Posts Tagged ‘Florida foreclosure attorney’

“Substantial Compliance” in the Paragraph 22 Context

I have been fortunate enough to win a lot of foreclosure cases where the plaintiffs failed to comply with the conditions precedent set forth in paragraph 22 of the mortgages upon which they’re suing … but I certainly haven’t won them all.  On those occasions where I did not win, it was typically because a judge ruled that Florida law required only the bank “substantially comply” with the conditions precedent in paragraph 22, and the letter which was sent comported with that standard.  Most judges before whom I’ve appeared have not employed this principle of law, but a few have.

Recently, a judge denied one of my motions for summary judgment, asserting “substantial compliance” as the legal standard, without a single case cite being submitted.  This really troubled me, and it prompted me to do a LOT of research and write this 14-page Memorandum of Law.

Please read the memo.  Understand the issues.  Realize there’s more to complying with the conditions precedent in paragraph 22 than the bank sending a letter – the letter must contain certain, specified information.  Be sure and argue that “substantial compliance” is not the legal standard in Florida, but, even if it were, that the mere sending of a letter is not “substantial compliance.”

This is a significant battleground in foreclosure cases in Florida.  Many circuit judges are on our side, and the appellate judges who have ruled on the issue certainly seem to be as well.  So keep pushing this issue.  Keep fighting.  This is a key issue, and, given the state of the law in Florida, it’s one I’m confident we can win.

Mark Stopa

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Foreclosure News – Mark Stopa, Matt Weidner on MSNBC

Foreclosure defense attorneys Mark Stopa and Matt Weidner appeared today, live, on The Dylan Ratigan Show.

Here is a link to the show.                   

Even with the plethora of media reports in recent months, most Florda homeowners do not defend their foreclosure cases.  That’s an absolute shame.  I really hope stories like this help homeowners realize they can’t give up – loan modifications are going to happen on a widespread basis only if homeowners fight, stand up to the banks, and advocate for change.

Mark Stopa

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Appeal in a Foreclosure Case – Lessons Learned

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

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

The lessons to be taken from this:

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

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

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

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

Mark Stopa

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Florida courts “clearing” foreclosure cases

This article by Kimberly Miller of the Palm Beach Post explains, in layman’s terms, how the judiciary views foreclosure.  For most judges, it’s all a numbers game – how quickly the judges can “clear” foreclosure cases.  As the article reflects, there is still a huge backlog of foreclosure cases in Florida courts, but senior judges and “rocket dockets” are chipping away at the backlog.  

This is a disturbing trend, one that should make all homeowners facing foreclosure realize the need for a competent foreclosure defense attorney.  Quite simply, without an attorney, your case might be lumped in with all the other cases that judges are all too quick to try to “clear” from their dockets. 

Here’s the entire article: 

Florida’s courts cleared 65,830 foreclosure cases in a three-month period beginning July 1, with 71 percent being decided in quickie hearings before the judge sometimes called “rocket dockets.”  According to a report released today by the Office of State Courts Administration, only 23 foreclosure cases went to trial statewide during the same time period.

The report, the first of its kind, was conducted between July 1 and Sept. 30 to measure how Florida’s 20 circuit courts are using a $6 million state allotment awarded over the summer to hire additional judges and staff to handle foreclosures.  Despite clearing 65,830 cases, 25 percent of which were dismissed for reasons that could include a completed short sale or deed-in-lieu of foreclosure agreement, the report found a backlog of 396,509 cases are still clogging Florida courts.

Lawmakers awarded the $6 million, in part, hoping that getting homes back onto the market will hasten an economic recovery.  “We needed a way to see how we are doing and identify reasons for delays or slowdowns,” said Kris Slayden, who oversees foreclosures for the Office of State Courts Administration. “This shows we are doing what we said we would do, reducing the backlog.”

