Archive for November 10th, 2010

A terrific article on the Foreclosure Crisis – must read

I read lots of articles in the media about foreclosure, and this one may be the best I’ve ever read.  It’s a little crass, as it includes a few f-bombs, but put that aside and what you have is an author who does an incredible job of explaining the foreclosure crisis in a way that the typical American can understand. 

By:  Matt Taibbi, Rolling Stone

The foreclosure lawyers down in Jacksonville had warned me, but I was skeptical. They told me the state of Florida had created a special super-high-speed housing court with a specific mandate to rubber-stamp the legally dicey foreclosures by corporate mortgage pushers like Deutsche Bank and JP Morgan Chase. This “rocket docket,” as it is called in town, is presided over by retired judges who seem to have no clue about the insanely complex financial instruments they are ruling on — securitized mortgages and laby­rinthine derivative deals of a type that didn’t even exist when most of them were active members of the bench. Their stated mission isn’t to decide right and wrong, but to clear cases and blast human beings out of their homes with ultimate velocity. They certainly have no incentive to penetrate the profound criminal mysteries of the great American mortgage bubble of the 2000s, perhaps the most complex Ponzi scheme in human history — an epic mountain range of corporate fraud in which Wall Street megabanks conspired first to collect huge numbers of subprime mortgages, then to unload them on unsuspecting third parties like pensions, trade unions and insurance companies (and, ultimately, you and me, as taxpayers) in the guise of AAA-rated investments. Selling lead as gold, shit as Chanel No. 5, was the essence of the booming international fraud scheme that created most all of these now-failing home mortgages.

The rocket docket wasn’t created to investigate any of that. It exists to launder the crime and bury the evidence by speeding thousands of fraudulent and predatory loans to the ends of their life cycles, so that the houses attached to them can be sold again with clean paperwork. The judges, in fact, openly admit that their primary mission is not justice but speed. One Jacksonville judge, the Honorable A.C. Soud, even told a local newspaper that his goal is to resolve 25 cases per hour. Given the way the system is rigged, that means His Honor could well be throwing one ass on the street every 2.4 minutes.

Foreclosure lawyers told me one other thing about the rocket docket. The hearings, they said, aren’t exactly public. “The judges might give you a hard time about watching,” one lawyer warned. “They’re not exactly anxious for people to know about this stuff.” Inwardly, I laughed at this — it sounded like typical activist paranoia. The notion that a judge would try to prevent any citizen, much less a member of the media, from watching an open civil hearing sounded ridiculous. Fucked-up as everyone knows the state of Florida is, it couldn’t be that bad. It isn’t Indonesia. Right? 

Read the rest of the article here.  It’s worth the read.

Mark Stopa

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Appeal in a Foreclosure Case – Lessons Learned

Earlier today, Florida’s Fourth District Court of Appeal issued a published decision in a foreclosure case.  (Clarification:  I was not involved in this case.)  It seems unfavorable to homeowners and, candidly, it is.  As a foreclosure defense and appellate attorney, I’m frustrated when I read decisions like this, particularly since it’s clear to me that this appeal never should have been filed.  Remember, folks – bad facts create bad law, so if you have bad facts, don’t appeal!  I don’t want to sound critical, so let’s put it this way – here are the lessons that all foreclosure defense attorneys should take from this ruling.  

First, a brief synopsis of the facts.  Homeowner is foreclosed.  Homeowner moves to vacate the foreclosure judgment based on fraud.  In support, homeowner alleges the bank representative who signed the affidavit supporting summary judgment lacked personal knowledge of the facts set forth in the affidavit.  The trial court denied the motion, and the Fourth District affirmed, agreeing with the lower court, essentially for two reasons: (1) just because the bank representative lacked personal knowledge of the contents of the affidavit did not mean the facts in the affidavit were untrue, rendering the homeowner unable to satisfy the “fraud” requirement for a 1.540 motion; and (2) the homeowner waived (or, using the appellate term, did not “preserve”) the objection that the information in the affidavit did not satisfy the business records exception to the hearsay rule because the homeowner did not assert that objection before the foreclosure judgment was entered.

The lessons to be taken from this:

1.  It’s much easier to defend a foreclosure lawsuit before the foreclosure judgment is entered rather than afterwards.  Here, for instance, the homeowner had to prove “fraud” post-foreclosure, and the appellate court ruled the homeowner failed to meet this burden.  Had this same argument about the bank representative’s lack of personal knowledge been made prior to the foreclosure, the homeowner would not have had to prove fraud, but could have simply argued that the affidavit was inadmissible.  Under well-established law, such an argument would have been well-taken, summary judgment would have been denied, and the foreclosure judgment would not have been entered. 

