believe Judge Blanc has lost the forest for the trees here. In other words, are the last-minute cancellations of foreclosure sales causing problems for the courts? Undoubtedly. But rather than telling banks to cancel the sales sooner, shouldn’t people in positions of authority, such as Judge Blanc, be trying to evaluate why these foreclosure sales are being cancelled and try to do something to change the process?
Personally, I find it absurd that thousands of homes are sitting, empty, abandoned, going further and further into disrepair (a result of homeowners being scared into vacating possession via a foreclosure judgment yet the banks cancelling the foreclosure sale and not taking title), yet the Chief Judge overseeing it all is only concerned about the impact on court staff.
Respectfully, shouldn’t we be doing something to address the fact that homeowners are being dispossessed yet the homes they’re being forced to vacate are sitting unoccupied (because the banks won’t conduct foreclosure sales and won’t take title)?
Am I the only one who finds it absurd that Floridians are being evicted yet banks aren’t taking title and these homes aren’t going back on the market?
What does a foreclosure accomplish if the home sits, unoccupied?
In his letter, Chief Judge Blanc indicates that effective January 3, 2001, all affidavits in support of summary judgment in foreclosure cases “shall include as an attachment copies of payment records upon which the affiant relies to support the motion,” as required by Fla.R.Civ.P. 1.510(e). Unfortunately, though, Chief Judge Blanc is not requiring this because this is the law requires it (and judges in his circuit have been overlooking this requirement). Rather, the judge’s concern is “the recent trend of post-judgment cancellations caused by concerns with the content” of these affidavits.
What does that mean, exactly? As I read it, Chief Judge Blanc is directing that Rule 1.510(e) be followed, per the law, only because of his concerns about the eleventh-hour cancellations of foreclosure sales, which burden court staff. In other words, as I read it, Judge Blanc is saying “I’m requiring that the law be followed, not because it’s the law and must be followed, and not because there are serious questions about the propriety of these affidavits, but because the failure to attach documents to summary judgment affidavits is causing foreclosure sales to be cancelled, burdening court staff, and I don’t want my court staff burdened.” In fact, it seems to me that the judge is advocating for the banks, as if he’s saying “attach these documents to summary judgment affidavits so these foreclosure sales can go forward and not be cancelled.”
Respectfully, judge, is this what it’s come to? Aren’t judges supposed to follow Rule 1.510(e), requiring documents be attached to affidavits in foreclosure cases, because it’s the law? Particularly given the legitimate concerns about the propriety of these affidavits, shouldn’t you follow the law because it’s the law? Respectfully, I can’t believe I’m reading a memo directing that the law be followed because to do otherwise burdens court staff.
Perhaps more significantly, aren’t you concerned about the cancellation of foreclosure sales for reasons besides the impact on your court staff? Respectfully, the entry of foreclosure judgments – and cancellations of foreclosure sales – is impacting hundreds of thousands of Floridians. Arguably, this is the single biggest issue in our economy today … yet you’re only viewing the issue from the perspective of the burden on your Court staff? Respectfully, that disappoints me. After all, if people in positions of authority, such as yourself, won’t take a “big picture” view, then who will?
In my view, the fact that banks are systematically pushing foreclosures yet not taking title is yet another reason for Florida courts to slow down in the prosecution of foreclosure cases. Respectfully, what’s the rush? If banks aren’t taking title, and homes are sitting abandoned, why throw a neighbor on the streets?
Mark Stopa
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Posted on December 3rd, 2010 by Mark Stopa
I’ve read and re-read the Press Release of Honorable Thomas McGrady, Chief Judge of Florida’s Sixth Judicial Circuit. I understand where Judge McGrady is coming from, and I agree with him in certain respects. In others, however, I respectfully but strongly disagree, so much so that I feel compelled to respond.
