Posts Tagged ‘foreclosure blog’

When to Retain a Foreclosure Defense Lawyer

I talked to two prospective clients this week, and both conversations broke my heart.  In both cases, it was clear to me that I really could have helped these homeowners, but they waited too long to consult me.

In the first case, the homeowner failed to defend and was defaulted by the clerk.  A default, of course, is like a forfeit in sports.  It’s the court’s way of saying a defendant does not get to participate in a lawsuit or assert any defenses in opposition to foreclosure.  It is possible to vacate a default (and, hence, defend a case), but the longer one fails to act after having been defaulted, the harder it is to defend a case.

In this particular case, the bank was so slow to prosecute (even after getting a default against the homeowner) that the clerk issued a notice of intent to dismiss for lack of prosecution.  Incredibly, even after receiving that, the bank still failed to do anything for 60 days.  If this homeowner had consulted me at that point, I would have filed a motion to dismiss for lack of prosecution.  While I can’t “guarantee” anything, I am virtually certain I would have gotten that motion granted and the case would have been dismissed.  Alas, the homeowner did not consult with me, and about 120 days after the notice was issued, the bank finally woke up and filed something, precluding a dismissal.

An opportunity for a great result presented itself, but the homeowner didn’t have a lawyer, so the opportunity was lost.

In the second case, an elderly homeowner suffered a final judgment of foreclosure while trying to defend his foreclosure case himself.  He was desperate to file an appeal and willing to pay me to do so.  Sounds good, right?  Well, for me, it doesn’t matter if a client is willing to pay; if I don’t think I can help, I’m not going to take somone’s money.  Don’t get me wrong; I’m more than happy to take on an appeal.  The problem is that if a homeowner doesn’t make the appropriate arguments (in a procedurally proper way) before the foreclosure judgment was entered, then there is little any foreclosure defense lawyer can do about it on appeal.  After all, the purpose of an appeal is to ask the higher court to rule that the lower court made a legal error.  If the homeowner didn’t argue something correctly (or at all), then the appeal won’t be successful.

What really frustrated me about this case was that, prior to suffering the final judgment of foreclosure, the homeowner actually got the judge to dismiss the case with prejudice!  Unfortunately, the judge later vacated that order of dismissal upon a motion from the bank.  When I reviewed the transcript from the hearing on that motion, I was pulling my hair out with frustration, feeling confident that the judge would not have vacated his order of dismissal if I was involved in the case at that stage of the case.  Alas, I was not involved, so the motion was granted, the order of dismissal was vacated, and, ultimately, the homeowner was foreclosed.

What’s perhaps more frustrating about that is that the homeowner had enough money to pay for a court reporter and order a transcript of the hearing, but he tried to handle the hearing himself.  I’m sorry, but that’s ass backwards.

Look, I know that many homeowners think they know a lot about foreclosure law.  Some of them, quite frankly, have taken advantage of their unemployment (to the extent that’s even possible) by studying foreclosure laws.  That’s all fine and good, but I’d bet anything that I know far, far more about the arguments to make in opposition to a bank seeking to vacate an order of dismissal  under Rule 1.540.  As I read the transcript, it was clear this homeowner had no idea what to argue or what to say.  The bank brought witnesses to testify and the homeowner had no idea what to do.

This was a huge hearing, mind you.  If he won, then the order dismissing his foreclosure lawsuit with prejudice would have remained in place.  It was important enough for him to hire a court reporter, and he had the financial means to do so, yet he decided to handle this hearing without a lawyer.  Sigh.

By no means are lawyers perfect, and that includes foreclosure defense lawyers.  However, these were two examples, just from this week, where it was very apparent to me that I could have helped homeowners avoid foreclosure if only those homeowners had consulted with me sooner.

So if you’re wondering when to retain a foreclosure defense attorney, learn from the mistakes of these two homeowners.  Hire a lawyer to defend your case from the outset.  If you don’t, you risk missing out on viable arguments and defenses that may well help you avoid foreclosure.

Mark Stopa

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Stopa Law Firm Offering Free Seminar, Free Foreclosure Defense

Stopa Law Firm will be holding a free foreclosure seminar on Saturday, June 25, 2011 – the details are on the front page of this website.  I intend to discuss the foreclosure process in general, loan modifications, strategic default, and other “hot-button” issues currently facing Florida homeowners. 

Meanwhile, I’ve decided that I need to make this more than a seminar.  In addition to the free seminar, I will choose five homeowners for whom I will provide the same foreclosure defense I provide my other clients – for free. 

