Archive for October, 2011
Posted on October 19th, 2011 by Mark Stopa
The attached opinion, hot off the presses from Florida’s Third District Court of Appeal, contains an absolutely awesome opinion from a Florida appellate judge, appropriately criticizing a horribly inappropriate, unethical, ex parte act by a bank’s attorney. Here’s what happened. After a bank’s lawyer procured a deficiency judgment in a foreclosure case, after a duly-noticed hearing against a pro se homeowner, the bank’s lawyer, at the ex parte urging of the judge, submitted a revised judgment for the court’s entry. Proceeding ex parte, without a motion, and without a hearing, the court entered an amended judgment which more than doubled the amount set forth in the initial judgment.
The bank’s lawyer argued this was appropriate because the amount in the initial order was a mistake. However, as the Third District judge appropriately ruled, even if that was true, it was incumbent on the bank to file a motion and set a duly-noticed hearing, giving the homeowner a chance to object. This is, after all, a basic notion of due process – notice and an opportunity to be heard. Plus, as a procedural matter, there are limited circumstances when a judgment can be amended; clearly, a motion must be filed.
Please read the opinion – this is the sort of stuff that I’m fighting on a regular basis – ensuring fairness, compliance with due process, following the law, and the elimination of ex parte rulings.
All of this sounds good, and it is, but there’s one enormous problem. The judge’s ruling was a dissent. Two judges disagreed with him, ruling that the revised judgment, entered ex parte, without a motion, without a hearing, and at the urging of the judge, should stand.
I implore everyone – read the opinion. This is the type of conduct that’s being permitted in Florida courts nowadays. This is what I’m fighting to prevent. Just about everyone I know thinks this is disgusting, appalling, unethical, grievable, sanctionable, etc. Yet this is the sort of stuff that’s happening in our courts, and, incredibly, it’s being allowed on a widespread level.
Please keep fighting foreclosure abuses. I remain hopeful that if we continue the fight then the rejection of this blatant misconduct won’t always be the minority position.
Meanwhile, I can only hope that any judges who make ex parte rulings in foreclosure cases will take a long and hard look at this ruling. You may think that ex parte rulings are okay, but, respectfully, this is the slippery slope you begin to tread down when you start making ex parte rulings on a widespread level.
Mark Stopa
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Posted on October 19th, 2011 by Mark Stopa
I’m constantly asked by homeowners why banks won’t give principal reductions. This article is a pretty good explanation.
Here’s the article…
“Why won’t the bank just reduce the amount of my loan instead of taking my home and then selling it to someone else for way less than I would have been happy to pay?” It’s a question that gets asked repeatedly these days, especially by people who are facing foreclosure or are upside down on their mortgages.
For the answer, we turned to Jack Guttentag, the Mortgage Professor and Inman columnist.
Guttentag believes that lenders have been too stingy when it comes to reducing loan balances. Private lenders have offered loan reductions only sparingly, he says, and Fannie Mae and Freddie Mac not at all.
Here’s the professor’s take on why homeowners can’t catch a break on loan reductions.
1. The buck stops there.
The decisions to reduce principal loan amounts are made by the firms that service mortgages — the same folks who brought the country the robo-signing scandal. As servicing firms, anything they decide must be in the financial interest of their client — that’s your lender, not you. If they depart from customary practice — and writing down loan balances is a departure from customary practice — the buck stops with them, Guttentag says. In other words, who’s going to take the risk of reducing Joe Homeowner’s loan amount and then have to explain it to the boss? To take Nancy Reagan out of context: They just say no.
2. Banks are in the business of making money.
No lender is going to write down the balance of a loan in default just because you owe more than the home is worth. Truth is, there is no benefit to the lender to helping Joe Homeowner keep his house instead of selling it to the next guy. Plus, to help Joe would eliminate the possibility that the bank could also get a deficiency judgment against him. Banks are in this for the squeeze and think of Joe as just the orange. Nothing personal, of course.
