Posted on Wednesday, December 22, 2010
Lenders and their law firms are violating new procedures implemented by the Florida Supreme Court intended to address a controversy over botched foreclosure cases, according to attorneys for homeowners.
After a national foreclosure scandal that resulted in a moratorium, new procedures implemented by lenders and their law firms are still falling short of requirements set by the state's high court, the defense lawyers say.
The attorneys for homeowners claim that so-called robo-signers, who signed off on foreclosure paperwork en masse, have been replaced by "robo-verifiers" in the wake of the new Supreme Court rules.
They contend that lenders are still failing to ensure that the foreclosure cases they pursue are accurate and that they own the loan in question.
In its February order — which was underscored this month after the national foreclosure controversy spawned investigations by attorneys general and regulators — the Florida Supreme Court said it wanted to "provide incentive" for a lender to "appropriately investigate and verify its ownership of the note or right to enforce the note and ensure that the allegations in the complaint are accurate," and to "give trial courts greater authority to sanction plaintiffs who make false allegations."
The rule, as interpreted by several attorneys and based on recent trial court rulings, requires lenders to review and verify the accuracy of foreclosure complaints and their attachments after they are assembled by their attorneys.
A lender employee who independently double-checks the information would then sign the documents to verify the accuracy.
But foreclosure defense lawyers say that in many cases the same attorney who put together the lawsuit is signing as the verifier.
And when the attorney handling the foreclosure sends the complaint to the lender for verification, the lenders' employees are using an unreliable verification method, they say.
"The hope was that with the verification requirement the banks would take this more seriously," said Ronald Kaniuk, a foreclosure defense attorney in Boca Raton. "But they are not. This is a statewide problem, and it's not going away."
In a deposition conducted in early December by an attorney with the Ice Legal firm, a Wells Fargo employee detailed the bank's "verification" process. The employee, Alden Berner, said he and two other "legal process specialists" were in charge of verifying all of Wells Fargo's foreclosure cases filed in Florida. Berner declined to estimate how many cases he verified on a daily basis.
"He got the message not to come out sounding like a robo-signer," said foreclosure defense attorney Thomas Ice.
A Wells Fargo spokesman did not return a call for comment.
Bank employees have admitted signing hundreds of foreclosure affidavits without checking the information. The revelations of the "robo-signers" created chaos within the industry as lenders and servicers halted foreclosures amid investigations by state and federal authorities.
Berner's role as a verifier differs from that of a robo-signer. Critics say robo-signers sign foreclosure documents without having knowledge of their contents. In Berner's case, he testified that he uses a computer only to verify the name of the lender or loan servicer against the name of the investment entity that owns the loan.
That still falls short of the intent of the Supreme Court ruling, critics say.
Berner acknowledged he does not know who places the information in the system he relies on, and does not review any attachments in the complaints. He said he assumed the bank's attorneys "accurately input that information into the complaint."
"I did not review the mortgage note and date," Berner said during the deposition related to five cases. "I rely that our attorneys do their job and put the information in those complaints … correctly based on the information provided to them in our referral process," Berner said.
Based on Berner's deposition, Ice Legal has asked a judge to dismiss one of the foreclosure suits with prejudice, which would keep the lender from refiling the foreclosure action. Ice said the situation Berner described is not isolated and expects that will be shown in other depositions. He also plans to file motions to dismiss the other four cases.
"These are the robo-verifiers," Ice said.
"Berner, through his 'verification,' … didn't really verify anything," Ice said in the motion to dismiss. "The bank's counsel could have attached a copy of a comic book to the complaint, and Berner still would have stated that 'the allegations in the complaint are true and correct.' "
Margery Golant, a consumer attorney in Boca Raton, said the process described by the Wells Fargo employee is "clearly improper."
"If the attachment isn't there, they can't verify that what is attached is true and correct," said Golant, who will conduct a Florida Bar course next month to train foreclosure attorneys on verification procedures.
Golant said another major issue with the lack of compliance with the Supreme Court rule is that many attorneys in Florida are verifying their own complaints.
Foreclosure defense attorneys are increasingly challenging the process in court.
"This is a strange situation, but the question will ultimately have to be decided by an appeals court or the Supreme Court," Golant said. "But my opinion is an attorney's verification doesn't mean anything. I don't think that was the intention of the rule."
Ice said he has encountered several cases in which foreclosure attorneys signed as verifiers of documents to "pretend" they were complying with the rule.
"The purpose of this is for the lenders and servicers to check what the attorneys are doing," Ice said. "So in the end they will be responsible for mistakes and won't be able to say, 'I thought my attorney did it right.' "
An attorney's signature on a complaint is already considered a verification, according to Florida Bar rules.
"This was intended as an extra layer of precaution," he said.
South Florida firms that have filed cases in which they verified their own complaints include Greenfield and Coomber in Boca Raton, Smith Hiatt & Diaz in Fort Lauderdale and Rutherford Mulhall in Boca Raton.
Representatives at Greenfield and Coomber did not return calls seeking comment. Christine Green, an attorney at Smith Hiatt, declined comment.
Robert Wunker, an attorney at Rutherford Mulhall, said he personally verifies his own foreclosure documents, which he said complies with Supreme Court rule.
Wunker said the court's didn't specify who can verify the complaint.
Wunker said the attorney who handles a foreclosure suit is the most appropriate person to do research and verify facts in the case.
"It is the attorney who has the best knowledge and belief as to who the parties are that need to be foreclosed upon and who the parties are who have title or interest in the property."
Wunker said he relied on computerized records provided by the lender, the note of the mortgage and public records to verify the information.
"I have access to the same records that an employee would," he said.
While some judges have accepted complaints verified by attorneys, at least one judge in Pinellas County recently criticized the practice and dismissed a case because of what he considered to be an unverified foreclosure complaint.
"The Supreme Court clearly indicates in its opinion that one of the primary purposes of the rule change is to have the plaintiff appropriately investigate and verify its allegations," according to 6th Circuit Court Judge Anthony Rondolino's ruling. "An attorney should not become a witness substituting for these essential client verifications."
For Golant, the issue will be clarified and dealt with in the coming months since it will increasingly be argued in court and eventually appealed to the higher courts.
"It takes awhile for these issues to come to light," she said. "This will become just like the robo-signing problem. The whole process is robotic."
DBRPolyana da Costa