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A Brilliant Move by the Bank – Dismissal

I  had a foreclosure trial today, and the bank’s attorney made a brilliant strategic move.  He dismissed the bank’s lawsuit before trial began.

Why was that brilliant, you wonder?  Why would the bank choosing to lose their case be a good move?  Simple.  By dismissing the bank’s foreclosure lawsuit before trial began, that lawyer prevented me from making arguments that the judge and several other defense lawyers in the courtroom had never heard before.

You see, I came to court with a box of case law.  I left my house at 5:30 a.m., I arrived early, and I watched several trials before mine.  I’m very confident the judge had never heard some of the arguments I was going to make. and had never been shown some of the case law I brought with me.  If the bank allowed trial to go forward today against my client, he would have allowed me to educate the judge – and all of the other foreclosure defense attorneys in the courtroom – with novel arguments and case law.  Once the judge realized that was the law, and he was bound to follow it – not just in my case but in many other cases with those same issues – that bank and its lawyer would have had problems in many other cases.  And once the other defense attorneys realized what they should argue, they’d parrot those arguments in future cases.  So the bank and its lawyer made the only smart move they could make.  They gave up.

I could literally see the logic in their thought process as it happened.  “If we dismiss Stopa’s case, we can get him out of this courtroom, prevent him from sharing those cases with the judge, and prevent him from showing the local defense attorneys the arguments he raises and the objections he makes.  If we proceed with trial, even if we somehow win, Stopa will have spread his information to everyone.”

That sounds arrogant, I realize.  But at my last trial, that’s just what happened.  Trial went on for four hours, and the judge commented how nobody had ever presented him with the cases I showed him, and he felt he was obligated to sustain an evidentiary objection I made and prevent the plaintiff from introducing critical evidence in that case.  The judge clearly didn’t like that result – openly wondering how foreclosure plaintiffs would be able to prevail whenever that objection is made.  Ironically, I lost that trial.  But I can’t help but think the bank’s lawyers made a mistake by going forward that day.  Yes, they won that case.  But that judge now realizes I was right on that critical evidentiary issue, and he’ll be constrained to rule that way in hundreds of foreclosure trials in the future … not just mine, but everyone’s.  That’s literally what the judge was saying in open court that day … how are the plaintiffs going to prove this issue in light of this objection?

From the bank’s perspective, you tell me … who won?  Who did better?  The plaintiff’s lawyer who dismissed the bank’s case today before trial started, losing that case but preventing me from unleashing my box-full of arguments in an open courtroom?  Or the plaintiff’s lawyer who won the case against me a few days ago (subject to my pending appeal, of course), but who allowed me to convince the judge that homeowners must prevail on a significant evidentiary issue that arises in hundreds, even thousands of foreclosure cases?

Plaintiffs’ lawyers, if you truly, sincerely think about it, you’ll realize I’m right on this one.  So when our case is set for trial, give me a call and let me know that you’ll dismiss the case and prevent me from sharing my box-full of arguments with judges and other defense attorneys.  We both know that’s the smart move for you.

 

Mark Stopa

www.stayinmyhome.com

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Plaintiff as Servicer? I Think Not.

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

www.stayinmyhome.com

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300 Foreclosures in 3 Days? … Not on My Watch

Making the rounds this week was a story about a Seminole County judge who heard 300 foreclosure cases over a three-day period.  Many media outlets and consumer advocates found this troubling, as it gave the judge less than a minute to adjudicate each case.

This is a terribly sad and unfortunate dynamic.  You know the story – as Florida courts are inundated with foreclosure cases, and the Florida legislature refuses to give our courts the money it needs to function properly, some judges have felt they have no choice but to operate in this fashion. 

I’m pleased to say this type of time crunch rarely if ever happens in cases in which I’m counsel.  Why?  Three simple reasons:

1.  I’m a lawyer.  I hate to say it, but sometimes attorneys are given more respect than pro se litigants.  Remember, all judges are lawyers, and most judges are unlikely to force a fellow attorney to conduct a hearing in 30 seconds. 

