Archive for September 21st, 2011

Non-Judicial Foreclosures – the Insurmountable Obstacle

Today’s St. Pete Times discusses how Florida Governor Rick Scott and various members of the Florida legislature are considering whether to convert foreclosure lawsuits in Florida to non-judicial proceedings.  This would mean, essentially, that instead of having to prevail in court to be entitled to a foreclosure, a bank could obtain a foreclosure without any court involvement, essentially by declaring its right to foreclose on its own.  

First off, any existing clients of Stopa Law Firm should not be worried.  While I can’t predict the actions of our idiot governor or the legislators who may or may not be paid off by bank lobbyists, I cannot imagine any circumstance in which existing lawsuits which are currently pending in our courts would somehow be removed from the court process.  In other words, no matter what, this proposed legislation should not impact pending cases. 

That said, this entire concept is so absolutely ridiculous – pending cases or not – that it’s hard to know where to begin. 

We’ve all seen, over the course of the past year, how the foreclosure process is filled with fraud.  We’ve seen banks knowingly create false evidence and try to use that evidence to procure a foreclosure.  We’ve seen banks foreclose on the wrong home, sue people who were current on their payments, lie about the amounts owed, and take countless other nefarious acts.  Anyone lobbying for non-judicial foreclosure has to realize:

if banks are willing to commit such awful acts of fraud when foreclosures are supervised by courts, what would they do without supervision? 

And what would it say about you to bless this misconduct, to the detriment of Florida homeowners? 

I trust most people reading this don’t need me to point out the ridiculousness of non-judicial foreclosures given what we now know about bank misconduct. 

Banksters like to retort by saying “pushing through foreclosures faster will help the economy?”  Oh, really?  Banks aren’t taking title to properties now, even after obtaining foreclosure judgments (as seen by the incredibly frequency with which foreclosure sales are cancelled), because they can’t handle or don’t want these homes.  That’s why countless properties remain vacant, uninhabited and dilapidated – banks don’t want them, even at the slow pace at which foreclosures are being processed.  Hence, what will happen if all of these properties are thrown onto the market, all at once, accelerating the process?  Who’s going to buy, or live in, 100,000 homes?  500,000 homes?  1,000,000 homes? 

Again, I’m confident most of you reading this realize the absurdity of the bankers’ position.  Hence, let me address the issue that you may not have realized – what I deem the insurmoutable obstacle to any proposed legislation for non-judicial foreclosures.  

Quite simply, most mortgages entered in Florida require banks to foreclose via a court proceeding.  If you’re not sure what I mean, read your mortgage.  It probably contains a clause similar to the following:

Mortgagee, at its option, may [upon default in payments] elect to require immediate payment in full of all sums secured by this Mortgage without notice or demand and may, at its option, foreclose this mortgage by judicial proceeding.

Did you catch the key language?  By judicial proceeding.  You see, most Florida mortgages explicitly require that banks foreclose by a judicial proceeding. 

Do you think Florida’s governor or the legislature can override that requirement?  I sure don’t.  This term of the mortgage is part of a contract between the bank and the homeowner.  The governor and the legislature are strangers to that contract.  Hence, they have no right whatsoever to change the terms of that contract. 

By way of example, most people know that most foreclosure lawsuits, when they go to trial, are tried by a judge, not a jury.  This is because most mortgages have a clause wherein the homeowner agreed to waive any right he/she had to a jury trial.  Generally speaking, courts enforce this provision because the parties agreed to it, and no matter how inequitable it may seem, the parties are free to contract to whatever terms they choose, and those contract terms must be honored.  In other words, no matter how unfair or inequitable we may think these jury trial waivers are, courts honor them because the parties agreed to them. 

With this in mind, I cannot fathom how Florida’s governor or legislature could create a law (even if they were so inclined) that removes foreclosures from the court system.  Where a homeowner and a bank agreed that the bank had to obtain a foreclosure via a judicial proceeding, this contractual obligation cannot be changed by a third party.  It simply can’t, any more than the jury trial waiver can. 

