Foreclosures in Florida

WHO SIGNED THE COMPLAINT TO FORECLOSE YOUR MORTGAGE?

If you got sued for foreclosure recently, take a look at who signed the papers.

As of February 11, The Florida Rules of Civil Procedure require that home mortgage foreclosure complaints must be verified by the plaintiff. That means that someone who is an employee of the mortgage company must swear or affirm that the statements in the complaint are true, under penalty of perjury. 

You read that correctly. If the statements in the foreclosure complaint are not true, the person who signed it can be prosecuted for perjury. 

Besides the banker, the bank’s lawyer most also sign the complaint. But lawyers are not allowed to testify in cases where they represent someone. The bank’s lawyer is not allowed to swear to the truth of the statements in the complaint. Neither is his or her partner, associate, paralegal, secretary, clerk or receptionist.

A handful of law firms represent most of the banks and mortgage companies in foreclosure cases in Florida. The Attorney General is already investigating one of them, Florida Default Law Group, for foreclosure fraud.  

The fraud accusations include charges that people who work for these lawyers have been claiming that they worked for the banks when they signed mortgage assignments.

Lynn Szymoniak is a Palm Beach County lawyer who is an expert in uncovering document fraud in real estate mortgage foreclosure cases.  Lynn has uncovered the following instances of law firm employees signing mortgage assignments as if they were officers of mortgage companies or banks. 

Ususally, you won’t see an Assignment of Mortgage in the court papers until late in the case. They aren’t always produced until after the motion for a final judgment is filed. 

Hollan Fintel is a lawyer at Shapiro & Fishman who has signed documents as Vice president of Wells Fargo, N.A. Patricia Arango and Caryn Graham are associates at the Law Office of Marshall Watson. Christopher Bossman works for the Law Offices of Daniel C. Consuegra, not for Deutsche Bank. Cheryl Samons is the office manager of David Stern & Associates, and Beth Cerni works there too.

Look for these names. If one of these law firms represents the bank that’s suing you, check to see if any of these people swore that they work for the mortgage company. If they did, the complaint is no good. Look for these names on any Assignment of your mortgage. You might have a defense. Get a lawyer. 

HOW CAN THEY PAY FOR ALL THOSE ADS IF THE CREDIT REPORTS ARE FREE?

You've seen the ads for free credit reports. There's the guy that started out with the pirate hat who keeps singing even though he's unhappy about his job, his car, his phone and his wife. There's Ben Stein and a squirrel. There are probably more than that.

Have you wondered how somebody who's giving something away for free can afford to pay for all those TV commercials? Here's the secret. They won't give you the free report unless you sign up for something else that you have to pay for, month after month after month.

If you want a free credit report, you can get it. Congress passed a law in 2003 allowing you to get a credit report for free once a year from each of the 3 major credit bureaus - Equifax, Experian, and TransUnion. Log onto www.AnnualCreditReport.com or call 877-322-8228. 

What you won't get are the credit scores and monitoring reports that freecreditreport.com and Experian are trying to sell you. If you want those services, you have to pay for them. 

The problem is that a lot of people didn't understand that the folks who run the ads are selling "membership" in a credit monitoring program. If you sign up with Experian, for example, they're going to charge your credit card $14.95 a month from now on unless you cancel within 7 days. 

So many people have complained about getting charged when they thought they were getting something for nothing that the Federal Trade Commission finally passed a new rule. Some of the changes go into effect April 1. Besides a prominent notice in the ads for these services, the FTC says the amended rule requires these national credit bureaus to delay any advertising for products or services on AnnualCreditReport.com until after consumers get their free credit reports. 

If your home mortgage payments are delinquent, chance are you've missed some payments on other accounts as well. You've probably worried about your credit rating. You may not be in a position right now to do very much to fix it. And you probably don't need to add another $15 a month to your expenses.

DID BANK OF AMERICA LIE ABOUT SECURITIZED MORTGAGES?

This week the Federal Home Loan Bank of San Francisco sued Bank of America and 8 other banks for lying about securitized mortgages. The FHLB spent more than $19 Billion for mortgage-backed securities from these 9 companies based on statements by the sellers that it says were untrue or misleading. Now it wants to undo the deals, and get its money back.

