Posts Tagged ‘stop foreclosure Tampa’
Posted on July 31st, 2012 by Mark Stopa
I’m sorry I haven’t posted much in recent days. You see, I’ve been really busy procuring summary judgments for some of my clients. No, not summary judgments of foreclosure (against my clients) … summary judgments in my clients’ favor. Summary judgments as in … case over … case dismissed … you lose, bank – do not pass go, do not foreclose, and do not collect any money. Obviously this doesn’t work every time, but as the Orders below reflect, it certainly works sometimes.
What are the arguments? How have I been able to do this? Well, take a look at the Orders, all of which are also accessible via public records:
Order Granting Summary Judgment
Order Granting Summary Judgment
Order Granting Summary Judgment
Order Granting Summary Judgment
Order Granting Summary Judgment
Order Granting Summary Judgment
Order Granting Summary Judgment
Essentially, there are two arguments … two ways (at least) I believe homeowners can argue they’re entitled to summary judgment and the outright dismissal of a foreclosure case.
The first is predicated on a topic I’ve posted about many times – a plaintiff’s obligation to prove not just its standing to foreclose, but its standing to foreclose as of the time it filed suit. There are many recent cases which have illustrated this proposition of law, reversing summary judgments of foreclosure entered for the banks when they failed to prove the requisite standing at inception. My favorite, though, is McLean v. J.P. Morgan Chase Bank, N.A., 79 So. 3d 170 (Fla. 4th DCA 2012). The reason I like McLean so much is because that case makes it clear that the remedy when a foreclosure plaintiff cannot prove standing at the inception of its lawsuit is the outright dismissal of the case – without prejudice and without leave to amend. In other words, it’s not just that a plaintiff can’t win a foreclosure lawsuit without proving standing at inception; where the plaintiff cannot meet this burden, the defendant must prevail. In the McLean court’s words:
if the evidence shows that the note was endorsed to Chase after the lawsuit was filed, then Chase had no standing at the time the complaint was filed, in which case the trial court should dismiss the instant lawsuit and Chase must file a new complaint.
Following McLean, the argument for summary judgment is rather simple. If the Note attached to the Complaint was not endorsed, and there is no assignment of mortgage in the court file, but an original note with an endorsement and/or an assignment of mortgage shows up later, then the homeowner files a motion for summary judgment asserting this chronology. If the bank goes to the summary judgment hearing without evidence that it had an endorsed note or an assignment of mortgage before suit was filed, then summary judgment for the homeowner is proper.
But wait, one might argue. Isn’t it the moving party’s burden at summary judgment to conclusively disprove the non-existence of factual disputes, i.e. to conclusively prove the bank lacked standing when it filed suit? And isn’t that a high burden? Yes and yes. However, if a homeowner proves that the note attached to the Complaint lacked an endorsement, and that there was no assignment of mortgage before the suit was filed, then the homeowner has done just that. The burden would then shift to the foreclosure plaintiff to present some evidence that it had an endorsed note and/or an assignment at the time the lawsuit was filed. If it cannot, then the homeowner should prevail.
Sound too good to be true? Read this and this. So you’re aware when you’re making these arguments, among the local judges who have granted summary judgment in my clients’ favor on this argument: Honorable Amy Williams (St. Petersburg), Honorable Lynn Tepper (Dade City) and Honorable Robert Foster (Tampa). Obviously the facts of each case can vary, but it’s worth noting that these good judges were willing to look beyond the fact that a homeowner was alleged to be in default and strove to uphold the law.
The second basis for summary judgment is predicated on the bank’s failure to comply with a condition precedent to the filing of the lawsuit. A condition precedent is just what it sounds like – something a bank must do prior to filing a lawsuit. You see, many mortgages in the cases with which I deal (and the majority of mortgages in Florida) have a provision in them, typically in paragraph 22 of the mortgage, which requires the lender provide written notice to the homeowner of any alleged default and an opportunity to cure that default prior to filing suit – what I call a “notice and cure letter.” This paragraph typically spells out certain provisions which must be set forth in the letter, often like such:
22. Acceleration; Remedies. Lender shall give notice to Borrower prior to acceleration following Borrower’s breach of any covenant or agreement in this Security Instrument (but not prior to acceleration under Section 18 unless Applicable Law provides otherwise). The notice shall specify: (a) the default; (b) the action required to cure the default; (c) a date, not less than 30 days from the date the notice is given to Borrower, by which the default must be cured; and (d) that failure to cure the default on or before the date specified in the notice may result in acceleration of the sums secured by this Security Instrument, foreclosure by judicial proceeding and sale of the property. The notice shall further inform the Borrower of the right to reinstate after acceleration and the right to assert in the foreclosure proceeding the non-existence of a default or any other defense of Borrower to acceleration and foreclosure.
As a nice touch, paragraph 22 of most mortgages is written in bold, creating a good argument that the parties obviously intended for that provision to carry great weight in the scope of the contract.
So how can a homeowner use this to obtain summary judgment? Read paragraph 22 closely; there are a variety of ways. The simplest is when the homeowner shows the “notice and cure” letter required by paragraph 22 was not sent, and the bank can’t prove otherwise. When that happens, then summary judgment is proper. Also, if the letter was sent, but it did not say what paragraph 22 required it to say, then summary judgment would also be proper.