I see tragic situations every day.  I want to help our community.  I realize lots of people will want free representation, so, quite candidly, I’m going to choose those in the most dire of circumstances.  For instance, the email I just received talked about a family whose daughter is paralyzed, in a wheelchair, living in a home that has accommodations for her wheelchair, and are facing foreclosure because the bank won’t give them a loan modification.  I want to be able to help people like this.  I need to be able to help people like this.  So on June 25, in addition to the seminar, I’ll choose five homeowners for whom I’ll give free foreclosure defense representation. 

More details to follow; I’ll plan to see you on June 25.

Mark Stopa

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Foreclosure Trial in Lee County

I was in court for today’s trial for less than an hour, but it was such a bizarre experience that I found myself taking notes to document the details.  As I told my bright associate, Philip Healy, on our return trip, it was nothing like a “normal” trial, i.e. a trial in a non-foreclosure case, but I guess there’s nothing “normal” nowadays, especially in Lee County. 

Anyway, the day started with 108 different cases being assigned a number and all parties/attorneys “checking in” with the clerk to announce their presence.  Incredibly, 108 cases were to be tried, all at once, before just two judges! 

When the judge arrived, he started by asking that anyone who thought their trial would be more than a couple of minutes stand up and say so (apparently with the intent that these “contested” cases be moved to a different room with a different judge).  Incredibly, I was just one of two people to stand up.  “Really?” I thought to myself.  “Just two people think their case will take more than a couple of minutes?” 

When I announced “Number 53,” a local attorney who is not counsel of record who I had never seen before announced himself as opposing counsel, saying the bank was seeking a continuance.  Before I could respond, the judge said that motion would be adjudicated by the other judge.  The local attorney said he couldn’t leave that room yet, though, as he was counsel in several other cases which were still to be called up.  So I found myself waiting and watching the other cases get “adjudicated.” 

Next up was an attorney from one of the foreclosure mills; she must have had 15 cases set for trial.  One by one, she repeatedly announced that voluntary dismissals had been filed in most of those cases.  In others, she sought a continuance, which, when unopposed, was granted.  As she concluded, the judge stated (and I wrote it down, I was so troubled):

“Do we give her some sort of award for resolution attorney of the day?”

This prompted applause from two of the clerks seated to the judge’s right. 

As I felt like I was in some bizarro-world, up marched a Florida default attorney.  Philip knows her, and it’s clear she’s fairly green, yet it appeared she was handling all of the FL Default cases – I’d estimate 25 or so.  Clearly, though, she wasn’t about to try 25 cases.  One by one, she announced her intentions to the court with these cases.  Many of them were voluntary dismissals.  No explanation was given; no rationale provided – just a voluntary dismissal.  In others, she sought a continuance, which, when unopposed, was granted without argument. 

As I watched, I was struck by the randomness of it all.  There seemed to be no rhyme or reason why some cases were being dismissed, whereas others were proceeding forward.  One defense attorney didn’t seem to mind, as she left the courtroom with the case against her client having been dismissed without her having to say one word. 

FL Default didn’t dismiss all of the cases, though.  For some, they asked for a continuance.  For others, the judge instructed counsel to submit a Final Judgment ex parte

One exchange between the FL Default attorney and the judge bothered me so much I wrote it down.  The attorney asked for a continuance because she did not have the original note, saying it was still with David Stern’s office.  (Apparently, Stern is the go-to excuse for any mill that is missing evidence.)  However, the judge wasn’t going to be deterred by missing evidence.  Realizing the defendant was not present, the judge said it made “no sense” to amend the pleadings when the defendant was not present at trial and that there were “other ways” to win at trial when the plaintiff did not have a lost note.  Apparently, the attorney didn’t get the hint, so the judge spelled it out for her: “Prepare an affidavit of lost note and submit it to me, along with an affidavit of fees and costs and an ex parte judgment packet.” 

I was horrified.  Was this a judge?  Or the supervisor of Florida Default Law Group (counseling the young attorney on how to prosecute the case)? 

A few cases later, the same attorney asked for a continuance.  A fellow foreclosure defense attorney objected.  The judge then said, not to the entire courtroom but not trying to keep it quiet, either, that if a defendant opposed a continuance that the court would enter a dismissal.  The judge then dismissed that case. 

I was stunned.  Remember, I was one of two people who stood up at the beginning, and the judge said the motions for continuances in those cases would be heard by the other judge.  But sensing the opportunity, that attorney and I both walked up to the front of the line and announced our case numbers.  The other attorney also had a FL Default case, so he went first, saying “Judge, my situation is exactly the same.  They are seeking a continuance, I’m opposing it.  And this is the third request for continuance.”  With very little argument, the judge dismissed that case. 

