Archive for October, 2010

Strategic default – by the Mortgage Bankers Association

Mortgage Bankers Association Strategic Default
Apparently, what’s good for the goose is not good for the gander.  Or that’s what the MBA would have us believe, anyway.   

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Proof of foreclosure fraud – a smoking gun

Everyone who has ever wondered what all this hoopla about foreclosure fraud is all about, please take ten minutes and read this deposition transcript from a former paralegal of David Stern (who runs one of the big foreclosure mills in Florida).  It’s truly appalling – notary fraud, assignment fraud, ex parte Orders, prosecuting foreclosures knowing it was the wrong plaintiff, signing someone else’s name on court filings, etc., etc. 

To any judge or anyone else who ever questioned whether fraud exists in foreclosure cases on a widespread basis, I dare you to deny it after you read the transcript. 

Thanks to friend and fellow foreclosure defense attorney Matt Weidner for publishing this transcript.

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Florida Default … acknowledging its own incompetence; proof of title problems

New House Title, a title insurance company owned by the same people who own Florida Default Law Group, has refused to insure title on a property which Florida Default prosecuted on behalf of JP Morgan Chase to a foreclosure judgment.  Think about that for a minute.

The owners of Florida Default won’t insure title on a property that Florida Default prosecuted to a foreclosure judgment!

If you believe in “putting your money where your mouth is,” this conduct is telling.  After all, if Florida Default was confident that it was prosecuting foreclosure cases correctly, wouldn’t it be telling everyone “of course you can insure title on this property; we did everything correctly.”  Per Kimberly Miller of the Palm Beach Post, they’re not doing that – instead, they’re telling everyone “we won’t insure title on this property, even though we foreclosed on it.”  It’s pretty clear, in my eyes, the only reason they’d be refusing to insure title is because they realize there are title problems.  In other words, Florida Default is admitting its own incompetence! 

 If you think I’m overreacting, let me ask you this:

If the people prosecuting the foreclosure don’t have confidence in the title that results from the foreclosure, then how can anyone else? 

And what’s the point of a foreclosure if there will still be title problems afterwards?  Are these foreclosure mills that hellbent on removing homeowners from their homes that they’ll foreclose but do so in such a sloppy manner that they create blighted titles? 

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Foreclosure fraud is NOT a political issue

I’m pleased to see so many high-ranking officials in our country demanding changes to the foreclosure process.  I’m disappointed, though, that all of these demands seem to be coming from Democrats, including, for example, House Speaker Nancy Pelosi.  This is not a political issue, folks!  Fraud is fraud.  Democrat, Republican, Independent – whatever your preference – it shouldn’t matter. 

Personally, for example, I am a registered Republican.  I always have been.  I’m also socially conservative, so much so that I disagree with Nancy Pelosi on just about everything.  You know what, though?  When it comes to foreclosure fraud, none of that should matter.  Presenting false evidence to the courts on a widespread basis should bother everyone – Democrats, Republicans, and Independents.  With that in mind, I must ask:

Where are all of my fellow Republicans? 

Are Republicans really that tied to party allegiances that they’re unwilling to call a spade a spade?  If so, that disappoints me.  Yes, I suppose that calling out the big banks is contrary to traditional Republican views favoring big business.  But wrong is wrong, and it’s time more Republicans said so. 

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More proof of errors in the foreclosure process

Yesterday, I had a hearing before a local judge who, prior to his time on the bench, practiced real estate law.  The hearing parlayed into a discussion about title problems, which the judge acknowledged he started thinking about because of the recent articles in the media about it.  (Consider that all the more reason to keep getting these issues into the media – they prompt thought-provoking questions).  Anyway, during the conversation, the judge made a compelling point:

In the years that he’s been adjudicating foreclosure cases – tens of thousands of foreclosure cases – he can’t ever recall seeing a case where the plaintiff’s firm moved for leave to amend to add an additional defendant after the case was filed.  As the judge noted, there will be no need for this in every case, but in a certain percentage of cases, something happens, after the foreclosure lawsuit is filed, that prompts the need for additional defendants.  Maybe the homeowner got his A/C repaired and could not pay the bill, prompting a mechanic’s lien.  Maybe the homeowner couldn’t pay the homeowner’s association fees, prompting an association lien.  Mechanics’ liens, association liens, code enforcement liens – these things happen, even after a suit is filed (in the judge’s estimation from his time as a lawyer, about 10% of the time), and if the bank wants to foreclose, and get clear title, these parties must be added to the case.  After all,

 even if the bank wins a foreclosure judgment, if the company that has the mechanic’s lien, condo association lien, or the like, is not joined as a defendant and foreclosed, then the purchaser at the foreclosure sale does not have clear title – the purchaser would own the property “subject to” that lien.