To illustrate, take a look at this Order Granting Summary Judgment, where the Court explained that the “notice and cure” letter did not specify what was necessary to cure the default (as the letter indicated that additional monies in unspecified amounts were owed above and beyond that set forth in the letter, leaving the homeowners guessing as to the amounts necessary to cure the default) and the letter did not indicate that failure to cure the default would result in a “foreclosure by judicial proceeding.” Mind you, those are just a few of the ways a letter could be deficient. Just off the top of my head, here are a few things I look for when I’m evaluating if a letter complies with paragraph 22:
– Was the letter sent to the homeowner’s correct address?
– Was at least 30 days’ notice provided (bearing in mind that if the notice is sent by mail, the homeowner obviously didn’t receive the letter on the day it was dated, though that may not matter depending on how “notice” is defined in the mortgage)?
– Is there some admissible evidence from the Plaintiff that the letter was actually sent (as opposed to merely being filed in the court file by plaintiff’s counsel)?
– Does the letter specify the amount necessary to cure the default, or does it make reference to additional, unspecified charges as to the amounts owed, leaving the homeowner in the dark as to the total amount he must pay to cure the default?
– Does the letter apprise the homeowner that a “foreclosure by judicial proceeding” may result if the default is not cured, or does it tell the homeowner that it may initiate a legal action? Many of the letters I’ve seen do the latter, and not the former, and several judges in Florida have found the letter deficient on this basis. In fact, Judge Amy Williams granted a summary judgment in one of my cases based on this distinction earlier today.
– Does the letter inform the homeowner of the right to reinstate after acceleration?
– Does the letter inform the homeowner of the right to assert in the foreclosure proceeding the non-existence of a default or any other defense to acceleration and foreclosure?
In my view, even if the bank satisfied some or most of these obligations, a homeowner should still prevail in a foreclosure lawsuit if the bank didn’t comply with all of them. Yes, all of them.
But that’s crazy, you say. The homeowner is in default, so the bank should win. This paragraph 22 stuff is so technical – would a judge really care about this? Fortunately, yes. This argument may be technical, especially if a letter was sent but it did not contain all of the requisite language. However, this is what the homeowner and the bank negotiated in their contract when the mortgage was entered. The fact that the banks drafted these mortgages, and paragraph 22 is usually bolded, make it all the more appropriate to hold the banks to the terms of their own contracts.
Though homeowners need not prove prejudice to prevail on this issue, there was/is a good reason for judges to enforce the terms of paragraph 22. Quite simply, under the terms of these mortgages, every homeowner is entitled to an opportunity to cure any default before facing foreclosure on his/her home. That’s the point of the letter, and the point of paragraph 22 – to ensure the homeowner knows about the alleged default and can fix it before facing foreclosure. Where the letter didn’t comply, the homeowner is deprived of that chance, and that’s simply not fair.
If you feel bad about making this argument, don’t. Frankly, one of the reasons I love making this argument is because insurance companies have been using it to screw honest homeowners for many years. You see, when homeowners make a claim for money under an insurance policy, insurance companies often deny coverage – not because there’s no coverage, but because that’s what they do to make money – deny coverage and force the homeowners to go to court. Then, once facing a lawsuit, insurance companies love to defend that suit by complaining that the homeowner failed to comply with the conditions precedent set forth in the policy, namely submitting to a proof of loss or an EUO (examination under oath). There are many cases where courts have ruled against homeowners, and in favor of insurance companies, not because insurance company was correct in denying coverage, but because the homeowners didn’t do what they were supposed to do before filing suit. See Goldman v. State Farm Fire Gen. Ins. Co., 660 So. 2d 300 (Fla. 4th DCA 1995); Edwards v. State Farm Fla. Ins. Co., 64 So. 3d 730 (Fla. 3d DCA 2011). While I hate how insurance companies have been able to do this, I love being able to use this case law in support of my arguments in foreclosure cases. After all, Florida courts have been requiring parties to comply with conditions precedent in a contract for many years, and have consistently granted summary judgments where they failed to do so. Though some might argue otherwise, there is no reason to treat foreclosure cases any differently. Hence, where a bank didn’t comply with the terms of paragraph 22, the court should dismiss the lawsuit for failure to comply with conditions precedent.
Sound too good to be true? Read this, this, this, this, this, and this. Among the judges who have granted summary judgment, and/or dismissed a foreclosure lawsuit based on this argument, are Honorable Lynn Tepper (Dade City), Honorable Amy Williams (St. Petersburg), Honorable Robert Foster (Tampa), Honorable James Barton (Tampa), Honorable Donald Evans (Tampa), Honorable John Schaefer (Clearwater), Honorable Walter Schafer (New Port Richey), and Honorable J. Rodgers Padgett (Tampa). Again, the facts of each case may vary, but you should rest assured that there are good judges in Florida willing to follow the law even if some would argue that dismissing a foreclosure lawsuit where the homeowner hasn’t paid his mortgage is inequitable.