I can certainly see how some would think it’s unfair to treat lawyers better than pro se homeowners.  However, candidly, I can see this from both sides.  I’ve watched many hearings where homeowners try to defend themselves but, frankly, have no idea what arguments to make or how to make them.  For instance, “I lost my job” is almost never relevant in a foreclosure case. 

Like it or not, hiring an attorney may give homeowners a better chance of being heard in court. 

2.  “Contested” cases are treated differently.  Many Florida judges treat “contested” foreclosure cases and “uncontested” foreclosure cases differently.  “Uncontested” cases often get set for hearing at the same time as dozens of other cases.  The judges’ rationale in doing so is that nobody is opposing these cases (hence the “uncontested”), so the court can have hearings in such cases quickly, one after another.  Hence, if a homeowner shows up to attend a hearing in such a case, it may have already been set on the court’s calendar for a quick, “uncontested” hearing. 

Conversely, judges know that hearings in “contested” cases will take longer to adjudicate, as someone is there defending them.  Hence, hearings in these cases are often scheduled differently on the court’s calendar.  As a result, contesting your foreclosure case from the outset may ensure your hearing is set in a manner that ensures you have more time to be heard.   

If that doesn’t make sense, look at it this way …

Many Florida judges know that my colleagues and I aren’t going to roll over and consent to foreclosure in a 30-second hearing.  We’re going to have extensive legal arguments and case law.  So the judges aren’t likely to set a hearing in our cases at the same time as hearings in other cases where nobody is arguing.  My hearing might take 20 minutes, while the court could take that same 20 minutes to hear 20 cases.  What do you think the court is going to do, wait on 20 other cases to hear my one case for 20 minutes, or handle the 20 uncontested cases?   

3.  I ask.  In the unusual situation where a hearing in one of my cases is set on a “mass motion” calendar with many other cases, all at once, I ask that the hearing be continued, i.e. file a Motion for Continuance, to ensure more hearing time. 

This is a really simple argument, actually. 

“Judge, I see you have many other cases set for hearing today.  My argument is going to be 15-20 minutes, with case law, so I respectfully submit this case should be heard on another day.” 

What do you think the judge is going to do, delay the hearing in 20 other cases, or the hearing in my one case? 

Having 300 foreclosure cases heard in a three-day period is unfortunate.  Frankly, however, it’s a problem that, quite often, is fairly easy to avoid.

Mark Stopa

www.stayinmyhome.com

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Schneiderman for President?

New York Attorney General Eric Schneiderman released a statement today, below, regarding the launch of the federal Consumer Financial Protection Bureau (as he continues to distance himself from other Attorneys General throughout America who are selling themselves out for big banks). 

My immediate reaction?  FINALLY!  How refreshing!  Somebody who gets it!  Somebody in politics who realizes it will take more for America’s economy to improve than appeasing the big banks at every turn. 

Schneiderman should run for President.  Seriously.  I don’t know anything else about him, but just knowing what I know about his stance on this issue, it’s clear he can separate himself from almost every politician and appeal to a huge segment of the American public – merely by expressing a willingness to improve the economy in a real way, without just appeasing Wall Street.  And if you don’t think that’s enough to be a Presidential candidate, let me ask you – who else is there?  And what’s more important than fixing the economy (in the way set forth in his statement, below)?

I love his website, too, which says:

As Attorney General, my top priority is to restore New Yorkers’ faith in their public and private sector institutions. From cracking down on corruption in government, to rooting out fraud against taxpayers, to protecting consumers from financial crimes, and keeping our streets safe, I will work every day to build the best public law firm in the country to serve and protect all New Yorkers.

Anyone willing to crack down on corruption in government (when most won’t even acknowledge its existence) deserves recognition, regardless of his other views.  Bravo, Schneiderman, bravo. 

Here’s the statement …

 “Our office welcomes the opening of the federal Consumer Financial Protection Bureau, and we look forward to working closely with the agency to advance the financial best interests of New York’s consumers. Nearly three years after the financial crisis dragged the economy into recession, there is much work to be done to restore confidence in the markets for everyday people, businesses and investors. As a watchdog holding financial institutions accountable for wrongdoing, the CFPB will play a critically important role in developing a regulatory framework that ensures consumers are protected, and our economy is not vulnerable to another financial meltdown. It is now up to the Senate to expeditiously confirm Richard Cordray as CFPB’s Director, so that the bureau can fulfill its full mandate under the law.”

