Posts Tagged ‘robo-signers’

Making Banks Prove Their Case

Many homeowners wonder how a foreclosure defense attorney can help when they’re behind on monthly mortgage payments.  If I had to explain what I do, and how I help, in just one sentence, it would be this: 

I force the banks to prove their case.

That may sound simple, but if it were, then why are banks so reluctant to go to trial?  Why do contested cases take so long for banks to prosecute?  And when these cases do approach trial, why do banks often dismiss them voluntarily? 

Many consumer advocates think the banks are trying to hide something truly nefarious, and in some cases, that may be.  More often, though, I think the explanation is more simple – banks struggle to prove an entitlement to foreclose because they lack the requisite evidence. 

A wonderful illustration of this is seen in the recent decision by Florida’s Fourth District Court of Appeal in Glarum v. LaSalle Bank. In that case, the homeowner admitted he was in default on mortgage payments but disputed the amount owed.  As so frequently happens in foreclosure lawsuits throughout Florida, the bank filed an affidavit in support of a motion for summary judgment, asserting the amount owed exceeded $340,000 (based on data entries in the bank’s computer system).  The lower court granted that motion, agreeing the bank was entitled to foreclosure.  The appellate court (the Fourth District) reversed, ruling the bank’s evidence – the affidavit – was insufficient to establish a right to foreclose as a matter of law. 

In support of its ruling, the Fourth District began with the basic proposition that affidavits and other information used for summary judgment must be admissible in evidence, just as if it were a trial.  See Fla.R.Civ.P. 1.510(c).  The court then concluded the affidavit was not admissible, and not a basis upon which to grant foreclosure, because, in its words:

[the person who signed the affidavit] did not know who, how or when the data entries were made into Home Loan Service’s computer system.  He could not state if the records were made in the regular course of business.  He relied on data supplied by Litton Loan Servicing, with whose procedures he was even less familiar. [The person who signed the affidavit] could state that the data in the affidavit was accurate only insofar as it replicated the numbers derived from the company’s computer system.  Despite [his] knowledge of how his company’s computer system works, he had no knowledge of how that data was produced, and he was not competent to authenticate that data.  Accordingly, [his] statements could not be admitted under section 90.803(6)(a) [the business records exception to the hearsay rule] and the affidavit of indebtedness constituted inadmissible hearsay. 

Without an admissible affidavit, the Fourth District concluded the bank was not entitled to a foreclosure and reversed the lower court’s Final Judgment of Foreclosure. 

If this sounds complicated, think about it this way.  Courts don’t determine the outcome of lawsuits based on information from people who lack personal knowledge of the facts at issue in the lawsuit.  For example, I couldn’t go testify as a witness at a trial and say “I didn’t see the car accident, but my friend told me the driver of the blue car ran the red light, and here are medical bills showing the amount of the victim’s medical expenses.”  It simply doesn’t work that way.  My friend would need to testify to what he saw at the accident scene, and the victim or his doctors would need to provide the proof of the medical expenses. 

The situation in foreclosure cases is no different (and, fortunately, the Fourth District did not apply a different set of rules simply because this was a foreclosure case).  To establish the amount owed on a note/mortgage, the bank must introduce admissible evidence.  Again, this sounds easy, but Glarum shows how this can be a huge problem for banks. 

Think about it this way.  We all know that, in the vast majority of foreclosure cases, the bank that’s suing wasn’t the original owner/holder/servicer of the mortgage.  Consequently, the bank that’s suing can’t simply go into court and say “this is how much the homeowner owes us” without relying on some sort of documents from the prior bank(s)/servicer(s).  In other words, as Glarum explains, an employee of the current bank can’t just say “this is what the prior bank told us was owed” or “this is what our computer system says the prior bank was owed.”  To prove its case, the current bank would need to introduce evidence from an employee of that prior bank (showing the amount owed), or, at minimum, introduce evidence from an employee of its current bank establishing some sort of legitimate procedure as to how the amount from the prior bank was input into its computer. 

As a practical matter, this sort of thing never happens.  Banks rely on their own employees to win a foreclosure case – they don’t want to have to track down information from employees of other banks.  Heck, sometimes the banks can’t do this, even if they wanted to, because the prior bank(s) no longer exist and/or the current bank doesn’t even know who the prior bank(s) were.  (Wouldn’t it be an awesome irony if the MERS system kept banks from proving their cases because they didn’t know which banks owned the notes/mortgages previously and didn’t know who to contact to obtain admissible evidence?)

