Posts Tagged ‘Clearwater’

Aggressive Foreclosure Defense Can Prompt Changes in the Judiciary

One of my goals, both as a foreclosure defense attorney and the author of this blog, is to make everyone – the public, homeowners, and judges – aware of the many pitfalls with the way foreclosure cases are handled by our courts.  I realize not everyone agrees with my positions on all of these issues, and that’s okay.  I also realize I’m not well-liked in some circles for being so vocal in my views, and that’s okay, too.  My job isn’t to be well-liked – it’s to represent homeowners as well as I possibly can (consistent with the law and my ethical obligations).  Besides, meaningful change in how foreclosure lawsuits are handled is nothing but a pipe dream unless someone such as myself is willing to stand up and say “this is wrong.”  Not everyone will agree 100% of the time, but I stand no chance if I don’t try.

For example, a few weeks ago, I started receiving Orders from Honorable Douglas Baird in Clearwater which systematically denied my clients’ Motions to Dismiss, without a hearing.  I found this troubling, particularly since Judge Baird had not even placed me on notice that he might be ruling on such motions without a hearing.   Given my overwhelming belief that this disregarded the most basic notions of due process, I felt compelled to file a Motion to Disqualify the judge. 

As I’ve said before in this blog, I don’t want this to appear as if I disrespect Judge Baird.  I respect him plenty.  The issue is that I strongly disagree with him on these issues and, candidly, felt compelled to tell him so.  As I see it, if I can’t express respectful disagreement (especially on issues for which there is no clear “right” answer), what’s the point of being a lawyer? 

Anyway, Judge Baird granted the Motions to Disqualify, and in so doing, wrote me a letter.  The letter said, in essence, ”I figured foreclosure defense attorneys such as yourself realized that it was my procedure to deny motions to dismiss without a hearing, but since you didn’t realize that, I’m granting the Motions to Disqualify.” 

Judge Baird and I are never going to agree on some of these issues.  What I respect, though, is that even though he disagrees with me, Judge Baird realized how his procedure could be construed to others as unfair, particularly when I didn’t know about it beforehand.  In fact, since that happened, I have yet to receive an Order denying a Motion to Dismiss without a hearing from Judge Baird.  Is that a coincidence?  Maybe.  That said, I just received an Order (in a different case) from Judge Baird directing me to file a written memorandum to the bank’s response to my Motion to Dismiss within five days, after which he may rule on the Motion to Dismiss without a hearing.

Respectfully, I still find this new procedure patently unfair, and I said as much in another Motion to Disqualify.  As I see it, the judge should not be taking it upon himself to prosecute a lawsuit that the Plaintiff has chosen, for whatever reason, to let stagnate.  In other words, it’s not a judge’s role to say “I see the Plaintiff has stopped prosecuting this case.  It’s time for me to help advance the case towards judgment.”  My concern about this conduct is heightened by the fact that the Plaintiff is seeking relief in the case and the Defendant is not.  Where only one party is seeking relief, the judge’s attempts to advance a dormant case towards judgment, sua sponte, reveal bias. 

Also, I find it unfair to be given five days “from the date of the Order to file a written response.”  By the time I received the Order, that gave me three business days to respond.  Respectfully, that’s unreasonable.  There is no emergency here; this case has been languishing for months.  For the judge to suddenly, out of the blue, require me to file a written response within three business days, failing which my client’s argument may be denied without a hearing … I find that inappropriate.  What if I were on vacation?  What if I were in trial?  What if I were busy with other files?  I have handled all types of lawsuits, from inception through trial and appeal, and I can’t ever recall being given such a short deadline.  Respectfully, why should I have to drop everything to file a written memo (in three days)?  Simply because the judge decided, on his own, to start prosecuting this case towards judgment?  

All of that said, I can’t help but feel a bit encouraged.  After all, even though I suspect he still disagrees with me, it appears that Judge Baird has changed his procedure, if only a little.  Instead of denying a Motion to Dismiss outright, without a hearing (and without any warning that a ruling may be coming), he’s at least giving me a chance to file a written memorandum before he rules.  I still think this is insufficient, but at least it shows that the judges are receptive to opposing viewpoints.  It’s a baby step, yes, but Rome wasn’t built in a day. 

Candidly, I’m don’t know how Judge Baird is going to react to this most recent Motion to Disqualify.  I’m sure no judge likes receiving such a motion, and I suspect he still disagrees with my belief that his procedures are flawed.  That said, I remain hopeful that he will continue to re-evaluate his stance on these issues.  After all, I’ll argue all day long, as I have several times now, that it’s not a judge’s role to set a foreclosure case for hearing when the plaintiff has decided, for whatever reason, not to push the case towards judgment. 

Part of my willingness to express these views in an open forum, other than my stern conviction that I’m right, is that judges are all over the map on issues such as these.  To illustrate, consider the procedures of Judge Anthony Rondolino.  Like Judge Baird, Judge Rondolino is a Pinellas County judge.  The rules are the same for both judges, the law is the same, and the cases are generally the same.  Nonetheless, Judge Rondolino often grants Motions to Dismiss, most recently via this seven-page Order (entered after a 45-minute hearing), yet Judge Baird routinely denies Motions to Dismiss, often without a hearing.  When one Pinellas County judge is regularly granting well-taken Motions to Dismiss, after duly-noticed hearings, and another is regularly denying them without a hearing, there is clearly room for reasonable people – even reasonable judges – to disagree.  As such, it’s up to us, as foreclosure defense attorneys, to assert our views as respectfully but persuasively as possible.  Be respectful, but don’t back down, and don’t give up.  Judges are paying attention, and your efforts may make a difference.

