Archive for March 9th, 2012

My Week of Foreclosure Cases

It’s Friday afternoon and whew, what a week.  I had hearings all across the state – Ocala, Jacksonville, Bartow, Bradenton, Viera, and Orlando – on a variety of foreclosure-related issues.  To give everyone a feel of the defenses/issues that come up in foreclosure cases, and to see what it’s like to defend these cases for a living, I thought it would be fun to share some of the issues that arose in my cases this week.

On Monday, I had a hearing in Ocala on plaintiff’s motion to vacate technical admissions.  (For those unfamiliar, take a look at Fla.R.Civ.P. 1.370.)  I served a Request for Admissions in early July, 2011, and the plaintiff did not respond to them until six months later, then sought to vacate the technical admissions that arose under Fla.R.Civ.P. 1.370. due to its failure to respond within 30 days.

At the hearing, plaintiff’s counsel seemed to think his motion would automatically be granted, as he was ill-prepared for my arguments in opposition.  I suppose his belief in that regard wasn’t totally misplaced, since there are a lot of cases which discuss how courts are loathe to enforce technical admissions and vastly prefer to litigate cases on the merits.  See Ramos v. Growing Together, Inc.,, 672 So. 2d 103 (Fla. 4th DCA 1996); Melody Tours, Inc. v. Granville Market Letter, Inc., 413 So. 2d 450 (Fla. 5th DCA 1982).  However, I cited a case which affirmed a lower court’s order which refused to vacate technical admissions, see Assset Mgmt. Consultants of Virginia, Inc. v. City of Tamarac, 913 So. 2d 1179 (Fla. 4th DCA 2005), and I argued the admissions should be enforced because plaintiff gave no good reason for its failure to timely respond, waited so long to vacate the technical admissions, and that my client had foregone other discovery efforts in reliance on the technical admissions.

The judge took the motion under advisement, so I have yet to see what he thinks (and, admittedly, it’s probably a close call).  That said, the cases cited above are a good illustration of when technical admissions under Rule 1.370 should be vacated and when they should not.

On Tuesday, I hopped a plane to defend a motion for summary judgment in Jacksonville.  Unfortunately, the facts in that case lent themselves to fewer defenses than I often see in foreclosure cases.  The Plaintiff was the original mortgage holder (odd in today’s world of alphabet-soup securitized trusts), and the mortgage did not have the “notice and cure”provision that we typically see in paragraph 22.  But two interesting defenses carried the day, prompting the judge to deny summary judgment.

First, one of my clients died while the lawsuit was pending, prompting me to file a Notice of Suggestion of Death.  Under Fla.R.Civ.P. 1.260(a), it was thus incumbent upon the Plaintiff to substitute the proper parties into the case (which it didn’t do), failing which a foreclosure was impossible because all of the necessary parties had not been joined.  I’ll spare you the intracicies of probate law (which, frankly, aren’t my forte anyway), but just think about it logically.  If a defendant owns real estate, then dies, that real estate goes to his heirs, right?  Well, if those heirs aren’t joined in a foreclosure case, then how would the rights of those heirs be adjudicated if they aren’t joined in the case?  They aren’t, and that’s the point.  In fact, Rule 1.260 provides for dismissal of all claims as against those parties if they aren’t joined within 90 days of the suggestion of death.  This is a little-known rule of law but a good one to keep in mind whenever a defendant dies.  Defense counsel should file a Notice of Suggestion of Death, and it’s then up to Plaintiff’s counsel to add the necessary parties as defendants.

Second, the plaintiff admitted, in its affidavit in support of summary judgment, that even thought it was the original mortgage holder, it assigned the mortgage to a third-party as collateral for a loan in 2007, long before the lawsuit was filed.  Although that third-party issued a Power of Attorney in favor of that plaintiff, authorizing the plaintiff to proceed with foreclosure on its behalf, that Power of Attorney was executed after the lawsuit was filed.  Hence, on the day the plaintiff filed suit, it lacked standing.  The plaintiff’s attorney argued otherwise, basically contending it was still the plaintiff’s note and that plaintiff had merely given it as collateral for a loan.  However, controlling precedent from Florida’s Fourth District Court of Appeal is right on point and showed plaintiff’s lack of standing at the inception of the case:

