Archive for October, 2012

Bankruptcy Court Enforces the Automatic Stay Against the State Court

In addition to foreclosure defense, my firm also represents homeowners in bankruptcy proceedings throughout the Middle District of Florida.  Even though bankruptcy isn’t for everyone, I couldn’t imagine not offering this service, as bankruptcy and foreclosure often go hand in hand.  To illustrate, one of the benefits of bankruptcy is that it entitles homeowners to an “automatic stay” of their foreclosure case.  In layman’s terms, this means the foreclosure case must stop, dead in its tracks, until the bankruptcy court rules it can proceed.  As a result, it makes perfect sense for many homeowners to incorporate bankruptcy into their foreclosure defense strategies.

For example, suppose a homeowner has a trial approaching in the foreclosure case and is concerned he/she may lose.  It may make sense to file bankruptcy, right before the trial, as, that way, the state court is required to cancel the trial as the bankruptcy proceeds.  This “stay” doesn’t last forever, of course, but it’s a good way to prevent a bank from proceeding with a scheduled hearing or trial in a foreclosure case.

Typically, whenever any attorney mentions that a bankruptcy has been filed or that an automatic stay is in place, the state court judges are loathe to do anything.  That’s how federal law works – when the stay is in place, the state court lawsuit cannot proceed.  It’s an “automatic” stay – the foreclosure case automatically stops when the bankruptcy is filed.

Recently, however, I’ve encountered a judge who thought it was okay to proceed with the foreclosure case even when a homeowner filed bankruptcy.  The judge was not intending to proceed with substantive motions, but to hold a “case management conference” or a “status conference” right after a bankruptcy is filed.

That prompted me to file this motion, where I asked the bankruptcy court to require the foreclosure court to honor the automatic stay and to refrain from conducting further court proceedings in the face of that stay.  Today, I received this signed Order, granting the motion and directing the foreclosure court to refrain from any court proceedings in light of the automatic stay.

As you’re fighting foreclosure, keep this dynamic in mind.  A state court judge cannot proceed with a foreclosure case when you file bankruptcy, and if the judge tries to do so, the bankruptcy court can and likely will intervene.

Mark Stopa

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Blazing the Trail

Have you ever made an argument in a foreclosure case, and you think it’s a solid, well-taken argument, but there is no case law directly on point?  It can create a sinking feeling.  “I think I’m right, but how will I ever get a judge to agree with me when there aren’t any appellate court decisions which have ruled this way already?”  The tendency, when presented with such a situation, can be to shy away from the argument.  To back down.  To let someone else try to make the argument first.  “I don’t want to look foolish.”  “I don’t want to be wrong.”  “If this is such a good argument, why aren’t there any cases that have ruled this way already?”

While I understand this feeling, this is absolutely and unequivocally the wrong mindset.

As foreclosure defense lawyers, many of the issues with which we are confronted are novel.  That’s just the nature of the beast.  Just think of it this way – when, prior to now, in the entire history of America, have property values collapsed by half (or more), causing millions of Americans to face foreclosure, essentially all at once?  Obviously, the answer is “never.”  These are unprecedented times, so it should come as no surprise that, in the history of jurisprudence, our court system has never before been confronted with some of the legal issues with which we now deal on a daily basis.  As a result, to defend homeowners the right way, we have no choice but to argue things we may have never argued before – to present arguments to judges they may have never heard before, for which there is no case law.

One such example?  Asking a judge to enter summary judgment for a homeowner in a foreclosure case.

In Florida, I know of no appellate decisions that directly authorize this.  Such case law may exist, for example, if it’s undisputed the homeowner paid the mortgage in full all along, but that’s not what I’m talking about here.  I’m talking about cases where homeowners are behind on their mortgage payments, perhaps significantly behind, and the bank has filed suit for foreclosure, but the homeowner is entitled to prevail on that case anyway.

I introduced this concept a few months ago,via this blog post.  In the ensuing months, I’ve made that same argument many times before Florida judges, often before judges who had never heard it before.