First off, I agree that many judges should be commended for “upholding their oath of office” and “following the law.” Florida’s judges are facing an unprecedented challenge vis a vis the incredible volume of foreclosure cases, and many judges have performed admirably, particularly those in the Sixth Judicial Circuit over which Judge McGrady presides. Let’s put it this way – my biggest frustration as a foreclosure defense attorney is that judges so routinely treat foreclosure lawsuits much differently than other lawsuits. With a few glaring exceptions (who I will not name but I’m sure Judge McGrady knows who I’m talking about), the judges in the Sixth Judicial Circuit generally do not act this way, and that’s certainly a good thing.
That said, I respectfully but firmly disagree with Judge McGrady’s broad-sweeping statements regarding foreclosure cases in the entire state of Florida. With all due respect, Judge, you may realize what’s happening in the Sixth Judicial Circuit, but I don’t believe you know what’s happening in other counties, so I don’t think it’s fair for you to criticize anyone who is commenting on events in other counties in Florida.
Every day, it’s a battle for foreclosure defense attorneys such as myself to ensure the most basic rights for homeowners in foreclosure cases. Many times, it feels like we aren’t just battling the banks and their lawyers, but the judges as well. Sometimes, I half-expect these judges, as a hearing concludes, to rip apart their robes and reveal a “Bank of America” T-Shirt exposed underneath. You may think that sounds absurd, but, all too often, that is the climate I’ve seen and felt as a foreclosure defense lawyer in Florida.
You obviously feel passionately that these problems are not pervasive in the Sixth Judicial Circuit, and I’m not going to argue with you about that. Instead, I’ll say this – as for the rest of Florida, you haven’t seen what I’ve seen:
– You haven’t seen a Palm Beach senior judge, at the start of a rocket docket of more than 100 summary judgment motions, assert he’s “heard it all before,” limit the arguments of homeowners and their attorneys to sixty seconds, even going so far as to count down the time as the minute concludes. You may think there aren’t “robo-judges” in Florida, but how else would you define this? Remember – those were summary judgment motions.
– You haven’t seen a senior judge in Tampa let the bank’s lawyer argue for 4 pages of transcript at a hearing on a Motion for Ssummary Judgment, then limit the defense argument to 4 lines of transcript, cut off the attorney after those four lines, and enter summary judgment without reading or looking at the opposing affidavit, written response, motion to vacate default, or motion to stay for military status (justifying his conduct in the face of due process objections by asserting it was “too little, too late” since the case had been pending for two years).
– You haven’t seen Lee County judges systematically and sua sponte require docket soundings in all foreclosure cases, immediately after the cases are filed (without clearing the date with counsel and without allowing phone appearances), and require all discovery be completed in two months, for the purpose of granting summary judgment or setting trial, even though the case is not at issue and the homeowner’s motion to dismiss has not been adjudicated.
– You haven’t been told, by a senior judge in Hernando County, that a plaintiff’s attorney can schedule a summary judgment hearing whenever he wants, without clearing the date with defense counsel (or even knowing defense counsel has a conflict), and that if defense counsel has “a problem with it,” he needs to file a motion to strike the hearing. You didn’t hear this judge assert, when defense counsel complained about the procedure, that it was his “job,” at the instruction of the Florida Supreme Court, to dispose of foreclosure cases as quickly as possible.
– You haven’t tried to set hearings on defense motions in foreclosure cases, only to have court assistants or administrators tell you that the available hearing times were reserved exclusively for plaintiffs’ motions. Of course, there is never a time set aside for defense motions – only for the banks’ motions.
– You haven’t tried to attend foreclosure hearings in Tampa (Section I, on the fifth floor) only to be told those hearings are not open for public access.