I was next.  I said “Case 53, I’m in the same situation, judge.”  The judge asked the local counsel the reason for the continuance.  He said it was a VA loan (without explaining why that meant they needed a continuance).  Before I could get into my many arguments against a continuance (he was not counsel of record; in fact, there was no counsel of record, and the motion for continuance did not even come close to complying with Rule 1.610), the judge announced he was dismissing the case. 

The fill-in attorney then said he would file a notice of voluntary dismissal without prejudice, to which I responded “it’s too late, trial has started, and the judge has already dismissed the case.”  The judge interjected “it doesn’t matter, you’re the prevailing party,” not realizing that an involuntary dismissal under 1.420(b), as opposed to a voluntary dismissal without prejudice, should operate as an adjudication on the merits, i.e. a dismissal with prejudice.  But that wasn’t the time for that fight.  Figuring I could submit a written Order, I gladly left, having prevailed at trial in a foreclosure case. 

As I left, I felt a warped sense of justice.  My client’s Motion to Quash Service and Motion to Dismiss had never been heard, yet we had to attend three docket soundings and a trial, all of which were clearly premature.  The procedure was totally perverse.  Yet the court had pushed the case so quickly that even the Plaintiff wasn’t prepared to proceed, prompting the request for a continuance and the dismissal. 

What was perhaps even more bizarre, though, was how the court automatically presumed the case must be dismissed merely because the continuance was denied.  In a normal situation, where a continuance is denied, the next thing that happens is the Plaintiff tries the case!  Here, though, it was so clear the Plaintiff was not prepared to try the case that the judge automatically parlayed the denial of a continuance into a dismissal. 

Was this brilliant lawyering?  Not really.  Rather, this was another illustration of what I’ve been saying for a long time – if you fight foreclosure, and defend your case, you never know what good things may result.

Mark Stopa

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Are You a Robo-Signer?

You may not think you’re a robo-signer, and, hopefully, you’re not.  But in today’s climate of foreclosure chaos, you may be a robo-signer and not even know it!  That’s what West Palm Beach resident Liz Mills realized when she googled her name on-line, as the Palm Beach Post describes here.

Is this what it’s come to nowadays?  The fraud is so rampant that people have their signatures forged and don’t even know it? 

Here’s the article, another in a series of fine reporting by Kimberly Miller. 

West Palm Beach resident Liz Mills learned she was a robo-signer when a friend suggested she search her own name online.  On foreclosure blogs and in at least one newspaper article, the 51-year-old process server was singled out for the numerous and varying styles of her signatures on summons paperwork used to prove her efforts in locating home­owners in foreclosure.

Now Mills is coming forward in affidavits filed in three foreclosure cases, saying she didn’t sign the paperwork and never signed in front of a notary despite notary stamps affixed to the documents.

In one case, Mills allegedly signed a return of non-service, meaning the homeowner could not be found, for a foreclosure in Lehigh Acres near Florida’s west coast – a town where Mills said she has never been.

“I’m not really sure what’s going on with all of this or what could happen, but it’s upsetting because if you read the articles it’s like they are trying to make the individual process servers the fall guy,” said Mills, who became a process server 12 years ago. “I think they just wanted to move the paperwork along faster.”

Service of process is sometimes the first notice a homeowner has that the bank has filed for foreclosure .  Sloppy service or “sewer service,” as some defense attorneys call bad service of process, can leave a homeowner in the dark and defenseless until after the final judgment and a notice of sale is sent out.

Defense attorney Tom Ice, of Royal Palm Beach-based Ice Legal, believes Mills’ testimony in the three cases could force them to be re-served, sending the banks back to square one in the proceedings.  “It’s always bothered me that a high number of my clients come in and say they didn’t know there was a lawsuit,” said Ice, who is defending the homeowners in the cases.

With the crush of foreclosures statewide, process service has become big business. Once entrusted only to sheriff’s deputies, summonses may now be handled by special process servers certified by the court. The servers often work for larger companies that dole out the legwork.

Mills worked for several process service companies, including Miami­-based Gissen & Zawyer Process Service Inc.

The Florida Attorney General’s Office is investigating the company after allegations of backdating returns of service, improper billing practices and filing questionable affidavits with the courts.

Mills said she believes her signatures were forged on documents because she has a short name that’s easy to sign.

But Alan Rosenthal, an attorney defending Gissen & Zawyer, said the company believes the documents in question in the Mills cases bear her true signature.

“Gissen & Zawyer does not have any of its personnel sign affidavits of service other than the process server whose name is on the signature line, and does not condone such behavior by anyone who works for them,” Rosenthal said. “Gissen & Zawyer believes the signatures on the Liz Mills affidavits are hers.”

Process service company Caplan, Caplan and Caplan, which Mills also worked for and is involved in one of the cases, had no comment.

