Florida’s Kangaroo Foreclosure Courts: Judges Denying Due Process on Behalf of Banks

Florida is ground zero of the foreclosure crisis. In addition to being one of the epicenters of the housing meltdown, it has also become the jurisdiction where local lawyers have been the most effective overall in unearthing how servicers and foreclosure mills have engaged in widespread document fabrications and use of improper affidavits to foreclose.

This abuse of contracts and legal procedures matters because the courts are the last bastion of defense of the individual. Even libertarians, who keenly oppose government mission creep, give courts an elevated role as a protector of rights.

Given the success that local attorneys are having (it has reached the point where the state attorney general’s office has opened an investigation into three so-called foreclosure mills operating in the state), pushback by the mortgage industrial complex was inevitable. The old saw about “best government money can buy” now looks to apply to the courts, the one area most people assume to be relatively free from tampering by well funded interests.

The New York Times did report on this development, but its account was such a pale version of what is happening on the ground as to give readers a distorted picture.

These new foreclosure-only courts are special creations of the Florida legislature, funded separately from the usual court system. They are manned by retired judges, which means in many cases they are not familiar with real estate law.

But perhaps most important, the explicit objective of these courts is to clear up the backlog. And that is coming to pass not by the Legislature having thrown enough resources at the problem (that is, having greatly enlarged court capacity to process more cases in parallel) but by pushing for faster resolution. The problem is that an accelerated process runs roughshod over due process and allows banks to foreclose when they may not be the right party, or worse, when the foreclosure is the result of servicing error.

Let’s look at one example of banana republic faux justice in the US, via a speech by foreclosure court Judge Roger Colton to his court on how the day was going to go. It’s simply breathtaking. He says that if the bank is foreclosing, he’s not going to consider any evidence that the foreclosure is in error (servicing errors, plaintiff can’t provide proof it owns the note, which means it might not be the right party and procedurally, means it lacks standing to take action). He says he has already heard everything, there is a lot of unemployment in the area; he is going to schedule a court date, but that is merely a deadline for negotiation. In other words, he makes it abundantly clear he has no interest in hearing evidence. When he gets to seeing a defendant after his speech to the court (p. 13), he rubber stamps what the bank wants without even considering the evidence. And apparently his entire day went like that. The summary from an attorney who was representing a client before him that day:

On 8/30, I had a Summary Judgment Foreclosure hearing on Palm Beach County’s “Rocket Docket”. The judge spoke for 14 minutes to the crowd, of mostly pro se defendants, about how they should just agree to the summary judgment and the plaintiffs, (whose attorneys (Shapiro & Fishman had a dedicated courtroom and to whom he referred to as “my attorneys”) would be gracious (Ha!) enough to allow them to stay in their homes for 120 days if needed (even though the statute says he only has to give them 30). When it came to hearing arguments which were fully briefed and provided to the court (pursuant to the instructions of the Divisions head judge) he only allowed 30-60 seconds for argument, failed to read any of the papers, failed to review the plaintiff’s foreclosure package,flatly ignored the Affidavit filed in Opposition, ignored my plea for a trial, signed the judgment and dismissed me. I never was permitted to even read the proposed judgment or to examine the “newly discovered” allonge which Shapiro’s counsel said I had no right to see.

Newly discovered allonges (separate documents with endorsements on them) are fakes; this is the new preferred method of document fabrication. Per the UCC (Uniform Commercial Code), an allonge is to be used ONLY when all the space that could be used for endorsement of a note has been used up. That means margins and the reverse side. And when an allonge is employed, it has to be so firmly attached to the original as to constitute a single document. Hence, no way can it travel separately and suddenly be discovered if it were legitimate.

If you think this case is isolated, here are some reports via e-mail courtesy Lisa Epstein, who runs ForclosureHamlet. The first is from Miami-Dade (emphasis theirs):

I went with a family member to court in attempts to stop a foreclosure sale….we were there sitting in court waiting….I heard this judge take on other cases….Regardless of their issue this judge just kept on denying every motion that he was hearing. Not even taking the time not even a minute or a second to even glance at the documents these poor homeowners were bringing to him.

People were telling him that they have been approved and/or were being considered for a modification under HAMP and that they were there to ask to have the sale of their home stopped because apparently the plaintiffs attorneys were not aware of this information. As you may all know, most of these attorneys DO NOT maintain constant contact with their clients, therefore servicers even though they may place in their system for a sale to be postponed based on loss mitigation approval, still, it doesn’t reach their attorneys in time to actually stop the sale. So homeowners are being told by the servicers to actually try and contact the attorneys because they are not able to. Unbelievable but true….

Once the homeowner left the court room the judge asked… “what is this HAMP that these people keep claiming they are approved for?” mannnnn I said to myself… “this judge must have been pulled from retirement from another part of this world, and to get put on the stand to make these decisions… the courts must really be desperate for not even taking the time to even educate them about the huge issue at hand with these foreclosures and modifications and fraudulent documents etc…. then after denying a few more cases in less than 2 minutes he said… “WOW… and i got paid to do this everyday 5 days a week?… this is easy.”