Besides Bank of America,the bank filed securities complaints in the Superior Court of California for San Francisco County against units of Bear Stearns, Credit Suisse, Deutsche Bank, JPMorgan Chase, Merrill Lynch, Morgan Stanley, Royal Bank of Scotland, and UBS.

At least two other Federal Home Loan Banks are also suing securities dealers to cancel their mortgage-backed security purchases. The Seattle bank sued 11 companies to recover $4 billion in certificates backed by bad mortgages. The Federal Home Loan Bank of Pittsburgh bank sued banks and ratings agencies for misrepresenting securities sold for $2.7 billion.

There are a dozen Federal Home Loan Banks in the country. They were chartered by Congress in 1932 to give low-interest credit to banks, credit unions, savings institutions, thrift and loan companies and insurance companies, Those companies, in turn, use that money to make home mortgages, commercial real estate mortgages and small business loans.  

I have one question about these lawsuits by the Federal Home Loan Banks. Why did it take them so long to figure out that these securities were based on home mortgages that were almost guaranteed to go into foreclosure? Some of us have been saying this for years!

OUTRAGEOUS FORECLOSURE OF THE WEEK - Week ending 3/6/2010

The OUTRAGEOUS FORECLOSURE this week has a different twist. Charlie and Marie Cordoso didn't actually get sued for mortgage foreclosure by Bank of America. Or by anybody else. This isn't surprising, since there was no mortgage on their Springville, Florida house. 

In spite of that, Bank of America filed and won a foreclosure case against someone else, using the address and property description of the Cardoso's house. Charlie and Marie, who live in Massachusetts, didn't find out about the lawsuit until after the bank had removed their furniture and padlocked the house. Now they are suing Bank of America.

The Outrageous Foreclosure of the week accepts nominations. Let me know if you have an outrageous foreclosure to report.

FLORIDA BANKS WANT FASTER FORECLOSURES, NO JUDGES

Florida bankers wants to take your home in as little as three months time without a judge reviewing the paperwork. The Florida Association of Bankers recently sent a 53-page bill to the state legislature calling for non-judicial mortgage foreclosures. That means no more hearings in front of a judge. No more mediation, either.

Right now, the fastest a bank can complete a home mortgage foreclosure in Florida is about six months. Because there are so many cases in the Florida courts these days, it actually takes nine months or more to finish most foreclosures even if you don't fight the lawsuit. Contested cases can take a lot longer.

There are states that permit non-judicial foreclosures but they don't have the same kind of real estate mortgages that we have here in Florida.  In those states a mortgage is actually a deed. The bank gets ownership of the property when it lends the money. The borrower gets the deed when he pays of the loan. It's similar to what happens here with the title to a car when you take out a loan to buy it.

That is not what the law is here in Florida. Here, a mortgage is merely  a lien on the property. The bank does not get ownership until it has completed the foreclosure process and received a certificate of title at a foreclosure sale. Homeowners need to make sure that doesn't change.

More than half of the foreclosure cases in the state of Florida are handled by a few very large law firms. They have a lot of employees and most of them are not lawyers. They make a lot of mistakes. Some of them are trivial, like forgetting to send some of the necessary papers to the court. 

Some of the mistakes banks make are enormous.There have been several instances where two different banks sued to foreclose the same mortgage. 

After Wells Fargo and its lawyers, Florida Default Law Group, made mistakes in almost 50 bankruptcy cases, U.S. Bankruptcy Court Judge John Olson published an opinion that makes it clear how outrageous these people are. In October, 2008, Judge Olson wrote that Florida Default and Wells Fargo  “engaged in the systematic process of churning out unrefined and unexamined form pleadings, instead of producing and filing carefully considered legal papers." 

Nonjudicial home mortgage foreclosures are a terrible idea. If the bankers can persuade ($) the legislators to pass this, we may be talking about the outrageous foreclosure of the hour, not the week.

OUTRAGEOUS FORECLOSURE OF THE WEEK - Week ending 2/20/2010

This week's outrageous foreclosure is Palm Beach County Circuit Court Case # 502009 CA 04349 XXXXMB. The plaintiff isn't registered to do business in Florida. It doesn't own or even claim to own the mortgage it wants to foreclose, and it didn't bother to attach a copy of the promissory note, which it does claim to own, to the mortgage foreclosure complaint. 

The OUTRAGEOUS FORECLOSURE OF THE WEEK is going to be a regular feature, because there are just so many of the darned things. If you know of an outrageous real estate mortgage foreclosure case, let me know the details. 

