Archive for September, 2012

Untimely Objections are Waived

I had two hearings this morning where the Plaintiff moved for an extension of time to respond to my client’s interrogatories.  In each hearing, the issue became whether the plaintiff could “respond” to interrogatories, as opposed to “answer” them, several months after those interrogatories were served.

What’s the difference, you ask?  By seeking the ability to “respond,” as opposed to “answer” the interrogatories, the plaintiffs wanted to preserve the right to object.  In other words, having gone several months without serving any discovery responses at all, the plaintiffs wanted to avoid giving me substantive “answers” to my interrogatories by interposing blanket objections.  If permitted, that would force me to file a motion to compel answers, without objection, and set that motion for another hearing.

Florida law has a very simple rule on objections.  If you have objections to discovery, you have to serve those objections within 30 days.  Sometimes, candidly, this rule is not rigidly enforced at the trial court level.  However, given the existence of the Rule, it is easy to argue that plaintiffs should not get to wait 5 or 6 months to “respond,” then, when they do respond, serve blanket objections without any substantive “answers”.  In other words, judges may be lenient about the 30-day requirement, but they typically wont’ allow any party to wait 5-6 months before objecting to discovery.

Imagine the roles were reversed.  If defendants were trying to get away with waiting several months to “respond” to discovery, plaintiffs would be standing on the table screaming about how we are delaying the foreclosure case.  The standard should be no different for plaintiffs.  This is particularly so since plaintiffs love to ask for summary judgment or trial, even with discovery outstanding, and assert the defendants were dilatory in pursuing discovery.

I won both hearings based on this argument.  Both times, the judge gave the plaintiff more time to answer my discovery, but the judge required “answers” to my interrogatories, without objection.

Anyone faced with this situation, I strongly recommend you adopt this approach.  “More time to respond to discovery is fine, judge.  But at this point, the plaintiff should be providing substantive answers, without objection.”  I’m confident, more often than not, this argument will prevail.

Mark Stopa

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Jurisdictional Arguments in Foreclosure Cases

Do you understand the concept of subject matter jurisdiction?  Do you know when and how jurisdictional arguments can arise?  Do you know when and how to incorporate such arguments into your defense of a foreclosure case?

“Subject matter jurisdiction” is the authority of a court to adjudicate a specific case or type of case.  In the foreclosure context, the concept is generally quite simple.  In Florida, when a plaintiff sues for mortgage foreclosure, and the amount in controversy exceeds $15,000, then the circuit court has exclusive jurisdiction to adjudicate that case.

Candidly, foreclosure cases are often litigated without subject matter jurisdiction ever becoming an issue.  In other words, the lack of subject matter jurisdiction is typically not a defense.  So why would I want to talk about it?  Two reasons.

First, the issue of subject matter jurisdiction is incredibly nuanced, so much so that most lawyers (not just pro se homeowners – most lawyers) don’t understand all of the subtleties.  Hence, if you do understand the concept, or have a lawyer who does, you’ll have a significant leg up on everyone else, including the foreclosure mills.

Second, the upside if you’re able to prevail on a jurisdictional defense is significant.  Think about it.  If you’re a homeowner defending a foreclosure case, and you prevail on an argument that the court in which the case was filed lacks subject matter jurisdiction, that means the court cannot adjudicate your case.  Hence, you cannot be foreclosed, at least not in that case, because the presiding court does not even have the authority to rule!  It wouldn’t matter if you were behind on mortgage payments or had a defense to the foreclosure lawsuit – the court could would not have the authority to foreclose upon you, even if it wanted to!

Jurisdictional issues have arisen in several of my cases in recent weeks.  While an explanation of all of the nuances of subject matter jurisdiction is beyond the scope of this blog, let me give an example.

I had a hearing on a Motion for Summary Judgment.  I prevailed, and the Court entered this Order Granting Summary Judgment, dismissing the case.  The plaintiff moved for rehearing, and the court entered an Order denying rehearing.  Two weeks later, though, the judge that entered the Order denying rehearing sua sponte vacated that Order, then directed that a hearing be scheduled on the motion for rehearing.

