The Florida Foreclosure Fraud Weblog

I Have a Hearing Tomorrow.

Mike — Wed, 01 Sep 2010 17:17:48 +0000

A Sudden Bullfight

Imagine, for a moment, that you have a bullfight tomorrow. In the hot afternoon sun, you’ll step into a bullring, cape in one hand, blade in the other, and stare down an angry, two-ton beast with long, sharp horns.

How long have you known about this bullfight? Sometime this morning. And, oh, yeah… you’ve never, ever, been in a bullring before.

How confident do you feel?

Your Summary Judgment Hearing is No Different

Now, imagine yourself in a different kind of fight: a massive bank, represented by an army of lawyers, has filed a foreclosure case – sued you to take away your home. Maybe you answered the original complaint; maybe you just wrote a letter asking to work things out; maybe you did nothing. And now, months or even years later, you get a Notice of Hearing for the Motion for Final Summary Judgment the bank filed months earlier.

And that hearing is coming up soon – next week or maybe even tomorrow. And that’s when you decide to finally call a foreclosure lawyer.

What a Lawyer Hears When Your Hearing is Tomorrow

I’m starting to get these calls all the time. Now that the Florida legislature has decided to “clear out the backlog” of foreclosure cases (you’ve heard the phrase, “rush to judgment?”) these final summary judgment hearings are coming much more quickly than they used to – on much shorter notice.

And that means my phone starts ringing, with people who want me to help them save their homes – and their hearing is tomorrow. Now, I’m perfectly happy to handle a summary judgment hearing, and it’s not the first time I’ve ever seen one, but these hearings are meant to be the final act in a foreclosure case – the end, not the beginning. Walking into a courtroom is like stepping into that bullring – no matter how good you are, you need to prepare first. And that’s nearly impossible if you waited until the last minute to hire a foreclosure lawyer.

Beating a summary judgment usually requires evidence in the form of documents, witness testimony, and expert analysis that can take months to gather. If you wait until the last minute to hire a lawyer, your lawyer won’t have the chance to do any of these things. You’re stepping into the bullring unprepared – and you’re about to get the horns.

Why Should You Have a Lawyer Defend Your Foreclosure From Day One?

Most people in foreclosure want to do one or more of these:

Stop the foreclosure sale
Avoid a deficiency judgment
Negotiate a short sale
Get a loan modification and keep the home
Walk away from the home without taking on tons of debt

During the lifetime of a foreclosure case – sometimes, a period of years – an experienced lawyer knows what to do to work towards any of these goals. All of them require time to accomplish. And very, very few non-lawyers can successfully represent themselves and hope to really meet any of these goals. (It does happen, but very rarely.)

Of course, there’s the additional problem that most foreclosure lawyers – myself included – are now fully booked up with hearings for the next six or seven weeks due to the new foreclosure dockets in most courts. Even if we could help you tomorrow, we’ve probably already got a different bullfight on our calendar.

That’s why, if you want to fight your foreclosure, you need to hire a lawyer as soon as you get served – if not sooner. If you were served a while ago, but don’t have a hearing date yet, don’t wait another minute. Get help. Don’t wait. Don’t lose your home because you were too scared, too uncertain, or – let’s face facts – too stupid to admit you needed help. Don’t be the guy that we could have helped, if only you called us last month. I already know too many of those – and they’re all looking for new homes. Don’t be that guy. Just don’t.

The picture above is from a real bullfight. I took it about ten years ago on my honeymoon in Spain. I wish I’d had a better camera.

Smith Hiatt and Diaz, foreclosure mill, hit with $49,000 contempt fine

Mike — Tue, 31 Aug 2010 02:12:51 +0000

I just got a short report from a friend in Manatee County about big events happening in Bradenton today:

“Judge Dunnigan just fined Smith Hiatt & Diaz $49,000.00.”

If they don’t pay within 4 days, it’s another $7,000 per day.

This apparently arises from an incident a few weeks ago when Manatee County Judge Janette Dunnigan issued a contempt order against Smith Hiatt & Diaz for its complete disregard of the court, manifested by multiple failing to show up at hearings after repeated warnings.

I hear there’s a transcript being prepared; I’ll post it when I get it.

Inadmissible Affidavits: National Law Journal Quotes Attorney Mike Wasylik

Mike — Fri, 27 Aug 2010 16:25:49 +0000

Regular readers of this site know that much of the “evidence” banks try to introduce into foreclosure cases is either inadmissible or sometime just flat-out fake.

The national news media is picking up on this crisis. The National Law Journal reports on the use of boilerplate affidavits in Florida’s foreclosure cases:

Defense lawyers across Florida are increasingly attacking the validity of affidavits that owners of notes must file with the courts as part of the foreclosure process. Attorneys like Dustin Zacks, of the firm Ice Legal in West Palm Beach, Fla., are successfully arguing that plaintiffs — usually a trust that owns the note or the servicer of the note — are violating court rules by filing affidavits with no records attached to support their foreclosure suits. The records include details of the loan, borrower fees and payment history.

There are strict rules governing the way affidavits are used in court cases, and those court rules apply equally to foreclosure cases:

Supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein. Sworn or certified copies of all papers or parts thereof referred to in an affidavit shall be attached thereto or served therewith. The court may permit affidavits to be supplemented or opposed by depositions, answers to interrogatories, or by further affidavits.

I’ve seen affidavits in as many as five hundred foreclosure cases, and of those, no more than three actually met the requirements of the rule. Each of those came within the last two months – long after Judge Rondolino’s affidavit ruling made national news.

During my conversation with the reporter who wrote this story, I expressed a concern that widespread admission of these affidavits may lead to a real estate crisis in Florida, but it wasn’t a focus of the article and didn’t get very much attention this time around:

Wasylik said summary judgments that were granted based on insufficient affidavits can be appealed and set aside.

“If courts are fooled into granting judgments … it could be disastrous for Florida’s real estate,” he said.

The problem with granting foreclosures on flimsy or faked-up evidence, is that they are subject to being set aside, even many years later in some cases. Any home that’s ever been through a foreclosure is potentially subject to having a judgment set aside, and the sale voided – and that potentially means setting aside any subsequent sales to later buyers.

No one could ever be certain, buying a home that had been foreclosed, that they actually owned it. Certainly and stability of title to real property would go straight into the toilet. And that would damages property values for decades to come, spawning waves of lawsuits that make the current
foreclosure crisis look like a tiny ripple in the pond.

It’s time that Floridians demanded their judges follow the law – because all Floridians will pay a heavy price if they don’t.

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Fraudulent foreclosure affidavits on a massive scale: The Gulf Coast Business Review

Mike — Wed, 07 Jul 2010 04:48:47 +0000

In every foreclosure case, there are at least one, possibly two, points at which a legal notice must be published. In every foreclosure case, the notice of sale must be published in a local newspaper twice before the sale (Fla. Stat. § 45.031 (2)) and in some cases, if the owner of the property cannot be found, the plaintiff can serve by publication in the newspaper instead of having a process server deliver it personally.

But no matter what, any time a legal notice is published in a newspaper, some representative of the newspaper must provide a “Proof of Publication” affidavit, swearing that the ad was published on the dates indicated, and that the newspaper meets certain specified legal requirements.

In the Tampa Bay area, there is one newspaper that handles the legal notices for almost every foreclosure case: the Gulf Coast Business Review. And just last night, I had the opportunity to take a look at several of the “proof of publication” affidavits produced by that particular newspaper. You’ll be shocked at what I found.

Two things looked suspicious about the signatures on the affidavits. First, they were extremely uniform – almost identical. Second, the notary’s signature blocked out the signature line. Underneath the signature, instead of a line, there was just white space. These are classic signs of digital manipulation.

So I grabbed six different affidavits in a series of related foreclosure sales in Sarasota County. Once I had the digital images, I was able to copy the signature block by itself from each one, and digitally overlay them to see just how alike they were. One by one, the signatures showed themselves to be…

…identical. And you don’t need a 5710-A dual-column gas chromatograph with flame analyzation detectors to figure it out. You can just use your eyeballs. Here are two of the affidavits, one laid over the other (slightly offset so you can see both):

[click to enlarge]

Every letter on every affidavit, whether typed or signed, fell in exactly the same place on each sheet of paper – except the notary stamp. What does this mean? The affidavits aren’t affidavits at all – they’re computer-generated images that some foolish notary has been stamping her seal on. Knowing the volume of legal ads run by this paper, they’re probably generating hundreds of them for every issue.

And here’s the problem:

A notary public may not sign notarial certificates using a facsimile signature stamp unless the notary public has a physical disability that limits or prohibits his or her ability to make a written signature and unless the notary public has first submitted written notice to the Department of State with an exemplar of the facsimile signature stamp….

A notary public may not notarize a signature on a document if the person whose signature is being notarized is not in the presence of the notary public at the time the signature is notarized. Any notary public who violates this subsection is guilty of a civil infraction, punishable by penalty not exceeding $5,000, and such violation constitutes malfeasance and misfeasance in the conduct of official duties. It is no defense to the civil infraction specified in this subsection that the notary public acted without intent to defraud. A notary public who violates this subsection with the intent to defraud is guilty of violating s. 117.105.

Fla. Stat. § 117.107 (2) & (9) Mass-producing affidavit signatures like this, by computer, is flatly illegal. And if that’s what is really happening over at the Gulf Coast Business Review, this business is about to take a very interesting turn – for the worse. And for homeowners, it means one more chink in the armor, one more place to attack, one argument of last resort, before the sheriff comes to remove you from your home.

(Still doubting? Check out all six affidavits set one on top of another. The signatures line up, the letters line up, even the whitespace below the signature lines up – but the notary seals don’t.)

Thanks to notary Ron Gillis for teaching me more about Florida notaries than I ever thought I’d need.

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More bizarre foreclosure affidavits

Mike — Mon, 28 Jun 2010 19:31:13 +0000

The Plaintiff’s firm in a foreclosure action we’re defending just filed an affidavit in support of its request for attorney fees on this contested case. After reciting all the boilerplate preliminaries, the affidavit said:

Smith, Hiatt, & Diaz has reached a fee agreement with their client wherein the Firm is paid based upon a flat fee for uncontested foreclosures, such as this matter. The Firm is paid a flat fee of $1,300.00 for an uncontested foreclosure. To the extent an issue is raised which fails to raise a genuine issue of fact, but must be replied to, the Firm is paid on a flat fee basis for a response to the issue. The Firm does not maintain specific time records for uncontested foreclosures pursuant to it’s [sic] flat fee arrangement, therefore I have not reviewed specific time records.

I am familiar with the specific steps and requirements that the Firm must complete to handle an uncontested foreclosure to its conclusion. This knowledge, together with my understanding of the flat fee agreement, leads me to the opinion that a flat fee of $2,850 is reasonable. In my opinion reviewing the actual file in this case is not necessary and would be futile, therefore I have not reviewed the actual file.

This affidavit is, on its face, ridiculous. First of all, this is a contested case, so the uncontested rates wouldn’t even apply. But even if they did, Smith Hiatt & Diaz is asking for more than double its flat-fee rate with no explanation of how this “uncontested” case deserves more than double the going rate.

And there can be no explanation. Why? Because this affiant never looked at any time records – there weren’t any. He never looked at the actual file -because it would be “futile” and ” not necessary” to do so. So what, then, about this “uncontested” case makes it so special that they demand double the standard rate?

No one can say.

