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Foreclosure articles, editorials and columns from Florida and national papers

Lawmaker Questions Power to Foreclose
By ROBBIE WHELAN
Wall Street Journal
Nov. 1, 2010

A Virginia lawmaker asked the state's attorney general to launch an investigation of
Mortgage Electronic Registration Systems, the middleman firm in millions of court filings that
helps keep the mortgage-securitization machine moving.
Robert G. Marshall, a Republican member of the Virginia House of Delegates,
requested that Virginia Attorney General Ken Cuccinelli determine whether the Reston, Va.,
company violates state law because it doesn't pay a fee every time a loan changes hands.
Opinions differ as to whether MERS must pay local fees every time it sells an interest in a
loan.
"There are too many people getting foreclosed on not properly," said Mr. Marshall,
who represents two counties near Washington, adding that he is drafting a Virginia law that
would require lenders to pay county fees before being allowed to proceed with foreclosures.
"The disdain with which the conditions of law have been treated by those who want to make
money too fast is very troubling to me."
Brian J. Gottstein, a spokesman for Mr. Cuccinelli, said the attorney general is required
to produce an opinion on the matter but declined to comment "on any particular industry
participant right now."
R.K. Arnold, MERS's chief executive, said the company's activities are legal in all 50
states and have held up under previous scrutiny.
The challenge is the latest sign lawmakers and lawyers for borrowers are taking aim at
MERS as the foreclosure mess drags on. Created 13 years ago by Fannie Mae, Freddie Mac
and several large U.S. banks as an electronic registry of land records, the company's name is
listed as the agent for mortgage lenders on documents for 65 million home loans. But that
same streamlining has made MERS a target of critics who say the company might not have the
legal right that it claims to foreclose on borrowers.
In a state-court lawsuit filed in Georgia last week seeking class-action status, lawyer
David Ates says MERS isn't a secured creditor, meaning it lacks the power to foreclose on
behalf of lenders, mortgage servicers or other parties.
Mr. Ates said he is seeking to have all Georgia foreclosures by the company "be
declared invalid and the title be returned to the debtor."
Mr. Arnold said the company's role in foreclosing on a mortgage is unquestionable
because every time a loan is registered with MERS, the borrower must sign a document saying
the company assumes all rights and responsibilities on behalf of the creditor or lender.
"The legal concept is as sound as any concept in America: You made a loan to a
homeowner," Mr. Arnold said in an interview. "They granted you a mortgage, and that's
recorded in the land records, and the company that has the mortgage and can foreclose is
MERS."
Mr. Arnold added: "We can foreclose in all 50 states, and we will continue to do that."
Tom Kelly, a spokesman for J.P. Morgan Chase, said last month that the New York
bank hasn't used the MERS record-keeping system since at least 2008 to foreclose in the
bank's name because "some local courts wouldn't accept MERS." J.P. Morgan still uses MERS
for mortgages originated by other banks or brokers.
MERS spokeswoman Karmela Lejarde said the company doesn't keep track of how
many users have stopped using the electronic filing system. MERS declined to say how many
lawsuits have been filed against the company since foreclosure troubles erupted in mid-
September.
On its corporate website, MERS says its goal is "to register every mortgage loan in the
United States." During the housing boom, the company helped lenders transfer ownership of
home loans quickly and at low cost, making it easier to bundle loans into pools that are then
morphed into securities.
Christopher L. Peterson, a law professor at the University of Utah who has criticized
the record-keeping company's business model in scholarly articles, says the foreclosure furor
is a serious challenge to MERS because the documentation problems show the company is
doing an end run around hundreds of years of American property law.
"By having all the mortgage loans recorded in the name of one entity, the records
don't mean anything anymore," Mr. Peterson said. "We used to have the records that showed
the true economic interest of who owns the land in the public system. Now we just have one
proxy, and we can't tell which lender or which trust owns the right to foreclose, because
virtually every securitized loan is recorded in the name of MERS."
There is no sign county governments across the U.S. are pursuing a wide-scale effort
to recover fees from MERS. And while state supreme courts in Arkansas, Kansas and Maine
have thrown out individual foreclosure cases on the grounds MERS didn't have the right to
bring the actions on behalf of banks, no nationwide consensus has emerged.
"MERS is on the mortgage. It's a condition to the loan. The borrower agreed to that.
We're foreclosing on behalf of the company that holds the promissory note," said Mr. Arnold,
MERS's CEO. "At the end of the day, it's going to wind up in the favor of MERS."
Also last week, the District of Columbia's attorney general, Peter Nickles, issued a
statement saying no D.C. homeowner can be foreclosed upon unless the security interest of
the note holder has been physically recorded with the district's Recorder of Deeds, a condition
that electronic assignments through MERS don't meet.
MERS said in a statement that its transfers of interest in a property were valid because
MERS's name is on the original documents when the loan is made and recorded.
Write to Robbie Whelan at robbie.whelan@wsj.com


65,830 foreclosure cases in Florida cleared in three months
11/02/2010 © Palm Beach Post
By Kimberly Miller

Florida's courts cleared 65,830 foreclosure cases in a three-month period beginning
July 1, with 71 percent being decided in quickie hearings before the judge sometimes called
"rocket dockets."
According to a report released today by the Office of State Courts Administration, only
23 foreclosure cases went to trial statewide during the same time period.
The report, the first of its kind, was conducted between July 1 and Sept. 30 to
measure how Florida's 20 circuit courts are using a $6 million state allotment awarded over
the summer to hire additional judges and staff to handle foreclosures.
Despite clearing 65,830 cases, 25 percent of which were dismissed for reasons that
could include a completed short sale or deed-in-lieu of foreclosure agreement, the report
found a backlog of 396,509 cases are still clogging Florida courts.
Lawmakers awarded the $6 million, in part, hoping that getting homes back onto the
market will hasten an economic recovery.
"We needed a way to see how we are doing and identify reasons for delays or
slowdowns," said Kris Slayden, who oversees foreclosures for the Office of State Courts
Administration. "This shows we are doing what we said we would do, reducing the backlog."
Palm Beach County's foreclosure court cleared the most cases in the state during the
three-month period, wiping 9,846 suits from its system. About 70 percent of those cases were
decided via summary judgment, with just one trial being held, according to the report.
The concern among foreclosure defense attorneys has been that some senior judges
hired with the state money would rush through foreclosures using summary judgments. A
summary judgment is held in lieu of a traditional trial when the facts of the case are
considered irrefutable. They are often allowed when the borrower is not contesting the
foreclosure or represented by an attorney, having possibly walked away from the home.
"Summary judgment is a shortcut that should rarely be used," said foreclosure
defense attorney Tom Ice, of the Royal Palm Beach-based Ice Legal. "In foreclosure cases
they are routinely filed and routinely granted. That's a disturbing trend that there are so few
trials."
Ice said it's even more of a concern in light of recent revelations that some foreclosure
affidavits, which are used in summary judgments, are flawed or fraudulent. Beginning in late
September, major lenders including Bank of America, Ally Financial, Inc., and JP Morgan
Chase, acknowledged that some of their foreclosure paperwork would need to be re-filed.
"All you need is one issue of fact, such as dispute over note ownership, to get a trial,"
Ice said.
Palm Beach County Judge John J. Hoy, who took over foreclosure court today, refused
to comment for this story. Hoy replaces Judge Meenu Sasser, who is now hearing civil cases.
Palm Beach County, which is the 15th Circuit Court, received $646,540 of the $6 million, using
it to hire two senior judges and six case managers to tackle foreclosures. The Palm Beach
County Clerk and Comptroller's Office received $403,000 out of a $3.6 million statewide
allowance given to clerks' offices to handle foreclosure paperwork.
Today's report showed Palm Beach County had 46,438 foreclosures backlogged as of
June 30. That fell to 36,592 as of Sept. 30.
The 19th Circuit Court, which includes Martin and St. Lucie counties, received
$212,729 to hire senior judges, case managers and administrative assistants. As of Sept. 30,
it had cleared 951 cases, but still had a backlog of 18,110.

Judge: 357 idle foreclosure suits gone in 2 1/2 hours
10/30/2010 © Bradenton Herald

