Archive for February, 2011

Words of Wisdom

I came across this quote from Abraham Lincoln today, and it seemed especially appropriate, not just because it’s his birthday, but with everything our country is facing. 

America will never be destroyed from the outside. If we falter and lose our freedoms, it will be because we destroyed ourselves.

Mark Stopa

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Fraud on the Court, Ben-Ezra style

Just yesterday I was lamenting the absence of any sanction against Ben-Ezra & Katz for its ongoing and systemic fraud on the courts, per Fannie Mae, which fired the foreclosure mill.  Today, I got some insight into the fraud, and it’s not pretty.  To illustrate, read this Order to Show Cause.  I promise – it’s a whopper. 

Apparently, Ben-Ezra filed a foreclosure suit with a lost note count, then filed an “original” note signed by an entirely different defendant on an entirely different property, along with a fraudulent assignment of mortgage.  The Court entered summary judgment, then, upon realizing the fraud, directed Ben-Ezra & Katz to show cause why they should not be held in contempt of court. 

This morning, Judge Maxine Cohen Lando conducted the show-cause hearing.  I’m hoping to get my hands on the transcript, but, from what I’m told by a colleague, she held Ben-Ezra & Katz in contempt, vacated the foreclosure judgment, dismissed the lawsuit with prejudice, and referred the lawyers to The Florida Bar. 

FINALLY!  A sanction for fraud.  I applaud Judge Lando for this ruling and hope other judges follow suit.  Better yet, I encourage all judges to realize the extent of the fraud and take stock of it before signing foreclosure judgments.  Bear in mind, the fraud must be really bad for Fannie Mae to terminate Ben-Ezra, and this is undoubtedly just one example. 

It’s worth noting that Ben-Ezra’s young associate was also held in contempt by the Court.  This is ironic, as I was just having a conversation about this issue the other day with a young associate at a foreclosure mill, about how just because his bosses tell him to “follow procedure” by doing something unethical doesn’t mean he should oblige.  After all, it’s his name on the signature line of court filings, and when push comes to shove, if there is misconduct, he’ll be the one who has to answer for it.  Suffice it to say this is something for all the young lawyers at the foreclosure mills to think about.  Yes, the economy is bad and yes, we all need to earn a living, but it’s not worth committing ethical violations, even if that is “procedure” at the foreclosure mill.  Maybe you’ll get away with it once, maybe ten times, or maybe even a hundred, but eventually you will get caught, and, as Judge Lando has shown, the sanction when you get caught is (and should be) extreme.

Mark Stopa

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Agreed Order GRANTING a Motion to Dismiss

One of my biggest frustrations as a foreclosure defense attorney is having meritorious motions to dismiss denied by judges who come out and admit the motion is well-taken but deny the motion anyway because “the foreclosure crisis necessitates that cases be moved along,” or words to that effect.  One of the biggest battles I’ve fought in recent years is to fight this dynamic, continuing to educated Florida judges about the legal arguments that necessitate dismissal of inadequate foreclosure complaints. 

In recent weeks, I’ve really felt like Stopa Law Firm (myself and my bright associate, Philip Healy) have been making headway, not just with the judges, but opposing counsel as well.  Today, for instance, one of the big foreclosure firms called to say they wanted to cancel the upcoming hearing on our Motion to Dismiss and agree to entry of an Order granting the motion.  This has happened a few times, actually, in recent weeks, and this is a great sign. 

Here’s the Agreed Order Granting Motion to Dismiss that we’ve submitted to the Court for execution.

Mark Stopa

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Fannie Mae Fires Another Foreclosure Mill

Want more proof that banks are engaged in repeated, ongoing, and systemic fraud on unsuspecting homeowners, the court system, and the public at large?  Fannie Mae has terminated Ben-Ezra & Katz, P.A. from representation in all foreclosure cases in Florida.  Although Ben-Ezra & Katz dismissed its misconduct as “technical paperwork problems,” Fannie Mae’s decision to fire the foreclosure mill is a pretty obvious indication there’s more to it than that.  In the words of Fannie Mae, Ben-Ezra & Katz was not acting “in strict compliance with proper procedures, ethical codes of conduct and legal requirements.”