While Mills’ affidavits attesting to forged documents directly affect three foreclosures, there could be an impact on other cases that bear her name.

Judges have recently dismissed foreclosures based on bad service of process, although the cases can usually be refiled.

A 4th District Court of Appeal decision in December sided with the homeowner, based on paperwork that contained an illegible grouping of numbers – either the server’s identification number or the time of service. Both are required by state statute.

Mills, a former waitress, said she became a process server because she was a single mom and it offered a flexible schedule.

The typical charge for process service is $45, about $10 of which goes to pay Mills, who may have to make several visits to a home.

When Gissen & Zawyer didn’t think she was working fast enough, she said, she was called to Miami for a conference.

“They stood there and screamed at me that I was not serving their work fast enough,” said Mills, who worked for the company about 10 months.

Ice said the reprimand shows speed was valued over thoroughness.  “These were processed like an assembly line,” said Ice, whose firm handled the 4th DCA case. “The pressure was not just on Mills. It’s on all of the process servers to do whatever it takes to get the job done quickly.”

Mark Stopa

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Mediation in Foreclosure Cases

Mark Puente of the St. Pete Times has a nice write-up on what he calls Problems with Foreclosure Mediation.  The article is here and is quoted, below. 

I’m quoted in the article, essentially agreeing there are problems with the mediation process, and I stand behind that.  However, for me, the problem is far more than the banks’ informational advantage through document production and file access (or lack thereof).  In my view, the mediation process does not work in foreclosure cases because mediations take place too soon. 

The mediation process works (in non-foreclosure cases) because both sides fear a risk of losing the case if it goes to trial.  This is why every mediator says “you never know what the judge/jury will do” – and it’s true.  We don’t know.  In your typical case, either side could win.  But in foreclosure cases, the dynamic is totally different.  When mediation takes place, banks think they will win the case (at summary judgment, just like they usually do).  As a result, they perceive no risk of losing the case and have little to no incentive to settle at mediation. 

The problem is largely in the timing.  In foreclosure cases, the mediation process is designed to take place within the first 60 days.  In non-foreclosure cases, mediation usually takes place much later; often just before trial.  By mediating right before trial, the parties all realize that if they don’t settle, they will go to trial (and face the risks associated with losing).  This “all or nothing” proposition is scary for most litigants, encouraging settlements.  Until the mediation process is set up that way in foreclosure cases, I fear it will continue to be a process that does little more than frustrate and disappoint well-intentioned homeowners.  

Here is the article …

A program set up to prevent foreclosures provides greater access to financial records for bank attorneys than defense lawyers in Pinellas and Pasco counties, those defending homeowners say.  Since the mediation program started in August, defense attorneys say they haven’t had electronic access to the records even after their clients provided the court-ordered information to mediators. That has put them at an unfair disadvantage.  Defense attorneys also say banks are dictating the dates and times of the mediation sessions without checking the schedules of opposing counsel and homeowners.

Mark Stopa, a St. Petersburg foreclosure defense attorney, said the lack of access to records gives banks an upper hand in the process.

“It is a problem,” he said. “The whole process is inequitable and not doing what it was intended. I am not happy or excited about the process.”

In Hillsborough County, defense attorneys receive access to the case information once they prove representation.

Ron Stuart, spokesman for the Pinellas-Pasco judicial circuit, said the access issue is being remedied. He urged patience as the remaining glitches are being resolved. He acknowledged that court officials knew about the different levels of access when the program started. Clearwater-based Mediation Managers Inc. operates the program in Pinellas and Pasco counties.

“We were going into an avenue that was all new to us,” Stuart said. “It’s in the hands of Mediation Managers. They’re trying to get it solved as quickly as they can.”

The high court ordered the state’s 20 judicial circuits in late 2009 to sponsor mediation sessions between homeowners and lenders to reduce foreclosures. The program applies to owner-occupied, residential properties and aims for a quick resolution.  Lenders pay a $750 fee for each case. A successful mediation could lead to a modification of the mortgage loan, such as a lower interest rate or a time extension for the borrower. Some people still will lose their homes.

Mediation Managers immediately notified court officials about the access problem when defense attorneys complained last month, said Dick Rahter, the nonprofit’s president. The technology needs to be improved so defense attorneys can get access to information about their cases, but not private records in all cases, he added.

Nobody, Rahter said, anticipated this problem.  “The policy is being looked at and may change in the near future,” he said. “I was always concerned about that from the beginning.”

Bank attorneys, he said, are not controlling the scheduling process. Some problems developed when defense lawyers didn’t notify the mediation program about representing a client, Rahter said.  He acknowledged that some scheduling conflicts have slipped through the cracks.  “It’s kind of like a juggling act,” Rahter stressed. “We’re doing our best.”