MANATEE - The foreclosure case was filed in March 2007. Within a month, all of the
parties were served with copies of the suit.
Then, nothing.
No reply from the homeowner. No filings nor hearings set by the bank´s attorney.
The court case sat idle for the next 3 1/2 years, seemingly forgotten among the
thousands of foreclosures clogging the legal system.
That was until Thursday, when Manatee County Circuit Court Judge Paul E. Logan
dismissed it for inactivity.
He was just getting warmed up. In the span of 2 1/2 hours, he threw out 357
foreclosure cases because they had been inactive for at least 10 months.
The purge was part of an effort to reduce the backlog of open foreclosure cases,
estimated at 12,000 in Manatee alone. The target: A 62-percent reduction, or nearly 7,500
cases, before July.
"It´s just a small dent,¨ Logan said Friday of the cases he dismissed the previous day,
the most he´s done in a single day.
Logan estimated he and other judges have tossed about 1,250 inactive foreclosure
cases since the initiative began in July. And more are likely as several more dismissal dockets
are planned in the coming months.
"We will be doing this on a regular basis to try to get these cases moving,¨ Logan said.
He said the most common reasons attorneys gave for the inactivity were ongoing
negotiations with the borrower, a settlement had been reached with the borrower or that the
lender was reviewing paperwork.
A local attorney said there was another reason, especially if the homeowner is in a
trial mortgage modification or attempting to arrange a short sale.
In such cases, lenders usually leave foreclosure cases in limbo for months or years in
case those alternate arrangements fall through, said Dawn Bates-Buchanan, managing
attorney of Gulfcoast Legal Services´ Bradenton office. That way, lenders don´t have to re-file
the foreclosure suit and pay another filing fee of up to $1,900.
But in dismissed cases, the lender might be more willing to modify a loan, approve a
short sale or accept an alternative instead of filing for foreclosure again, she said. Bates-
Buchanan called the mass dismissals "great news¨ and said two of her clients´ cases already
have been dismissed while another 15 might be.
The administrative dismissals are among several methods that local judges and court
officials are using to better manage the foreclosure process. They also have set up an
automated system for scheduling court hearings and established "rocket dockets¨ to expedite
uncontested cases.
They´ve also taken a harder stance against law firms, especially so-called "foreclosure
mills¨ with large case volumes, for not abiding by court rules and procedures.
In one case, Manatee County Circuit Court Judge Janette Dunnigan found a Fort
Lauderdale firm in contempt and levied a $49,000 fine for missing court hearings it scheduled
and not filing required paperwork. The firm is appealing.
Logan said of the roughly 500 cases on his docket Thursday, bank lawyers voluntarily
dismissed 68 beforehand, The remainder were either set for trial, referred to case
management or allowed to remain open.
Duane Marsteller, Herald staff writer, can be reached at 745-7080, ext. 2630.

Foreclosure lawyer accused of forgery
10/28/2010 © Miami Herald
A Coral Springs lawyer who worked for a troubled foreclosure rescue company is facing a
criminal probe for allegedly forging court documents.
BY DAVID OVALLE

State authorities are investigating allegations that a Coral Springs lawyer forged the
signatures of Broward County judges while working with a disgraced foreclosure assistance
company, court documents show.
The lawyer, Frank J. Ingrassia, worked with Outreach Housing, which is accused of
siphoning more than $2 million from desperate homeowners, according to a search warrant
filed in Miami-Dade court this month.
The probe is being spearheaded by the Florida Department of Law Enforcement. Also
investigating is the Florida Attorney General's Office and the Office of Financial Regulation,
which last year sued the company and its officers.
Ingrassia, a former Florida assistant attorney general, did not return calls for
comment. He has not been charged.
His attorney, Timothy Lucero, declined to comment.
FDLE also declined to comment, saying the investigation is ongoing.
During the ongoing mortgage crisis, some foreclosure rescue companies have offered, for an
upfront fee or monthly retainer, to negotiate with lenders to save homes. But critics say they
never deliver, or refuse to refund money if they are unsuccessful.
The Ingrassia probe is in addition to a wider investigation by the Attorney General's
Office into the practices of law firms specializing in foreclosures.
That includes Plantation's David J. Stern, whose statewide firm has been rocked by
recent allegations of deceptive and shoddy court filing practices.
As for Ingrassia, the lawyer made headlines in June 2008 when he filed dozens of
lawsuits against financial lenders alleging they fraudulently inflated the incomes of borrowers
so that they could qualify for loans.
Ingrassia worked for Affirmative Defense Group, which was refered most of its cases
by Outreach, a now-shuttered Margate company that purportedly assisted homeowners facing
foreclosures in getting legal settlements with lenders.
State authorities allege the company induced 961 people to fork over their mortgage
payments. The ``illegal revenue'' amounted to more than $2 million, and employees were
paid from the money that was supposed to be held until homeowners settled with lenders, the
warrant said.
The companies did virtually nothing to help clients stave off foreclosure, FDLE said in
the warrant. Agents raided Ingrassia's Coral Springs office in July ``due to allegations that
Ingrassia forged the signatures of some 17th Judicial Circuit [Broward County] judges.''
He is under investigation for forgery.
Agents are also looking into the practices of Outreach and its founder, Blair Wright.
Wright, in an interview Wednesday, insisted his company was legitimately trying to
help homeowners reach foreclosure settlements with lenders. He says lawyers such as
Ingrassia and Kirsten Franklin -- both of whom he is suing in Miami-Dade court -- mismanaged
the cases, ignored clients and pilfered hundreds of thousands of dollars.
``It's disgusting,'' Wright said. ``Part of the money they took was from trust funds --
and these [lawyers] are still out on the streets.''
The Florida Supreme Court, in January, ordered Franklin barred from practicing law for
three years because she abandoned hundreds of clients and allowed Wright to unduly
influence her.
The state's lawsuits against Ingrassia, Franklin and Wright are still ongoing.
One victim, 77-year-old Tamarac retiree Cebert Griffith, whose house is still in
foreclosure, said he hired Ingrassia though Outreach -- paying thousands in fees.
He found out later that Ingrassia never appeared in court on his behalf.
"We're on a fixed income,'' Griffith said. "And to be scammed by these people, it's disgusting.''

Lee suit to fight foreclosure fees
10/28/2010 © Ft. Myers News-Press

Three Lee County property owners who say they are being priced out of the court
system will file a lawsuit today against top Florida officials, arguing a 2009 law that raised the
cost of foreclosure lawsuit filings is unconstitutional.
The lawsuit will be filed in federal court in Fort Myers on behalf of Kevin Camm, Enneis
Haney and Yuyuan Lucy Lu, all of whom are involved in foreclosure lawsuits in Lee County.
The three are attempting to file a class-action lawsuit to stop enforcement of the law.
The defendants are Gov. Charlie Crist, Attorney General Bill McCollum, Chief Financial
Officer Alex Sink, Agriculture Commissioner Charles Bronson, the Florida Cabinet and the
Florida Department of Revenue.
The plaintiffs want the case certified as a class-action lawsuit, and seek an order
declaring the statute unconstitutional and orders stopping the collection of the filing fees and
giving refunds to those who have paid the fees since the law was passed.
In May, Florida legislators passed a bill that increased foreclosure filing fees from $295
to $395, $900 or $1,900, depending on the value of the property. The idea was to capitalize
on the influx of foreclosures and make the court system self-sufficient, instead of relying upon
the state´s general revenue fund. The state is bringing in about $44 million per year less than
it expected, but officials believe the fund will be able to sustain itself for another two years.
"Here´s a statute that was passed in the heat of the moment and now it´s up to the
courts to stand up,¨ said Fort Myers attorney Marcus Viles, who is representing the plaintiffs.
"It taxes people who are trying to hang on to their home. Plus, $1,900 is an outrageous
amount.¨
When the law was being discussed in Tallahassee, almost 33,000 foreclosures were
being filed statewide per month because of a downturn in the state and national economy.
Most recently, about 20,000 foreclosures are filed each month.
The lawsuit, an advance copy of which was obtained by The News-Press, alleges the
law violates a person´s constitutional rights by imposing a filing fee for "exercising the
fundamental right to defend oneself in court.¨
The lawsuit states that before 2009, Florida didn´t impose a filing fee on compulsory
counterclaims, cross claims or third-party complaints.
Counterclaims are filed in defense of a lawsuit, third-party complaints are filed when
another, non-sued party is alleged to be involved, and a cross claim is when defendants or
plaintiffs sue each other.
"The current filing fees are an attempt by the state of Florida to prevent people from
having access to the courts, to interfere with and discourage the filing of compulsory
counterclaims and the related third-party complaints, particularly in mortgage foreclosure
cases,¨ the lawsuit states.
Viles said counterclaims are most effective in defense of a foreclosure filing, but with a
$1,900 price tag for people who can´t afford their mortgage, it affects people at a low point in
their lives.
"The sliding scale fees have a directly disproportionate impact upon the poor and the
most-injured, creating an ever greater obstacle to court access,¨ the lawsuit states.
Reached late Wednesday, Sterling Ivey, a spokesman for Crist, said he couldn´t
comment until legal staff could view and research the lawsuit.

West Palm Beach duo builds foreclosure data-filtering firm
10/27/2010 © The Palm Beach Post

WEST PALM BEACH - They say they´re just two guys with laptops and a water cooler.
But the electronic system of collecting and organizing judicial records that Jay
Hollenkamp, 28, and Michael Olenick, 44, have created streams data gold to court-hungry
customers.
Their West Palm Beach-based company, Legalprise Inc., snatches information from
state foreclosure court records and filters it into searchable spreadsheets.
For example, they can tally how many times a law firm has requested a summary judgment in
a foreclosure case, or how often attorneys file paperwork saying a home´s note is lost.
Started a year and a half ago, Legalprise collects data from five states, including
Florida, and hopes to expand to cover all 23 states where foreclosures are part of the judicial
process.
Its clients are mostly attorneys, some of whom use the data to market to new
customers.
But the small start-up, which is run out of an old second-floor apartment above a
Pilates studio along Dixie Highway, got a business boost when major lenders temporarily froze
their foreclosure proceedings beginning in September.
The concern was that improperly filed, or even fraudulent, court documents were
being used in foreclosure cases.
"When you see one lost summons, it looks bad,¨ Olenick said. "But when you see that
hundreds have been filed, it´s something totally different and you know something is wrong.¨
Since news of the foreclosure flaws surfaced, Olenick said, the company has been
inundated with requests for information from reporters, attorneys, and state agencies wanting
to investigate the situation.
"I´ve barely been sleeping,¨ Olenick said.
Both Olenick and Hollenkamp have law degrees. Olenick never practiced, but said the
education helps him build better court-related computer programs.
Hollenkamp worked as a corporate bankruptcy attorney before joining Olenick. The University
of Florida graduate said he´s always been interested in entrepreneurship and helping build a
company from the ground up. He said Legalprise is like a Google for foreclosure cases.
But the partners are hoping to build it into more than a search engine, possibly
creating an analysis or rating agency.
Legalprise is looking for investors and taking on interns.
This summer it will have students from one of Palm Beach County´s top academic
programs at Suncoast High School helping crunch numbers.
"What´s stopping us isn´t demand, it´s capacity,¨ Olenick said.