Is it just me, or is it totally perverse that the misconduct is so egregious that Fannie Mae is forced to admit it yet nobody else (the courts, the judges, the Florida Attorney General, the Florida Bar, etc.) is concluding similarly or invoking any sanction for this admitted misconduct?    

Fannie Mae is admitting its own lawyers acted improperly in foreclosure cases, so much so they were terminated.  Where is the sanction? 

If I walked into a bank tomorrow and stole money, I’m pretty sure I’d get arrested.  Yet somehow big banks can steal from homeowners in a widespread, systemic basis and there is no penalty, no sanction, no nothing.  Am I the only one appalled here? 

By the way, I’ve litigated countless cases against Ben-Ezra & Katz and all the other foreclosure mills and I’ve seen basically no difference in how they all operate.  In my view, if Ben-Ezra is “in strict compliance with proper procedures, ethical codes of conduct and legal requirements,” then the other foreclosure mills aren’t, either.  If anyone thinks I’m wrong, I’d love to see documentation or other proof illustrating how Ben-Ezra is different from all the rest.  I don’t see it. 

Here’s the article, courtesy of Kimberly Miller of the Palm Beach Post. 

Federal mortgage giant Fannie Mae has cut ties with a second South Florida law firm handling its foreclosure cases, requiring an immediate transfer of those files to other attorneys and likely causing more turmoil in the state’s foreclosure courts.  The termination of its relationship with the Fort Lauderdale firm of Ben-Ezra & Katz, P.A. was announced today in a notice to loan servicers. The notice says payments to the firm should be stopped immediately and gives servicers a Feb. 15 deadline to find new firms to handle the Ben-Ezra & Katz files.

“Fannie Mae has become aware of certain document execution issues at the Ben-Ezra law firm regarding its processing of foreclosure cases on our behalf,” said Fannie Mae spokeswoman Amy Bonitatibus.  “It is our expectation that law firms will handle matters in strict compliance with proper procedures, ethical codes of conduct and legal requirements.”

Ben-Ezra & Katz has represented banks in 508 Palm Beach County foreclosure cases in the past two years where the homes were ordered to auction.  In a statement, Ben-Ezra & Katz said it was disappointed and surprised by Fannie Mae’s decision, and that the issues Fannie Mae is referring to were technical paperwork problems that the firm is correcting.

“When problems of foreclosure files surfaced last fall, we hired an outside law firm to conduct an audit of our processes and procedures,” the statement said. “It is ironic that in trying to make sure we were doing everything correctly, we reached this position with Fannie Mae.”  The move by Fannie Mae follows its November firing of David J. Stern’s Plantation-based law firm, which is one of four so-called “foreclosure mills” under investigation by the Florida attorney general’s office.  Ben-Ezra & Katz is not one of those firms, nor was it included in a more recent attorney general query of three additional firms regarding their foreclosure practices.

Mark Stopa

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Big Banks – Thumbing their Noses at the Military

Video of Banks Screwing Over Active Servicemembers 

Perhaps nobody in America “gets it” more than Dylan Ratigan.  The above video is his most recent illustration of how banks are repeatedly and continuously preying on the most vulnerable members of our society, including on homeowners who are on active duty in the military.  Disgusting. 
If you’re a Servicemember, please remember you have rights, as a Tampa judge in one of my cases appropriately ruled here.
Mark Stopa

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File Bankruptcy, Save Money, Buy a Home (Cash!)

Many prospective clients who contact Stopa Law Firm are hoping to own their home free and clear.  They see stories about foreclosure fraud and think a judge will eliminate their mortgage and give them their home for free because of fraud by a bank.  For a variety of reasons (which I’ll explain in a separate blog), it just doesn’t work that way.  That said, I am firmly convinced that owning a home outright is a perfectly reasonable goal for many Florida homeowners.  Here’s what I envision. 