Mark Stopa

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When foreclosure lawsuits are frivolous

Florida’s Second District Court of Appeal issued a very significant ruling today that helps frame the arguments for many foreclosure cases in Florida.  Here’s the backdrop …

A Hillsborough County judge appropriately dismissed a foreclosure lawsuit because the bank lacked standing to sue.  Having prevailed in the lawsuit, the defendant moved for attorneys’ fees under Fla. Stat. 57.105, asserting the bank and its lawyers knew or should have known the lawsuit lacked the requisite legal or factual support.  In layman’s terms, the defendant alleged the lawsuit was frivolous, and since the bank’s lawyers knew it, the lawyers and the bank should pay the defendant’s attorney’s fees.  When the Hillsborough judge denied a fee award, the defendant appealed. 

The Second District reversed the Hillsborough judge’s order, finding the lawsuit was frivolous and the defendant should have been awarded attorneys’ fees (from the bank and the bank’s lawyers).  Why is this so significant?  Well, it’s not easy to get attorneys’ fees against a lawyer as a sanction.  Fla. Stat. 57.105 sets forth the circumstances where it can happen, but judges (who are lawyers themselves) typically don’t like awarding sanctions under the statute. 

The point here, though, isn’t about attorneys’ fees.  The point is that the Second District is saying that certain legal principles in foreclosure cases are so well-established that the banks and their lawyers subject themselves to sanctions if they contend otherwise.  This is earth-shattering news because, candidly, these are arguments that Florida foreclosure defense attorneys make on a regular basis.   

The fact pattern in this case was one I see often.  The bank filed suit for foreclosure and to re-establish a lost note.  As the case progressed, the bank could not prove it was the owner or holder of the Note.  The note was lost (and hence not in the bank’s possession), and an Assignment of Mortgage had not been recorded in the Hillsborough County Public Records as of the date the Complaint was filed.  Essentially, the bank could not prove it had standing to foreclose as of the date the lawsuit was filed.  In the words of the Second District:

Because J.P. Morgan did not own or possess the note and mortgage when it filed its lawsuit, it lacked standing to maintain the foreclosure action. See Bank of N.Y. v. Williams, 979 So. 2d 347, 347 (Fla. 1st DCA 2008); Jeff-Ray Corp. v. Jacobson, 566 So. 2d 885, 886 (Fla. 4th DCA 1990). It follows that when J.P. Morgan filed its mortgage foreclosure action, it knew or should have known that its action was unsupported by the material facts necessary to establish the claim.

Based on these facts, the Second District concluded not only that the foreclosure lawsuit was appropriately dismissed, but that the bank and its lawyers were deserving of sanctions, i.e. payment of attorneys’ fees to the defendant!  This is huge news, so much so that it will impact my arguments in court on a daily basis.  Now, every time I have a case with this fact-pattern (and I have many), I’m going to tell the presiding judge not only that dismissal is required for lack of standing, but that the law is so well-established in this regard that appellate courts have required sanctions for the bank filing the suit in the first place.  Again, the point isn’t about sanctions or attorneys’ fees, but to make judges realize that the law in this arena is clear, and foreclosures can’t happen upon such facts.  I assure you – judges will open their eyes when they realize an appellate court issued sanctions against a lawyer. 

So what are the facts?  Well, this is the fact-pattern I’ll be looking for: (1) a foreclosure lawsuit where plaintiff is not the original mortgage holder; (2) no assignment of mortgage as of the date the suit was filed; and (3) no indorsement to plaintiff/indorsement in blank as of the date the suit was filed.  When presented with such a fact pattern, Florida courts should – no, *must* – dismiss foreclosure lawsuits.  

One note – notice how the Second District emphasized the bank’s lack of standing “when it filed its lawsuit”?  This is no coincidence.  There is a well-established line of cases holding that a plaintiff cannot acquire standing to foreclose after filing suit.  Hence, if the plaintiff obtained an indorsement/assignment after the suit was filed, and did not have the indorsement/assignment beforehand, dismissal is still required, even if the original note is in thecourt  file.  The Second District did not explicitly say dismissal is required even if the original note is in the file, but that’s what they mean when they talk about the bank not having standing “when it filed the lawsuit.”  It doesn’t matter if the note shows up afterwards – it matters if the bank had the note when it filed suit.  


Mark Stopa

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The Foreclosure Mess – Florida Judges Can Do Better

The title of this blog is not my verbiage – it’s the title of the most recent media article that criticizes how judges are handling foreclosure lawsuits in Florida.  The article concentrates heavily on the perverse foreclosure procedures and rulings in Lee County, including the premature “docket soundings” that I’ve blogged about previously. 