As for homeowners out there, I strongly encourage you to evaluate which foreclosure defense lawyers are willing to fight, respectfully but forcefully, and which are just “going through the motions” of a foreclosure case.

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Real stories of foreclosure victims

Just as I was finishing my last blog about loan modifications, I received a comment on this blog from a homeowner.  The homeowner’s story moved me, so much so that I felt compelled to post it (with her permission), below.  As you read it, ask yourself “Does this sound like a deadbeat?  Or does this sound like an honest, honorable, hard-working American who is trying to do right for her family and meet her financial obligations?” 

What particularly irks me about this situation is that she was induced to default by a scam operation out of California that promised a loan modification but never delivered.   

Dear Sir, I am writing to you as my last hope to save my home. My husband lost his job here in Tampa Fl. and had to move to Houston in order to keep his job at a lower rate. On March 8, 2010, we paid $2,500, up front, to a California company called National Relief Group to get a loan modification.  They told us it would take 120 days to complete, not to contact our lender, and to stop paying our mortgage in order to get our home modified. Its been now 8 months and still no answer and we are now $14,000.00 behind including late fees and penalties. Since then my husband was cheating on me and left me right after life support and took off. I filed for divorce and got granted the house. However I was to refinance the house in my name and the kids. Since my divorce, my credit was ruined being so lengthy almost 18 months and costly.  As the months went by I got a letter from the Attorneys for Bank of America.  They filed a suit for foreclosure, I panic because that was not our intention. I want to keep my home – I just needed assistance to lower the modification in order to keep paying the house. I called the company that was supposed to modify the loan and for months they kept saying it was in negotiation process, and we kept getting deeper in the hole with no promises it would go through. So I called Bank of America. I was told that if I wanted to keep my house, I would have to come up with $14,000. I told them to please work with me by doing a repayment plan for the back paid fees and penalties, or to put the back pay towards the end of the loan and I would continue to pay the mortgage, as I do not want to lose my house. The lady I spoke to from BOA was rude, obnoxious and uncaring to my plea. She said to ask my family, friends, etc. to help bring my mortgage up to date in order to keep it from foreclosure. She also informed me that I would have to come up with $10,000 and they would do a six month plan which would take me from $1234 a month to $2700 a month. I told her I could not afford that payment and she told me that was the only way I could keep my house from foreclosure and she also said I would have to come up with the money soon because they move fast on foreclosures, within 30 to 60 days. I cried to her, I pleaded to her that this was not my fault, why I was in this position and it would be a win-win situation to keep the house out of foreclosure if I’m willing to pay my mortgage every month but I could not come up with the back payments thru no fault of my own, all we were trying to do was to get help by modifying the loan to make it affordable to us since my now ex had lost his job in Tampa.

Needless to say that I sat there in shock and confused as to how a person wants to keep their home and can find noone to help them. I recently got another letter from the court advising that the attorneys for BOA are also not only doing the foreclosure but also seeking attorney’s fees as well. This is insane. I am a disabled woman on a fixed income now receiving alimony, my sons have moved back into my home and between the 3 of us we can pay the mortgage. However, I am so disgusted that the banks will not work with me, I can’t refinance, I can’t seem to get any help from anyone in keeping my home. Its all I have left. I am turning to you for help, guidance and direction as to what I can do so I don’t lose my home. I am able to make my monthly mortgage payments, however I cannot cough up, nor do I have family left and/or friends who can help me with this kind of back pay.  Something has to be done as I am not one to walk away from my responsibilities without giving my all. I am not a loser or a low life as people are calling us that now, just a disabled woman trying to keep a roof over her head.

Anything you can do to help us would be greatly appreciated as I feel you are my last hope. If you have any questions, please feel free to contact me at 727-XXX-XXXX.

Sadly, this story is not unusual.  In fact, I hear stories like this every single day.  Contrary to what many Americans think, most homeowners aren’t “deadbeats.”  Most of my clients aren’t “taking advantage of the system.”  These homeowners are good people who are trying to do the right thing.  Can the banks say the same?

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Intermission, at Best, in Battle over Foreclosures

I love today’s article by David Streitfeld of the New York Times:

Intermission, at Best, in Battle Over Foreclosures

Aside from appropriately acknowleding that Foreclosure-Gate is far from over, the article reflects the point I’ve been emphasizing for many months – Florida judges are starting to realize that just because the banks want things to return to ”business as usual” doesn’t mean our courts should.  We’ve all seen and learned far too much to let banks keep pushing through foreclosure cases like they’re in front of a conveyor belt at a factory. 

Also, notice how the New York Times continues to discuss foreclosures on a national level by talking to lawyers and judges right here in Florida?  Tampa, West Palm Beach, Sarasota … this is the ground zero of the foreclosure crisis.  Lawyers such as myself, Matt Weidner, and a handful of others, along with websites like and … we are making a difference.  So if you’re a homeowner facing foreclosure, don’t give up.  We are making headway, and the nation is watching us.

Here’s the article:

Bank of America may be trying to bring down the curtain on the foreclosure furor, but there were numerous indications Tuesday that the problems would not move off-stage so quickly.  A day after the bank said it would once again pursue defaulting borrowers in the 23 states where foreclosures were overseen by the courts, judges in Florida said they were expecting even more challenges from defaulting homeowners.

The White House is convening a meeting of regulators and administration officials on Wednesday to review federal investigations into the foreclosure crisis, while state law enforcement officials emphasized their inquiry into flawed foreclosures was continuing.  “There has been an attempt by some of the major servicers to indicate there are no problems,” said Patrick Madigan, an assistant attorney general in Iowa. “We’re not at the end of this process. We’re at the beginning.”