Take your typical, middle-income family.  They owe $300,000 on a home worth $125,000, have $30K in credit card debt, make $40-$50,000/year, and are facing foreclosure.   One reasonable approach for this family would be to file a Chapter 7 bankruptcy, eliminate their credit card debt, eliminate the deficiency on their home (the $175,000 difference between what they owe and what the home is worth), continue living in the home (even after the bankruptcy, as is their right), defend their foreclosure case with an experienced foreclosure defense attorney, and diligently save the money that they’re not having to spend each month on their mortgage.  Given the rate at which foreclosure lawsuits are progressing (or not progressing, as the case may be), it is totally reasonable to think Florida homeowners can save enough money to buy a new house – with cash, free and clear – by doing nothing except defending their foreclosure case and saving their money. 

It sounds too good to be true, but for many homeowners, this is a perfectly legitimate, lawful thing to do.  Think about it.  We’ve all seen articles, like this one, explaining how a foreclosure lawsuit can take years for a bank to prosecute to conclusion.  That means you may be able to stay in your home for years, saving money, and if/when the foreclosure comes, you’ll have a pile of money to do what you want with, including buy a new house outright. 

Suppose your monthly mortgage payment was $1,000/month.  After a year (of defending your foreclosure case, staying in your home, and saving your money), you’ll have $12,000 cash; after two years, $24,000; after three, $36,000.  At $2,000/month, you have $48,000 after two years and $72,000 after three years.  SEVENTY TWO THOUSAND DOLLARS.  CASH.  Have you looked at the real estate market nowadays?  Do you know what kind of house you can own, right now, outright, with that kind of money?  I’m seeing nice homes – 3/2/2 – go for less. 

You’ll notice I mentioned bankruptcy as the first step in this process.  Here’s why.  If/when you lose your foreclosure case, you may be on the hook for the deficiency (in my example, above, $175,000).  This means you’ll owe the bank more money even after being foreclosed.  So if you’ve saved tens of thousands of dollars while the foreclosure case is pending, you risk losing that money to satisfy the deficiency.  You may have saved $50,000, but if you owe the bank $175,000 deficiency, you’ll lose your $50K.  And if you try to file bankruptcy at that point, to avoid paying the deficiency, you’ll likely avoid the deficiency, but you’ll be required to turn over your savings as part of the bankruptcy… so either way, you lose your savings.  But if you file bankruptcy first, before you save these monies, you get to keep all of the money you save in the ensuing months/years, as you’ll have eliminated the deficiency and your other debts. 

In sum, I find it totally reasonable to think you can file bankruptcy, eliminate your debt, live in your home, save your money, and use the savings to buy a house outright! 

This approach cannot work for all people, and it’s not intended as legal advice for any particular person.  However, I firmly believe a lot of Florida homeowners would be drastically improving their financial picture by employing this strategy, particularly if they’re already facing foreclosure.  

Some people may think this approach is slimy.  My response to that is simple.  Banks have had no problems screwing over well-intentioned homeowners.  They took the bailout money and put it in their pockets.  If you’re trying to get a loan modification, and are instead facing a foreclosure suit, what are you supposed to do?  Consent to foreclosure and let the bank through you on the street?  Keeping banging your head against a wall, hoping to get a mortgage modification that will probably never come (only to wind up foreclosed and thrown on the street with no money and nowhere to go)?  Or eliminate your debt, defend your foreclosure, save your money, and secure your financial future?  The banks did what was in their best financial interests – why shouldn’t you? 

If you’re facing foreclosure, or think you’re a candidate for what I’ve described, please call for a free consultation.  888-450-1549.

Mark Stopa

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Strategic Default Gaining in Popularity

Here’s a well-written article from Lita Epstein of AOL…

The growing popularity of strategic default can’t be denied. Forty-eight percent of homeowners surveyed say they would consider a strategic default — also known as walking away — if their home were underwater, in the latest research done for RealtyTrac and Trulia. That’s up from 41 percent in May. Yet the banks still seem to be in denial that a strategic default wave may be building.

