Archive for March 13th, 2012

The Holy Grail of Foreclosure Defense: A Free House

On many occasions, clients have asked me about a “free house.”  “The bank committed fraud,” they say.  ”My Assignment of Mortgage was robo-signed.  Can you get me a free house?”

I’d like to think I fight foreclosure as vigorously as anyone.  However, I can’t help but cringe at these inquiries.  It might not be what these clients want to hear, but it’s important that my clients know the truth (the whole truth, and nothing but the truth).

First off, no matter what I might think about it, judges aren’t in the business of giving free houses to delinquent homeowners for bank fraud, particularly when these homeowners are behind on their mortgage.  Sure, it’s possible with the right fact-pattern.  And sure, it’s happened a few times in published court cases across the nation.  But those results are few and far between, so much so that, in my view, the typical homeowner should not be looking at a “free house” as his/her primary objective when defending a foreclosure case (unless I’ve specifically told you differently, in which case you know to heed my specific instructions).  Something to keep in the back of your mind?  Okay.  The primary objective?  No way.

I know there are foreclosure defense attorneys who disagree with me on this point.  In fact, some such attorneys actively sell homeowners on the concept of trying to get a free house.  I can’t help but wonder, though, how much these attorneys are charging homeowners to pursue this approach.  Are the extra fees really worth it?  Personally, I just don’t see it.  If you disagree, show me Florida cases where a homeowner defending foreclosure got a free house.  Show me.  Frankly, I doubt I’ll see much.  Plus, bear in mind – under Florida law, even a dismissal “with prejudice” does not necessarily mean a bank in a foreclosure case cannot institute a new foreclosure lawsuit on the same note and mortgage.  I’ve studied this issue at length, and what I’m prepared to say at this point is this – sometimes a dismissal “with prejudice” precludes a subsequent foreclosure suit, but sometimes not.  Hence, not only is a dismissal with prejudice hard to get, it doesn’t necessarily mean (even in those cases where it is entered) that the bank can’t turn right around and file a new lawsuit.  How much extra should a homeowner pay in attorneys’ fees for what likely amounts to a Hail Mary?

All of that said, are there instances where a homeowner can or will be entitled to a “free house” (in a way that virtually any judge will acknowledge)?  Absolutely.  Let’s say that again:

Absolutely, there are instances where a homeowner should and will get a “free house.” 

Am I going to tell you what they are?  Heck no.  Frankly, this shouldn’t even be part of your thought process.  It’s sort of like planning to win the lottery – hoping is fine, planning is not.  Perhaps more importantly, I’m not about to tip off the enemy to my ideas on that issue.  Bankers and their lawyers read this blog, too – do I really want to tip them off?  Please.

Rest assured – if a case lends itself to me taking the position a client should get a “free house,” I will jump on it with both feet, like white on rice.  It’s rare, yes, but it can happen.  To illustrate, take a look at this Final Judgment.  Here, not only did the Court dismiss this case “with prejudice,” it made fact-findings that Plaintiff does not own the Note, does not hold the Note, and that Defendant does not owe Plaintiff any money (among others).

Think about those findings for a minute.  In my view, any subsequent lawsuit in which Plaintiff tries to claim Defendant owes it money will be barred by a legal doctrine called res judicata.  To put it in layman’s terms, how can a court rule my client owes this bank any money when a court has already ruled it owes this bank no money?  There aren’t do-overs in court cases – if you sue and lose, you don’t get to keep suing until you win (eventually).

My point, I guess, is this.  I may not be out there openly talking about a “free house,” but there are reasons for that.  I don’t think it’s terribly pragmatic for the typical homeowner, nor is it cost-effective.  That said, if I have the chance to help a client in this regard, I’m going to seize the opportunity.  After all, a “free house” is the holy grail of foreclosure defense, and everyone likes a trophy now and again.

Mark Stopa

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