To clarify, I suppose it’s possible (idiotic, but possible) to allow non-judicial foreclosures on mortgages that have not yet been entered/signed (presuming those mortgages are written in a way that allow non-judicial foreclosures).  In that circumstance, the legislature would not be enacting a requirement that is contrary to the express terms of the parties’ agreement.    However, the legislature simply cannot allow non-judicial foreclosures on existing mortgages given how mortgages in Florida are presently written.  This is, quite clearly, an insurmountable obstacle to non-judicial foreclosures in Florida.

Mark Stopa

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Broward County – Hearings Required!

I spend a lot of time on this blog expressing concerns about foreclosure-related procedures in various courts throughout Florida.  Candidly, I haven’t done a good enough job of pointing out those policies and procedures that are fair and comport with due process.  The foreclosure crisis is a nightmare for everyone involved, including our judges, and quite simply, we should all give praise where it’s due.   

For instance, remember this recent blog, where I lamented the entry of a Final Judgment of Foreclosure in a Broward County case, ex parte, without notice, and without hearing?  Apparently, Judge Marina Garcia-Wood, who presides over all foreclosure cases in Broward County (and who entered an Order vacating that Final Judgment), has realized the problem with ex parte Orders being submitted and signed in foreclosure cases (without notice or hearing to homeowners or their counsel).  In fact, she has created a new procedure to prevent this problem.  In Judge Garcia-Woods’ words:


A copy of the motion must accompany any Order (ex-parte, stipulations, agreed Orders, etc.) submitted for the Judge’s signature along with enough copies of “proposed” order(s) for all parties with self-addressed stamped envelopes.  All parties must be copied on all correspondence and pleadings.  THERE WILL BE NO ENTRY OF EX PARTE ORDERS REGARDING FINAL JUDGMENT OF FORECLOSURE, MOTION FOR DEFAULT, MOTION FOR SUBSTITUTION OF PARTIES, ETC.  ALL MOTIONS FOR SUMMARY JUDGMENT, MOTION FOR DEFAULT, MOTION FOR SUBSTITUTION OF PARTIES, ETC. SHALL BE SET FOR HEARING USING THE ON-LINE SCHEDULING SYSTEM AND IN COMPLIANCE WITH FLORIDA RULES OF CIVIL PROCEDURE.

It’s worth noting the bold and ALL CAPS are in the Judge’s preferences; they’re not something I added.  

I cannot begin to say how much I respect this judge for implementing this procedure on a circuit-wide basis in Broward County.  It would be easy for the judge to take the approach of “there’s too much paperwork, I have to sign things ex parte” or “I can’t have hearings on everything; there’s too much of a backlog.”

Broward County has as many foreclosure cases as any county in Florida, if not more.  Judge Garcia-Wood is the only judge handling these cases in Broward County.  Hence, even though it’s undoubtedly difficult, and even though it’s undoubtedly more work, this Judge is showing that it’s certainly possible to do the job the right way. 

In Broward County, gone are the days where Orders are signed ex parte in foreclosure cases, preventing homeowners and their lawyers from presenting bona-fide arguments in opposition.  Gone are the days where plaintiffs’ lawyers think they can “slip one past” a judge via an ex parte Order.  I can’t begin to say what a breath of fresh air this is. 

Aside from being thrilled about this change in procedure, I have two lingering thoughts here:

1.  If Broward County is able to implement this procedure, and it has as many foreclosure cases as any county in Florida, then undoubtedly every county can adopt this same approach.  The integrity of our profession mandates as much.

2.  Even though it’s sometimes awkward and uncomfortable, we have to make the courts realize when their procedures have run astray.  Here, for example, this judge realized the impropriety and basic unfairness of Orders being entered ex parte and without notice or hearing (even though she wasn’t the one who signed the ex parte Final Judgment), and she was willing to do something about it.  Most judges do care, so I can’t help but think if we make them realize their procedures are astray, they’ll care enough to change them. 


Mark Stopa

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