Strategic default is when a borrower makes the strategic decision to stop paying his mortgage. Since it takes 1½ to 2 years to foreclose on a home in most states, the borrowers then use the cash that would have gone toward paying their mortgage to pay off other debts and improve their own financial position.

Rick Sharga, senior vice president of RealtyTrac, says there’s $300 billion worth of adjustable mortgages expected to reset in the next 12 to 15 months. That will increase monthly mortgage payments by $1,000 on homes already underwater by 30 percent to 50 percent. He thinks its “tough to make an economic decision to stay in that situation.”

“Some families, who like their neighborhood and their kids are in a stable school environment, will likely stay in their homes, even if the mortgage payment goes up, if they can afford it,” Sharga explains. There’s another group of people, mostly young couples, “who don’t have an emotional attachment to the location.” For them it’s more an investment decision about keeping a roof over their heads. They will ask themselves whether they can live more cheaply in a rental, since they don’t expect their home to regain enough in value in the next 10 to 20 years.

“We’re a more mobile society,” Sharga says. “People just don’t have the same emotional ties to their home as in the past.” He also thinks there is a “visceral anger toward lending institutions,” which is driving some of this movement toward strategic default. People watched as the banks got their bailouts, but they’re not willing to share in the loses of the general public by offering principal reduction. Interestingly, men (57 percent) are more likely than women (40 percent) to consider strategic default as an option for dealing with negative equity, the survey found.

Jon Maddux, one of the founders of You Walk Away, has seen a 45 percent increase in the number of people signing up for his service in 2010 over 2009. He expects 2011 to be even bigger year for his company. The web traffic to his website has jumped 20 percent in December 2010 versus December 2009.

Sharga thinks the banks may still be living In some state of denial. He thinks there is “wishful thinking in the banking community” that strategic default won’t grow in popularity. He believes the only way to stem the tide is for the banks to consider principal reduction programs to give an incentive to underwater borrowers to stay in their homes.

The banks must face the “harsh reality that there is about $1 trillion sitting on their books” in property that has lost value. Sharga explained that $1 trillion number comes from an executive of JP Morgan Chase who testified before Congress that it would cost the banks between $900 billion and $1 trillion to “right size” the market values of the mortgages on the books.

He thinks banks should consider modifying the loans of underwater borrowers so that the payments are based on the home’s current market value. Any difference should be set up as a balloon payment that can be partially earned out as the homeowner continues to make on time payments. That way both the borrower and lender share in potential losses in the future. That gives the borrower an incentive to stay in the home and pay the mortgage on time.

Another inventive incentive is being promoted by the Loan Value Group called the Responsible Homeowner Reward. Right now only a few banks have signed on to the program, but Frank Pallotta, executive vice president and managing partner of the Loan Value Group (LVG), says more and more lending institutions are showing interest. LVG has commitments in excess of $1 billion of face value of mortgages with rewards ranging in size from 10 percent of the unpaid balance to as much as 30 percent. LVG signs nondisclosure agreements with the banks that do sign on to the program, so he could not divulge which banks are currently working with him.

The way the reward program works is that if your home is underwater LVG works with the borrower to get details about the current value and the borrower’s current financial situation. Using this information it then works with the bank to come up with a reward specific to the borrower’s situation. The reward is then set aside in an account that the borrower can earn as he makes on time payments over a two to five year period depending on the terms. Then the reward sits in a reserve account and is given to the homeowner when he pays off the mortgage, sells the home or refinances the home. After the borrower earns his reward, he can lose it if he becomes delinquent more than once in any 12 month period. This gives the homeowner an incentive to pay on time even if underwater.

Pallotta thinks that “if the banks decide to do nothing they do it at their own peril.” He said by their “doing nothing it is a proactive decision” to enable strategic default. He sees a “lack of connection between the servicer and the borrower.” His company works to improve the communications between the two and come up with a win/win solution for both.

