News

 

Posts Tagged ‘avoid foreclosure’

A Synopsis of Foreclosure-Gate; Blame the Banks!

I’m glad to see an increasing number of reporters placing the blame for the foreclosure crisis where it belongs – in the laps of the big banks.  Here’s an article from the New York Times that sums up public perception:   

How the Banks Put the Economy Underwater

By YVES SMITH
Published: October 30, 2010

IN Congressional hearings last week, Obama administration officials acknowledged that uncertainty over foreclosures could delay the recovery of the housing market. The implications for the economy are serious. For instance, the International Monetary Fund found that the persistently high unemployment in the United States is largely the result of foreclosures and underwater mortgages, rather than widely cited causes like mismatches between job requirements and worker skills.

This chapter of the financial crisis is a self-inflicted wound. The major banks and their agents have for years taken shortcuts with their mortgage securitization documents — and not due to a momentary lack of attention, but as part of a systematic approach to save money and increase profits. The result can be seen in the stream of reports of colossal foreclosure mistakes: multiple banks foreclosing on the same borrower; banks trying to seize the homes of people who never had a mortgage or who had already entered into a refinancing program.

Banks are claiming that these are just accidents. But suppose that while absent-mindedly paying a bill, you wrote a check from a bank account that you had already closed. No one would have much sympathy with excuses that you were in a hurry and didn’t mean to do it, and it really was just a technicality.

The most visible symptoms of cutting corners have come up in the foreclosure process, but the roots lie much deeper. As has been widely documented in recent weeks, to speed up foreclosures, some banks hired low-level workers, including hair stylists and teenagers, to sign or simply stamp documents like affidavits — a job known as being a “robo-signer.”

Such documents were improper, since the person signing an affidavit is attesting that he has personal knowledge of the matters at issue, which was clearly impossible for people simply stamping hundreds of documents a day. As a result, several major financial firms froze foreclosures in many states, and attorneys general in all 50 states started an investigation.

However, the problems in the mortgage securitization market run much wider and deeper than robo-signing, and started much earlier than the foreclosure process.

When mortgage securitization took off in the 1980s, the contracts to govern these transactions were written carefully to satisfy not just well-settled, state-based real estate law, but other state and federal considerations. These included each state’s Uniform Commercial Code, which governed “secured” transactions that involve property with loans against them, and state trust law, since the packaged loans are put into a trust to protect investors. On the federal side, these deals needed to satisfy securities agencies and the Internal Revenue Service.

This process worked well enough until roughly 2004, when the volume of transactions exploded. Fee-hungry bankers broke the origination end of the machine. One problem is well known: many lenders ceased to be concerned about the quality of the loans they were creating, since if they turned bad, someone else (the investors in the securities) would suffer.

A second, potentially more significant, failure lay in how the rush to speed up the securitization process trampled traditional property rights protections for mortgages.

The procedures stipulated for these securitizations are labor-intensive. Each loan has to be signed over several times, first by the originator, then by typically at least two other parties, before it gets to the trust, “endorsed” the same way you might endorse a check to another party. In general, this process has to be completed within 90 days after a trust is closed.

Evidence is mounting that these requirements were widely ignored. Judges are noticing: more are finding that banks cannot prove that they have the standing to foreclose on the properties that were bundled into securities. If this were a mere procedural problem, the banks could foreclose once they marshaled their evidence. But banks who are challenged in many cases do not resume these foreclosures, indicating that their lapses go well beyond minor paperwork.

Increasingly, homeowners being foreclosed on are correctly demanding that servicers prove that the trust that is trying to foreclose actually has the right to do so. Problems with the mishandling of the loans have been compounded by the Mortgage Electronic Registration System, an electronic lien-registry service that was set up by the banks. While a standardized, centralized database was a good idea in theory, MERS has been widely accused of sloppy practices and is increasingly facing legal challenges.

As a result, investors are becoming concerned that the value of their securities will suffer if it becomes difficult and costly to foreclose; this uncertainty in turn puts a cloud over the value of mortgage-backed securities, which are the biggest asset class in the world.

Other serious abuses are coming to light. Consider a company called Lender Processing Services, which acts as a middleman for mortgage servicers and says it oversees more than half the foreclosures in the United States. To assist foreclosure law firms in its network, a subsidiary of the company offered a menu of services it provided for a fee.

The list showed prices for “creating” — that is, conjuring from thin air — various documents that the trust owning the loan should already have on hand. The firm even offered to create a “collateral file,” which contained all the documents needed to establish ownership of a particular real estate loan. Equipped with a collateral file, you could likely persuade a court that you were entitled to foreclose on a house even if you had never owned the loan.

That there was even a market for such fabricated documents among the law firms involved in foreclosures shows just how hard it is going to be to fix the problems caused by the lapses of the mortgage boom. No one would resort to such dubious behavior if there were an easier remedy.