South Florida at center of growing foreclosure legal mess
10/23/2010 © South Florida Sun-Sentinel

Does this sound familiar? South Florida lawyer from humble origins presides over a
rapidly expanding business empire. He spends lavishly along the way, with a fleet of expensive
sports cars, million-dollar waterfront properties and yachts, including one named
"Misunderstood."
He has a trusted female aide, whom former co-workers say got generous perks,
including a luxury car, a home and personal bills paid by the firm.
No, I'm not talking about Scott Rothstein, the attention-seeking Ponzi schemer.
I'm describing David J. Stern, a publicity-evading attorney headquartered in Plantation
who has gotten rich from America's mortgage meltdown.
Stern, who hasn't been accused of any wrongdoing, doesn't deal in fictitious legal
settlements but painfully real foreclosures.
Tons of them.
His firm has processed foreclosures for the nation's biggest banks, along with
government-sponsored mortgage companies Fannie Mae and Freddie Mac, pumping more than
100,000 cases through the foreclosure pipeline the last two years. His law firm and supporting
companies grew from 250 employees to more than 1,100.
A pair of Royal Palm Beach attorneys representing delinquent homeowners began
looking at Stern's operations last year, and questions about the firm's procedures have been
piling up since.
Now Stern has become an overnight villain of the foreclosure crisis. He's being
investigated by The Florida Bar and Florida Attorney General Bill McCollum.
Sworn depositions of former Stern workers released by McCollum paint an unflattering
portrait of an overwhelmed outfit more interested in ruthless speed than due process.
They described a frantic environment where legal corners might have been cut, with
people signing documents on behalf of others and possibly manipulating dates and
misrepresenting proper notification of lawsuits to homeowners.
"Everyone was pumping out as many files as they could," Kelly Scott, a former
assistant to operations manager Cheryl Samons, told investigators earlier this month.
She described reams of foreclosure documents spread across a conference table daily,
with paralegals authorized to forge Samons' signature. "Most of the time she was very tired,
exhausted from signing her name," Scott said. "You had to understand it was more than five
hundred files that she's signing morning and afternoon.a thousand a day."
Scott also said Samons got generous perks from Stern, including a leased BMW and
personal bills paid by the company.
Thanks to troublesome practices at firms like Stern's, some banks have temporarily
halted foreclosures across the country, including in Florida, where 20 percent of homeowners
are behind on mortgages.
The ongoing mess might mean years' more turbulence for South Florida's ailing real
estate market.
I couldn't reach Stern or his attorney, Jeffrey Tew, for comment. Earlier this week,
Tew told Bloomberg News, "David's wealth is a reflection of his acumen and the tremendous
volume of foreclosures.He started from scratch and has built a wonderful legal practice and
has made a lot of money. That's the American dream, isn't it?"
In September, Stern, 50, told The New York Times: "I can't speak for the other firms,
but I can assure you there has not been submission of fraudulent documents.We have done
nothing wrong and are going to cooperate fully."
Flush with foreclosure cash, Stern has bought a $14 million waterfront mansion in Fort
Lauderdale, an $8 million mansion with a tennis court on Hillsboro Beach, and a $6 million
condo in a Fort Lauderdale high rise in the last two years. He also bought a Bugatti, four
Ferraris and four Porsches, and a yacht that a friend told the New York Times that he
considered naming Su Casa es Mi Casa (Your House is My House), something Stern denied to
Times reporters.
In Florida, foreclosures must be approved by judges, and the housing meltdown has
caused a horrific backlog in state court. Special divisions with retired judges have been set up
to clear the caseload. Critics wonder if expediency is also trumping the rights of homeowners
in the courts.
"I've represented murderers where I've gotten more due process than in foreclosure
cases," said Davie attorney Michael Wrubel, a former criminal attorney who now specializes in
foreclosure defense. "The volume is so heavy, mistakes are made."
He said Stern's firm exhibited questionable ethics, often reluctant to re-open
foreclosure judgments that were based on erroneous documents.
He called the firm's methods, as described in the worker depositions, "Outrageous,
and stupid as well.Did they really think they were going to get away with this
forever?"
Banks try to dismiss the latest concerns as paperwork glitches and technicalities, and Wrubel
acknowledges that it's hard to engender sympathy for delinquent homeowners.
"In foreclosures, nearly every client is guilty of being in default," Wrubel said. "But the
issue is can you prove that the (bank) lawfully owns the note and has the right to
foreclose?"
Because so many mortgages are sold and divided among intricate pools as
investments, he said the answer isn't nearly as clear-cut as banks want you to believe.
But with so many parts of the system drowning in the foreclosure flood, who's got time for
intricacies like the law?
Michael Mayo can be reached at mmayo@sunsentinel.com or 954-356-4508.

Fannie Mae asks Florida law firm to hold cases
10/26/2010 © Florida Today

ORLANDO - Fannie Mae has asked a Florida law firm under investigation by state
officials for fabricating foreclosure documents to put on hold all the cases involving the
government-controlled mortgage buyer.
Fannie Mae today also asked the Law Offices of David Stern to stop setting up
hearings for Fannie Mae cases. Spokeswoman Amy Bonitatibus said Fannie Mae was working
closely with their regulator on this matter.
Last week, the Florida Attorney General's Office released the deposition of a former
assistant at the law firm who testified that the office manager for the foreclosure department
would sign 1,000 files a day without reviewing them. The office manager also would allow
paralegals to sign her name for her when she got tired, the former assistant said.

Freeze souring house deals
10/23/2010 © Daytona Beach News-Journal

DAYTONA BEACH -- So far, major banks freezing parts of the foreclosure process have
caused some lost or delayed house sales in the Volusia-Flagler market, real-estate officials
said this week.
"It's a strong knee-jerk reaction by the lenders, and it's too strong," said Aswin Suri,
owner of Exit Realty of Daytona. "We had a deal with a bank that's not even among the ones
freezing foreclosures, and it was about to close when it was held up because of the freeze."
Still, investigations of mishandled foreclosures are continuing across the country.
Sales of bank-owned property and short sales have accounted for a majority of home sales in
recent months. Real-estate firms report distressed house sales are between half to 80 percent
of their business.
John Adams of Adams Cameron Realty said some sales are being "delayed" until the
uncertainty about foreclosure documents and processes is resolved.
"We have contracts until the end of the year, and, if the houses come back on the
market in a few days or weeks, then we still might have a sale. But if it's Christmas, then they
will probably walk," he said. "Right now, it's still to early to tell what the eventual impacts will
be."
Adams may get an early holiday gift.
Two of the largest and earliest banks to announce a freeze, Bank of America and Ally
Financial's GMAC Mortgage, announced Monday they are lifting the moratorium in 23 states
that have judicial foreclosure processes, including Florida.
"I haven't heard rumblings up here about lost deals," said Scott Nieminen of Executive
Realty and head of the Flagler County Association of Realtors. "I think this will be a short
freeze, a blip on the radar, and thank God because I think we were just starting to see the
market stabilizing."
Even mortgage brokers have seen deals fall off the table, said Van Johnson of My
Mortgage in DeLand.
"I would be leery of buying a bank-owned property until this is all cleared up. A buyer
could end up spending thousands of dollars for a survey, appraisal and title search, and at the
last minute be told no because of the freeze," he said.
Significant foreclosures in the economic downturn and high unemployment rates have
been a drag on the real estate markets and clogging courts for more than three years. Recent
bank repossessions have set national records the past two months.
The high number of foreclosures caused mountains of paperwork that lenders breezed
through and were signed by officials without review -- known as robosigning -- and not before
a notary public, according to pretrial depositions for lawsuits filed in Florida and Maine.
"We have been telling people for a long time there were problems with the papers,"
said Larry Glinzman, spokesman for Community Legal Services of MidFlorida, a local HUD-
certified housing counseling agency.
"In one case, we had two banks foreclosing on the same house and each had signed
and notarized documents stating they owned the house. Go figure."
GMAC started its freeze and reviews Sept. 20 in 23 states that have judicial
foreclosure processes where a judge rules on a foreclosure lawsuit filed by a lender. In 27
other states, the homeowner has to file a lawsuit to challenge a foreclosure in court.
Bank of America quickly followed GMAC's freeze and then made it nationwide Oct. 8. JPMorgan
Chase has a freeze in place in 41 states while it examines its practices to ensure they are
legal. PNC Financial also has a freeze in some states. Wells Fargo and Citigroup did not
announce foreclosure suspensions.
Freeze actions vary by bank. GMAC is still starting new foreclosures, but is not evicting
people or selling foreclosed homes in the 23 judicial process states. Bank of America stopped
seizing foreclosed homes, but is processing new cases and selling homes already foreclosed.
Some say that last activity may come back to haunt some buyers and lenders of
foreclosed properties if titles are later called into question.
"My biggest fear is that title insurance companies would be reluctant or refuse to issue
title insurance for a foreclosed home for fear of someone coming back with a fraud claim," said
Patrick Sullivan of Coldwell Banker Expert Group in Daytona Beach. "I would not advise
anyone to sign a mortgage without a warranty deed."
That fear of a questionable title is why mortgage lenders require title insurance, said
Lisa Blythe, marketing director for Southern Title in Daytona Beach.
"The policy protects the homeowner and the lender. If a homeowner has concerns, call
your insurance company," she said.
Carol Lawrence of Landmark Title Services in DeBary and RE/MAX Associates said she
has not received alerts from title insurance companies denying policies based upon foreclosure
status.
"This has only come to light in the past 30 days and it's too early to tell what the
impacts will be," she said. "But they're not closing the door. We have the attorneys general
looking into it."
State Attorney General Bill McCollum announced last week he is participating with all
the other attorneys general to review foreclosure processes, practices and documents. Federal
officials said Wednesday a multi-agency committee is reviewing lender foreclosure practices
for compliance with federal laws.
A long foreclosure freeze would only delay an economic recovery, said economist Sean
Snaith, director of the UCF Institute of Economic Competitiveness.
"Putting a moratorium on foreclosures would be like ripping a Band-aid off really slowly.
Except, in this case, it not only prolongs the pain, but pushes the recovery further into the
future," he said.
The freeze also fails to punish the responsible parties, if there are irregularities, and
only serves to hurt homeowners who are already suffering by providing a false life preserver,
Snaith said.
Home sellers could be assisted with a longer freeze as less expensive bank-owned
properties are removed from the market, reducing inventories and sales competition, Adams
said.
However, a lengthy freeze would prevent the courts from clearing a large backlog of
foreclosure cases as mandated by state law.
"We had 100 cases last week that were cancelled because the lenders asked for a
delay. It may slow the process, but it's a worthwhile reason," Flagler County Clerk Gail
Wadsworth said.

