The robo-signing controversy has slowed foreclosure filing to a crawl in Florida, one of 23 states that require foreclosures to be processed through the courts. The Law Offices of David J. Stern were handling close to 20 percent of all foreclosures in the state until the firm was terminated by mortgage holders over robo-signing. Nick Timiraos writes for the Wall Street Journal,
In March, the Stern law firm told judges across Florida that it was unable to file the necessary paperwork to withdraw from 100,000 cases. Florida’s attorney general is investigating allegations that the firm routinely forged notarized documents. The firm denies the accusations and is challenging the attorney general’s jurisdiction in court.
In the meantime, there’s not enough lawyers in the Sunshine State to pick up the slack.
Ally Financial Inc., which owns GMAC Mortgage, and happens to be owned primarily (73%) by the U.S. government has transferred its cases, but an Ally spokeswoman says the “situation in Florida is challenging, given the large number of borrowers in foreclosure and the number of quality law firms to manage these cases.”
Palm Beach County Judge Peter Blanc plans to hold special hearings to reassign the hundreds of cases that are backlogged. “If nobody shows up” on behalf of the banks, “we will dismiss the cases,” he says.
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Robo-lawyering?
So where does a dismissed case put the status of the foreclosed home?
It depends on if it gets dismissed with prejudice or not. If so, further suit cannot be brought (I’m not sure if the holder of the note could then sell it to another entity, who could then try to foreclose. Basically I don’t know if it would bar futher foreclosure suits against the property itself, or only bar that particular plaintiff from bringing further suit, opening up potential for a secondary collections market).
I’m sure in this case most of these will be dismissed without prejudice, meaning the bank will simply have to go through the expense and hassle of filing a new suit and starting the process over. Cumbersome and expensive, esp. in Florida where this process moves at a snails pace.
OK. A mortgage loan is originated. The mortgage loan is packaged with other mortgage loans and sold. The purchaser, another entity, sells the bundle of loans (called a “pool”) to another entity who then issues Certificates to the ultimate owner/beneficiary. These Certificates are made up of pools of many mortgages. Clear so far? OK here is where the fraud on the banks comes in. The banks attempt to close in their name when they do not have standing as owners of a single loan. They try to use blank re-assignments (struck down in New York by their Supreme Court) to get the loan back out of the pool of loans. This is fraud and you can prove to yourself with some reading on the Securities and Exchange Commission website. http://www.sec.gov. Take some time to read the Prospectus on the selling of these asset (mortgage) backed securities and you will see what the banks fear you to know. They are committing fraud on a massive scale and getting caught. Once a mortgage (say it is a carrot) gets blended in the securitization process (carrot juice) you can not take out a single carrot out of the Certificate. It is illegal for many reasons, least of which is the tax consequence. Don’t believe me. Look and learn for yourself. The Corporations fear an informed public. Why do you think large investors are making Bank of America buy back Certificates? GOOD NEWS IS THAT JUDGES ARE BEING EDUCATED ABOUT THIS FRAUD AND THAT IS WHY FORECLOSURES ARE SLOWING DOWN. THIS TIME THE GREED OF THE BANKS IS BRINGING THEM DOWN. LOOK AT BANK STOCK PERFORMANCE!
” GOOD NEWS IS THAT JUDGES ARE BEING EDUCATED ABOUT THIS FRAUD AND THAT IS WHY FORECLOSURES ARE SLOWING DOWN.”
This is fine in States that require a court hearing to obtain a foreclosure judgement. However, in many States, for example California, most mortgages are secured by a “Deed of Trust”. When you take out a mortgage you authorize a trustee to sell the property in the event of non payment to the mortgagee. This does not require a court appearance. In the event of default, the mortgagee instructs the trustee to institute foreclosure proceeding. This is a much more streamlined procedure.The Deed of Trust must be filed in the County Records Office. Where the fraud arises is where the mortgage changes hands and the new mortgagee is not recorded. In this case, the new mortgagee does not have standing to instruct the trustee to initiate foreclosure proceedings. However, since the property can be sold without a court order, the onus is on the mortgagor to challenge the foreclosure in court. Many people who are delinquent do not even realize that they are being foreclosed by a mortgagee who has not filed the necessary paperwork to have proper standing.
The biggest problem is that even if the property is foreclosed on, it is difficult to obtain a new mortgage on the property, since there is break in the chain of title that will show up when the title company does a title search. They will not issue an insurance policy where there is any potential for a cloud on the title. This means that the mortgagee (bank) will have difficulty selling the property.
The tragedy of all this is that there are plenty of lawyers – quality lawyers – throughout our state that could handle the foreclosures. Foreclosure in Florida is a “judicial” procedure that makes it more time consuming, but, as legal proceedings go it is pretty basic stuff. The real problem lies with the lenders who have their paperwork all messed up. This bum, Stern, got the work for offering to be “creative” with the documentation. He should be housed under the jail!
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