The banks and other players in the securitization industry now seem to be looking to Congress to snap its fingers to make the whole problem go away, preferably with a law that relieves them of liability for their bad behavior. But any such legislative fiat would bulldoze regions of state laws on real estate and trusts, not to mention the Uniform Commercial Code. A challenge on constitutional grounds would be inevitable.

Asking for Congress’s help would also require the banks to tacitly admit that they routinely broke their own contracts and made misrepresentations to investors in their Securities and Exchange Commission filings. Would Congress dare shield them from well-deserved litigation when the banks themselves use every minor customer deviation from incomprehensible contracts as an excuse to charge a fee?

There are alternatives. One measure that both homeowners and investors in mortgage-backed securities would probably support is a process for major principal modifications for viable borrowers; that is, to forgive a portion of their debt and lower their monthly payments. This could come about through either coordinated state action or a state-federal effort.

The large banks, no doubt, would resist; they would be forced to write down the mortgage exposures they carry on their books, which some banking experts contend would force them back into the Troubled Asset Relief Program. However, allowing significant principal modifications would stem the flood of foreclosures and reduce uncertainty about the housing market and mortgage securities, giving the authorities time to devise approaches to the messy problems of clouded titles and faulty loan conveyance.

The people who so carefully designed the mortgage securitization process unwittingly devised a costly trap for people who ran roughshod over their handiwork. The trap has closed — and unless the mortgage finance industry agrees to a sensible way out of it, the entire economy will be the victim.

Posted in Main | No Comments »

How to Avoid Foreclosure Rescue Scams

Indiana’s Attorney General has filed suit against ten companies who took advantage of homeowners in financial distress, i.e. foreclosure rescue scams.  Given the nature of my practice, I’ve encountered many homeowners with horror stories about foreclosure rescue scams.  ”They promised me a loan modification, took $2,500, and I never heard from them again.” 

Unfortunately, there is sometimes no way to know for sure if the company with whom you are dealing is a “scam” until after the fact.  That said, here are some warning signs that the company with whom you are dealing may not be on the “up and up”:

1.  An out of state company.  I have received inquiries from from homeowners facing foreclosure from all over the country.  My response is always the same.  “Unfortunately, I can only represent homeowners with properties in Florida.”  Is that to say it’s impossible for an out-of-state company, or even an out-of-state lawyer, to help you?  Not necessarily.  That said, how is someone going to handle a foreclosure lawsuit from out of state? 

2.  A non-lawyer.  If you’re sued for foreclosure, there are only two types of people who can defend the foreclosure lawsuit – (1) the defendant/homeowner; and (2) a lawyer.  A non-lawyer cannot defend a foreclosure case; to do so would constitute the unlicensed practice of law. 

3.  A guarantee.  The Rules Regulating The Florida Bar preclude lawyers from guaranteeing a result to a client (in any case, including foreclosure cases).  Even if the Rules did not so require, I’d never give a client a guarantee.  Unfortunately, there’s no way to know, for sure, what the bank is going to be willing to do in the future.  Likewise, there’s no way to know, for sure, how a judge will rule.  If you’re being given a guarantee, chances are pretty good that it’s a scam.   

4.  Up-front payments.  This one is tough, because most lawyers charge up-front fees.  So don’t view this as a determining factor in and of itself, but consider it in conjunction with the others.  In other words, if an out of town, non-lawyer is guaranteeing you a loan modification and requiring you to pay up front, chances are excellent that it’s a scam.

5.  The company instructs you not to communicate with your bank.  It’s hard for me to envision a scenario where I’d tell a client who is seeking a loan modification or some other resolution in lieu of a foreclosure not to talk to the bank.  If that’s what you’re being told, chances are good that your “foreclosure rescue” company doesn’t want you to talk to your bank to catch on to the fact that they aren’t doing anything. 

6.  The company is not filing papers in response to your foreclosure lawsuit.  As I’ve blogged repeatedly, meaningful loan modifications are few and far between, especially prior to a foreclosure lawsuit being filed.  If the “foreclosure rescue” company you’ve retained is not going to defend your foreclosure case, chances are they aren’t going to help you.

Posted in Main | No Comments »

Attorneys’ fees should NEVER be awarded by summary judgment

As a foreclosure defense attorney who represents homeowners throughout Florida, I’ve become all too familiar with the shortcuts taken by foreclosure mills in trying to “push through” foreclosure cases.  One tactic I repeatedly see is requests for attorneys’ fees as part of a summary judgment motion.  Typically, the plaintiff’s attorney signs an affidavit that his fees are reasonable, and another attorney, acting as an “expert,” signs an affidavit opining the same, and the bank requests that these fees be included as part of the Final Judgment of Foreclosure. 

This may sound like a legitimate approach, but here’s the thing.  If you object to the court’s consideration of attorneys’ fees by affidavit, and insist on the “expert” testifying live, in open court, you should prevent the court from awarding attorneys’ fees at a summary judgment hearing.  This is not an area of law in which the judge has discretion;

attorneys’ fees cannot be awarded based on affidavits when the opposing party insists on live testimony. 

