No Response from Florida to Foreclosure Chaos

Kim Miller of the Palm beach Post openly wonders, in this article, why nobody in Florida is doing anything in response to documented problems in the foreclosure process.  To illustrate, we’re all familiar with the Florida Attorney General’s power point presentation, appropriately titled “Unfair, Deceptive, and Unconscionable Acts in Foreclosure Cases.”  The problem, of course, is that if the foreclosure fraud is this well-documented, why aren’t there any negative repercussions for anyone?  Unfortunately, as I see it, nobody will do anything.  The AG, despite its investigation into the foreclosure mills, has done nothing.  The Florida Bar has done nothing. 

But don’t take my word for it – read the article. 

By Kimberly Miller, Palm Beach Post Staff Writer

Fed up with the foreclosure chaos, the New Jersey courts demanded that banks prove the integrity of their home repossession systems or face shutdown.  To demonstrate the need for the Dec. 20 order, New Jersey cited flaws in six Florida foreclosure cases, including three in Palm Beach County, as examples.

In Nevada and Arizona, attorneys general last month sued Bank of America for a dual-track foreclosure system that offers homeowners hope with a loan modification, while at the same time taking away the home in court. Called deceptive and labeled consumer fraud in the lawsuits, the practice is also prevalent in the Sunshine State.  And on Friday, the Massachusetts Supreme Court issued a bombshell ruling against banks’ ability to foreclose on homes – a decision could reverberate nationwide.

The moves by other states to address the foreclosure morass has Florida homeowner advocates and defense attorneys asking why more isn’t being done here.  The Florida Attorney General’s Office is investigating four so-called “foreclosure mill” law firms and is part of a 50-state coalition trying to work out solutions with the banks. Also, the Florida Supreme Court assembled a foreclosure task force in 2009 and requires mediation in all homesteaded foreclosures – a program that has logged minimal success in the year since it became mandatory.  But as hundreds of homes continue to sell at auction each day and the variations of alleged malpractice mount, critics charge that Florida is burying its head in its sandy beaches, waiting for an ocean breeze to blow the whole thing over.

“This collective turning of our backs and shutting of our eyes is not working,” said St. Petersburg defense attorney Matt Weidner. “I think there is widespread delusional behavior to pretend nothing is wrong.”

And it appears clear something is wrong.  Although few dispute that the vast majority of foreclosures are on homes where the borrower has stopped paying the mortgage, a comprehensive presentation given last month by investigators in the Florida attorney general’s economic crimes division meticulously outlines problems in how banks went about taking back those homes.

The report includes pages of allegedly forged signatures, false notarizations, bogus witnesses and improper mortgage assignments. It implicates the banks, their servicers and law firms for contributing to the foreclosure conundrum.

In 2009, Florida had 399,128 foreclosures filed. Between January and October 2010, 224,400 more Floridians received foreclosure notices.  The numbers consistently ranked the state in the nation’s top three for foreclosures for much of 2009 and 2010.

“The best thing the state can do to address the foreclosure issue is to create more jobs, put people back to work so they can get back on schedule and pay their mortgage,” said Sen. Garrett Richter, R-­Naples, who heard a lengthy foreclosure presentation during a December meeting of the Senate Banking and Insurance Committee, which he chairs.

He empathizes with both struggling borrowers and homeowner associations trying to collect delinquent fees, and believes employment, more than legislation, is the answer to the foreclosure dilemma.  “I don’t think we have a massive problem with fraud in the banking industry,” he said. 

A spokeswoman for new Attorney General Pam Bondi said the office will wait to see what its law firm investigations find before making a move.  But in Florida, even the attorney general’s power to investigate is in question.

A Palm Beach County judge ruled in October that the attorney general’s office doesn’t have the authority under the Florida Deceptive and Unfair Trade Practices Act to investigate law firms . The state has appealed the ruling.

“They all say they are impotent to do anything,” said Mark Stopa, a Tampa-based defense attorney. “Part of why this whole thing has been allowed to continue is because there is very little negative repercussions.”

The Florida Bar says it can investigate individual attorneys only when a specific complaint is lodged, and has no authority to initiate its own query.

Judges are hesitant to point out flaws in foreclosure filings on their own because they say it mars their impartiality, making them an advocate for the homeowner.

Florida’s clerk of court offices are barred from policing the content of the foreclosure cases filed with them, said Sharon Bock, Palm Beach County’s clerk and comptroller.

And in the fall, as bank after bank acknowledged errors, the Florida Supreme Court said it has no power to freeze foreclosures under the state constitution or court rules.

New Jersey has not frozen foreclosures, but six of the nation’s largest lenders are expected at a Jan. 19 hearing to show proof why the courts should not stop their foreclosures.

Florida does not have the ability to follow New Jersey’s lead, said State Courts Administrator Lisa Goodner.

New Jersey’s court administrator is a sitting judge who can issue orders, while Goodner is not a judge and has no such power.

“In Florida, contested and uncontested mortgage foreclosure proceedings must be resolved in the individual trial courts through the normal litigation process,” Goodner said.

Attorney Tom Ice, of Royal Palm Beach-based Ice Legal, said the question isn’t whether Florida can use the exact same mechanism as New Jersey, but whether it can do something to address the problem. He believes it can.  “They’ve taken the position that it’s out of their hands,” Ice said of Florida’s Supreme Court. “They don’t have to sit idly by while people make a mockery of the system.”

Mark Stopa

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