– You haven’t received dozens of conformed Orders on disputed matters, ex parte, without notice and without hearing, which most Florida judges sign routinely, even when it is obvious that these Orders are not agreed Orders, usually without giving defense counsel a chance to object. For instance, I once had a situation in Tampa where I prevailed on a motion after a hearing and the Judge entered an Order in my client’s favor, I prevailed on rehearing and the Judge entered a second Order in my client’s favor, yet, weeks later, the bank’s attorney submitted an Order, ex parte, that reversed the Court’s rulings, and the judge executed it before I received a copy in the mail or a chance to respond Respectfully, this never happens except in foreclosure cases, yet in the foreclosure context, it happens routinely.
– You haven’t had a client have a Final Judgment of Foreclosure entered against him – hours prior to the beginning of the summary judgment hearing, then have the judge explain this was her “procedure.”
– You haven’t seen the Administrative Orders in Orange, Seminole, and Lee Counties, which systematically prohibit any phone appearances in foreclosure cases, in direct contravention of Fla.R.Jud.Admin. 2.530, which requires that phone appearances be granted for all hearings of 15 minutes or less absent good cause. (It is my opinion that these Orders exist to make it harder for attorneys to defend homeowners and, hence, to cause more foreclosure cases to go uncontested).
– You haven’t witnessed senior judges routinely reschedule hearings where the defense counsel is present but plaintiff’s counsel is not, yet systematically grant the relief sought by plaintiffs when plaintiff’s counsel is present and defense counsel is not. This double-standard is, respectfully, gross, yet it happens on a regular basis throughout Florida courtrooms in foreclosure cases.
– You haven’t successfully argued that a summary judgment hearing should be stricken from the calendar, had plaintiff’s counsel cancel that hearing pursuant to the court’s Order, yet have a senior judge enter a Final Judgment of Foreclosure (even though nobody was present at the hearing) because she did not even look in the court file or the docket, so she did not see that the hearing had been cancelled.
– You haven’t watched a Brevard County judge repeatedly chastize foreclosure defense attorneys for filing motions to dismiss, arguing it was a “waste of time” and that counsel should be “trying to settle the cases,” then, when counsel responded that the motions to dismiss were sometimes granted, angrily retort that “accomplished nothing” because the bank could amend or re-file. Of course, this judge gave no explanation how it was possible to “settle” cases with banks when judges such as himself make it so apparent that he is hostile towards homeowners.
As I re-read your article, Judge, I’m troubled at the apparent insinuation that recent media reports and news stories are not based on fact. Generally speaking, they are. The media is not making up stories about foreclosure fraud and robo-signers. These stories exist because of real events that have happened to real people. Hence, the problem, in my view, is not that the media or foreclosure attorneys have misled the public into a negative perception about the judiciary, but rather that there are legitimate problems in how foreclosure cases are being handled in our courts. That sounds harsh, but, respectfully, if nothing were amiss, then there would be no news stories.
Essentially what I’m saying is this – I hear what you’re saying in your article, but I respectfully submit that your assertions, as well as your target audience, are misplaced. Instead of trying to speak to the public at large, and assure them the judiciary is fair through your words, prove the judiciary is fair through actions. Prove it by influencing other judges, throughout Florida, to handle the foreclosure crisis more like the Sixth Judicial Circuit. Convince Lee County to stop issuing those Orders setting docket soundings at the inception of a case. Tell Orange County to stop prohibiting phone appearances. Help all Florida judges realize that disputed Orders should not be entered ex parte, even in foreclosure cases. Convince all judges that it’s not fair to reschedule hearings where plaintiff’s counsel does not attend but to rule for the plaintiff when defense counsel does not appear. Suggest that the Florida Supreme Court amend the rule on lack of prosecution in foreclosure cases, so as to dismiss foreclosure lawsuits that are languishing.
As I see it, if you can use your influence to help fix the problem, you won’t feel the need to issue press releases like the one you did, as the public’s perception of the judicial system will take care of itself.
Mark Stopa
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Posted on December 2nd, 2010 by Mark Stopa
Every time I think the foreclosure fiasco can’t get any worse, it does. Now, Fannie and Freddie (which are controlled by the U.S. Government and have survived on taxpayer aid, i.e. money from you and me), say it’s okay for foreclosure lawsuits to proceed even as loan modifications are being reviewed/processed – what’s become known as a “dual track” process.