3. In this economy, you will likely default anyway.
Sure, you want to believe that the economy is going to turn around and the value of your home will again rise to what you paid for it. After all, hasn’t listening to a fairy tale been a surefire way to fall asleep?
From the lender’s standpoint, the only reason to write down a loan balance is that it will reduce the chance that you will default. And evidence has shown that people who are heavily underwater — that’s deep in negative equity territory — are more likely to default than those who aren’t. Truth is, negative equity discourages people from making their mortgage payments. They figure: Why keep throwing good money after bad?
4. Banks are short-staffed and the staff they do have is untrained.
Most interactions between mortgage borrowers and servicers are handled by computers or relatively unskilled employees, says Guttentag. Borrowers in serious trouble are referred to a smaller number of more skilled and specialized employees, but until you enter the red zone, you are likely to encounter frustration.
Guttentag says that at the onset of the mortgage crisis, servicers were caught short-handed and the sheer volume of foreclosures in the pipeline hasn’t allowed them to catch their breath.
5. Mortgage insurance works against you.
When mortgages carrying mortgage insurance go to foreclosure, banks are protected up to the maximum coverage of the policy, which generally is enough to cover all or most of the loss. This discourages modifications, says Guttentag. Why would a bank do a modification for $15,000 if the $40,000 foreclosure cost is going to be paid by the mortgage insurer? Even if the insurance coverage falls short of the foreclosure cost, the shortfall has to exceed the modification cost before modification becomes financially more attractive.
So there you have it. A five-point plan for keeping homeowners on the hook for that hefty loan balance.
Mark Stopa
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Posted on October 13th, 2011 by Mark Stopa
Many homeowners may not realize it, but in states like Florida, banks can collect additional money from you after a foreclosure lawsuit, even after the foreclosure is over and long after you’ve been evicted. By way of example, suppose you owe $400,000 on your home and you stop paying your mortgage. By the time the bank gets a Final Judgment of Foreclosure, to include interest, attorneys’ fees, and costs, that number will likely be more like $500,000. (Everyone always under-estimates the impact of default interest on the total amount owed.) Suppose the home is worth $200,000. When the bank forecloses, it will have collected just $200,000 of the $500,000 you owe. The remaining $300,000 is called a deficiency. Even after being evicted, you still owe that money. Even after the foreclosure, the bank can chase you down to collect that $300,000.
If you’re not sure what I mean, go look at a Final Judgment of Foreclosure in any (closed) court case. Chances are, it says the court “reserves jurisdiction” to award a deficiency. This means, in layman’s terms, the bank can come back to the court in the future and ask the court to enter a deficiency judgment against that homeowner.
Don’t get me wrong – nobody wants to be foreclosed. But for many homeowners, avoiding a deficiency is the primary goal. Many homeowners can accept getting foreclosed so long as they don’t owe the bank more money after the foreclosure is over.
I’m convinced most homeowners don’t realize the magnitude of the problem vis a vis a deficiency judgments. Many clients have told me “I don’t have anything the bank can take.” In many cases, that’s true – you can’t get blood from a stone.
However, it’s not that simple. Once a foreclosure case i over, all the bank has to do is obtain the deficiency judgment and record it in the public records. This is like any other judgment in any lawsuit – it’s the court’s way of saying “homeowner owes this money to bank.” And here’s the problem – that judgment doesn’t just go away. Money judgments are valid in Florida for up to 20 years. 20 years! And they accrue interest at a statutory rate (currently 6%, but often as high as 10% or more). After 10 years, that $300,000 judgment can be $450,000 or more, easily.
Some homeowners still scoff, saying “the bank can never collect from me.” My response to this is simple – ”are you sure?”
By way of example, the Second District Court of Appeal just issued an opinion, hot off the presses, which should scare the daylights out of all Florida homeowners. It hasn’t made headlines among foreclosure defense advocates because it’s not a foreclosure case, but take a closer look.
