Archive for February 16th, 2011

Does Mediation Stop Foreclosure?

I was on NBC’s 11:00 news last night (Tampa market), helping to explain an all-too-common problem.  Two well-intentioned homeowners were promised a mediation, but the bank didn’t care; they were going forward with foreclosure anyway.  Shannon Behnken of NBC deserves a lot of credit for helping (albeit indirectly) one Dade City couple get their mediation before the judge signed a Final Judgment of Foreclosure, but the media can’t intervene for everyone.  Homeowners need to realize that mediation isn’t a cure-all; they must defend their foreclosure lawsuit.   

Here’s a link to the video of the story.

Mark Stopa

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Why Isn’t Wall Street in Jail?

In his most recent epistle, Matt Taibbi of Rolling Stone investigates why none of the crooks on Wall Street have been imprisoned for their criminality.  In his words:

Nobody goes to jail. This is the mantra of the financial-crisis era, one that saw virtually every major bank and financial company on Wall Street embroiled in obscene criminal scandals that impoverished millions and collectively destroyed hundreds of billions, in fact, trillions of dollars of the world’s wealth — and nobody went to jail. 

How could this be?  Matt explains, in detail, the incestuous relationships between Wall Street bankers and the agencies in charge of policing them.  This incest goes as high up the pyramid as possible, from the SEC to the Department of Justice and even President Obama:

As for President Obama, what is there to be said? Goldman Sachs was his number-one private campaign contributor. He put a Citigroup executive in charge of his economic transition team, and he just named an executive of JP Morgan Chase, the proud owner of $7.7 million in Chase stock, his new chief of staff. “The betrayal that this represents by Obama to everybody is just — we’re not ready to believe it,” says Budde, a classmate of the president from their Columbia days. “He’s really fucking us over like that? Really? That’s really a JP Morgan guy, really?”

This article is a must-read.  It’s a bit dense, but it will help you understand what has caused the problems we’re now facing and why nobody in a position of authority is doing anything about it. 

Why isn’t Wall Street in Jail?

Mark Stopa

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NY Providing Lawyers for all Homeowners in all Foreclosure Cases

For many years, the right to counsel has existed only for defendants in criminal cases.  The logic, essentially, is that criminal cases are important enough that everyone should get a lawyer, even if he/she cannot afford one, because a person’s freedom is at stake.  Civil lawsuits, by contrast, are important, but not important enough that the government is going to foot the bill for an attorney. 

This week, though, New York took the unprecedented step of ensuring that all homeowners facing foreclosure have legal representation.  In my view, this move is an implicit yet glaring illustration of how foreclosure defense attorneys are critical to protecting the rights of homeowners facing foreclosure.  Essentially, it’s like saying “losing your home is as important as losing your freedom.” 

If you disagree, think about it like this.  Do you think New York would bear the expense of ensuring all homeowners have counsel if there wasn’t an overwhelming need for those homeowners to have an attorney?  In that same vein, isn’t New York’s willingness to incur this expense, for the benefit of homeowners and the system as a whole, a pretty obvious admission that the banks’ widespread fraud cannot go uncontested any longer?  It sure seems that way.   

If you’re in Florida, or any other state besides New York, and you’re wondering whether an attorney is necessary for your foreclosure case, remember what New York is doing.  New York sees such an overwhelming need for homeowners to have attorneys that they’re requiring it – even at their own expense.  To my knowledge, never before in the history of America have attorneys been required in non-criminal cases… until now.   

Here’s the entire article, courtesy of David Streitfeld of the New York Times.

New York court officials outlined procedures Tuesday aimed at assuring that all homeowners facing foreclosure were represented by a lawyer, a shift that could give tens of thousands of families a better chance at saving their homes.  Criminal defendants are guaranteed a lawyer, but New York will be the first state to try to extend that pledge to foreclosures, which are civil matters. There are about 80,000 active foreclosure cases in New York courts. In more than half of them, only the banks have lawyers.