Mark Stopa
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Posted on April 4th, 2012 by Mark Stopa
It’s a new ballgame, folks.
Remember my recent posts, including here and here, where I argued at length that a servicer could not prosecute a lawsuit without the trustee/agent ratifying the servicer’s actions? In my view, it’s not enough that the servicer says it has the authority to proceed on behalf of a trust – the servicer must prove it with evidence from the trust itself.
Unfortunately, this has not been happening in foreclosure cases in Florida. Instead of servicers proving their authority to act on behalf of a trustee, the servicers merely assert they have that authority, without any independent proof. This has prompted many consumer advocates, including myself, to wonder whether the plaintiffs named in foreclosure lawsuits even know these lawsuits are pending, a phenomenon many in the industry have called The Wizard Behind The Curtain.
Anyway, earlier today, Florida’s Fourth District issued an earth-shattering opinion, agreeing with everything I’ve been arguing in these regards:
In the mortgage foreclosure context, ‘standing is broader than just actual ownership of the beneficial interest in the note.’ … In securitization cases, a servicer may be considered a party in interest to commence legal action as long as the trustee joins or ratifies its action. … Here, the caption of the verified complaint states that the underlying action is brought by CW solely in its capacity as special servicer on behalf of U.S. Bank, N.A. … Although CW’s complaint is verified, it is verified by the SVP for CW – not by the real party in interest, the trust. CW relies on nothing more than its own allegations and affidavit to support its argument that it has standing to sue on behalf of the trust. This is insufficient evidence to prove that it is authorized to sue on the trust’s behalf.
Ellstno/Leetsdale, LLC v. CWCapital Asset Mgmt, LLC, Case No. 4D11-3151 (Fla. 4th DCA 2012) (boldface in original).
In light of this opinion, a servicer cannot prosecute a lawsuit on behalf of an alphabet soup securitized trust unless the servicer presents proof from the trust reflecting its authority to proceed.
Think about that for a moment. Let it simmer. How is the plaintiff going to prove that at trial? As I’ve been saying for a long time, I see two possibilities: (1) have the trustee so testify (in addition to the servicer, which means, yes, there must be two witnesses); or (2) produce a written, authenticated document showing the servicer’s authority to act on the trustee’s behalf with respect to that specific property.
This opinion should also dispel any notion that it is acceptable for a non-party servicer to verify a foreclosure complaint in lieu of the plaintiff doing so. The Elston opinion did not expressly so hold, but it clearly suggested as much. (“Although CW’s complaint is verified, it is verified by the “SVP” for CW – not by the real party in interest, the trust.”).
Personally, I love that the Wizard Behind the Curtain is finally being exposed. In my view, banks AND THEIR LAWYERS better think twice about prosecuting foreclosure cases based solely on the representations of a servicer. Clearly, the servicer must be able to prove its authority to prosecute that case with something besides its own affidavit.
Mark Stopa
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Posted on February 15th, 2012 by Mark Stopa
I observed a foreclosure trial today, and one aspect of it in particular really bothered me. The plaintiff prosecuting the case was not the owner of the Note, but merely the servicer. Many judges and, of course, plaintiffs’ attorneys, seem to think this is fine, arguing the servicer can foreclose because it’s the “holder” of the Note, even though, by its own admission, it’s not the owner. In other words, the plaintiff/servicer concedes it does not “own” the Note, i.e. it’s not the plaintiff’s Note, but because it has the Note in its possession, and the Note is indorsed in blank, it can foreclose.
I’ve thought about this argument a lot, read a lot of case law, and see some fatal problems. Frankly, I’m frustrated these problems are largely being ignored and hope that everyone starts arguing and adjudicating this issue appropriately.
First off, taking the plaintiff’s argument to its logical extreme, anyone can steal a Note with a blank indorsement – literally, be a thief – but because he possesses the Note, and the Note is indorsed in blank, he could foreclose simply because he’s the holder. That sounds insane, but once you accept the argument that the plaintiff need only be the “holder,” and that ownership is irrelevant, that’s what you’re allowing – a thief can foreclose. Anyone can foreclose. Come to court with a Note with a blank indorsement, and how you obtained that Note is irrelevant – you can foreclose.
Respectfully, that’s just not the law. It can’t be the law. There’s no way the law can allow or would allow a thief to foreclose. Undoubtedly, this is why Rule 1.944 requires the plaintiff be the “owner and holder.”
I can hear the plaintiffs’ attorneys now. “But many Florida cases say being a holder is sufficient; they don’t have an ownership requirement.” To a limited extent, I suppose that is true, but read those cases. For example, Riggs v. Aurora Loan Services, 36 So. 3d 942 (Fla. 4th DCA 2010), talks at length about whether the plaintiff was the holder, and plaintiffs’ lawyers love to cite Riggs for the proposition that being the “holder” is all that matters. However, the issue of ownership wasn’t a question in Riggs – in that case, the plaintiff showed it was the “owner and holder.” Respectfully, it is totally misguided to take a case where ownership was not in question and use that case for the proposition that ownership is immaterial. It may have been immaterial in that case because ownership wasn’t disputed, but that certainly doesn’t mean ownership is immaterial in all cases.