I encourage you to read the entire article, but here’s a good synopsis of the total apathy exhibited by some Florida judges in foreclosure cases.  One Fort Myers judge, when confronted with a motion by the bank to temporarily suspend a foreclosure case because it was questioned the accuracy of its own filings, denied the motion! 

Think about that.  This was one of the rare instances where a bank tried to clean up its misconduct, and halt a foreclosure while it evaluated the propriety of its actions, yet the judge basically said “I don’t care – just finish the foreclosure.” 

Respectfully, some judges need the judicial canons by which they are bound.

Canon 1 – A Judge Shall Uphold the Integrity and Independence of the Judiciary

Canon 2 – A Judge Shall Avoid Impropriety and the Appearance of Impropriety in all of the Judge’s Activities

Canon 3 – A Judge Shall Perform the Duties of Judicial Office Impartially and Diligently

Canon 4 – A Judge May Engage in Activities to Improve the Law, the Legal System and the Administration of Justice

Canon 5 – A Judge Shall Regulate Extrajudicial Activities to Minimize the Risk of Conflict With Judicial Duties

Canon 6 – Fiscal Matters of a Judge Shall be Conducted in a Manner that does not Give the Appearance of Influence or Impropriety; etc.

Canon 7 – A Judge or Candidate for Judicial Office Shall Refrain from Inappropriate Political Activity

Mark Stopa

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When Loan Modifications Fail, Try Bankruptcy

I’ve read article after article about the inability of homeowners to obtain meaningful loan modifications, and these stories mirror the experiences I see as a foreclosure defense attorney.  In fact, in recent weeks, I’ve come to believe bankruptcy is a more appealing option, for many homeowners, than constantly beating your head against a wall trying to get a loan modification that probably isn’t ever going to happen.  If you’re unemployed and/or seriously in arrears, this probably isn’t a close call – a loan modification is so unlikely that bankruptcy is the far more pragmatic option.

Today, I just read an article that concludes the same thing.  The article is out of the Pittsburgh Post-Gazette, but the process works the same way in Florida.  The point, essentially, is this – if you can’t get a loan modification, bankruptcy may be the next-best option. 

Even if you don’t like the sound of “bankruptcy,” there is no harm in calling Stopa Law Firm for a consultation.  It’s free, and you may be surprised at how bankruptcy can help you.  Some people don’t like the stigma of “bankruptcy,” but in today’s economy, you can’t make financial decisions about what others may think – you should do what’s best for you and your family.  Call us for a free consultation to help decide if bankruptcy is the best option for you. 

Here’s the article…

Attorneys say bankruptcy court more effective than many loan modification efforts
Monday, December 20, 2010
By Tim Grant, Pittsburgh Post-Gizette

Trying to work with a lender to modify an existing mortgage can be so onerous and complex that many borrowers give up. And it’s not much easier for lawyers who work on behalf of clients facing foreclosure.

“What we have found is that it’s easier to take someone facing foreclosure into bankruptcy because the modification process has no teeth,” said Alan Patterson, a partner at the Gross & Patterson law firm, Downtown.

“As attorneys, we don’t seem to have the ability to force banks that are foreclosing to modify the terms of their loans,” Mr. Patterson said. “There’s really no one to talk to on the mortgage side to get anything accomplished.”

The federal government has tried to encourage lenders to modify troubled loans in an effort to get the economy back on track, but many borrowers remain mired in red tape even with help of an attorney.

Homeowners saddled with payments they can’t afford are reporting that mortgage lenders are not always easy to deal with: Many of them lose paperwork. Their loan officers are rude. Borrowers can never talk to the same representative twice and sometimes wind up spending all their limited resources making payments to save a house while relying on promises lenders make that don’t come to pass.

“Customers looking to obtain a loan modification and use legal counsel to assist them will find it is extraordinarily expensive,” said Ron Roteman, a partner and business and bankruptcy attorney at Stonecipher Law Firm, Downtown.

The time required to get a loan modification is very lengthy and chance of success are about 50-50.

“Dealing with lenders is very frustrating,” Mr. Roteman said. “It’s very difficult to have a conversation with the ultimate decision-maker. The file seems to get passed from one company representative to another.

“It requires the owner or their attorney to repeat the story every time they talk to someone,” he said. “The whole process is highly undignified.”

In Allegheny County, homeowners facing foreclosure can resolve their problems with lenders through the “Save Your Home” program established in January 2009 by President Judge Joseph James.

Participation in the program cannot start until the lender files a Mortgage Foreclosure Complaint action against the borrower in Civil Court.