Mark Stopa

www.stayinmyhome.com

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Cash for Keys; Another Reason to Fight Foreclosure

According to today’s St. Pete Times, Chase is offering cash incentives to some homeowners to consent to foreclosure.  I have yet to see this happen on a widespread basis, but it certainly seems like this is becoming more of a possibility for homeowners who fight their foreclosure cases. 

This is indicative of what I’ve been telling homeowners for many years now – if you defend your case, you never know what type of settlement a bank may be induced to offer.  Who knows; maybe the bank will offer a deal like this to you.  Or, if you defend your foreclosure,  maybe the laws will change in a way that helps you.  The only certainty is this – if you give up, and get foreclosed, you lose any ability to take advantage of these possibilities. 

Also, how cool is it that banks are being forced to pay cash to homeowners in foreclosure?  Banks got their bailouts; it’s nice to see some homeowners getting a little relief, too.  

Here is the article. 

JP Morgan Chase has a deal for some homeowners behind on their payments: If they’ll accept a quick sale of their home, the bank will give them $10,000 to $20,000 and forgive what it loses on the mortgage.  Homeowners get the cash after the home is purchased in a short sale, meaning the buyer pays less than what the bank is owed.

What’s in it for Chase? By avoiding foreclosure, a process that can take nearly two years in Florida, the bank saves attorney fees, court costs and property taxes. And it speeds the process of getting bad loans off its books.  The bank began offering the incentive in late 2010.

“The net result is better for homeowners and investors,” said Mary Kay Bean, a Chase spokeswoman.

Chase still suffers a loss in the process. But generally speaking, sale prices on foreclosure homes are lower than those on short-sale homes. 

Bean declined to discuss the criteria used to select homes in the program. But Realtors said the homes are in more desirable locations and newer.

Chase’s offer of cash to walk away from a home and forgiving the loan balance applies only to mortgages the banks owns.

Chase is also offering the cash payment to other homeowners whose mortgages it services. However, whether unpaid balances on these loans will be forgiven depends on the investors who own the mortgages.

In either case, borrowers aren’t walking away without consequence.  After a home is sold, the settlement is reported to credit bureaus, Bean said. Sellers must also pay taxes on the money forgiven by Chase since it is considered income.  Obviously, homeowners whose mortgage balance was not waived will be in worse shape creditwise.

Realtor blogs are buzzing with chatter about this program, saying Chase is offering up to $35,000. Bean declined to confirm that amount.

Another factor beneficial for homeowners and real estate agents: Chase provides an answer in about 35 to 40 days after an offer is made on a home. Most short sales typically take six to nine months to finalize.

“We’ve been working to get than down,” Bean said, stressing that Chase has closed more than 100,000 short sales since 2009.

Florida is saddled with more than 300,000 foreclosures. Thousands of other loans are nearing default because the homes are worth less than what is owed.

Bean declined to discuss whether the cash offer would propel more borrowers into a “strategic default.” The term describes homeowners who can pay their mortgages but stop because they owe more than the home is worth.

“It’s a very individual decision on how some people handle their financial decisions,” she said.

The St. Petersburg Times found two real estate agents who represent borrowers in the Chase program. The homeowners declined to talk.

Andrew Duncan, leader of the Duncan Duo & Associates at Keller Williams Realty in Tampa, is listing a Clearwater home for $150,000. He was skeptical of the offer until holding a conference call with a Chase representative.

“It’s a win-win all around,” he said. “The banks need to do something to get these homes on the market.”

Chris Hounchell, a short sale specialist with RE/MAX Metro in St. Petersburg, represents the seller of a high-end condo. Banks have finally realized they need to prevent more foreclosures, he said.   More importantly, Hounchell said, the cash offers will help stabilize the housing market by ridding the rolls of distressed properties.