Our views: The crisis continues
Foreclosure moratorium would hurt the still struggling economy
Florida Today editorial
October 21, 2010

During the real estate bubble, lenders wrote mortgages like they were giving away
candy on Halloween.
Their irresponsibility nearly sank the economy and now they´re repeating it as the
foreclosure crisis continues.
Attorneys general in all 50 states are starting a coordinated probe into inaccurate and
fraudulent documents prepared by lenders and their subcontractors in foreclosure suits.
Federal investigators are doing the same.
The problem involves untrained mortgage company and law firm workers who signed
hundreds of documents a day without reviewing them, violating laws that require a signed
affidavit saying all documents filed were complete and accurate.
As a result, experts say an untold number of people may have been forced from their
homes illegally.
Some of the nation´s largest lenders, such as Bank of America and JP Morgan Chase,
put a temporary halt on foreclosure sales to address the problem, with the effect rippling
along the Space Coast:
Brevard County courts, which currently are handling nearly 13,000 foreclosure suits,
are reporting a growing number of foreclosure hearings canceled or postponed.
The figure reflects just part of the Space Coast´s crisis, where 30,000 foreclosure suits
were filed between January 2007 and September 2010.
The situation is raising calls from consumer groups and some lawmakers for a national
moratorium on foreclosures until the legal issues are probed and settled.
At a gut level, the anger is understandable. But it would be the wrong approach,
further hurting the economy as it struggles to recover from the Great Recession.

Space Coast impact

The hard truth is the economy is not going to rebound until the housing debacle is
resolved, and the only way for that to happen is for the foreclosure system to remain at work,
despite its problems.
Absent that, the situation could become far worse.
A moratorium would freeze the sale of foreclosure properties and could bring the
crippled housing industry to a standstill, with a snapshot in Brevard showing the
consequences:
Foreclosure sales have accounted for one-third or more of all sales along the Space
Coast in recent months.
There´s also little evidence that homeowners who are making their payments are being
unfairly targeted for eviction.
The banks, however, should not walk away from their latest fiasco unpunished.
The attorneys general should be relentless in their investigations and the courts should hold
the banks fully accountable.
Federal law enforcement officials also said Tuesday they are examining whether
financial firms broke federal laws when they filed fraudulent court documents to seize people´s
homes.

Lawmakers must help

Beyond that, lawmakers in Congress - including those from Brevard and Florida
heading to Capitol Hill after the election - should support new laws that give homeowners a
better shot at reworking their mortgages so they can keep making payments and stay in their
homes.
Banks are still failing miserably on that front, throwing people on the streets who don´t
need to be there and making it hard on others taking steps to avoid trouble.
One is Donna Ditto of Palm Bay, who is not in foreclosure but has been trying to modify her
mortgage with JP Morgan Chase since June.
The process, she told FLORIDA TODAY, is a nightmare of delays and conflicting
information.
"I have sheets and sheets of paper where I take every name, every time for every
person I talk to. It´s been hell, it really has . . .I am about at the end of my rope right now,¨
she said.
Consumer groups are offering proposals that Congress should approve, including
reforming bankruptcy laws so homeowners could go to the courts to modify their loans if
they´re having no luck with the banks.
The Obama administration should also change the refinancing guidelines in its anti-
foreclosure plan so homeowners current in their payments are eligible to refinance at more
affordable rates, even if their homes have dropped in value.
The banks have proven again they can´t be trusted to get it right, leaving it to
Congress and White House to take more forceful action.

Florida's foray into the foreclosure crisis
10/21/2010 © South Florida Sun-Sentinel editorial

For a short-timer, Florida Attorney General Bill McCollum has a lot on his plate,
particularly when it comes to residential and commercial foreclosures. News of unscrupulous
lending practices, coupled with the examination of those practices by lenders, resonates in a
state that relies so heavily on real estate for growth and jobs.
So it was a relief that McCollum last week joined counterparts in the other 49 states in
scrutinizing banks, mortgage companies and loan servicers involved in the debilitating
foreclosure crisis. He has also asked for a meeting with major lenders that have curtailed
foreclosure procedures to assess how big an impact a foreclosure moratorium could have on
Florida.
The reality is that the impact could be huge. Half of Florida's housing sales currently
involve foreclosed properties, and if that pipeline is shut off for a long period of time, it would
prolong hopes for an economic recovery in the Sunshine State. For that reason, McCollum is
wise to hold off on any further action, such as encouraging a freeze on foreclosures or
initiating lawsuits, at this point.
Still, McCollum, and definitely his successor, be it Pam Bondi or Dan Gelber, will be
under intense pressure to do something to address this debacle. The idea that a property
owner can lose his investment due to fraudulent practices or a "robo-signing" in which the
processor knows nothing about the documents he or she signed, should not be tolerated,
period.
There are many players in this foreclosure crisis that share blame for the problems
that have undermined troubled real estate markets like Florida's. Banks, mortgage companies,
loan processing companies, and federal and state regulators - take your pick. They all seem
to be on the wrong side of what has become a pattern of sidestepping established rules and
law to seize property. Not to mention consumers too willing to take on more debt than they
could handle.
Unfortunately, the problems with the foreclosure process - ranging from losing key
documents to one case where a lender foreclosed on property the owner used cash to buy
outright - may force attorneys general across the country to go to court to seek redress.
Critics may see this as an attempt to cash in on a crisis. But if there's a violation of
state law, it should be an easy step for state attorneys general to help their constituents by
simply doing their jobs.
BOTTOM LINE: There's a role for state attorneys general, particularly in Florida.

Foreclosure attorney Stern leaves as chairman of subsidiary firm
10/21/2010 © South Florida Sun-Sentinel