When I see this issue (and I see it in essentially every foreclosure case), here’s what I do.  I file an objection, and argue as follows:

  1. In its Motion for Summary Judgment, Plaintiff attempts to tax attorneys’ fees and costs.  In support, Plaintiff provides an affidavit of its counsel and an affidavit of an alleged expert. 
  2. The affidavit of this “expert” lacks facts and is conclusory in nature.  Under the circumstances, Defendants want to cross-examine this alleged “expert” as to the factual basis of the affidavit. 
  3. Under controlling law, attorneys’ fees may be awarded upon presentation of affidavits, without live testimony, if the party opposing the entry of fees does not object.  See DM Records, Inc. v. Turnpike Commercial Plaza, 894 So. 2d 1030 (Fla. 4th DCA 2005); Ins. Co. of North America v. Julien P. Benjamin Equip. Co., 481 So. 2d 511 (Fla. 1st DCA 1985). 
  4. In this case, however, Defendants are objecting to the use of affidavits in lieu of live testimony.  As such, an evidentiary hearing on the Motion is required.  See Dvorak v. First Family Bank, 639 So. 2d 1076 (Fla. 5th DCA 1994); Dhondy v. Schimpeler, 528 So. 2d 484 (Fla. 3d DCA 1988); Soundcrafters, Inc. v. Laird, 467 So. 2d 480 (“the trial court erred in permitting Laird’s sole expert to testify by way of affidavit over Soundcrafters’ objection.”); Terrazzo, Inc. v. Altman, 372 So. 2d 512 (Fla. 3d DCA 1979); Geraci v. Kozloski, 377 So. 2d 811 (Fla. 4th DCA 1979) (“In an adversary proceeding such as this the determination of an attorneys fee for the mortgagee based upon affidavits over objection of the mortgagor is improper. Evidence should be adduced so that the full range of cross examination will be afforded both parties.”). 
  5. As evidence is not permissible at a summary judgment hearing, see Fla.R.Civ.P. 1.510, it would be reversible error to award attorneys’ fees via summary judgment.  See cases, supra. 

As I see it, this is a really simple way to prevent banks from tacking on attorneys’ fees at a summary judgment hearing.  Banks and their lawyers don’t like it, but short of asking the judge to ignore the law, there’s not much they can do about it.   

One could argue that this is a bad idea because banks can come back and re-set a hearing, with live testimony (after entry of Final Judgment) and at that point they’ll have more attorneys’ fees to tax because we made them come back for another hearing.  In theory, that’s true.  But let me ask you this – how often do you think they’ll actually re-set another hearing?  Once the bank gets a final judgment of foreclosure, do you think they’re going to bother coming back into court, for a separate hearing, with their expert, to present testimony about a few thousand dollars in attorneys’ fees?  Before you answer, bear in mind – often, the bank’s attorney, as well as the fee “expert,” are in a separate part of the state and will do anything possible to avoid having to travel to a hearing.  Perhaps better yet, Florida law typically does not permit attorneys to recover fees for the time spent traveling to a hearing, particularly an out-of-town hearing.  With this in mind, let me ask again – if you successfully prevent the inclusion of attorneys’ fees in a final judgment of foreclosure, do you really think two lawyers are going to travel across the state for an in-person hearing to try to tack on a few thousand dollars in attorneys’ fees (in a case where they’ve already obtained a foreclosure judgment)?  I sure don’t.  That’s a big reason why I file objections to fee awards by affidavit, such as the one here

Posted in Main | 7 Comments »

Open Letter to Chief Judge Blanc – Palm Beach County

In recent weeks, I’ve noticed two things out of Palm Beach County that really concern me. First, I saw this article in the Palm Beach Post, where Chief Judge Blanc discussed the backlog in foreclosure cases and his belief that “it is important to clear the foreclosure cases so that vacant and dilapidated homes can go back on the market, presumably increasing neighborhood property values.” As I explained in my blog entitled “Who is Harming the Economy – BANKS, Not My Clients” (below), it’s clear that banks are the reason for these abandoned homes, not homeowners, and pushing foreclosure cases through will only make things worse in that regard, not better.

Then, just yesterday, I saw this 103-page (103 page!!) Palm Beach foreclosure docket set for August 2, 2010 (h/t Lisa Epstein of foreclosure hamlet). At that point, I felt compelled to write an

Open Letter to Chief Judge Blanc

In so doing, I am really trying to be respectful and not be critical. That said, I am going to keep writing letters like this, just as I’ve done to Chief Judge McGrady in Pinellas and Chief Judge Menendez in Hillsborough, in the hopes that Florida judges will realize there are more important concerns than the backlog in their cases. With billions of dollars changing hands via foreclosure judgments, isn’t it time that judges take a long and hard look at the environment they’re creating by “pushing through” foreclosure cases? As I explain in the letter, there are a lot of far-reaching consequences of these foreclosure cases, and it’s time that everyone take stock of the situation. Continuing to “push through” foreclosure cases, hundreds at a time, is simply not the answer.