There’s is actually much more of the same, multiple instances with particulars, with the judge clearly operating from the presumption that the borrowers were all deadbeats and the sale would go forward.

This message comes from Hillsborough County:

As I previously noted, when I attended court, many many cases were missing the note and mortgage. Many of these were located later but they definately did not meet the deadline for 20 days ahead and the question is–is anyone reviewing these for fraud? My assessment is that court staff are too buried and have no training in this. I literally saw pile after pile of cases moving through the system like a Burger King window. Legitimately, the court staff can say they are overwhelmed….One could ask, how do you have a summary judgment without the note and mortgage????? I do not feel that what I witnessed was something done on purpose to hurt the homeowner. instead, I feel that the judges believe that the homeowners have not met their obligations and they still haven’t “gotten it” that lawyers could blatantly lie to the court and present false documents. But I honestly did not feel as I observed that there is some horrible conspiracy taking place. It’s more like the judges are bending over too much to assist their “work partners”, i.e., the attorneys handling the cases, to pull their cases together.

Further confirmation of the e-mailed reports comes from Mark Stopa, a Florida attorney:

When do judges decide who wins a foreclosure case? Do they evaluate each case on the merits? Or do judges see “foreclosure case” and automatically decide, in their minds, that the bank is going to win (but refrain from announcing such until entry of final judgment)? In other words, is the outcome of these cases predetermined by some judges? …

My experience yesterday, though, as outlined in this Motion to DQ Judge, makes me wonder, not about myself, but about the thousands of cases in Florida where homeowners don’t have an attorney. I strongly encourage you to read the entire Motion to DQ Judge, as it’s a matter of public record, but here’s the cliff notes version.

On August 19, 2010 at 9:30, a summary judgment hearing was set on a mass-motion calendar. My clients were pro se until just a few days prior, so the documents I filed in opposition to summary judgment had not yet made it into the Court file yet. As such, the Judge thought my clients were pro se. At or before 8:15 a.m. on August 19, 2010, the Judge entered conformed copies of a Final Judgment of foreclosure even though the summary judgment hearing was not scheduled until 9:30 a.m. that day. That’s worth repeating:

The judge entered a Final Judgment of foreclosure more than an hour BEFORE the scheduled hearing.….

At 9:30, when the hearing began, I voiced my concern about this to the Judge. She was obviously caught off guard, but it quickly became apparent to me that her “procedure” is to make conformed copies of the Final Judgment, to be mailed to the parties, prior to the hearing (and to send out those copies to all parties immediately upon conclusion of the hearing). Essentially, she’s already made up her mind before the hearing, is holding the gavel in the air, and is ready to throw it down as soon as the hearing starts.

Moreover in Florida, the public is being barred from observing these trials. In Duval County, Palm Beach County, and Hillsborough County (and this is not a full list), police are refusing entry, claiming safety issues (overcrowding) when lawyers and defendants report there are plenty of open seats. The First Amendment Foundation has urged concerned parties to write letters of protest to judges denying access, including camera access. That battle has not yet been escalated.

Contrast this rubber-stamping of these cases with the statement of the Florida attorney general: ““We’ve had so many complaints that I am confident there is a great deal of fraud here.” Representative Alan Grayson has asked the Florida to halt all foreclosures in the state pending the outcome of the investigation of the state attorney general, since 80% of the foreclosures are undertaken by three of the four foreclosure mills under scrutiny.

But don’t hold your breath. Even though the Supreme Court is preparing a response to Grayson’s, the Chief Justice, Charles Canady, is very much a corporate Republican. In other words, doing the right thing will no doubt be deemed to be too inconvenient.

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  1. attempter

    This is exactly the kind of organized judicial crime we’ve been expecting. In my comment to the earlier post on this, I noted how they intentionally dug up the lumpenjurist dregs, the retired (i.e. otherwise worthless to the private sector) judges who are the dumbest and most corruptible, to preside over what should be called a lawless drumhead tribunal. This is systematic “legal” lynching.

    So what are the people going to do about this? They should boycott these courts as a bloc, refuse all response other than a single reiterated declaration that we won’t enter a kangaroo court, and hunker down in their homes, refusing to leave.

    You can’t appease organized crime by supplicating before it. You have to resist it on its own terms.

    1. Charlie

      You state that these retired judges are “worthless to the private sector” How exactly is a retired person supposed to have worth to the private sector? Don’t these judges lak of expertice in forclosure matters play into their preferential treatment towards banks.

      1. attempter

        If someone truly wanted to retire, I can’t imagine he’d be induced to go back to work for something as ugly and unpleasant as this.

        From that I reason that these did not want to retire, but instead wanted lucrative private sector sinecures, and were rejected. So they’ve been rotting in forced retirement, waiting for the call to take any nasty job available in order to demonstrate their loyalty, so maybe then they’ll get that payday.

    2. Doc Brown

      I’m curious if the multiple frauds, and other the offenses, being committed by the banks and “foreclosure firms” could fall under the RICO Act. Not only does RICO provide for criminal penalties, it also allows for CIVIL penalties and sanctions. Would it be possible for defrauded homeowners to obtain equitable remedy? I only did one year of law school before I became ill, but I remember some things. :)

  2. Expat

    It’s so cute when average Americans have their epiphany. When they finally get a chance to see what country they allowed to develop as they sat on their fat asses eating Cheetoh’s and Big Macs bought with borrowed money. And all of a sudden they realize the system is not “nice”, democratic, fair, or moral.

