Glarum has the banks running scared.
The biggest challenge banks face in today’s foreclosure crisis is that they still haven’t come to grips with the need to tell the truth when they testify. The recent case of Glarum v. LaSalle [PDF] has put even more pressure on the banks to tell the truth in foreclosure court, and now the banks and their lawyers are in a blind panic.
Banks have to provide admissible evidence in foreclosure cases
In the Glarum case, the trial judge had granted a summary judgment in favor of the bank, and ordered the Glarum home to be sold at auction. In support of its motion for that summary judgment, the bank offered the sworn affidavit of Ralph Orsini, who swore that the Glarums had defaulted on their loan and that they owed the bank a particular amount of money. Unfortunately, Orsini didn’t know these things were true, so he relied on the computer database to tell him these things. And according to the appellate court, that’s where the problem began:
Orsini did not know who, how, or when the data entries were made
into Home Loan Services’s computer system. He could not state if the
records were made in the regular course of business. He relied on data
supplied by Litton Loan Servicing, with whose procedures he was even
less familiar. Orsini could state that the data in the affidavit was
accurate only insofar as it replicated the numbers derived from the
company’s computer system. Despite Orsini’s intimate knowledge of how
his company’s computer system works, he had no knowledge of how that
data was produced, and he was not competent to authenticate that data.
(Emphasis mine.) The appellate court threw out the affidavit, and the resulting judgment, because Orsini’s statements were mere hearsay. They didn’t prove anything.
Applying long-held evidentiary principles to foreclosure cases
Bank lawyers, instead of recognizing this case as reaffirming long-understood principles of basic evidence, have sounded the alarm. Here’s what one “client alert” from Greenberg Traurig had to say:
The Fourth District Court of Appeals has sent a strong statement that more generic affidavits currently utilized in some cases will no longer be sufficient where they do not include specific and detailed factual information regarding the compilation of the loan and payment data into a computer system. In doing so, the appellate court may have achieved the unintended result of dramatically changing the foreclosure landscape in Florida.
Again, emphasis mine. Changing the landscape? Hardly. Here are some of the things that Greenberg Traurig recommends banks will need to do in future foreclosure cases:
- The affiant should be familiar with and have a specific understanding as to how the records are kept by the company and about the company’s recordkeeping practices in general.
- The affidavit may need to include factual information establishing that the records relied upon were kept in the ordinary course of the company’s regularly conducted business activity, with specific reference to each record that is relied upon.
- …the affidavit may need to contain language addressing the procedures that the company takes to ensure that the information input into its computer system is accurate.
- …the information included in the affidavit will need to be sufficient to show that the records were made by or from information transmitted by a person with knowledge.
- The courts may even require the affidavit to provide information regarding the procedures used by the prior loan servicer to ensure that the information is kept within the normal course of its business…
- Particular care should be given to who the company selects as the affiant…
None of this is revolutionary, or even surprising, to anyone who’s ever litigated a commercial case before—it’s “Business Records 101.” Business records are never admissible, because they are hearsay, unless you do all those things. Why? Because business records are hearsay, so you have to lay the groundwork to get them admitted.
Pursuant to section 90.803(6)(a), Florida Statutes, documentary evidence
may be admitted into evidence as business records if the proponent of
the evidence demonstrates the following through a record’s custodian:
(1) the record was made at or near the time of the event; (2)
was made by or from information transmitted by a person
with knowledge; (3) was kept in the ordinary course of a
regularly conducted business activity; and (4) that it was a
regular practice of that business to make such a record.
That’s always been the law in every case, and the Glarum court has now ruled that the same law that applies to everyone else now applies to banks, too. And that’s just fair.
If you want to save your home, you’ve got to take depositions.
What lessons can be learned from Glarum? First, that banks are terrified of having their affiants’ depositions taken, and will fight even harder to prevent that from happening. They are terrified of what “borrower’s counsel” like us can do when we have the opportunity to ask them questions under oath. And when we do get the chance to ask those questions, we can blow a foreclosure case right out of the water, just like in Glarum.
Finally, borrowers, homeowners, and other foreclosure defendants should know this: taking depositions in your foreclosure case is a critical step in protecting your home—one that our law firm has long viewed as essential in almost every foreclosure case. And it’s a step that almost no foreclosure defendant is competent to handle on their own. If you want to save your home, you’ve got to get a good lawyer who knows how to take a deposition—no exceptions.