“It’s a step in the right direction,” he said. “Chase is offering more money than anybody else.”

Bean offered this advice to borrowers:  “You should open your mail. This could be very important for some.”

Mark Stopa

www.stayinmyhome.com

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Banks Keep Stealing – Why Keep Paying?

Below is an article written by MSNBC’s Dylan Ratigan, who makes a compelling argument for strategic default

The dire straits of the middle class of America has made it near impossible for our politicians to keep up the pretense that our current government truly works for the “people.” Between the multiple overt and secretive bailouts, the massive bonuses and the circular use of our tax money to lobby for these continued handouts, you can no longer hide from the evidence.

When Senator Durbin said “The banks… frankly own this place,” you realize it was not in jest.

Couple this with recent protections handed by the Supreme Court to corporations to directly influence elections and it can make things seem hopeless for those not on Wall Street or their chosen politicians. Favored CEOs and now even foreign countries get all the printed money they need, leaving us paying both our bills and theirs.

And now nearly a quarter of all Americans are currently underwater in their mortgage because of that steadfast honor.

If you are one of them, chances are you didn’t do anything wrong. Almost all of you were not subprime borrowers or speculators, but merely people buying a house that they thought they could afford at the time. You were just unlucky in that you bought a house during a time when an outdated Wall Street and their complicit politicians decided to use housing to regain the income they lost due to the Schwabs and Etrades of the internet age.

You didn’t cause this mess. They did.

Now you are struggling to make the same payments on this mortgage on your now overpriced home even in light of a crashing economy and massive deflation, all while the government does everything in its power to help Wall St. keep the bonuses coming.

Well, it is becoming time to take matters into your own hands… I suggest that you call your lender and tell them if they don’t lower you mortgage by at least 20%, you are walking away. And if they don’t agree, you need to consider walking away.

It probably doesn’t feel right to you.

That is because you probably are a good person. But your mortgage is a business deal, and it is not immoral to walk away from a business deal unless you went in to the deal with the intention of defaulting.

But somehow, even though the corporations are pumped to exercise their new rights, former bankers like Henry Paulson, current ones like Jamie Dimon and — get this — now even Fannie Mae execs want to keep you from exercising your rights.

But before you let them (or anyone commenting below) force you into paying that $500k mortgage on a $300k house, ask them if they’ll push Jerry Speyer into “honoring his obligation” by breaking into his $2 billion personal piggy-bank to keep paying for Stuyvesant Town?

Or how about asking Hank and Jamie to lecture fellow bailed-out CEO John Mack about how “you’re supposed to meet your obligations, not run from them”? Maybe make him use some of his $50+ million for those buildings he bought in San Francisco?

And before shaming and punishing American homeowners, did they nag Steve Feinberg about helping “teach the American people…not to run away” by writing a check out of his billion-dollar pocket to cover all the stiffed landlords and vendors at Mervyn’s? After all, at least you aren’t single-handedly putting 1,100 employees out of work when you walk on your mortgage.

As part of the deal for your house, your mortgage holder gets interest payments from you and they also use the note to your house for their capital reserves. In return, they take the risk of a foreclosure. In many states, you paid extra to have a non-recourse loan where the lender just gets the house back if you stop paying — your interest rate would’ve been much lower if you were held personally liable like a student loan. But if you still feel bad, then donate the money saved to charity instead of to their bonuses. And when someone tries telling you why it is so wrong, here are some answers:

– Yes, it might seem selfish, but you are actually going to help fix our country the right way, through the use of pure capitalism. There are 3 parties involved in your mortgage — the mortgage holders, the servicing bank and you. You probably want to stay in your house. Most of the people who actually own your mortgage also want you to stay in your house, preferring a mortgage reduction that you keep paying instead of the total loss of a foreclosure. But the major banks (BofA, Wells Fargo, JP Morgan, Citi, etc.) that underwrite and service the loans don’t care about either of you. They (with the aid of their government) just care about hiding their true financial condition for long as possible so they can continue to bonus themselves outrageously. The credible threat of you walking away from your mortgage en masse is the only market-based solution that will force these banks to work with the mortgage holders on your behalf.

