Archive for April, 2012

Court Reporters in Foreclosure Cases

“Always bring a court reporter to every hearing.”  If I’ve heard that advice once, I’ve heard it 1,000 times in the foreclosure context.  Proponents argue homeowners “need a transcript to bring an appeal.”  But is that advice correct?  Frankly, I’d say no, not always.

In an ideal world, I’d agree it’s probably best to have a transcript of every hearing.  It would be great to memorialize everything, to make the presiding judge realize we’re serious about the defense of that case.  But we don’t live in an ideal world.  Banks may be able to afford court reporters for every hearing in every case, but most homeowners I know can’t.  Let’s face it – bringing a court reporter to every hearing, and having each such hearing transcribed, can be expensive.  For many homeowners, it’s simply not cost-effective.

Fortunately, there are certain types of hearings for which having a court reporter is critical, whereas there are others for which court reporters aren’t necessary.  How can one know the difference?  It’s really not that complicated.  The key is understanding when a transcript is necessary for an appellate court to adjudicate an appeal and when such a transcript is unnecessary.

At most hearings in foreclosure cases, the trial court judge makes a ruling based not on any testimony or anything that anyone says at the hearing, but based merely on the paperwork filed in the case.  When this happens, like at a hearing on a motion to dismiss or a motion for summary judgment, there is almost never a need for a transcript.  For these types of hearings, the written papers either reflect that the judge got it right or got it wrong.  What was said at the hearing changes nothing, so the existence or absence of a transcript changes nothing.

To use a fancier term, the appellate court’s review of the trial court’s ruling in these situations is de novo.  This means the appellate court gives no deference whatsoever to the trial court’s ruling, nor should it.  This may sound confusing, but just think about it.  If a legal ruling is based only on paperwork contained in a court file, then an appellate court can review the court file and the papers therein just as easily as the trial court.  As such, in these situations, there is no reason to defer to the trial judge’s ruling, no reason for a transcript, and de novo review.

If a transcript isn’t necessary at hearings where a judge’s ruling is based solely on the content of papers in a court file, when is it necessary?  Well, rather obviously, when the judge’s ruling is based on things other than the content of written papers in the court file … like a trial, or any other hearing where evidence will be presented.  Quite simply, if a court hearing is scheduled and testimony is being submitted, e.g. at trial, it is imperative that the homeowner bring a court reporter and have a transcript of the trial.  Otherwise, the homeowner cannot show the appellate court what happened at trial and, hence, cannot possibly show the appellate court that the lower court erred in its ruling.

Think of it this way … An appellate court exists as a forum for litigants to prove the trial court ruled incorrectly.  If you can’t show what happened at trial, i.e. what testimony the bank presented at trial, you can’t possibly prove the trial court ruled incorrectly by foreclosing against you.  You need the transcript to prove what happened and to prove why the trial court erred.

Unlike rulings on motions to dismiss or motions for summary judgment, where appellate courts confine their analysis to the court file and, hence, given no deference to the trial judge’s ruling, appellate courts typically give deference to a judge’s ruling at trial.  After all, unlike the appellate judge, the trial judge is physically present in court and has the opportunity to observe the witnesses as they testify.  This puts trial judges in a better position than appellate judges to weigh the evidence and make a ruling.  As a result, (and I realize I’m generalizing a bit here, and there are exceptions, but) it is basically impossible to win an appeal of a judge’s ruling at trial in a foreclosure case without a trial transcript.  The appellate judges defer to the lower court’s ruling, and homeowners can’t show a reason for the appellate court not to defer when they can’t show what happened.

Hence, in my view, it’s important for homeowners to bring a court reporter to trial (or any other hearing where testimony/evidence will be presented) but generally unnecessary to do so at hearings where no evidence will be submitted.

One significant thing to keep in mind when discussing foreclosure trials is Florida Rule of Civil Procedure 1.530(e), which provides:

When an action has been tried by the court without a jury, the sufficiency of the evidence to support the judgment may be raised on appeal whether or ot the party raising the question has made any objection thereto in the trial court or made a motion for rehearing, for new trial, or to alter or amend judgment.

In layman’s terms, this means that if a homeowner loses at trial in a foreclosure case, then he/she can bring an appeal if the bank did not prove its case at trial.  Even if the homeowner did not object to the sufficiency of the evidence, and even if the homeowner did not have a lawyer, the homeowner can still bring an appeal if the bank didn’t prove its entitlement to foreclose.  The key, of course, is having a transcript of the trial – and pursuing the appeal in a timely fashion.