3 GOOD CHANGES TO MORTGAGE FORECLOSURE RULES IN FLORIDA - AND ONE BAD ONE

The Florida Supreme Court is making three changing to the rules for banks that want to foreclose home mortgage loans that could be helpful to homeowners, and one that could be disastrous.

Some of changes to the Florida Rules of Civil Procedure for mortgage foreclosures went into effect February 11,2010. The Court is postponing the changes to the Final Judgment of Foreclosure form for sixty days to take comments about the form. It's a good thing they're waiting.

1.    Every complaint to foreclose a mortgage will have to be verified. This means it must contain an oath, affirmation, or statement saying "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." 

    There are a few holes in this rule. It doesn't say who has to sign. It doesn't say what, if anything, the person signing the complaint has to do to get knowledge about the facts in the complaint. I'm betting those unanswered questions will end up with the court of appeals deciding what the law requires.

    Still, this is a good change because it should cut down on false claims that the bank owns the promissory note but can't find it.

2.    There is now a standardized form that the process servers will have to complete, regarding the unsuccessful efforts they made to locate a defendant, before the foreclosure complaint can be served by publication. Too many foreclosure cases have been served on homeowners by publishing a notice in the local paper, when the defendant could easily have been served in person. This often happens to people who live in gated communities or condos. 

This is another check on the honesty of the bank and its minions. Its a good change because it will eliminate some embarrassment and unpleasant surprises for the homeowner.

3.    The third good change is an addition to the form for the final judgment of foreclosure. There will now be directions to property owners as to how to claim a right to funds remaining after the property is auctioned. This won't help the many homeowners who are "underwater," but there are plenty of people who end up with a home mortgage foreclosure even though they have some equity. This is a proposal and won't be final immediately.

    Now for the BAD news. The proposed new form has a place for the homeowner's Social Security Number. What an opportunity for identity theft! It's a pretty safe bet that this requirement won't be in the final version of the form, but if you're concerned, feel free to write to the Florida Supreme Court and tell them so. The address is Supreme Court Building, 500 Duval Street, Tallahassee, 32399-1925. 

MORTGAGES, MORALITY AND HYPOCRISY

Last October, University of Arizona law professor Brent T. White published an article saying most people who are “under water” with their real estate mortgages don’t walk away from their homes because of shame, guilt and pressure from “the government, the financial industry, and other social control agents.” Homeowners stay even though ”strategic default” might be “the wisest financial decision.”

 

White went on to say: “Lenders, on the other hand, have generally resisted calls to modify underwater mortgages despite the fact that it would be both socially beneficial and morally responsible for them to do so.”

 

Since then, there’s been a lot written about the morality of “walking away” when the amount of the home mortgage debt is more than the house is worth.

 

Kenneth R. Harney of the Washington Post called White’s paper “incendiary.” He printed comments from a Fannie Mae spokesman and from the CEO of “several major mortgage-related companies, saying that defaulting homeowners are morally wrong. CBS MoneyWatch followed suit. 

Bankers and mortgage company officials were quick to pass judgment on people who choose to let their home mortgages go into foreclosure. None of them suggested that these homeowners might be struggling to provide their families with food, water, electricity, medical care and safe transportation. And none of them commented on the morality of the mortgage lenders

 

But the best, as in most hypocritical, comments of all came from John Courson, CEO of the Mortgage Bankers Association. The Wall Street Journal reported that in an interview last year, Courson not only said homeowners “should not walk away from lawful debts,” but asked: “What about the message they will send to their family and their kids and their friends?”

 

Here’s the hypocrisy. This is the same Mortgage Bankers Association that just finalized a short sale of their headquarters building in Washington, D.C. after defaulting on their own mortgage. That’s right. Courson and his cronies left their bank holding the bag for over $25 MILLION!

 

Do you think Mr. Courson tells his kids he feels ashamed and guilty for walking away from that mortgage? Do you think he's struggling to meet their basic needs? Neither do I.

THE "PRODUCE THE NOTE" RIP-OFF

About once a week someone asks me if it is true that "the bank can't foreclose your mortgage if they have lost the promissory note."  

NO!. That is not true. Don't count on it to save your home. There is a provision in the Florida law that allows the bank to reinstate a promissory note that has been lost, stolen, or destroyed. 