An assignment of a promissory note or mortgage, or the right to enforce such, must pre-date the filing of a foreclosure action.  Jeff-Ray Corp. v. Jacobson, 556 So. 2d 885, 886 (Fla. 4th DCA 1990).  A party must have standing to file suit at its inception, and may not remedy this defect by subsequently obtaining standing.  Progressive Express Ins. Co. v. McGrath Cmty. Chiropractic, 913 So. 2d 1281 (Fla. 2d DCA 2005).  The assignee of a mortgage and note assigned as collateral security is the real party in interest, that he holds the legal title to the mortgage and note, and that he, not the assignor is the proper party to file a suit to foreclose the mortgage.

            Here, before A.I.M. filed any of the foreclosure actions below, A.I.M. assigned the promissory note and mortgage to a third party as collateral for a loan.  Thus, A.I.M. did not have standing to foreclose on any of the properties at the time it filed suit.

Venture Holdings & Acquisition Group, LLC v. A.I.M. Funding Group, LLC, 75 So. 3d 773, 776 (Fla. 4th DCA 2011).

As a result, I just prepared this Motion for Summary Judgment.  Quite frankly, I fully expect to prevail on that motion and to win this case.  Remember, my motion is predicated on an affidavit from the plaintiff, and under well-established law, a party cannot change its testimony to avoid entry of adverse summary judgment.

All of that said, five years from now, defeating summary judgment in that case is not what I will remember about Tuesday’s hearing.  After ruling that summary judgment of foreclosure could not be granted because of this issue, the senior judge started looking at my client’s affirmative defenses and started granting summary judgment on a few of them.  What really bothered me here was that he did so without leave to amend and, as for a few of them, without letting me say one word about the propriety of summary judgment on those defenses or why those defenses were viable defenses in the case.  So I made an ore tenus motion to disqualify him, asserting he was obviously biased because he was not letting me be heard.  When he ignored me, I then made an ore tenus motion for continuance so as to file a written motion to disqualify him (which is precisely what the case law says I’m supposed to do in a situation like that).  His response?  To threaten to hold me in criminal contempt of court for interrupting him, and to then give me a lecture about how I was not to talk at a hearing unless the judge said I could talk – if the judge decided it was necessary that I talk.

I’ll refrain from too much commentary about this situation except to say this – don’t ever doubt how lawyers like myself, and a few of my colleagues, aren’t putting our necks on the line every single day to represent homeowners in what are sometimes very hostile courtrooms.

On Wednesday, I was off to Orlando for a hearing on a Motion to Dismiss for Lack of Prosecution.  The issue, in my view, was quite clear.  There was nothing filed in that case in the 10 months prior to my Notice of Intent to Dismiss for Lack of Prosecution and nothing filed in the 60 days thereafter.  As such, there was no “record activity” under Rule 1.420(e) and plaintiff could avoid dismissal only by showing “good cause,” in writing and under oath, at least five days before the hearing.

Not surprisingly, Plaintiff failed to show the required good cause.  Instead, a “coverage counsel” showed up at the hearing and argued that the plaintiff’s attorneys did not receive the Notice of Intent to Dismiss because it was sent to the wrong address.  Having seen this argument many times, I was prepared for it.  I had an affidavit from my staff showing the document was mailed correctly.  Plaintiff, of course, had no affidavit, and the “coverage counsel” was in no position to show the Notice of Intent to Dismiss was not received.  As a result, the judge granted the motion and entered this Order of Dismissal.

On Thursday, I had a hearing in Viera on my client’s Motion for Sanctions and Contempt.  My argument, basically, was that the case should be dismissed, or some other sanction imposed, as a result of the plaintiff’s failure to comply with an order from a year prior requiring it to file the original Note within 90 days.  The judge granted that motion, not with a dismissal, but with an award of attorneys’ fees coupled with an Order that the case “will” be dismissed if plaintiff doesn’t file the Note within 60 days.  Anyone want to place wagers on whether the plaintiff violates that Order, too?  Of course, dismissal is an entirely proper remedy when a party violates a court Order.  See Fla.R.Civ.P. 1.420.