A few things are clear, though:

Foreclosure plaintiffs mills routinely submit “affidavits” that cheapen and demean the court system. The oath and signature are supposed to mean something – that the person signing vouches for the actual truth of what’s there, and understands that their signature is applied under penalty of perjury. Courts are supposed to be able to rely on these documents – but thanks to the foreclosure plaintiffs’ mills and others like them, unreliable, ill-though, even perjurious affidavits are just sloshing through the system as fast as some lawyers’ laser printers can pump them out. Thousands of them, in every courthouse. They corrode our faith in the judicial system, because judgments are entered every day based on these sworn statements. Even careful judges who insist on a high standard for such documents can’t catch them all. It becomes the duty of the plaintiffs who submit them and the defendants who oppose them to ensure that only truthful, valid, legitimate evidence makes it to the court file, and that’s all that the court uses to render its verdicts. Otherwise, our courts are nothing more than rubber-stamps for plaintiffs run amok.

Ricardo, Wasylik & Kaniuk Meet Other Foreclosure Fighters at Florida Bar Convention

Mike — Tue, 22 Jun 2010 02:43:57 +0000

Foreclosure fighters at the annual Florida Bar Convention

Later this week, the Florida Bar will have its annual convention in Boca Raton, Florida. The lawyers of Ricardo, Wasylik, & Kaniuk PL will be there collaborating with other foreclosure fighters and meeting homeowner advocates from all over the state to coordinate our battle plan for the next year.

There are two events in particular that everyone needs to know about.

The War Room: Strategy Meeting for Tried-and-true Florida Foreclosure Defense Lawyers

Thursday, June 24, 5pm – 9pm (Boca Raton Resort)
The purpose of the War Room is to share strategies and identify best practices to fight the most unfair and deceptive practices of the Millionaire Foreclosure Mills representing the banks.

Foreclosure defense attorneys attending the Bar Convention are invited to attend. For details, contact event coordinator Matt Weidner at weidnerlaw@yahoo.com

Strategic Defense Unit

Friday, June 25, 9am-5pm (Boca Raton Resort)

The second event is open to non-lawyers fighting foreclosures of their own, and it’s a chance for the consumer advocates to meet each other and with the lawyers fighting in the trenches against the banks. In the words of the organizers, it’s a chance to “Network with the best attorneys / advocates in the state of Florida.”

This event is being hosted the the good folks who run 4closurefraud.org and foreclosurehamlet.org. They are charging a $35 fee but it should be well-worth showing up

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Former Taylor Bean & Whitaker CEO indicted for massive fraud

Mike — Wed, 16 Jun 2010 18:54:24 +0000

We all knew that something funny was going on at Taylor, Bean & Whitaker. Now we know the Feds think so too:

[Lee Bentley Farkas] The former chairman of a large mortgage lending company has been charged in a $1.9 billion fraud scheme that contributed to the failure of Colonial Bank, one of the nation’s 50 largest banks before it was seized by regulators last year, the Justice Department announced Wednesday.

Court documents said Farkas and co-conspirators at both companies misappropriated more than $400 million from Colonial and about $1.5 billion from a Taylor Bean-owned firm to cover Taylor Bean’s operating losses. Farkas, 57, is also charged with trying to defraud the government out of $553 million in Troubled Asset Relief Program bank bailout funds as the losses mounted.

Actually, when you add that up, it’s closer to $2.5 billion. That’s a whole lot of jail time. In fact, it’s probably a life sentence under federal sentencing guidelines.

What does this mean for those who borrowed money from Taylor, Bean? It’s too soon to say, but it definitely means that any loan documents should be carefully reviewed for evidence of fraud in the origination of the loan, and all servicing records need to be reviewed for evidence of fraudulent charges.

(Photo Source: Marion County Sheriff’s Office)

How to clear the foreclosure docket: an open letter to Florida’s judges

Mike — Sun, 25 Apr 2010 00:17:45 +0000

Dear Florida judges:

You’re under a lot of pressure. We understand. Foreclosure cases are at an all-time high, and still rising – and you have to figure out a way to handle them all.

The foreclosure docket threatens to crowd out almost every other civil matter pending before the court – and now that foreclosure victims are getting wise and defending themselves instead of just rolling over, these cases are taking a lot more of the court’s time and effort than the old way, when uncontested foreclosures would be granted without any real critical attention to the evidence.

You’ve got chief judges breathing down your neck about the size of your docket, and the speed in which you handle these cases. While most of you became judges because you wanted to make important decisions, you’ve now been relegated to the role of case managers – speeding these cases along as fast as you can, ordering people out of their homes in five-minute hearings, relying on “evidence” that you wouldn’t even consider in any other kind of civil case, taking as true the representations of plaintiffs’ lawyers that you know have taken shortcuts in other cases… this isn’t why you went to law school.

I’ve got some good news for you: there is an answer to this overwhelmed docket. It’s called due process. And there are a number of ways in which due process will solve your ills.

Dismiss cases that should be dismissed.

The easiest way to clear your docket is to remove cases. Many judges take that approach in favor of the plaintiff: granting summary judgment prematurely, ordering the home sold, even when there are real factual issues that should prevent that. But most foreclosure cases, as they are filed today, should never make it to that stage. The complaint – the initial papers – are so completely defective that the court should throw them out on its own accord.

For example, since February 11, 2010, the Florida Supreme Court has required that all foreclosure complaints be filed under oath – “verified,” as the rule calls it. Few foreclosure plaintiffs’ law firms are submitting these sworn complaints, and unsworn complaints should be thrown out. At least one county is about to announce a policy of throwing them out without leave to amend – the plaintiff must re-file, and pay another $1,900 filing fee. They won’t make that mistake too many times.

Many other complaints should be tossed as well for a complete failure to state a claim. Where it’s obvious from the pleadings and the exhibits that the wrong bank has filed – kick it. This takes the case off your docket, and prevents sloppy lawyers on the plaintiffs’ side from wasting your time with cases that should never have been filed.

Circuit courts that get a reputation for dismissing non-compliant or sloppily-pled cases will soon find that they have fewer of those cases to deal with, and can focus on the ones that have merit.
Make plaintiffs respond to discovery.

One of the greatest complaints from the foreclosure defense bar is that plaintiffs deliberately stonewall and raise frivolous objections when met with even the most basic of discovery requests. I routinely ask plaintiffs to tell me who the witnesses are that know about the facts of their case – a simple, fundamental request that should be fully answered in all civil cases.

They object, every time.

I ask them for documents to prove they have the right to enforce the loan. Same boilerplate objections. I ask for documents my client has signed – objection. I ask for statements they’ve made to third parties about the loan – objection. All of these thing,s and many more, are routine discovery requests that the parties are entitled to ask and have answered. But in foreclosure cases, it’s almost impossible to get those answers.

But what if foreclosure cases wee treated the same way as all other civil matters? The judge would order the discovery answered. The plaintiff would either obey the rules and comply…. or they wouldn’t. And if they don’t, the case should get thrown out. And sometimes, they do.

Throwing cases out because a plaintiff has filed to obey the rules of discovery is a time-honored response to foot-dragging and stonewalling… in very other civil case. So too should it be in foreclosure cases.
Throw cases out for fraud or dishonesty.

Fraud on the court cannot be tolerated. Unfortunately, it happens all too often in foreclosure cases. Sworn testimony of the people working for plaintiff’s law firms has shown time and time again that foreclosure mills generate fake documents as “evidence” to submit to the court, and every once in a while, that fraud gets discovered. Dismiss those cases with prejudice and they’ll never come back. Sanction those attorneys and they’ll stop committing fraud on the court. And if they don’t have the evidence to foreclose – which is surely the reason they take the risk of fabricating it – they won’t file the case in the first place. There’s a another dent in the docket problem.
Stop granting summary judgment on flimsy evidence

Summary judgment, all too often, cuts off a defendants’ right to trial in a foreclosure case even though the plaintiffs’ “evidence” is flimsy at best… a far cry from the “slightest doubt” standard that is supposed to apply in a summary judgment proceeding. Judges should deny these cases and allow them to go to trial.

This is counterintuitive – reduce your docket by spending more time on each case? Here’s how that will work – a trial flushes out those cases in which the evidence is too slim to grant the foreclosure. Each piece of evidence may be challenged, and if it falls short, excluded from admission. At first, this will take more time to process, but after losing a few cases when the evidence simply isn’t there, plaintiffs’ lawyers will stop bringing flimsy cases. And since so many of these cases involve flimsy evidence, the total number of cases filed will drop.

I could go on for days about the due process as a matter of fairness and justice. Instead, I’d like you to think of it in a new way: a way to improve your efficiency.

1 Rule 1.110 (b), Fla. R. Civ. P., now states:

When filing an action for foreclosure of a mortgage on residential real property the complaint shall be verified. When verification of a document is required, the document filed shall include an oath, affirmation, or the following statement:

“Under penalty of perjury, I declare that I have read the foregoing, and the facts alleged therein are true and correct to the best of my knowledge and belief.”

Lawyers for Homeowner Rights sponsor Rally in Tally

Mike — Tue, 20 Apr 2010 17:17:40 +0000

Lawyers for Homeowner Rights, a group of Florida foreclosure lawyers dedicated to protecting the legal rights of Florida homeowners, are set to march on Tallahassee to protest a dangerous new foreclosure law proposed by the banks.

What if you were accused of a crime, convicted, and sentenced without a trial?

Imagine you were accused of a crime… and you were never charged, never told the evidence against you, never brought before a judge to determine if there were probable cause. Instead, the police just filed a document at the courthouse accusing you and mailed you a copy. If you didn’t respond within thirty days, you would be convicted and sentenced without trial. And then, imagine it was worse – if you contested the charges, the government didn’t have to prove you did it – you had to file a court case and prove your innocence. If you couldn’t prove that, you would be convicted and sentenced.

Not a single one of you think that’s fair. So why does your bank want to change Florida foreclosure law to work like this?

Your bank wants to foreclose your house without any proof.

Time after time you’ve read in this space how the banks and their lawyers have tried to foreclosure on Florida homeowners with inadmissible, or even faked, evidence of debt. And judges are starting to catch on. And the bankers, used to getting what they want, are starting to get frustrated by having to produce all this “proof” and “evidence” before taking away your home. So they’re asking your Florida legislature for permission to write the court system out of the process entirely.

Lawyers for Homeowner Rights fight bank attempts to write new loopholes into law

The new law would create a new “non-judicial” foreclosure process, where the banks no longer need permission from a judge to sell your house or produce any evidence that they’re entitled to do so. And if you, the homeowner, want to challenge it, you have to file your own lawsuit, pay the filing fees (up to $1,900.00!), and then hope you can prove your case, instead of the other way around. And that’s just not fair.

The banks pushing this new bill claim that it will help clear the current backlog of foreclosure cases. They’re lying sacks of dung. Let me say that again – they’re lying sacks of dung. This new bill won’t touch a single case that’s already pending in the court system; it won’t even reach the vast majority of current home loans. Only new loans taken out after the bill passes would be affected, and that means that anyone who hopes to buy a home after this session would be targeted by this bill.

So the banks are trying to exploit this current crisis by short-circuiting the rights of all future buyers, and the “solution” they propose doesn’t solve a thing. The good news? There’s someone fighting back.

Lawyers for Homeowner Rights

A group of foreclosure lawyers from all over the state of Florida has formed Lawyers for Homeowner Rights, a group dedicated to protecting the legal rights of homeowners. On Wednesday, LHR will hold a “Rally In Tally”, busing lawyers, consumer advocates, and homeowners in from several key Florida cities (including Tampa and Jacksonville) to confront state legislators and demand they support homeowners, not bankers.

The Rally begins at 9:00 a.m. on the steps of the state capitol. Everyone is invited who wants to help protect Florida’s homeowners from the grasping of the banks, and their desperate attempt to cut fairness out of the foreclosure process once and for all.

Along with the attorneys of Ricardo, Wasylik, & Kaniuk, these lawyers and several others are founders of LHR:

Remember – the government answers to you.