Mark Stopa

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Just How Much Foreclosure Fraud Exists?

The Florida Supreme Court is currently deciding whether a plaintiff should be able to voluntarily dismiss a pending lawsuit when a defendant is seeking sanctions for fraud on the court.  I’ve been following the arguments and the briefs being filed, and I’m struck by what I just read from The Mortgage Bankers Association.

In the first issue of its brief, MBA argues (stay with me, it’s important, so I’m quoting it):

Initiating radical change in the applications of Rule 1.420 and Rule 1.540(b) could convert the mortgage debacle, from which Florida is slowly recovering, into a widespread financial crisis. …  [Not allowing a plaintiff to voluntarily dismiss a lawsuit in the face of a claim for sanctions for fraud on the court] would impact general credit and lending practices, just as the fragile real estate finance industry begins to rebound from a severe economic downturn.  If the [banks] face potential revocation of voluntary dismissals, lending practices in Florida could come to a grinding halt.  The threat of sanctions would force lenders either to prosecute technically infirm cases, rather than cure defects in a new proceeding, or risk being prohibited from re-filing, after faulty documents have been corrected.  Such unduly harsh procedural impediments would deprive lenders of the ability to collect their loans or apply collateral to satisfy these obligations.  Without the ability to collect on defaulted notes, lenders would be unable to make new loans and refinance indebtedness in this State.  The economic impact could be devastating to the State of Florida.

Let me get this straight.  According to the MBA, not allowing banks to dismiss foreclosure cases when a defendant is claiming “fraud on the court” would cause a “widespread financial crisis,” cause lending to come to a “grinding halt,” prevent lenders from collecting their loans or making new loans, and be “devastating” to Florida.

Those are some incredibly strong statements, so much so that I can’t help but wonder …

If those would be the consequences, just how pervasive must the foreclosure fraud be?

Think about it.  If the fraud isn’t pervasive, there’s no way the Florida Supreme Court’s ruling (no matter which way it rules) could possibly have the consequences the MBA is suggesting.   The fact that the MBA is this concerned should speak volumes about the magnitude of foreclosure fraud in Florida.

If you doubt the existence or pervasiveness of foreclosure fraud in Florida, don’t listen to me or a consumer advocate.  Simply read the MBA’s own brief.

Mark Stopa

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Deplete Savings? Or Own a House Outright?

I’m estatic.  I just talked to a client who read this blog, followed my advice, and now owns a house outright.  Sound too good to be true?  I disagree.  It’s been a while since I’ve discussed this issue, so let’s revisit the topic …

Through my years as a foreclosure defense attorney, I’ve encountered countless homeowners who share the same type of story.  Unemployment or underemployment led to financial problems and a mortgage default.  Not wanting to go into foreclosure, these homeowners pulled monies out of a 401(k), IRA, or savings account to stay current on the mortgage.  Eventually, though, the savings were gone, yet the monthly mortgage payments still kept coming.  As a result, the homeowner had no money, yet was still facing foreclosure anyway.

The client with whom I spoke today read this blog (which I wrote back in 2010), realized his savings were dwindling, and didn’t let himself fall into this trap.  Instead, he took his remaining $50,000 in savings, saved money while he didn’t pay the mortgage on the house he was living in, and purchased a home, outright, for cash.  He has now moved into that house and declared it his homestead.  As a result, guess what?  Even if the bank forecloses on his old house, and even if it gets a deficiency judgment, it can’t take his homestead, which he owns outright.  In fact, even if he loses his job later on, and has to declare bankruptcy (to eliminate the deficiency), he can still keep his homestead, free and clear.  All of the money remaining in his 401(k) and the college plans for his kids – that remains in place, too, safe from creditors.

In my view, this is the perfect way to handle this type of situation.  Instead of spending all of his savings, having nothing, and getting sued for foreclosure on the house in which he’s living … basically, winding up with nothing … he used his savings (and the money saved while not making payments on his old house), bought a new house outright, moved in, and declared it his homestead.  Instead of nothing, he has a house that he owns, free and clear.

Think about how much different this man’s financial future will be simply because he strategized in this manner.  No matter what, he has a house.  No matter what, he has money saved for retirement and his kids’ college.  All it took was the realization that continuing to make monthly mortgage payments on a house he couldn’t afford was not a long-term solution.

If there was one thing I wish more homeowners realized, it was that this approach is almost always better than depleting savings accounts to make monthly mortgage payments the homeowner simply can’t afford.