In the opinion, the Second District explained that USAMERICABANK was entitled to garnish the wages of Richard Nelson Klepal, Jr. even though he was the head of household because the promissory note he signed with the bank expressly authorized it to do so.
The “head of household” exception is an often-cited reason why homeowners think a bank won’t be able to collect a deficiency judgment against them. “I have children, and I’m the head of household, so the bank can’t garnish my wages.” Yes, that’s the layman’s explanation, but, regrettably, it’s not that simple. As the Second District just yesterday, if you consented to the bank garnishing your wages in your note/mortgage, then the bank can garnish your wages even if you’re the head of household.
With that, I ask – how many homeowners reading this know whether their note/mortgage allows the bank to garnish wages? I suspect the number, if it’s not zero, is darn close. Scary, eh? And remember – even if you are currently the head of household, and even if your note/mortgage doesn’t allow the bank to garnish your wages, what is going to happen when your children grow up and/or you aren’t head of household any longer? Remember, deficiency judgments are valid for twenty years, accruing interest each year.
My point isn’t to scare anyone. Rather, I’m trying to educate homeowners so they don’t find themselves in the predicament in which Mr. Klepal found himself. Quite simply, don’t ignore a possible deficiency judgment against you. And don’t assume the bank won’t be able to collect on its judgment. Even if you’re the head of household now, even if you’re unemployed or earning very little income now, twenty years is a long time. Chances are, your circumstances will improve at some point in the next twenty years, especially if you’re currently 65 or younger. (As I’ve said before, deficiency judgments are less of a concern for the elderly. But anyone still in the work force should try their darndest to avoid one.)
So what should you do? Simple. As part of fighting your foreclosure case, strive to avoid a deficiency judgment in one of three ways:
1. Settlement. Every case is different, but it’s certainly possible to get the bank to agree to waive the right to collect a deficiency as part of a settlement of the foreclosure case … if you fight. If you make it easy for the bank, you won’t get this sort of agreement. But if you fight, and make it difficult for the bank to foreclose, it stands to reason you have a better chance at convincing the bank to waive a deficiency. In doing so, you may get foreclosed, but at least you won’t owe the bank more money after the foreclosure is over.
2. Bankruptcy. Yes, it’s a dirty word for some, but bankruptcy is a totally lawful way to eliminate debt. If the bank won’t agree to waive a deficiency, a Chapter 7 or Chapter 13 bankruptcy is a far better option than letting a bank garnish your wages or collect a six-figure judgment against you for the next twenty years.
3. What happens if you can’t get a settlement with the bank and aren’t a candidate for bankruptcy? Simple – asset protection. This is complicated, and beyond the scope of this blog. But I talk with homeowners about this regularly. If you have assets, and are facing a potential deficiency judgment, make sure you talk to a lawyer who can counsel you on asset protection strategies. This may sound shady, but rest assured – there are perfectly lawful things you can do to protect your assets from creditors.
Fighting to avoid a deficiency isn’t as fun or sexy as talking about “foreclosure fraud” or “robo-signing.” But it’s a very practical approach for many homeowners, allowing them to move on with their lives without a bad investment haunting them for years to come. Please don’t under-estimate the importance of this aspect of your foreclosure case.
Mark Stopa
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Posted on October 13th, 2011 by Mark Stopa
This would be funny … if it weren’t a spot-on illustration of the problems in America.
I’ve never viewed myself as a radical or an activist, but that’s the thing – the “Occupy” movement isn’t radical at all. In fact, it seems that the majority of the public views the protests favorably.
I’ve read critiques that the Occupy movement is nothing more than liberal activists wanting something for nothing. I don’t see it that way. America’s government and political system has become far too top-heavy, catering to the whims of the socioeconomically elite (the 1%) at the expense of mainstream America (the 99%).