Download LHR’s press release about the Rally in Tally [pdf]

( Photo source / Photo rights )

Foreclosure mill lawyer Forrest McSurdy calls truth a “technicality”

Mike — Mon, 19 Apr 2010 16:10:13 +0000

The Wall Street Journal published an article on the two Sixth Circuit cases I wrote about last week, both the Harpster and the Visicaro cases. The article quotes a lawyer in David J. Stern’s office, Forrest McSurdy, who makes the outrageous statement that:

Judges get in a whirl about technicalities because the courts are overwhelmed. The merits of the cases are the same: people aren’t paying their mortgages.

This statement is wrong on so many levels, I only have time to address a few.

The truth is not a “technicality.”

What this judge called a “fraud on the court,” McSurdy called a “technicality.” The judge is right – this document was a fraud. McSurdy claims that the document was signed several months before being notarized, but the document itself shows that this is false. The notary signed and dated the document for Dec. 5, 2007, but the notarial seal was not issued until several months later. his means one of two things must have happened:
1. Terry Rice acknowledged the document on December 5, 2007, several months before the notary commission was issued;
2. Terry Rice acknowledged the document on December 5, 2007, under a previous notarial commission, but failed to stamp it until that commission had expired and was later renewed; or
3. Terry Rice acknowledged the document several months after December 5, 2007, but back-dated it to reflect a the earlier date.
Numbers 1 and 3 are fraud; number 2 is gross incompetence. Maybe McSurdy is going for 2? In any event, for the Law Office of David J. Stern to submit an improperly-notarized document like this is not a mere oversight.
The Constitution is not a “technicality.”

McSurdy tries to downplay the importance of this false documentation by calling it a mere “technicality.” However, when considering the evidence submitted in support of a summary judgment, the courts have found such “technicalities” like truth to be of utmost importance. Take a look at Bifulco v. State Farm Mut. Auto. Ins., 693 So. 2d 707, 709 (Fla. 4th DCA
1997):

We note at the outset that a trial court, in passing upon a motion for summary judgment, is bound by the procedural strictures inherent in Fla.R.Civ.P. 1.510… [T]he procedural strictures inherent in the Florida Rules of Civil Procedure governing summary judgment must be observed… The procedural strictures are designed to protect the constitutional right of the litigant to a trial on the merits of his or her claim. They are not merely procedural niceties nor technicalities.

(Emphasis added.) This is not simply a loophole – this is a fundamental matter of justice. (And, I wonder, what kind of “whirl” you’re going to see this judge in next time you’re before her?)
The “whirl” of too many foreclosure cases

McSurdy blames the courts for this one – they’ve got so many foreclosure cases, he claims, that they’re taking extra time to parse each one for all kinds of minute flaws in the evidence! Actually, quite the opposite is true, and as Judge Rondolino describes, most judges are too busy to parse through all the paperwork submitted to the court in a meaningful way – until they realize how often that paperwork is completely inadmissible. And that’s a large part of the reason why David J. Stern and law offices like his operate the way they do – because for too long, too many foreclosures went unchallenged and too many judges didn’t notice the fakery until it was pointed out to them. And now they’re experiencing some buyer’s remorse.
The merits of the case

The merits of these cases are often the same: plaintiffs, who don’t own the loans, don’t have the legal right to enforce them, and who, in many cases, fraudulently induced the borrowers to default by promising them modifications if they would only stop paying, are systematically throwing people out of their homes by submitting fraudulent evidence to paper over the fact that they didn’t do their only job – keep track of the loan. And their lawyers are systematically forging documents for submission to the court, in an attempt to paper over the sins of their clients.

That’s the merit of these cases. And they’re all the same.

Forrest McSurdy should really reconsider his remarks, if he intends to continue practicing law in this state.

Obama foreclosure relief plan falls flat, says Congress.

Jason — Wed, 14 Apr 2010 16:12:31 +0000

Here’s something most of you already know: federal government programs designed to help homeowners stave off foreclosure just aren’t working. A Congressional Oversight Panel investigating foreclosure relief programs found that the programs are almost universally disappointing:

Only 1 in 6 homeowners in foreclosure crisis have been helped.
Only one million families will lower their payments through this plan, out of six million current and expected foreclosures.
The $75 billion allocated for foreclosure relief gets paid mostly to mortgage investors, not homeowners, but only if the investors lower monthly mortgage payments for borrowers
Programs created more than a year and a half ago are still not fully implemented.

This sad, but not unexpected, failure of government relief programs underscores why most homeowners facing foreclosure should seek the assistance of a licensed attorney who understands how foreclosure works. Don’t be part of the 5 million families that won’t get help,

( Photo Source / Photo Rights )

Why this Pinellas judge may never admit another foreclosure affidavit

Mike — Mon, 12 Apr 2010 17:51:02 +0000

Foreclosure should almost never be granted by summary judgment. That’s what I believe, and that’s what most of the lawyers who defend foreclosures in Florida believe.

Now, it looks like there’s at least one judge who is starting to think that way too.

Before I share with you why this judge may never again grant another foreclosure summary judgment, let me give you a little bit of background. About three months ago I defended a summary judgment hearing for this client. The plaintiff had submitted an affidavit – a sworn statement – testifying to all sorts of facts, even though it was obvious from the face of the affidavit that the person making the statement couldn’t possibly know what those facts really were. At the hearing, I argued that the affidavit was not admissible, that the court should throw it out and deny the motion for judgment. Unfortunately, at that time the court disagreed with me, entered judgment against my client, and set a sale date. Almost immediately, I asked the judge to reconsider his ruling – and did he ever.

The attached hearing transcript [PDF - foreclosure affidavits invalid] shows a judge who takes his job seriously, a foreclosure mill that can’t get its act together, and a foreclosure defense lawyer who wouldn’t give up (me).

You’ll want to read all 24 pages of this, but let me break out a few observations for you.

Summary judgment in foreclosure cases should almost never be granted.

On page 18, line 13, I lay out the case for denying these motions almost every time. A summary judgment should not be granted unless the moving party shows the facts that entitle it to judgment are established beyond the “slightest doubt.” That’s a higher burden than a criminal defendant enjoys – a mere “reasonable doubt.” Under the law, it’s harder to obtain a summary judgment in a foreclosure case than a criminal conviction. And up to now, few judges apply that standard in foreclosure cases as they should.
Affidavits in foreclosure cases are unreliable hearsay.

My argument for throwing the affidavit out is that the “testimony” in it was inherently unreliable. The affiant (the person making the statement) effectively stated that she had read some records and that was the basis for her testimony. But as the judge recognized on the rehearing, that’s hearsay, and it’s not admissible. It’s also worth noting that the affiant in this case was an employee of the plaintiff’s law firm – the Law Office of David J. Stern – and not an actual employee of the supposed plaintiff…. so there’s no way she could testify about the facts of this case. Perhaps most important of all, I have seen hundreds of motions for summary judgment in foreclosure cases, and not one of them met the requirements for admissibility. Not one. So read the transcript, look at the cases I’ve cited, look at the cases the judge cites, and see how they apply to your own foreclosure cases.
Some judges care about getting it right.

As you read the transcript, you will see that this judge not only read my brief and the cases I cited, but also did extensive additional research on his own – even during the hearing itself! This judge obviously cared about getting to the right answer, and even when he thought he knew the right answer already, said “I’m just begging you to send me some cases that would help me….” Every judge should care this much about doing the right thing.
This is an epidemic.

What got this judge so fired up about foreclosure affidavits? Between my first hearing and this one, he found a case where two separate banks filed foreclosure cases against the same defendant, on the same note. It gets worse: both plaintiffs were represented by the same law firm, which was the same one in this case. Even worse: both cases involved the same person signing two different affidavit, one for each bank, each affidavit claiming that bank owned the note. The very same person! Obviously, the people signing these affidavits have no idea whether they’re true or not. The judge talks about this other case on the record, on pages 6 and 7 of the transcript.
It’s hard to speak up when you’re getting pummeled.

Plaintiffs’ firms are ill-equipped to handle these arguments, properly presented. This case is no different. At one point, the judge was incredulous that the plaintiff’s lawyer had a copy of this motion for weeks, but apparently had not even read it, and on multiple occasions, made references to some case law that he couldn’t even identify for the court. Look to pages 9 and 10 of the transcript for that, but first look at line 18 on page 9, where the judge asks the plaintiff’s lawyer to speak up even though he was getting “pummeled.”
Ladies and gentlemen, start your depositions.

This quote speaks for itself:

THE COURT: You know what I’d really like to see? I’d like to see in one of these cases where a defense lawyer cross-examines, takes a deposition of these people, and we can see whether they ought to be charged with perjury for all of these affidavits.

That’s page 15, lines 20-25. Fortunately, a number of such depositions have been taken. One’s already been taken of the affiant in this particular case.

The tide is turning. Fight your foreclosure – you just might win.

Forged foreclosure filings by David J. Stern anger Pasco judge

Mike — Wed, 07 Apr 2010 17:04:47 +0000

Foreclosure plaintiff submits faked assignment documents in Pasco case

Imagine you’ve been sued for foreclosure. Now, imagine the plaintiff submits, as evidence, a bunch of falsified documents to establish its right to foreclose.

That could never happen, right?

Wrong. It did, and Pasco Judge Lynn Tepper found out and would not stand for it, in U.S. Bank, N.A. v. Harpster (51-2007-CA-6684ES) [PDF]

In the Harpster case, the plaintiff, represented by the Law Office of David J. Stern, submitted to the court an “assignment of mortgage” which supposedly gave the plaintiff, U.S. Bank, the right to proceed with the foreclosure. Cheryl Samons (actually an employee of David Stern) signed the affidavit as the “Assistant Secretary” of MERS, and Terry Rice, a Florida Notary Public, notarized it.

All this supposedly happened on December 5, 2007. Only one problem – the notary’s stamp said Terry Rice’s commission expired on May 19, 2012. That stamp could not have been lawfully issued any time before May 19, 2008. So that assignment document wasn’t really signed on December 5 of 2007 – unless our notary has discovered a way to travel in time.

Judge Tepper was none too pleased about the fraud. When informed by Tampa attorney Ralph Fisher, she not only threw out the fraudulent assignment documents, she dismissed the case “with prejudice” – meaning that U.S. Bank can never again file a foreclosure action against this defendant. It seems pretty likely, now, that the Harpsters are going to get to keep their house as long as they like.

Faked foreclosure filings by plaintiffs are all too common

Our firm has discovered that foreclosure plaintiffs file false documents all the time. Just last week, I was in a hearing before another judge, who told me a bout a case he had just discovered where two different banks tried to foreclose on the same note against the same defendant. Each plaintiff submitted a sworn affidavit claiming that it owned the note.

Who signed the affidavits for those two banks? The same person – an employee of the plaintiff’s law firm, the Law Office of David J. Stern, P.A. Obviously, this judge was none too pleased, either. Surely, he’s wondering how many forged documents have slid through in cases that he wasn’t able to spot.

As my colleague Matt Weidner points out, these cases underscore a very important lesson for both defendants and their attorneys alike:

Believe nothing.
Challenge everything.
And don’t give up hope.

Congrats to attorney Fisher for a job well done.

Foreclosure lawsuits are built on lies: Shapiro & Fishman admits foreclosure claims cannot be verified

Mike — Thu, 25 Mar 2010 21:15:57 +0000

New foreclosure lawsuit rules require plaintiffs’ mills to tell the truth -and boy, are they mad!

On February 11, the Florida Supreme Court amended the rules of foreclosure proceedings in a radical way: they want someone to swear that the allegations in the complaint are actually true. (Buncha bomb-throwers, aren’t they?)

