Foreclosure Process

Dormant foreclosure cases starting to trickle back into courts

Posted on Wednesday, December 1, 2010

Some large law firms that handle the state's foreclosures are regrouping and re-filing court documents that were pulled earlier this fall, claiming that flaws have been fixed and hoping to move home repossessions forward.

But foreclosure defense attorneys are crying foul. They say judges shouldn't allow simple do-overs on what they believe amounted to fraud upon the court when attorneys submitted "robo-signed" affidavits or other questionable documents that bank and law firm employees have said were not verified, reviewed or correctly notarized.

St. Petersburg defense attorney Matt Weidner said the re-filings are placing the courts in an "absurd" position, requiring judges to "bless or at least overlook the fraud committed."

"The foreclosure mills and their clients have caused themselves and this entire country a profound mess," Weidner said. "Now they want our courts to sign off on their misdeeds."

In one Palm Beach County case, the Florida Default Law Group, which is under investigation by the state, filed a motion this month to confirm a final judgment against a suburban West Palm Beach homeowner that was originally awarded in May.

Following the judgment, the firm notified the court that an affidavit in the case, signed by notorious robo-signer Jeffrey Stephens, may not have been properly handled. Stephens, an employee of Ally Financial, Inc. formally GMAC, said in court depositions that he signed an estimated 10,000 foreclosure documents a month swearing to the veracity of each case, when, he in fact, had not personally verified documents.

The Nov. 8 filing in the Palm Beach County case claims the paperwork is now in order and that the previous filing was not fraud because there was no intent to mislead the court. Also, it would not have changed the course of the case as the homeowner is still in default and the original amounts owed to the bank remain the same.

A foreclosure auction date has been requested on the suburban West Palm Beach home for Dec. 30. The Tampa-based Florida Default Law Group could not be reached for comment.

University of Florida Law Professor Amy Mashburn said how the courts handle the new filings will depend on whether there was intent to deceive either on the part of the bank or its attorney.

"The system takes very seriously anytime someone under oath is swearing that something is personal knowledge," Masburn said. "But the law has to be careful. It matters who is complicit."

Facing a deluge of foreclosures as mortgages soured and unemployment rose, banks and law firms have worked out two basic systems to process foreclosures: the bank prepares the documents, then forwards them to attorneys to file with the courts, or, in fewer situations, law firms prepare the documents for the banks, sign them, and then file them.

In the second example, it's likely an employee of the law firm would know if there were problems.

In sworn statements taken by the state, two former employees of the Plantation-based David J. Stern law firm said signatures were regularly forged with the knowledge of managers, notarizations were made without witnesses, and filings were not verified. Recent letters filed in Florida courts by Stern attorneys claim affidavits, that may not have been properly verified, were drafted based on client information.

But even if the bank was preparing the documents, some argue it's hard to believe foreclosure firms could see the same signatures swearing personal knowledge on thousands of cases and not realize something was wrong.

"That should have been a red flag," Mashburn said.

Weidner believes the solution is for the courts to throw out the foreclosure cases, but Mashburn said it's more likely monetary or bar-related sanctions could be levied.

Fort Lauderdale real estate attorney Shari Olefson agrees. She said the foreclosure problems were more about negligence than fraud.

"A lot of people will argue fraud, but they will have to prove it, and I think factually, they won't be able to," said Olefson, author of Foreclosure Nation, Mortgaging the American Dream. But, Olefson added; "There should definitely be some punitive actions taken against people who negligently filed these affidavits."
South Florida Sun-Sentinel.com
By Kimberly Miller, The Palm Beach Post.

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