Several readers pointed to an article in the Palm Beach Post, “Foreclosure crisis: Fed-up judges crack down disorder in the courts,” about how judges are having to resort to increasingly forceful measures to get foreclosure mill lawyers to comply with court orders. I had refrained from discussing it here because one aspect of the news story struck me as potential misreporting, so I wanted to verify it (and Lisa Epstein pointed to the transcript which enabled me to do so).
There have already been a number of reports of a marked shift in attitudes among judges in the wake of the robosigning scandal. In many courtrooms, the presumption that the bank is right has vanished. For instance, Mark Stopa reported late in March:
It was September, 2010. I was defending a motion for summary judgment before Judge Parsons (Volusia County). The argument was really strong. Yet when the hearing began, I felt like I was battling for my life. Judge Parsons’ displeasure with foreclosure defense oozed from every fiber of his being. He asked pointed question after pointed question, grilling me for cogent explanations why summary judgment should be denied. I left the hearing having prevailed, but having felt like I just ran a marathon. Even as he denied the MSJ, the judge made it clear he wasn’t pleased to have to do so.
Fast forward to today….The hearing was brief but very interesting. With very little argument, the judge [Parsons] apologized for entering the Order ex parte, noting that such matters are often uncontested and he did not realize this one was contested. Quickly, the issue became whether the motion to correct the alleged scrivener’s error should be heard right then or at a future hearing [The bank’s lawyer had admitted the securitized trust that filed the lawsuit, sought summary judgment, and filed an affidavit in support did not exist].
The bank’s lawyer asked it to be heard right then, arguing the case had been delayed. The judge interjected, saying something to the effect of:
The bank is complaining about delay? I find that ironic. In October, I was handling 40-50 foreclosure cases at a time. Nowadays, I can’t get a bank to come have a hearing. The banks all shut down in October, stopped prosecuting these cases. I don’t see how the bank is now in a position to complain about delay.
From my perspective, it wasn’t just the ruling in this case, or what Judge Parsons said. It seemed to me that his entire approach/perspective on foreclosure cases had changed. Apparently, he realized that the banks chose to shut down operations due to their ongoing, systemic fraud and he wasn’t letting them get away with it any more. Maybe I’m reading too much into it, but the ruling and the commentary were a stark contrast to his demeanor prior to October and a refreshing change.
The Palm Beach Post reported on a case . First the article, which gives an overview of the state of play in the Sunshine State:
A Palm Beach Post review of cases in state and appellate courts found judges are routinely dismissing cases for questionable paperwork. Although in most cases the bank is allowed to refile the case with the appropriate documents, in a growing number of cases judges are awarding homeowners their homes free and clear after finding fraud upon the court…
In February, Miami-Dade County Circuit Judge Maxine Cohen Lando took one of the largest foreclosure law firms in the state to task in a public hearing meant to send a message. She called Marc A. Ben-Ezra, founding partner of Ben-Ezra & Katz P.A., before her to explain discrepancies in a case handled by an attorney in his Fort Lauderdale-based firm.
“This case should have never been filed,” said Lando, who referred to the firm’s work on the case as “shoddy” and “grossly incompetent.” She called Ben-Ezra a “robot” who filed whatever the banks sent him, and held him in contempt of court. She then gave the homeowner the home – free and clear – and barred the lender from refiling the foreclosure….
Ongoing scrutiny by the FBI, the Florida attorney general, the Florida Bar, the media and defense attorneys has uncovered countless examples of forged signatures, post-dated documents, robo-signing and lost paperwork.
I wondered about this part of the article, “She then gave the homeowner the home – free and clear – and barred the lender from refiling the foreclosure.” I’ve heard of cases being dismissed with prejudice, which means the same parties can’t come back to court. But it doesn’t prevent another party (presumably the one who actually does own the note, meaning an entity earlier in the securitization chain) from asserting its rights.
Well, per an example that ForeclosureFraud) presented at the end of March (hat tip Lisa Epstein), another judge, Jennifer Bailey, did indeed give a borrower a house, so it’s plausible that that also happened in the case discussed in the Palm Beach Post.
Judge Bailey was so disturbed by the foreclosure mill and servicer’s non-compliance in a foreclosure case decided to, as she put it, sanction the bank, since sanctioning the attorney would have a permanent effect on his career and not have the needed impact on the source of the misconduct.
You really need to read the entire transcript, it’s a doozy. The short form is that the bank was unable to produce the note and the judge had agreed to let the foreclosure proceed, provided the trust posted a bond to protect the borrower from another party showing up with the note at a later date and suing the borrower, who now has no house, for the full amount. Of course, the servicer foreclosed and did not have the trust post any bond (and the borrower was current on a HAMP trial mod too, it seems…).
So what did the judge do?
1. Cancelled the note
2. Ordered title to be conveyed by the trust back to the owner
3. Ordered the HSBC trust that tried to foreclose and the foreclosure mill and its successors to jointly and severally indemnify the borrower should the original note resurface in another case
So consider what happened if the servicer was foreclosing in the name of the wrong trust…it has just made the trust it filed under and the foreclosure mill liable if the right party ever shows up.
A few rulings like this will really focus the minds of everyone in the food chain.