Posted in Main | 1 Comment »

Foreclosure defense – finding reputable attorneys amidst a sea of lawyers

With Florida facing unprecedented numbers of foreclosures (and no end in sight), an incredible number of lawyers, and even some non-lawyers, have thrown their hats into the ”foreclosure defense” arena in Florida. Whether it’s Tampa, Miami, Jacksonville, Orlando, or somewhere in between, experienced attorneys such as those at Stopa Law Firm are available to assist homeowners through the foreclosure process.  The problem, though, is this –

with all of the choices available, how can the average homeowner tell the difference between an experienced attorney, who is likely to help, and a “johnny come lately” who is not? 

In recent weeks, I’ve seen my fair share of pleadings and court filings from other foreclosure defense attorneys (usually because a client started out with a different lawyer and changed to Stopa Law Firm).  Without naming names, I must say – some of the pleadings and court filings I’ve read are absolutely awful.  Don’t get me wrong -there are a fair number of reputable attorneys who can capably defend foreclosure cases.  In my view, though, many are inept.  How can you tell the difference? 

Here are some “red flags” I’d keep in mind

1.  Up-front money to a non-lawyer.  It’s against the law for a non-lawyer to charge an up-front fee for a loan modification or foreclosure defense work.  A non-lawyer can’t defend a foreclosure case anyway (that’s called the unlicensed practice of law – it’s a criminal offense, actually), so if you’re seeking help with foreclosure, I’d be exceptionally careful about retaining any non-lawyer, especially with up-front money. 

2.  Realtors pushing a short sale.  Look, I don’t want to badmouth realtors.  But there’s an inescapable problem with putting your trust in a realtor (instead of a lawyer).  Typically, all realtors care about is selling the house – after all, that’s the only way they get paid.  Realtors may want you to believe a short sale will solve all your problems, but often, that’s not so.  Usually, when the bank agrees to a short sale, the homeowner remains liable for the deficiency (the difference between what you owe on the house and the short sale price).  Often, the amount of this deficiency can be tens or even hundreds of thousands of dollars.  And if this deficiency is reduced to judgment, that judgment remains for twenty years, meaning the bank may pursue payment of these monies from you (e.g. garnishing wages) for up to twenty years. 

Time and time again, I’ve seen realtors either fail to disclose these facts or actively mislead homeowners about their liability for a deficiency.  Don’t make that mistake.  No matter what your realtor may tell you, the standard short sale contract does not include a waiver of deficiency.  Just because a short sale contract says it requires the bank’s approval, that does not mean the bank is waiving the deficiency.  Accepting a short sale and waiving a deficiency are not the same thing.   

If you’re thinking about a short sale on your home, ask yourself this – what am I gaining out of this?  How does this help me?  If the bank is putting, in writing, that it is waiving the deficiency, and accepting the short sale price as full payment of the Note and Mortgage, then a short sale may make sense, as you’d be eliminating a big liability (the deficiency).  However, if the bank isn’t waiving the deficiency, how does it help you to do a short sale?   I’d argue, in this scenario, that a short sale hurts most homeowners, for two reasons.  First, instead of continuing to live in the home while the foreclosure case is pending, that homeowner must move out and find a new place to live.  Isn’t it better to keep living in your house?  Second, by agreeing to sell the home, and vacate possession, that homeowner has lost virtually all leverage with the bank.  If that doesn’t make sense, pretend you’re the bank for a moment (scary thought, I know).  Why would any bank agree to waive the deficiency if the house is already sold and you’ve moved out?  What would the bank gain by doing that?  Arguably, nothing, and that’s precisely the problem. 

This is where, in my opinion, a lawyer is so much more valuable than a realtor.  By defending your foreclosure case, while you live in your home, lawyers can try to point out technical problems with the lawsuit against you.  Realtors can’t.  Hopefully, the lawyer is good enough that the bank prefers to work out a settlement with you (i.e. a short sale as full payment, with a full waiver of the deficiency, or a loan modification) instead of continuing with the foreclosure case.  In that scenario (unlike the prior example, where you’ve already sold the home, moved out and lost all leverage), the bank would have a reason to waive the deficiency – you’d be moving out and agreeing to sell the house as part of the settlement.  Again, I’m not trying to badmouth realtors, but this is something I’d consider before I put all my trust in a realtor.  

3.  Any type of guarantee.  Lots of prospective clients want guarantees.  “Can you guarantee me a loan modification?”  “Can you guarantee me that I can live in my home for X months?”  No matter what, I never provide guarantees.  In fact, my standard fee agreement clearly indicates there are no guarantees.  Make no mistake – this is not because I question my abilities.  Guarantees have no place in foreclosure defense because (i) The Rules Regulating The Florida Bar prohibit a lawyer from giving a client any sort of guarantee on the outcome of a lawsuit; and (ii) there is never a way to know, for sure, how a case is going to play out, especially a foreclosure case.  Even if I think the law is on my client’s side, the judge may disagree.  Even if I think a loan modification should happen, the bank may disagree.   There are, quite simply no guarantees in foreclosure defense. 

