Archive for December, 2011

A Principal Reduction for 2011 – More Proof Homeowners Must Save!

I can only hope that the last foreclosure case I worked on in 2011 was a sign of things to come for 2012. 

Out of the blue, I randomly received a letter from BB&T offering to accept $27,300 as payment in full of my client’s outstanding mortgage if it was paid before the end of the year.  This was a terrific offer, as my clients owed approximately $150,000 on their mortgage, and payment of this $27,300 would give them the house free and clear (and while the property appraiser’s values are hardly 100% accurate, its assessed value of the home is $54,000, showing this was truly a good deal).  Plus, this offer was given with no strings attached – no financial disclosures were required, and it didn’t matter where the money came from – the bank was walking away for less than 20 cents on the dollar.

Candidly, my clients would have loved to pay this $27,300 and keep their house, but, unfortunately, they lacked the money or the means to do so.  However, my clients were more than happy to get a deficiency waiver, which is what they’d be getting if they could sell the house for $27,300 (or something higher) to a third party, i.e. an investor.  After some work, we found someone willing to pay more than the bank’s asking price for a deed.  So just like that, viola!  The bank got its money, the investor got a house, and my clients had to move, but they got a complete deficiency waiver, so everyone was happy. 

I see a few morals to this story: 

1.  For the banks, deals like this should be more prevalent.  Cut your losses, add some cash to your balance sheet, and move on.  Or, you know, fight me in court.  Your choice. 

2.  For homeowners facing foreclosure, save your money!  Unsolicited offers like this are rare, but if you’re given one, you’ll be glad you have money set aside to take advantage (and you’ll be kicking yourself if you don’t). 

I’ve been saying this for a long time, to anyone who will listen – if you’re facing foreclosure, it’s almost always a good idea to save money.  Maybe you can use that money to pay off your mortgage.  Maybe you can use it as a down payment for a loan modification.  Maybe you’ll accumulate enough to buy an entirely different house.  The possibilities are endless if you can save money, and that certainly beats the alternative, i.e. not having money, especially if you’re facing the prospect of getting foreclosed and having to move elsewhere. 

3.  For homeowners facing foreclosure, you never know what good things may happen if you don’t give up.  If these homeowners didn’t fight, then would have never received this deal.  But they fought the bank, stayed the course, and got a result that satisfied them. 

4.  The bank’s offer was predicated on getting the money before the end of the year, and that’s no coincidence.  Banks want to improve their balance sheets before the end of each quarter, so keep that in mind when you’re negotiating.  Much like a car dealer, the best deals are often available at the end of March, June, September, and December. 

Let’s hope 2012 brings more stories like this!  Happy New Year to all. 


Mark Stopa

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Facing Foreclosure from a Homeowner’s Association

Did you know your home/condo can be sold at a foreclosure sale even if you’re current on your mortgage payments?  Or even if you own your home/condo free and clear?  I’m not talking about nefarious acts by a bank (this time).  Rather, foreclosures can happen in Florida, consistent with the law, if you live in an association and you fail to pay your association dues.  

Given the nature of my mortgage foreclosure defense practice, I’ve seen this dynamic many times.  Typically, the homeowner: (i) doesn’t realize he/she is behind on association payments, then gets sued for foreclosure; (ii) doesn’t think he/she can afford those payments and gets sued for foreclosure; or (iii) wrongly presumes an association foreclosure lawsuit can be defended like a mortgage foreclosure case.  No matter the situation, the homeowner is making a mistake that must be avoided.  Quite simply, you can’t fall behind on association payments. 

Let’s put it this way – even though I make my living charging attorneys’ fees, I do everything possible to prevent/turn away these cases, for a variety of reasons: 

First, unlike mortgage foreclosure cases, there often aren’t any defenses in a foreclosure case brought by an association.  Yes, sometimes the association attorneys charge ridiculous attorneys’ fees, but that’s not going to defeat a foreclosure, it’s just going to reduce the amount of the judgment.  Call me crazy, but I don’t like charging attorneys’ fees if I don’t think I’m going to help a client. 

Second, foreclosure lawsuits brought by an association tend to go much quicker than mortgage foreclosure cases.  If you think delay will be a by product of defending an association foreclosure, you’re probably wrong. 

Third, getting current on association payments isn’t nearly as daunting as getting current on a mortgage – often it’s just a matter of a couple thousand dollars, perhaps less.  Although that’s a lot of money for some people, it’s a small price to pay to avoid foreclosure and keep living in your home (especially if you have an attorney defending a mortgage foreclosure case).  Plus, unlike mortgage foreclosure cases, where a few thousand dollars in attorneys’ fees for the bank’s attorney are a drop in the bucket compared to the total amount owed on the mortgage, thousands of dollars in attorneys’ fees in association cases make a big difference in the total amount owed.  In association cases, it’s almost always best to stop the bleeding as soon as possible. 