“It’s such an uneven playing field,” said the state’s chief judge, Jonathan Lippman. “Banks wind up with the property and the homeowner winds up over the cliff, on the street. It doesn’t serve anyone’s interest, including the banks.”  A lawyer for every defendant will also serve the courts’ interests, the judge said, by making proceedings more efficient.

Under the procedures, which will be put in place in Queens and Orange Counties in the next few weeks and across the state by the end of the year, any homeowner in foreclosure who does not have a lawyer will be supplied one by legal aid groups or other pro bono groups.  Legal aid groups are expected to have foreclosure offices in the courts to handle the influx.

After revelations last fall that several major banks had used improper methods to speed foreclosures, the courts are increasingly becoming a central battleground for people seeking to modify their loan and salvage their house. Simply responding to a foreclosure notice in court, homeowners have learned, can sharply delay the proceedings.

That is a change from when the foreclosure crisis began. A few years ago, most foreclosed owners in New York and everywhere else did not show up at court proceedings and simply abandoned their homes. It was a “paper process,” the New York court system concluded in a recent report, with lenders inevitably the winners. New York now mandates settlement meetings overseen by a judge and attended by the lender, a sort of court inside the court. Homeowners are participating in large numbers but most of those without lawyers have little idea how to defend themselves. The cases are also overwhelming the courts. In several counties, half of the civil cases in higher courts are foreclosures.

Legal aid groups will find the task of representing all foreclosure defendants easier if the State Legislature agrees to Judge Lippman’s request for a $100 million increase in legal services programs spread over the next four years. Current financing for legal services in New York is about $200 million a year drawn from a variety of public and private sources.

New York, which is one of the 23 states where foreclosures must be overseen by a judge, has been more aggressive than most in trying to reshape the flood of housing cases. Lawyers pursuing foreclosure in New York are personally liable for the accuracy of the documents they represent. It is a requirement that some lawyers find onerous, but has been credited with significantly slowing the pace of foreclosures in the state.

Legal aid organizations in the 23 states, which include Illinois, Florida and New Jersey, say that they do not have enough money or lawyers to help everyone who needs assistance. New Mexico and Connecticut have started classes to help train people to represent themselves. Legal aid groups in other states are forced to choose among families, helping some but not others.

New York’s action “will shift the debate,” said Donald Saunders, director of the civil division of the National Legal Aid and Defender Association. “Everything Judge Lippman is saying will be looked at closely elsewhere.”

Mr. Saunders added, however, that fiscal realities could trump other considerations.

Nationwide, 2.2 million households are in foreclosure, with another 2.1 million at least 90 days past due, according to LPS Applied Analytics. After the banks’ revelations about their procedures, the average number of days delinquent for a foreclosed property rose to 507 days in December, its first time above 500.

In New York, the two initial counties will serve as a model for the statewide program. Legal Services of the Hudson Valley will work with the court in Orange County to provide representation, while the Legal Aid Society, which assists people in New York City, will supply lawyers in Queens, a foreclosure hotbed.

According to court data, foreclosure filings in Queens have increased 217 percent, to 5,839 cases from 2005 to 2009.

“There’s a huge demand,” said Steven Banks, the society’s attorney in chief. While there are no specific statistics for foreclosure, he said that in general the group has been able to fulfill only one out of nine requests for help.

How then will it handle so many more foreclosures?

“Redeploying resources,” Mr. Banks said. It should help that the lawyers will “take more of an early intervention in the case rather than at the 11th hour when the sheriff is on the way,” he added.

Judge Lippman, who announced the new initiative in his annual State of the Judiciary address in Albany, said he hoped that the lawyers would reach out to defendants even before they appeared in court.

Citing the 1963 ruling by the Supreme Court that state courts are required by the Constitution to provide counsel in criminal cases to defendants who cannot afford their own, Judge Lippman said this was the right moment to extend that provision.

“Today it is an equally obvious truth that people in civil cases dealing with the necessities of life can’t get a fair day in court without a lawyer,” he said.

Mark Stopa

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