With this backdrop, it’s troubling that I’ve seen and heard of instances where clients facing foreclosure have been given a guarantee.  If you’re been given a guarantee, I’d question not just the validity of the guarantee, but the reputation of the person providing it to you.  If that sounds harsh, check out R.Reg.Fla.Bar. 4-7.2(c)(1)(g). 

4.  Pushing bankruptcy at the initial consultation.  There’s no easy way to say this, so I’ll just say it.  A fair number of bankruptcy firms have expanded their practice into foreclosure defense, but these firms don’t necessarily know how to properly defend a foreclosure case.  Bear in mind, bankruptcy law and foreclosure defense may seem similar, but they’re drastically different – different courts (federal vs. state) with entirely different sets of rules (Federal Rules of Civil Procedure vs. Florida Rules of Civil Procedure).  Many bankruptcy firms sell themselves as “full service” firms, but they’re really just bankruptcy firms that do a “bare bones” foreclosure defense, which (once they lose the foreclosure case) dovetails into a bankruptcy.  This sounds harsh, and I typically don’t like to talk about other lawyers in this tone, but I’ve seen too many instances where bankruptcy firms did not interpose legitimate defenses for a foreclosure client, then pushed that client into bankruptcy.  

Make no mistake – bankruptcy is a perfectly useful tool for many clients.  However, if a lawyer is trying to sell you on a bankruptcy in your initial consultation, and your foreclosure lawsuit was just filed, I’d be skeptical of his/her ability to competently represent you in that foreclosure case (particularly if you don’t have other debts).  Quite simply, for most clients I’ve seen, bankruptcy is a last resort.  Many homeowners don’t realize – it’s entirely possible that a foreclosure case can be resolved without resorting to bankruptcy.  For instance, one benefit of bankruptcy – eliminating the deficiency – could be accomplished (remember, no guarantees) without a bankruptcy, merely by defending the foreclosure case and entering a settlement with the bank.  And even if a settlement doesn’t transpire, there is typically nothing stopping you from filing a bankruptcy as your foreclosure lawsuit nears a conclusion.  In essence, I suggest ensuring you get the best of both worlds – a competent foreclosure defense attorney and, if and when necessary, a competent bankruptcy attorney. 

Nothing in this post was directed at anyone in particular, and, as always, these are just my opinions.  That said, I thought my views on these issues may help homeowners sift through the sea of foreclosure attorneys in Florida so as to make an informed decision.

Posted in Main | 20 Comments »

Servicemembers – know your rights

Facing a foreclosure is hard enough.  For members of the military, it’s even harder.  How can anyone be expected to deal with an impending foreclosure while being deployed overseas in service of our country?  It’s bad enough having to worry about your spouse and children being evicted from the home in which they live – imagine having to do so while you’re risking life and limb overseas. 

Fortunately, laws exist to prevent our servicemembers from confronting this nightmare.  The Servicemembers Civil Relief Act, 50 U.S.C. Sections 501-596, is, by its very terms, intended to enable the brave men and women of our military to “devote their entire energy to the needs of the nation” by requiring that lawsuits, including foreclosure lawsuits, be stayed while the servicemember is deployed.  There are exceptions, of course (just like most things in the law), but the way I read the statute, it would be hard for any judge to allow a foreclosure to proceed against a homeowner who is overseas on active military duty.  See Coburn v. Coburn, 412 So. 2d 947 (Fla. 3d DCA 1982).  Significantly, there is no distinction even if the servicemember has an able-bodied spouse home to defend the foreclosure case – the entire lawsuit is still stayed. 

If you’re a member of the military, are about to be deployed overseas, and are facing foreclosure, make sure the judge handling your case knows about your deployment.  That’s what I just did for one client in a case before Judge Levens in Tampa, and the court entered an Order Staying The Case until his deployment ends.  This means, in essence, that no activity can happen in the case until my client returns from his deployment, ensuring that there will be no foreclosure, if at all, until after my client’s deployment is over.  Banks may think this is unfair, but The Servicemembers Civil Relief Act is specifically designed to ensure that servicemembers can “devote their entire energy to the needs of the nation” and not have to worry about pending foreclosure lawsuits.

Posted in Main | 2 Comments »

Who is harming the economy – BANKS, not my clients

With all the recent media attention that Stopa Law Firm has received, I’ve gotten a TON of positive feedback from clients and prospective clients in Florida and many other states.  Thank you to everyone who has encouraged the fight against the systemic fraud being perpetuated by banks every day. 