Sometimes, quite candidly, it’s not easy.  A few times, the judge seemed to think I was nuts, at least at first, when I told the court that I wanted summary judgment for my client.  Typically, however, once I get into the argument, and explain why my client should prevail, that initial skepticism is replaced with intrigue at the argument.  Often, in fact, these judges have agreed with my position, entering orders granting summary judgment and dismissing the case.

Invariably, do you know what happens when I go back before that same judge a second time?  Or a third time?  It’s easier.  The judge is familiar with the argument.  The judge understands the legal issues and knows how they apply.  I’m no longer the crazy lawyer asking for a client who hasn’t paid his/her mortgage to prevail, but the lawyer making sound, legitimate arguments that are perfectly consistent with the law.

Do you know what makes all of this a bit easier?  When the judge I’m arguing before sees that other judges have agreed with my argument.  That’s why, whenever I have a hearing on this issue, I bring the Orders I’ve obtained which entered summary judgments for my clients in other cases.  It’s one thing for me to argue something – it’s another for the judge to see that 5, 10, or 15 other, Florida judges have agreed with my argument and dismissed the case as a result.

In the grand scheme of things, my “success” here is limited.  I know that this argument isn’t being made everywhere in Florida.  I know there are many capable judges who have yet to hear the argument.  I can’t argue this for everyone.

It’s time to get the word out, folks.

Below are several of the Orders I’ve obtained upon making these arguments.  By posting these Orders, I am not suggesting that the same result will happen in any particular case.  That said, it’s certainly possible, and I have to think the chances for any particular homeowner will improve if/when the judge sees that numerous other, Florida judges have agreed with this argument.  Hence, that’s the point here – to blaze a trail.  To help everyone (including judges unfamiliar with the argument) realize this argument has worked, and can work in the future.  Everyone in foreclosure-world should be aware of these arguments.

Order Granting Summary Judgment – Judge Carven Angel (Hernando County)

Order Granting Summary Judgment – Judge Amy Williams (Pinellas County)

Order Granting Summary Judgment – Judge Pamela Campbell (Pinellas County)

Order Granting Summary Judgment – Judge John Schaefer (Pinellas County)

Order Granting Summary Judgment – Judge Amy Williams (Pinellas County)

Order Granting Summary Judgment – Judge W. Douglas Baird (Pinellas County)

Order Granting Summary Judgment – Judge Robert Foster (Hillsborough County)

Order Granting Summary Judgment – Judge Donald Evans (Hillsborough County)

Order Granting Summary Judgment – Judge Michele Sisco (Hillsborough County)

Order Granting Summary Judgment – Judge Frank Gomez (Hillsborough County)

Order Granting Summary Judgment – Judge James Barton (Hillsborough County)

Order Granting Summary Judgment – Judge J. Rogers Padgett (Hillsborough County)

Order Granting Summary Judgment – Judge Robert Foster (Hillsborough County)

Order Granting Summary Judgment – Judge James Barton (Hillsborough County)

Order Granting Summary Judgment – Judge Donald Evans (Hillsborough County)

Order Granting Summary Judgment – Judge Donald Evans (Hillsborough County)

Order Granting Summary Judgment – Judge George Shahood (St. Lucie County)

Order Granting Summary Judgment – Judge Thomas Kirkland (Orange County)

Order Granting Summary Judgment – Judge Lynn Tepper (Pasco County)

For those of you counting, that’s 14 different Florida judges who have entered summary judgment for a homeowner in a foreclosure case.  (Undoubtedly there may be more of which I’m not aware.)

So take these arguments.  Use them and apply them, as appropriate.  Keep fighting.  And, more than anything, realize that there are virtually always defenses that homeowners can utilize, even those facing foreclosure.

Mark Stopa

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U.S. Sues BOA for $1Billion for Mortgage Fraud

A federal prosecutor has filed suit against Bank of America for more than one billion (that’s B B B Billion, with a B) for mortgage fraud against Fannie Mae and Freddie Mac.

Move along, folks.  There’s nothing to see here.

Mark Stopa

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What is a “Negotiable Instrument”? And Why Does it Matter?

