Bad Press on Bank Foreclosures Making Some Judges More Cautious

Lawyers who defend homeowners against foreclosures, even when their client has a good case, like servicing errors, often run into bank-friendly judges. The plaintiff’s argument typically boils down to, “We’re a bank, they are a deadbeat.”

It looks as if banks are increasingly hoist on their own petard. There has been so much coverage of what can most charitably be called “improprieties” that some judges are no longer accepting the bank case at face value.

We had linked to a Bloomberg story last week describing how Florida’s rocket docket had slowed down considerably. Although the main cause was banks delaying foreclosures to check documentation, the story also made clear that judges now felt compelled to take borrower allegations of fraud seriously, rather than zip through cases.

Some courts in formerly bank-friendly Florida are going further and demanding underlying documents, not just affidavits. From The Palm Beach Post:

Palm Beach County judges are going to be looking closer at foreclosure filings, asking for evidence to be attached to affidavits instead of taking them at face value.

The Florida Rules of Civil Procedure requires affidavits to not only include sworn knowledge as to the statements made in the affidavit, but also to have “sworn or certified copies of all papers or parts thereof referred to in an affidavit” attached.

Chief Judge Peter Blanc said with the volume of foreclosures judges were processing in the past, uncontested cases were not being questioned as to the attachment of documents.

But considering recent revelations that the affidavits were likely flawed, he thinks it’s a good idea to start requiring the supporting evidence.

“In the past, the judges weren’t requiring the attachments, now we’ve got something in the record saying there may be a problem, so now they should attach the documents,” Blanc said. “Dealing with the volume we are dealing with, we want to make sure all of our i’s are dotted and t’s crossed.”

So the bank overdoing on streamlining and cost cutting isn’t merely leading them to have to redo affidavits; if this court is a harbinger, other judges may starting to demand banks produce more documents. Small changes like that over thousands of cases will have an impact on servicer economics. I’m sure few readers will shed a tear.

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  1. attempter

    When I saw the headline I said, “that could mean two very different things”.

    This sounds like the better meaning, although it can still also mean the judges will simply be more careful about openly proclaiming their contempt for the law, and will just slow things down the absolute minimum required to plausibly pretend to look at the documentation, but still really just rubber-stamp it.

  2. SteveLaudig

    So were the judges accomplices after the fact of fraud before but now are no longer accomplices after the fact. Just another example of that pesky rule of law.

  3. Another Gordon

    Csn somebody please explain how it is that when affidavits have been shown to be forgeries those who forged them (and if not merely an isolated case, also those managing the process) are not immediately arrested for perjury.

    Can the courts say in effect, “Your last few affidavits were forgeries, now you are trying harder or maybe just having a moratorium while you work out how to make better forgeries so you are obviously a fine upstanding citizen and everything is just peachy again”.

    I thought affidavits had the same standing as sworn testimony so it appears the courts are being very negligent of their responsibilities if they are not arresting lots of perps.

    1. Nathanael

      The problem is District Attorney discretion. If you have the DA in your pocket — or even if the DA simply doesn’t understand what constitutes a crime — or anything in between — you can commit practically any crime and get away with it, because the DA can choose not to prosecute.

      It would be different if there were more than one DA per district. (This is probably why most people can’t get away with murder even if well-connected; the state Attorney General can prosecute if the local DA doesn’t, the federal DOJ can prosecute if the state doesn’t. But on most crimes, if the local DA doesn’t do anything, the state AG is simply too busy to worry about it, and so forth.)

      In the UK, they have “private prosecutions” to avoid this particular systemic problem.

  4. Koshem Bos

    We should stop short of accusing the court of collaborating with the servicers. Although our justice system is way more politically and culturally biased than any similar justice system, most judges are smart, honest and tough.

    The free lunch days of servicers in the courts are probably over.

    1. freepressmyass

      You’re kidding, right?
      We’re talking judges.
      Most get elected.
      That requires campaign cash.

      Need I say more?

      1. Externality

        Elected judges came about as a remedy to the problems of (1) were appointed by corrupt officials; (2) judges who were biased against the “locals” in favor of big business; and (3) judges whose rulings were far outside community norms.

        The idea of allowing voters to have a role in judicial appointments came about in American Midwest and West as a remedy to the following example: Judge X is appointed by his good friend, a governor who is beholden to the railroad industry that dominates state politics. While on the bench, Judge X always rules in favor of the railroad, dismissing all suits against the railroad and allowing the railroad to win, on dubious grounds, contract and land condemnation cases. There is no clear proof that Judge X is on the take and he refuses to resign. Allowing the people to assess the fitness of Judge X to have authority over them acts as a check on judicial corruption.

        Were we to go back to appointing judges, the corruption would simply move from the election process to the appointment process.

        1. Externality

          Elected judges came about as a remedy to the problems of (1) judges who were appointed by corrupt officials; (2) judges who were biased against the “locals” in favor of big business (e.g., railroads, banks); and (3) judges whose rulings were far outside community norms.

        2. Nathanael

          The NY state system features elected judges — but at the appellate and higher levels, the judges must be *both* elected *and* appointed.

          I’m not sure how to apply this concept to the lower levels (which are just as broken in NY as elsewhere, if not more), but it works *very very well* at the upper levels at eliminating *both* forms of corruption, because the people who get in under appointment corruption are not generally the same people who can get in under election corruption, except in the smallest districts.

  5. Timmy's Foreclosures

    Exactly, Circuit Court judges are elected. The vast swaths of the populace, if they even push with the stencil for these votes, choose either D or R, completely clueless about who they are voting for anyway, or why it would matter. You can have a rich nation cruise along like this, with most of the populace disengaged, well fed, housed, employed.

  6. tpn

    While it’s easy for the banks to make the argument that “deadbeat” homeowners, who were conned into a speculative scheme and lost, don’t deserve a free house, it is a little harder to argue that they are not entitled to “due process”, in spite of whatever scam or default strategy they bought into. Whether or not this distiction will be made in any large scale remains to be seen, especially since there is a lot of “paperwork” involived in due process. paperwork no one seems willing to do. Everyone wants to get rich, no one wants to do the paperwork.

  7. alex

    “We’re a bank, they are a deadbeat.”

    What’s the difference again? Oh right, banks aren’t deadbeats because the Fed throws trillions at them.

    “The Florida Rules of Civil Procedure requires affidavits to not only include sworn knowledge as to the statements made in the affidavit, but also to have “sworn or certified copies of all papers or parts thereof referred to in an affidavit” attached.”

    What’s that, the state of Florida has laws? And judges are supposed to make sure they’re followed? Who would’ve thought.

  8. Impeach!

    Systemic troubles have gone on for years, the plutocracy is just so out of touch.

    WASHINGTON, Oct 20 (Reuters) – The Obama administration said on Wednesday it found no sign of “systemic” troubles so far with U.S. home mortgages, as banks sought to play down a crisis over accusations of shoddy foreclosure practices.

    But Housing and Urban Development Secretary Shaun Donovan insisted the government would “take every action” to press banks to fix paperwork problems at the core of a foreclosure crisis that has put major financial firms on the hot seat.

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