    Bwahh, ha ha ha ha! Next time maybe they will bother to learn science, learn morality, learn math, and vote for someone new at least every two terms.

    1. glenn c

      Vote for the lesser of 2 evils? Is that what our country has become? The race for FL Governor has each candidate “ratting out” on their opponents criminal record. I believe both candidates are telling the truth here. Both partys are guilty! Do we get blamed as citizens for voting one of the two into office? If so why?? Please explain this to me. I’m an Independant voter, but still can not & will not vote for any Criminal.

  3. txchick57

    I spent a year working from time to time on cases like this in TX last year on behalf of homeowners. TX is a non-judicial foreclosure state. We would file suits before foreclosure day attempting to get TROs to stop the sales for some or all of all of the reasons you’ve detailed above. We have our own 3 or 4 big foreclosure mills here too. In some counties we had 100 percent success getting TROs and in others it was very difficult (the judges would set very high bonds that the clients couldn’t meet or just deny them outright). One judge in Tarrant County (Ft. Worth TX) stated that the client should just pay his mortgage payment into the registry of the court and then they’d have a trial on whether or not the servicer trying to foreclose actually held the note.

  4. maxf

    This is why it is so important to be ready for bankruptcy, in place of a hearing in front of any of these judges.

  5. Michael

    The processes they’re using are almost identical to the Star Chamber of England. The Star Chamber is known for it’s torture but torture was pretty rare: it wasn’t necessary because the judges just stamped whatever came before them. Despite that it was famously used for sedition and other crimes, it was mainly used to steal property in quiet proceedings.

    The similarities are uncanny: the use of special-purpose appointed judges, the ability of a judge to ignore the law in part or in whole, the taking of property for a party favored by the state, hearings that are secret if a judge wants them closed, an automatic loss with no lawyer, defense lawyers are often ignored, affidavits by the plaintiff delivered with no chance to review or cross-examine, witnesses for the defense ignored – these are all Star Chamber and Florida Foreclosure Court practices.

    The Star Chamber grew in scope and was eventually so bad it was one of the primary motivations behind the Bill of Rights; the founders, and judges through history, revile what happened there.

    1. Kevin de Bruxelles

      Actually in terms of class and power the courts in Florida are the opposite of England’s Star Chambers; although as you point out they do use the same processes.

      In England, the Star Chambers were a weapon of the king to be used against the aristocracy. Nobles could easily manipulate the workings of common courts so a special court was needed in order to advance royal power. These courts were tools used by the central authorities to help put an end to feudalism in England by restoring central power. Commoners were not tried in these courts

      In Florida, on the other hand, the courts are for commoners but are being manipulated by the new aristocracy, wealthy corporations. The central authorities (US Federal Government) are also bought by these same corporate aristocrats and are therefore unable and/or unwilling (take your pick) to impose the rule of law. So we may be seeing the early days of a new type of feudalism which represents a break down of central authority and the takeover by a newly powerful aristocracy.

  6. Dave of Maryland

    You haven’t been paying attention !!!!!

    Back in Ventura, CA, in 1995 or so, I was stopped for jaywalking. I decided to contest it. I went to the court on the specified afternoon & found it was a preliminary hearing.

    Individual cases took no more than a minute or two. The judge handed out summary sentences, many of one to six months in the county jail. No defendant had legal representation & ALL were under a great deal of pressure to plead guilty. There were no witnesses, there was no prosecution. The judge read the charges from the bench & gave summary judgment. Everyone was guilty, there were no exceptions & little mercy.

    When, after two or three hours & maybe a hundred cases, my turn came I was told that things would go very badly for me if I didn’t agree to pay the fine ($50, if memory serves). In for a penny, in for a pound, as they say, I refused, a court date was set, and I left. The entire time I was there, the judge took no breaks. He must have had a very big bladder.

    On the appointed date a week or two later, court began promptly at 8:30 am. I arrived to a near-empty courtroom. The judge, whose silver hair was very well coiffed (notable for a man), started by reading off a few nuisance cases. The complaining policeman’s name was read, but there were none of them in the room. Then the defendant’s name was read. They were all present. The judge then dismissed the case, as there was no one present to present it to him. Cases were disposed of even more quickly here than they had been at the preliminary hearing. After less than five minutes my case came up, and was dismissed. I made no statement whatever.

    Once the preliminaries were out of the way, a series of drunk driving cases were heard. In the courtroom were both defendants (with attorneys) and prosecutors, with the complaining policeman in tow. At the time in California, if you had been stopped with any measurable amount of booze in your system, you were guilty of something. Over the limit, you were a drunk. Under the limit, you were a “wet reckless”, regardless of circumstance or lack of a prior conviction. The penalties were nearly identical. A friend of mine went through this – twice, and while I’m happy they got her off the road before she killed someone, it was clear to me the defending attorneys made no effort to defend anybody. They were simply there to help the process along.