There are websites that promote the idea that you can get your foreclosure case dismissed if the bank does not produce a promissory note They offer to sell you forms to request production of the note. They also offer you a form motion asking the court to force the bank to produce the note. Don't get ripped off!

To get a missing note reinstated under section 673.3091 of the Florida statutes, banks have to claim:

    (a) that they were entitled to enforce the note when they lost possession or that they directly or indirectly acquired ownership of it from someone who was entitled to enforce it when the loss occurred;

    (b) that they didn't transfer the note to someone else and that it was not taken from them by lawful seizure; and 

    (c) that they can't reasonably obtain possession of the note because it was destroyed, or its whereabouts can't be determined, or it is in the wrongful possession of someone who can't be brought into the lawsuit. 

If the bank can introduce evidence of what the note said and can prove it has the right to enforce it, the law says thats the same as if they had produced the note.

The bank can be required to post a bond in order to protect the borrower if someone else shows up with the note and sues to collect on it. Some judges require that routinely, others only do so if the borrower files a motion requesting it..

Even if the bank is not claiming that the note is lost, they don't have to produce the original note until the final hearing. Then they have to give it to the court, not to you. They never have to give the original note back to you unless you pay it in full.

If you are in foreclosure, and the bank is asking that the note be reinstated, what do you think is going to happen if you send the bank's attorney a request to produce the note? They've already said they don't have it, so they are either going to ignore your request or object to it. If you follow that 30 days later with a motion asking the court to compel them to produce the note, do you really think the judge is going to order that? 

There are a lot of legitimate things that you can ask the bank to do. You can ask the bank to describe the actions it took to locate the note. You can insist they prove that both the mortgage and the note were assigned to the plaintiff. The list goes on. Depending on how busy the bank's attorney is, these legitimate requests could add months to the time it takes to get to final hearing. And there is even a remote possibility that they could result in having the case thrown out. But don't waste your money and the judge's time trying to force the bank to produce a note when they've already said they don't have the darn thing.

MUST BE PRESENT TO WIN

This is the story of how WACHOVIA BANK managed to win a mortgage foreclosure case that it shouldn't have won because the parties on the other side didn't defend themselves in time.

Lets start with some basic "who can you sue" Florida foreclosure law. The owner of a mortgage that's in default can foreclose out the borrower and also anyone who has a lien on the property that's "inferior" or "junior" to that mortgage, but not anybody with a lien that's "superior."  Superior and inferior are usually based on the time when the mortgage is recorded. A first mortgage can foreclose out a second mortgage, but a second mortgage can't foreclose out a first.

In December, 2002, Bruce and Melissa Henry gave a first mortgage to MERS as nominee for Southshore Mortgage Company on property in Sarasota County. WACHOVIA BANK got second and third mortgages on the same property from them in July, 2003. Eventually the Henrys stopped making payments. 

In August 2006, Wachovia filed a foreclosure lawsuit against Mr. and Mrs. Henry and also against MERS and Southshore. Wachovia claimed that the first mortgage was "not based on a bona fide loan." There's nothing in the public records or the court file to back up that claim, but it didn't matter because neither MERS nor Southshore answered the complaint. 

Wachovia won defaults against MERS and Southshore in May, 2007 and a Summary Final Judgment that foreclosed out MERS and Southshore along with the borrowers in July, 2007.

There's more to this story, but this is the part that's important to you if you are facing foreclosure: A mortgage company WILL win a foreclosure case if the other side doesn't defend itself, even if the mortgage company has no right to win. 

Back to the rest of the story. Not surprisingly, the folks with the first mortgage were not happy when the court said they were too late to foreclose their mortgage. They appealed. A few weeks ago the 2nd Circuit Court of Appeals sent the whole thing back to the foreclosure court with instructions to have a hearing on the evidence. Wachovia will lose if it can't prove that the the first mortgage is "not a bona fide loan," but for now Wachovia is still the winner.

As for Mr. and Mrs. Henry, they still have the right to stay in the property until after the battle of the banks is over.

One of the lessons from the Henry case is that banks and their lawyers can make mistakes. Don't assume that you have no defenses just because you've missed some payments. Think about the rules in a poker game: a full house beats three of a kind unless the player with the full house folds. Don't fold without finding out what your rights are. 

Schedule a consultation with a mortgage foreclosure defense lawyer. And don't wait until it's too late.