For technical, legal reasons that are difficult to explain (i.e. one of the nuances of subject matter jurisdiction), I did not believe the Court had subject matter jurisdiction to vacate its Order denying rehearing or to require that a hearing be scheduled on the motion for rehearing.  Basically, I believed the case was over and that the court lacked the authority to conduct a rehearing.  As such, I moved to vacate the Order directing the hearing.  The Court entered an Order denying that motion, again directing that the rehearing proceed.

I lost the jurisdictional argument at the trial court level, but I still believed the court lacked jurisdiction.  Hence, I filed this Petition for Writ of Prohibition in Florida’s Second District Court of Appeal.  The same day I filed it, and just one day before the hearing, the Second District issued this Order, directing that the hearing be cancelled and all activity in the circuit court be stayed until the Second District adjudicated the petition.  In fact, the Second District even ordered that the plaintiff show cause, within 10 days, why the petition should not be granted.

The petition has not yet been adjudicated, and I don’t know how the Second District is ultimately going to rule.  However, this is a good example of one of the tools that a good foreclosure attorney should be able to pull out of his or her toolbox when the need arises.  Quite simply, if a court doesn’t have jurisdiction, then we as lawyers have to be able to say so, and if the lower court rules against us, we have to be able to seek relief in the appellate court.  The issues may be complicated, but if we don’t argue them, then we’re missing out on perfectly legitimate reasons/arguments to help homeowners avoid foreclosure.

How can a homeowner know when to assert a jurisdictional defense?  That’s a hard question to answer – outside the scope of this blog.  That said, jurisdictional issues typically arise in foreclosure cases when a case is dismissed and a plaintiff or the court tries to vacate or undo that dismissal.  There are some rigid, hard and fast rules on when it’s possible to vacate a dismissal, so this is where the jurisdictional issues come into play.

Also, I’ve seen cases that were dismissed by the court but the plaintiff simply ignores the dismissal and keeps filing papers.  In this type of situation, the parties and the clerk can all act as if the case is still pending (essentially ignoring the dismissal), but it doesn’t matter – if the case is dismissed, the court lacks jurisdiction unless the dismissal is vacated appropriately.

As you’re fighting foreclosure, please keep jurisdictional defenses in mind.  If you’re not sure whether they apply (and you undoubtedly aren’t – like I said, the concept is lost on many lawyers, much less pro se homeowners), then make sure you seek competent counsel for assistance.

Mark Stopa

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The Beginning of the End?

America is the greatest country in the world and has been such since long before I was born.  Will that continue forever?  If history is any indication, the answer is no.  Consider the Roman Empire.  The Soviet Union.  Germany.  Is America doomed to the same fate?  If so, will it happen in our lifetimes?  If it does happen, will we be able to tell?  Will there be warning signs?

I don’t consider myself an alarmist, a radical, or anti-government.  I’d imagine, though, that if America’s existence as we know it were to end, or were to be fundamentally altered, the beginning of the end might have headlines which look something like this …

California Company Buys 700 Florida Foreclosures in a Single Sale

Nobody in the mainstream media is talking about this, so please take a few minutes and think about the ramifications of this story.  Think about what’s going on in “our” country.

It started, in my view, when “our” federal government insured millions of mortgages (guaranteeing it would pay the banks the full loan amount in the event the borrower defaulted), inducing banks to lend at unprecedented rates.  The big banks committed all sorts of nefarious acts along the way with an eye towards increasing the bottom line.  The biggest real estate bubble in world history resulted.

The bubble burst, helping to destroy the American economy.

The big banks and corporate America were bailed out with taxpayer dollars, but those same taxpayers – lower and middle class America – got no such bailout.  The corporate crooks who committed the nefarious acts faced no punishment.

Millions upon millions of Americans lost the equity/wealth in their homes, and, ultimately, lost their homes altogether to foreclosure.

Meanwhile, the bailed-out banks refused to negotiate with homeowners, and “our” government refused to do anything to force them to do so.  Hence, the cycle continued, as the economy remained in the toilet, banks kept foreclosing, and homeowners kept getting thrown onto the street.