This movement provides hope for necessary changes. I like the first two suggestions of Matt Taibbi:
1. Break up the monopolies. The so-called “Too Big to Fail” financial companies – now sometimes called by the more accurate term “Systemically Dangerous Institutions” – are a direct threat to national security. They are above the law and above market consequence, making them more dangerous and unaccountable than a thousand mafias combined. There are about 20 such firms in America, and they need to be dismantled; a good start would be to repeal the Gramm-Leach-Bliley Act and mandate the separation of insurance companies, investment banks and commercial banks.
2. Pay for your own bailouts. A tax of 0.1 percent on all trades of stocks and bonds and a 0.01 percent tax on all trades of derivatives would generate enough revenue to pay us back for the bailouts, and still have plenty left over to fight the deficits the banks claim to be so worried about. It would also deter the endless chase for instant profits through computerized insider-trading schemes like High Frequency Trading, and force Wall Street to go back to the job it’s supposed to be doing, i.e., making sober investments in job-creating businesses and watching them grow.
Mark Stopa
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Posted on October 11th, 2011 by Mark Stopa
Saturday’s St. Pete Times had an interesting article about how Bank of America is offering cash to homeowners who are delinquent on their mortgage payments. Instead of pushing for foreclosure, BOA is offering cash in exchange for the homeowners consenting to the home being sold to a third party for less than the amount owed, i.e. a short sale.
In an industry littered with horror stories and negativity, this is good news. If you’re skeptical, don’t be – this is a natural consequence of foreclosure defense attorneys like Stopa Law Firm making it difficult for banks to foreclose through the court process. In other words, take a second look at my website, written in early 2008, including this sentence:
If your bank cannot win its foreclosure lawsuit against you quickly (because you are fighting for yourself and defending your rights), it may be willing to negotiate with you in ways that it otherwise wouldn’t…
I foresaw resolutions like this years ago. It only makes sense. If foreclosure defense attorneys are continuing to make it difficult for banks to win in court, and the court systems are so clogged that cases are moving slowly, it makes perfect sense for banks to try to find a way to avoid the court process and resolve these disputes in other ways. Giving homeowners facing foreclosure cash payments in exchange for them consenting to a short sale is an obvious solution for the banks. It’s a “win” for both sides – the bank gets the property sold and the homeowner gets money to move elsewhere.
As the article suggests, I’m sure this solution won’t work for all homeowners. For instance, the article notes that BOA isn’t intending to waive a deficiency judgment in all cases. That’s ridiculous – it doesn’t help to put a few grand in your pocket if the bank can get a judgment against you far in excess of that amount. This why we all need to keep fighting. The more difficult we make it for the banks to foreclose, the more inclined they’ll be to give homeowners a fair resolution. And make no mistake, that’s what’s happening here – the banks don’t care about being fair to homeowners; they care only about avoiding the time and expense associated with foreclosure lawsuits.
Here’s the article. …
Bank of America is offering up to $20,000 to select Florida homeowners willing to agree to a short sale instead of entering foreclosure.
To sweeten the deal further, the nation’s largest lender will consider waiving the deficiency on the loan, which allows homeowners to sell the house for less then they owe without having to make up the difference to the bank. It can save homeowners thousands of dollars.
Not every Bank of America customer in Florida will be eligible for the program, which pays a minimum cash incentive of $5,000. It’s targeted toward homeowners who cannot afford their mortgages.
To quality, the short sales must be submitted for bank approval by Nov. 30 and must close by Aug. 31. Sales already under contract are not eligible; neither are properties outside of Florida.
This is a “test-and-learn” program being rolled out only in Florida because of the higher foreclosure rates than other parts of the country, said Christina Beyer Toth, a Tampa-based spokeswoman.
Florida is seen as a viable market to gauge short-sale response when presenting homeowners with relocation assistance, she said. If successful, the plan could expand to other states.
The bank notified select Florida real estate agents this week about the offer.
“It will get a lot of people off the fence about wanting to sell their home,” said Steve Capen of Keller Williams Realty in St. Petersburg. “This makes sense.”