Fourth, the amount you owe your association will go up astronomically if you don’t stay current.  By the time the association tacks on include late fees, penalties, interest, and attorneys’ fees, $1,500 in association dues can easily become $3,000, $4,500, or more.  Then, if you have to hire a lawyer to defend the case, you’re paying your own lawyer while you’re also incurring more fees to the association’s lawyer.  Again, I like getting paid, but collecting fees in a situation like this rarely behooves the client.  I’d rather see homeowners keep the money they’d pay me and use them to get current with their association. 

The combination of these factors cannot be overlooked.  Association foreclosures go quicker, there are fewer defenses, and they’re very expensive to defend, especially compared to the total amount owed.   Don’t lose your home to a foreclosure by your association.  And don’t let your unpaid balance get so out of hand that you get sued – you’ll win up paying far more than you otherwise would, and there’s probably not much a lawyer can do to change that.

Mark Stopa

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No Foreclosures at Christmas – the Right Approach

Broward County, Florida has as many foreclosure cases as anywhere in the state.  In a typical day, it’s not unusual for there to be more than 100 foreclosure sales – in ONE day.  With that backdrop in place, I’m pleased to report there is not a single foreclosure sale scheduled in Broward County from December 21, 2011 through the end of the year.  Don’t believe me?  See for yourself at (the website which conducts all foreclosure sales for Broward County, as well as several other Florida counties).

Trust me, this is no accident.  Remember, just last year, the Broward courts entered an order which cancelled all foreclosure sales which had been scheduled over the holidays.  Clearly, Judge Marina Garcia-Wood, who oversees the foreclosure cases in Broward, appropriately realized that foreclosure lawsuits are suits in equity and it was within her discretion not to schedule foreclosure sales during the holidays.  I know my posts can sometimes come off as critical, so let’s give credit where credit is due.  Kudos to Judge Garcia-Wood for having the sensitivity and foresight to ensure that no foreclosure sales were scheduled over the holidays.

Unfortunately, it does seem that other Florida counties are proceeding with foreclosure sales during the holiday season, including the week between Christmas and New Year’s.  To those counties, I urge you to think about and adopt the approach being implemented in Broward.  Respectfully, there is never a good time for foreclosure, but doing so over the holidays is terribly inequitable and, in my view, borderline inhumane.  I realize everyone has a job to do, but can you imagine being thrown out of your home at Christmas?  The Broward County courts have prevented foreclosure sales over Christmas two years in a row … why can’t every county follow suit?

Finally, I implore everyone to take a moment and think about what is is that makes foreclosure over the holidays so wrong.  When you have that vision in your mind – that feeling of family and friends, together at home, ask yourself this – “Is there ever a good time for foreclosure?”

Mark Stopa

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Applying Recent Case Law in a Motion to Dismiss

I’ve read, discussed (here and here), and enjoyed the recent decisions out of Florida’s Fourth District Court of Appeal emphasizing the need for a plaintiff in a foreclosure case to have standing to foreclose when the lawsuit was initially filed.  Today, I encountered one of my own cases where this argument was particularly appropriate. 

BAC filed suit in December, 2009 and I moved to dismiss for lack of standing.  In October, 2011 the court granted my motion and gave BAC leave to file an Amended Complaint.  In November, 2011, an Amended Complaint was filed, but BAC wasn’t the only Plaintiff – a company called Asset Resolution Corporation was as well.  In support of its alleged standing, ARC attached an Assignment of Mortgage reflecting BAC transferred its interest in the note/mortgage in February, 2011. 

Two things jumped out at me here. 

First, if BAC transferred its interest in February, 2011, why was the BAC attorney telling the Court in October 2011, in opposition to my Motion to Dismiss, that BAC was the proper plaintiff and had standing to foreclose?  This is the slimy, shady, underhanded stuff that drives me nuts. 

Second, the Amended Complaint should be dismissed because ARC did not have standing at the inception of the case.  In fact, its Amended Complaint showed it did not obtain an interest in the Note/Mortgage until 13 months after the lawsuit was first filed (which is why ARC was not named in the original Complaint). 

Anyway, I see this fact-pattern as a really good one, so I filed a fairly comprehensive Motion to Dismiss, citing all of the Florida cases which address the need for a plaintiff to have standing at the inception of the lawsuit and asking the court to dismiss the Amended Complaint without leave to amend. 

It’s not going to happen in every case, but the flurry of recent cases from Florida’s appellate courts are going to make it really difficult for Florida’s trial court judges to deny motions to dismiss in many foreclosure cases.