    Maybe it’s the same in Florida, maybe it’s different, maybe it’s worse. Eric C. tells me that in upstate New York, such judges are often completely untrained in law. (Some years back the NY Times did a series on these fellows.) He says I got off easy. Paul Craig Roberts has written a series of articles on judicial maladventures. From my experience it seems that at least some judges expect the defending attorneys to play along. The ones who do get rewarded & might expect to eventually become prosecutors and/or judges themselves. My suspicion was that those who don’t have their cases decided against them anyway, regardless of evidence or merit – which Yves seems to have accidentally confirmed.

    All of this was years before current efforts to stack traffic courts with hand-picked toadies. So, it looks very much like after exposing the fraud of mortgage foreclosure, defending attorneys must now expose fraud in the courts themselves. That’s going to be a much harder job.

    1. Karen Eliot

      When I was sentenced for drunk driving it was just after CA had changed their laws (1985). The attorney “representing” me passed me a note asking me to lunch. On a whim, I passed it back with the words “Sure, why not?” Result: I was sentenced as a misdemeanor rather than a felony, meaning no loss of driving privileges. And when I failed to attend the classes/pay the fines (not being able to afford either) I thought it would affect my ability to leave the state. Nope. The charge was listed as fully taken care of. To this day I wonder if my agreeing to what could be considered harassment under duress didn’t save me from a felony conviction and jail time!

      1. Yoto Frig

        Too bad, you should have went to jail for a long time.
        Why we let drunk driving scum off so easily I will never understand.

  7. jake chase

    Should defaulting homeowners be allowed to retain possession in perpetuity merely because a bank is unable to produce an original properly endorsed note?

    Have all of you forgotten that these mortgage liabilities are also someone else’s assets?

    If you want something to worry about, worry about the title clouds overhanging these foreclosed properties.

    Here in Florida we now have an army of foreclosure attorneys seeking personal riches by introducing gotcha moments into routine default proceedings. Their television advertising runs all day long and is beginning to rival that of the ambulance chasers.

    1. jamie newman

      Of, course, Jake. The rule of law should be discarded as necessary to protect the interests of rentier parasites who couldn’t be bothered to engage in due diligence before throwing their money at securitized crap.

    2. fajensen

      Err – Yes!

      Never mind what the Law says; Think of the consequences: What would the poor, destitute, banksters *do* when a more crooked competitor are front-running everyone by defaulting homes that others (by luck more than planning) happen to hold the note on?

      Hell, if one dispense with the requirement of presenting the original notes entirely, *several* banks can fight for years over the same carcass, while the lawyers are gleefully ordering Porches.

      Lawyers LOVE a long, bitter, fight! Entire careers, 30 years of paid work, were spent on cases like Exxon Valdez!

    3. attempter

      Have all of you forgotten that these mortgage liabilities are also someone else’s assets?

      Have I forgotten that they’re the banks’ assets? No.

      That’s sort of a feature in my advocacy of default, not a bug.

    4. DownSouth

      It’s amazing how quickly the banksters start bawling “victim.”

      I suppose if they can establish their victimhood credentials sufficiently, all that silliness in the Bill of Rights and the Fourteenth Amendment about due process can be dispensed with.

      Before long, they’ll be making the same claim that Eddie Long did yesterday. Long is the televangelist and pastor of a mega-church in Atlanta. He is being sued by four young men for sexual coercion. Long jets around the globe in private jets and lunches with presidents, but nevertheless claims “I feel like David against Goliath.”


    5. anonymous

      “Should defaulting homeowners be allowed to retain possession in perpetuity merely because a bank is unable to produce an original properly endorsed note?”

      Yes. Showing a clear chain of title is Property Law 101 (which is why the Florida Legislature created special courts to ignore it).

  8. LeeAnne

    Documenting this story as you have is an important public service -indeed, an urgent one. A free press sufficiently funded for ongoing broad investigative reporting would have prevented this scenario.

    Kudos to the courageous reporters still out there doing the job for what is probably inadequate compensation given how news budgets have been squeezed.

    Granted judicial misbehavior is as American as apple pie, this scenario could not have occurred on such a scale if we still had a broad based functioning free press. Because the press was feared, it acted as a prophylactic that reduced, when it didn’t prevent, bad behavior like this against the people. The press performed that function on every level of this society -from the President down.

    Today’s journalism students have never experienced a truly functioning free press; never experienced consistent press observation of the levers of power, and the reporting of it.

    When the question is asked, ‘where are the lobbyists for the people’? The answer is, ‘it is our investigative reporters and journalists -the ‘FREE PRESS.’ In a representative democracy/republic (whatever) ‘the press’ is the advocate of the people in the halls of power. Without a fully functioning free press, the people could be said to be orphaned; their care givers missing in action, while vulture lobbyists have the field to themselves free of interference.

    That’s insane.

    While the corporatocracy led by corporate finance continues to squeeze the life out of businesses -literally; the fewer employees, the lower their wages, the more intensely those with jobs are abused, the more economic fear in the society, the higher the share price.