I’ve also gotten some criticism, too, allegedly because what I’m doing by defending homeowners facing foreclosure is ”harming the economy.”  The criticism typically goes something like this: “Your clients are living for free, dragging down the value of my property, and you’re helping them do it.” 

Respectfully, people who say things like this are wrong.  It’s not a matter of opinion – they’re wrong.  And I can prove it. 

First off, my clients care about their homes.  Whether they’re living in them or renting them out, my clients haven’t abandoned their homes – they’re maintaining them.  My clients’ homes aren’t the vacant houses you see with foot-high grass that haven’t been inhabited in a year.  My clients are living in their houses (or, in some instances, renting them out), and actively trying to keep their houses via a loan modification.  I dare anyone to explain, in any intelligent way, how the economy is harmed when people live in their homes, maintain their homes, and try to enter a loan modification.  Who is harmed here?  Some CEO at a bank who gets an $800,000 bonus instead of $850,000?  Please.   

Nothing my clients are doing reduces the value of their neighbors’ houses.  You know what affects that value of these homes?  Abandoned houses.  And why are houses abandoned?  Because banks scare people into leaving their homes, making it easy for them to obtain a foreclosure judgment, but then banks don’t schedule a foreclosure sale because they don’t actually want the home.  What results is the property sits in limbo – the homeowner stopped paying and abandoned it long ago, but the bank won’t set the foreclosure sale, so nobody else can buy the property, either.  The homeowner is not living in it, and the bank doesn’t own it … the property just sits, empty, abandoned, for months, even years.    

Don’t believe me?  Go check the public records.  I’ve been doing that recently in Pinellas County, and it’s scary what I’ve found.  

For instance, there was a foreclosure sale scheduled tomorrow, July 13, 2010, in Case No. 08-2426-CI-08.  But the sale isn’t going forward because the bank cancelled the sale – for the third time.  In fact, the Court entered final judgment in September, 2009, yet the foreclosure sale has still not taken place.  It’s not because the homeowner has put up a fight, either – the homeowner never appeared in the case and lost by default – the bank just refuses to proceed with the foreclosure sale.  Sound impossible to believe?  Don’t take my word for it – here’s a cut-and-paste of the docket, from the clerk’s website: 