Mark Stopa

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Defend Your Foreclosure – Before It’s Too Late

I’ve written a few blogs recently containing some very favorable decisions from Florida’s Fourth District Court of Appeal, including here and here.  Today, this same court issued a ruling in Vilvar v. Deutsche Bank which, to most homeowners, probably appears quite unfavorable.  In its decision, the Fourth District explains at length why a homeowner’s 1.540 motion was appropriately denied by the trial court judge because the homeowner did not show the bank committed fraud in obtaining a Final Judgment of Foreclosure.  The court even went so far as to chastise the homeowner’s attorney for filing the appeal, intimating it could have sanctioned him if it so desired. 

Has the Fourth District suddenly had a change of heart?  Why the drastically different outcomes? 

The obvious distinction between Vilvar and other, recent cases I’ve discussed is purely a procedural one.  In Vilvar, the homeowner tried challenging the foreclosure lawsuit after the case was already over, after the foreclosure judgment had already been granted.  By contrast, the homeowners in the cases which had favorable rulings brought their arguments/objections prior to the foreclosure judgment being entered. 

This may seem like an immaterial distinction, but it’s not.  Florida law is very clear – the circumstances in which a foreclosure judgment will be vacated, after the case is over, are quite limited.  In fact, arguments that would defeat entry of a foreclosure judgment if made while the case is pending are often insufficient to vacate the foreclosure judgment after it’s already been entered.  To illustrate, here’s how the Fourth District explained itself in this regard:

We likewise find no merit to Vilvar’s claim that Cross’s affidavit did not contain admissible evidence and that failure to attach any sworn or certified copies of the records upon which she relied should have made the affidavit insufficient under 1.510(e).  Vilvar’s failure to timely object to the sufficiency of Cross’s affidavit when it was presented on motion for summary judgment is fatal to this claim.  (citing cases)

What’s telling about this part of the ruling is that  deficiencies with the bank’s affidavits supporting summary judgment are precisely the sort of thing the Florida courts have been giving as a reason a foreclosure judgment should not be entered.  But making that same argument after the case is already over?  Too late, argument waived, motion denied. 

This is an excellent illustration of how homeowners can waive legitimate defenses in foreclosure lawsuits if they’re not timely and appropriately raised.  Please don’t make the same mistake Ms. Vilvar did.  Don’t wait to defend your foreclosure until it’s too late.

Mark Stopa

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Florida Supreme Court Keeps Foreclosure Cases Pending, Headed Towards Judgment

If you talk to any circuit court judge in Florida or observe virtually any hearing in a foreclosure case, you’ll hear the judge explain how the Florida Supreme Court wants Florida’s trial court judges to finish/adjudicate foreclosure cases.  I’ve lamented this dynamic before, so instead of repeating myself in that regard, let’s discuss two ways the Florida Supreme Court could accomplish its stated objective but is failing to do so.

First, instead of making changes to the mediation program, the Court eliminated the program altogether

I realize the mediation program, as it existed, wasn’t working.  With all due respect to the Court, however, the purpose of the program – to force banks to negotiate with homeowners – is too important to give up so easily.  Instead of giving up on the program, and taking away an opportunity for homeowners to avoid foreclosure, the Court should have figured out what was wrong with the program and fixed it.  For instance, I’ve said from the outset that the problem with the program was that it required mediations too soon.  It wouldn’t be difficult to implement a system that required mediation before summary judgment or before trial – later in the process, after homeowners have had a chance to save money, get back on their feet, and/or fix whatever temporary financial problem caused them to go into foreclosure.  Scrapping the problem altogether shouldn’t have been an option. 

Second, the Court changed Fla.R.Civ.P. 1.420(e) and, just this summer, issued what I see as a terribly misguided opinion which makes it very difficult to to dismiss a case for lack of prosecution.  To illustrate, I had a case just the other day where the bank hadn’t filed any papers in 10 months, so I filed a Notice of Intent to Dismiss for Lack of Prosecution, as contemplated by the Rule.  61 days later, I filed a Motion to Dismiss for Lack of Prosecution.  The other day, I attended a hearing on the motion and had to concede the motion could not be granted because the bank’s attorneys filed a Notice of Appearance on the 59th day, two day before the Motion to Dismiss was served. 

The Notice of Appearance did nothing to advance the case to judgment, and until recently, such a filing would not have been deemed “record activity” and would not have prevented a dismissal.  However, under the Court’s new decision in Chemrock, this filing prevented a dismissal and re-started the one year clock at the beginning.  In other words, under the Court’s new rule, it doesn’t matter that the bank has done nothing to move the case in a year – it filed something, so the case would remain pending. 

At the hearing, the presiding trial court judge expressed frustration at the Court’s new rule, lamenting how the Florida Supreme Court was instructing Florida judges to dispose of foreclosure cases yet making it so difficult to dispose of these cases via Rule 1.420(e).  Notably, this was the third Florida judge who has expressed such frustration to me about the Court’s rule. 