With all due respect, this is a total disgrace and abomination of epic proportions. To deceive homeowners into thinking a modification can happen, even though their foreclosure lawsuit is proceeding full speed ahead, is deplorable. For the U.S. Government to advocate that approach, based on tax dollars of you and me, makes me sick to my stomach.
Please, everyone, don’t take this lying down. Stand up and fight. Tell the media, your local congressman, your friends, anyone who will listen – this is wrong.
Here’s the article…
Federal regulators and lawmakers pressed mortgage guarantors Fannie Mae and Freddie Mac to suspend foreclosure proceedings while distressed borrowers seek new mortgages.
Acting Comptroller of the Currency John Walsh testified at a Senate Banking Committee hearing Wednesday that his agency is directing national servicers to suspend foreclosures for borrowers who are actively seeking to qualify for loan modifications.
Dual-track processing is “unnecessarily confusing for distressed homeowners,” Walsh told the committee, which held its second hearing since allegations of shoddy or fraudulent foreclosure practices arose in September.
Government-controlled Fannie and Freddie, taking congressional questions on the dispute for the first time, insisted that borrowers and lenders both benefit from the dual track process of pursuing foreclosure and loan modification at the same time.
Freddie Mac Executive Vice President Donald Bisenius said that the dual-track process minimizes losses, protects communities from blight and ultimately helps borrowers.
“It is not in the borrower’s interest for the process to drag on indefinitely,” Bisenius said. “The longer the borrower’s delinquency goes uncured, the farther behind he or she gets, and the harder it becomes to bring the loan current.”
A foreclosure can cost $30 to $40 a day, or as much as $15,000 a year, Bisenius said.
Congress is examining the foreclosure process after Ally Financial Inc.’s GMAC Mortgage unit, JPMorgan Chase & Co. and Bank of America Corp. temporarily halted home seizures in September amid claims that legal documents were mishandled.
At the hearing, lawmakers questioned bank regulators about what actions they have taken to ensure that home seizures are fair and legal. They also criticized dual-track processing as confusing and sometimes unfair.
“Countless constituents have told us stories of being stonewalled by banks for very long periods of time, of not being told the reasons for their rejection of their modification request, of significant delays caused by banks losing their paperwork, and trial modifications canceled with no rationale,” said Sen. Robert Menendez, D-N.J. “That just can’t continue to happen.”
Federal Reserve Board Governor Daniel K. Tarullo called the system “literally a race between foreclosure and modification” and called for national standards on loan servicers.
“The problems are sufficiently widespread that they suggest structural problems in the mortgage servicing industry,” he said. “It has now become evident that significant parts of the servicing industry also failed to handle foreclosures properly.”
Attorneys general, consumer advocates and congressional lawmakers have said that problems in the housing system are further complicated because delinquent homeowners seeking to renegotiate their loans through government- or bank-sponsored programs such as the Home Affordable Modification Program are often surprised and confused to discover that their foreclosures haven’t been suspended.
Freddie Mac, Fannie Mae and other purchasers of home loans, including the Association of Mortgage Investors, said the dual-track system balances the interests of everyone involved.
“While we believe that borrowers who already are under significant stress arising from their financial situations should not be subjected to needless confusion, we also believe that unnecessary delays in an already lengthy foreclosure process would be counterproductive,” Bisenius said.
His comments were echoed by Terry Edwards, executive vice president at Fannie Mae. The two mortgage companies are controlled by the U.S. government and have been surviving on taxpayer aid since 2008.
The average foreclosure takes 449 days, Bisenius said, which provides sufficient time to explore alternatives. The company and its servicers suspend foreclosures when a loan workout, short sale or other option becomes viable, he said.
Mark Stopa
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