All 50 state attorneys general have joined in an investigation into lenders’ foreclosure processes, which in at least some cases appear to have been so sloppy that legal requirements went by the wayside.

The lenders maintain the errors involved mere technicalities, while lawyers for defaulting homeowners say they are symptomatic of a foreclosure system out of control.

The Obama administration, which declined last week to push for a national freeze on foreclosures, emphasized Tuesday that it was committed to holding accountable any bank that had violated the law.  Robert Gibbs, the White House press secretary, said that the administration was “strongly supporting the investigation by the state attorneys general” while noting that the Federal Housing Administration and Financial Fraud Enforcement Task Force have undertaken their own investigation.

Federal regulators have been looking into loan servicing problems for some months before the recent freezes by the big lenders. The meeting at the White House on Wednesday, which will be attended by the housing and urban development secretary, Shaun Donovan, among others, will focus in part on concerns about the foreclosure crisis’s effect on the housing market and the larger economy.

In remarks at a quarterly news briefing Tuesday, William C. Dudley, president of the Federal Reserve Bank of New York, said the Fed was “seeking to establish the facts” in conjunction with the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency.

“We want to ensure that the housing finance business is supported by robust back office operations,” he said. He gave no timetable for when such a review might be completed.  Whatever the outcome of the various investigations, the era when the vast majority of foreclosures were unopposed and easily granted may be waning. Some judges in Florida, the state whose courtrooms are the most overwhelmed by foreclosures, said they were likely to scrutinize the papers submitted by the big lenders with extra care.

“If we get information that there was a problem with a prior affidavit, maybe we look more carefully at the next one,” said Peter D. Blanc, chief judge of the 15th Judicial Circuit in West Palm Beach, Fla.

Thomas McGrady, chief judge of the Sixth Judicial Circuit in Clearwater, said it was still an open question for him and other judges whether they would accept amended documents from Bank of America or force the lender to refile its cases.  “All of the courts are struggling with this,” Mr. McGrady said.

The investigation by the state attorneys general is so new — it was formed last week — that its scope is still being settled. Behind the question of improper foreclosure documentation lies a more important issue of whether lenders even have legal standing to foreclose because they lack the original mortgage note as required by law.

“The problems are not over, but their extent remains to be seen,” said Mr. Madigan, the Iowa assistant attorney general.

Bank of America, the country’s largest lender, announced it was unfreezing foreclosures in the 23 states less than three weeks after it froze them. A process that many expected to take months was completed in days.

In its statement, the bank said that it had “reviewed our process” and found it satisfactory enough to file new affidavits in 102,000 pending cases starting next week. Documents in those cases were presumably improperly done before. A bank spokesman declined Tuesday to explain more fully the lender’s review process.

GMAC Mortgage, another large lender that had announced a freeze, also said it was refiling cases. “We have more training, more people, a more robust policy now,” Gina Proia, a spokeswoman said.

Four years ago, in a case that foreshadowed the current uproar, a Florida court censured GMAC for false testimony. An employee said in a deposition that she had neither reviewed the record of the mortgage in the case nor known how it was created, which contradicted her sworn affidavit.

GMAC promised at the time to clean up its procedures, reminding employees not to sign court pleadings unless they had independently reviewed and checked the facts.  Despite GMAC and Bank of America’s proclamations that everything is now being done by the book, some legal and financial experts are disbelieving.

“The banks have dragged their feet and taken forever to do loan modifications, yet within less than two weeks they have managed to review hundreds of thousands of foreclosure cases,” said Adam J. Levitin, an associate professor of law at the Georgetown University Law Center. “It is simply not credible.”  Mr. Levitin is convinced that the lenders will suffer for what he sees as their attempt to put themselves above the rules. “The genie is out of the bottle,” he said.

While most cases in Florida are still unopposed, the judges there are already starting to see an increase in defendants with counsel, even if they are simply acting as their own lawyer.  “The largest impact has been from the publicity,” said Lee E. Haworth, chief justice of the 12th Judicial Circuit in Sarasota. ”A lot more borrowers are coming forward to oppose summary judgment. More hearings are going to be contested.”

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Willful blindness by judges

It’s a bit awkward to openly criticize judges’ handling of foreclosure cases, especially since I appear before these judges on a regular basis.  That said, unless someone is willing to tell these judges, respectfully but firmly, their decisions are wrong (with an intelligent explanation why), meaningful change in foreclosure cases is just a pipe dream.

For instance, I’ve been quite perturbed by this recent quote from W. Douglas Baird, a judge in Clearwater:

“We’re processing thousands of cases where no one is really contesting them, and in those instances, something like that just would not be brought to our attention.  It’s not a situation where the courts have the ability to go through every document that’s filed and challenge and question those documents.”

I’ve been before you enough, Judge, that you know I respect you.  That said, on this issue, you are mistaken.  Even in a case that is uncontested, it is the judge’s obligation to ensure that the Plaintiff met its burden of proof.  To illustrate, let’s remove ourselves from the foreclosure arena for a moment.  Suppose you’re presiding over a trial in a negligence action.  Suppose the Defendant, for whatever reason, does not attend trial, via counsel or otherwise, and puts up no opposition.  Are you going to sign a Final Judgment without making the Plaintiff put on evidence?  Of course not (or, at least I’d hope not).  The Plaintiff’s obligation to prove its case is not eliminated simply because the Defendant is not present.  Now suppose the Plaintiff puts on evidence of duty and breach but no evidence of damages, then rests its case.  Are you going to sign a Final Judgment for $100,000 in damages merely because Plaintiff’s counsel asks for it in closing?  Again, of course not.  If there is no evidence of $100,000 in damages, you can’t award that relief – even if the relief sought is uncontested.  Respectfully, these principles are not reasonably in dispute. 