Will banks begin to consider principal reduction for underwater borrowers to stem the tide of strategic default? No one knows that answer for sure, but there are good solutions for the banks to consider and companies out there ready to help them. Yet while the Obama administration supports principal reduction as an option for struggling borrowers, the regulator for Fannie Mae and Freddie Mac does not, according to recent reports.

Mark Stopa

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Banks Keep Stealing – Why Keep Paying?

Below is an article written by MSNBC’s Dylan Ratigan, who makes a compelling argument for strategic default

The dire straits of the middle class of America has made it near impossible for our politicians to keep up the pretense that our current government truly works for the “people.” Between the multiple overt and secretive bailouts, the massive bonuses and the circular use of our tax money to lobby for these continued handouts, you can no longer hide from the evidence.

When Senator Durbin said “The banks… frankly own this place,” you realize it was not in jest.

Couple this with recent protections handed by the Supreme Court to corporations to directly influence elections and it can make things seem hopeless for those not on Wall Street or their chosen politicians. Favored CEOs and now even foreign countries get all the printed money they need, leaving us paying both our bills and theirs.

And now nearly a quarter of all Americans are currently underwater in their mortgage because of that steadfast honor.

If you are one of them, chances are you didn’t do anything wrong. Almost all of you were not subprime borrowers or speculators, but merely people buying a house that they thought they could afford at the time. You were just unlucky in that you bought a house during a time when an outdated Wall Street and their complicit politicians decided to use housing to regain the income they lost due to the Schwabs and Etrades of the internet age.

You didn’t cause this mess. They did.

Now you are struggling to make the same payments on this mortgage on your now overpriced home even in light of a crashing economy and massive deflation, all while the government does everything in its power to help Wall St. keep the bonuses coming.

Well, it is becoming time to take matters into your own hands… I suggest that you call your lender and tell them if they don’t lower you mortgage by at least 20%, you are walking away. And if they don’t agree, you need to consider walking away.

It probably doesn’t feel right to you.

That is because you probably are a good person. But your mortgage is a business deal, and it is not immoral to walk away from a business deal unless you went in to the deal with the intention of defaulting.

But somehow, even though the corporations are pumped to exercise their new rights, former bankers like Henry Paulson, current ones like Jamie Dimon and — get this — now even Fannie Mae execs want to keep you from exercising your rights.

But before you let them (or anyone commenting below) force you into paying that $500k mortgage on a $300k house, ask them if they’ll push Jerry Speyer into “honoring his obligation” by breaking into his $2 billion personal piggy-bank to keep paying for Stuyvesant Town?

Or how about asking Hank and Jamie to lecture fellow bailed-out CEO John Mack about how “you’re supposed to meet your obligations, not run from them”? Maybe make him use some of his $50+ million for those buildings he bought in San Francisco?

And before shaming and punishing American homeowners, did they nag Steve Feinberg about helping “teach the American people…not to run away” by writing a check out of his billion-dollar pocket to cover all the stiffed landlords and vendors at Mervyn’s? After all, at least you aren’t single-handedly putting 1,100 employees out of work when you walk on your mortgage.

As part of the deal for your house, your mortgage holder gets interest payments from you and they also use the note to your house for their capital reserves. In return, they take the risk of a foreclosure. In many states, you paid extra to have a non-recourse loan where the lender just gets the house back if you stop paying — your interest rate would’ve been much lower if you were held personally liable like a student loan. But if you still feel bad, then donate the money saved to charity instead of to their bonuses. And when someone tries telling you why it is so wrong, here are some answers:

– Yes, it might seem selfish, but you are actually going to help fix our country the right way, through the use of pure capitalism. There are 3 parties involved in your mortgage — the mortgage holders, the servicing bank and you. You probably want to stay in your house. Most of the people who actually own your mortgage also want you to stay in your house, preferring a mortgage reduction that you keep paying instead of the total loss of a foreclosure. But the major banks (BofA, Wells Fargo, JP Morgan, Citi, etc.) that underwrite and service the loans don’t care about either of you. They (with the aid of their government) just care about hiding their true financial condition for long as possible so they can continue to bonus themselves outrageously. The credible threat of you walking away from your mortgage en masse is the only market-based solution that will force these banks to work with the mortgage holders on your behalf.