Consider, again, my thief example. Once you accept that a thief cannot foreclose, you necessarily accept that the plaintiff who forecloses must own the Note.
Again, I can hear the plaintiffs’ lawyers. “But a servicer can foreclose because the servicer is the holder and has a servicing agreement with the owner, so it’s foreclosing with the consent of the owner of the Note.” This was the argument being espoused at the trial I observed today – the servicer doesn’t own the Note, but is foreclosing with the consent of the owner.
This argument may sound unique or complicated, but it’s one the Florida courts have adjudicated for many years in a number of contexts – that of principal and agent. Here, the plaintiff is saying that it, the servicer, is acting as the agent of the owner, the principal, by prosecuting the foreclosure case. This is the dynamic we see in thousands of foreclosure cases – the servicer alleges it can prosecute the case for the owner under a theory of agency.
In my view, this begs the question of when can an agent bind the principal? Let’s say that again:
Under what circumstances can an agent bind a principal?
There are zero Florida cases that discuss this concept in the context of foreclosure cases, so let’s look to case law in other contexts.
In Fla. State Oriental Med. Ass’n v. Slepin, the First District ruled an attorney was not entitled to collect attorneys’ fees incurred representing a corporation because the attorney (the alleged agent) did not have the authority to act on behalf of the corporation (the alleged principal). 971 So. 2d 141 (Fla. 1st DCA 2007). The attorney said he was acting on the corporation’s behalf, and he purported to act on its behalf, but the First District ruled he wasn’t, in fact, an agent and didn’t have the authority to bind the corporation. In so ruling, the court explained:
A finding of actual authority would require evidence that a principal acknowledged an agent’s power, that the agent accepted the responsibility of representing the principal, and that the principal retained control over the agent’s actions.
Similarly, the Florida Supreme Court has explained:
Essential to the existence of an actual agency relationship is (1) acknowledgment by the principal that the agent will act for him, (2) the agent’s acceptance of the undertaking, and (3) control by the principal over the actions of the agent.
Villazon v. Prudential Health Care Plan, 843 So. 2d 842 (Fla. 2003).
Let’s read those requirements closely, and break them down, one by one.
1. The principal acknowledged the agent’s power.
2. The agent accepted the responsibility of representing the principal.
3. The principal retained control over the agent’s actions.
In the trial I observed today, the plaintiff/servicer admitted it did not even know who the owner of the Note was. Think about that for a minute. The servicer was supposed to be acting on behalf of the owner, with the owner’s consent, but it didn’t even know who the owner was. On these facts, how on earth could the servicer possibly prove the owner/principal “acknowledged the agent’s power”? Clearly, it couldn’t, and it didn’t. The servicer couldn’t even identify the owner, much less prove the owner authorized the servicer’s actions.
This argument is so simple it’s ridiculous.
“I have authority to foreclose.”
“Who gave you authority?”
“I don’t know, but I have authority.”
I can just see my kids making this argument to me and my wife.
“I have permission to stay up until 10:00. That’s my new bedtime.”
“Who gave you that permission?”
“I don’t know, but it’s allowed.”
These arguments don’t even begin to make sense, but that’s what the servicer was arguing today. “I don’t know who gave me authority, but I have authority.”
As I see it, to prove the requisite authority, the servicer must either (a) introduce a servicing agreement into evidence; or (b) provide testimony from the owner as to the servicer’s authority. Without one of those two things, I just don’t see how the servicer can possibly show the owner of the note authorized the servicer to foreclose. Do you disagree? You tell me … without a servicing agreement or testimony from the owner as to the servicer’s authority, how can the servicer prove the owner “acknowledged the servicer’s power”? Once you conclude there is no such answer, then you necessarily agree that a servicer cannot foreclose without such proof.
Similarly, in the trial I observed, the plaintiff/servicer failed to show the owner of the Note “retained control over the agent’s actions.” After all, how could the servicer possibly show the owner of the Note “retained control over the servicer’s actions” when the servicer couldn’t even identify the owner? Clearly, the servicer was acting as its own boss here, answering to nobody.
I realize that some of the arguments being espoused by servicers in foreclosure cases seem unique, and there appears to be an absence of case law setting forth these issues. However, once you realize a servicer purports to act on behalf of the owner, and is hence just another fancy word for an agent, it should become clear that basic principles of law regarding agents and principals must apply, as quoted above. This requires proof in foreclosure cases that, many times, is simply not forthcoming.
Mark Stopa
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Posted on September 26th, 2011 by Mark Stopa
Stopa Law Firm receives many heartbreaking emails from prospective clients in truly desperate situations, but the one I just received is beyond heartbreaking. This man, a single father, got hurt on the job, had to take time off work after back surgery, then was terminated because his employer didn’t want to accommodate him through his injury (even though it was an on-the-job injury). Perhaps worse yet, he hasn’t been able to get a new job because his former employer is telling prospective employers he had surgery and can’t work.
Not surprisingly, this father has been unable to pay his mortgage and, even less surprisingly, the bank has been unwilling to help him. The situation is so bad for this man and his son that he concluded his email to me by saying:
I’m considering suicide so my kids have some money and my life insurance is being cancelled in 3 weeks … big decisions to make.