Plantation foreclosure attorney David J. Stern, who is under investigation by state
regulators over his law firm's alleged mishandling of tens of thousands of foreclosure
documents, has left his position as chairman of the subsidiary company that handles most of
his law firm's paperwork, the Securities and Exchange Commission said.
The SEC disclosure came Wednesday as calls increased for The Florida Bar, which is
also investigating Stern's operations, to use its state constitutional authority to regulate
attorneys' conduct and take steps to discipline law firms that have become what some say are
"foreclosure mills."
"The Bar should step up and regulate this. It must insist that attorneys involved in
handling foreclosures comply with the rules of the court," said Diane Thompson, an attorney
with the National Consumer Law Center who is an expert on mortgages.
Tom Pahl, an assistant director at the Federal Trade Commission involved with new
regulations for lawyers doing loan modifications, said foreclosure practices need more scrutiny
by state bar organizations. That's especially true in Florida, Pahl said, noting Florida Attorney
General Bill McCollum is investigating Stern and other firms, whose attorneys have argued in
court that The Florida Bar - not state regulators - has jurisdiction.
"It's hard to make that argument when [the Bar] doesn't bring many cases against
lawyers harming consumers," he said.
Kenneth Marvin, The Florida Bar's director of lawyer relations, said he is spending
"hours every day" on the foreclosure issue.
Stern and Marshall C. Watson, the head of a foreclosure firm in Fort Lauderdale, are
being investigated by both the Bar and McCollum's office. The Attorney General also is
investigating Shapiro & Fishman LLP, with offices in Boca Raton and Tampa, and the Florida
Default Law Group in Tampa regarding its foreclosure practices. And several other attorneys
doing foreclosure work for lenders and loan services are under Bar scrutiny.
DJSP Enterprises Inc. - created when Stern sold his law firm's non-legal operations to
DJSP for $58 million - announced lead independent director Stephen J. Bernstein was the
new board chairman but that Stern continues as CEO. Several other DJSP executives,
including president and COO Richard Powers and CFO Howard S. Burnston, voluntarily
resigned, according to an SEC filing.
Chris Simmons, director of investor relations for Stern, could not be reached for
comment despite several attempts by phone. The law firm representing Watson also could not
be reached for comment despite several attempts by phone.
Stern could face more serious sanctions under his current Bar probe because he has
received a public reprimand before. In 2002, the state Supreme Court found that "in the
interest of expediency and to maximize your own profit," Stern had filed misleading affidavits
in regards to title insurance.
The court said the documents claimed the title services were out-of-pocket costs,
when in fact they were performed by employees paid by Stern's law firm. Marvin said
punishments can be more severe if lawyers are cited for offenses similar to ones they
previously were reprimanded for.
Bar investigations are against individual attorneys, not law firms, and can lead to
various penalties that must be ordered by the Florida Supreme Court: reprimands,
suspensions and disbarments for a specific time period or permanently.
Reports continue to surface about overworked clerks and managers, who hugely
outnumber the firms' attorneys, pushing through piles of shoddy paperwork as the lenders and
loan servicers they work for pressure them to finalize foreclosures.
In the wake of the revelations, state lawmakers and congressional leaders have called
for reform and greater oversight of the foreclosure process in Florida and other states where
the courts handle such cases. In addition, several major lenders have said they are reviewing
their processes and some have moved to halt foreclosure-related proceedings.
The Bar has sanctioned 616 attorneys since 2008, including some involved in
mortgage or loan modification fraud. The Bar, concerned about foreclosure specialists
partnering with lawyers as a way to circumvent laws barring upfront fees, opened 195
investigations involving loan modifications in 2009, with some attorneys tied to multiple
investigations.
Bar records show no attorneys this year have been disciplined regarding improper
foreclosure document practices, and the Bar has not issued any alerts.
A typical Bar investigation takes around two years to complete, Marvin said, although
the process can be fast-tracked for emergencies. He said permanent disbarment for Fort
Lauderdale attorney Scott Rothstein, now in prison for defrauding clients out of millions in a
Ponzi scheme, took only about a month because Rothstein agreed to the action
Marvin would not say if the Bar was considering fast tracking the foreclosure
investigations.
New depositions released this week by the Florida Attorney General's Office included
testimony from a Stern legal assistant who said her manager would sign up to 1,000
documents daily without reviewing their accuracy. Manager Cheryl Salmons was so exhausted,
she authorized three paralegals to sign her name, assistant Kelly Scott said under oath.
Attorney Jeffrey Tew, who represents Stern, declined to comment on potential
penalties given Stern's previous reprimand.
Christopher Immel, a foreclosure defense attorney at Ice Legal in Royal Palm Beach
who has deposed lawyers about questionable documents, said it's often difficult to get
information about improper documentation procedures because frontline attorneys and others
who are familiar with such practices fear they will implicate themselves if they are disclosed.
"It's difficult to say how active the Bar will be, and if they will be going after the senior
attorneys," he added. "This is widespread abuse through an entire firm."
Staff writer Harriet Johnson Brackey contributed to this report. Diane Lade can be
reached at 954-356-4294 or dlade@sunsentinel.com.

ACLU seeks information on constitutionality of foreclosure courts
Adolfo Pesquera
Daily Business Review
Oct. 20, 2010
The American Civil Liberties Union and the ACLU of Florida filed public records requests
Tuesday in search of possible constitutional violations in foreclosure proceedings.
The two groups raised concerns about an impaired right to due process when
minorities go through expedited foreclosures. The organization requested records from the
Office of the State Courts Administrator and chief judges in all 20 of Florida´s circuit courts.
The Legislature allocated more than $9 million to add judges to help erase the backlog
of nearly 500,000 cases. But reports of rampant errors, possible fraud by mortgage servicers
and a judicial emphasis on fast-track foreclosures have raised fears the process is denying
justice to homeowners.
"It is disturbing that Florida may be implementing less exacting due process
protections at a time when widespread flaws in the foreclosure system illustrate the need for
increased vigilance," said Larry Schwartztol, staff attorney with the ACLU racial justice project.
He said the requests aim to shed light on whether recent changes in Florida´s handling
of foreclosure proceedings violate homeowner rights. The ACLU is particularly concerned about
the rights of minorities because studies have shown they were disproportionately hurt by the
subprime crisis and foreclosure filings.
The Center for Responsible Lending reports nearly 8 percent of blacks and Hispanics
have lost their homes to foreclosures compared with 4.5 percent of whites. Depreciation on
nearby properties has become another drain on minority equity. The center estimated blacks
will lose $194 billion in equity and Hispanics $177 billion between 2009 and 2012 by indirect
"spillover" losses.
"Communities of color in Florida and across the country are hit hardest if courts
disregard the kinds of protections that are meant to uphold people´s basic constitutional
rights," said Muslima Lewis, senior staff attorney and director of the ACLU of Florida´s racial
justice project. "Getting the documents we are requesting will be an important first step
toward exposing and addressing any systemic injustices."
A four-page records request is addressed to Laura Rush, general counsel for the State
Courts Administrator´s office.
The ACLU seeks records on practices set up to manage and dispose of foreclosures,
including correspondence involving judges, staff and entities outside state government.
Adolfo Pesquera can be reached at (954) 347-2616.


AG's office reprimands one of its attorneys for "foreclosure mill" work
10/20/2010 © Tampa Tribune

TAMPA - The Florida Attorney General's Office has reprimanded one its attorneys for
notarizing documents for one of the "foreclosure mills" the office is investigating. Erin Cullaro,
an assistant attorney general for the office's Economic Crimes Division in Tampa, is a former
employee of Tampa-based Florida Default Law Group.
The Attorney General is investigating the firm, along with three other Florida firms, for
what "appears to be fabricating and/or presenting false and misleading documents in
foreclosure cases."
Cullaro was given permission from the Attorney General's Office in April 2008 for dual
employment, allowing her to notarize law firm documents for 15 minutes three days a week.
But, according to the written reprimand, Cullaro failed to renew the application into
the new fiscal year, "which would have altered the {Attorney General's Office } to your
continued outside employment and accurately reflected the time commitment involved."
In addition, the reprimand says, "your continued dual employment created an
appearance of impropriety" because the attorney general's office was inquiring into the
practices of foreclosure law firms. The reprimand states that Cullaro's says she quit her notary
role before the formal investigation begun. Even so, she could ultimately lose her job,
according to the reprimand. Tom Ice of Ice Legal in West Palm Beach represents homeowners
in foreclosure and wants to question Cullaro about documents she signed in some of his cases.
Her signature varies drastically and court documents assert she signed off on documents while
out of town on business with the attorney general's office.
Court documents reviewed by the Tribune show Erin Cullaro's signature varied from a
full, cursive signature to a squiggly "E." When she signed the reprimand letter, she used the
"E."
Ice said Cullaro worked as a lawyer with Florida Default Group before she worked for
the attorney general's office. When she left the firm, she continued to serve as an expert
witness for the firm, signing affidavits to establish that the firm's fees were reasonable. Her
sister-in-law, Lisa Cullaro, notarized the affidavits, according to court documents.
When Erin started work for the attorney general's office, the Cullaros changed roles
and Erin Cullaro notarized the documents.
Ice said both of the Cullaro's signatures varied in appearance,In light of recent reports about
foreclosure law firms allowing employees to forge signatures, Ice said he questions whether
the Cullaros permitted this, too.
Matt Weidner, a St. Petersburg foreclosure defense attorney, said he also wants to
question the Cullaros about inconsistent signatures, but that their attorneys have fought his
motions.
"It's simple, really," Weidner said. "If it's their signatures and for some reason they
signed them differently, why not just say that?"
John Cullaro, Erin Cullaro's husband, represents her in the case. He could not be
reached for comment.
Both Lisa and Erin Cullaro no longer serve as witnesses or notaries for the firm, but
the job has stayed in the family. John Cullaro, according to court documents, is one of Florida
Default's new expert witnesses.

Reporter Shannon Behnken can be reached at (813) 259-7804.