What’s in it for Bank of America? It saves attorney fees, court costs and property taxes by avoiding foreclosure. It also speeds the process of getting bad loans off its books and gets the properties back on the market faster.
Capen, who specializes in short sales, plans to heavily market the offer to clients. But he cautioned that homeowners shouldn’t get overly excited because many of these plans have restrictions.
“It will only help a fraction of the people,” he said.
Homeowners get the cash after the short-sale deal closes. A caveat: Homeowners might have to pay income taxes related to the deficiency waiver and the cash payout.
The cash payouts give homeowners a reason not to trash their homes or strip them bare before moving out. When houses enter foreclosure, homeowners can essentially live for free until banks take possession at the end of the court process, which takes an average of nearly two years in Florida.
Attorney Chris Boss of Yesner & Boss said the deficiency waiver will enable homeowners to buy a house without filing bankruptcy or waiting three years from when foreclosures become final.
“It’s a chance to get away from the house with some money in your pocket,” Boss said. “This is good for the economy.”
Other national lenders started similar programs.
Late last year, JPMorgan Chase began giving homeowners $10,000 to $20,000 and waived losses on the mortgage. The bank still suffers a loss in the process, but generally speaking, sale prices on short-sale homes are higher than foreclosed homes.
Real estate experts and economists have said the housing market cannot fully recover until the millions of distressed mortgages are removed from the system.
Mark Stopa
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Posted on October 7th, 2011 by Mark Stopa
This memo written by foreclosure defense attorney Nye Lavalle is making waves around the internet, as it’s been re-posted by foreclosure defense colleagues such as Matt Weidner and Ice Legal. The basic point of the memo is that homeowners shouldn’t rush into bankruptcy court, that they should fight their foreclosure case first (then file bankruptcy as a last resort). I respect Nye, Ice, and Matt a lot, but I respectfully disagree with their take on this issue (hence the title of this blog – Bankruptcy in the Beginning – A Dissent from my Colleagues).
First off, I absolutely agree with the concept of homeowners fighting their foreclosure lawsuit with a bright foreclosure defense attorney. At this point, with all of the foreclosure fraud and the legitimate arguments about a bank’s lack of standing, there should be no excuse for any homeowner not to retain a foreclosure defense lawyer, especially with the low rates being charged nowadays.
My point, simply, is this. In my view, contrary to what the memo indicates, it is eminently reasonable, if not better, for many homeowners to file in the early stages of the foreclosure process, not at the end.
What does that mean, exactly? If you’ve been sued for foreclosure, you have to defend the foreclosure case. Not defending is tantamount to suicide, and bankruptcy is not a substitute for foreclosure defense. However, in addition to foreclosure defense, it often makes sense to file bankruptcy early in the foreclosure process, shortly after you’ve been sued, rather than waiting until the end of the foreclosure lawsuit.
Why would lawyers in the same line of work have such differing opinions? Unfortunately, many homeowners, and even some lawyers, incorrectly believe if they file bankruptcy then they automatically and contemporaneously lose their home. Generally, it doesn’t work that way.
Part of the confusion lies in the term “surrender.” When homeowners file Chapter 7 bankruptcy, they often “surrender” the home, which, in layman’s terms, means they’re giving up the home as part of the bankruptcy. The bankruptcy trustee, at that point, has the discretion to do with the home what he/she wants. For instance, the trustee can sell the home to a third party. However, when the home is underwater, as many homes are when homeowners file bankruptcy, the trustees often don’t sell the home – not because they can’t or don’t want to, but because there simply aren’t any buyers. After all, who wants to buy a home when there is a mortgage on the home that exceeds the home’s value? Hence, what often happens is that title to the home remains vested in the homeowner, even after the bankruptcy is concluded. In other words, the homeowner typically still owns the home (subject to the mortgage) even after the bankruptcy is over.