The Court’s elimination of the mediation program and its institution of a more rigid Rule 1.420(e) may seem unrelated, but they’re not.  Both such decisions enable foreclosure lawsuits in Florida to continue languishing indefinitely.  Personally, I don’t think there’s anything wrong with that – the bank is the plaintiff, and if it is willing to let its cases languish, that’s its prerogative.  My point, simply, is this – if the Florida Supreme Court wants to get foreclosure cases moving, then it doesn’t make much sense to eliminate the mediation program and create a rule that makes it so difficult to dismiss cases for lack of prosecution. 

What troubles me most about this dynamic is this … if cases don’t settle at mediation, and aren’t dismissed for lack of prosecution, yet Florida judges feel compelled to push them forward, then entry of foreclosure judgments becomes a more likely alternative.  Ultimately, that’s the problem here – the Florida Supreme Court should be implementing procedures to create alternatives to foreclosure, not making foreclosure a more likely outcome.

Mark Stopa

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LPS Response to Nevada AG Complaint – Hogwash!

Suppose someone found thousands of terminally ill, cancer ridden patients and systematically killed them.  Do you think he/she would avoid criminal prosecution for murder by arguing they were going to die anyway? 

That sounds bizarre, I realize.  But take a look at the statement issued today by Lender Processing Services in response to the Complaint filed by the Nevada Attorney General.  The part that stuck out to me:

the company is not aware of any person who was wrongfully foreclosed upon as a result of a potential error in the processes used by its employees.

Apparently, in the eyes of LPS, the end always justifies the means, so I’d love to ask LPS: 

Do you think you could commit murder without penalty if the victims were terminally ill? 

Mark Stopa

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Defending an Appeal on the Issue of Verification

Several months ago, I got a foreclosure lawsuit against a Florida homeowner dismissed without prejudice and without leave to amend.  Shapiro & Fishman filed an appeal on behalf of the bank, arguing the court shouldn’t have dismissed the case because verifications of foreclosure complaints can be done “on information and belief,” not in the manner set forth in Fla. Stat. 92.525.  

Here is the bank’s Initial Brief and here is my Answer Brief.  As you can see, the bank tried to limit the scope of the appeal to the issue of verification, i.e. whether the lower court’s interpretation of Fla.R.Civ.P. 1.110(b) is correct.  My Answer Brief, by contrast, highlights several reasons why the dismissal should be affirmed, including that the court acted within its discretion by denying a 76-day extension of time for the bank to file an Amended Complaint and dismissing the lawsuit where the bank willfully disregarded the court’s Order.  (Shocking, I know, that a bank would violate a Court Order.) 

Before your eyes gloss over at the legalese, bear this in mind.  Banks are pushing for a ruling from a Florida appellate court on the issue of verification because they don’t want to have to verify complaints in foreclosure cases in a manner that would subject them to perjury charges.  Instead, they want to verify “on information and belief,” which lends itself to virtually no sanction at all.  Let’s hope the Second District doesn’t allow this nebulous form of verification or, at minimum, affirms the dismissal for the other reasons stated.

Mark Stopa

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Nevada Attorney General Sues LPS

Lender Processing Services is the largest provider of mortgage default services in the United States, processing more than 50% of all foreclosures in America.  Today, the Nevada Attorney General sued LPS, alleging it:

1.  Engaged in a pattern and practice of falsifying, forging, and/or fraudulently executing foreclosure related documents, resulting in countless foreclosures that were predicated on deficient information;

2.  Required employees to execute and/or notarize up to 4,000 foreclosure related documents every day;

3.  Fraudulently notarized documents without ensuring that the notary did so in the presence of the person signing the document;

4.  Implemented a widespread scheme to forge signatures on key documents, to ensure that volume and speed quotas were met;

5.  Concealed the scope and severity of the document execution fraud by misrepresenting that the problems were limited to clerical errors;

6.  Improperly directed and/or controlled the work of foreclosure attorneys by imposing inappropriate and arbitrary deadlines that forced attorneys to churn through foreclosures at a rate that sacrificed accuracy for speed;

7.  Improperly obstructed communication between foreclosure attorneys and their clients; and

8.  Demanded a kickback/referral fee from foreclosure firms for each case referred to the firm by LPS and allowed this fee to be misrepresented as “attorneys’ fees” passed on to Nevada consumers and/or submitted to Nevada courts. 

These allegations are so powerful I see no need to elaborate.  Instead, I’ll ask you this … if these things happened in Nevada, what are the chances they didn’t happen in Florida and every other state?

Mark Stopa

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Finally!! SEC Sues Former Fannie, Freddie Executives

The Securities and Exchange Commission sued several former executives of Fannie Mae and Freddie Mac, alleging they misrepresented to investors their exposure to subprime loans.

It’s not a criminal complaint, but it’s about damn time the U.S. Government did something.  Let’s hope this is just the beginning.

Mark Stopa

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