After that hearing, I came to my office to find a judge had issued an Order sua sponte (which means on the court’s own motion, without motion from any party) which vacated an Order entered by a different judge ten months prior which dismissed the case.  What really troubled me was that the judge did so 2011 sua sponte, ex parte, without notice, without a hearing, without evidence, and without reviewing the court file (which is lost somewhere in storage).  As such, I filed this Emergency Motion to Vacate Order.

In the motion, I spoke at length about the unfairness of issuing a ruling like this ex parte, without notice, and without hearing – especially when that ruling is based on fact-findings.  Respectfully, fact-findings are based on evidence, and if there is no evidence presented, and no hearing, then there can’t be any fact-findings.  That said, I’ve spoken about such issues previously, so instead let’s concentrate on the other part of the motion – the court’s jurisdiction to enter that Order.

After a Final Judgment or an Order of Dismissal (without leave to amend) is entered, the court’s jurisdiction to act is limited.  A party can move for rehearing within 10 days, or the court can reconsider its ruling within this same time period.  See Fla.R.Civ.P. 1.530.  A party can file a Notice of Appeal within thirty days and seek review in the appellate court.  Both such deadlines had plainly passed in my case, so the only possible source of jurisdiction was Fla.R.Civ.P. 1.540.

Subsection (b) of Rule 1.540 clearly requires a “motion” be filed, which means a court cannot enter an Order under Rule 1.540(b) on its own initiative.  Hence, the only way the could have issued the Order vacating an Order of Dismissal from 10 months prior was under Rule 1.540(a).  However, subsection (a) of the rule is limited to “clerical errors.”  In my case, the Court had vacated an entire Order, somehow finding (sua sponte, ex parte, without notice, without hearing, and without evidence) that the entire Order was entered “in error.”  However, as the Fourth District has explained, this is not the type of “error” that justifies sua sponte action under 1.540(a):

If the court mistakenly entered the modification order, this is a judicial mistake.  This is not the type of mistake that may form the basis for relief under subsection (b) of Florida Rule of Civil Procedure 1.540.  Subsection (a) of rule 1.540 allows the trial court to correct errors “arising from oversight or omission … on its own initiative or on the motion of any party … The clerical mistakes referred to by subsection (a) are only “errors or mistakes arising from accidental slip or omission, and not errors or mistakes in the substance of what is decided by the judgment or order.

Moforis v. Moforis, 977 So. 2d 786 (Fla. 4th DCA 2008) (citing several cases).

As such, it seems pretty clear to me that the court was not authorized to vacate the Order of Dismissal from April, 2011 and that it will be required to reverse its ruling.  Of course, should it not, I’ll be filing an appeal in Florida’s Second District Court of Appeal.

Speaking of the Second District, Thursday also found me drafting this Emergency Motion to Stay Pending Appeal or Strike Order Setting Trial.  In that motion, I explained how the Court could not proceed with trial in light of my pending appeal to the Second District, where I’m challenging the propriety of the Court’s Order vacating an Order of Dismissal.  As the Second District has explained previously:

Pursuant to Florida Rule of Appellate Procedure 9.130(f), a nonfinal appeal does not act as an automatic stay of proceedings in the trial court, but it divests the trial court of the power to “render a final order disposing of the cause pending such review.”  … Here, this court never authorized the trial court to enter a final order disposing of the Wife’s petition while the Husband’s nonfinal appeal was pending.  Thus, while the trial court had jurisdiction to proceed with pending matters pertaining to the Wife’s petition for support while the Husband’s appeal was pending, the trial court had no authority to enter a final order disposing of the case until the Husband’s appeal of the prior nonfinal order was no longer pending.

Cooper v. Cooper, 69 So. 3d 977 (Fla. 2d DCA 2011).

In addition to normal file maintenance and day-to-day stuff, that was my week defending Florida homeowners from foreclosure.  Well, actually, that was just Monday through Thursday.  It was tiring, but I’m reminded of what Marv Levy (former head coach of the Buffalo Bills) was known for saying on game day – “where would you rather be than right here, right now?”  Helping homeowners in foreclosure cases – there’s no other way I’d rather make my living.

Mark Stopa

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Banks Want Real Estate

Every foreclosure defense attorney has heard it.  Every plaintiff’s attorney has said it.  Virtually every judge has said it.