Horrifying. I worked hard in law school, but trust me – I’ve never been trained on how to deal with a situation like this … not from anything I learned in law school or as a lawyer, anyway.
I just finished talking with this gentleman (who consented to me discussing his situation here) and I think/hope I was able to make him realize suicide is not an option, that there is help available. For some people, that’s essential to hear:
The bank isn’t going to kick you out of your home tonight or any time soon.
The bank has to win a foreclosure lawsuit to evict you, and you’re entitled to have a lawyer like me defend the lawsuit each step of the way.
Suicide is not the answer; help is available.
On a day like today, a rainy Monday when I, quite candidly, would have just as soon not worked, this was a glaring illustration of why I do what I do. There are countless homeowners in Florida and throughout the country who are desperate, hopeless and, yes, even suicidal. It is incumbent upon all of us, as people and as Americans, to make people in these types of situations realize that there is hope, there is help, and suicide is not the answer.
Mark Stopa
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Posted on December 18th, 2010 by Mark Stopa
Apparently, the Broward County courts have realized the holiday season is not an appropriate time to conduct foreclosure sales, as they’ve cancelled all foreclosure sales between now and the end of the year via this Order (hat tip, Matt Weidner and Foreclosure Hamlet).
For me, this begs two questions.
1. I’m glad we can agree that foreclosure sales should not be happening over Christmas, but what about Writs of Possession? A foreclosure sale is horrible, obviously, but it’s the Writ of Possession that forces a homeowner to be removed from his/her home. Why should those proceed over the holidays?
2. I’m glad we can all agree that foreclosure sales should not happen over Christmas. But doesn’t that beg the question – when, exactly, is a good time for foreclosure sales? Is it really better to foreclose on Florida homeowners in January as opposed to December? January 3 is somehow a better day to foreclose than December 29?
The fact that our courts can recognize the inhumanity of foreclosing on homeowners over the holidays, but, all too often, won’t acknowledge the inhumanity of it the rest of the year, disappoints me beyond description.
Judges, the next time you go to sign a Final Judgment of Foreclosure, think about that feeling in your heart/mind/body that causes you to feel the compassion necessary to not schedule a foreclosure sale over the holidays. Whatever it is that makes you feel that way – bottle it up and remember it all year long. After all, if you can realize that foreclosure is traumatic enough that it shouldn’t happen over the holidays, you should realize that foreclosure shouldn’t happen any other time of year, either.
Mark Stopa
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Posted on December 2nd, 2010 by Mark Stopa
Every time I think the foreclosure fiasco can’t get any worse, it does. Now, Fannie and Freddie (which are controlled by the U.S. Government and have survived on taxpayer aid, i.e. money from you and me), say it’s okay for foreclosure lawsuits to proceed even as loan modifications are being reviewed/processed – what’s become known as a “dual track” process.
With all due respect, this is a total disgrace and abomination of epic proportions. To deceive homeowners into thinking a modification can happen, even though their foreclosure lawsuit is proceeding full speed ahead, is deplorable. For the U.S. Government to advocate that approach, based on tax dollars of you and me, makes me sick to my stomach.
Please, everyone, don’t take this lying down. Stand up and fight. Tell the media, your local congressman, your friends, anyone who will listen – this is wrong.
Here’s the article…
Federal regulators and lawmakers pressed mortgage guarantors Fannie Mae and Freddie Mac to suspend foreclosure proceedings while distressed borrowers seek new mortgages.
Acting Comptroller of the Currency John Walsh testified at a Senate Banking Committee hearing Wednesday that his agency is directing national servicers to suspend foreclosures for borrowers who are actively seeking to qualify for loan modifications.
Dual-track processing is “unnecessarily confusing for distressed homeowners,” Walsh told the committee, which held its second hearing since allegations of shoddy or fraudulent foreclosure practices arose in September.
Government-controlled Fannie and Freddie, taking congressional questions on the dispute for the first time, insisted that borrowers and lenders both benefit from the dual track process of pursuing foreclosure and loan modification at the same time.
Freddie Mac Executive Vice President Donald Bisenius said that the dual-track process minimizes losses, protects communities from blight and ultimately helps borrowers.
“It is not in the borrower’s interest for the process to drag on indefinitely,” Bisenius said. “The longer the borrower’s delinquency goes uncured, the farther behind he or she gets, and the harder it becomes to bring the loan current.”
A foreclosure can cost $30 to $40 a day, or as much as $15,000 a year, Bisenius said.
Congress is examining the foreclosure process after Ally Financial Inc.’s GMAC Mortgage unit, JPMorgan Chase & Co. and Bank of America Corp. temporarily halted home seizures in September amid claims that legal documents were mishandled.
At the hearing, lawmakers questioned bank regulators about what actions they have taken to ensure that home seizures are fair and legal. They also criticized dual-track processing as confusing and sometimes unfair.