What does that mean? Simple. The homeowner can fight the foreclosure lawsuit in state court, with an experienced foreclosure defense attorney, even after the bankruptcy is over. If that sounds off to you, think of it this way – the homeowner still owns the home, even after the bankruptcy, so the bank has to win a foreclosure judgment against the homeowner to divest the homeowner of title.
Now for the important part.
Why would anyone choose to file bankruptcy early in the foreclosure process, rather than wait to file bankruptcy at the end of the foreclosure process, as Nye (and others) suggest? Simple. Suppose you file bankruptcy early on, your bankruptcy has concluded, and you’re still living in your home, defending the foreclosure lawsuit against you in state court. If you’re able to save money while that case is pending (since you’re not making monthly mortgage payments), then you are entitled to keep that money. It’s yours. By way of example, if you save $500/month for 24 months after the bankruptcy is over while the foreclosure case is pending, that $12,000 is yours to keep. There’s no risk of having to turn over that money to the bank or any other creditors – you’ve already eliminated those debts via the bankruptcy.
Conversely, suppose you fight the foreclosure in state court, don’t file bankruptcy right away, and save money while the foreclosure lawsuit is pending. The same 24 months pass, you save the same $500/month, and then you file bankruptcy. In that scenario, you generally don’t get to keep that $12,000 – it’s an asset which must be turned over to the bankruptcy trustee. (Alternatively, if you don’t file bankruptcy, lose the foreclosure, and a deficiency is entered, you’ll likely lose the $12,000 to the bank.)
In these two scenarios, the conduct was the same – bankruptcy, foreclosure defense, and saving $500/month for 24 months – but by filing the bankruptcy at the beginning of the process, you come out of it with $12,000, whereas by filing at the end, you likely lose that entire $12,000.
By no means does this mean that everyone should file bankruptcy in the beginning of the foreclosure process. For some clients, bankruptcy doesn’t make sense. For others, it’s better to wait and see what happens. However, for many clients, it absolutely makes sense to file bankruptcy at the beginning of the process.
How do you know if you fit into this boat? Generally, I’d say if your income is $50,000 or less, you have little in the way of assets, your house is underwater, you have significant debts (credit cards, deficiency), and you think you can save money while the foreclosure lawsuit is pending, then it makes sense to file bankruptcy early on. Otherwise, you may find that you’ve fought your foreclosure lawsuit and saved money, but lost your foreclosure case, had to file bankruptcy, and had to give up the money you saved (or, if you don’t file bankruptcy, that you’ll lose the money you saved to the bank or other creditors).
I realized, some time ago, that bankruptcy goes hand-in-hand with foreclosure defense. That’s why Stopa Law Firm handles foreclosure defense and bankruptcy. By handling both, I think we give homeowners the best of both worlds, using the tools of foreclosure defense and bankruptcy to best fit homeowners’ needs. Often, the two work hand-in-hand, and I hope these examples illustrate that.
Mark Stopa
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Posted on October 7th, 2011 by Mark Stopa
I’ve been frustrated in recent weeks with what I perceive to be a double standard on the issue of delay in foreclosure cases. Respectfully, it feels like some judges accuse homeowners and their attorneys of delay (falsely, in my view), even as they allow/enable more significant delays by the banks.
By way of example, take a look at this Order, then compare it to this Order.
In the first Order, a Florida court denied my client’s Motion to Dismiss, without notice and without hearing, including language which I would characterize as unnecessarily curt. I’ve made the arguments in that Motion to Dismiss many times, and often prevailed. Here, I did not prevail and did not even get a hearing, but what really bothered me were what I perceived to be some unnecessary jabs in the Order.