If I’ve heard it once from a plaintiff’s lawyer, I’ve heard it 1,000 times.  “We have the original note, and it’s endorsed in blank.”  Plaintiffs’ attorneys love to argue this to support foreclosure.  Sometimes, it’s ALL they argue.  Contrary to what the typical homeowner might think, there are typically no lengthy arguments with case law, no public policy arguments, no attempts to show documents aren’t forged or robo-signed … just “we have the original note, and it’s endorsed in blank.”

Why does this matter?  Why is the argument so simple?  More importantly, should it be so simple?

Many Florida cases have clarified that the “holder” of a promissory note is the person/entity that gets to foreclose.  See Fla. Stat. 673.3011(1).  “Holder,” of course, is defined by Fla. Stat. 671.201(21) as the person/entity in possession of the original Note, with an endorsement.  Hence, that’s why I so often hear “we have the original note, and it’s endorsed in blank,” as that’s the Plaintiff’s way of saying it is the holder of the Note and is entitled to foreclose.

There are a few ways this argument can completely fall apart.  The most fundamental problem, though, is to attack the very premise upon which it is based.  You see, the entire concept of being a “holder” or of having possession of an original Note, with an endorsement, is predicated on the Note being a “negotiable instrument.”  If it’s not a “negotiable instrument,” then the entire concept of being the “holder” is irrelevant.

So what is a “negotiable instrument”?

Florida Statute 673.1041 defines a “negotiable instrument” as an “unconditional promise” to pay a “fixed amount of money” if it: (a)  Is payable to bearer or to order at the time it is issued or first comes into possession of a holder; (b)  Is payable on demand or at a definite time; and (c)  Does not state any other undertaking or instruction by the person promising or ordering payment to do any act in addition to the payment of money, but the promise or order may contain: 1. An undertaking or power to give, maintain, or protect collateral to secure payment; 2. An authorization or power to the holder to confess judgment or realize on or dispose of collateral; or  3. A waiver of the benefit of any law intended for the advantage or protection of an obligor.

If that sounds confusing then, well, it is.  That’s why I like to think of a negotiable instrument as a check.  Imagine you have a check, and it’s payable to you.  If you wanted to give that check to John Smith to cash, you’d have to endorse that check on the back, i.e. sign it and write “pay to the order of John Smith.”  Also, you’d have to hand John Smith the check.  If John Smith had the check in his possession, with an endorsement on the back to him, then he could take it to the bank and cash it.

Suppose John Smith had the check, but you hadn’t endorsed it.  Could John Smith cash the check?  Of course not – the bank would tell him it wasn’t endorsed.  Likewise, if you endorsed the check, but didn’t give it to John Smith, the bank wouldn’t cash the check.  John needs two things to cash that check – an endorsement and possession of the original check.

But what if what you gave John Smith wasn’t a check at all.  What if it was an IOU.  Or a bag of rocks.  Obviously, John Smith couldn’t take those things to a bank and get cash – they aren’t negotiable instruments.  Silly examples, perhaps, but they illustrate the point.  A negotiable instrument has to be an unconditional promise to pay a fixed amount of money, payable to bearer, payable on demand, without any other undertakings.

Sounds confusing, and it is.  In fact, there are very few cases that talk about this.  Hence, let’s use a simple example from foreclosure-world.  Suppose a bank is suing to collect on a home equity line of credit agreement.  The agreement provides the homeowner can borrow up to $25,000, and the agreement is recorded, just as a mortgage is recorded.  As is typical, the bank that is suing isn’t the same as the bank that loaned the money.

When that bank comes into court and tries the same, old party line – “we have the original note, and it’s endorsed in blank” – make sure you stop them, dead in their tracks.  You see, that entire argument is irrelevant.  It doesn’t matter that the plaintiff has the original note, or even that it has an endorsement.  Those buzzwords are only relevant if the agreement is a negotiable instrument.  In the case of a home equity line of credit, that plainly isn’t the case.  After all, looking at the home equity line of credit agreement, nobody can tell whether the homeowner borrowed $25,000, zero dollars, or some amount in between.  In other words, the agreement is not an “unconditional promise” to pay a “fixed amount of money,” it’s a conditional promise to pay an unspecified amount of money – predicated on how much the homeowner decides to borrow, if anything, in the future.