“Countless constituents have told us stories of being stonewalled by banks for very long periods of time, of not being told the reasons for their rejection of their modification request, of significant delays caused by banks losing their paperwork, and trial modifications canceled with no rationale,” said Sen. Robert Menendez, D-N.J. “That just can’t continue to happen.”
Federal Reserve Board Governor Daniel K. Tarullo called the system “literally a race between foreclosure and modification” and called for national standards on loan servicers.
“The problems are sufficiently widespread that they suggest structural problems in the mortgage servicing industry,” he said. “It has now become evident that significant parts of the servicing industry also failed to handle foreclosures properly.”
Attorneys general, consumer advocates and congressional lawmakers have said that problems in the housing system are further complicated because delinquent homeowners seeking to renegotiate their loans through government- or bank-sponsored programs such as the Home Affordable Modification Program are often surprised and confused to discover that their foreclosures haven’t been suspended.
Freddie Mac, Fannie Mae and other purchasers of home loans, including the Association of Mortgage Investors, said the dual-track system balances the interests of everyone involved.
“While we believe that borrowers who already are under significant stress arising from their financial situations should not be subjected to needless confusion, we also believe that unnecessary delays in an already lengthy foreclosure process would be counterproductive,” Bisenius said.
His comments were echoed by Terry Edwards, executive vice president at Fannie Mae. The two mortgage companies are controlled by the U.S. government and have been surviving on taxpayer aid since 2008.
The average foreclosure takes 449 days, Bisenius said, which provides sufficient time to explore alternatives. The company and its servicers suspend foreclosures when a loan workout, short sale or other option becomes viable, he said.
Mark Stopa
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Posted on November 22nd, 2010 by Mark Stopa
This article is disturbing on a number of levels. Wells Fargo foreclosed on a home, then sold it to a third party, and only then did the buyers find the original homeowner, in the garage, deceased – apparently for a long time. Before you write that off as “just one of those things,” consider this quote from the neighbor of the deceased woman:
‘The main thing I think is sad about it is that somebody could have their house foreclosed on and sold out from under them and they’re still dead inside the house. I just think that’s pretty inhumane, and it certainly says we need to change this process somehow, reach out to people a little better than that. At least make sure they’re alive before you sell their house.’
I couldn’t have said it better myself.
Mark Stopa
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Posted on November 18th, 2010 by Mark Stopa
Today’s Washington Post reports that Citimortgage has admitted mistakes in its foreclosure filings. Unfortunately, news like this has become so common that it’s easy to say “ho, hum,” but we must not fall into that trap. For instance, here’s a quote that is buried in the story but, upon reflection, is really, really disturbing:
“to assure that these affidavits are substantively correct and properly executed, Citi expects that affidavits executed prior to the fall of 2009 will need to be refiled”
Think about that for a minute. As I read that, Citi is admitting that all affidavits executed in and before the Summer of 2009 must be re-filed, apparently because every such affidavit was done incorrectly. You may think that’s a good thing, but ask yourself this – what about all of the homes Citi foreclosed on from before the Fall of 2009?
I can’t speak for Citi, but I can vitually guarantee you that Citi isn’t going to unwind any of those foreclosures. The new affidavits wil only be filed in the cases that aren’t already over. For those that lost their homes to improper evidence, there is, apparently, no remedy.
Here’s the entire story…
http://voices.washingtonpost.com/political-economy/2010/11/citimortgage_admits_to_foreclo.html
Citigroup, which for almost two months has claimed its process for preparing foreclosure affidavits was sound, is reviewing about 14,000 documents, including 4,000 that may have been notarized improperly, a company official said in written testimony to Congress to be delivered Thursday.
Unlike other large mortgage servicers it competes with, Citi had not frozen foreclosures and had repeatedly declined to publicly discuss any internal reviews it was conducting. Harold Lewis, managing director of CitiMortgage, said in the written remarks that 10,000 of the 14,000 documents being reviewed are for judicial foreclosures.
The purpose of the review is “to assure that these affidavits are substantively correct and properly executed. Citi expects that affidavits executed prior to the fall of 2009 will need to be refiled,” Lewis said. The other 4,000 documents that are being reviewed were prepared at its Dallas processing center and “may not have been signed in the presence of a notary, to assure that these affidavits are substantively correct and properly executed.” Lewis said these affidavits were also be refiled.
Lewis and other representatives from large mortgage servicers-Bank of America, J.P. Morgan Chase, Ally Financial-will take questions from members of Congress Thursday starting at 10 a.m. at a House Financial Services Committee hearing. Lewis said that Citibank had been taking steps to improve its foreclosure practices since the fall of 2009.
In responding to questions about the robo-signing problems at other servicers, Citi has previously said that it has “have strong training to ensure that appropriate employees are fully aware of the proper procedures.”
Mark Stopa
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Posted on November 8th, 2010 by Mark Stopa
The New York Times did a story over the weekend about how Florida foreclosure attorneys are charging homeowners facing foreclosure. I’ve read the article and, with respect to my colleagues, I’m disturbed. According to the article, Roy Oppenheim charges $500/month to his clients (every month the case is pending, no matter how little activity takes place in the case each month). Ice Legal charges a retainer, monthly fees, and a contingent fee. Peter Ticktin charges monthly fees plus a 40% contingent fee. As I see it, instead of trying to make their services as affordable as possible, these lawyers are trying to figure out how much they can get away with billing. I’m also troubled at the ethical quagmires created by these fee arrangements.