When that happens, the sheriff’s department will serve the borrower with the foreclosure paperwork along with an “urgent notice” advising the borrower of the Mortgage Foreclosure Program along with a hot-line telephone number to the Allegheny County Department of Economic Development.

Counseling agencies will contact the borrowers within 24 hours to accept them into the program and schedule a conciliation conference before Judge Michael E. McCarthy, head of the foreclosure division.

Judge McCarthy will sign an order that temporarily prevents lenders from being able to continue the foreclosure process while housing counselors try to help the borrowers to reach an agreement with their lenders.

“I can’t predict the likelihood of a loan modification because it’s really on a case-by-case basis,” Judge McCarthy said. “But at least through the Save Your Home program, a counselor will carefully review your case.”

Edward Mermelstein, a real estate attorney and a partner at Rheem, Bell & Mermelstein in New York, said residential mortgage modifications usually involve a reduction in the borrower’s interest rate or principal loan amount or both.

“Since interest rates have dropped so dramatically in recent years, banks are more likely to entertain a discussion about dropping interest rates,” Mr. Mermelstein said.

“Banks are less inclined to reduce the principal unless there is a compelling reason to do so. One example would be if the house value has dropped so dramatically that it’s below the mortgage amount and the borrower is more likely to walk away,” he said.

As long as a homeowner is still working and earning an income, Mr. Patterson said he is more inclined to help them by filing Chapter 13 bankruptcy on their behalf.

While in Chapter 13 bankruptcy, he said, he could put together a plan that would allow the borrower to catch up on the mortgage arrears and save the house over the course of the plan.

“That scenario only works if the borrower is still employed,” Mr. Patterson said. “If they are not working and can’t make payments, there is no way to save the house even under a loan modification.”

Mark Stopa

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Mark Stopa’s Response to Palm Beach Chief Judge Blanc

I am in receipt of a letter written by Honorable Peter Blanc, Chief Judge of Florida’s Fifteenth Judicial Circuit (Palm Beach County), wherein Judge Blanc asks bank lawyers to comply with an administrative order regarding the Cancellation of Foreclosure Sales.  As Judge Blanc sees it, the problem is that his court system is burdened with administrative work caused by banks routinely cancelling foreclosure sales at the very last minute.   

I read Judge Blanc’s letter, and, candidly, I am troubled – on a number of fronts.  As such, I wrote a Response, which is found below.

My primary bone of contention is this – the eleventh-hour cancellation of foreclosure sales is a much, much bigger issue than the administrative work that results for the court system.  I don’t want to sound disrespectful, but I believe Judge Blanc has lost the forest for the trees here.  In other words, are the last-minute cancellations of foreclosure sales causing problems for the courts?  Undoubtedly.  But rather than telling banks to cancel the sales sooner, shouldn’t people in positions of authority, such as Judge Blanc, be trying to evaluate why these foreclosure sales are being cancelled and try to do something to change the process? 

Personally, I find it absurd that thousands of homes are sitting, empty, abandoned, going further and further into disrepair (a result of homeowners being scared into vacating possession via a foreclosure judgment yet the banks cancelling the foreclosure sale and not taking title), yet the Chief Judge overseeing it all is only concerned about the impact on court staff. 

Respectfully, shouldn’t we be doing something to address the fact that homeowners are being dispossessed yet the homes they’re being forced to vacate are sitting unoccupied (because the banks won’t conduct foreclosure sales and won’t take title)? 

Am I the only one who finds it absurd that Floridians are being evicted yet banks aren’t taking title and these homes aren’t going back on the market? 

What does a foreclosure accomplish if the home sits, unoccupied? 

In his letter, Chief Judge Blanc indicates that effective January 3, 2001, all affidavits in support of summary judgment in foreclosure cases “shall include as an attachment copies of payment records upon which the affiant relies to support the motion,” as required by Fla.R.Civ.P. 1.510(e).  Unfortunately, though, Chief Judge Blanc is not requiring this because this is the law requires it (and judges in his circuit have been overlooking this requirement).  Rather, the judge’s concern is “the recent trend of post-judgment cancellations caused by concerns with the content” of these affidavits. 

What does that mean, exactly?  As I read it, Chief Judge Blanc is directing that Rule 1.510(e) be followed, per the law, only because of his concerns about the eleventh-hour cancellations of foreclosure sales, which burden court staff.  In other words, as I read it, Judge Blanc is saying “I’m requiring that the law be followed, not because it’s the law and must be followed, and not because there are serious questions about the propriety of these affidavits, but because the failure to attach documents to summary judgment affidavits is causing foreclosure sales to be cancelled, burdening court staff, and I don’t want my court staff burdened.”  In fact, it seems to me that the judge is advocating for the banks, as if he’s saying “attach these documents to summary judgment affidavits so these foreclosure sales can go forward and not be cancelled.” 