Now let’s evaluate this in the foreclosure context.  Suppose you’re at a hearing on a Motion for Summary Judgment.   The Defendant has been defaulted, did not try to defend the case, and is not present at the hearing.  Judge, you’d have the public believe you essentially have no obligation to review the file before signing a Final Judgment of Foreclosure.  I’m sorry, Judge, but you’re mistaken.  It’s still your obligation, even in an uncontested case, to make sure the Plaintiff has met its burden of proof.  The volume of cases before you does not change the Plaintiff’s burden.

Now – does anyone expect you to review the file as closely as you would if the case is contested?  Of course not.  But it’s still your job, as presiding judge, to ensure the Plaintiff has done what needs to be done for summary judgment to be entered. 

In my view, the most obvious shortcoming in foreclosure cases – even those that are uncontested – is with respect to the affidavits the foreclosure mills use in support of summary judgment.  Fla.R.Civ.P. 1.510 clearly provides:

Sworn or certified copies of all papers or parts thereof referred to in an affidavit shall be attached thereto or served therewith.

I don’t know that I have ever seen a plaintiff comply with this rule in a single foreclosure case, yet judges such as yourself repeatedly enter summary judgment anyway.  Why?  The rule is clear – when the affiant references documents in an affidavit, those papers must be attached.  In foreclosure cases, the affiant always references documents (because the affiant never has personal knowledge of the amounts owed and has to rely on a life of loan history), yet these documents are never attached.  This is a fatal flaw under the plain language of the rule.  In fact, there are many appellate court decisions that reverse summary judgment on these facts.  (If you disagree, Judge, then please talk to your colleague, Judge Rondolino.  He routinely cites these cases at hearings.) 

Judge, I don’t expect you to pore over every page in the court file before entering summary judgment in an uncontested case.  But it takes two seconds to look at the Plaintiff’s Affidavit in Support of Summary Judgment and see if any documents are attached.  Heck, that’s something an intern or judicial assistant could do.  If no documents are attached, and the affidavit references such documents (as they invariably all do), then summary judgment should not be entered, even in an uncontested case. 

Despite all of this, you told the media “[w]e’re processing thousands of cases where no one is really contesting them, and in those instances, something like that just would not be brought to our attention.  It’s not a situation where the courts have the ability to go through every document that’s filed and challenge and question those documents.”

I respectfully but firmly disagree, Judge.  You don’t have to look at “every document that’s filed” to realize summary judgment is improper.  All you had to do was look at the only document the Plaintiffs rely upon – the affidavit.  If you had, and you followed the plain language of Rule 1.510, you’d deny summary judgment, even in uncontested cases.  To act otherwise – and to tell the media otherwise – is to close your eyes to the glaring problems in foreclosure cases and to enter final judgment anyway (what the law calls “willful blindness,” hence the title of this blog). 

The unfortunate irony here, Judge, is that the foreclosure crisis has spun out of control in recent weeks because of these affidavits.  Robo-signers executed these affidavits by the thousands without having personal knowledge of their contents, as required.  What’s most unfortunate about this, in my view, is this could have – and should have – been prevented.  After all, the very purpose of the rule requiring the documents be attached is to restore credibility to the filings when the affiant lacks personal knowledge.  Unfortunately, too many judges allowed foreclosures without this required credibility, and now the situation has blown up in our faces.  (A question worth pondering – would the fraudulent affidavits be as big of a controversy if the requisite documents were attached?)

I’m not saying this is your fault.  However, I firmly believe that if judges applied the law and stopped bending over backwards to help the foreclosure mills “push through” cases the problems we’re now facing would be far less pervasive.  Even if you disagree, it’s time for you to stop acting like you have no obligation to review files.  You do, even in uncontested cases.  Also, it’s also time for you to stop systematically denying motions to dimiss without a hearing.  This causes reasonable people, including myself (and, yes, even other judges with whom I’ve spoken) to question whether you are fair and impartial.  After all, when you’re openly telling the media that you don’t review files, it’s not unfair for me to wonder (as in this Motion to DQ Judge) whether you’re reviewing my clients’ files before you deny their motions to dismiss, via a form Order, without a hearing.

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My solution to the foreclosure crisis

There’s no sense in belaboring the point any longer.  For me, the solution to the foreclosure crisis is clear:

Reduce the principal on every mortgage on every owner-occupied home in America such that the mortgage is no greater than the home’s present value.

Is this a radical solution?  Absolutely.  But let me ask you this: who would it harm?  Banks?  Please.  The banks got bailed out – with OUR tax dollars.  The bailout has enabled banks to recover, so much so that they’re now earning record profits, while mainstream America continues to suffer.     

When do the American people get their bailout? 

How many millions of Americans need to be foreclosed before the U.S. government steps in?  I don’t want to turn this into a political debate, but what I find most ironic about Obama’s failure to act in response to the foreclosure crisis is that, prior to the election, he was criticized as a socialist, wanting to take from the rich to give to the poor, yet exactly the opposite is happening:

with every foreclosure, the rich are getting richer at alarming rates while the poor and middle class continue to suffer.

It’s absolutely amazing to me that so much wealth is being transferred from the middle class and the poor to the rich – right under the nose of a Democractic president.