The amended rule says:

When filing an action for foreclosure of a mortgage on residential real property the complaint shall be verified. When filing an action for foreclosure of a mortgage on residential real property the complaint shall be verified. When verification of a document is required, the document filed shall include an oath, affirmation, or the following statement:

“Under penalty of perjury, I declare that I have read the foregoing, and the facts alleged therein are true and correct to the best of my knowledge and belief.”

Plaintiffs’ foreclosure mills can’t handle the truth

For the plaintiffs’ law firms, the foreclosure mills filing all these lawsuits, the new rule is a disaster – because they can’t possibly confirm the truth of what they file with the courts. How do we know this?

One of them actually told the Florida Supreme Court so. Shapiro & Fishman, one of Florida’s largest foreclosure mills, has asked the Court to back down from the verification requirement, with the astonishing reason that it’s impossible to get anyone to swear to the truth of a foreclosure complaint.

Plaintiffs’ lawyers don’t know the truth

In their “Motion for Rehearing,” [PDF] Shapiro explained that their lawyers cannot ethically swear to the truth of the papers they file with the court, because they rely on information from others:

It is also unclear whether an attorney or law firm representing a lender can verify a mortgage foreclosure complaint based upon information he/she/it obtained from the client or other parties, including the holder of the note and the servicer.

Plaintiffs don’t know the truth

Well, ok…. If the lawyers can’t do it, how about their clients, the plaintiffs who claim to own the loan? Nope, says Shapiro:

[W]hile the holder of the note may have some limited knowledge in order to verify portions of the complaint, it may not have the necessary knowledge to verify the remainder of the complaint. For example… it may not have personal knowledge of when the last payment on the note was made or if a default notice was mailed to the client.

No one knows the truth!

So… the supposed owner of the note ordinarily has no idea when or if they’ve been getting paid? That may sound crazy, but many lender hire “servicing agents” – in essence, bag men – to collect their money for them from borrowers. So, why couldn’t the servicing agents swear to the truth of the complaint? Shapiro says, it’s because they don’t know enough, either…. and what they don’t know will surprise you: who these bag men work for.

The loan servicer would, presumably, have that knowledge [about payment status of the loan]… but likely would not have personal or direct knowledge of other factual allegations.

What “other factual allegations”? Simple things, like who owns the note – the very people these bag men are supposedly collecting for. (If they don’t even know, then who does?)

Ripping the mask off foreclosure plaintiffs’ lies

There’s one giant, gaping hole in Shapiro’s argument to the Supreme Court. In every foreclosure action, these law firms submit to the court evidence in the form of affidavits – sworn written statements – which are supposed to swear to the truth of all the elements of the plaintiffs’ claim. These affidavits are the basis for judgment in more than 99% of all foreclosure cases where the house is sold.

And Shapiro has just admitted that they are false. Because the one person signing them cannot possibly have “personal knowledge” of all the facts of the case – at least, that’s what Shapiro has said.

And for the first time in a long time, I believe them.

( Photo source / Photo rights )

MERS (What’s in your mortgage?)

Mike — Thu, 18 Mar 2010 16:57:13 +0000

Mars - not your mortgagee

The MERS Conveyance

The heart of your mortgage – the most important clause in the entire document – is the “Transfer of Rights in the Property” clause. This is the language that creates the lender’s security interest backing the loan – it’s the sentence that allows them to foreclose if the borrower doesn’t pay.

But many Florida mortgages contain a bizarre twist – the mortgage conveyance does not go to the lender – whoever made the loan – but to another entity known as “MERS.” This strange construction – where the loan goes one way and the mortgage goes another – runs against real estate law that has existed for hundreds of years and may have serious consequences for anyone trying to enforce that mortgage.

What is MERS?

MERS is such a strange creature that courts have repeatedly had to explain exactly what it is anytime they deal with it. I’ll turn it over to the judges:

In 1993, the MERS system was created by several large participants in the real estate mortgage industry to track ownership interests in residential mortgages. Mortgage lenders and other entities, known as MERS members, subscribe to the MERS system and pay annual fees for the electronic processing and tracking of ownership and transfers of mortgages. Members contractually agree to appoint MERS to act as their common agent on all mortgages they register in the MERS system.

The initial MERS mortgage is recorded in the County Clerk’s office with “Mortgage Electronic Registration Systems, Inc.” named as the lender’s nominee or mortgagee of record on the instrument. During the lifetime of the mortgage, the beneficial ownership interest or servicing rights may be transferred among MERS members (MERS assignments), but these assignments are not publicly recorded; instead they are tracked electronically in MERS’s private system. In the MERS system, the mortgagor is notified of transfers of servicing rights pursuant to the Truth in Lending Act, but not necessarily of assignments of the beneficial interest in the mortgage.

MERSCORP, Inc. v. Romaine, 861 N.E.2d 81 (2006)

MERS operates much the same way in Florida:

Here, MERS’s counsel explained to the trial judge at the hearing that, in these transactions, the notes are frequently transferred to MERS for the purpose of foreclosure without MERS actually obtaining the beneficial interest in the note.

Mortgage Electronic Registration v. Azize, 965 So.2d 151 (Fla. 2d DCA, 2007)

The purpose of MERS is to sidestep local and state requirements that mortgage documents be placed in the public record – and also to avoid the fees that attach to such recording. As a consequence, there is little or no public record as to who actually owns the loan on your home or who might have the right to foreclose.

You’ve got a MERS in your mortgage

The mortgage contains one very specific clause that grants a lender the right to foreclosure on a defaulted loan, called the “conveyance” clause. It used to say:

This Security Instrument secures to Lender: (i) the repayment of the Loan, and all renewals, extensions and modifications of the Note; and (ii) the performance of Borrower’s covenants and agreements under this Security Instrument and the Note. For this purpose, Borrower does hereby mortgage, grant and convey to Lender, the following property…

With a MERS instrument, the last sentence is changed to read:

For this purpose, Borrower does hereby mortgage, grant and convey to MERS (solely as nominee for Lender and Lender’s successors and assigns) and to the successors and assigns of MERS, the following property…

It’s that sentence that creates a whole lot of problems. First of all, no one really knows what it means to say MERS is “solely as nominee for Lender.” That seems to invoke a bizarre legal scenario in which the borrower somehow creates an agency relationship between the Lender and MERS. To make this more clear: any mentally sound person can, with proper procedures, appoint a person to act on their behalf as an agent, and to handle their business or personal affairs. But no person can appoint an agent to act for someone else without that person’s permission. That’s what seems to be happening here.

The second problem with that MERS conveyance is that it seems to create some limited power of MERS. Unlike an agent who is fully authorized to act for the Lender, MERS is, in this case, “solely” the “nominee” for the Lender. While it’s not clear exactly what that includes, it’s clear that it does not include the type of broad, sweeping powers an agent would need to have in order to do many of the things that MERS pretends to be able to do with your mortgage – especially to assign it to someone else.

The third problem may be the biggest. Under Florida law, and the laws of many other states as well, a mortgage cannot exist without the debt it is supposed to secure. The mortgage, in other words, always follows the note. But in MERS conveyances, that doesn’t happen. The mortgage, at its inception, goes in a different direction than the debt – the note goes to the lender, but the mortgage goes to MERS. (This is commonly referred to as “bifurcation.”) It’s not clear at this point whether MERS’ status as “nominee” is enough to pretend that the lender is holding the mortgage through its supposed agent, MERS… but if it’s not, there are decades of case law that say that the mortgage conveyance to MERS may be a nullity.

Let me say that another way: it’s as if the mortgage were never created at all.

And without a mortgage, there’s no foreclosure. There’s still a note, and a debt, but the house is free and clear.

Is there life in MERS?

None of these problems with the MERS conveyance have yet been addressed by any Florida court, and it’s not yet clear how they would rule if they did. However, if you haven’t yet signed your mortgage, it’s something you need to be aware of, and if you already have a mortgage with MERS in it, you need to know that these issues exist if you ever find yourself facing a foreclosure action.

Read the whole “What’s In Your Mortgage” series here.

Clear Image Financial Group, Inc. shut down by state regulators for loan modification violations

Mike — Thu, 18 Mar 2010 16:30:09 +0000

The Tampa Tribune reports that state regulators have shut down Clear Image Financial Group, a Tampa-area loan modification firm.

“We have a lot of people out of work and struggling to keep their homes that are looking for help. Some are paying for services they never get,” said the agency’s Commissioner Tom Cardwell. “It is important that our residents know their rights and the laws that help protect them from being victimized in their time of need.”

The agency’s cease-and-desist order was based on the Clear’s alleged acceptance of up-front fees for loan modification services, which is usually illegal in Florida.

Loan modification failures

The state rarely acts unless it gets complaints from consumers, so it seems very likely that the people who hired this company to help them obtain loan modifications did not get the results they were seeking. Does this mean Clear failed to do what they promised? Possibly, but not necessarily. It’s very likely that, no matter what they tried to do, the company would have been unable to get loan modifications for its customers anyway.

Although there’s a lot of buzz about loan modifications and how they can benefit borrowers, most of that buzz is pushed by loan-mod consultants hoping to charge consulting fees, or from large institutional banks under government pressure to look like they’re actually doing something to help borrowers. The actual numbers are a lot more disappointing: according to the Treasury department, only 116,000 permanent modification have occurred under the entire duration of the HAMP program, but over 240,000 “trial” modifications have not been made permanent (i.e., they failed.) Compare this to the 300,000 foreclosures that occur across the country every month. Loan modification is just a drop in the bucket.

Don’t lose your home waiting for an illusory promise of a loan modification

All too many of these hopeful borrowers are pursuing loan modification as a stop-gap to prevent foreclosure. In the meantime, they fail to fight the foreclosure lawsuit that always comes, sooner or later, because somewhere along the line, someone promised them that their loan would be modified. (I’ve even heard of borrowers who skipped court proceedings entirely for exactly that reason – and then lost their homes because they weren’t there.)

If you don’t fight for your home, then odds are you’re not going to get a new loan to save it either. Don’t rely on false promises of loan modification unless you have someone in your corner who’s ready, willing, and able to fight the banks on the loan mod.

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Back from the debt: owing money on property you thought you paid off

Jason — Mon, 15 Mar 2010 18:43:59 +0000

When you sell a piece of property you generally presume that you are no longer responsible for what might happen to the property after it’s transferred to the new owners, but that’s not what happened to a recent caller to the firm looking for help.

This individual called to ask how she could be responsible for a property after she quit-claimed the deed to her ex-husband. In her situation, a divorce court had ordered the property to be transferred to the husband and that he would refinance the property, removing the wife from the mortgage, note and deed. And he complied. The property was refinanced, properly, and the ex-wife was removed from the deed and the mortgage and the promissory note.

A couple of years later, the husband fell into default with the mortgage, and the bank sued to foreclose, and won. Unfortunately, the bank had lost the new note, and through a series of mistakes, attached the original note, the one showing the ex-wife as responsible for the note, to the judgment. Neither the attorney for the bank nor the judge caught the error, and after all was said and done, a judgment was entered against both the ex-husband AND the ex-wife.

She called wondering if this could be corrected. The answer is yes, it can be. This is a simple mistake, and Florida Rules of Civil Procedure 1.540(b) allows for mistakes such as these to be corrected. Of course, it is not done automatically. To get the correction, the ex-wife will have to file the proper motion with the court in a reasonable amount of time, not longer than one year. Time is of the essence in a situation like this. Failure to correct this judgment could result in the former owners being responsible for the unpaid amounts due to the bank.

( Photo Source / Photo Rights )

Notice of default (What’s in Your Mortgage?)

Mike — Thu, 11 Mar 2010 17:52:53 +0000

Your mortgage is a thick, dense, practically unreadable document that dictates many of the terms of the relationship between the borrower and the lender on a typical home loan. The document itself is written by the bank’s lawyers, and most of them tend to use specific language that has been tried-and-true in other deals. In other words, most mortgage contracts are cobbled together from boilerplate that appears in loan after loan after loan, almost all of it meant to protect the lender’s interest.