“Banks don’t want more homes.”  “Banks don’t want to foreclose.” 

Such statements are made, of course, to try to justify foreclosure after foreclosure on Florida homeowners.  Banks and their lawyers want to appear reasonable … they want to appear willing to settle cases without foreclosing.  Likewise, judges want to soften the blow for homeowners, as if to say “the bank doesn’t want to take your house, but it has no alternative.”

But do the banks have an alternative?  Do they really want to avoid foreclosures?  Or do they want more real estate?  For me, the answer is clear – banks want real estate.

I can hear the naysayers already … “Stopa doesn’t know what he’s talking about.  Banks have enough real estate; they don’t want more.”

Okay, then, Mr. Naysayer.  Kindly answer some questions for me.

There were 788 foreclosure sales in Pinellas County between January 1, 2012 and March 8, 2012.  See  Of these, the plaintiff the winning bidder in 679 of them.  679 out of 788; 86.1%.  If the banks don’t want more real estate, why are they taking title to the properties upon which they’re foreclosing rather than letting third-parties purchase these properties at the foreclosure sales?  Let’s ask that again:

 If banks don’t want real estate, why don’t they let third parties purchase foreclosed properties at foreclosure sales?

“It’s a public auction,” retorts Mr. Naysayer.  “The banks can’t stop third-parties from bidding.”

I suppose that’s true, but it’s terribly misleading.  After all, in the vast majority of foreclosures, the amount of the bank’s final judgment far exceeds the current value of the home being foreclosed.  We all know the real estate market has declined in recent years, so combine declining home values with 2-3 years of default interest (typically 18%), attorneys’ fees, forced-placed insurance, real estate taxes, filing fees, and service of process costs (all of which are included in the final judgment amount), and it’s not uncommon for the bank’s judgment amount to exceed the property value two-fold or even three-fold.

For third-party purchasers, the amount of the bank’s final judgment is irrelevant in their evaluation process – they’re going to bid based on the current market value of the home.  This isn’t rocket science – nobody is going to pay more than a house is worth.

Banks, though, can bid up to the final judgment amount, as a credit bid, without coming out of pocket.  Hence, banks can shut out all of the investors/third-party purchasers merely by bidding up to their judgment amount on the foreclosure sales.  Sure, these third-parties could technically overbid the banks, but, again, who would be so foolish as to pay more than current market value?

This is the dynamic transpiring in thousands upon thousands of foreclosure cases throughout Florida.

This is why the plaintiff that foreclosed is the winning bidder at foreclosure sales nearly 90% of the time.

Don’t believe me?  Go see for yourself.

Pinellas County:

Pasco County:

Duval County:

Orange County:

Polk County:

Sarasota County:

Manatee County:

Broward County:

Miami-Dade County:

Lee County:

Pick a county, any county.  It doesn’t matter which; the dynamic is the same everywhere.  In nearly 90% of foreclosure sales, the banks bid up to their judgment amount, far in excess of what the property is currently worth, effectively shutting out all third party purchasers and ensuring they procure title to the homes.

I would love to have a cogent explanation on why banks do this.

Why do banks do this?  Why do they bid more than the house is worth?  Why don’t they let the house be sold to a third-party for something resembling fair market value?

Think about what happens when a bank takes title.  It has to maintain the home.  Pay more real estate taxes.  Pay more association dues.  Pay for insurance on the home.  Pay a realtor a commission to sell the REO.  Pay, pay, pay.

Why are banks choosing to pay more?  Why are they choosing to take title and pay more when they can let the properties be sold to third-party purchasers at foreclosure sales?

Why?  For me, there’s only one answer:


“Nonsense,” says Mr. Naysayer.  “Banks have enough real estate.”

Okay, I retort, then answer my question.  Why don’t banks let third parties purchase these properties at foreclosure sales?  Actions speak louder than words, and the banks’ actions at foreclosure sales – where they take back nearly 90% of foreclosed homes – speak volumes.

I’d love to hear some theories on why banks want more real estate.  Obviously it’s money-driven, but how?

Whatever the reason, one thing is clear – banks want more real estate, and their actions at foreclosure sales prove it.


Mark Stopa

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