– No, you will not “hurt” your neighbors — certainly not near the scale of the banksters. Chances are someone just as nice will you will move in and (unlike you) pay a fair, non-inflated price for the house. Encourage your neighbors to fight back against the banks and ask for their own mortgage reductions as well.

– Yes, it might make getting a loan harder for everyone. Considering the spate 0% down NINJA loans over the past decade, that probably isn’t a bad thing.

– Yes, it might hurt your credit. But with time, people bounce back from having foreclosures on their record. Search online and then talk to a lawyer about the repercussions, which vary by state.

– No, the banks won’t necessarily pass the losses on to customers. They already make a lot of money. If costs are passed on to every consumer without banks competing on price, that’s a sign of illegal collusion or a monopoly. Let’s fix that instead of just letting banks ruin our lives. They might, however, not all make $145 billion in bonuses next year doing something fundamentally so easy that it is an unpaid job in Monopoly.

Meanwhile, our captured government has made it clear that they want to further reward these banksters because there are clearly better ways to “save” the economy without rewarding those most responsible for the damage.

Instead of claw backs for the past theft and strong financial reform for the future, they choose to cover-up the gross misuse of our tax money, making our country worse by helping the criminals on the backs of the most honest.

But thankfully, in this country we still have the tools to fight back and regain our country. Our vote, our voice, our laws and what we choose to do with every penny we have that doesn’t go to taxes are the benefits of our hard-fought freedom, and in this battle we must use them all to fight back. It’s time for the citizens to once again own this place.

Mark Stopa

www.stayinmyhome.com

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How Civil Procedure Impacts Florida Homeowners Facing Foreclosure

It’s sometimes difficult to explain, in layman’s terms, how a foreclosure defense attorney can assist homeowners who are behind on their mortgage.  Sure, most Americans are aware, at this point, how attorneys such as myself force the bank that is suing to prove it is the “right” bank, i.e. force the bank to prove it owns and holds the original note and mortgage.  As I see it, though, a better explanation of how I help my clients comes through an understanding of the Florida Rules of Civil Procedure. 

Generally speaking, there are only two ways a bank can “win” a foreclosure lawsuit in Florida (as required to foreclose on a Florida homeowner).  First, the bank can prevail on a motion for summary judgment.  This is when there are no material facts in dispute and the bank is entitled to judgment as a matter of law.  Nearly 100% of foreclosure cases are adjudicated this way, typically after a bank presents an affidavit supporting its position and the homeowner presents no conflicting affidavits.  

Second, the bank can win at trial.

When a competent foreclosure defense attorney handles a file, it is often, quite candidly, not terribly difficult to defeat a motion for summary judgment brought by the bank.  Yes, some cases are harder to defend than others, and no, I’m not saying summary judgment is impossible.  However, in my experience, most homeowners have sufficient defenses to preclude a foreclosure via a motion for summary judgment.  To understand why that is so, try not to get bogged down in legal jargon.  Instead, think about it like this.  For a bank to obtain a foreclosure via summary judgment, the judge must accept all facts asserted by the homeowner as true (even if the bank disagrees with those facts) and, based on the homeowner’s version of the evidence, must conclude whether the bank is entitled to a foreclosure.  See Fla.R.Civ.P. 1.510.   

To explain how this standard works, I like to use a traffic light analogy.  Suppose it’s a personal injury case and the plaintiff’s lawyers line up 10 witnesses, all of whom say the traffic light was red at the time of the accident.  Now suppose the defendant presents one witness, himself, who says the light was green.  Even though the plaintiff has many more witnesses, the judge is required, at summary judgment, to accept what the defendant says – the light was green – and to rule accordingly.  This is a high legal standard, and it’s a big reason why it’s so hard for banks to obtain a foreclosure via summary judgment when the homeowner retains counsel.  Essentially, the homeowner just needs to find one material fact in the bank’s case with which it disagrees to prevent summary judgment.   When that happens, the bank is left with just one option – trial. 

