Archive for February 12th, 2013

Hiding the Fraud?

I’ve noticed a trend in recent weeks in my foreclosure defense practice, one that’s become significant enough that it’s worth mentioning … banks are trying to avoid putting anything in writing under oath.  I mean nothing.  At all.  As in, the case can go from start to finish without anything in writing under oath.

First, a little background …  You know the history here.  In the process of trying to foreclose on millions of well-intentioned homeowners, banks got caught robo-signing fraudulent documents, particularly affidavits, leading to various problems and sanctions.  (Too few sanctions, yes, but sanctions nonetheless.)

So how have the banks responded?  By stopping the fraud and cleaning up their business practices?  Hehehehe.  That’s just silly.  To avoid further problems, the banks are frequently trying to avoid filing anything that could be deemed fraudulent.  The biggest difference?  Affidavits in support of summary judgment are being replaced by trials with live testimony.

What’s the difference, you ask?  With an affidavit, there’s a written document in a court file … a paper trail that could be used later to prove fraud.  With trial testimony, there’s no written document and, hence, no paper trail to prove fraud.  Think of it this way … imagine the Department of Justice wanted to evaluate the proof a bank submitted to prevail in a foreclosure case where a foreclosure judgment was entered 12 months ago.  If there’s an affidavit, the DOJ could go to the courthouse and get a copy of the affidavit to assess whether there was fraud.  If there’s no affidavit, and the foreclosure judgment was entered after testimony at trial, there’s no paper trail, so the bank has total deniability.  There’s nothing under oath in writing that anyone could say is fraudulent.  (Yes, I realize these investigations are few and far between, but that’s a different story.)

I’ve also noticed the banks’ reluctance to go under oath when answering interrogatories.  Florida law requires that interrogatory answers be given under oath, i.e. under penalty of perjury.  Banks routinely answer interrogatories by failing to provide substantive information, and even when they do provide information, the verification on those interrogatory answers is often not under oath.  Any lawyer knows interrogatory answers need to be given under oath, so why would a bank sign these answers but refuse to give them under oath?  In my view, the answer is simple … banks avoid answers under oath to avoid the potential pitfalls of doing so, including prosecution for perjury.

I’m not saying banks never provide written filings under oath in foreclosure cases.  They still do.  But the frequency with which they do has definitely decreased in recent months, and I can’t help but conclude these are the reasons why.

Update:  In response to a good question about trial testimony being transcribed by a court reporter … many trials have no court reporter, particularly uncontested trials.  And for those that do, there’s no transcript unless somebody pays to have it transcribed, which is hard to imagine happening where the case is uncontested.  Hence, testimony at trial is a sneaky way to prevent anything in writing, under oath ever being put in a court file.

Mark Stopa

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