Lest you doubt this is a huge problems for banks, check out this posting from one of Florida’s foreclosure mills.  They’re running scared from the Glarum opinion, desperately trying to sway judges to change this decision due to the negative consequences it would have on banks’ ability to prosecute foreclosures.  In other words, the banks want the courts to apply a different set of laws to foreclosure cases because if the law is followed, and banks are made to prove their entitlement to foreclosure with admissible evidence, they will struggle to do so. 

Back to my original point.  In its simplest form, foreclosure defense lawyers force banks to prove their case – to prove their entitlement to foreclosure.  Often, as you’ve seen here, that’s harder to do than you’d think, and that’s why a competent defense lawyer, who is able to point out the flaws in the bank’s evidence at each stage of a foreclosure lawsuit, is so important. 

Mark Stopa

Posted in Main | 2 Comments »

Mark Stopa’s Response to Chief Judge Thomas McGrady’s Press Release

I’ve read and re-read the Press Release of Honorable Thomas McGrady, Chief Judge of Florida’s Sixth Judicial Circuit.  I understand where Judge McGrady is coming from, and I agree with him in certain respects.  In others, however, I respectfully but strongly disagree, so much so that I feel compelled to respond.  

First off, I agree that many judges should be commended for “upholding their oath of office” and “following the law.”  Florida’s judges are facing an unprecedented challenge vis a vis the incredible volume of foreclosure cases, and many judges have performed admirably, particularly those in the Sixth Judicial Circuit over which Judge McGrady presides.  Let’s put it this way – my biggest frustration as a foreclosure defense attorney is that judges so routinely treat foreclosure lawsuits much differently than other lawsuits.  With a few glaring exceptions (who I will not name but I’m sure Judge McGrady knows who I’m talking about), the judges in the Sixth Judicial Circuit generally do not act this way, and that’s certainly a good thing.  

That said, I respectfully but firmly disagree with Judge McGrady’s broad-sweeping statements regarding foreclosure cases in the entire state of Florida.  With all due respect, Judge, you may realize what’s happening in the Sixth Judicial Circuit, but I don’t believe you know what’s happening in other counties, so I don’t think it’s fair for you to criticize anyone who is commenting on events in other counties in Florida.  

Every day, it’s a battle for foreclosure defense attorneys such as myself to ensure the most basic rights for homeowners in foreclosure cases.  Many times, it feels like we aren’t just battling the banks and their lawyers, but the judges as well.  Sometimes, I half-expect these judges, as a hearing concludes, to rip apart their robes and reveal a “Bank of America” T-Shirt exposed underneath.  You may think that sounds absurd, but, all too often, that is the climate I’ve seen and felt as a foreclosure defense lawyer in Florida.  

You obviously feel passionately that these problems are not pervasive in the Sixth Judicial Circuit, and I’m not going to argue with you about that.  Instead, I’ll say this – as for the rest of Florida, you haven’t seen what I’ve seen:

– You haven’t seen a Palm Beach senior judge, at the start of a rocket docket of more than 100 summary judgment motions, assert he’s “heard it all before,” limit the arguments of homeowners and their attorneys to sixty seconds, even going so far as to count down the time as the minute concludes.  You may think there aren’t “robo-judges” in Florida, but how else would you define this?   Remember – those were summary judgment motions.

– You haven’t seen a senior judge in Tampa let the bank’s lawyer argue for 4 pages of transcript at a hearing on a Motion for Ssummary Judgment, then limit the defense argument to 4 lines of transcript, cut off the attorney after those four lines, and enter summary judgment without reading or looking at the opposing affidavit, written response, motion to vacate default, or motion to stay for military status (justifying his conduct in the face of due process objections by asserting it was “too little, too late” since the case had been pending for two years). 

– You haven’t seen Lee County judges systematically and sua sponte require docket soundings in all foreclosure cases, immediately after the cases are filed (without clearing the date with counsel and without allowing phone appearances), and require all discovery be completed in two months, for the purpose of granting summary judgment or setting trial, even though the case is not at issue and the homeowner’s motion to dismiss has not been adjudicated. 

– You haven’t been told, by a senior judge in Hernando County, that a plaintiff’s attorney can schedule a summary judgment hearing whenever he wants, without clearing the date with defense counsel (or even knowing defense counsel has a conflict), and that if defense counsel has “a problem with it,” he needs to file a motion to strike the hearing.  You didn’t hear this judge assert, when defense counsel complained about the procedure, that it was his “job,” at the instruction of the Florida Supreme Court, to dispose of foreclosure cases as quickly as possible.  