– No, you will not “hurt” your neighbors — certainly not near the scale of the banksters. Chances are someone just as nice will you will move in and (unlike you) pay a fair, non-inflated price for the house. Encourage your neighbors to fight back against the banks and ask for their own mortgage reductions as well.

– Yes, it might make getting a loan harder for everyone. Considering the spate 0% down NINJA loans over the past decade, that probably isn’t a bad thing.

– Yes, it might hurt your credit. But with time, people bounce back from having foreclosures on their record. Search online and then talk to a lawyer about the repercussions, which vary by state.

– No, the banks won’t necessarily pass the losses on to customers. They already make a lot of money. If costs are passed on to every consumer without banks competing on price, that’s a sign of illegal collusion or a monopoly. Let’s fix that instead of just letting banks ruin our lives. They might, however, not all make $145 billion in bonuses next year doing something fundamentally so easy that it is an unpaid job in Monopoly.

Meanwhile, our captured government has made it clear that they want to further reward these banksters because there are clearly better ways to “save” the economy without rewarding those most responsible for the damage.

Instead of claw backs for the past theft and strong financial reform for the future, they choose to cover-up the gross misuse of our tax money, making our country worse by helping the criminals on the backs of the most honest.

But thankfully, in this country we still have the tools to fight back and regain our country. Our vote, our voice, our laws and what we choose to do with every penny we have that doesn’t go to taxes are the benefits of our hard-fought freedom, and in this battle we must use them all to fight back. It’s time for the citizens to once again own this place.

Mark Stopa

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Getting Away With Foreclosure Fraud

There is a rule of procedure in Florida that enables a plaintiff to dismiss a lawsuit, voluntarily, at any time.  The case can be on the eve of trial, after years of work and preparation, and the plaintiff can dismiss the case (and there’s nothing the defendant can do about it).  The parties can be entering a hearing on a defendant’s motion for summary judgment, which the plaintiff realizes will be granted, and the plaintiff can dismiss the case (and there’s nothing the defendant can do about it).  In both instances, yes, the case is over, and yes, the defendant has “prevailed,” but if the dismissal is without prejudice, the plaintiff can re-file the exact same lawsuit at any time in the future. 

In a recent foreclosure case, the fairness and practicality of this rule was put to the ultimate test.  The underlying facts were the classic example of foreclosure fraud.  You can read the entire opinion here, but here’s my Cliff Notes version.  The plaintiff lacked standing when it filed suit for foreclosure.  A bright foreclosure defense attorney began proving as much.  Rather than admitting their lack of evidence, the bank and its lawyers created a fraudulent assignment of mortgage.  Instead of accepting the assignment as gospel, the homeowner’s attorney challenged its veracity and began pushing for sanctions for fraud on the court, seeking some extreme but appropriate (on these facts) remedies, including dismissal with prejudice and, essentially, elimination of the mortgage. 

Undoubtedly realizing they were caught in a fraud, the bank and its lawyers voluntarily dismissed the case.  Then they prepared a new assignment and filed a new lawsuit, acting as if the fabricated evidence never existed.  The homeowner’s attorneys pushed back, asserting they shouldn’t be able to dismiss the case and sweep the fraud under the rug. 

So that was the issue before the appellate court – can a bank, when confronted with damning evidence of fraud on the court, fabricating evidence, and foreclosure fraud, simply dismiss the case, create a new assignment, and re-file (essentially sweeping its own misconduct under the rug)?  