For instance, the Order criticizes me/my client for filing a motion for extension of time on April 26, “after the 20-day response period permitted by Florida Rule of Civil Procedure 1.140(a)(1) had expired.” I found this off-base because the date this motion was filed was totally irrelevant to the Court’s adjudication of the Motion to Dismiss. More troubling, the 20-day response period is not a deadline to “file” a response (i.e. ensure the response is filed in the court file) – the deadline is to “serve” a response (i.e. to mail out the response from my office). As the motion/docket reflect, my client’s motion for extension was served on April 25, not April 26. While that was 21 days after service, not 20, the response was timely because the 20th day was a Sunday, and the Florida Rules of Civil Procedure dictate that the deadline fell on the ensuing business day, which was April 25. Hence, my client’s response was timely.
Then, the Court commented about how my client “had four months to prepare his answer,” as if to justify its ruling requiring an answer “within ten (10) days from the date of this Order.” Candidly, this commentary was even more troubling. Any litigator knows that when a Motion to Dismiss is filed, an Answer is not drafted until the Motion to Dismiss is adjudicated. As such, there was no reason for me to begin drafting an Answer until this Order was entered. After all, if the motion had been granted, there would have been no need for an Answer. Quite simply, we did not have 4 months to draft the Answer – we had less than ten days (since it took 3-4 days for the Order to get to my office by regular mail).
Anyway, when it came to a homeowner’s motion, that was the court’s position on delay – that I should have to Answer a Complaint in a foreclosure case in less than 10 days (and receive the jabs from the Court in the Order about delay).
Reasonable people can disagree about whether a deadline like that is fair, and that’s fine. But my frustration when it came time for the bank/plaintiff to file a Reply to my Answer. Instead of filing a Reply within 20 days, as required by the Florida Rules of Civil Procedure, the bank’s lawyer filed a motion for extension of time. Incredibly, the bank’s lawyer had the audacity to ask for an additional SIXTY days (80 days total) in which to file the Reply. Mind you, a Reply is generally quite ministerial and is far easier to draft than an Answer. Nonetheless, the judge signed this Order granting the extension, without notice or hearing, and without any qualms whatsoever about delay.
Apparently, at least in this case, the court found it okay for a homeowner to get less than 10 days to file an Answer (and be criticized for delay), yet a bank gets 80 days to file a Reply to that Answer (with no criticisms about delay).
In the grand scheme of things, are these two Orders in this one particular case that big of a deal? No. However, in my view, it’s a good example of the type of double standard that I see happening in some courtrooms on a regular basis. Homeowners and their lawyers are criticized for delay – even when they’re merely ensuring due process rights for homeowners – while banks can delay cases however they want with seemingly no repercussion whatsoever.
Respectfully, this double standard should stop. If judges are going to take the approach towards me like this judge took in the first order, then that’s fine – but they should employ that same approach towards banks.
Mark Stopa
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Posted on October 6th, 2011 by Mark Stopa
Mark Stopa
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Posted on October 6th, 2011 by Mark Stopa
Mark Stopa
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Posted on October 4th, 2011 by Mark Stopa
Most of the foreclosure mills who work for the banks handle foreclosure lawsuits throughout the State of Florida. Typically, they don’t have offices throughout the state, yet they handle cases everywhere. Obviously, lawyers based in Fort Lauderdale don’t travel to every motion to dismiss hearing in Sarasota, or vice versa. So how can these mills get away with this, particularly in counties which have administrative orders requiring in-person attendance at all hearings? Their procedure is simple. If the foreclosure mill is based out of Fort Lauderdale and has cases in Sarasota, the mill hires a lawyer who lives in Sarasota to “cover” all hearings in that area. This “local counsel” isn’t an employee of the mill and isn’t counsel of record in the case – that attorney just “covers” hearings.
This practice has become so prevalent that, in many counties (such as Broward, Sarasota, and Manatee, among others), there are a small handful of attorneys who handle nearly 100% of the foreclosure hearings for banks. Go to the courthouse in Ft. Lauderdale, Room 519 or Sarasota, Room 5B, on a typical morning and you’ll see what I mean – the same 3-4 attorneys appear on behalf of numerous foreclosure mills and banks, even though they aren’t counsel in the case and don’t formally represent that bank.