Palm Beach County’s foreclosure court cleared the most cases in the state during the three-month period, wiping 9,846 suits from its system. About 70 percent of those cases were decided via summary judgment, with just one trial being held, according to the report. 

The concern among foreclosure defense attorneys has been that some senior judges hired with the state money would rush through foreclosures using summary judgments. A summary judgment is held in lieu of a traditional trial when the facts of the case are considered irrefutable. They are often allowed when the borrower is not contesting the foreclosure or represented by an attorney, having possibly walked away from the home.  “Summary judgment is a shortcut that should rarely be used,” said foreclosure defense attorney Tom Ice, of the Royal Palm Beach-based Ice Legal. “In foreclosure cases they are routinely filed and routinely granted. That’s a disturbing trend that there are so few trials.”

Ice said it’s even more of a concern in light of recent revelations that some foreclosure affidavits, which are used in summary judgments, are flawed or fraudulent. Beginning in late September, major lenders including Bank of America, Ally Financial, Inc., and JP Morgan Chase, acknowledged that some of their foreclosure paperwork would need to be re-filed.  “All you need is one issue of fact, such as dispute over note ownership, to get a trial,” Ice said.

Palm Beach County Judge John J. Hoy, who took over foreclosure court today, refused to comment for this story. Hoy replaces Judge Meenu Sasser, who is now hearing civil cases.

Palm Beach County, which is the 15th Circuit Court, received $646,540 of the $6 million, using it to hire two senior judges and six case managers to tackle foreclosures. The Palm Beach County Clerk and Comptroller’s Office received $403,000 out of a $3.6 million statewide allowance given to clerks’ offices to handle foreclosure paperwork.

Today’s report showed Palm Beach County had 46,438 foreclosures backlogged as of June 30. That fell to 36,592 as of Sept. 30.

The 19th Circuit Court, which includes Martin and St. Lucie counties, received $212,729 to hire senior judges, case managers and administrative assistants. As of Sept. 30, it had cleared 951 cases, but still had a backlog of 18,110.

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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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The state of affairs, Strategic Default

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

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

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

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Title insurance, where we go from here

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

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

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

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

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What will it take, judges?

Connecticut Attorney General Richard Blumenthal on Monday accused GMAC of using “defective foreclosure documents” in its filings and said he ordered a moratorium “to forestall horrendous, illegal harm against homeowners.”

California Attorney General Edmund G. Brown Jr. on Friday called GMAC’s document review process a “sham.”

In Illinois, Attorney General Lisa Madigan said she “wants to see GMAC stop the filing of foreclosures in Illinois as well until this situation can be remedied,” a spokeswoman said.

Iowa, North Carolina and Texas have also opened criminal and civil investigations into GMAC’s lending practices as well as those at other large mortgage companies, officials said.

With all of this in mind, I have to ask … What’s it going to take, judges? 

How many high-ranking officials have to speak up before you’ll stop pushing through foreclosure judgments? 

How much proof do you need? 

It’s one thing, I suppose, for homeowners to cry “fraud” – you’ve convinced yourself their cries don’t matter because the homeowners are self-interested, didn’t pay their mortgage, and are trying to stay in their homes.  But how can you “explain away” the positions of the AGs of numerous states?  What’s their self-interest? 

 I’m quite certain these AGs aren’t facing foreclosure, yet they’re appalled and disgusted at the conduct of the banks and the foreclosure mills.  Why aren’t you?

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Loan Modifications – it’s not that complicated

I am constantly befuddled at the banks’ refusal to provide loan modifications to clients and even more frustrated at the inability or unwillingness of anyone (be it those in the judiciary or the legislature) to do anything about it.  The entire process is totally out of whack.  To illustrate, the banks have somehow convinced everyone, even the Florida Supreme Court (as part of the new mediation program) that homeowners must turn over a series of financial documents before being considered for a loan modification.  Respectfully, that’s just not so.  Production of tax returns, check stubs, or other financial documents are absolutely not necessary to obtain a loan modification.  Under HAMP, ok, I will give you that.  But for a private modification, they are absolutely unnecessary.  If you disagree, take a look at my recent conversation with a bank’s attorney, which went something like this. 