If you’ve watched Law and Order or a similar lawyer show on TV, a trial may not seem like a big deal.  Let me assure you – trials don’t happen like you see on TV.  In fact, in my experience, banks don’t like to go to trial in foreclosure cases, even if that’s the only way they can get a foreclosure.  I won’t speculate about banks’ motives too much, but I strongly suspect the banks are afraid of losing at trial and the precedent/fallout that would ensue.  With media coverage of foreclosure cases how it is, can you imagine if a big bank like Bank of America went to trial against a homeowner who hadn’t paid his/her mortgage in two years and lost?  Homeowners throughout the country would be emboldened not to pay their mortgages and to push cases to trial.  To put it differently (and forgive me if this sounds sexist, but it’s a comparison with which I can related since I have a little sister) … going to trial for a bank is like a big brother getting into a fight with his little sister.  Why do it?  If you win, you’re supposed to win – you’re bigger, and she’s a girl.  If you lose, then, good grief!  You lost a fight to a girl!  Rather than risking that humiliation, isn’t it better to avoid the possibility altogether? 

Hence, there are only two ways a bank can “win” a foreclosure case – summary judgment and trial – but summary judgment is hard to get and banks typically don’t want trials.  So what happens?  Foreclosure cases often languish.  Banks file them, but when homeowners defend those cases with an experienced foreclosure attorney, the cases often progress at a slow rate.  The banks’ lawyers have so many other cases, it’s easy for them to ignore these cases and work on others. 

Personally, I don’t see anything wrong with this dynamic.  When I represent plaintiffs in lawsuits against insurance companies, I have to work to push the case towards judgment, and if I don’t, the case languishes.  Do you think anybody is helping me move the case forward if I don’t work on that file?  Heck no!  That’s just how it works – when you’re the plaintiff, and you want a remedy through the court system, it’s your burden to prosecute your case towards judgment; if you don’t, you don’t get that remedy.  Foreclosure cases operate the same way – the banks want relief, so they must prosecute their cases towards judgment; if they don’t, then they don’t get a foreclosure (and the homeowner remains in his/her home while the case is pending).     

Many Florida judges don’t like this dynamic.   They see cases languishing and, in an ongoing effort to reduce the backlog of cases from their docket, they sometimes take actions to advance cases towards judgment.   Lee County in particular is notorious for this, setting cases for trial right after they are filed.  I’ve already expressed my dislike for judges acting in this manner at length, so instead of rehashing that, let’s evaluate this issue from a procedural perspective. 

Under established law, a case can only be set for trial (in a foreclosure lawsuit or any other type of case) if it is “at issue.”  This means, in layman’s terms, that all motions to dismiss filed by the homeowner have been denied and the homeowner has filed an Answer to the Complaint.  (It’s more complicated than that, but that’s the simple explanation.)  See Fla.R.Civ.P. 1.440. 

If a foreclosure case has not progressed to that point, i.e. where it is “at issue,” yet the judge sets it for trial anyway, then the judge is committing legal error that should be reversed on appeal.  It may seem hard to believe, but if a judge sets a foreclosure lawsuit for trial prematurely, and the bank wins at trial, the appellate court would/should reverse that foreclosure.  It doesn’t matter if, substantively, the bank was perfectly entitled to foreclosure – from a procedural perspective, the trial was set prematurely and should not have taken place.  See Bennett v. Continental Chemicals, Inc., 492 So. 2d 724 (Fla. 1st DCA 1986) (en banc); Precision Constructors, Inc. v. Valtec Construction Corp., 825 So. 2d 1062 (Fla. 3d DCA 2002).

If you’re defending a foreclosure lawsuit and the bank or the judge is trying to set it for trial prematurely, make sure you cite Rule 1.440, Bennett, and Precision Constructors.  Respectfully let the judge know that he/she will be reversed on appeal, even if the bank is otherwise entitled to foreclosure.  That may sound harsh, but these rules of procedure are in place for a reason, and it’s incumbent on everyone to follow these rules in all lawsuits, including foreclosure cases.