No foreclosure moratorium: White House, judges have a better response.
10/20/2010 © Palm Beach Post editorial

From now on, Palm Beach County Chief Judge Peter Blanc says, even when foreclosure
cases are uncontested, banks will have to produce sworn or certified documents to prove that
they have the right to repossess a home. That approach in courts around the country beats a
national foreclosure moratorium.
Since Florida Rules of Civil Procedure require such paperwork, that should have been the case
all along. In light of allegations that attorneys representing lenders and mortgage servicers
have been using forged documents, it's more important than ever that judges make them
follow the letter of the law. Civil rights organizations and some Democratic lawmakers have
called for a nationwide moratorium on foreclosures in response to the alleged fraud. Holding
lenders accountable makes more sense.
Judge Blanc admitted to The Post's Kim Miller, however, that in thousands of cases
that hasn't happened. "In the past, when affidavits came in on defaults, the judges haven't
been requiring the documents because no one was there objecting," Judge Blanc said, noting
that 80 percent of the cases are uncontested. "Dealing with the volume we are dealing with,
we want to make sure that all our i's are dotted and t's crossed."
Even when the homeowner fails to show up in court, lenders should have to prove
their case, because they can collect from defaulting homeowners the balance between what
they owe and what the bank gets from selling the home. The records that support lenders'
foreclosure claims include details of the loan, borrower fees and payment history that verify
how much is owed. In one case, a judge failed to inspect the documents and granted
summary judgment to a lender even when the homeowner's attorney objected to the validity.
A summary judgment is a swift ruling made instead of a trial when the facts of the foreclosure
are considered irrefutable. The problem has been that, too often, the facts are disputable.
The 50 state attorneys general have opened a joint investigation into whether banks
and loan servicers used false documents and signatures to justify hundreds of thousands of
foreclosures. The Obama administration's Financial Fraud Enforcement Task Force is
investigating whether those that did submit flawed paperwork misled federal housing
agencies, which own or insure a majority of home loans.
These investigations, coupled with judges taking a more active role, is a practical
response as opposed to the political response of calling for a moratorium. A nationwide
foreclosure moratorium only would delay the inevitable for most homeowners, and further
delay the housing market recovery.
Jack McCabe, a real estate consultant based in Deerfield Beach, favors a moratorium,
but admits that it would have a negative affect on the economy. "Forty to 50 percent of sales
in the state have been foreclosure sales," he said. With a moratorium, there would be "a large
reduction in the number of foreclosure sales, and in sales in the overall market with these
foreclosures not being available." Buyers of non-distressed properties might wait, fearing that
they are paying too much.
The housing market will not improve until those distressed homes get back onto the
market and get sold. The foreclosures must be scrutinized, but they must continue.
- Rhonda Swan, for The Palm Beach Post Editorial Board

Witness: Foreclosure firm owner gave gifts for altering documents
10/19/2010 © Tampa Tribune

TAMPA - Some employees of Florida's largest "foreclosure mill" were given jewelry,
cars and houses from the firm, in exchange for altering and forging key documents used to
obtain foreclosures, according to a statement released today by the Florida Attorney General's
Office.
The office released transcripts of two interviews it conducted for its investigation into
the law offices of David J. Stern. The sworn statements were from Kelly Scott, a former
employee of Stern's and Mary R. Cordova, a former employee of G&Z, a process server used
by Stern's office. The women's testimonies appear to back up that of former Stern's employee
Tammie Lou Kapusta, whose statement was released last week. The three statements paint a
picture of a secret system designed to speed up the foreclosure process. Attorneys and staff
members forged signatures, changed dates, passed around notary stamps, the women say in
interviews with attorney general's staff.
The two former Sterns employees described long tables where employees would sign
as a witness and notarize documents without actually witnessing the signing. Twice a day,
Scott said, the company's chief operating officer, Cheryl Samons, would go into the office and
sign 500 documents at a time - without reading them.
Scott was Samons' legal assistant.
As a perk of Samons' job, Stern's office would routinely pay her personal mortgage, a car
payment, her electric bills and her cell phone bill, according to Scott, who told investigators
Stern also bought Samons a new BMW sport utility vehicle every year and gave her and other
employees jewelry. Additionally, Stern purchased employee David Vargas a house, a car and a
cell phone, Scott claims in her statement.
Scott said the office would move forward with cases, even if they knew the
homeowner had not been properly notified of the lawsuit.
Fannie Mae and Freddie Mac were Stern's "babies," Scott said, and they routinely
questioned documents and came to the office to check files. Last week Freddie and Fannie said
they would audit Stern's files.
Someone inside both organizations would tip Sterns off to the visits, and Stern's staff
would then alter client codes and hide files, according to Scott's statement. When Fannie and
Freddie employees left, they'd bring the files back out. The other witness, Cordova, worked at
G&Z for two months. The firm, which handled service for various foreclosure law firms, had
special instructions for Stern, the firm's main client, according to Cordova's statement.
Every file was billed for at least four people to be served with the foreclosure
paperwork, even if the firm knew there weren't that many people with interest in the property.
These bills were sent out before the parties were served and, often, Cordova said, the
company didn't follow through with the service. These bills are paid by the lenders and,
eventually, passed along to the homeowners. Kapusta, whose statement was initially released
last week, said she was fired after she questioned procedures. The other two employees said
they left on their own.

sbehnken@tampatrib.com(813) 259-7804.

Palm Beach County judges want more evidence in uncontested foreclosures
10/19/2010 © Palm Beach Post

Thousands of Palm Beach County homes have been repossessed by lenders that failed
to follow a court rule requiring evidence be attached to foreclosure affidavits, something
judges often allowed to happen when no one contested the case.
After revelations in recent weeks that sworn affidavits from several major banks and
home loan servicers may be flawed, Palm Beach County Chief Judge Peter Blanc said banks
will increasingly have to prove their foreclosure claims with sworn or certified supporting
paperwork.
The 15th Circuit's judges discussed the evidence regulation, outlined in the Florida
Rules of Civil Procedure for summary judgments, on Friday. A summary judgment is a swift
ruling held in lieu of a full trial. They are requested by bank attorneys when the facts of the
foreclosure are considered irrefutable.
"In the past when affidavits came in on defaults, the judges haven't been requiring the
documents because no one was there objecting," said Blanc, who added that about 80 percent
of foreclosures in the county are not contested. "Dealing with the volume we are dealing with
we want to make sure that all or i's are dotted and t's crossed."
More than 30,000 Palm Beach County homes were served a foreclosure notice in
2009. The tally through September this year is 16,068, according to the Palm Beach County
Clerk of Courts.
Since lenders, including mortgage giants Bank of America, JPMorgan Chase, and Ally
Financial Inc., announced a halt to some of their foreclosure proceedings pending review of
court documents and procedures, Blanc has been debating how active judges be in foreclosure
cases, especially those that aren't challenged. Bank of America announced Monday it plans to
restart its foreclosure process and resubmit documents with new signatures in states,
including Florida, that require a judge's approval for a foreclosure.
Blanc said if the foreclosure affidavits are accurate, and they are based on personal
knowledge, it shouldn't be too time consuming for the evidence to be printed and attached.
The problem is the faulty affidavits have been shown in depositions not to be based on
personal knowledge, sworn to instead by bank employees signing up to 10,000 documents
every month. Also, sworn statements from former employees of the large foreclosure law firm
David J. Stern in Plantation have stated that affidavits were backdated, included forged
signatures and were notarized by non-notaries. Stern's attorney Jeff Tew refutes any
statements that illegal activity happened at the firm.
Foreclosure defense attorneys have argued for months that in the rush to take back
homes, that large law firms representing lenders and overwhelmed judges ignored the
evidence rule. Only when attorneys or homeowners protested did the rush to summary
judgment slow, they claim.
"Just because a case is uncontested doesn't mean a judge should just sign off on
whatever is being requested without proof of what kind of damages the bank is entitled to,"
said Tampa-based foreclosure defense attorney Mark Stopa. "The volume of cases before a
judge does not change the plaintiff's burden of proof."
West Palm Beach defense attorney Joseph Rodowicz is handling more than 50
foreclosure cases submitted by Stern's firm and that of the Florida Default Law Group in
Tampa. He said none of his cases has supporting documentation attached to affidavits.
"When a court is looking for a judgment they should have evidence before it of a
debt," Rodowicz said.
Rodowicz and Stopa said they would expect to see, at the very least, an account
history attached to the affidavits that would show payments or a trail of ownership if the loan
had been sold or bundled into a security.
Tew said his client's firm will comply with whatever the courts request and that he
doesn't believe it will be overly burdensome.
"I don't think it will slow the process," Tew said.
Stern has been hit hard by the foreclosure freeze. Tew acknowledged that the one-
time ninth-largest private employer in Broward County with about 1,600 employees has
recently had to institute layoffs.

New foreclosure mediation program to improve communication
10/16/2010 © Polk County Democrat
By MARY CANNADAY

With Florida having the highest inventory of foreclosed homes in the nation, The
Florida Supreme Court assembled a committee of 15 people in 2009 to come up with possible
solutions.
Poor communication between buyers and lenders hinders the foreclosure process and
for borrowers, lack of information is common. The Task Force on Residential Mortgage
Foreclosure Cases concluded that early case management and mediation would save time and
in some cases avoid foreclosure.
The court then ruled that home lenders must spell out the foreclosure process to
borrowers and must give them the opportunity to meet with a mediator, lender representative
and other key officials to try to hammer out a new agreement.
The goal is to reduce the stockpile of empty, foreclosed homes; to help motivated
borrowers keep their property and to loosen the stranglehold on Florida´s courts.
The new law kicked in on July 1 requiring that mediation be offered in all foreclosure
cases. Cases pending before that date can mediate also, but must apply. The lender pays for
the service.
Local mediation programs are supervised by the Collins Center for Public Policy in
Tallahassee. The Central Florida Mediation Group LLC, on U.S. Highway 98 South, coordinates
the operation for the 10th Judicial Circuit, comprising Polk, Highlands and Hardee counties.
Mediators attend specialized training at the University of South Florida and other sites
around the state, and upon completion, they are placed on rotation with the local center
where the mediations are held.
William Blakeman, a Bartow attorney, has added the foreclosure mediations to his
existing expertise in family and civil mediation. Blakeman was certified by the Florida Supreme
Court in 1995 to conduct family law mediation, covering issues from visitation to alimony. The
veteran mediator says he believes the new program can work for motivated parties.
Guidelines are well-defined and the entire process, from notification and filing of
foreclosure to mediation, must be completed within four months, he explained.
The process starts with a requirement the borrower attend financial counseling, with a
HUD-approved provider. This is paid for by the lender as part of the overall $750 mediation
fee. After counseling is completed, mediation is scheduled through the Central Florida
Mediation Group.
Blakeman stresses that the program is in its infancy, with cases just now coming in
from borrowers who have completed the financial counseling segment. He expects the
program to ramp up, but when asked about possible obstacles to people using the process he
acknowledges there are a couple.
The borrower may not want to work things out and in some cases may be wary of
having to move out sooner than if worked though the courts. Some may be afraid of the
mediation process itself.
Those who do come to the table must be ready to justify a new agreement, bringing
financial statements, proof of income and other documents that prove they can succeed with a
renegotiated plan, Blakeman noted.
The mediations could have a number of outcomes, Blakeman said. Among them are
refinancing, deeding the property back to the bank, having a lowered interest rate, extending
the length of the loan, or allowing the homeowner to rent the house until it is sold by the
bank.
Whether bringing parties to the table succeeds in reducing foreclosures and unclogging
the courts remains to be seen.
The Florida Supreme Court is keeping tabs on the project, though, and is requiring
that some statistics be reported to them by Dec. 28, 2010 - one year from the date they first
ordered the new program. They will be looking at whether borrowers were successfully
contacted, which parties did or did not show up for mediation and what percentage of the
mediations resulted in completed agreements.