– You haven’t tried to set hearings on defense motions in foreclosure cases, only to have court assistants or administrators tell you that the available hearing times were reserved exclusively for plaintiffs’ motions.  Of course, there is never a time set aside for defense motions – only for the banks’ motions.

– You haven’t tried to attend foreclosure hearings in Tampa (Section I, on the fifth floor) only to be told those hearings are not open for public access. 

You haven’t received dozens of conformed Orders on disputed matters, ex parte, without notice and without hearing, which most Florida judges sign routinely, even when it is obvious that these Orders are not agreed Orders, usually without giving defense counsel a chance to object.  For instance, I once had a situation in Tampa where I prevailed on a motion after a hearing and the Judge entered an Order in my client’s favor, I prevailed on rehearing and the Judge entered a second Order in my client’s favor, yet, weeks later, the bank’s attorney submitted an Order, ex parte, that reversed the Court’s rulings, and the judge executed it before I received a copy in the mail or a chance to respond  Respectfully, this never happens except in foreclosure cases, yet in the foreclosure context, it happens routinely. 

– You haven’t had a client have a Final Judgment of Foreclosure entered against him – hours prior to the beginning of the summary judgment hearing, then have the judge explain this was her “procedure.”

– You haven’t seen the Administrative Orders in Orange, Seminole, and Lee Counties, which systematically prohibit any phone appearances in foreclosure cases, in direct contravention of Fla.R.Jud.Admin. 2.530, which requires that phone appearances be granted for all hearings of 15 minutes or less absent good cause.  (It is my opinion that these Orders exist to make it harder for attorneys to defend homeowners and, hence, to cause more foreclosure cases to go uncontested).   

– You haven’t witnessed senior judges routinely reschedule hearings where the defense counsel is present but plaintiff’s counsel is not, yet systematically grant the relief sought by plaintiffs when plaintiff’s counsel is present and defense counsel is not.  This double-standard is, respectfully, gross, yet it happens on a regular basis throughout Florida courtrooms in foreclosure cases. 

– You haven’t successfully argued that a summary judgment hearing should be stricken from the calendar, had plaintiff’s counsel cancel that hearing pursuant to the court’s Order, yet have a senior judge enter a Final Judgment of Foreclosure (even though nobody was present at the hearing) because she did not even look in the court file or the docket, so she did not see that the hearing had been cancelled. 

– You haven’t watched a Brevard County judge repeatedly chastize foreclosure defense attorneys for filing motions to dismiss, arguing it was a “waste of time” and that counsel should be “trying to settle the cases,” then, when counsel responded that the motions to dismiss were sometimes granted, angrily retort that “accomplished nothing” because the bank could amend or re-file.  Of course, this judge gave no explanation how it was possible to “settle” cases with banks when judges such as himself make it so apparent that he is hostile towards homeowners. 

As I re-read your article, Judge, I’m troubled at the apparent insinuation that recent media reports and news stories are not based on fact.  Generally speaking, they are.  The media is not making up stories about foreclosure fraud and robo-signers.  These stories exist because of real events that have happened to real people.  Hence, the problem, in my view, is not that the media or foreclosure attorneys have misled the public into a negative perception about the judiciary, but rather that there are legitimate problems in how foreclosure cases are being handled in our courts.  That sounds harsh, but, respectfully, if nothing were amiss, then there would be no news stories. 

Essentially what I’m saying is this – I hear what you’re saying in your article, but I respectfully submit that your assertions, as well as your target audience, are misplaced.  Instead of trying to speak to the public at large, and assure them the judiciary is fair through your words, prove the judiciary is fair through actions.  Prove it by influencing other judges, throughout Florida, to handle the foreclosure crisis more like the Sixth Judicial Circuit.  Convince Lee County to stop issuing those Orders setting docket soundings at the inception of a case.  Tell Orange County to stop prohibiting phone appearances.  Help all Florida judges realize that disputed Orders should not be entered ex parte, even in foreclosure cases.  Convince all judges that it’s not fair to reschedule hearings where plaintiff’s counsel does not attend but to rule for the plaintiff when defense counsel does not appear.  Suggest that the Florida Supreme Court amend the rule on lack of prosecution in foreclosure cases, so as to dismiss foreclosure lawsuits that are languishing. 

As I see it, if you can use your influence to help fix the problem, you won’t feel the need to issue press releases like the one you did, as the public’s perception of the judicial system will take care of itself.  