Mark Stopa

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Judges Helping Bank Lawyers at Foreclosure Trials

A prospective client just sent me this transcript from a trial she handled herself.  Although she lost, this homeowner did a decent job.  She didn’t assert any objections, some of which certainly would have been appropriate, and I think she’d be the first to admit it would have been much better if she had a lawyer.  We all know lawyers can do better than pro se homeowners, though, so I don’t want to harp on that.

Instead, I want to discuss something that really jumped out at me as I read the transcript.  Unfortunately, I fear this will be a significant issue in many foreclosure cases as more trials take place, and it’s something about which everyone should be aware.

Read the transcriptDo you notice how the judge was helping the bank’s lawyer? 

You might think it was subtle, but, as I see it, the judge’s “help” absolutely jumped off the page.

Look at page 8.  The bank’s lawyer made it clear he had “no further questions” (for the only witness he brought to trial), and it was clear to me that he was done presenting evidence.  However, the bank’s counsel had not asked his (only) witness any questions or introduced any evidence to prove the bank’s claim to re-establish the lost note, as would be required for the bank to prevail and foreclose.  Clearly, the judge realized counsel was not introducing evidence of an essential part of his case.  But instead of allowing him to screw up (and, potentially, enter judgment for the homeowner), the judge interjected:

“[Counsel], this is a lost note?”

If you’re a nonlawyer, this might seem subtle, but as a lawyer, I assure you – this was an obvious reminder by the judge that the bank’s attorney needed to submit additional evidence.  Of course, right on cue, the lawyer responded by asking more questions, with an eye towards proving what a bank needs to prove to re-establish a lost note under Florida Statute 673.3091.

Tellingly, at the bottom of page 8 and continuing at the top of page 9, the bank’s lawyer actually asked the judge if she “required anything else.”  This was not innocuous, either; this was the lawyer’s way of asking the judge, on the record, if he was missing any other evidence necessary to prove his case (and for the bank to prevail).  In response, the judge told him precisely what to ask:

“no explanation as to how [the note] got lost?” 

Again, right on cue, the bank’s attorney responded by asking the question the judge told him to ask, i.e. how the note was lost.

Later (on pages 44-45), after all the evidence was admitted and the bank’s lawyer and this homeowner were making closing arguments, the homeowner argued the case should be dismissed given the bank’s failure to give her the required 30-day notice and opportunity to cure.  The bank’s lawyer didn’t think this letter was necessary, but the judge prompted him to re-open his case to introduce the letter into evidence, asking him

“Do you wish to re-open the case to admit the letter?” 

Notably, the bank’s attorney had not asked to re-open the case; the judge suggested, all on her own, that he do so.

That’s three instances where this judge prompted the bank’s lawyer to do something to prove his case.  The judge prompted counsel to ask questions about a lost note, directed him to ask for an explanation of how the note was lost, and encouraged him to re-open the evidence to introduce the lost note.

Ladies and gentlemen, this is completely, undoubtedly, 100% wrong.  And that’s not just my opinion – that’s what many, many Florida appellate decisions have held.  Judges cannot help bank lawyers prove their cases at foreclosure trials.  This judge did, three times, in fact, but that conduct never should have happened.

I hate to compare foreclosure trials to criminal case, but, frankly, criminal cases is where this type of fact-pattern often arises.  Sometimes, when a prosecutor forgets to ask an important question or introduce a key piece of evidence, the judge (wanting to see the criminal defendant get convicted) will feel compelled to suggest a question or remind the prosecutor to introduce certain evidence.  This is plainly not permitted.  Quite simply, a judge is not allowed to give “tips” or “hints” to a plaintiff’s attorney, at trial, to help the attorney prove the plaintiff’s case.  In fact, a judge’s conduct in this regard requires that a motion to disqualify the judge be granted.  See Blackpool Assocs., Ltd. v. SM-106, Ltd., 839 So. 2d 837 (Fla. 4th DCA 2003); Evans v. State, 831 So. 2d 808 (Fla. 4th DCA 2002); Lee v. State, 789 So. 2d 1105 (Fla. 4th DCA 2001), Asbury v. State, 765 So. 2d 965 (Fla. 4th DCA 2000); Chastine v. Broome, 629 So. 2d 293 (Fla. 4th DCA 1993) (“When the judge enters into the proceedings and becomes a participant, a shadow is cast upon judicial neutrality so that disqualification is required.”) .