    But the press IMO had to be gone first. The combination of no ‘free press’ with unlimited corporate financing of election campaigns is really GAME OVER for democracy in this country.

    Sandra Day O’Connor’s warning that we were at risk of a dictatorship was prescient; too bad she was unwilling or unable to hear that voice when she voted in favor of Bush v Gore, and BTW, when asked by the press a few years later, the press, in all its acquiescence to power, accepted her response unchallenged: she said ‘the NY Times, [that bastion of honest unbiased reporting] said Gore would have lost.’

  9. Tertium Squid

    What’s key to me about these machinations aren’t the actions of individual judges, but rather the system behaving in a way that protects the system. The thought of millions of people getting off the hook on their mortgages is feared as ruinous to the banks, TBTF’s, and government that owns or guarantees trillions of $$$ in CDO’s. Thus the judges and legislators act accordingly and the little guy gets squashed since, after all, none of this is about him.

  10. Tom Stone

    It is my understanding (IANAL) that if no one can prove ownership of these notes they would escheat to the states. So,no jubilee for the borrowers,but some $ for cash strapped states.

    1. fajensen

      “… but some $ for cash strapped states.”

      Not really – The states get to maintain a house worth cents on the dollar and gets to pay its own property taxes to rub salt in the wound.

  11. Eagle

    What keeps people from appealing the judgement? If you can tie up the foreclosure in court long enough, you’ll likely eventually cost the servicer enough money that they’ll likely settle.

    The people at the other extreme who are taking advantage of this mess to live in their house without making payments must be doing it somehow – most likely by diligently reading about the process and proactively responding to all letters.

    1. DownSouth

      It’s unbelievable how quickly the right-wingers, who trot out property rights at the slightest provocation when used in the defense of the rich and the powerful, jettison them when they’re invoked in the defense of the unfortunate and the dispossessed.

      So yes, Eagle, people are entitled to a fair trial and maybe even an appeal in defense of their property.

      You can read all about it in the Bill of Rights.

      Fifth Amendment: No person shall be…deprived of life, liberty, or property, without due process of law.

      1. Anonymous Jones

        Most casual libertarians are interested only in their own liberty (including the liberty to restrain others’ liberty).

        Most casual propertarians are interested only in their own property (including property they can amass by appropriating others’ property).

        This isn’t new or unbelievable. It should be constantly noted, however…

        1. DownSouth

          Could it have something to do with your history of comments on this blog, such as this one?

          Eagle says:
          April 11, 2009 at 9:32 am
          It’s getting hard to read this blog without getting the impression the goal of the author(s) is not getting a working banking system but punishing bankers. No wonder you attract so many nuts in your comments.

        2. maxgen1

          DownSouth says:

          “It’s getting hard to read this blog without getting the impression the goal of the author(s) is not getting a working banking system but punishing bankers. No wonder you attract so many nuts in your comments.”

          The web is named, “Naked Capitalism.”

          The article is titled “floridas-kangaroo-foreclosure-courts-judges-denying-due-process-on-behalf-of-banks.”

          I don’t see how capitalists’ assault on civil rights is irrelevant. It is certainly relevant to naked capitalism and the title of the article.

    1. Karen Eliot

      …don’t forget firearms. Floridians are bigtime gun owners. (I find that kinda heartwarming, actually.)
      Maybe we’ll soon be seeing some of them defend their properties the old fashioned way….

  12. Francois T

    How’s that for a prime example of the seminal post written by Gonzalo Lira a few months ago?


    In a police-state, the citizens are “free” only so long as their actions remain within the confines of the law as dictated by the state. If the individual’s claims of rights or freedoms conflict with the state, or if the individual acts in ways deemed detrimental to the state, then the state will repress the citizenry, by force if necessary. (And in the end, it’s always necessary.)

    What’s key to the definition of a police-state is the lack of redress: If there is no justice system which can compel the state to cede to the citizenry, then there is a police-state. If there exists a pro forma justice system, but which in practice is unavailable to the ordinary citizen because of systemic obstacles (for instance, cost or bureaucratic hindrance), or which against all logic or reason consistently finds in favor of the state [FT here: banks in this case, but, since they’re wards of the State…] — even in the most egregious and obviously contradictory casesthen that pro forma judiciary system is nothing but a sham: A tool of the state’s repression against its citizens. Consider the Soviet court system the classic example.

    A police-state is not necessarily a dictatorship. On the contrary, it can even take the form of a representative democracy. A police-state is not defined by its leadership structure, but rather, by its self-protection against the individual.

    I disagree with the last paragraph; the police-state will always devolve into a dictatorship, usually for efficiency reasons.

    So, Ladies and Gentlemen, the stakes are pretty simple to grasp: Let the State of Florida get away with this, and pretty much every State shall do likewise. It’ll be the end of our individual freedoms as a norm;said freedoms will then be considered a privilege to be dispensed by the powers in place at the moment.

    The Rule of Law will finally be replaced by the Rule of Men; exactly what the powerful and the well-connected have been looking for during decades.

    Have a good week everyone.

  13. Hugh

    Disheartening but unsurprising. Just another example of a two tiered system of justice. There is one law for the powers that be and another for you and me.