Mark Stopa

Posted in Main | 14 Comments »

Wells Fargo admits more mistakes in foreclosure affidavits

As if we needed more proof that the banks’ foreclosure procedures are fundamentally flawed, Wells Fargo just announced it is re-doing affidavits in 55,000 foreclosure cases, as the original affidavits, executed by robo-signers, were flawed.  Lest you think 55,000 improper foreclosure filings is not a big deal, bear in mind – that’s just what Wells Fargo is admitting, based on its own, internal investigation.  If Wells Fargo is admitting to 55,000, you can bet the problem is far more widespread.

Posted in Main | No Comments »

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.

Posted in Main | 8 Comments »

New York Times – still talking about Florida foreclosures

The New York Times, arguably the top newspaper in the nation, is covering Florida’s foreclosure crisis on a daily basis.

Foreclosure Fraud in New York Times

I bet I exchanged 20 emails with Mr. Streitfeld before he wrote this article.  We’re all busy, but we have to keep feeding this information to the media.  They can’t write a story if they don’t know the facts.

Posted in Main | No Comments »

Breaking News – JP Morgan Chase halting foreclosures

Hot off the presses …

JP Morgan Chase is halting foreclosures, essentially for the same reasons as GMAC. 

That makes two of the biggest mortgage companies in the country who have openly admitted the affidavits that cause foreclosure judgments to be entered have not been done correctly.  In the words of the Chase spokesman:

“It has come to our attention that in some cases employees in our mortgage foreclosure operations may have signed affidavits about loan documents on the basis of file reviews done by other personnel — without the signer personally having reviewed those loan files,” said Tom Kelly, a Chase spokesman. “As a result, we have begun to systematically re-examine documents we have filed in current foreclosure proceedings to verify that the affidavits and other documents meet the standard of personal knowledge or review where that is required.”

The obvious question, of course, is:

When banks are admitting their evidence is faulty, how can judges keep entering summary judgments of foreclosure?

Posted in Main | 1 Comment »

Foreclosure fraud – from coast to coast

I just read this article and I loved it so much that I cut and pasted it below. From the suggestion of a foreclosure moratorium to the realization that taxpayers are now paying for investigations of foreclosure cases (which the greedy banks and their lawyers should have been doing on their own), this author “gets it.”  It’s great to see the media finally starting to side with homeowners.

posted by: Jessica Pieklo 6 hours ago

Foreclosure Fraud Expands to California

This week California officials demanded that Ally Financial Inc stop foreclosing on homes in the state after reports show the mortgage lender was violating the law.  The report comes on the heels of significant problems with GAMC foreclosures and shows just how little help consumers are getting in the foreclosure process.

Just cease-and-desist letter was the result of testimony from that Florida case where a foreclosure official admitted to signing thousands of documents in foreclosure cases without even reviewing the homeowners’ loan documents.

Attorneys general in Texas, Iowa, Illinois and Florida are also investigating the mortgage giant for similar instances of fraud.

The process now coming under scrutiny is known as “robo-signing” and one that is nothing short of fraud on the court.  The affidavits that get signed are executed, under penalty of perjury, that the signer has personal knowledge sufficient enough to warrant the extraordinary relief of re-taking possession of a person’s home.

The process also shows the significant economic machine that processing residential foreclosures has become.  Ultimately it is not just the homeowners that lose when this happens, it is the taxpayer.  We will now have to weed through hundreds of thousands of foreclosure proceedings to determine the fraudulent from the legitimate-a process that is supposed to happen before filing.  Had sufficient regulatory oversight of the lending industry existed, in any fashion after the meltdown of the housing industry, this is a crisis that would have been avoided.

Just to show how out of control those initiating foreclosure are, including the enormous banks involved, is news like this--homeowners having homes sold out from under them, without their knowledge, by lenders like Bank of America, despite the fact that the homeowner didn’t have a mortgage at the time.

Put these stories together and what emerges is a singular narrative of greed at the expense of individual homeowners.  The foreclosure process is expensive and ultimately damaging for the overall economic health of our communities.  But there’s not enough incentive for banks and attorneys to work with homeowners, despite the fact that many, if given a fair opportunity, would be able to save their homes. 

Given the scope of the foreclosure industry, unfortunately I think we are only going to hear more of these kinds of stories.  Given the scope of the fruad that has come to light, Congress should demand a halt on all residential foreclosures until the legitimate cases can be sorted from the illegitimate ones.

Posted in Main | 1 Comment »