To illustrate my concerns, let’s take one of the examples in the article. If a client of the Ticktin lawyers gets the principal on his/her mortgage reduced from $500,000 to $200,000 (be it by modification, settlement, court order, or the like), then that homeowner owes the Ticktins $120,000 ($300,000 x 40% = $120,000). Perhaps worse yet, that $120,000 is secured by a mortgage on the client’s home. Hence, the $500,000 mortgage is reduced to $200,000, but there is now a second mortgage, payable to Ticktin, in the amount of $120,000, so the homeowner still owes $320,000.
Respectfully, isn’t it our job as foreclosure defense and bankruptcy attorneys to help homeowners avoid foreclosure? To try to reduce their debt? I realize this is a business, but I can’t help but feel that these fees are excessive. As I see it, why should Ticktin, Ice Legal, Stopa Law Firm, or any foreclosure defense attorney get a windfall if we’ve helped a client and obtained a principal reduction? Striving for favorable results is our job – it’s why we get paid. Sometimes favorable outcomes happen, sometimes they don’t, but either way, we shouldn’t get a windfall, particularly at the expense of our clients.
I’d be less disturbed about foreclosure lawyers charging a contingent fee if it was the lawyers’ only way of billing. For instance, if a lawyer somehow eliminates a mortgage from a client’s home, and hasn’t collected any fees, a contingent fee seems reasonable to me. In that scenario, the client now has a free and clear house and the lawyer helped obtain that result without getting paid, so a contingent fee seems fair. Unfortunately, there are two fatal problems with this line of thinking. First, it’s clear that these lawyers are charging more than just a contingent fee – they’re charging retainers and monthly fees, too. When the foreclosure defense attorneys are already getting a monthly fee, the contingent fee strikes me as excessive. My concerns are heightened in that regard because I find the $500 monthly fee excessive on its own. Bear in mind, in foreclosure cases, there are often many months of inactivity, where the lawyer does little or no work. As I see it, why should a lawyer keep collecting $500/month when he/she isn’t doing any work? I strongly believe the fees a foreclosure lawyer collects should bear some reasonable relationship to the work being performed.
Second, I agree with Margery Gallant, who opines in the article that the elimination of a mortgage and client owning a home free and clear is generally not “realistic.” There are undoubtedly exceptions, but the typical homeowner cannot expect that he/she can march into court and convince a judge to eliminate a mortgage and give the homeowner a free home. Don’t get me wrong – I’m always on the lookout for fact patterns that could lend themselves to this result. For the typical Floridian, though, this is not a realistic goal (especially with the climate in the judiciary being what it is). As such, I’m left wondering just what these foreclosure defense attorneys have to do to earn their contingent fee.
For example, suppose the foreclosure lawsuit is dismissed without prejudice, meaning the bank can re-file a separate suit and seek foreclosure. Should a foreclosure defense attorney be able to collect a contingent fee in that scenario? I’d argue “no,” unless the fee was very low. After all, the fees obtained should be commensurate with the results obtained, and a dismissal without prejudice does not lend itself to a $50,000 or $100,000 contingency. Unfortunately, I’ve seen contingent fee agreements that require such a payment even upon a dismissal without prejudice. As I see it, that’s grossly excessive.
Also, I strongly believe these fee arrangements are rife with conflicts. To illustrate, Tom Ice says he “doesn’t ever want to have a client say ‘I’m not taking the deal because I can’t afford to pay you.” Yet isn’t this the very dynamic that these contingent fees create? Using the example above, if the homeowner is offered a $300,000 reduction, doesn’t he/she have to think about whether he/she can pay the $120,000 mortgage to Ticktin before accepting the offer? If so, who is going to counsel the homeowner about that? Ticktin? How does that conversation go? “I’m glad you’ve been offered the $300,000 reduction – just be sure you can pay the $120,000 fee to me.”
Mr. Ticktin says he “would never enforce the mortgage and foreclose.” If that’s true, though, then why have this fee agreement in the first place? Clearly, these lawyers want to leave open the possibility of foreclosing on their clients’ homes, as otherwise they wouldn’t be including such language in their fee agreements.
Also, many homeowners facing foreclosure are candidates for bankruptcy. Using the same example, above, are the Ticktin lawyers going to give conflict-free advice to a client about bankruptcy if Ticktin has a second mortgage on the client’s home? How can they? Ticktin and the homeowner are directly adverse – the homeowner wants to eliminate the mortgage, which could happen via bankruptcy, whereas Ticktin wants to enforce it, which a bankruptcy would preclude. Undoubtedly, Ticktin’s representation to that client about the benefits of bankruptcy are impacted by its own interests in keeping the mortgage intact.
The more I study these fee agreements with other foreclosure defense attorneys, the more comfortable I feel with the fees being charged by Stopa Law Firm.
