This is starting to get interesting. Having achieved the creation of special courts to whittle down a backlog of foreclosures, called the “rocket docket” due to the propensity of many of its judges to operate on an accelerated timetable that too often led to a refusal to hear borrower objections and evidence, servicers are now withdrawing foreclosure cases in Southwest Florida en masse.
It is not yet clear whether these cases are being abandoned or whether the banks will refile once they find a way to argue their action is valid. However, reading between the lines, one has to question whether they will succeed. From the Fort Myers News-Press:
Banks in recent weeks have been dropping hundreds of their Southwest Florida foreclosure lawsuits instead of facing defendants at trial, according to local attorneys and court records….
Some foreclosures at large law firms were never actually read by the attorneys who filed them here and elsewhere, and some of the mortgages that ended up in mortgage-backed securities sold to investors were never legally transferred by the banks, defense attorneys have alleged.
“We think they’re going to come back and refile,” Lee County Clerk of Court Charlie Green said.
That’s an expensive proposition, he said, noting foreclosure suits carry a hefty filing fee: about $1,900 for a $250,000 house, for example…
But eight voluntary dismissals were filed Tuesday alone by seven different banks including Bank of America, one of the largest filers of foreclosures in this area. Bank of America did not reply to a request for comment Tuesday.
At one court hearing alone, attorney Kevin Jursinski said, one of his associates watched as “50 in a row” were withdrawn.
“Can they re-litigate?” Fort Myers-based attorney Carmen Dellutri asked. “I don’t think so.”
To be blunt, whether these cases resurface will in large measure depend on the servicer or foreclosure mill’s willingness to create bogus documents. I’ve seen this happen even in my limited direct contact with foreclosure cases. The bank’s law firm presented an allonge an attachment to the borrower’s note to allow space for additional signatures which magically showed that the note had indeed gone through all the parties as stipulated in the pooling & servicing agreement for that deal. Per the Uniform Commercial Code, an allonge is supposed to be so firmly attached to the original note as to be inseparable, yet the bank’s team claimed to have miraculously found it. In addition, it bore signs of being a forgery (pixtillated signatures on a “wet ink” document; signatures reproportioned to fit signature lines).
But the use of this sort of forgery raises the bar to consumer challenges. They are fairly easy to creates, and to challenge them, a homeowner would need to hire a document expert to challenge its validity. And despite the growing skepticism among judges of documentation submitted by banks, to side with a borrower on the grounds of document forgery might be a bridge some judges are not willing to cross.
Either way, this development signals that banks are coming to recognize that the pushback in the court system against poor securitization practices is only going to become more concerted.