But even though these contracts are put together by the lenders’ lawyers, there are a few items in there that work to the borrower’s advantage. One of these: the Acceleration and Remedies Clause. In many Florida mortgages, you’ll find it in Paragraph 22 of the mortgage. Here’s an example:

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 Borrower of the right to reinstate after acceleration and the right to to assert in the foreclosure proceeding the non-existence of a default or any other defense of Borrower to acceleration and foreclosure. If the default is not cured on or before the date specified in the notice, Lender at its option may require immediate payment in full of all sums secured by this Security Instrument without further demand and may foreclosure this Security Instrument by judicial proceeding. Lender shall be entitled to collect all expenses incurred in pursuing the remedies provided in this Section 22, including, but not limited to, reasonable attorneys’ fees and costs of title evidence.

How does this language protect you? By imposing certain pre-conditions – lawyers call them “conditions precedent” on the lender – certain things that must be accomplished before the lender accelerates or forecloses.

Acceleration

Before we get to the specific conditions, we need to be clear on what “acceleration” means. Because mortgage loans are typically paid off over time, in installments, the full amount of the mortgage is not due until the very end of the loan. However, if the borrower misses a few payments, or breaks the agreement with the lender in some other way, the lender typically has the option to “accelerate” the loan – make the entire amount of the loan due immediately. Without acceleration, the lender can only demand those amounts which have already been due and not paid – usually only a fraction of the total amount loaned. And if the lender can’t recover all or most of what is has lent out, there’s no point in foreclosing. Hence, the acceleration right.

You're on notice!

Notice: the form and contents

But before the lender can accelerate the loan, it first has to fulfill its duties under the Acceleration and Remedies paragraph – in this case, Section 22. The lender has to send the borrower a written notice that the borrower is in default and then give the borrower a chance to fix the problem – a chance known as the Right to Cure.

What must the notice say? It’s all set out in the mortgage:

(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 and sale of the Property.

The notice shall further inform Borrower of the right to reinstate after acceleration and the right to to assert in the foreclosure proceeding the non-existence of a default or any other defense of Borrower to acceleration and foreclosure.

So it the notice must tell you, the borrower:

(a) what went wrong;
(b) how to fix it;
(c) when it must be fixed, giving at least 30 days
(d) what happens if you don’t fix the problem – acceleration, foreclosure and sale of the home;
(e) that you have the right to fight back.

If the lender fails to give this notice, fails to give it more than 30 days before acceleration, or the notice is missing any of these essential parts, they do not have the right to accelerate, and they do not have the right to foreclose.

Read the whole “What’s In Your Mortgage” series here.

How to beat foreclosure the wrong way: bankruptcy abuse

Mike — Sun, 07 Mar 2010 01:46:25 +0000

How to beat foreclosure

Today’s St. Petersburg Times features a front-page story with the bold-face heading “How to Beat Foreclosure” and tells the stories of people who have stayed in their homes for years by gaming the system.

Only one problem: filing bankruptcy time and time again is an abuse of the system, and can cause you a lot more trouble than it’s worth. And ultimately, it’s not necessary at all.

Bankruptcy abuse

The article tells the story of a handful of families who have managed to stop foreclosure sales by filing bankruptcy once, twice, even as many as eleven times. Unfortunately, this tactics won’t work for long, as judges are starting to get wise. And they have options:

Under a “three-strikes and you’re out” rule, debtors on a third filing get no relief from foreclosure if they had two cases pending in the previous year. In addition, judges are giving banks and other creditors more opportunity to request a one- or two-year ban on filings by those who seem to be abusing the system. And judges can order serial filers to appear in person and show cause why their case should not be dismissed.

Foreclosure defense, not bankruptcy, may be the better answer

The good news is, most homeowners don’t need to file bankruptcy to avoid a foreclosure. All they need is a good lawyer who knows how to defend a foreclosure case. Because of the way that mortgage loans were re-packaged and sold off in bundles over the last decade, many of the so-called lenders bringing foreclosure cases can’t prove that the borrower actually owes any money to them. And if they’re not the ones that have the right to collect, they’re not the ones who have the right to foreclose. Lawyers and judges call this legal concept “standing.”

(Curious? Confused? Check out the free 30-page Consumer’s Guide to Fighting Florida Foreclosure for more information.)

Foreclosure plaintiffs have no leg for standing on

So what does a “standing” defense mean to you? Well, if you’ve ever heard of a “produce the note” defense, that’s essentially a variety of a standing defense – because in most cases, only the party holding the original note has the right to foreclose. That’s why a foreclosure complaint with a “lost note” allegation is such a problem for the court system.

But who cares? You owe the money to someone, does it really matter which bank tries to take your house?

Absolutely it does.

Here’s why: there are cases in Florida where one party, claiming the right to enforce a mortgage note, foreclosed on property, sold the property, got paid, and the borrower walked away… only to find out, some time later, that some other lender held the note, and sued them for it.

Standing: a protection against borrowers paying twice for the same loan

So, you ask, what happened in these cases? Surely the courts must have sent the second plaintiffs packing, since the debt had already been paid…. right?

Wrong.

The party holding the note had a right to be paid, period. And so these borrowers had to pay twice, because they didn’t challenge the right of the foreclosing plaintiff to enforce the note.

Don’t pay twice on the same debt

If you don’t mind paying for your home twice, once at the foreclosure sale and then again later when someone else shows up with the note, then go ahead – let your house go into foreclosure without a fight. But if you want to make sure that your rights – including the right to pay only once for your loan – then fight. The good news is, Florida appellate courts recognize the importance of standing – and have started to throw out foreclosure cases where the lenders can’t prove their right to collect.

So if you’re facing foreclosure, call a lawyer right away.

The bank can change your locks before foreclosure. (What’s In Your Mortgage?)

Mike — Thu, 25 Feb 2010 18:02:39 +0000

Locked out

Imagine this: you’re on a two-week vacation. You come back, and find a notice on your door:

Entry by unauthorized persons prohibited.

Alarmed, you try your key in the lock – it doesn’t fit. You peek through the windows and see that everything you left behind is gone – your furniture, your clothes, your photographs – everything.

You’ve been a victim of your mortgage.

Protection for the bank but not for you

At issue is a clause in most mortgages that allows the bank to “protect its interest” in the “security” pledged for the loan – in other words, your home. If the bank, or its inspectors, decide at any point that you’ve “abandoned” the home, they claim the mortgage gives them the right to change the locks, board the windows, drain the pipes, and clean out any trash.

Here’s the language most commonly used in many Florida mortgages:

9. Protection of Lender’s Interest in the Property and Rights Under this Security

Instrument. If (a) Borrower fails to perform the covenants and agreements contained in this Security Instrument, (b) there is a legal proceeding that might significantly affect Lender’s interest in the Property and/or rights under this Security Instrument (such as a proceeding in bankruptcy, probate, for condemnation or forfeiture, for enforcement of a lien which may attain priority over this Security Instrument or to enforce laws or regulations), or (c) Borrower has abandoned the Property, then Lender may do and pay for whatever is reasonable or appropriate to protect Lender’s interest in the Property and rights under this Security Instrument, including protecting and/or assessing the value of the Property, and securing and/or repairing the Property.
…
Securing the Property includes, but is not limited to, entering the Property to make repairs, change locks, replace or board up doors and windows, drain water from pipes, eliminate building or other code violations or dangerous conditions, and have utilities turned on or off. Although Lender may take action under this Section 9, Lender does not have to do so and is not under any duty or obligation to do so. It is agreed that Lender incurs no liability for not taking any or all actions authorized under this Section 9.

What does this mean? It means that the bank decides you’ve “abandoned” your home – or in some cases, simply gone on a vacation that’s too long for their tastes – they can come in and take complete possession of your home, without foreclosing or even giving you prior notice.

The banks argue this language is needed to protect the property in the event someone walks away from the house. But what protections are there for a homeowner whose house has been improperly seized?

None… because you’ve agreed to let them do it. Of course, if challenged, many banks will attempt to fix a problem they cause by seizing a house that’s not really been abandoned, but sometimes there’s no way to fix the harm they’ve done. How do they give back irreplaceable photos or mementos? How do they restore your sense of security in your own home? There’s probably not enough money they can throw at you if this happens.

So be careful when you sign that mortgage. You might just be handing the bank a key to your house without realizing it.

Read the whole “What’s In Your Mortgage” series here.

( Photo Source / Photo Rights )

What tricks and traps did the bank slip into your mortgage?

Mike — Mon, 22 Feb 2010 12:56:33 +0000

Some contracts might as well be in a foreign language ( source / rights )

Car rental companies hate me.

Whenever I rent a car, before I sign that two-sided, extra-long, faint-colored fine-print contract of theirs, I sit and read it, so I know what I’ve agreed to.

Now, I’ve been a lawyer for fifteen years. I can say I understand those contracts almost all the time. But the average non-lawyer who rents a car has no idea what they’re agreeing to, besides the daily rental rate, whether they have to fill the tank before returning it, and if they’re lucky, they understand the insurance bit.

That’s a two-page contract. When you bought your house, you had to cope with a stack of paper as thick as your wrist, on legal-sized paper, which you had five minutes to look at before you signed it. Right?

I have to confess: when I bought my first house, I had no idea what I had gotten myself into by signing all those papers. My wife, who’s a smarter lawyer than me, didn’t have a clue either. But we wanted the house, so we needed the loan, and we signed. And signed. And signed. In duplicate, triplicate, notarized and photocopied.

For us, nothing ever went wrong. But we were lucky. A lot of people have gotten hurt, badly, because they agreed to something they didn’t fully understand.

Knowing what I know today, I’d have to think long and hard about whether I would ever sign a mortgage, ever again. And I sure as hell won’t do it unless I a chance to review the loan papers before closing day.

What’s in your mortgage?

The mortgage is the document that allows the bank – or whoever they sell your loan to – to take your house away in a foreclosure case if you stop paying. It’s one of two extremely important documents you sign when you borrow money to buy a house (or when you refinance).

In a series of posts, I’ll take a look at several keys provisions of a typical mortgage- ones that are common in most, if not all, mortgage forms commonly used today. Once you’ve had a chance to read them, you’ll have a better idea of what’s in your mortgage, and why you should be very, very concerned.

Read the whole “What’s In Your Mortgage” series here.

Lenders sign bogus paperwork to support foreclosures

Mike — Mon, 15 Feb 2010 15:45:35 +0000

Bogus property records

What if you lost your house because the bank submitted bogus paperwork to the court?

It happens more often than you think. Sometimes, it’s just a mistake. Sometimes, it’s a cover-up of past mistakes. Sometimes, it’s out-and-out fraud by the foreclosing lender. Here’s a shocking example from the Tampa Bay area: evidence that documents prepared for foreclosure cases have been systematically faked: They actually have the word “BOGUS” in them.

Your assignment, if you choose to accept it

Usually, before a foreclosure begins, the plaintiff needs to find an “assignment” of the mortgage, which supposedly transfers the rights to the loan from the original lender to whomever actually forecloses. (In today’s foreclosure crisis, it is rarely the original lender who forecloses, but someone they’ve sold the loan to.)

These assignments get “recorded” as part of the public record. And if you look in Florida’s public records, you’ll find that a number of these so-called assignments literally transfer mortgages from lenders to “BOGUS ASSIGNEES.” Look at this bogus assignment [PDF] I found in the public records of Pasco County.

Linda Green, did you read this before you signed it?

This one claims to assign the mortgage and the loan from MERS (more about them later) to “Bogus Assignee for Intervening Assignments.” This document was prepared by Ron Mehrg of “DOCX” and signed by MERS officers Linda Green and Jessica Odhe.