Reset Original Sort Link To Activity Code Date P/D Docket Entry Ver
1 Link to Case-related Persons DUMB 07/07/2010 CLERK FORECLOSURE SALE CANCELLED: PER FAX(KENB) N
2 Link to Case-related Persons FAXC 07/07/2010 PLAINTIFF FAX COPY OF CORRESPONDENCE: REQUEST CANCEL SALE F
3 Link to Case-related Persons DATC 06/15/2010 PLAINTIFF ORD RESCHED SALE CLW FOR: 071310 OR16947PG2397-002 F
4 Link to Case-related Persons MOTN 06/15/2010 PLAINTIFF MOTION FOR NEW SALE DATE F
5 Link to Case-related Persons MOTN 06/14/2010 PLAINTIFF MOTION FOR NEW SALE DATE F
6 Link to Case-related Persons DUMB 03/04/2010 CLERK FORECLOSURE SALE CANCELLED: NO REP AT SALE N
7 Link to Case-related Persons ORGR 03/03/2010 PLAINTIFF ORDER GRANTING MOITON TO SUBSTITUTE PARTY PLAINTIFF F
8 Link to Case-related Persons NOTH 02/01/2010 PLAINTIFF NOTICE OF HEARING 030210 9:00 (TELEPHONIC) F
9 Link to Case-related Persons DATC 02/01/2010 PLAINTIFF ORD RESCHED SALE CLW FOR: 030410 OR16822PG1961-001 F
10 Link to Case-related Persons REFE 01/27/2010 PLAINTIFF RE-OPEN FEE PAID – $50.00 N
11 Link to Case-related Persons MOTN 01/25/2010 PLAINTIFF MOTION FOR NEW SALE DATE F
12 Link to Case-related Persons REOP 01/25/2010 PLAINTIFF REOPEN CASE/OTHER N
13 Link to Case-related Persons MOTN 01/15/2010 PLAINTIFF MOTION SUBSTITUTE PARTY F
14 Link to Case-related Persons ASIG 10/28/2009 PLAINTIFF ASSIGNMENT OF JUDGMENT OR16739PG1512-001 R
15 Link to Case-related Persons DUMB 10/23/2009 CLERK FORECLOSURE SALE CANCELLED: PER FAX(KENB) N
16 Link to Case-related Persons FAXC 10/23/2009 PLAINTIFF FAX COPY OF CORRESPONDENCE: REQUEST CANCEL SALE F
17 Link to Case-related Persons PBNS 10/09/2009 PLAINTIFF PUBLISHERS AFFIDAVIT NOTICE OF SALE F
18 Link to Case-related Persons NSGC 09/28/2009 CLERK NOTICE OF SALE/COPY TO GULF COAST BUS REV F
19 Link to Case-related Persons HOMC 09/17/2009 PLAINTIFF SALE SCHEDULED IN CLEARWATER FOR: 102309 OR16705PG0007-006 F
20 Link to Case-related Persons HOME 09/17/2009 PLAINTIFF FINAL JUDGMENT OF FORECLOSURE/JDMT AMOUNT $ 112143.45 F
21 Link to Case-related Persons DEJD 09/17/2009 PLAINTIFF DEFAULT JUDGMENT N
22 Link to Case-related Persons ATTY 09/17/2009 PLAINTIFF ATTORNEY COVER LETTER RCVD BY COURT 091009 F
23 Link to Case-related Persons NOTH 08/13/2009 PLAINTIFF NOTICE OF HEARING 091709 9:30 F
24 Link to Case-related Persons CCOU 05/01/2009 PLAINTIFF CORRESPONDENCE TO COURT RE: FROM COURT-RESET HEARING F
25 Link to Case-related Persons CCFP 05/01/2009 PLAINTIFF CERTIFICATION-COMPLIANCE W/FORECLOSURE PROC F
26 Link to Case-related Persons NOTH 02/20/2009 PLAINTIFF NOTICE OF HEARING 043009 9:30 (TELEPHONIC) F
27 Link to Case-related Persons NOTH 12/22/2008 PLAINTIFF NOTICE OF HEARING 043009 9:30 (TELEPHONIC) F
28 Link to Case-related Persons DEBT 09/15/2008 PLAINTIFF AFFIDAVIT OF INDEBTEDNESS F
29 Link to Case-related Persons FEES 07/10/2008 PLAINTIFF AFFIDAVIT OF ATTORNEY FEES F
30 Link to Case-related Persons FILE 06/30/2008 PLAINTIFF NOTICE OF FILING ORIGINAL NOTE AND MORTGAGE F
31 Link to Case-related Persons TEXT 05/08/2008 CLERK KALANI UHATAFE F
32 Link to Case-related Persons DEFA 05/08/2008 CLERK DEFAULT ENTERED /NAVITALAI UHATAFE/UNKNOWN SPOUSE NKA N
33 Link to Case-related Persons MODE 05/07/2008 PLAINTIFF MOTION FOR DEFAULT F
34 Link to Case-related Persons ARMY 05/07/2008 PLAINTIFF AFFIDAVIT AS TO MILITARY SERVICE F
35 Link to Case-related Persons DUPE 05/02/2008 PLAINTIFF UNKNOWN TENANTS IN POSSESSION F
36 Link to Case-related Persons DUPE 05/02/2008 PLAINTIFF JANE DOE F
37 Link to Case-related Persons DUPE 05/02/2008 PLAINTIFF JOHN DOE F
38 Link to Case-related Persons DROP 05/02/2008 PLAINTIFF NOTICE OF DROPPING : F
39 Link to Case-related Persons SURN 03/10/2008 CLERK SUMMONS RETD NOT SERVED JOHN DOE F
40 Link to Case-related Persons SURN 03/10/2008 CLERK SUMMONS RETD NOT SERVED JANE DOE F
41 Link to Case-related Persons SURS 03/10/2008 CLERK SUMMONS RETD SERVED NAVITALAI UHATAFE 022108 F
42 Link to Case-related Persons DUPE 03/10/2008 CLERK 022108 N/K/A KALANI UHATAFE F
43 Link to Case-related Persons SURS 03/10/2008 CLERK SUMMONS RETD SERVED UNKNOWN SPOUSE OF NAVITALAI UHATAFE N
44 Link to Case-related Persons NOTC 03/06/2008 PLAINTIFF NOTICE OF SCRIVENERS ERROR RE: PARTY PLTFF F
45 Link to Case-related Persons SUPP 02/20/2008 CLERK SUMMONS TO PROCESS SERVER – PICK UP HEAVEN SENT (4) N
46 Link to Case-related Persons LPRF 02/20/2008 PLAINTIFF LIS PENDENS RECORDING FEE PAID – $5.00 N
47 Link to Case-related Persons 02CI 02/20/2008 PLAINTIFF CIRCUIT CIVIL FILING FEE PAID $255.00 N
48 Link to Case-related Persons NOLP 02/19/2008 PLAINTIFF NOTICE OF LIS PENDENS OR16157PG0506-001 F
49 Link to Case-related Persons CCST 02/19/2008 PLAINTIFF CIVIL COVER SHEET F
50 Link to Case-related Persons COCS 02/19/2008 PLAINTIFF COMPLAINT AND COPY(S) F
51 Link to Case-related Persons SECT 02/19/2008 PLAINTIFF THIS CASE ASSIGNED BY CLERK TO SECTION 008 BY 3777 – RANDOM MF N

Lest you think this is an aberration, it’s not.  Check for yourselves.  Every day, whether it’s in Tampa, Orlando, Jacksonville, Miami, or anywhere in between, banks are obtaining foreclosure judgments throughout Florida, then refusing to set the foreclosure sales.  This is what causes houses to remain abandoned and not maintained.  This is what drags down property values and harms the economy, not my clients.  The banks are causing houses to be abandoned, not my clients.   So next time you see a house that’s abandoned, don’t blame me.  And certainly don’t blame my clients.  Chances are, the bank owns the property – or scared the owner into moving out, got a foreclosure judgment, but doesn’t want to set a foreclosure sale, so the remains abandoned indefinitely. 