Florida’s Fourth District Court of Appeal recognizes the significance of this question.  That’s why all of the judges on the court joined in the opinion (making it an en banc opinion, which is rare, as opposed to the standard three-judge panel), and certifying the question to be of great public importance to the Florida Supreme Court.  The judges also acknowledged the pervasive nature of fraud in foreclosure cases, ruling ”many mortgage foreclosures appear tainted with suspect documents.”  Unfortunately, however, all but two of the judges ruled that the bank could dismiss its case, and re-file, despite the rather obvious fraud on the court and fabrication of evidence.   

I readily acknowledge there are technical, legal arguments to be made in support of such a ruling.  As I said at the outset of this blog, there is legal precedent for the court’s ruling.  However, I find the decision to be a travesty of justice.  Think about it.  What is the court saying via this ruling? 

Banks, you can commit foreclosure fraud.  You can fabricate evidence.  If you get caught, simply dismiss the case, fix your evidence, and re-file a new lawsuit (without penalty).  

Everyone knows foreclosure fraud is a huge problem in Florida courts.  Even the judges in this decision acknowledge as much.  Hence, this ruling is yet another illustration of how nobody in a position of authority is willing to do anything about it. 

One aspect of the ruling that I can’t get out of my head is where the court says, in certifying the question as one of great public importance, that if the sanctions this homeowner sought were available after a voluntary dismissal, it would “dramatically affect the mortgage foreclosure crisis in this State.”  I have this horrible, nagging feeling that is what’s driving the court’s ruling.  The judges realize there is fraud (as all of us do), but they don’t want to “dramatically affect the mortgage foreclosure crisis” in Florida, so they issue a ruling that basically lets the banks get away with fraud.  In other words, as I read the ruling, what I see is “we don’t want every homeowner in Florida to be claiming fraud, and clogging up our court system, so we’ll let the banks get away with fraud for the sake of the system.” 

Maybe I’m wrong.  I’d like to think I am.  Time and time again, though, I’ve seen Florida judges be presented with an opportunity to uphold justice, to disavow fraud, and to prove they won’t tolerate fraud by big banks.  Yet time and time again, Florida judges don’t avail themselves of the opportunity to send such a message.  Respectfully, what does this say about our court system?  Our system of justice? 

We will administer justice, unless it’s inconvenient, or creates a backlog on our dockets, in which case we’ll turn the other cheek for the sake of the system.

The irony here is that if Florida judges made strict rulings disavowing fraud then it would help the very system with which they are so concerned.  To illustrate, suppose banks knew they would be harshly sanctioned for foreclosure fraud.  Eventually they’d realize (at least in theory), that they can’t engage in that fraud, so they’d prosecute cases the right way.  If that happened, foreclosure defense lawyers like me would have less to talk about in defense of homeowners, as banks were prosecuting cases correctly.  But lawyers like me virtually always have defenses to assert, often fraud, because banks routinely engage in fraud, often because there is no punishment for their having done so.  And hence the cycle continues, on and on.  Banks commit fraud, homeowners complain about it, judges won’t sanction it, banks commit more fraud, homeowners complain more, etc., etc. 

Imagine if Florida somehow passed a law that legalized armed robbery.  Do you think there’d be an increase in armed robbery?  I do.  Most people, for moral reasons, would still refrain from it.  But if armed robbery were legal, more people would commit it.  Foreclosure fraud works the same way.  Without a deterrent, more banks will do it.  Hence, where homeowners are prevented by law from robbing a bank, it seems that banks are somehow protected by our laws from robbing homeowners.

Mark Stopa

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My Inner Conflict from being a Republican

Through the months I’ve written this blog, I’ve generally avoided political debates.  Foreclosure defense, as I see it, should not be a matter of Democrat versus Republican.  It should be a matter of right versus wrong – of applying the law and disavowing fraud.  Unfortunately, many in our country seem intent on making foreclosure a political issue.  If you’re pro-homeowner, you must be a Democrat (and vice versa); if you’re pro-bank, you must be a Republican (and vice versa).  As a life-long Republican, this drives me nuts.  In fact, as I continue to fight foreclosures on behalf of homeowners, I’ve come to question just what it means to be a Republican. 