In Lee, for instance, the judge suggested to the prosecutor that he have a witness identify the defendant’s tattoos.  In Evans, the judge suggested that the prosecutor inquire about the defendant’s immigration status after she testified she was a law-abiding citizen.  In both cases, the appellate court reversed criminal convictions, concluding the judge should not have “helped” the prosecution.

Unfortunately, some judges view foreclosure cases in much the same way as criminal trials.  Many such judges want to see foreclosure judgments entered, so they feel compelled to give “hints” or “suggestions” to bank attorneys on how to proceed (rather than letting those lawyers screw up and cause a favorable result for a homeowner).  In my view, that’s exactly what we saw in this transcript, above.  The judge wanted the bank to prevail, so she was giving hints to counsel on how to proceed.

If it sounds like I’m being critical, I’m not trying to be.  It’s human nature to “help” someone who is struggling or forgetful.  In a sense, I can understand how judges would feel a natural instinct to give suggestions to counsel on what to do – it’s human nature to help people.

That said, judges must resist this urge.  Giving advice like this during a trial is not appropriate.  For anyone defending a foreclosure trial, it is very important not to allow a judge to do this (and to point it out to the judge if he/she does so).  I realize you can’t control what the judge says or does, but if this happens … OBJECT!!!  Tell the judge:

“Respectfully, Judge, I don’t think it is fair or appropriate for you to be suggesting to plaintiff’s counsel what questions or ask or what evidence to present.”

Likewise, if a bank’s attorney asks a judge, during trial, ”do you need anything else,” the appropriate response from the judge is “counselor, it’s not my role to tell you if you’ve submitted sufficient evidence to prove your case.”

I encountered this very dynamic in my foreclosure trial last week.  At various points, the bank’s attorney wasn’t sure how to proceed, and the judge started giving him hints, suggesting areas of inquiry and giving advice on how to proceed.  The first two times, I interjected, forcefully but respectfully, telling the judge it was inappropriate for him to be giving advice to plaintiff’s counsel.  The third time, I was more aggressive, moving to disqualify the judge.  Although the judge denied that motion, he did not give any more hints to plaintiff’s counsel, and without the judge helping him, the bank’s attorney wasn’t sure how to proceed.  Ultimately, this uncertainty left counsel unable to prove his case, forcing him to dismiss it.

After the trial, the judge joked with me that I was a “pain in the ass,” but told me I was right by asserting these objections.  In his words, the judge knew he couldn’t ”carry” the bank’s lawyer any more.  I’m not saying the judge liked it (hence the “pain in the ass” comment), but when push came to shove, and when I called him out on it, the judge realized he couldn’t help the bank’s attorney.

Everyone needs to be aware of this issue.  Judges can’t give hints to counsel, and if they do, then we all need to, respectfully but forcefully, make it clear that we are objecting to any and all such “hints.”

Why is this so important?  Well, bear in mind … a huge aspect of foreclosure defense is forcing plaintiffs’ attorneys to prove their case.  It’s the responsibility of the bank’s attorney to prove that case (not the judge), both by asking the right questions and introducing all of the required evidence.  Then, at the end of trial, it’s the judge’s job to evaluate whether the evidence is sufficient for the bank to foreclose, and, if it’s not, to rule in the homeowner’s case.  In other words, the judge is there to evaluate the evidence, not to make sure the bank submits evidence. 

By the way, I’m inclined to take an appeal on behalf of the homeowner who handled that trial herself, for two reasons.  One is a pretty glaring hole in the evidence (which I’ll keep to myself to avoid helping any nosy bank lawyers who may be reading this) and the second is, yes, how inappropriate it was for the judge to keep helping the bank’s attorney.

Mark Stopa

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Victory at a Foreclosure Trial

After four years of defending Florida homeowners from foreclosure, I had my first foreclosure trial today.  That may seem hard to imagine, but that’s not terribly uncommon in foreclosure-world.  Banks don’t want to go to trial, especially against a lawyer, and even when they do, I’d like to think I’m pretty good at procuring settlements or, when appropriate, filing bankruptcy.  Combine dilatory plaintiffs with settlements and bankruptcy and trials aren’t terribly common.

Anyway … more than an hour into today’s trial, Bank of America’s lawyer realized it was unable to prove its case, so it voluntarily dismissed the lawsuit.  And just like that, the case was over.  My client won.