Am I the only one who thinks this is absurd?  How can banks get away with this?  Why are judges so quick to enter foreclosure judgments, and throw their neighbors on the streets, when banks are so slow to set foreclosure sales?  Why do my clients get cricitized in the media (which refuses to report about banks’ refusals to enter loan modifications), yet banks cause properties to be abandoned all over Florida and get off scot-free?  This is yet another illustration of how banks are harming the economy to help themselves.  Banks don’t care if the property is abandoned – if they don’t want to pay the insurance or property taxes, they won’t set the foreclosure sale.  

Here’s an idea for you, banks:  if you don’t want the properties, I’ve got 400(+) clients who will take them, maintain them, and make good use of them.  Better yet, if you’re not going to set the foreclosure sale, don’t scare away the homeowner.  Let the homeowner continue living in the home, maintaining the home, taking care of the home – just as my clients are doing.

Posted in Main | 20 Comments »

The mediation process in Florida’s foreclosure lawsuits – why it’s flawed and what must be done to fix it

Foreclosure defense attorney Mark Stopa attended a hearing last week on a Motion to Dismiss before a Pinellas County judge.  The hearing was, unfortunately, like all too many other hearings in foreclosure cases – the judge denied the motion to dismiss (without reading or even looking at the case law and statutes provided).  This hearing stood out, though, for two reasons:  (1) the judge, upon seeing the case had been pending since 2008, actually said it was his/her (no reason to reveal the gender of the judge) ”job” to move cases towards judgment; and (2) the judge ordered the parties to mediation even though both parties said they did not want to go, then acted like he/she had done my client a favor.   The tone and demeanor of the judge was as if he/she was saying ”I denied your motion to dismiss, but I’m ordering mediation, and now you can work something out there.”  

In my view, the judge was totally missing the boat.  Respectfully, how is a mediation going to accomplish anything when the bank has already indicated it’s not going to settle?  More importantly, how are mediations ever going to keep homeowners in their homes when judges are systematically pushing through foreclosure lawsuits, entering final judgments for the banks for all of the relief requested?   The incident got me thinking, and, ultimately, writing a letter to the Honorable Thomas McGrady, Chief Judge of Florida’s Sixth Judicial Circuit, which can be found here –   

Open Letter to Judge McGrady

Mediations have settled lawsuits throughout Florida for many decades, primarily for two reasons: (1) parties want to avoid expenses (attorneys’ fees) associated with litigation; and (2) parties want to eliminate their risk of losing the case.  The problem with mediating foreclosure cases is that banks perceive no risk of loss because judges so rarely, if ever, rule in the homeowner’s favor.  Why should a bank settle when it knows the judge will enter judgment in its favor for all of the relief requested?   

Contrary to what banks and their lawyers (and even some judges) may believe, Florida homeowners have valid defenses to foreclosure in many cases – and I’m not just talking about the fraudulent assignments with which we’ve become so familiar.  For instance, in recent weeks I’ve seen several cases where the bank attached a Note to a Complaint that contains an indorsement to a different company (not the plaintiff), I move to dismiss on the basis the bank is not the “holder” under Section 671.201(21), and magically, the bank then files the same Note, only this time it has two more indorsements on it, including one to the bank that is suing.  When this happens, it’s clear that the indorsements were done after the suit was filed – after all, if they were done beforehand, the Note attached to the Complaint would have contained all three indorsements.  This is a fatal impediment to forelosure because standing cannot be acquired post-filing.  In cases like this, final judgments should be entered for homeowners, yet that never happens.  Why?  There have been hundreds of thousands of foreclosure cases filed in Florida, yet I don’t know that I’ve ever seen a case where a final judgment was entered in the homeowner’s favor on a standing defense.  With respect to our learned judges, how is that possible? 

I get that judges want us to mediate these cases.  I get that judges want to reduce the backlog of cases on their dockets.  But until judges start ruling for homeowners in some of these cases, banks will never perceive that they have a risk of losing, and they’ll never settle, no matter how many mediations they’re ordered to attend.  

If judges want cases to settle, it’s incumbent upon them to start listening to the arguments of the many bright foreclosure defense attorneys in Florida, applying the law, and, when appropriate, entering orders and judgments in favor of homeowners, even if they haven’t paid their mortgage.  Until the banks start perceiving that they can lose a case, the mediation process, no matter how well-intentioned, just won’t work.

Posted in Main | 12 Comments »