To understand this distinction, check out this hearing transcript as well as this Order, entered by St. Petersburg judge David Demers.  Clearly, Judge Demers understands and agrees with this distinction, ruling the Plaintiff’s complaint (and amended complaint) had to be dismissed because the Plaintiff was incorrectly arguing that a home equity line of credit agreement was a negotiable instrument.

Why does this matter, you ask?  Simple.  If the Note (or HELOC, or whatever you want to call it), is not a negotiable instrument, then all of the statutes I’ve cited above don’t apply.  The entire argument Plaintiffs like to make – ”we have the original Note, and it’s endorsed in blank” doesn’t apply.  That, in and of itself, doesn’t mean the bank can’t foreclose.  However, to prove its standing to foreclose, the bank has to prove the Note/HELOC was transferred to it in some way other than the standard endorsement.  As I see it, this likely means the bank has to provide proof of an assignment.  What’s the difference between an assignment and an endorsement?  It’s a big difference, actually.  The way banks have operated in recent years, they’ve used endorsements to prove standing – that’s what the machine in their huge factory kicks out, over and over again – endorsements.  If you make them spit out an assignment, you may well see that the machine that is the banking industry is ill-equipped to do so, particularly one that predates the filing of the complaint, as requierd.  Hence, if you successfully argue the Note is not a negotiable instrument, and force the bank to prove standing with something besides an assignment, you may render them unable to prove standing at all.

There are almost no Florida cases that make this distinction.  Many cases make the conclusory statement that the Note is a negotiable instrument, without explaining how/why.  It’s imperative that everyone realize that not all notes are negotiable instruments.  Judge Demers realized it, and if/when more judges follow suit, I’m convinced many banks will be unable to establish the requisite standing to foreclose.


Mark Stopa

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The Topic Both Candidates Ignore

As I watched the debates last night, I commented on both my Facebook page and Twitter account, @MarkStopa, that Obama and Romney both ignored any discussion of foreclosure or housing.

Apparently, I wasn’t the only one who noticed, as the Washington Post just wrote an article titled The Topic Both Candidates Ignore.

If you’re having trouble paying your mortgage, or are facing foreclosure, don’t sit back and wait for help.  The candidates aren’t even discussing the issue – do you really think either side is going to do anything to help?  You have to help yourselves, folks.  Defend your case.  Assert your rights.  Hire competent counsel.  Nobody is going to help you – you have to help yourself.


Mark Stopa

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Sua Sponte Hearings and Trials in Foreclosure Cases

Florida courts are inundated with foreclosure lawsuits, yet they’re under-funded and under-staffed.  It’s simply not fair to anyone involved – the litigants or court personnel.  However, I don’t believe the answer is for the courts to take it upon themselves to set hearings or trials in these cases, as, in my view, that creates an appearance of bias that the courts should strive to avoid.

I voice these concerns in more detail, here.  Everyone might not agree, and that’s fine.  But we have to be willing to express these concerns to ensure a fair process for all involved.

Mark Stopa

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“Obama, Save My Home”

Fox News recently quoted me in this story about a Tampa homeowner who put a big sign on her roof begging Obama to save her home.  (Credit this reporter for actually explaining why loan modifications are so infrequent.)

This is going to be the starting point of my discussion at tomorrow’s seminar.  The government isn’t helping you, folks.  You have to help yourself.

Mark Stopa

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The Big Lie in the 2012 Presidential Election

During last night’s debate, I watched in horror as Obama and Romney both blamed homeowners for the mortgage crisis and ensuing financial collapse.  Even as they disagreed about everything under the sun, Obama and Romney joined in unison, arm in arm, blaming homeowners for entering mortgages they “couldn’t afford.”