It seems pretty obvious that MERS didn’t intend to ship this mortgage off to a “Bogus assignee” – one that literally doesn’t exist. This was, at the start, just a horrible mistake by DOCX, the document preparer. Then it got worse.

Most documents of this kind are computer-generated. Pull up the template, enter a few names, print. Sometimes templates like this have “placeholder” names that are replaced with the real ones when they are created. The more obviously fake these names are, the better, to prevent mistakes from happening – so they might use something like “bogus assignee” as a placeholder, thinking that no one in their right minds could possibly miss that when putting in the real names. But, someone did. So far, just an innocent mistake.

Then, Linda Green signed it. What could she possibly have been thinking? Did she read what she signed? Did she review the file to make sure that the mortgage was actually being sold to the right party?

Obviously not. With the volume of home loans, and the money sloshing around in the system, emphasis was on speed and efficiency – not doing it right. There were many people, like Linda Green, whose job it was to sign these papers, were paid to do so in volume. They would sit with a stack of paper, and sign, sign, sign, for hours at a time. Never once did they stop to check what they were signing – they didn’t get paid to do that.

And in the process, Linda Green and people like her were slowly wrecking the trustworthiness of our public property ownership records.

Papered over: the coverup

So how did they fix this problem? The disappointing answer, is that they didn’t. Once MERS discovered all these bogus assignments (and there are a lot of them, all over Florida and maybe even the whole country) they simply had DOCX go back and print out some new assignments, and had Linda Green sign them all over again. (That’s what happened to this Pasco County family’s home.)

But signing new assignments doesn’t fix the old one – it just papers it over. The trouble is, once Linda Green and MERS assigned the mortgage to anyone – even a “bogus” assignee – it was no longer theirs to assign to anyone. The result is uncertainty and confusion in the public records. Because it’s not clear who, if anyone, currently owns this mortgage, there’s a “cloud” over the title of the property – meaning it will be difficult for anyone to buy this home and be certain that they own it free and clear of all liens.

And that means, no one in their right mind would ever buy that home except for a deep, deep discount – driving down home prices for everyone in the neighborhood. And that’s true of every county, every state, where one of these BOGUS assignments has been entered.

The tip of the bogus iceberg

Any idiot – except perhaps Linda Green – can see that these “Bogus” assignments are exactly that. But the damage goes much deeper. All over the country, hundreds of Linda Greens, for thousands of lenders, have signed millions of such papers. Few, if any, of them have been checked for accuracy. That means that all mortgages are potentially the subject of bogus transfers, even if the word “bogus” doesn’t appear on the documents. Your mortgage, my mortgage, your neighbors’ and mine – all potentially blown up with the stroke of a careless pen.

In the long term, all of us will pay for the careless of the Linda Greens out there.

Deed In Lieu of Foreclosure: Florida lawyers spot bait-and-switch scam

Mike — Tue, 03 Nov 2009 18:06:44 +0000

Deed in Lieu of Foreclosure: Giving up the keys

Just want to hand in the keys and walk away from your upside-down loan? Many of our clients – often facing impossible monthly payments or gut-wrenching shortfalls on their loan-to-value ratios – just want to turn in the keys and walk away from their loans. “What about a deed in lieu?” they ask.

That’s usually when I have to deliver the bad news. Not only are DIL’s hard to negotiate unless you’re already in foreclosure proceedings, they’re often impossible to get nowadays just because the banks already have too much undervalued real estate. They don’t want your house – they want your money. And taking your house through foreclosure is mainly a way to motivate you to cough up some of that cash.

Lenders offer Deeds in Lieu as part of a bait-and-switch

Florida attorney Jonathan Alper reports that he recently spotted a bait-and-switch (my words, not his) on a supposed DIL settlement offered to one of his clients. Alper reports:

When I looked at this client’s “deed in lieu” I found that the lender did not include a release of liability, and in fact the document referred to the borrower’s continued liability for a deficiency. This client had negotiated a deed in lieu of foreclosure [but] not a deed in lieu of deficiency liability. Also, by surrendering title to the property without the bank having to foreclose, the client gave up all the defenses available in a foreclosure action which he could use as leverage to negotiate a complete release.

[emphasis mine - Ed.] Alper offers this bit of advice, which everyone trying to negotiate a DIL should take to heart:

If your mortgage lenders offers you a deed in lieu make sure it’s the real deal. You give them the property back and they release you from any further liability. Anything less may be a trap.

Admiral Ackbar couldn’t have said it better.

Another foreclosure crisis: Not enough lawyers defending homeowners

Mike — Fri, 09 Oct 2009 16:11:30 +0000

We’re all familiar with the all-too-common cries that the number of foreclosures in this country is reaching “crisis” proportions.

But the New York Times sees another kind of crisis: those in foreclosure trouble don’t have access to legal help.

an overwhelming number of homeowners who face foreclosure do not have legal help in protecting their rights. As a result, people are losing their homes who do not need to.

It is absolutely true that many people now losing their homes could have saved them if they’d only had adequate legal help. All over the country, judges are throwing out foreclosure cases because banks who claim to own the loans really don’t — and they might have no idea who really does. This is the lynchpin behind the “produce the note” defense – the idea that a bank actually has to prove that a borrower owes them money… meaning this bank, as opposed to another one. It’s the only way to protect borrowers from facing multiple actions by multiple lenders, each of whom claim to be able to collect the same loan.

Proof of ownership.

For the most part, only a lawyer trained in the rules of evidence and the laws relating to the transfer of promissory notes – the loan documents themselves, which are usually governed by the Uniform Commercial Code – can really force a foreclosure plaintiff to cough up the evidence the shows who really does – and who really doesn’t – own the loan.

According tot he Times, the problem is that there aren’t enough lawyers. But there are plenty of lawyers out there, and more every day are learning how to fight these battles. So the problem isn’t that we need more layers – it’s that too few foreclosure victims ever hire a lawyer to help them out.

And because of that, too many people lose homes they could have saved.

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Illegal eviction in Florida foreclosures: borrower beware!

Mike — Thu, 18 Jun 2009 11:49:40 +0000

Going through foreclosure? Not sure when you have to leave?

Illegal eviction explained

You’re at risk for an illegal eviction. Tampa resident and illegal eviction victim Bruce Wernet explains.

I came home to find two trucks being loaded with my personal belongings. A “lock-out” company, hired by the bank, informed me that the house was foreclosed upon, and they now were the owners of my personal property.

I called the Hillsborough County Sheriff’s Office, and the company was ordered to leave. Once a home becomes foreclosed on, it doesn’t mean that the bank can take your belongings and change the locks. They are required to file a writ of possession that is carried out by sheriff’s deputies.

In my case, no writ of possession had been filed. But the lock-out company already had removed several valuables that were never recovered. I felt violated, as if I woke up and found myself in a communist country.

If you find yourself the target of an illegal eviction, call the sheriff first and a lawyer next. Don’t lose your home before you absolutely have to.

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Florida lawmakers stick it to foreclosure victims again: homeowners’ filing fees go up to $1,900

Mike — Fri, 29 May 2009 16:48:37 +0000

No man’s life, liberty, nor property is safe while the legislature is in session.
-Judge Gideon Tucker

Foreclosure filing fees jacked up to $1,900

In an apparent effort to stem the tide of foreclosure cases, and stauch the bleeding budget at the same time, the Florida Legislature this year jacked up court fees in foreclosure cases – up to $1,905 just to file the case, if the case is for more than $250,000. (Most of them are.) The new fees are effective June 1, 2009.

New extortionate fees for defendants, too

Sticking it to the banks? Well, not so fast. If the foreclosure defendant has a counterclaim – say, they want to countersue the lender for fraud or other violations of the law related to lending – they have to pay a filing fee, too. And it’s also $1,900. The money for both fees go straight into the state’s general fund.

High fees prevent homeowners from protecting their legal rights

This is an outrage. Charging any filing fees for counterclaims, in my view, is ridiculous. Charging $1,900 to someone who’s in foreclosure – already in financial distress? Every member of the legislature that voted for this provision should be horsewhipped in public, just before being turned out of office. Why? Because few, if any, foreclosure defendants can possibly afford to pay that much to bring a claim that the lender has engaged in fraud or some other illegal conduct. (For that matter, few could afford the old counterclaim fees of $295, imposed last year.) This new filing fee effectively prevents foreclosure defendants from enforcing their legal rights in foreclosure actions if the lender has broken the law.

Homeowners get stuck coming and going

Even the initial filing fee, the one paid by plaintiff, ultimately hurts homeowners because in cases where the foreclosure is not contested, that filing fee as a “cost” that is added to the amount of the lien assessed against the home. If there’s any equity left in the house – not currently common, but once was and someday will be again – that filing fee comes out of the homeowner’s pocket, not the plaintiff’s.

Unfortunately, it looks like we’re stuck with this, although there may be some ways to mitigate or even avoid the impact altogether – such as filing separate actions instead of counterclaims, or perhaps removing cases to federal court where possible. In the meantime, we’ll be left wondering how the legislature is going to screw homeowners next year.

The Florida Foreclosure Fee Schedule

Here’s a copy of the new fee schedule for all court filings. This one is for Putnam County, but it’s the same one that will apply across the state.

Fake Sale Dates and Identity Theft

Mike — Thu, 21 May 2009 21:45:25 +0000

Identity Theft Warning

The phone rings. On the other end, someone claims to be calling from your bank, telling you that a sale date has been scheduled on your home for next week, or the week after.

But, they say, you can stop this if you submit an application for a loan modification. All you need to do is give them your latest paystubs, income tax returns… you get the idea.

Funny thing is… when you check with the clerk, there’s no sale date at all. It’s a complete lie. So who’s making these calls?

That’s what I, and some other lawyers I know, wonder when our clients tell us about the calls. Not every homeowner in foreclosure is lucky enough to have a lawyer or the savvy to check what their real sale date is. A large number of these folks will not even think to question whether it’s really their bank on the other end of the phone line.

And far too many will be willing to surrender their private financial information to someone on the other end of the line, without knowing who it really is.

How to Stop Identity Theft

If you’re in Florida, it’s easy to check whether your home is scheduled for sale – just call the Clerk of Court. If you’re anywhere else, check with the relevant authority. But beyond that, do not – under any circumstances – send private financial data to anyone who claims to be from your bank unless you are absolutely, 100% positive that they are who they say they are. If you’re not sure, ask them for a street address, not a P.O. box, to mail your information to. And then get online and check out that address.

Be safe out there.

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Obama foreclosure plan or loan modification scam?

Mike — Mon, 20 Apr 2009 13:02:55 +0000

Looking for government help to save homes

One of the most popular search terms people use to find one of our sites is “Obama foreclosure plan.” Homeowners in economic distress are hungry for information about government programs. And of course, where there are people hungry for information about what the government is doing to help them save their homes.

Seeking information about the Obama foreclosure relief plan

Unfortunately for those seeking information about President Obama’s plan to help homeowners avoid foreclosure, many web sites have cropped up designed to lure those people into paying for services the government might offer them for free.

One such site is pictured above. I won’t link to it, but the site uses the same look-and-feel of the Obama campaign website, and the current White House website. There’s a video of the President speaking. The site even – almost certainly without legal authorization – uses the Obama campaign logo. All this is, of course, designed to give the false impression that the site is somehow government-related or government-sponsored. The site goes further, bragging about the availability of government programs to help homeowners:

Demand is expected to be very high for these programs. Although billions have been set aside to assist affected homeowners, unfortunately this window of opportunity will only last for a limited period of time. Individuals who are interested in applying for loan modification are encouraged to do so immediately.