    The looters own the judges? Well, of course, they do. We couldn’t have a kleptocracy without them, now could we?

    1. Doug Terpstra

      Thanks, Hugh. “There is one law for the powers that be and another for you and me.” You have a lot of stuff worth stealing!

  14. Keating Willcox

    I am amazed that such transactions as mortgages on $500,000 properties were so carelessly handled, for which the originating banks and companies should lose their shirt, and that lawyers don’t have major paperwork for any case that involves such large assets. The law is clear, a note and mortgage lose their effect if not carefully handled, and fraud based on creating false paperwork is criminal larceny. What am I missing here? If a lawyer creates a fake signature page, why is that different from what Bernie Madoff did? or any embezzlement scheme? Were I a lawyer in Florida, I would appeal all such cases and treat them with the value they are worth. Owners of all such investments should work to determine exactly what the underlying mortgages are and repair what they can.

  15. Charles Weaver

    Just spitballing here, but I wonder what the life expectancy of these judges (and their famlies) might be? I could tell you exactly if I were being screwed by these slimeballs.

  16. JBH

    Banks made loans. Community banks made them
    and kept them in portfolio. The housing market
    went bust. Many homeowners cannot now make
    the payments they in all good faith obligated
    themselves to. Now they want to go to court
    and get out of their legal obligation. What is
    so difficult for those who post on this website
    to see about this? The people who can’t pay their
    mortgage payments should vacate their homes
    for the next best occupant. It is morally
    unconscionable for it to be any other way, and
    it is doubly so for those of you blaming
    the banking community who have kept their side
    of all those legal contracts.

    1. F. Beard

      You don’t understand fractional reserve lending apparently. Bank don’t lend existing money; they create new money as they lend it. To not borrow from the banks is to risk being priced out of the housing market by those who do.

      The bankers are responsible for this mess.

    2. Yves Smith Post author

      With all due respect, you clearly didn’t bother reading the post. What about servicing errors and fraud and origination fraud don’t you understand? As I’ve indicated, people who can’t afford their homes or don’t have a reasonable basis for thinking they were screwed typically don’t fight foreclosures.

      Oh, and by the way, this legal fact set does not apply to anyone who didn’t securitize their loans (like the type of community bank lenders you mention).

      But aside from that, why should homeowners be treated worse than other borrowers? If a corporate borrower, or an individual who borrowed to buy a yacht or a painting gets in trouble, the bank will negotiate and restructure the loan if at all possible. This isn’t about morality, it’s good business. Your community bank and banks that hold the loans will restructure the deal if the borrower has decent income (ie can still service debt at a level that leaves the bank better off than foreclosing).

      I suggest you become informed before spouting off.

      1. DJ

        “As I’ve indicated, people who can’t afford their homes or don’t have a reasonable basis for thinking they were screwed typically don’t fight foreclosures.”

        I’ve read most of your posts on the subject. I don’t remember you indicating any such thing. Maybe you should consider that you’ve given a false impression. The logical extension of my impression was that you think it’s fine for Calpers to take a total loss so that someone can live in a home indefinitely without paying the mortgage. Clearly some of your readers do think this way or think that Citibank will take the hit. Why aren’t you taking the time to get pissy with them?
        None of this should be construed to mean that I’m not for lawyers into creative documentation going to the Graybar Hotel where they can get in touch with their feminine side.

        1. Yves Smith Post author

          You need to improve your reading skills. I have never said anything remotely along the lines you suggest. I point out that the folks who were responsible for moving the notes to the trust by a particular date in the now distant past for all these deal, which is clearly provided for in the pooling and servicing agreement, the REMIC (IRS) rules, and New York State law (which was elected in all these deals to govern the provisions related to the trust) appear not to have done so on a massive scale. Their fuckups appear to be unsolvable by any means other than document forgeries and fabrication. This is an INDUSTRY self inflicted wound, and you accuse me of a line of thinking that amusingly shift focus off the people who screwed up and are now engaging in fraud and civil rights abuses to clean up their mess.

          Calpers should be hopping mad at people who failed to honor their contractual commitments in such a colossal way that what was sold as secured paper may turn out to be in many cases to be unsecured. That is not a deadbeat borrower problem, that is a securiization industry problem. Get your targets straight.

          I have REPEATEDLY discussed who fights foreclosures and why:





  17. Jesse

    I beleive everyone is overlooking the basics here, its not about paying or not paying its about what is going on with our legal system. When a judge can overlook the law and take matters into his own hands its called tyranny!

    America was based on principals not lawlesness, our court systems have become a joke! The bankers own all these monkeys and the people have no say so, what is wrong with this picture?

    Until Americans decide to unite and quit acting like its ok to screw people for whatever the reasons and get these clowns out of office nothing will change.

    You cannot say that its ok to go to court for any hearing and let the judge ignore the law no matter what you believe is right or wrong, whether the homeowner owes or not. The system has to follow the law and it does not. Only Americans can change this, its not up to anyone else.

    The problem America faces as someone else stated is Americans eat too many Cheetos and dont pay attention to what our government is up too and when they finally wake up its too late. Look at global news and see how other contries protest issues like these, people unite and march until something is done. Here, we dont give a darn as long as it does not effect me!

