Archive for May 22nd, 2012

Blame the Banks? Or the Government? Or Both?

It is thoroughly appalling to me how nobody – and I mean NOBODY – has blamed the U.S. government for the housing crisis, if not the entire Great Recession.  Sure, the banks are dirtbags, but we all know that.  Why is nobody placing appropriate blame on our government?

If you don’t know what I mean, take a look at this Final Judgment, where a homeowner prevailed over BB&T at trial.  Yes, the bank was sleazier than the skuz on the bottom of my shoes, declaring this homeowner in default when there was no default.  But take a close look at WHY the bank did so.  As the Final Judgment reflects, the bank was financially motivated to declare a default because it knew the government was going to pay the mortgage in the event of default.

As if that’s not disgusting enough, what makes it even worse was that BB&T did not even loan the money – a prior bank did.  Yet as a result of a deal with the FDIC, BB&T was in the position of pocketing millions of dollars from our government merely by declaring this homeowner in default.  This should piss off everybody in America – a bank that didn’t loan money wrongly declares a default so it can collect millions from our government. Where is the outrage?

These perverse financial incentives permeate foreclosure-world to a degree that is impossible for the typical person to fathom.  Personally, I’m convinced the government’s involvement (coupled, of course, with the lack of ethics on Wall Street) is the reason for the housing crisis.

If that doesn’t make sense, think about it like this.  Suppose you were a bank.  Suppose you could make a loan and either get paid monthly, with interest (if the homeowner paid) or get the entire mortgage paid in full by the government (if the homeowner stopped paying).  What would you do?  You’d loan as much money as possible, right?  You’d loan to every Tom, Dick, and Harry, regardless of his/her creditworthiness.  You’d loan more and more money on each loan because there’d be no downside – either the homeowner paid according to the terms of the loan, with interest, or, if the homeowner didn’t pay, the government would pay in full.

This is the dynamic that has existed over the past several years throughout our country.  Many, many mortgages are fully guaranteed by the U.S. government.  This is why home prices were inflated during the boom.  Banks jacked up appraised values because there was no downside – they wanted to loan more, knowing the loans were guaranteed by the U.S. government.  And this is why banks won’t settle cases now – why settle with homeowners when they can get a judgment and get paid in full by the government?

Don’t believe me?  Don’t take my word for it – read the findings of Judge Levens in this Final Judgment.

Mark Stopa

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Appeal of an Order Denying a Motion to Quash Service

Here is my Initial Brief in a foreclosure case where I’m appealing an Order denying my client’s Motion to Quash Service.  The fact-pattern was pretty straightforward, and so was the brief.  The Return of Service (the document the process server filed to establish service of process was effectuated) did not reflect that the process server informed my client of the contents of the Summons and Complaint, as required by Fla. Stat. 48.031(1)(a), and my client’s Verified Motion established that she was not so informed.  On these undisputed facts, I submit that service should have been quashed, and I think Florida’s First District Court of Appeal will agree.

This is not the first time I’ve posted a brief like this.  In the past, I’ve found that when I do so, I will get calls from prospective clients who want me to raise a similar issue in their case.  That’s great, and I’m happy to shed a spotlight on viable defenses available to homeowners in foreclosure cases.  That said, anyone in this situation needs to realize that the right to bring this sort of appeal is predicated on the homeowner’s compliance with some extremely technical rules of procedure, including: (i) you have to challenge service with the first paper filed in the foreclosure case; and (ii) you have to file a Notice of Appeal within 30 days of the Order denying that motion.

All too often, I find that homeowners could have asserted a defense or brought an appeal like I’ve done here, but they tried to handle the situation on their own and blew the procedural requirements.  If you’re a homeowner facing foreclosure, don’t make this mistake!  Don’t miss out on viable defenses because you tried to handle your lawsuit yourself!  After all, if you broke your arm, you wouldn’t try to perform surgery on yourself.

Mark Stopa

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