Notably, my client did not even retain me until this trial was already scheduled.  Hence, despite not getting to defend the case like I normally would (filing all appropriate defenses from the outset), we were still able to win.  Please let this be a lesson that it’s probably not too late to defend your case.

So what was the magic formula, you ask?  What’s the secret for winning a foreclosure case at trial?

Come on, now.  I’m willing to share information here, don’t get me wrong.  I want to help homeowners understand their rights/defenses.  But do you really think I’m going to let the bank lawyers know what they need to do to win at trial?  I don’t think so.

Instead, I’ll leave it at this … if you’re a homeowner facing foreclosure, please realize it’s possible to settle a case or, if you can’t settle, to win at trial.  Yes, win.

If you’re a bank lawyer, you better offer my clients a fair resolution.  If you don’t, and you want to go forward with trial, you better be prepared for the possibility that you will lose at trial.  In other words, if you want to go to trial against me, you better get your best grip, as I’ll be ready.

Spare me the standard party line of “my client won’t negotiate.”  You better tell them they need to negotiate because you’re afraid you’ll lose at trial.

Let’s put it this way … right before trial, the bank’s lawyer approached me and said Bank of America wasn’t willing to offer anything in settlement.  I retorted, “that’s okay, I think we’re going to win.”  And win I did.

Maybe next time they’ll think differently about settlement.

Mark Stopa

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The Zombie Files

Below is a well-written, informative article by Kim Miller of the Palm Beach Post, illustrating how 7,000 foreclosure cases lie dormant in Palm Beach County alone.  Make sure you comment on Kim’s article, and be sure to let her know you particularly like the quotes from me.  ;)

The zombie files: Nearly 7,000 stagnating foreclosure cases lie dormant in Palm Beach County’s courts

Nearly 7,000 stagnating foreclosure cases lie dormant in Palm Beach County’s courts, creating a payment-free limbo for some homeowners but a stain of vacant and abandoned homes in deteriorating neighborhoods.

These sleeper files, which have remained inactive for a year or longer, date as far back as 1997, according to documents provided to The Palm Beach Post by the clerk of courts.

But most are from the early years of the housing crash when lenders feverishly sought to repossess homes, unaware that the frenetic pace would cause a second crisis based on faulty documents and unlawful corner-cutting.

While an unknown number of dormant files are mistakes, such as one party forgetting to request a dismissal after an agreement is reached, others remain open but unmoving because of homeowner bankruptcy, loan modification negotiations or bank neglect.

“I have no idea what’s going on and I’m not pushing it,” said Robert Feinson, a Jupiter resident whose case has sat idle since November 2010, more than two years after his lender initially filed for foreclosure against him. “Right now, we’re just waiting to see who is going to make the next move.”

The 6,927 zombie files make up about 17 percent of Palm Beach County’s 39,252 foreclosure cases.

The banks with the largest number of dormant cases include Bank of America (670), JPMorgan Chase (602) and Deutsche Bank (546).

After 10 months of inaction, a homeowner, or the court itself, can seek a dismissal of the foreclosure based on non-prosecution . If the bank fails to react within 60 days, the case can be thrown out and the bank forced to start over.

It’s a move Palm Beach County Chief Judge Peter Blanc said might begin in earnest this summer after a one-time bump in state funding allows him to hire additional judges to tackle foreclosures and get rid of “deadwood.”

The last court-initiated weeding-out occurred two years ago when Blanc received $640,000 to add judges, he said.

“There’s a whole variety of reasons why cases were dismissed, which is sort of consistent with how the practice was all over the place in the early years,” Blanc said.

The frustration over stalled and prolonged cases can be heard in Palm Beach County Judge John Hoy’s foreclosure court.

This month, Hoy waved a calendar at bank attorneys who had missed deadlines or sought to cancel foreclosure sales for reasons such as a failure to publish the auction announcement or belief that a loan modification was in the works.

Often the claim that a short sale or loan modification is pending comes after a final foreclosure judgment is made as banks backpedal on rulings.

“This is a 2009 case,” Hoy said to one lender attorney who was seeking an extension of time. “If you can’t take care of your old cases, don’t file new ones. ”

On another foreclosure, which was filed in January 2008, Hoy was equally nonplussed.

“There are 111 docket entries in this case and we’re still screwing around on a motion to dismiss?” he asked the attorneys. “What’s going on around here?”

When the lender’s attorney couldn’t produce an endorsed note proving ownership, Hoy dismissed the case.