2.  You cannot expect an appellate court to reverse a lower court ruling based on an argument that you did not make in the lower court.  There is a long line of cases that stand for this proposition and the rationale is clear.  Generally speaking, no party in a lawsuit can go to an appellate court, and argue “the lower court got it wrong,” when that party did not make that argument to the lower court.  Look at it this way – the purpose of an appeal is to correct an erroneous legal ruling of a lower court.  If you don’t make an argument in the lower court, then, generally, the lower court can’t possibly get it wrong, as the judge can’t rule on an issue that you didn’t raise.  This is called failing to preserve error, or preservation, and it’s one of the most common ways that appellate judges deny appeals with otherwise well-taken arguments. 

In this case, for instance, the homeowner never argued, prior to the foreclosure judgment being entered, that the affidavit in support of summary judgment could not be admitted under the business records exception to the hearsay rule.  As such, even though such an argument is well-taken, the appellate court is not going to reverse on this basis.  Think of it this way – the appellate court isn’t going to tell the lower court judge “you got it wrong, judge, and we’re reversing the foreclosure judgment” when the party bringing that appeal did not even assert that argument to the judge.  The judge can’t get it wrong when he/she was never asked to rule on that issue. 

3.  Undoubtedly, the biggest lesson of all – retain a competent foreclosure defense attorney from the outset.  Not to toot my own horn, but Stopa Law Firm routinely files written objections to the admissibility of affidavits upon which banks rely in support of summary judgment.  This way, there is never a question whether my clients have preserved arguments pertaining to the admissibility of these affidavits.  As a result, when I attend a hearing on a motion for summary judgment, the judge will know that if he/she grants summary judgment, I’m going to have a good argument to reverse that ruling on appeal, and the error will have been preserved.  That may sound harsh, but the threat of reversal is one of the best ways to get judges to rule in a homeowner’s favor and deny summary judgment.  At the end of the day, that’s all we have as foreclosure defense attorneys – we constantly present case law to the judge and do everything we can to get the judge to follow the law in each case.

Mark Stopa

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Phone Appearances in Foreclosure Cases

As a foreclosure defense attorney, I overwhelmingly prefer to attend hearings in person.  There’s something to be said for getting to look the judge in the eye as I make my argument, and I like being able to hand the judge copies of documents and case law when necessary.  Basically, all else equal, I prefer attending hearings in person rather than by phone.  

That said, there are instances when phone appearances make sense.  Some hearings, quite candidly, are less significant than others, and for such hearings, it often makes sense to appear by phone.  For one, it’s certainly more convenient.  More importantly, the unfortunate reality is that, as a foreclosure defense attorney, many of my clients don’t have a lot of money.  When clients are operating with a limited budget, I try to make that budget stretch as far as possible, and sometimes that means attending less significant hearings by phone. 

Fortunately, the Florida Supreme Court has envoked a Rule of Judicial Administration – Rule 2.530(c) – that facilitates phone appearances.  The rule says, essentially, that for all hearings of 15 minutes or less, the judge “shall” allow phone attendance “absent good cause.”  In my experience, requests to appear by phone are routinely granted in most Florida counties.  Essentially, there is almost never “good cause” to preclude a phone appearance, particularly if a hearing is brief and does not require the presentation of evidence. 

Unfortunately, a few counties in Florida, including Orange and Lee, have issued administrative orders that preclude phone appearances in all foreclosure cases.  Respectfully, I find this procedure out of line.  As I see it, the chief judges of Orange and Lee (and any other counties that have issued such an administrative order) cannot create a rule that contravenes Rule 2.530.  The Florida Supreme Court has created Rule 2.530 pursuant to its exclusive authority to envoke rules of practice and procedure in all Florida courts, an authority expressly granted to it by Article V, Section II of the Florida Constitution.  It’s not within the powers of a circuit court judge, even a chief judge, to apply a blanket rule that contravenes Rule 2.530. 

In a recent case, I decided to push this argument.  I filed a motion to attend a hearing by phone in Orange County, which, in light of the administrative order, the judge denied.  However, I then filed a motion to stay the hearing pending appellate review, which the judge granted.  I then filed this Petition for Writ of Certiorari or Mandamus, laying out the argument I just made, above, with some legal authority in support. 

You may not think this is earth-shattering news, but check out footnote three of the Petition.  Candidly, I’m concerned that some judges issue administrative orders precluding phone appearances with the specific intent of making it harder for foreclosure defense attorneys to represent clients, making it easier for them to “push through” foreclosure cases.  That sounds harsh, but some of these judges actually set hearings on their own, without clearing the date, and order me to personally attend, even knowing I’m out of town.  With all due respect, that’s wrong.  And respectfully, I’m not going to be bullied into foregoing legal representation of clients who need my help.  Hence, I consider this Petition for Writ of Certiorari or Mandamus my most recent attempt at curbing the perverse judicial procedures that permeate foreclosure cases in Florida.  For me, it’s not just an issue of appearing by phone – it’s forcing judges to follow the law and ensuring my ability to represent homeowners in all foreclosure cases.

Mark Stopa

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