Mark Stopa:  I have a client whose monthly payment was $2,500.  We want a loan modification where we pay $2,000/month at 4% interest and the principal balance is reduced by $50,000 (to better reflect the current value of the house). 

Attorney:  We need financial disclosures.

Mark Stopa:  No, you don’t.  The parties can agree to this modification and my client will begin paying immediately.  If my client defaults on the modified loan, we will consent to the foreclosure in the pending case. 

Attorney:  But then we would have lost the ability to claim that $50,000. 

Mark Stopa:  No, you wouldn’t.  We’d consent that if we default on the modified loan that the bank reserves all remedies available for the breach of the original mortgage.

Attorney:  We can’t do that.  The bank would have to pay a new filing fee.

Mark Stopa:  No, it wouldn’t.  We can stipulate to the dismissal of the pending foreclosure lawsuit but have the court reserve jurisdiction to enforce the settlement.  If my client defaults on the modified mortgage, you can obtain a foreclosure judgment in the pending case, ex parte, without paying a new filing fee. 

Attorney:  (silence)

Mark Stopa:  Doesn’t this give everyone the best of both worlds?  My client gets the loan modification it wants.  The lawsuit ends.  The bank resumes collecting monthly payments (which is supposedly what it wants).  If my client defaults on the modified loan, the bank loses nothing.  In fact, if my client defaults on the modified loan, it will be easier for the bank to foreclose than it would have been without the modified loan, because we are waiving all defenses. 

Attorney:  That sounds reasonable to me.  I’m going to have to talk to my colleagues about this and get back to you.   

Mark Stopa:  (Still waiting for a return call)

Obviously this approach can’t work in every case (i.e. only homeowners who were confident that they could make the monthly payments indefinitely should enter a settlement like this).  But why can’t hundreds, if not thousands, of foreclosure lawsuits be settled in this manner?  Banks reduce the principal to the present value of the house, hence reducing the monthly payments to an amount the homeowner can afford.  The parties stipulate to dismiss the pending case but reserve jurisdiction to enforce the settlement.  If the homeowner defaults on the modified loan, the bank forecloses on the original mortgage (after, say, a 10-day notice), ex parte.  

LOAN MODIFICATIONS SHOULD BE HAPPENING EVERY DAY in this manner.  The lack of such modifications is clear evidence that banks would rather foreclose than work with homeowners.  Let me say that again:

THE ABSENCE OF LOAN MODIFICATIONS IS CLEAR EVIDENCE THAT BANKS WOULD RATHER FORECLOSE THAN WORK WITH HOMEOWNERS.  I sincerely hope, in the near future, that the legislature, the judiciary, and the public at large begin to catch on to what the banks are doing and stop letting them get away with it.

UPDATE:  On July 8, 2010, I had a hearing in Tampa on a Motion to Dismiss before Judge Levens against Barbara Couture with Shapiro & Fishman.  As the hearing progressed, we somehow began discussing the very issue set forth in this blog.  In response to my argument that banks should be settling foreclosure cases via private modifications, Ms. Couture argued just what I’ve believed all along – banks don’t want to enter loan modifications where they reduce the principal (as I suggested above) out of fear that other homeowners will go into default.  It’s not that these modifications wouldn’t make sense in that particular case – they would.  But banks don’t care – they are so concerned with other loans, they won’t work with the homeowner who is right in front of them.  In other words, banks want people who owe more than their house is worth to continue paying (accepting all of the blame for the mistakes made by Wall Street even though the banks were bailed out and homeowners weren’t), and if homeowners stop paying, the banks won’t enter a modification and will push for foreclosure.  

Anyone else think this entire process is horribly unfair?

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