Mark Stopa
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Posted on November 5th, 2010 by Mark Stopa
I was one of a handful of attorneys who had the opportunity to participate in a conference with Chief Judge Thomas McGrady and several other judges in Florida’s Sixth Judicial Circuit (Pasco and Pinellas Counties) to discuss foreclosure-related issues. The conference was a unique opportunity for everyone to share their concerns about the foreclosure process in an open forum. Having reflected on the conference, here are my thoughts – both the good and the bad.
First off, I applaud Judge McGrady and the other judges who were willing to attend the conference and discuss these issues, with bank attorneys and foreclosure defense attorneys, in an open forum. I’m often critical of procedures being utilized in Florida courtrooms in foreclosure cases, so let’s give credit where credit is due. These judges deserve kudos for their willingness to discuss these issues openly, with both sides, as part of their attempts to promote fairness and efficiency in the process. I still disagree with some of the procedures, but the effort is there, at least in the Sixth Judicial Circuit. Anyway, here’s what I took out of the conference:
1. Judges Rule Based on Evidence in Each Case. Many homeowners have wondered (as did the media, who was invited into the latter part of the conference) what judges are doing differently in the wake of numerous media stories about fraudulent affidavits, foreclosure fraud, robo-signers, and the like. All of the judges made one thing clear – they rule based on the evidence before them in each particular case. Media reports, news stories, and internet articles are not part of a court file and judges do not take them into account when ruling on a particular case. In fact, the judges deem it part of their responsibility to ignore such factors when adjudicating a case. Quite simply, judges’ rulings are based on the evidence before them in that particular file and not anything external.
2. If you’re a homeowner, and want to defend a foreclosure, you must present evidence! Many people believe judges should be ruling in favor of homeowners in foreclosure cases in light of the many recent stories about foreclosure fraud. The judges have made it clear, though, that they aren’t going to make rulings based on newspaper articles or internet stories. To me, that means one thing:
If you want to fight your foreclosure, you must present evidence!
The judge on your case isn’t going to rule in your favor based on anything being said in the media. If you think there’s fraud or other misconduct being committed by the bank in your foreclosure case, you have to prove it to the judge. In my view, the best way to do that is to retain a competent foreclosure defense attorney to represent you, as asserting such defenses is what we do. You may suspect there’s fraud, and the media may be reporting fraud, but you have to prove fraud in your case or it won’t matter.
3. Judges’ opinions on the law vary widely. It was fascinating to see a panel of judges, all of whom are obviously intelligent jurists, have such different opinions on legal issues in foreclosure cases. At various points in the conference, different judges were openly (but respectfully) disagreeing with one another. To me, this is a huge indication that our appellate courts need to issue more written opinions in foreclosure cases (so as to clarify the law on these issues), but in the meantime, it shows that arguments that work in one courtroom may not work in another, and vice versa.
For instance, on the issue of affidavits supporting summary judgment (a hot topic in the media in recent weeks), the judges seem to fall into one of three categories: (1) some judges believe documents must be attached to an affidavit to satisfy the mandates of Rule 1.510(e) (a topic I discussed at length in my blog titled “Willful Blindness by Judges”), even in cases where the homeowner is not defending the foreclosure suit, failing which summary judgment will be denied; (2) some judges believe the absence of such documents is not a reason to deny summary judgment when the homeowner is not defending the case, but if the homeowner opposes summary judgment and objects based on the absence of supporting documents, then summary judgment will be denied; and (3) some judges believe the absence of such documents is not an impediment to summary judgment, even in the face of an objection (or, unfortunately, don’t care). I agree with the judges in the first category, and it’s hard for me to see an argument otherwise. The fact that there are differences of opinion, though, and that reasonable judges can disagree, reflects the need for homeowners to retain a competent attorney to raise these arguments in foreclosure cases. Where there are no black and white answers, persuasive argument from counsel can carry the day.
One concern I raised was how Pinellas County grants summary judgments of foreclosure even when the plaintiff or its counsel does not attend the hearing (if the defendant does not attend, either). When I voiced my disagreement with this approach to Chief Judge McGrady, who defended the procedure and clearly did not want to argue with me about it, the Pasco County judges indicated, essentially, that they agree with me. In their courts, if a plaintiff’s counsel does not attend a summary judgment hearing, they presume the plaintiff doesn’t care (or the case settled) and the motion is denied.
4. Ex Parte Orders. During the conference, I voiced my concern about how judges enter Orders from Plaintiff’s attorneys ex parte, i.e. without notice to defense counsel and without a hearing. The general consensus from the judges is that this shouldn’t happen but, given the volume of paperwork they’re dealing with, it’s going to happen from time to time, so it’s up to defense attorneys to challenge such Orders after they’re entered. Candidly, I’m disappointed there isn’t a procedure in place to prevent such Orders, but at least the judges realize the problem.
I monopolized a fair amount of the discussion during the conference, but I’m aggravated with myself that I didn’t initiate one more discussion – about judges taking it upon themselves to prosecute a foreclosure case by sua sponte setting a hearing. I’ll make that issue number 1 at the next such conference. In the meantime, bear in mind:
If you want to defend your foreclosure, you must present evidence!
Judges will not consider media stories if there is no evidence of it in your case.
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