Now for perhaps the most outrageous part … what has happened to all of the houses?  You know, all of the houses that were taken from middle class America via foreclosure instead of giving principal reductions?  “Our” government is selling those houses in bulk sales to private investors.  As the headline reads … California Company Buys 700 Florida Foreclosures in a Single Sale.

That’s 700 of my fellow Floridians who lost their homes … why?  So those homes could be sold to one, uber-wealthy investor for $12.3 million?  Do the math, folks – that’s $17,571 per house.

Are you seriously telling me that 700 of my fellow Floridians were foreclosed upon so “our” government could sell these houses, free and clear, for $17,571 each?  Seriously?  Selling hundreds of houses to one rich guy for pennies on the dollar is better than giving hundreds of homeowners a principal reduction … how, exactly?

I could sort of understand, maybe, the argument that our government can’t give principal reductions on a widespread basis because it would induce everyone to default.  I don’t agree, but I could at least understand that.  However, even if you accept the argument that foreclosure was/is the only option, there are certainly options for the re-sale of these properties other than selling them in bulk to the uber-wealthy.

For instance, why doesn’t “our” government set up public auctions for each property – one at a time – so anyone can bid?  Isn’t that the American way?  You work hard, save money, buy a house.  Why exclude 99.9999 percent of the American population from buying the houses that were foreclosed, allowing only the richest of the rich to buy these houses?  Why set up a system where the houses are sold for pennies on the dollar instead of something closer to their fair market value?

Bear in mind … it’s our taxpayer dollars at work here.  Our taxpayer dollars are what paid the banks the full judgment amounts.  So when we’re all footing the bill for it, why is it that only the mega-wealthy stand to gain?


Because that’s how America operates in 2012.

If you’re mega-wealthy, you get high-level positions in government, and you create the system in a way that it caters to the mega-rich.  That’s what we see in national politics from both Democrats and Republicans.  That’s what’s happening with these foreclosure sales – Fannie Mae is selling to the uber-wealthy because the high-level executives at Fannie are uber-wealthy.  You scratch my back, I scratch yours … and on and on the crooked system goes, catering to the whims of the sociological elite while the 99% get left behind.

I don’t know that this is the beginning of the end of America as we know it.  For all I know, this could be a blip on the radar.  However, if we look back in 20, 30, or 50 years and realize this was the beginning of the end, we can’t say we didn’t see the warning signs.

Mark Stopa

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Stopping a Foreclosure Sale

I just received an email from a prospective client which asked if I can stop a foreclosure sale that is scheduled for Monday, September 10, 2012 at 9:00.  Today, of course, is Sunday, September 9, 2012.  Hence, this homeowner is asking that I stop a foreclosure sale that is scheduled for tomorrow morning at 9:00.

I’d like to think I’m good at my craft.  Unfortunately, this request, though sincere, has been made too late.  Quite simply, this homeowner waited too long to seek my assistance.

As a practical matter, there is no way, even if I had been willing to take this homeowner’s case and start working on a Sunday, that I could file a motion or get a hearing – even on an emergency basis – before 9am on Monday.  Heck, even if the foreclosure sale had been scheduled for 11am, I wouldn’t have been able to get a hearing beforehand.  The court system is not equipped to allow hearings this quickly, and that’s if there is even a basis to ask the court for relief (when this homeowner’s case is post-judgment, meaning she has already lost the foreclosure case).

Since there’s nothing that can be filed in the foreclosure case itself, the only possible way to cancel this sale is to file bankruptcy.  The good news about bankruptcy is that it has an automatic stay, meaning, basically, that if a bankruptcy is filed before a foreclosure sale that the foreclosure sale must be cancelled as a matter of federal law.  Homeowners file bankruptcy right before a foreclosure sale (in order to buy more time in their homes) all of the time, and it’s perfectly legal.  Stopa Law Firm files bankruptcy for Florida homeowners in this situation, and many other bankruptcy firms do as well.

But here’s the problem …  Bankruptcy isn’t something I can just run to the courthouse and file.  The client has to complete a bankruptcy petition, which is full of financial information and documentation.  Even if the client were to file a “bare bones” petition, temporarily omitting some of the requisite information (with the intent of providing it later), a petition still needs to be filed and a filing fee needs to be paid.  As a practical matter, this just isn’t something that can be done without at least one business day.  To put that into perspective, my office often talks to existing clients about the possibility of filing bankruptcy weeks beforehand.