Anyway, would reducing every mortgage on owner-occupied properties to the current value of the property be a radical solution?  Absolutely.  Some people would argue this would be unfair to homeowners who’ve paid their mortgages.  I’m not oblivious to such arguments.  However, what’s our alternative?  Continuing to foreclose on thousands of homes every day?  Continuing to allow banks to earn billions and billions of dollars while the public suffers? Haven’t we seen by now that helping banks isn’t going to help Americans, the public at large, or the economy as a whole?  Banks only care about themselves and the profits of their CEOs – helping banks isn’t going to improve our economy.  For me, this all begs the question:  

Where are we headed here? 

In five years, are banks going to own 25% of all real estate in the United States?  30% 40%?  

Can you imagine how our economy would function with banks controlling that much real estate?  It’s a scary thought. 

Times like these are why we have a President.  Mr. Obama, it’s time for you to get involved and make a difference.  If you wait five years, or even two years, it will be too late.  Right now is the time to

Reduce the mortgage on every owner-occupied home to its present value. 

Of course, unless and until something like this happens, it’s incumbent upon homeowners facing foreclosure to retain a competent foreclosure defense attorney.  You never know – if you don’t give up, and hire an attorney to defend your case, maybe the government will do something like this, enabling you to keep your home (whereas if you give up, you’ll lose your home forever). 

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Who benefits from foreclosure?

When I see judges (some, not all) doing everything possible to “push through” foreclosure cases – often on behalf of a plaintiff nobody can identify – I often wonder:

Who do you think you’re helping, judge?

This is more than an esoteric, equitable concern.  Many times, the plaintiff filing the mortgage foreclosure lawsuit is not a Florida corporation (which are required to be registered on the Florida Department of State, Division of Corporations, and can be found at, a foreign corporation, or a national banking association.  Often, the plaintiff seeking foreclosure of our neighbor’s home is not an entity that exists in a way that the laws of the State of Florida require.  In these cases, the plaintiff lacks the capacity to sue and the Complaint should be dismissed, as one Florida judge recently ruled in this Order granting the Motion to Dismiss

Candidly, though, it’s the equity of it all that really bothers me.  Remember, mortgage foreclosure is supposed to be an equitable remedy, not an action at law.  With that in mind:

What is equitable about hundreds of Florida homeowners being foreclosed EVERY DAY?

Why should a small handful of rich and powerful bankers benefit so tremendously when so many of our neighbors are thrown on the streets? 

Today’s St. Pete Times provides a glaring illustration of how foreclosure is harming thousands for the benefit of a select few.  As the story details, David J. Stern, whose south Florida law firm handles approximately 20% of all foreclosure cases in Florida, recently raked in 58.4 million dollars via the sale of his back-office operations to an overseas company in which he is a significant shareholder.  In fact, Stern lives in a mortgage-free, 16,500 square foot house in Fort Lauderdale, with a tennis court and five yachts. 

I realize banks are entitled to representation by an attorney just like homeowners are.  That said, am I the only one who views this as excessive?  Why should Stern rake in millions of dollars while his neighbors get foreclosed?  Worse yet, why should he get to do so as a result of outright fraud (as outlined in the article)? 

Judges, the next time you have a foreclosure case in front of you, I hope you’ll ask yourself “who am I helping here?”  This is a key question not just on the issue of capacity, above, but in evaluating the equities of the foreclosure cases before you.  Remember, foreclosure cases are proceedings in equity, and there has to come a point when we stop throwing more homeowners on the street for the benefit of a select few.

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Mark Stopa, clients of Stopa Law Firm to appear on NBC Nightly News

For the third time in six weeks, Florida attorney Mark Stopa will be featured in a story by the national media. 

Stories of this type are always subject to be rescheduled, but at present, Mark Stopa and three clients of Stopa Law Firm are scheduled to appear on the NBC Nightly News with Brian Williams on Friday, July 9, 2010 at 6:30 p.m. EST.  

The interview was conducted by emmy-award winning journalist Mike Taibbi, and the NBC Nightly News is the highest-rated broadcast news program in the United States, so it goes without saying that this is a special opportunity. 

My goal, of course, is to continue to educate the public, especially Florida homeowners, about their rights through the foreclosure process.  Together, with attorneys like me, Matt Weidner, and many others in the Tampa/St. Pete area, we are making a difference – repeatedly getting noticed on a national level.  Let’s keep up the fight!

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Mark Stopa, Stopa Law Firm clients on ABC News

In his ongoing attempt to educate homeowners about their rights, foreclosure defense attorney Mark Stopa appeared on ABC News on July 6, 2010 at 11:00 p.m. in the Tampa, Florida market.  Three clients of Stopa Law Firm were featured in the story, as well as an interview from Mark.  Here is a link to the story.,-worry-free

According to Jamison Uhler, anchor for ABC’s Action News (and the journalist who ran the story), NBC was rated #1 among all TV networks at the 11:00 hour and the newscast was “one of NBC’s top ten highest rated 11pm newscasts in the station’s history!” 

I don’t agree with everything the media says in these types of stories (e.g., in this story, the portion about me telling homeowners to stop paying is not true – clients have already stopped paying by the time they come to me).  However, it’s important to keep involving the media with stories like this to educate the public about the process.  So thanks to everyone for tuning in, and make sure to keep fighting your foreclosure case!  Let’s keep the fight going; we are making progress.

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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.