Respectfully, judge, is this what it’s come to?  Aren’t judges supposed to follow Rule 1.510(e), requiring documents be attached to affidavits in foreclosure cases, because it’s the law?  Particularly given the legitimate concerns about the propriety of these affidavits, shouldn’t you follow the law because it’s the law?  Respectfully, I can’t believe I’m reading a memo directing that the law be followed because to do otherwise burdens court staff. 

Perhaps more significantly, aren’t you concerned about the cancellation of foreclosure sales for reasons besides the impact on your court staff?  Respectfully, the entry of foreclosure judgments – and cancellations of foreclosure sales – is impacting hundreds of thousands of Floridians.  Arguably, this is the single biggest issue in our economy today …  yet you’re only viewing the issue from the perspective of the burden on your Court staff?  Respectfully, that disappoints me.  After all, if people in positions of authority, such as yourself, won’t take a “big picture” view, then who will? 

In my view, the fact that banks are systematically pushing foreclosures yet not taking title is yet another reason for Florida courts to slow down in the prosecution of foreclosure cases.  Respectfully, what’s the rush?  If banks aren’t taking title, and homes are sitting abandoned, why throw a neighbor on the streets?

Mark Stopa

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Fannie and Freddie … “Move along, nothing to see here.”

Kimberly Miller of the Palm Beach Post has been on top of the emerging foreclosure stories as any reporter in the country.  Here’s her article today on how Fannie and Freddie have resumed foreclosure sales, essentially ignoring the pervasive fraud and title problems with which we’ve become all too accustomed.  …

By Kimberly Miller; Palm Beach Post Staff Writer

Fannie Mae and Freddie Mac gave the go-ahead this week to restart sales of their foreclosed properties, which had been on hold since September when it was revealed that flawed or fraudulent court documents may have been used to repossess homes.

Brokers received memos Wednesday from the government-sponsored enterprises saying that the homes could once again be marketed and sales finalized on properties already under contract. Fannie Mae’s letter explains that evictions and lockouts are still suspended on its properties.

In South Florida, the move releases thousands of houses for sale that were removed from the market earlier this fall, leaving buyers and Realtors in limbo. 

Brokers were encouraged in Fannie’s letter to contact buyers who chose to cancel delayed contracts to see if they are still interested.  “I’ve already sent e-mails to clients who opted out,” said Bill Richardson, managing broker for the Keyes Company in Boca Raton and president of the Realtors Association of the Palm Beaches. “I had numerous people put on hold, and some of them canceled because it was very uncertain when the auditing process would be done.”

A Lake Worth broker said she received a similar memo from Freddie Mac on Wednesday, but a Freddie spokesman said he could not confirm it today because too many people were off for the Thanksgiving holiday.

Amy Bonitatibus, spokeswoman for Fannie Mae, said the decision to move forward with the sales was made after a review of property acquisitions, including those handled by the Plantation-based foreclosure firm of David J. Stern.

Fannie Mae and Freddie cut ties with the firm last month after former employees, one of whom had been fired, gave sworn statements to state investigators about wrongdoing at the company such as forged signatures on foreclosure documents and the hiding of flawed files from auditors. The Stern firm is one of four so-called “foreclosure mills” in Florida under investigation by the state attorney general’s office.

“Fannie Mae remains committed to ensuring that borrowers are treated fairly in accordance with the legal process and to allowing new homebuyers to close on transactions in a timely manner,” Bonitatibus said.

But some homeowner advocates said there are still too many unanswered questions about whether foreclosures have been handled legally. Concerns about obtaining a clear title are legitimate, said Tampa-based foreclosure defense attorney Mark Stopa.

The foreclosure paperwork problems already have led at least one former homeowner to challenge his foreclosure in Pinellas County. The man’s home, repossessed in 2008 by Bank of America, has since been sold to a family who has had to hire an attorney to defend their title to the property.

“There are still legitimate questions about the validity of title to these homes,” Stopa said. “Unfortunately, too few people in positions of authority care. The fraud is there and we all know it, but too many people think it’s easier or better to ignore it than fix it.”

Fannie Mae and Freddie Mac own or guarantee about half of all U.S. mortgages, or 31 million home loans worth more than $5 trillion.  About 12 percent of Fannie Mae loans in Florida are delinquent, while Freddie Mac has 17 percent of its Florida mortgages in arrears.

The embargo on selling foreclosed properties likely added to last month’s slump of existing home sales, which dropped 12 percent in Florida compared to September and 21 percent compared to October 2009.

Mark Stopa

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