I hate to say it, but the reason I’m writing about this is because it’s the perfect example of what not to do.

I realize everyone is busy and has different challenges and issues in life, so I’m not trying to be judgmental.  Frankly, I wouldn’t want to have to walk in some of my clients’ shoes.  That said, if you want to avoid/prevent/stop a foreclosure sale, you simply cannot wait this long to seek assistance.  If you wait until a foreclosure sale is about to take place before soliciting counsel, you may be able to file a bankruptcy to stop the sale, but that sale will likely be rescheduled a few months later, so that’s all you will have gained – a few months.  (Remember, by the time a sale is scheduled, the foreclosure case is already over, and the time to seek rehearing or appeal in the foreclosure case has likely passed, so your options are limited at that point.)

If you obtain counsel sooner, i.e. before a Final Judgment is entered, or, preferrably, right after the foreclosure lawsuit is filed, then your chances of obtaining meaningful help from a foreclosure defense lawyer are improved significantly.  There are almost always defenses that can be interposed if I get involved in a case in the beginning.  There are almost always things I can do to help homeowners – with more than a few month “stall” that comes from filing bankruptcy before a foreclosure sale.  Sadly, though, if you go into “denial mode,” bury your head in the sand about your foreclosure problems, and then seek help at the last minute, it may be too late to do anything.


Mark Stopa

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Principal Reductions? Do You Feel Lucky, Punk?

Do you remember the National Mortgage Settlement?  You know, that settlement between the nation’s biggest banks, the federal government, and 49 State Attorneys General that made so many headlines from months ago?  Did anything ever come of that?  Did it provide any help to American homeowners?

As with every other government program that’s existed over the past few years, I haven’t been holding my breath.  Whether it’s HAMP, HARP, the Hardest Hit Fund, or any other random acronym, I’ve seen too little help being extended to my clients or homeowners in general.  These programs have been all hype and no impact.  So when the National Mortgage Settlement was announced, it didn’t change my approach to foreclosure defense or the advice I give clients in the slightest bit.

Occasionally, I encounter homeowners who question my skepticism.  They cite the requirement in the National Mortgage Settlement that the big banks write down the balances owed on mortgages.  My response?  “I’ll believe it when I see it.”

Now that some time has passed since the National Mortgage Settlement, we’ve had a chance to evaluate what the banks have been doing.  (Bear in mind, as you read this, the National Mortgage Settlement is what our nations leaders agreed to accept in lieu of pursuing the big banks for criminal charges and untold civil penalties.)  Unfortunately, but not surprisingly, it’s not good.  Instead of reducing principal on owner-occupied properties to keep homeowners in their homes, most of the “reductions” that the big banks have been offering have been in the short sale context.  “Sell your house, and we’ll forgive the deficiency.”  In other words, “sell your house, give us money, and we won’t make you give us more money.”

As if that’s not bad enough, many of these “reductions” have been given in non-recourse states, i.e. states where the banks cannot collect the deficiency as a matter of law.  Real nice, eh?  You see, unlike Florida, where banks can pursue deficiencies against homeowners, in states like California, the banks aren’t allowed to collect a deficiency – their sole remedy upon a default in mortgage payments is to foreclose and get the house.  If the house is worth $300,000 and the amount owed is $500,000, it doesn’t matter – the bank is limited to the $300,000 house.  (In Florida, by contrast, the additional $200,000 would still be owed.)

So what have the banks been doing to “comply” with the National Mortgage Settlement?  In non-recourse states like California, banks have been entering short sale agreements and “reducing” the balance owed to $300,000, “eliminating” the deficiency and applying those “reductions” towards their debt reduction obligations in the National Mortgage Settlement.

Keeping homeowners in their homes?  Pfft.  Offering real relief?  No way.  Why would the banks do that when they can ”comply” with their debt reduction obligations by eliminating debt that they’re not allowed to collect anyway?