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Conflict of interest, fraud on the court, Motion to DQ Counsel

(1)  Citimortgage admits its own employees signed an assignment of mortgage, conveying a mortgage to itself.  
(2)  Foreclosure Mill Shapiro & Fishman, LLP admits its standard practice is to prepare these assignments for their own clients (not the original mortgagee) to execute and record in the public record. 
 (3)  Shapiro never runs conflict checks prior to filing new lawsuits, leaving it up to their other clients (who may or may not be named as Defendants) to assert a conflict after the case has been filed.
These admissions were made in the course of a 3.5 hour, evidentiary hearing on a Motion to Disqualify Counsel brought by foreclosure defense attorney Mark Stopa on June 18, 2010 before Judge Foster in Tampa. 
I’ve attached the Transcript, DQ Motion, and the Exhibits introduced into evidence, but they’re not going to make sense without some background. (Bear with me, this is fascinating stuff.  To illustrate, even as he denied the motion (incorrectly, in my opinion), Judge Foster openly acknowledged the need for a written opinion from the Florida Supreme Court, comparing the issue to Gideon v. Wainwright, 372 U.S. 335 (1963) and Miranda  v. Arizona, 384 U.S. 436 (1966)).      
Facts (as set forth in DQ Motion,Transcript, and Exhibits):  Shapiro & Fishman represents Citimortgage, Inc. in a foreclosure lawsuit against JPMorgan, MERS, and the homeowners.  The Complaint does not specify how Citimortgage acquired standing to foreclose.  The public records reflect an Assignment of Mortgage, prepared by Shapiro, purporting to assign the mortgage from MERS, as Nominee for First Security Mortgage Services, to Citimortgage.  The assignment was executed the same day Citimortgage filed suit.  Citimortgage’s own employee testified that Nate Blackstun and Jamie Hardcastle, the individuals who signed this assignment (purporting to transfer the mortgage from MERS to Citimortgage) are actually employees of Citimortgage.  Quoting the testimony of a Citimortgage employee:
Q:  Who is Jamie Hardcastle?
A:  She works at Citimortgage in the — well, I’m not quite sure which department she works in. 
Q:  Do you know her?
A:  Yes. 
Q:  Do you work with her? 
A:  No, she works in my building. 
Q:  She’s an employee of Citimortgage, Inc.?
A:  Yes. 
Q:  How about Nate Blackstun?  Do you know him?
A:  Yes. 
Q:  Who is he? 
A:  He’s vice president of Citimortgage. 
Q:  Does he work in your building as well? 
A:  Yes.  …
Q:  Do you know whether Mr. Blackstun obtained the consent of MERS prior to signing an assignment of mortgage in this case? 
A:  He’s an authorized signer for MERS. 
Q:  Even though he’s also the Vice President of Citimortgage? 
A:  Yes. 
Q:  You see any sort of problem with that? 
A:  No. 
Q:  How do you allege that Citimortgage became the owner and holder of this note in this case?
A:  It was assigned to Citimortgage –
Q:  From whom?
A:  from MERS. 
Q:  From whom? 
A:  MERS. 
Q:  On behalf of whom? 
A:  I’m not sure. 
In fact, Shapiro and Fishman’s office manager admitted that Shapiro’s standard practice is to prepare an Assignment of Mortgage, provide it to its own client to sign (on behalf of the original mortgage holder, typically MERS), have its client execute the assignment, and cause the assignment to be recorded
Q:  Do you dispute that Jamie Hardcastle is an employee of Citimortgage, Inc.?
A:  Do I dispute that?  No. 
Q:  Do you dispute that Nate Blackstun is an employee of Citimortgage, Inc.?
A:  No. 
Q:  Yet they are the individuals who signed an assignment of mortgage on October 13, 2009, purporting to convey a mortgage from Mortgage Electronic Registration Systems, Inc. as nominee for First Security Mortgage Services to Citimortgage? 
A:  With authority from MERS to execute the document, yes they did. …
Q:  So all you basically do when you get a new client for a foreclosure case, you cause an assignment of mortgage to be prepared, send it to your client for signature, and knowing that your clients have it own employees signing it and then sending it back to you, true? 
A:  Yes.  However, that assignment is not part of the foreclosure action itself.  It’s a chain of title document which is not part of the foreclosure. 
Q:  You’ve never seen these assignments of mortgage be attached to a complaint? 
A:  Sure. 
Shapiro represents JPMorgan and MERS in other, pending cases, including at least one case where MERS is adverse to Citimortgage.  Yet Shapiro continues to represent Citimortgage in this case, adverse to JPMorgan and MERS.  (If you don’t think there is anything wrong with that, call The Florida Bar and tell them you represent ABC Corp. against XYZ Corp. and ask The Bar if it’s ok for you to represent XYZ Corp. against ABC Corp. – see what they say.  See if the Bar gives its blessing, even if both entities waive the conflict.)  Shapiro did not perform a “conflict check” prior to representing Citimortgage in this case and, in fact, does not perform conflict checks when taking on new files.  Instead, Shapiro’s standard practice is to file the suit for whichever bank it is representing in that case and presume there is no conflict unless a different bank asserts such a conflict. 
The issues:  (a) Whether Shapiro & Fishman have a conflict of interest under 4-1.7, R.Reg.Fla.Bar, precluding it from acting as counsel for Citimortgage, when it is simultaneously representing JPMorgan and MERS (in other, pending cases and, arguably, the instant case); and (b) whether Citimortgage has used Shapiro’s services to perpetrate a crime or fraud, without agreeing to disclose and rectify the crime or fraud, in violation of 4-1.16, R.Reg.Fla.Bar. 
The law:  Rule 4-1.7(a) precludes a law firm from representing a client if the representation is (1) directly adverse to another client; or (2) there is a substantial risk that the lawyer’s representation will be “materially limited” by the lawyer’s responsibilities to another client, a former client, a third person, or a personal interest of the lawyer.  The only way around this prohibition is compliance with 4-1.7(b), which requires, among other things, that each client gives informed consent, confirmed in writing or clearly stated on the record at a hearing.  See Lincoln Associates & Constr., Inc. v. Wentworth Constr. Co., Inc., 26 So. 3d 638 (Fla. 1st DCA 2010).  Additionally, Rule 4-1.16 precludes a lawyer from representing a client who has used the lawyer’s services to commit a crime or fraud unless the client agrees to disclose and rectify the crime or fraud. 