As a result, in a significant percentage of the cases being “pushed through” our courts, a second foreclosure lawsuit, or a suit to quiet title, will be necessary to remove the lien. 

In sum, if the foreclosure mills were prosecuting these cases correctly, then some percentage of the time, we’d be seeing requests to amend their pleadings to include these additional parties.  It won’t happen every case, but it should happen every so often.  But guess what?  We’re not seeing it.  Ever.  The judge I spoke with said he’s never seen it.  In all of my cases, I’ve never seen it.  If you’re a lawyer handling such issues, please chime in:

Have you ever seen an instance where a foreclosure mill amended its complaint to include an additional defendant because of a lien that arose after the foreclosure complaint was filed?

Based on my practice, and this judge’s observations, I strongly suspect the answer is “no.”  Consider this yet another illustration of the problems we’ll be facing in coming years as a result of the abuses by the banks and their foreclosure mills.

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The state of affairs, Strategic Default

I’ve read countless news articles in recent days, but this one really caught my attention.  To sum up the article: (1) banks still think they’re above the rest of us; (2) the foreclosure crisis isn’t over; (3) the moral obligation to pay one’s mortgage is decreasing, i.e. strategic default is becoming a more socially-accepted option; and (4) homeowners need to protect their families.  These two quotes jumped out at me:

“Do you think lenders would be shy about squeezing you for an extra nickel if they thought they could get away with it?”

“If you want to avoid foreclosure, you need to talk to a lawyer at the first sign of trouble.”

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Mark Stopa’s Letter to Chief Justice Canady

I’ve been stewing about the Florida Supreme Court’s response to Congressman Grayson for several days now.  After all, it’s very clear to me, notwithstanding what the Court said to Congressman Grayson, that the Court has the authority to issue a “foreclosure moratorium” via an amendment to Fla.R.Civ.P. 1.510. 

Today, I decided to do something about it.  Instead of staying home and watching the NFL, I went into the office and drafted this Letter to Chief Justice Canady

My hope is that the Court will realize, even if it disagrees with my request for a moratorium, that Floridians deserve an explanation as to the Court’s rationale.  There’s too much at stake for too many people for the most powerful Court in the State to punt the issue without an explanation.

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New York Times and USA Today – recognizing the title insurance quagmire

The New York Times and USA Today are now reporting what I’ve been writing here for quite some time (quoting me in both articles) – all of the problems we’re now seeing with BofA, GMAC, Chase, etc. … it’s all tied to the title insurance industry.  

New York Times 

USA Today

Sadly, I’ve been arguing this to judges for nearly two years, but only now is the story getting out.  To illustrate, here’s a quote from my Certiorari Petition (on a Motion to Disqualify Counsel) to the Second District that I filed in July: 

“…[T]he real estate market in Florida will collapse even further than it already has once title insurance companies have to pay claims where the actual holder of a Note emerges after a different bank has already foreclosed. It’s not hard to foresee, once that happens, title insurance companies will stop issuing policies altogether, as they’d have no way to do so with any confidence that the foreclosure sales provided clear title to the purchaser. Respectfully, this is a problem that must be avoided.”
The judiciary should have realized, long ago, that it couldn’t push through millions of foreclosure judgments, essentially all at once, in what everyone now knows to be a sloppy, haphazard manner, without running the risk of destroying the title insurance industry.

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Sloppy Foreclosure Process Could Ruin Florida

Those aren’t my words – they’re the words of St. Pete Times business columnist Robert Trigaux, in this article.

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Title insurance, where we go from here

Kimberly Miller of the Palm Beach Post was the first reporter who explained how the foreclosure moratoriums we’re now seeing are a direct result of title insurance problems.  She first reported that on September 24, 2010

After B of A announced it was halting foreclosures, Ms. Miller reported it again in today’s Palm Beach Post

This is the story, folks.  The banks didn’t stop foreclosures out of the kindness of their hearts, out of the sudden urge to “do the right thing,” or because judges made them.  The banks stopped foreclosures to give lip service to the title insurance companies, like Old Republic, that have stopped writing title insurance policies on foreclosure properties.  After all, even the banks realize that if they can’t get title insurance, the value of their REO will go down even more (yes, more). 

Soon, the banks are going to try to convince the title insurance companies that their title problems are fixed (the “lip service”), after which it will be “business as usual.”  At that point it will be up to foreclosure defense attorneys such as myself to continue to expose the pervasive fraud that permeates every aspect of foreclosure lawsuits in Florida and throughout the country.

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