“I kicked them back just now to January 2008,” said foreclosure defense attorney Malcolm Harrison after Hoy’s decision. “You’ll find a lot more errors on these older cases because they didn’t know what they were doing.”

Harrison hopes the “fatal flaw” in the bank’s case will force it to modify his client’s mortgage instead of refiling the foreclosure. The homeowners have been living in their Olympia home in Wellington without making a payment for about four years.

The reasons cases may be delayed are myriad, said Guy Cecala, publisher of the trade publication Inside Mortgage Finance. They include:

  • Fear of flooding the market with distressed properties that will crash prices.
  • Concern over getting a clear chain of title.
  • Unwillingness to take on maintenance and liability for a property.
  • Negotiating a loan modification or short sale.
  • A homeowner files for bankruptcy, putting the case on hold.
  • Problems with paperwork or how a previous law firm handled a file.

After the collapse of the Plantation-based Law Offices of David J. Stern in March 2011, about 100,000 foreclosure cases statewide needed to be transferred to new attorneys.

Tampa-area defense attorney Mark Stopa said he didn’t have a hearing or trial set by a bank on any of his foreclosure cases in a year.

Stopa said he was able to get between 30 and 40 cases dismissed in the past six months because of lack of prosecution.

“That’s something I love to take advantage of, and in years past, the courts would do it on their own,” he said. “It’s a good way to clear dockets that is favorable to homeowners.”

Feinson, the Jupiter homeowner, said he tried to get a loan modification after losing his business, but found himself dealing with a revolving door of lenders and servicers. His loan traveled from LIME Financial Services to La Salle Bank to Wilshire and finally to Bank of America, he said.

The last action on his case was an unsuccessful mediation in late 2010, just when the problems with robo-signing were revealed.

“We don’t know who has the mortgage and no one seems to have any answers,” Feinson said.

Forgotten foreclosures may see a reanimation of activity following the $25 billion settlement between the nation’s largest banks and the states’ attorneys general, Stopa said.

The agreement, announced in February, requires banks to modify more home loans and outlines a standardized way to process foreclosures.

Whether the settlement is good news for home­owner Kathryn Siddons, also of Jupiter, remains to be seen. Her home has been in foreclosure since 2008 with the last action on her file taken in the fall of 2010.

But she’s also been working on a loan modification, she said.

“We got a letter two years ago saying they couldn’t find our original note and we could work on other options,” Siddons said. “I just keep reapplying (for a loan modification). I’m afraid not to because then you’re just giving up.”

Mark Stopa

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Getting Retained in Old Foreclosure Cases

I just expressed my frustration about homeowners waiting too long to seek my help, but don’t get me wrong.  It’s possible – in fact, quite common – for a good foreclosure defense attorney to help homeowners many months or even years after a foreclosure lawsuit was first filed, particularly if a judgment has not been entered already.  Typically, an attorney like myself will just pick up with the defense of that case from that point forward, asserting whatever defenses are available and have not been waived.

Every so often, though, I see a glaring legal error from earlier in the case that I’ll feel compelled to ask the Court to reconsider.  This isn’t always possible, as many defenses are waived if not asserted properly the first time, but, in many instances, a motion for reconsideration is entirely proper.

Here’s one fact-pattern I see somewhat regularly (particularly out of Brevard County, Florida) …

The homeowner was defending lawsuit pro se (or perhaps not at all).  The bank was lax in prosecuting the case, so a clerk or a judge issued a notice of intent to dismiss for lack of prosecution under Fla.R.Civ.P. 1.420(e), setting a hearing on that issue two months out.  Despite that warning, and despite the impending hearing, the bank filed nothing for 60 days thereafter and filed no written “good cause” five days before the hearing.  However, in a last-ditch effort to avoid dismissal, the bank attorney showed up at the hearing and persuaded the judge not to dismiss the case for lack of prosecution.  Without a homeowner opposing that request, many judges agreed, allowing foreclosure cases to remain pending when, in my view, they should have been dismisssed.

I’ve seen this fact-pattern in a few cases where I was recently retained, and I’ve started filing motions like this.  Basically, I’m telling the Court that the case should have been dismissed for lack of prosecution, and if the court does not reconsider its ruling in that regard now, it will be facing an appeal on that issue at the conclusion of the case.  That may sound crazy, but as the motion reflects, it’s entirely possible for a homeowner to lose a foreclosure case, suffer an adverse judgment, and to appeal based on an argument that the case should have been dismissed for lack of prosecution (before the final judgment was entered).