How can this happen? Candidly, it happens because not enough homeowner and foreclosure defense attorneys complain about it. These lawyers aren’t allowed to “cover” for a hearing, yet they get away with it because too few people complain!
Florida Rule of Judicial Administration 2.505(e) lists the ways in which a lawyer can make an appearance in a case for a client. There are just three: (1) the attorney files the party’s first pleading; (2) the attorney files and serves a Notice of Appearance; or (3) the attorney stipulates to a substitution with current counsel, the client consents, and the Court signs an Order approving the stipulation.
If you’re a lawyer, and you want to argue at a hearing, you must do one of these three things. If you don’t, then guess what? You’re not counsel and you don’t get to talk/argue at a hearing! This may sound harsh or overly technical, but this is what the Second District ruled in Pasco County v. Quail Hollow Properties, 693 So. 2d 82 (Fla. 2d DCA 1997). The court’s rationale in Quail Hollow was clear, and it makes sense if you think about it:
The Court must be able to rely on representations of attorneys because such representations bind the client.
If the attorney is “covering” a hearing, as “local counsel,” but is not counsel of record, then he cannot bind the client, so he shouldn’t be permitted to argue/speak at a hearing. It’s really that simple.
Today, I encountered this precise issue in Sarasota County, before Judge Williams (who is currently hearing all foreclosure cases in Sarasota). As the hearing began, I argued that the opposing attorney should not be permitted to speak because she was not counsel of record, i.e. she hadn’t formally appeared in the case in any of the three ways listed above.
Judge Williams indicated he hadn’t heard this argument before, so he took a break, read Quail Hollow, and resumed Court. I’m pleased to say he agreed with me, requiring the attorney to file a Notice of Appearance if she wished to argue. In fact, he announced, in open court, that he would be requiring these “local” attorneys to file a Notice of Appearance whenever the opposing party objected to their attendance at a hearing.
What an incredible breath of fresh air! It’s great to see the rules being followed, but there’s more to it than that.
I’ve often found, in cases in these counties, the foreclosure mill which actually represents the bank is unwilling to do things that I’d ordinarily consider reasonable (cancel hearings that should be cancelled, consent to orders vacating a default, and the like) because they have nothing to lose by being obstinent. They aren’t actually attending the hearing anyway – they know their local attorney is attending. So they have nothing to lose by being disagreeable, rolling the dice by going to court, and hoping the judge will rule in their favor, even on issues they should lose. If these attorneys had to get in the car, travel, and go to court, they’d be more inclined to agree on such matters, but they don’t because they lose nothing by being disagreeable.
Also, it is patently unfair that foreclosure defense attorneys like Stopa Law Firm have to personally appear at hearings (and incur the expense associated therewith or pass that expense along to homeowners) when banks don’t have to bear this same expense – they just call a “local” attorney, who was already going to be in court that day anyway, and have him/her “cover” the hearing. Hence, so long as the banks get away with “local counsel” appearing, all of the counties that require in-person hearings are unfairly skewed against homeowners.
Finally, there is something patently unfair about the same couple of lawyers having hearing after hearing, day after day, before the same judge. I’ve personally witnessed these lawyers engage in friendly conversation with these judges, sometimes even criticizing defense lawyers and/or homeowners. They spend so much time together in court, the lawyers and these judges, they develop a type of friendship. Obviously, this dynamic doesn’t exist on the defense side – any one defense lawyer has hearings before one judge, in one county, every so often, but not every day, and certainly not multiple hearings every day.
I strongly encourage all homeowners and defense lawyers reading this to help put a stop to this dynamic. If “local” counsel is arguing in your case, and that “local” counsel has not filed a Notice of Appearance in the lawsuit and is not counsel of record, start the hearing by citing Quail Hollow to the judge and asking that the lawyer not be allowed to speak. Judge Williams in Sarasota agrees with this argument, and I trust other judges will do so as well.
Mark Stopa
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