Analysis:  In the face of the Motion to Disqualify Counsel, Shapiro presented a waiver of conflict, signed by an employee of Citimortgage, dated just one day before the hearing (the first time Shapiro discussed the issue of conflict with Citimortgage).  However, Shapiro presented no such waiver from MERS or JPMorgan, and no witness from MERS or JPMorgan testified or otherwise consented to waive the conflict.  In my opinion, the absence of consent from MERS and JPMorgan required Shapiro’s disqualification.  See Rule 4-1.7 and Wentworth
Throughout the hearing, Judge Foster repeatedly ruled that he “did not see the conflict” and that Citimortgage was “not adverse” to MERS and JPMorgan.  Respectfully, when these entities are on opposite sides of a lawsuit, the adversity is presumed.  They are adverse by definition, one being the Plaintiff and the other the Defendant.   Although Shapiro contends, when these entities are named as Defendants, that it’s merely to ”clear title,” that does not change the adversarial nature of the relationship.  For instance, suppose MERS or JPMorgan or First Security later realized it was the owner and holder of the note and mortgage (or, at minimum, that it had a bona fide claim in that regard) – the judgment in this case would bar such a claim under principles of res judicata and collateral estoppel.  Similarly, suppose a ”junior” lien holder had a bona fide argument that its lien was superior.  Isn’t Shapiro throwing one client under the bus (the defendant) for the sake of another (the plaintiff) without checking if its own client, the defendant, takes the position that it owns and holds the note and mortgage?  Shapiro says the defendant was defaulted, so it isn’t contesting the plaintiff’s position and there is hence no conflict, but isn’t it the lawyer’s job to inquire about the conflict, before filing suit, and not merely to leave it up to the client to figure it out?  Isn’t it Shapiro’s responsibility, under The Rules Regulating The Florida Bar, before filing suit against its own client, to make sure that the client it is suing consents to the relief being requested?  How do we know the client isn’t relying on the law firm (as clients reasonably do)?  I can see the logic now – “Shapiro is filing suit against us for a different bank.  Shapiro represents us.  Shapiro must be right – we must not have an ownership interest in this Note and Mortgage.”  We’ve already established that Shapiro isn’t checking – Shapiro admitted as much at this hearing – so if the bank isn’t checking, either, then who is?
Suppose this were any other setting, not a foreclosure case, and you represent ABC Corp. against XYZ Corp.  Would you ever file suit for XYZ Corp. against ABC Corp., in a different suit, without asking ABC Corp. if it consented?  Without asking ABC Corp. if it agreed with XYZ Corp’s position in that case?  I highly doubt it.  So why it is okay for Shapiro to do that in these cases, over and over again?  Merely because they are foreclosure cases? 
And what about all of the cases where Shapiro’s “other” client may claim ownership of the Note and Mortgage (e.g. because it is the record owner or prior record owner) but is not named as a defendant in the suit?  Why does Shapiro name these entities as Defendants in some cases but not in others?  If they need to “clear title” in some cases, why not in others?  Is Shapiro intentionally not naming its own client as a defendant to make it easier for its other client, the plaintiff, to win the foreclosure case, while leaving the door open for its other client (not named as a defendant) to file suit on the same Note and Mortgage?  After all, if the bank isn’t named as a defendant, the foreclosure judgment is not binding on it, and nothing stops that bank from filing a different lawsuit for foreclosure.
Meanwhile, in the face of an assignment of mortgage that appears fraudulent (unless you think self-dealing or dual agency is okay), Shapiro asserts Citimortgage’s standing is based on transfer of the note, not the assignment of mortgage.  Of course, Shapiro did not take this position until after the Motion to Disqualify Counsel was filed, which raises the question – why is Shapiro so willing to concede one ground for standing in this case when it asserts that basis for standing in other, similar cases?  We all know there are many cases in which Shapiro has used an assignment of mortgage as a basis for standing; in fact,often the assignment is attached to the Complaint.  Why, then, would it be giving up this argument in this case?  In my opinion, the answer is clear – Shapiro wants to take the spotlight off of itself and its own conduct, even if it means giving up an argument for a client.  “Let’s argue the assignment is irrelevant for purposes of standing, that way our conduct vis a vis the assignment becomes irrelevant, too.”  Maybe standing is, in any given case, based on transfer of the Note.  Respectfully, though, wouldn’t a conflict-free attorney want to argue every possible basis for standing, including the assignment, and not forego an argument for standing because it highlighted that attorney’s own conduct?  In other words, isn’t Shapiro’s representation of Citimortgage “materially limited” by its own self-interest?  See Rule 4-1.7(a)(2).  Notably, upon inquiry from Mr. Stopa, the Citimortgage employee made it clear Shapiro never advised her that it was giving up one basis for standing in the case.  Respectfully, how can a waiver be “informed’ when Citimortgage does not understand the ramifications of its waiver in the pending case? 