You see, I’ve always been a Republican.  I was raised in a Republican household.  I’m socially conservative.  I’m pro-life.  I’m Catholic.  I believe in the free market system and that excess government involvement in the private sector is not a good thing.  I believe Americans know how to spend their money better than the government does.  The failure of HAMP and how the banks put all of the bailout money in their pockets (instead of lending to the public, as intended) are two good examples of the government wasting our tax dollars.  It’s been a number of years, but I recall my Economics professors at Wake Forest being free-market advocates as well, and undoubtedly this is why.

In this same vein, I’ve always believed in the trickle down theory espoused by the Republican party.  If you help businesses, it will create more goods and services and more jobs for middle and lower class persons – at least, that’s how the theory goes. 

The problem, of course, is that, in recent years, I’ve seen the Republicans’ theory of trickle-down economics get completely obliterated.  At this point, how can anyone legitimately argue that “trickle-down economics” works?  Remember, banks took all of the bailout money and put it in their own pockets.  Wall Street got bailed out, but there was no “trickle down” – the rich bankers got richer while mainstream America continued to suffer (through continued unemployment and a foreclosure crisis that shows no signs of slowing down). 

By virtually all accounts, big banks like Bank of America would not have existed but for the bailout from U.S. taxpayers.  Yet Bank of America CEO Brian Moynihan managed to pocket a $10 million salary in 2010.  How can this be? 

Look, I believe in the capitalist system.  Americans who work harder, have more education, offer a service that is in demand … these people should be rewarded financially.  Professional athletes, Hollywood actors, Bill Gates, the founders of Facebook, lawyers, doctors … people like this  should not be begrudged because our society places a value on the services they provide.  In fact, I admit Brian Moynihan provides a service, running one of the nation’s biggest banks.  However, it thoroughly and completely disgusts me to see him (and other, similarly-situated CEOs at the big banks) pocketing unconscionable profits, at the expense of Americans everywhere, when banks like BOA exist because of Americans’ taxpayer dollars. 

What the big banks are doing is not capitalism.  Bank of America took billions of dollars of taxpayer money and stuffed it into its own pockets.  When you rely on government handouts, that’s not capitalism.  That’s not to say there isn’t a time and a place for (some) government subsidies, but $10 million, in one year, to one guy?  At a time when mainstream America continues to suffer?  However you want to define it, what BOA has done is not OK. 

Hence, from a political perspective, what do I do?  I remain socially conservative, pro-life, and Catholic, and in that sense I’m still a Republican.  But I’m thoroughly disgusted at how nobody in the Republican party seems to care that “trickle-down economics” is not working.  Wall Street got bailed out, and the big banks are recording record profits, yet unemployment remains rampant, the foreclosure crisis shows no signs of slowing down, and mainstream America continues to suffer.  How can anyone think this is OK?  More troubling, how can I align myself with a party that seems to think this is OK?  Honestly, I’m not sure how to answer that.  I’m not saying I’m a Democrat, but I’m not a Republican at this point, either. 

One could argue that anyone, in a rough economy, would do what BOA did, i.e. take any monies received and stuff it in their pockets.  After all, when the going gets tough, people tend to look out for themselves first.  Hence, it may well be that if homeowners had received that same bailout money that it wouldn’t have stimulated the economy any more than the bailout BOA received.  But I can’t help but wonder – how many Americans would have been helped with the $10 million given to Moynihan in 2010? 

I suspect many Republicans would deny being “OK” with the struggles of mainstream America.  If so, then prove it.  BOA was willing to hold its hand out when times were bad – force it to pay more back, in the form of higher taxes, now that things are good (for it, anyway).  Implement policies requiring higher taxes, payments, or penalties.  No matter what, though, stop sitting back, doing nothing, and watching Wall Street get richer while Main Street suffers.

Mark Stopa

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