Someone reading this would expect to be referred to a legitimate government program. Unfortunately, they’d be wrong. The site sends its visitors to a site for a clearly for-profit, privately-owned program that offers to help you get a new loan for some undetermined fee. Of course, no legitimate government site would do this (just as no legitimate government site would use a campaign logo). But for the careful reader, there’s proof that the website has nothing to do with any government program despite every possible effort made to convey that impression. In tiny print at the bottom, there’s a disclaimer:

Our website acts as an informative median, that lists references of available opportunities that individuals can learn about during our effort to recover the economy as a nation. We are not a government funded website nor do we have any affiliation with the US government. Our purpose is to open our users to multiple financial services that may help certain financial situations they face.

I think someone needs to look up the word “median,” first of all… but the important thing to remember here is that this is some private program that desperately wants you to believe that it’s a government program. It’s not.

Don’t give them a dime.

Senator Martinez responds to foreclosure concerns, weakly.

Mike — Fri, 17 Apr 2009 12:28:36 +0000

My friend Deidre Newton wrote to U.S. Senator Martinez in support of the “Helping Families Save Their Homes in Bankruptcy Act” (S. 61). This legislation would allow a bankruptcy judge to modify the terms of a debtor’s primary residence and reduce the principal owed on a mortgage to avoid home foreclosure.

Senator Martinez wrote back, a full page… and not a single word saying that he was supporting the bill.

Expect a “nay” vote from the gentleman from Florida.

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New scorched-earth tactics from second-note lenders: skip foreclosure, skip deficiency judgment, go straight for the jugular

Mike — Thu, 16 Apr 2009 12:55:07 +0000

Florida asset protection lawyer Jonthan Alper reports that more second-note holders are skipping the foreclosure process and going straight to court on the promissory note itself.

A colleague of Alper’s says, “In other words they are seeking what is tantamount to a deficiency decree and will not have to go through any procedure to domesticate it in the state where the assets are located.” Alper himself comments:

This tactic is prevalent in foreclosures of commercial loans against developers and builders. I would pursue the same tactic if I owned this second mortgage. I still rarely see deficiency claims from first mortgage lenders, but this report is another example of more aggressive collection by second mortgage lenders who receive nothing from foreclosure of “under water” Florida real estate.
I often tell my clients that, historically, first mortgage lenders on residential properties rarely pursue deficiency judgments, but history is no guide to what they will do next week, next month, or next year, since the financial environment is completely different now than it was during that “historical” span. The tactic described by Alper is not technically seeking a deficiency judgment; it’s worse, because it ignores the value of the property that secures the note.

(An aside note: Alper’s Florida Asset Protection Weblog is an excellent source of information on asset protection techniques in Florida and can be a useful primer for anyone who wants to know more about the topic.)

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Two more loan modification firms taking up-front fees draw the wrath of Florida Attorney General Bill McCollum: National Foreclosure Counseling Services Corp. and Keep Your Property, Inc.

Mike — Fri, 10 Apr 2009 13:45:26 +0000

Two more loan modification shops are under fire from Florida’s Attorney General Bill McCollum:

The lawsuits were filed against south Florida’s Keep Your Property Inc. and Jacksonville-based National Foreclosure Counseling Services Corp. The attorney general’s office alleges that both companies charged up-front fees to customers facing foreclosure. This is against the law in Florida.

McCollum has said previously that loan modification operations are the number-one consumer complaint his office received in all of 2008.

Dishonest process servers deliver consumer injustice

Mike — Tue, 07 Apr 2009 19:29:35 +0000

What if someone sued you and you didn’t even know about it? That’s happening to consumers all over the country, because some people appointed to deliver important court papers are lying about doing their jobs.

The Home Equity Theft Reporter details a new report from the New York area about this practice. The study suggests as high many 94% of lawsuits were botched by process servers.

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“Almost always scams” – law enforcement cracks down on foreclosure rescue operations

Mike — Tue, 07 Apr 2009 12:22:32 +0000

Foreclosure rescue scammers now have a new front to worry about: a coordinated operation by state and federal officials to shut down those who prey on foreclosure victims.

“The message is very simple: If you prey on vulnerable homeowners with fraudulent mortgage schemes, we’ll find you and we will punish you,” [U.S. Attorney General Eric] Holder said.

Scammers disguised as government programs

Other federal programs have given scammers an ironic opportunity to prey upon homeowners: they disguise themselves as government programs, using official-looking logos and bureaucratic-sounding names.

It’s all too easy to fall prey to the slick packaging, but HUD Secretary Shaun Donovan says there’s one easy way to tell who’s who: government programs are free.

April Charney comes to Tampa again, blasts “sloppiness, deception and outright fraud.”

Mike — Mon, 06 Apr 2009 12:37:27 +0000

The St. Pete Times reports on April Charney coming to town again:

At the start of class, April Charney makes one thing clear.

“This is very dense, complicated work,” she warns. “If you don’t get it, raise your hand and ask questions because the chances are others don’t get it either.”

[She's speaking to] lawyers and judges from all over Florida. And they’ve come to this seminar in Tampa to learn from the woman many consider the nation’s foremost expert on fighting foreclosure.

…Charney has parlayed her own experience helping clients save their homes into a veritable crusade to protect millions of Americans from what she says are illegal foreclosures. Over the next eight hours, she will cite example on example of the sloppiness, deception and outright fraud — including forged signatures — in some of the 275,000 foreclosure suits filed nationally each month.

She’s making some headway, too. April is teaching lawyers, packing in hundreds at a time to hear her speak, and those lawyers are going out and using her methods to stop these sloppy, deceptive, and fraudulent foreclosures.

And some judges are listening. More than ever, homeowners are beating their foreclosures. More than ever, people who would have otherwise lost their homes to these fraudulent practices are staying in their homes.

The tide is turning, thanks in large part to April Charney.

What happens to tenants when the landlord goes into foreclosure?

Mike — Mon, 30 Mar 2009 14:44:48 +0000

UPDATE

Since this article was posted, federal law has changed to protect the rights of tenants. If you’re a Florida resident and your landlord is in foreclosure, find out what you can do to stay in your home for the duration of your lease, under the “Protecting Tenants at Foreclosure Act of 2009,”.

Time to pack?

It’s a renter’s nightmare: a knock on the door, sheriff’s deputy standing outside with an eviction order because the landlord fell into foreclosure and the property was sold.

Time to pack, right?

Florida attorney James Tai, who handles landlord/tenant cases, says:

There really is nothing that tenants can do to if the property is foreclosed upon. The best that they can do is try to get advanced notice, so that the tenants do not have to make moving arrangements on short notice. In some instances, a tenant may have as little as 3 notice days to vacate the rental property. If a tenant does not have money saved up for relocation, this often leads to disastrous results.

James goes on to describe when a tenant has the right to notice in a foreclosure proceeding.

Even tenants have rights in foreclosure

I don’t completely agree with James when he says that there’s “nothing” a tenant can do. As James notes, a tenant who’s already in the property (even without a “signed” lease) is a “person in possession” who is a necessary party to the foreclosure action. In other words, the tenant is a co-defendant who has the chance to raise any legal defenses that might exist. And in some foreclosure cases, the tenant can raise some of the same defenses that the landlord could raise. That means that a properly-prepared tenant who is highly motivated to stay in their home could extend or even defeat the foreclosure, or create enough leverage that the foreclosing plaintiff agrees to let them stay on, even after the foreclosure.

Standing and other defenses

How? Well, there’s always the standing defense, one of my favorites. “Standing” simply means that the foreclosing plaintiff is the right person or right entity to be foreclosing – that they have the right to do so. If the plaintiff lacks standing, they lack the right to foreclose, and the tenant gets to stay. The standing defense is most commonly seen where a loan has been sold one or more times and it’s not completely clear who owns it. A foreclosure complaint which contains a “lost note” count often is a warning sign that a standing issue is present. So a tenant who gets served with a foreclosure complaint, one that includes a lost note count, may want to consult a lawyer to see if a standing issue could be raised to keep the tenant in the home.

(For a more detailed explanation of this and other defenses, read our free 30-page “Consumer’s Guide to Defending Florida Foreclosures.”)

Standing is just one of maybe a dozen different defenses to a foreclosure action, each of which could keep the tenant in their home for the rest of a one-year lease or even longer. But the tenant has to be willing to fight.

Afraid of Foreclosure Rescue Scams? Don’t Follow CNN’s Bad Advice.

Mike — Sun, 29 Mar 2009 22:38:11 +0000

Why CNN is Wrong About Foreclosure Rescue Scams

If you’re afraid – and you should be afraid – of getting ripped off by foreclosure rescue scams, you might think that CNN’s advice on how to spot foreclosure prevention rip-offs would be a good place to look. Sadly, you’d be wrong. Here’s why.

Their advice is focused exclusively on those who are seeking “counseling.” In Florida, trying to seek counseling after a foreclosure case has been filed – without seeking the advice of a licensed attorney – could be a disaster, and possibly even illegal. Why? Because foreclosure cases are lawsuits. Only a practicing attorney, licensed in the state of Florida, can help you defend a foreclosure case.
Their advice steers people exclusively to non-profits. While non-profit assistance can be a great boon to a homeowner in foreclosure – see, for example, the work of April Charney at Jacksonville Area Legal Aid – many people don’t qualify for free legal help.
Their advice steers people to those with connections, rather than knowledge or skill. (They even say, “Some foreclosure counselors have a servicer’s VP for mortgage mitigation on speed dial.”) Having a speed-dial isn’t the same thing as getting the job done. Why? The VP for the servicer isn’t the person calling the shots in most cases. It’s the investors who own the loan who do. And there’s no one who has those people on speed dial. The only way to get them to budge is to fight back.

The Helpful Bits

It’s not all bad news over at CNN. Some of the things they say make sense. Two things stood out:

Make sure someone is with you every step of the way. You don’t want to get bounced around from agent to agent, from rep to rep, having to restart the process every time. When you hire a Florida lawyer to defend your foreclosure, they have to stay on your case until the end, unless you or the judge say otherwise.
Find out what you’re paying for, and when. In Florida, it’s now illegal for most non-lawyers to take any money from you until they have finished providing all services. And they have to spell it out for you in writing. So don’t pay any money to anyone until you know exactly what you’re getting, and who you’re getting it from.

There are new scams popping up every day, so be careful out there!

“State of Emergency” due to foreclosure rescue scams, says McCollum

Mike — Fri, 27 Mar 2009 21:10:23 +0000

“State of emergency” were the words chosen by Attorney General Bill McCollum this week, when he announced that he was asking law enforcement officials from state and local agencies to step up enforcement efforts.

Mortgage fraud, and in particular, foreclosure rescue fraud, were the number one complaint to McCollum’s office in 2008.

There’s no such thing as the “Federal Mortgage Modification Administration” – not in our government, anyway.

Mike — Wed, 25 Mar 2009 19:05:27 +0000

This is NOT a government agency.

One of my clients today got a mailing from a group called the “Federal Mortgage Modification Administration.” They have a government-sounding name, a government-seal-looking logo, and a Washington, D.C. address. They purport to offer loan modification services, and it’s clear they are trying to look like a government agency that doesn’t exist. In their letter to my client, they even claim that Congress has granted them authority to modify home loans.

What an interesting mailing address…

Are they for real? Can they really do what they promise? Well, I can tell you this: When I lived in D.C., 611 Pennsylvania Avenue S.E. was a UPS Store. And the web site? Owned by a web design firm in California.

You be the judge.

Florida Foreclosure Law Center LLC and Lincoln Lending Services Accused of Illegal Loan Modification Operation

Mike — Tue, 24 Mar 2009 17:39:18 +0000

“We are asking the Court to shut them down.”