    America needs to wake up to the reality that the government dictates to us, the bailouts are a perfect example of this. Our great grandchildren will be paying for the banks who are kicking families out on the street today and we had no choice in the matter. Thats called inslavment, anyway you look at it.

    Do you really believe Americans would have decided to keep the banks in business had we had a choice? Not hardly, most would have said, let them fall like any other business does when it screws up. No one is bailing the thousands of little business’s out that are closing everyday but the banks are posting record profits, again, what is wrong with this picture?

    The have enslaved us for many generations to come and America sits idly by. Its a shame but its reality.

    The poster said it best, if Americans were to search the internet and get a copy of Modern Day Mechanics and understand how the fractionalized banking system works they would have a fit. Banks dont lend money, its agains the law! They create it with your signatures. I did not make this up, the FED publications say so.

    Wake up, educate yourselves on the reality of banking, the legal system and you might just change your mind about the whole picture…..I promise its not what you think it is.

    I challenge anyone who posted to go to Dunn and Brad street and type in your county court house name and you will see its a for profit corporation publicly traded on wall street and that goes for any agency including the IRS. Just exactly are they making profits is the question.

    Sorry for the long post but I live in Florida and am sick and tiered of the nonsense we see everyday with these kangaroo courts and more importantly what is going on in America, the once great nation that is nothing more than a ghetto now for politicians and bankers to rob Americans of everything they have, life, liberty, and the persuit of happiness, is a thing of the past along with the laws of this country. Its a total sham to say the least.


    1. Adam

      “I challenge anyone who posted to go to Dunn and Brad street and type in your county court house name and you will see its a for profit corporation publicly traded on wall street and that goes for any agency including the IRS. Just exactly are they making profits is the question.”

      Not quite sure what you’re getting at here. Yes, the IRS is formed as a company which gives it legal rights and corporate “personhood”. That makes sense as it is a) a government agency that utilizes US business law and b) an entity with a need for payroll, bank accounts, and other “business” representation on transactions. All of this necessitates an incorporation of the IRS. And yes, profits are not evil, so the IRS can make them. But here the US government, the owner of the IRS (most likely via the Articles of Organization or other such contract), then has a claim to all the cash/assets/profits of the IRS for use by the US Treasury.

      So…what’s the problem here? Government is functioning as it should be…

      And as a last note, please read up on the difference between private companies, public companies, and incorporation (contact your local Secretary of State regarding forming a company and they can inform you). Private companies are incorporated, have shares, and generate profits but don’t need to be traded on a market. “Wall Street” has turned into jargon for a market where shares in companies are traded, but this is not evil. The IRS can be a company, for-profit, and be private, 100% owned by the US government, not traded on “Wall Street”.

  18. jtec

    This is great. “…its about what is going on with our legal system. When a judge can overlook the law and take matters into his own hands its called tyranny!”
    Maybe it’s poetic justice because FL’s Acie Hastings said in the House something like ‘there’s no rules, we make them upas we go.’
    Years ago, in Houston, I bought a house before the 1st oil boom and it ended up under water. I just kept paying the note. Silly me. This is going to go on for a long time and, as usual, the ones left with the money will be the lawyers.

  19. Wol

    What no-one has mentioned …

    I’ve seen several reports of houses being foreclosed … WHEN THEY WERE BOUGHT WITH CASH.

    So all these people spouting off about how “if you can’t afford the loan, don’t complain when you get foreclosed”, what if you get foreclosed WHEN THERE IS NO LOAN! ?


    1. Mike L

      Wol has hit the nail on the head here. Anyone heard of identity theft? Anyone heard of the Debt Relief scams? This is the next one coming — these guys are going to walk into the FL courts with fake documents and walk out with the houses which they will immediately sell and walk away with the proceeds. Good luck if you buy a foreclosed property in Florida — I wouldn’t take odds on the legitimacy of the title.

  20. Carl Hilton Jones

    Yup. There is no justice system in the US. A “legal” system, perhaps, but no justice. The judges in these cases know they are not following the law; they don’t care, as long as they get paid. The banks bribe the legislature to set up sham courts and the legislature bribes retired judges to set up sham courts and stamp out outcomes predetermined by the banks. One of the whole problems with this country’s system is that judges are not help responsible for their actions. They can violate the law on a whim and no one can touch them.

    When are these judges going to jail? When are the legislators that knowingly set up this travesty going to jail? When are the bank executives that paid the bribes to make this happen going to jail? Never. Because the law means nothing in the US.

  21. Sue

    If these judges are supposed to be retired, how are they getting reimbursed for their services-I am sure they are not doing this for free-so how much are the banks paying them under the table? It would seem that a retired person would be empathetic to those who are living on fixed incomes to have financial difficulties-unless the pay off speaks more to their financial woes. And as said before-where do they get their expertise in the field-I guess that’s why it’s called a kangaroo court-or should it be called a three ring circus…Some of you make comments about being lazy and living on borrowed money, etc-what about those that were caught up in the liar loan situations, who then tried to work it out with the bank due to getting caught in emergency situations? I hope these old geezers can live with themselves as they go as there are some real legitimate hardship situations.