Thanks to a recent case from the Florida Supreme Court, the rules for lack of prosecution are really clear.  The banks may have convinced judges to ignore those rules because the homeowner didn’t have counsel (or didn’t know how to hold the bank’s feet to the fire on this issue), but we shouldn’t let them get away with it.

Of course, this is just one example of how, so long as a final judgment of foreclosure hasn’t been entered, it’s almost never too late for a good foreclosure defense lawyer to help Florida homeowners.

Mark Stopa

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When to Retain a Foreclosure Defense Lawyer

I talked to two prospective clients this week, and both conversations broke my heart.  In both cases, it was clear to me that I really could have helped these homeowners, but they waited too long to consult me.

In the first case, the homeowner failed to defend and was defaulted by the clerk.  A default, of course, is like a forfeit in sports.  It’s the court’s way of saying a defendant does not get to participate in a lawsuit or assert any defenses in opposition to foreclosure.  It is possible to vacate a default (and, hence, defend a case), but the longer one fails to act after having been defaulted, the harder it is to defend a case.

In this particular case, the bank was so slow to prosecute (even after getting a default against the homeowner) that the clerk issued a notice of intent to dismiss for lack of prosecution.  Incredibly, even after receiving that, the bank still failed to do anything for 60 days.  If this homeowner had consulted me at that point, I would have filed a motion to dismiss for lack of prosecution.  While I can’t “guarantee” anything, I am virtually certain I would have gotten that motion granted and the case would have been dismissed.  Alas, the homeowner did not consult with me, and about 120 days after the notice was issued, the bank finally woke up and filed something, precluding a dismissal.

An opportunity for a great result presented itself, but the homeowner didn’t have a lawyer, so the opportunity was lost.

In the second case, an elderly homeowner suffered a final judgment of foreclosure while trying to defend his foreclosure case himself.  He was desperate to file an appeal and willing to pay me to do so.  Sounds good, right?  Well, for me, it doesn’t matter if a client is willing to pay; if I don’t think I can help, I’m not going to take somone’s money.  Don’t get me wrong; I’m more than happy to take on an appeal.  The problem is that if a homeowner doesn’t make the appropriate arguments (in a procedurally proper way) before the foreclosure judgment was entered, then there is little any foreclosure defense lawyer can do about it on appeal.  After all, the purpose of an appeal is to ask the higher court to rule that the lower court made a legal error.  If the homeowner didn’t argue something correctly (or at all), then the appeal won’t be successful.

What really frustrated me about this case was that, prior to suffering the final judgment of foreclosure, the homeowner actually got the judge to dismiss the case with prejudice!  Unfortunately, the judge later vacated that order of dismissal upon a motion from the bank.  When I reviewed the transcript from the hearing on that motion, I was pulling my hair out with frustration, feeling confident that the judge would not have vacated his order of dismissal if I was involved in the case at that stage of the case.  Alas, I was not involved, so the motion was granted, the order of dismissal was vacated, and, ultimately, the homeowner was foreclosed.

What’s perhaps more frustrating about that is that the homeowner had enough money to pay for a court reporter and order a transcript of the hearing, but he tried to handle the hearing himself.  I’m sorry, but that’s ass backwards.

Look, I know that many homeowners think they know a lot about foreclosure law.  Some of them, quite frankly, have taken advantage of their unemployment (to the extent that’s even possible) by studying foreclosure laws.  That’s all fine and good, but I’d bet anything that I know far, far more about the arguments to make in opposition to a bank seeking to vacate an order of dismissal  under Rule 1.540.  As I read the transcript, it was clear this homeowner had no idea what to argue or what to say.  The bank brought witnesses to testify and the homeowner had no idea what to do.

This was a huge hearing, mind you.  If he won, then the order dismissing his foreclosure lawsuit with prejudice would have remained in place.  It was important enough for him to hire a court reporter, and he had the financial means to do so, yet he decided to handle this hearing without a lawyer.  Sigh.

By no means are lawyers perfect, and that includes foreclosure defense lawyers.  However, these were two examples, just from this week, where it was very apparent to me that I could have helped homeowners avoid foreclosure if only those homeowners had consulted with me sooner.

So if you’re wondering when to retain a foreclosure defense attorney, learn from the mistakes of these two homeowners.  Hire a lawyer to defend your case from the outset.  If you don’t, you risk missing out on viable arguments and defenses that may well help you avoid foreclosure.