Mark Stopa

www.stayinmyhome.com

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Mortgage Modifications CAUSE foreclosure – a first-hand account

In response to my blog entitled “How Loan Modifications Cause Foreclosure,” I received the following comment.  I’m posting it here because I want everyone to see that the issues I blog about are real problems that happen to real people.  So without further ado…

I have a mortgage with Litton Loan Servicing. About 1 1/2 years ago I was having some difficulty paying all my bills. So I called all my creditors and to my surprise they all had options to help me, including my mortgage company, Litton. I never told Litton that I could not pay their bill. I was just looking to see who could help. They encouraged me to apply for a HAMP modification. After several months I got accepted into the trial modification period. I asked them what that was. They said it was the final step that takes no more than 4 months, just make your payments on time and you will be fine. I thought all was well. I made on-time payments. I stayed in touch like they asked. After 7 months of timely payments I called them as I often did to check in. Finally, after 7 months, they said I was denied for some unexplainable reason and owed them $3000 and that my home was in default!

What kind of help is this?

I could have paid my full mortgage and not ended up in this debt. I do not understand how this is considered help. I have been paying hundreds each month in credit card bills. Meanwhile, my mortgage company is reporting me delinquent. I was worried about my credit when I should have been worried about my house. I could have easily paid my full mortgage. I cant live in a little plastic credit card. Who came up with this plan to help people?

I have spoken to dozens of people, mostly couselors and loss mitigation reps, some nice, some not. None of them suggested that I consider saving my house and not my credit cards! I don’t know who to trust anymore.

The best part… The loss mitigation side of Litton is promising to resolve the mistakes and get me a modification BUT the original mortgage department side of Litton has been pursuing foreclosure and has now told me that my loan is being sold to Green Tree Servicing on January 1st. Green Tree is the company that’s being sued for killing someone with harrassing phone calls. I don’t expect they will work with me and make it all better.

Here was my response:   If you’re facing foreclosure and credit card debt, you are a good candidate for a foreclosure defense/bankruptcy consultation. Give us a call for a free consult.  888-450-1549.  Whatever you do, please don’t give up.  Mark

Mark Stopa

www.stayinmyhome.com

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The Cause of the Foreclosure Crisis

David Bornstein of the New York Times penned a nice article today called When Lenders Won’t Listen.  Here’s the part that really jumped off the page at me…

After describing the injustices experienced by several homeowners in their experiences with lenders, a competing view was presented:

There are those of us who were raised with the idea that if you make a bargain you keep it.  If you say you will return something you have borrowed, whether it is a lawnmower from next door or a bank loan, then you do what you have said. … But then I was raised in a different America.

Unfortunately, I fear too many Americans, who remain unfamiliar with the foreclosure process, feel this way (presuming, of course, that position is from a homeowner and not a bank crony who is paid by the banks to sway public opinion by submitting such posts).  Anyway, I loved the response of David Bornstein, the author of the article, who wrote:

Not all bargains are made in good faith, however. Borrowers and lenders, it turns out, did not share equal information in many cases. … It was predatory lending that decimated inner city neighborhoods — not anything that resembled fair deals. … [M]any homeowners across the nation did understand what they were signing even if they failed to appreciate the real risks.  The difference was that the borrowers made their mistakes one house at a time, effectively as amateurs. The lenders made these mistakes as professionals, dealing with hundreds of thousands of borrowers, and they concealed the cumulative problem even as it was metastasizing. So now we have millions of homeowners who wouldn’t be in distress if not for the fact that they lost their jobs as a result of a recession that was precipitated by the very bankers who are now threatening to foreclose on them.

Wow.  What a truly awesome way to describe the impetus for the problems we’re facing. 

I urge all of you to forward that paragraph to your family, friends, and neighbors – unless, of course, you just want to forward this entire blog.  😉  From the words of a New York Times columnist, let’s make everyone realize the banks are the bad actors in the foreclosure crisis.  After all, the first step to a solution is recognizing the problem – and clearly the greed of the Wall Street Fat Cats was and is the problem.

Mark Stopa

www.stayinmyhome.com

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U.S. Government blesses loan modification fraud

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

www.stayinmyhome.com

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