Another loan-modification shop, this time in conjunction with a law firm, has apparently run afoul of the law. Florida’s Attorney General, Bill McCollum, has sued Florida Foreclosure Law Center LLC and Lincoln Lending Services and said at a press conference:

We are asking the court to shut them down.

“Forensic analysis” fee was a fraud

Florida law bars foreclosure rescue services from charging an advance fee yet Lincoln Lending asked homeowners to pay a $2,700 “forensic analysis” fee up front, claiming that they were reviewing the loan for errors and violations that would help lenders avoid foreclosure. McCollum said the fee was a fraud, designed to skirt the law. They also lied when they told homeowners that a $999 “loan-modification” fee would be paid by President Obama’s stimulus plan. It won’t.

Lincoln Lending Targeted Hispanics

Some of my colleagues have told me they’ve seen Lincoln Lending advertising on South Florida Spanish-language TV stations, calling the ads “outrageous.” The AG’s office apparently agreed. Also, because Lincoln was allegedly feeding clients to a local law firm, it may be “indirectly” involved in the practice of law, violating Florida law regarding unauthorized practice of law.

The lesson?

Be careful who you hire to help you when you’re facing foreclosure.

Loan Modifications Can Be a Foreclosure Trap – Because of “Investors” Owning the Loan

Mike — Sun, 22 Mar 2009 21:03:31 +0000

The Tampa Tribune explains why loan modification isn’t all it’s cracked up to be.

Rafael and Tina Castillo thought their mortgage lender must have made a mistake when it sent them their loan modification paperwork this month. The monthly payment of $1,700 had been reduced to $737.41 for the next six months…. But then came the kicker. September’s payment: $10,303.11.

Obviously, that bank isn’t really interested in helping out the Castillos. But why? Because their loan isn’t owned by that bank, it’s owned by a bunch of faceless “investors” who bought it on Wall Street:

Most of Wells Fargo’s loans are owned by investors, and those investors control the modification terms.

In other words, if the investors don’t want to modify your loan, there’s nothing the bank can do about it. Now, more than ever, it’s important to find out who owns your loan.

How to Lose Your License to Practice Law: Split Fees With Loan Modification Shops

Mike — Wed, 04 Mar 2009 21:18:22 +0000

Since the passage of Florida’s Foreclosure Rescue Fraud Act, § 501.1377, many operations have been trying to get around the new law by teaming up with attorneys to offer services, in hopes that the attorney’s exemption would shield them from liability.

The Florida Bar has called foul. In a just-released Ethics Opinion, the Bar has stated (properly, in my opinion) that fee-splitting arrangements with these operations, along with other types of business deals, violate the attorney’s obligations under the Rules of Professional Conduct.

The Florida Bar’s Ethics Hotline recently has received numerous calls from lawyers who have been contacted by non-lawyers seeking to set up an arrangement in which the lawyers are involved in loan modifications, short sales, and other foreclosure-related rescue services on behalf of distressed homeowners. These non-lawyers include mortgage brokers, financial management advisors, foreclosure “consultants” and others who engage in foreclosure related rescue services or other similar services. Non-lawyers have proposed a variety of agreements, even offering to hire lawyers as “in-house counsel” to provide services to the non-lawyer’s customers. The Foreclosure Rescue Act, Section 501.1377, Florida Statutes, went into effect October 1, 2008 and imposed restrictions on non-lawyer loan modifiers to protect distressed homeowners. The new statute appears to be the impetus for these inquiries.

Lawyers should be wary of these proposals, as many violate the ethics rules and may subject the lawyer to discipline.

(Emphasis added.)

The whole opinion is worth reading: Download the Opinion [pdf]

Nevada Law Enforcement Overwhelmed by Shady Foreclosure Rescue Operations

Mike — Wed, 18 Feb 2009 16:40:59 +0000

Florida isn’t the only state dealing with shady foreclosure rescue operations and loan mod shops popping up like mushrooms: Nevada is getting new complaints every day and has trouble addressing certain types of these scams due to statutory loopholes.

Waltuch said his state office has the statutory authority to go after foreclosure consultants but not loan modification consultants who work with properties not in foreclosure. He said his agency work in a roundabout way using loopholes available through the Consumer Affairs Division.

[via HETR]

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Florida AG Targets Orlando Foreclosure Rescue Firm: “Financial Management Advisors”

Mike — Mon, 16 Feb 2009 22:55:05 +0000

Florida AG Bill McCollum has set his sights on an Orlando-area firm offering loan modifications:

A local firm offering loan modification services to homeowners facing foreclosure violated a state law that prohibits companies from charging an up-front fee for their services, according a lawsuit filed Feb. 13 by Florida Attorney General Bill McCollum.

Among other things, the lawsuit states that FMA:

…require homeowners to pay an up-front fee before the Defendants will render any loan modification and foreclosure-related rescue services. Upon Plaintiff’s information and belief, the up-front fee charged by Defendants can be as high as $2,500 (Two Thousand, Five Hundred Dollars).

So what do you get for that $2,500.00? Apparently, nothing:

Upon Plaintiff’s information and belief, Defendants are not providing homeowners with the contracted-for services.

FMA also stands accused of false and misleading advertising, including fake testimonials, false claims of affiliation with lending agencies, and false claims to having attorneys on staff.

Download the complaint [PDF]

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Florida AG Shuts Down HomeKeeperUSA for Foreclosure Rescue Act Violations

Mike — Wed, 11 Feb 2009 20:41:43 +0000

Florida Attorney General Bill McCollum has shut down HomeKeeper USA, a Florida company, for violating Florida’s Foreclosure Rescue Fraud Prevention Act.

The attorney general’s office said it investigated the company for four weeks and found it violated the state’s newly-enacted Foreclosure Rescue Fraud Prevention Act by accepting upfront cash payments for arranging an alternative payment plan. The law requires services to be completed before payment is rendered.

The company, according to the attorney general’s office, offered to assist financially-strapped homeowners in arranging new payment plans with their lenders.

It appears that a company by the same name is still operating in Florida – so beware.

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Foreclosure Rescue Scams Still Run Rampant

Mike — Sun, 01 Feb 2009 16:15:29 +0000

Imagine facing foreclosure, terrified of losing your home, and then paying hundreds or even thousands of dollars to a company who promised to help you – and then did nothing. Tragically, that scenario is all too real for many Floridians. More and more illegal foreclosure rescue operations are cropping up statewide.

These companies charge fees to negotiate with lenders on behalf of homeowners. The goal is to stop the foreclosure and get the lender to modify the loan so the homeowner can afford to stay.

Unfortunately, many of these companies not only fail to deliver on their promises, they also violate a new state law regulating foreclosure rescue consultants.

The Florida attorney general’s office last year opened more than 50 investigations and sued several foreclosure rescue companies for not making good on promises to consumers. So far, three Tampa Bay area companies, including the one Matlock paid, have gone out of business amid these investigations.

Although the attorney general’s office has been diligently trying to weed out these scam artists from Florida, new ones crop up every day. If you’re in foreclosure, and you are hiring someone to help you, make sure you check them out first.

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April Charney Trains Tampa Lawers to Fight Foreclosure

Mike — Fri, 23 Jan 2009 14:05:10 +0000

Yesterday, nationally-recognized foreclosure expert April Charney came to Tampa to train Bay Area lawyers how to fight foreclosures and help homeowners save their homes.

If the lender can’t prove it owns the loan, judges will sometimes throw out the foreclosure. If the wrong lender forecloses, Charney said, homeowners could face another lawsuit later.

Charney said her strategies came from finding sloppiness and fraud in her cases and those of other attorneys. Many of the people losing their homes, she said, are in this position because of unethical and sometimes illegal foreclosure procedures.

The lawyers of Ricardo Wasylik & Kaniuk have trained with Charney and use updated versions of techniques that Charney pioneered in order to help homeowners beat foreclosure and keep their homes.

One local bankruptcy judge was impressed with Charney’s presentation.

Catherine Peek McEwen, a U.S. bankruptcy judge in Tampa, attended and said she wants to gain a better understanding of foreclosure law.

“I think the learning curve was up a notch for the Tampa Bay area,” she said.

“The state court judges are going to have more to chew on if these lawyers get in front of them.”

Several area judges already have.

Chase and Wells Fargo anger federal judges due to fraud and incompetence in mortgage cases

Mike — Mon, 29 Dec 2008 18:32:31 +0000

Two major lenders, Chase and Wells Fargo, have angered federal judges sitting in two different cases: Chase, because of an apparent fraud on the court, and Wells Fargo, through incompetence and sloppy bookkeeping.

Chase lies to the court

My good friend Jay Fleischman describes the Chase case:

In the case of In re Pawson, Case No. 05-18439 (Bankr. S.D.N.Y.) Chase filed a motion for relief from stay although the debtor had substantial equity in a co-operative apartment valued at $1,000,000. Chase alleged that the debtor was two months in arrears in his mortgage payments, though the debtor showed that Chase had been rejecting the online payments he had made since filing his petition.

Because this is not the first time Chase has been caught with its hand in the cookie jar, it now has to agree to follow special procedural safeguards in that bankruptcy court designed to prevent future fraud, and, if I’m reading the story correctly, must pay to the debtor $50,000 in compensation.

Wells Fargo can’t keep track of its payments

The Wells Fargo case is simply one of extreme incompetence:

The Burriers denied that they had missed payments, but in April, to keep their home, they agreed to make double payments to cover the ones Wells Fargo claimed they had missed. If the borrowers could prove that the mortgage checks were submitted, Wells Fargo said, their account would be credited and they would no longer have to make up the payments. The proof required by Wells Fargo and approved by the court was “valid, accurate and true copies” of the front and back of the checks the borrowers sent in.

Only one problem: Wells Fargo had been recording the payments electronically, so that the borrowers never got any canceled checks, and Wells Fargo knew that.

“The payments have, evidently, been lost in a black hole of the creditor’s organization or through accounting mismanagement,” the judge wrote. “This is a major lender/mortgage loan servicer where the left hand does not know what the right hand is doing — the collection department does not know what the check processing and accounting departments are doing.”

Like Chase, Wells Fargo has been in hot water before with this same judge, and he’s considering whether their conduct in this case deserves some kind of punishment.

Attorney Mike Wasylik addresses Foreclosure Defense on Tampa TV show “Success Made Simple”

Mike — Fri, 26 Dec 2008 16:47:24 +0000

I appeared recently on a Tampa-based show, “Success Made Simple” with Anthony Kocovic, discussing foreclosure defense. The video has just been released:

Enjoy the show, and have a happy New Year!

Who owns your loan? MSNBC asks April Charney the tough questions.

Mike — Fri, 19 Dec 2008 15:48:41 +0000

MSNBC has posted its interview with April Charney, the Jacksonville Area Legal Aid lawyer who has pioneered the field of foreclosure defense here in Florida.

“You ever look into a place where snakes hang out?” she asks in the middle of a conversation about the loan officers, appraisers, investment bankers, attorneys and others that she believes are responsible for the nation’s worsening financial crisis. “That’s what I see here. They’re writhing and oozing and morphing into creepy stuff with slime all over it.”

Then in her quiet, gentle drawl — the kind of voice that could get you invited to afternoon drinks on the finest porches in South Florida, where she grew up — she leans forward and says quite earnestly, “Not to discredit snakes or anything.”

Besides April’s dry humor, the article is a must read for anyone who’s interested in our current mortgage and foreclosure crisis, how the financial industry has hopelessly screwed up our residential real estate system, and what’s going to happen when a certain five-year deadline starts hitting some of these loans early next year.

The Florida Foreclosure Fraud Weblog

I Have a Hearing Tomorrow.

A Sudden Bullfight

Your Summary Judgment Hearing is No Different

What a Lawyer Hears When Your Hearing is Tomorrow

Why Should You Have a Lawyer Defend Your Foreclosure From Day One?

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