  22. lawgrace

    Foreclosure fraud is a NATIONWIDE scourge; and it is easy to prove here in Louisiana.
    Commercial and residential foreclosures via deceptive and fraudulent proceedings enables repetitive, illegal property flipping, and enables falsified IRS form 1099-A’s. Foreclosure fraud is the best means by which unscrupulous attorneys deceptively auction, bid (or insiders bid), and acquire those properties; and results in some blighted neighborhoods. Also, foreclosure fraud component involves the fabricated pleadings (such as false ‘lift stay motions’ and false ‘proof of claims’) that they file in Bankruptcy courts. Foreclosure fraud has far reaching effects on people; for example: illegitimate homelessness, unfairly answerable for IRS tax bills, and undue “deficiency judgments.” *more @ http://www.lawgrace.org/2010/09/30/important-facts-about-foreclosure-and-mortgage-fraud/

  23. Oscar BullFrog

    seems as good a place as any for this:

    There is a primary and ridiculously obvious reason:

    – why our borders are insecure,

    – why Americans do not trust politicians,

    – why America is trillions of dollars in debt,

    – why the U.S. economy is crippled and crawling,

    – why the size of Fedzilla dwarfs anything our Founding Fathers ever could have imagined, and

    – why just a tiny minority of Americans pay the vast amount of federal taxes while 50 percent pay no federal taxes;

    professional, corrupt Fedzillacrats who have rigged the system in their favor while fleecing the rest of America are still fiddling around in Washington, D. C.

    Democrats don’t get it. Most current Republicans don’t get it.

    Arrogant, pompous and narcissistic Fedzillacrats such as House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid refuse to budge in their foundational belief that -they- always know what is best for -us-. These socialists are the new slave masters and think feeding Fedzilla trillions more of our tax dollars is a wise and pragmatic policy. They are Fedzilla’s zookeepers. Indeed, they have run America their way — auguring us into a financial abyss.

    The Americans I meet on a daily basis in grocery stores, restaurants, airports, gas stations and on Main Street USA -are- mad as hell and want true change in Washington. They know the only way they will achieve corrections is to send a new breed of politician to Capitol Hill. Let’s send as many Ms, Mrs. and Mr. Smiths to Washington with their crowbar of common sense and tell them to swing it often. It is a target-rich environment. Jail-break that zoo and we jail-break ours.

    Bottom line is that Americans don’t care if Tea Party candidates have ever been elected to anything. They don’t care that Tea Party candidates have some skeletons in their closet. They don’t care that Tea Party candidates don’t have golden tongues. Those attributes don’t matter.

    Too much power in the hands of too few for too long is the recipe for disaster. Power corrupts and absolute power corrupts absolutely. A disaster is what we now have on our hands. The only way out of this mess is new senators and new representatives enacting time-tested successful ideas and rejecting the time-tested failed ideas. Both lists are long.

    Our Founders made that first selection well. Now it must be our turn or we will get sicker and die.

    Clean house and clean it well this time.

    [ed: with nods to TedZilla]

  24. DC

    Same things are happening to me (and others) in Wisconsin. Judges don’t seem to care about the law, all they care is if teh homeowners has made payments. We all shoudl strt foreclosure proceedings on these judges with only a copy of their mortgage which is public record and anyone can get a copy of.

  25. April

    Shame on these judges for not applying the RULE OF LAW! Hello. They’re not doing their jobs and should be removed from the bench!

    My husband and I had a recent experience with a judge who was biased, didn’t even bother to listen to the evidence we tried to present, as well as written and photographic evidence of a neighbor who kept harassing us, stealing things off our property. The nutjob neighbors admitted to doing many of these things (they’re not too bright), but lied under oath on many other things. The judge made an assumption that this was just a “neighbor dispute” but it was not. Years of constant harassment and threats of violence should have allowed us to get a permanent restraining order for these two nuts. And, ironically, they have a default judgment against them from JP Morgan Chase for non payment on their mortgage going on **TWO YEARS** and they are still in their house!!! I feel for the people who legitimately need to be heard and are working on loan mod’s, but the banks need to get their act together and move these foreclosures along for people like my neighbors. They’re dragging down property values as they don’t keep their property up and have stiffed the HOA going on three years. It’s not fair to the other people who ARE paying their mortgages to have to live next to people like this!

  26. Heather

    I witnessed the same thing sitting thru the foreclosure sale court to make sure my house was taken off the docket. It was disgusting. The judge denied everything and seemed to take pleasure in hurting people. This was after the moratorium was called. I was muttering from the back row so they made us get out of the court. I did say moratorium quite loud. The mood was really ugly and they called the police up several times.It would just take a little little spark.

  27. glenn c.

    I can’t wait to help your organizatiion. I’m an ex-government employee of the intellegence gathering sector of the formerly beautiful country of the United States of America.

    I want my freedom and country back, just as most civil, moral, people want.

    I’m making a token donation, and God willing will donate time, advice, and additional financial support as my financial situation improves.

    God bless,

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