Pardon me for interrupting, but what planet do these guys live on?  When I heard it live, it sounded like pure crazy-talk.  I thought for sure, once I reviewed the transcript of the debate, that I’d realize I heard it wrong, or it wasn’t as bad as it first sounded.  Nope.  Sure enough, I checked the transcript, and both Obama and Romney are blaming homeowners!  Check out their own words:

Obama:  “You had people borrowing money to buy a house that they couldn’t afford.”

Romney:  “You say we were giving mortgages to people who weren’t qualified.  That’s exactly right.  It’s one of the reasons for the great financial calamity we had.”

Meanwhile, what was noticeably absent from this entire conversation?  Any mention whatsoever of the real cause of the calamity – how banks were incentivized to loan to every Tom, Dick, and Harry … to create securitized, alphabet soup trusts … by our federal government, which promised to pay the loans in full if the homeowners defaulted.

Yes, as I’ve repeatedly attempted to explain on this blog, including here, here, and here, “our” federal government incentivized banks to lend at the unprecedent rates we saw during the boom by guaranteeing it would pay the banks the full loan amount if the homeowners defaulted.  Hence, the banks had nothing to lose by lending to anyone capable of signing his/her name on a mortgage – if the homeowner paid, the bank had a performing loan, whereas if the homeowner defaulted, the government would foot the bill.  It was a no-lose position for the banks, facilitated by our government.

These crazy lending practices have long since passed, of course, but do you know what’s been happening ever since?  “Our” government has been footing the bill to these banks, one house after another, just as it promised.  As millions of homeowners get foreclosed, “our” government pays these banks, in full.  And what is “our” government doing with those foreclosed properties?  Selling them to uber-wealthy investors, in bulk, for pennies on the dollar.

But, as Obama and Romney said, this is the homeowners’ fault.  Riiiiigggghhhhttttt.  Yup.  We’re the ones who created these garbage loans.  We’re the ones who incentivized the banks to lend – putting them, basically, in a no-lose position.  We’re the ones who profited hand over fist even as the economy around us collapsed.

Oh, no, wait.  We’re the ones who simply bought a house for our family because we had a job and qualified for a loan under the standards imposed by the banks and the government.  Now we’re the ones who lost our jobs, our families, and our dignity, while the talking heads blame us for the collapse.  Gotcha.

This is the Big Lie in the 2012 Presidential Election.  Apparently that’s politics today … hide the truth, conceal the role of the government in the collapse, and put two talking-heads on stage to shift the blame onto the very people whose votes they seek.

Are you disgusted yet?  Well, don’t expect to read about this in the mainstream media.  You see, I’ve told every media member I know about this issue.  Lots of good, competent reporters with whom I’ve done many news stories over the years … but nobody wants to talk about this.  Obama won’t talk about it.  Romney won’t talk about it.  The media won’t talk about it.  It’s the Big Lie … facilitated by, well, everyone.

Mark Stopa

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Client Distinction Award

I’m surprised, pleased, and humbled, to copy and paste an email I just received, informing me of my receipt of a Client Distinction Award from Martindale-Hubbel (an award apparently given to fewer than 4% of attorneys).  Honestly, I’m not sure I even realized such an award existed, but thank you to all of my clients who voted.  Anyway, here’s the email …

You have earned the Client Distinction Award. This honor has been made possible by your clients who have taken the time to compliment you in the following areas:

Communications Ability
Quality of Service
Value for Money

The results have been compiled and you have earned a Client Review Rating Score of 4.5 or higher on a scale of 1-5.

Less than 4% of the 900,000+ attorneys listed on and have been accorded this Martindale-Hubbell honor of distinction.

Before concluding, I thank my terrific staff for its hard work.  I clearly couldn’t have done this alone. 

Mark Stopa

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Free Foreclosure Seminar

Stopa Law Firm is sponsoring a Free Foreclosure Seminar on Saturday, October 6, 2012 at 10:00 a.m.

It’s at the Hyatt at 4811 Main Street in Tampa.

Please come, and bring a friend.  We’ll discuss several hot-button issues facing homeowners in their never-ending struggle to avoid foreclosure.

Mark Stopa

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