Mark Stopa

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Proof the AG Settlement Failed

I’ve read many good articles, including this one from Abigail Field, explaining why the 25 billion dollar settlement between the Attorneys General and the TBTF banks was a terrible deal for consumers and our country as a whole.  For me, though, there is one simple, obvious way to prove this settlement was and is a complete and collosal failure.  Simply compare the rate at which banks were filing new foreclosure lawsuits and prosecuting existing foreclosure cases before the settlement to the rates now, after the settlement.

Before the AG settlement was announced, banks were very slow to prosecute existing foreclosure cases and loathe to file new cases.  To illustrate, it seems crazy to say so now, but Stopa Law Firm went nearly a year without a single bank setting a hearing on a motion for summary judgment.  Think about that for a minute … nearly a year without a single summary judgment hearing (in any of my cases).  I like to think that’s partly a product of the banks and their lawyers not wanting to face me in court, but certainly there was more to it than that.  Banks were hesitant to prosecute foreclosure cases without a settlement and release from the AGs.

After the AG settlement was announced, banks accelerated the foreclosure process, both in terms of new cases and the prosecution of existing cases.  How do I measure the difference?  Well, the banks are now proceeding at rates faster than I’ve seen in the four-plus years I’ve been defending Florida homeowners.  If banks were a snail before the AG settlement, they’re now a jackrabbit.  That’s not to say foreclosure cases cannot be defended any more – they can.  But the approach and overall dynamic of foreclosure defense has changed drastically in recent weeks.

As for the key question, i.e. whether the AG settlement was helpful to homeowners, ask yourself this – “if the AG settlement was helpful, why are banks foreclosing faster now, after the settlement, than they were before?”

The settlement should have discouraged abusive practices in the banking industry.  Instead, the TBTF banks accepted their slap on the wrist, took their release from the AGs, and began their corrupt and fraudulent practices anew, full speed ahead.

Imagine a professional bank robber stealing $500 million from 20 different banks over a 10-year period, then being “punished” by having to pay back $500,000 with no criminal penalty and no jail time.  Wouldn’t the bank robber, after that punishment, go right back to robbing banks?  That’s what’s happening here with the AG settlement, only, in America, the bank robber would never escape punishment while the TBTF banks always get off scot-free.  That may sound harsh, but, again:

if the AG settlement was helpful, then why are banks foreclosing faster now, after the settlement, than they were before? 

Mark Stopa

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Hope is a Good Thing

As I think about the various, upcoming elections in our country, I’m reminded of some quotes from the movie Shawshank Redemption, probably my favorite movie of all time.

Andy: So you don’t forget… forget that there are places in the world that aren’t made out of stone. That there’s something inside that they can’t get to, that they can’t touch. It’s yours.
Red: What are you talking about?
Andy: Hope.
Red: Hope? Let me tell you something, my friend. Hope is a dangerous thing. Hope can drive a man insane. It’s got no use on the inside. You better get used to that idea.
Andy: Like Brooks did?

(Later in the movie, after Andy escapes from prison and Red is paroled…)

Andy: Hope is a good thing, maybe the best of things, and no good thing ever dies.

Hope is a good thing, maybe the best of things, and no good thing ever dies.

I love that quote, and not just for the movie’s sake.  That’s how I feel about our government right now.

The U.S. government is messed up – beyond description, really – and it would be easy to consider the situation hopeless.  But like Andy felt even while incarcerated (for a murder he did not commit), I remain hopeful.  I remain optimistic that our government can be changed because you, me, and other real-world, normal, every-day people will make it change.

That’s why I’m discussing the candidacy of Lisa Epstein for Clerk of Court in Palm Beach County, Deb Lilley for Clerk of Court in Charlotte County, Bob Sublett for Clerk of Court in Sarasota County, and Matt Gardi for Clerk of Court in Monroe County.

The candidacy of these three individuals may seem small and insignificant in the grand scheme of things.  How can this change our government?

Please realize … it’s more than just appointing a clerk of court.  It’s about involving normal, everyday people in our government.  It’s about making sure the 1% don’t run our country forever.  It’s about ridding our government of corruption and fraud.  It’s about forcing the voice of everyday Americans to be heard.

I’m hopeful these things can happen.  I’m hopeful our government will change.  It won’t happen overnight.  It will take time.  But I’m hopeful it can happen, on all levels – from a county clerk to President of the United States and at all levels in between.

If you’re skeptical, remember …  hope is a good thing, maybe the best of things, and no good thing ever dies.

Mark Stopa

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