Did circuit judge do too much homework?
10/17/2010 © Sarasota Herald-Tribune
Column by Tom Lyons
Published: Sunday, October 17, 2010.

Since I liked her reprimand of a law firm that handles foreclosure cases by the bushel
basket, I'm biased in favor of Circuit Judge Janette Dunnigan.
So f I were a judge assigned to review the propriety of that reprimand, I'd need to
recuse myself. I wanted to find the law firm guilty as soon as I read that Dunnigan cited the
lawyers there for contempt and assessed them a fine.
But anyone familiar with the work of foreclosure mills in general should be biased
against them.
Such firms have become infamous for filing documents signed by robo-signers, often
clerks who use fancy titles that make them sound important but who have little idea what is in
the thousands of documents they put their signatures on to attest to their accuracy and truth.
That revelation now threatens to bring the real estate legal world to a crisis state, as
more judges have caught on.
Smith, Hiatt and Diaz, a Fort Lauderdale law firm that files thousands of foreclosures
statewide on behalf of mortgage loan servicers, was reprimanded and later cited for contempt
by Judge Dunnigan, who fined the firm $49,000.
Among other things, the judge said they repeatedly failed to show for hearings the
firm had scheduled.
After previous apologies, the fine and contempt citing inspired the firm to fire back at
Judge Dunnigan. The firm's motion seeks to get her -- literally and metaphorically -- off their
case.
The firm says the judge got some facts wrong, and a motion claims that in two no-
show cases the firm had sent notice to cancel the hearings.
Maybe the judge didn't get every detail right. But the pattern of behavior was real, as
the judge found when she checked on other courts.
Way to go, judge, I'd say. But the law firm is trying to use the judge's diligence
against her, claiming it is a violation of judicial ethics for her to seek or use evidence not
presented in her court.
Justice is supposed to be blind, and sometimes it is required to be ignorant. When one
side of a civil suit fails to bring in some useful facts, for instance, it is improper for a judge to
help by running her own investigation.
But does the same apply when a judge is citing a law firm for bad behavior in her own
court, and she wants to be sure that behavior was typical and not flukish?
Here's the solid, unwavering word on that from several judges, and from the director
of the Judicial Qualifications Commission, the state organization that investigates judicial
ethics complaints. All agree: They can't even opine, because it would be unethical to do so
while the matter is pending.
Argh!
I'm not qualified to guess, but I can cite this in favor of my hope that Dunnigan was
doing the right thing: According to past advice from the state panel that advises judges on
ethical matters, judges are supposed to check into the facts after they encounter an alleged
lawyer in their court he or she suspects is practicing law without a license.
That isn't so different from Dunnigan checking on lawyers who clearly have more
cases than they can handle, and who admittedly rely heavily on clerical workers to create and
file massive numbers of the court documents the lawyers there Barely see.
But I can why such a firm would prefer that a judge know as little as possible about
what the firm has been doing in other courts. The facts do tend to create a bias -- just like
mine.

Tom Lyons can be contacted at tom.lyons@heraldtribune.com or (941) 361-4964.

Foreclosure freeze creates major headache for Collier, Lee real estate industry
10/18/2010 © Naples Daily News

Since Oct. 4, banks have withdrawn more than 270 foreclosure homes from the Fort Myers
multiple listing service, or MLS. In the Naples market, there have been about 120 listings
pulled from the MLS during the past week.

NAPLES -For years, Mike Donnelly has dreamed of owning his own home.
His dream was about to come true, until his closing was abruptly halted last week by
the seller, Fannie Mae.
"I was heartbroken,¨ said Donnelly, 52. "I thought, `You´re kidding me.´ It´s the perfect
dream house.¨
Fannie Mae, the seller, stopped the closing because of concerns over the title. The
servicer on the defaulted loan was Countrywide, now part of Bank of America.
Earlier this month, Bank of America announced it was putting a chill on foreclosure sales in 50
states because of concerns over faulty documents. Other major lenders, including Ally and JP
Morgan Chase, also have suspended some foreclosure sales, as they review their procedures
following criticisms that they improperly took homes away from struggling borrowers.
States are investigating the use of "robo signers,¨ who signed hundreds of affidavits a
day, allegedly without a proper review of foreclosure documents.
Donnelly was given a two-week extension to close. He´s waiting it out, still hoping to
buy the two-bedroom, two-bath home in Cape Coral.
"I definitely want the house,¨ he said. "I´m not going anywhere. Luckily, the landlord
liked me and she let me keep renting her house.¨
The freeze on foreclosures has caused headaches for buyers, sellers, real estate
agents and other businesses, from title insurers to law offices.
Banks have pulled hundreds of foreclosure homes off the market in Southwest Florida.
More foreclosure sales are getting canceled at the courthouse.
The slowdown in foreclosure sales actually could benefit the market in the short term.
It could boost prices by limiting the inventory of homes available for sale, creating more of an
urgency among buyers, said Kathy Zorn, broker and owner of Florida Home Realty of Collier
County.
"We won´t feel the effects of this right this second,¨ she said. "I don´t think in this
month. It will be interesting to see how it will affect our market.¨
Some fear that slowing the foreclosure sales will hurt the market as it´s finally showing
signs of recovery.
"It´s a lot like ripping a scab off a healing wound,¨ said Steve Koffman, a
broker/Realtor with Century 21 Sunbelt Inc. in Cape Coral.
Koffman estimates that about 20 percent of the bank-owned homes that were on the
market in Lee County are now in a holding pattern. On top of that, other homes that were
getting ready to come on the market never made it there because of the freeze.
Since Oct. 4, Koffman said, banks have withdrawn more than 270 foreclosure homes
from the Fort Myers multiple listing service, or MLS. In the Naples market, there have been
about 120 listings pulled from the MLS during the past week: "At least 40 percent of those
appear to be foreclosures,¨ Koffman said.
Brian Fulton, a mortgage broker with Tomasso Mortgage in Fort Myers, said closings
were delayed for five of his customers during the past few weeks. One of them was Donnelly,
who was a day or two away from closing when everything came to a standstill.
"The frustrating thing is he´s got money spent on an appraisal. He´s got money spent
on a home inspection, a survey. He probably has close to $1,000 invested in this particular
property,¨ Fulton said.
Now, Donnelly is living out of boxes.
"My house is all packed up,¨ he said. "Everything I own is packed up and I´m ready to
go out the door. It´s killing me.¨
Debra Monterosso, a Realtor with Amerivest Realty in Naples who specializes in bank-
owned resales, said her business is hurting after many of its listings were put into limbo.
"It slowly hit,¨ she said. "We probably had about 50 listings, and I want to say it
affects about two-thirds of them.¨
That means there are two-thirds of her team´s listings she can no longer sell, until the
reviews of those foreclosures are completed.
"It´s a nightmare for foreclosure agents,¨ Monterosso said.
On a positive note, she said one listing that was pulled for review last week has been
cleared for sale again already. She´s seen a few sales fall through. One couple she was
working with from Pennsylvania canceled a contract and walked away when their closing was
postponed by Fannie Mae.
"They bought something else,¨ Monterosso said.
Affected buyers have the option of getting their deposits back without penalty, but if they walk
away from a contract they´ll still lose the money they´ve invested in home inspections,
appraisals and surveys.
Tony Price, an owner broker for Priceless Realty in Fort Myers, said his company had
about 15 of its 75 bank listings pulled off the market in the past week. About half of the 15
had buyers, he said.
"There are a lot of properties that are not frozen,¨ Price said. "I do have a lot for Fifth
Third Bank. They haven´t pulled any of theirs.¨
While there has been a higher rate of cancellations for scheduled foreclosure sales at
courthouse auctions in Lee and Collier counties, banks involved in the freeze still are moving
ahead with some public sales.
Meanwhile, even as Bank of America and the other lenders are undergoing an
investigation of their foreclosure steps, they still are filing new actions against borrowers who
have defaulted on their loans.
In September, Collier County had 400 foreclosure sales at the courthouse - the
highest number it has ever seen in any month, said Robert St. Cyr, a director of community
outreach at the Clerk´s Office. He´s not sure what to expect this month with more sales being
canceled by banks.
"I think it´s too early to tell,¨ he said. "There is no trend line going here.¨
Locally, home sales dipped in the third quarter, from July through September.
Going forward, Realtors are worried that buyers may be more reluctant to purchase
foreclosures because of title concerns, causing a further slowdown.
As the busy season approaches, Realtors hope the freeze on foreclosures doesn´t
linger through the winter, especially since bank resales make up so much of the market these
days. In Lee, they are about 38 percent of all sales.
In August, short sales and bank-owned sales made up 50 percent of the residential
market in the Naples area, Naples Area Board of Realtors statistics show. Short sales are
those made for less than what´s owed on the mortgage.
At Florida Home Realty, Zorn has noticed more calls from sellers who are racing the
clock to try to get a short sale done. The freeze may give them more time to do that, enabling
them to avoid foreclosure, she said.
There also could be more mortgage adjustments worked out between banks and
borrowers.
"It´s much better to get a short sale - or get a loan modification - than to deal with
all the problems of a foreclosure,¨ said Steve Barker, a broker at Amerivest Realty in Naples.
There are still many unknowns.
Mike Hughes, a vice president for Downing-Frye Realty in Naples, wonders what might
happen to people who already lost homes to foreclosure or those who bought houses from
them. Will lives change? Will a sale be reversed?
He said one of the million-dollar questions is how fast the banks will get their reviews
done. It could be weeks, or months.
"One thing I´m sure of is that this does have the potential to put a wrinkle into the
recovery process,¨ Hughes said.
Jeff Ahren, co-chairman of the Collier County Foreclosure Task Force, said lenders
need to take a time out to make sure they are doing everything right when they foreclose so it
doesn´t hurt homeowners, or tie up courts later.
Ahren is pro bono coordinator at the Legal Aid Service of Collier County, which is
helping low-income borrowers fight foreclosures. He cautions that borrowers shouldn´t just
assume their foreclosures will be put on hold as there are cases still moving ahead.
There are some foreclosure cases lingering without any action, while others are getting
dismissed as lenders seem more eager to do mortgage work-outs, said Maria Barbosa, a
housing attorney for Legal Aid Service.
She said if problems with accuracy and documentation aren´t fixed in the foreclosure
process now, it could lead to many problems later. If the wrong bank forecloses on a
mortgage and there´s a final judgment, the borrower may not be able to get that judgment
wiped out, even in bankruptcy, Barbosa said.
She said if there isn´t a clear title when a bank sells a home, the buyer could face
problems later when he tries to resell it. The buyer may be forced to get what´s know as a
quiet title by filing a lawsuit and getting court approval.
"It´s foreseeable we could be creating more litigation in the future, rather than clearing
out the case load,¨ Barbosa said.