Unfortunately, Judge Foster did not seem to get (for lack of a better term) this latter argument, as he sustained an objection that Shapiro’s reliance on an assignment in other cases was irrelevant.  (That’s one purpose of a blog like this – to make judges think about these issues and understand them.  To wit, by no means am I trying to criticize Judge Foster here – I respect and appreciate that he gave me the opportunity to flesh out this evidence.  I just think the issues merit consideration from all of us.)  But Shapiro’s reliance on the assignments in other cases – and refusal to do so in this case – is precisely the point.  If Shapiro is relying on assignments in other cases, but not in this case, merely to take the spotlight off of itself so as to defeat a motion to disqualify, it’s representation is materially limited by its own self-interest, in violation of 4-1.7.  Remember, the rule requires “informed” consent, and if Citimortgage is consenting to the representation without understanding that Shapiro is waiving an argument that a conflict-free attorney would assert, the consent is not “informed.”   Also, how many hundreds or thousands of times has Shapiro relied on these assignments in other foreclosure cases (in which I, or another defense attorney, am not involved)?
Meanwhile, Judge Foster seemed to accept that a fraud was not being committed upon the Court (given how Shapiro distanced itself from the assignment of mortgage), but Rule 4-1.16 doesn’t require that the fraud be committed in that case.  The Rule requires that a lawyer withdraw from representation if “the client has used the lawyer’s services to perpetrate a crime or fraud, unless the client agrees to disclose and rectify the crime or fraud.”  Here, isn’t an assignment of mortgage, filed in the public records, purporting to convey an assignment from MERS to Citimortgage, but which is actually signed by employees of Citimortgage, a fraud?  As I’ve presented this argument, judges seem to be taking the position that it’s OK for an employee of Citimortgage to execute an assignment from MERS to itself as long as MERS consents, but how is that not self-dealing?  And why is it ok?  I know I’m not the only person who thinks it’s wrong.  See HSBC Bank USA, N.A. v. Vazquez, 2009 N.Y. Slip Op. 51814 (N.Y. 2009); Bank of New York v. Mulligan, 2008 N.Y. Slip. Op 31501 (N.Y. 2008) (“The Court is concerned that Mr. Harless might be engaged in a subterfuge, wearing various corporate hats.  Before granting an application for an order of reference, the Court requires an affidavit from Mr. Harless describing his employment history for the past three years.”); Bank of New York v. Orosco, 2007 N.Y. Slip Op 33818 (N.Y. 2007); Deutsche Bank Nat’l Trust Co. v. Castellanos, 2008 N.Y. Slip. Op. 50033 (N.Y. 2008) (“Did Mr. Rivas somehow change employers on July 21, 2006 or is he concurrently a Vice President of both assignor Argent Mortgage Company, LLC and assignee Deutsche Bank?  If he is a Vice President of both the assignor and the assignee, this would create a conflict of interest and render the July 21, 2006 assignment void. … The court is concerned that there may be fraud on the part of Deutsche Bank, Argent Mortgage Company, LLC, and/or MTGLQ Investors, L.P., or at least malfeasance.”). 
In comments made as the hearing began (which are unfortunately not in the transcript), Judge Foster made it clear that he didn’t want to require disqualification and upset the entire banking industry.  In a way, that’s exactly what this motion is doing – arguing that the manner in which these assignments have been completed (and, in essence, the entire MERS system) is a fraud.  Respectfully, though, why should the fact that the fraud is pervasive – and would upset the way banks litigate foreclosure cases – make this problem less worthy of attention?  Shouldn’t the fact that these assignments are being prepared fraudulently in virtually every case make judges more likely to fix the problem, not less? 
Shapiro argued extensively that my clients lack standing to argue this issue.  However, the Comment to 4-1.7 provides: “Where the conflict is such as clearly to call into question the fair or efficient administration of justice, opposing counsel may properly raise the question.”  This is where we need to educate judges about the widespread ramifications of “pushing through” foreclosure cases.  For instance, in these cases where the wrong Plaintiff is suing, what will happen when the actual owner of the Note and Mortgage emerges, after the foreclosure is granted?  What will happen to the homeowner, who has already been foreclosed upon by the wrong bank (but faces another lawsuit by the correct one)?  What will happen to the then-owner of the property, who purchased the property either at the courthouse auction or from such a purchaser?  What about the title company that issued title insurance based on that sale?  Particularly in lawsuits where the Note is lost, or where the original mortgage holder went into bankruptcy (and subsequent transfers or assignments were unauthorized as a matter of law) we must safeguard against these problems.  That’s why addressing these conflict issues is so important – it forces banks and their lawyers to take a hard look at the interests of all parties involved before a foreclosure case gets “pushed through.” 
Many Florida cases on the issue of disqualification talk about the appearance of impropriety and the public’s perception of our conduct as lawyers.  See Wentworth, Campbell v. American Pioneer Savings Bank, 565 So. 2d 417 (Fla. 4th DCA 1990); Andrews v. Allstate Ins. Co., 366 So. 2d 462 (Fla. 4th DCA 1978).   For the life of me, I can’t see how anyone can dispute the unseemliness of these events.  Perhaps that’s why at least one judge has questioned the conflict of interest in these situations.  See HSBC Bank USA, N.C. v. Vazquez, 2009 N.Y. Slip. Op 51814 (N.Y. 2009) (“Even if Plaintiff HSBC is able to cure the assignment defect, plaintiff’s counsel then has to adderess the conflict of interest that exists with his representation of both the assignor of the instant mortgage, MERS as Nominee for HSCB Mortgage, and the assignee of the instant mortgage, HSBC.”).  I urge more attorneys and judges in our great state to give careful consideration to these issues

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