Apparently, people have started to catch on to this utterly perverse system (implemented by 49 of our AGs and the federal government, mind you), voicing appropriate complaints.  Perhaps realizing they’ve been caught, and trying to create at least the impression of compliance, the banks have reacted.  In fact, every so often, I’m starting to see some of the bigger banks – Citi, JP Morgan Chase, Bank of America, GMAC, and Wells Fargo – reduce or even eliminate mortgages for some homeowners.  Yes, you read that right … every so often, these big banks are reducing the amounts owed on mortgages.

Before you get excited, I must immediately caution you.  Curb your enthusiasm.  These principal reductions have been very rare and, frankly, completely random.

Understanding how this process works requires that you begin with one basic premise – these banks have no desire to actually help homeowners.  Hence, there is no methodology to the implementation of these principal reductions.  Is it limited to homestead or owner-occupied properties?  No.  Is it being offered to homeowners with the greatest need, e.g. the elderly or those stricken with cancer?  No.  You see, those are some criteria that might be implemented if the banking industry gave a damn and was actually trying to help people.  But they don’t, so no such criteria exist.

The principal reductions I’ve seen from the big banks – as infrequent as they’ve been – are totally random.  In fact, as best I can tell, they’re being offered solely so the banks can say they’ve reduced debt, without actually reducing debt they intend to collect.

For instance, in Florida, it’s relatively common to settle foreclosure lawsuits by the bank agreeing to waive deficiency in exchange for the homeowner consenting to foreclosure.  This doesn’t happen all the time, of course, and I believe it’s much more likely if you defend your foreclosure case so as to gain some leverage to induce the bank to compromise, but it does happen.  Hence, if the banks eliminate deficiencies, that may sound good, but if it’s something they were going to do anyway, should that really count towards their debt reduction obligations in the National Mortgage Settlement?  That’s not the banks doing something good – that’s them doing something they were going to do anyway, for their own business purposes, and labeling it as something good to “comply” with the National Mortgage Settlement.

Another thing that irritates me about the banks reducing debt in the short sale context is that, quite often, this debt can be eliminated through bankruptcy anyway.  Banks know this, and that’s why, in the rare instances I’ve seen principal reductions, they’ve occurred on debts that could have been eliminated through bankruptcy anyway.

For instance, I had one client whose second mortgage was completely eliminated.  Poof.  That sounds great, but that client is still underwater on his first mortgage and is still looking at a bankruptcy.  Hence, what did eliminating that second mortgage really accomplish?  Banks often don’t pursue second mortgages anyway, and even when they do, those mortgages will be foreclosed when the first mortgage forecloses and the personal liability can be eliminated through bankruptcy.  In other words, that principal “reduction” may sound nice, but was it designed to keep that homeowner in his home?  Heck no.  In fact, that principal reduction was completely unsolicited – the homeowner didn’t even ask for it.  Does that sound like a bank that’s trying to help, or a bank that figured out, internally, which debts were the best to eliminate for its own, internal purposes?

A recent article in the St. Pete Times listed out the names of these big banks and some phone numbers to call.

Ally Financial/GMAC:  Toll-free 1-800-766-4622

Bank of America: 1-877-488-7814

Citigroup: 1-866-272-4749

J.P. Morgan Chase:  1-866-372-6901

Wells Fargo: 1-800-288-3212

Despite my pessimism, I’m never going to discourage any of my clients or any homeowner from calling to try to get this relief.  Call.  There’s no harm in calling, I suppose (except to the extent your case has been in hibernation mode and your call wakes up the sleeping giant).  That said, when I assess the chances of these calls doing any good, I can’t help but think of the famous line from Dirty Harry … Do You Feel Lucky, Punk?

Why that line (aside from it coming from Clint Eastwood, who was just in the news)?  The way I see it, for your pleas to the bank to work, you’ve got to be lucky.  Really lucky.  And I like the term “punk” in this context because we’re all punks.  We’ve all been punked by the big banks.  They screwed over America, avoided liability for their misdeeds under the National Mortgage Settlement, and when it came time to pay, they punked us all.

So go ahead and call.  Just remember Clint Eastwood’s famous line, and when your pleas go unanswered, remember why I’ve put so little stock in every government program that’s come into place in the past several years.

Mark Stopa

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