Palm Beach judge denies state's request in "foreclosure mill firm" case
Ruling says Florida Bar and courts, not state regulators, have jurisdiction
Diane C. Lade
South Florida Sun-Sentinel
1:41 PM EDT, October 14, 2010

A Palm Beach County judge will not allow the Florida Attorney General's request for
documents that would bolster its investigation of one of the state's largest foreclosure law
firms, saying The Florida Bar and the courts were responsible for regulating attorneys.
Circuit Judge Jack S. Cox on Thursday denied the state's request for a rehearing on
the case involving Shapiro & Fishman, of Boca Raton, one of three South Florida foreclosure
firms under state investigation since August.Two of the three have been fighting the Attorney
General Bill McCollum's original subpoenas for extensive documents involving the firms
employees, investments and clients over the past five years.
Gerald Richman, the attorney representing Shapiro & Fishman, had filed a motion to
quash the subpoenas, arguing McCollum had no jurisdiction. Cox agreed last week, adding the
request was overbroad, vague and unduly burdensome.
McCollum fired back with a rehearing request, saying the state had standing because
the firm was being investigated for allegedly creating improper documents to speed
foreclosure - constituting fraud, which would be handled by the Attorney General.
But the judge didn't back down from his original view Thursday, saying state
investigators were using civil, not criminal, unfair trade statutes - which meant they were
looking at activities regulated by the Bar and courts.
Asked for comment, Ryan Wiggins, spokeswoman for the Attorney General, said the
state's attorneys were still "discussing and weighing our options" as the ruling just came out.

Crisis yields a new brand of flipping
10/15/2010 © Sarasota Herald-Tribune

Homes that fell into foreclosure during the housing collapse are being marketed as
bank-owned, even though the homes have been purchased by private sellers who are flipping
the property for a profit.
In its most common form, private sellers -- in some cases the Realtor listing the home
-- still state "foreclosure" and "bank-owned" in yard signs, on websites and in the official real
estate listings database.
It is unclear precisely how widespread this new brand of flipping is. But Realtors have
a name for it -- "fauxclosures" -- because it centers on homes that once were bank-owned.
The phenomenon is so common now because of the huge proportion of distressed
sales in the market -- more than 50 percent -- and the hunger for those types of deals among
buyers, said Chip Waterman, a Coldwell Banker agent who has sold distressed properties in
Southwest Florida for the last 30 years.
"Using the word 'foreclosure' in the lead of your listing or ad indicates to any buyer
looking for that great deal that it is the fabulous buy they have been looking for," Waterman
said.
Many of the homes involved are the same properties used in questionable deals during
the housing boom. They fell into foreclosure in short order because of unsustainable lending
terms, and they are coming out of that process often at half the price paid then. Other
distressed borrowers now have agreements with lenders to sell their house for less than what
it is worth, referred to as a short sale, and flippers also are targeting those properties.
"They are confusing the buyers and the agents out there and muddying the waters
with crazy disclosures to make it look and feel like a real foreclosure," Venice-based Realtor
Charryl Youman said. "Many of these signs lead you to an agent selling his or her own
property that was bought as a foreclosure and is now being flipped."
'Real damage is done'
Many of those involved in "fauxclosures" are reluctant to speak of the problem publicly
for fear of professional or personal repercussions, but their stories are similar.
The buyers thought they were getting a deal by purchasing a bank-owned property
only to find that after all their time and expense, that was not the case and they scuttle the
deal. Others who complete the deal later discover that a middleman has sucked thousands of
dollars in equity out of the property.
Todd David of Prudential Florida Realty in Venice and his client were enticed by a for-
sale sign in the front yard of a tidy home on Gerald Avenue in North Port.
Naples-based United Real Estate sales agent Michael Slovin's name and phone number
were on the advertisement, from which hung a smaller yellow sign reading, "Foreclosure."
When David pulled up the sales information from the Mid-Florida Multiple Listing
Service at the end of June, the description matched the Bargain-nature tone of the sign:
"Recently bank foreclosed!!" and "The bank's loss is your gain."
The house had been purchased by a three-person investment firm, which includes
Slovin, Florida Division of Corporation records show.
The firm, Mortgage Equity Investors LLC, bought the 2,100-square-foot home for
$103,001 on April 6 from U.S. Bank. When Slovin listed the property on May 4, the price was
$148,200 -- a 44 percent increase.
"This is becoming very prevalent. In the economic climate we are in right now, people are
trying to do what they need to do to sell a property and that's fine," David said. "But when
you step across the line, not only in your advertising but what is going on behind the scenes,
real damage is done."
Mortgage Equity Investors, based in North Port, has been on a buying spree in recent
months within the region's bank-owned inventory, according to county property appraiser and
civil court records. Florida Division of Corporation records show Slovin's partners Harvey
Slovin and Ann Burrell also are officers of Flippers II LLC and Flippers III LLC.
Michael Slovin, who declined to comment for this story, disclosed in the MLS listing for
the Gerald Avenue house that he is an owner-agent.
Slovin's broker at United Real Estate is Glenn Vereen, who had 34 properties in the
"Featured Listings" on his website last week, 28 of which contained the language "bank
foreclosed" and three with "bank foreclosure."
The first "bank foreclosed" property already had been purchased from IndyMac Bank
by a Delaware investment group then resold to a Naples couple, according to Collier County
property records. The Delaware firm paid $231,000 in May, the Naples couple paid $464,100
last month and Vereen listed it at $480,000.
The first of the properties Vereen had listed as a "bank foreclosure" is a Cape Coral
home that also has been privately owned twice since a bank owned it. The home was first
purchased from a bank by Vereen's United Equities and Real Estate Group Inc. for $100,000
on Jan. 12 after foreclosure proceedings were completed, property and court records show.
Two days later Vereen's United Equities conveyed ownership through a quit-claim deed for $10
to Grand Slam Realty LLC, based in Bonita Springs. Vereen's website showed the home listed
at $159,000.
The circumstances are similar in both cases to what happened at the Gerald Avenue
property in North Port.
"It has been bank-foreclosed on, and as a Realtor you have to disclose all of the
factors that are germane to the value of the property." Vereen said. "To say we've somehow
influenced buyers is preposterous."
Vereen blamed lazy or incompetent Realtors for any misunderstanding caused by a
foreclosure sign in the front yard or the words "bank" and "foreclosure" in the MLS listing.
"What is happening is you are having some Realtors not doing their jobs, or doing a
disservice to their clients," he said. "If Mr. Uninformed comes into one of our houses we, as
Realtors, must inform that individual on everything about it."
Vereen said he and Slovin are like other investors buying and reselling distressed real
estate for a profit: "They are all flips -- anytime you have an investor recycling product,
cleaning them up and bringing that back to the market. Profit is not a dirty word. It is still
America."
The repercussions
There is nothing wrong with buying a distressed property and reselling it quickly for a
profit.
When done with full transparency and the proper legal disclosures in an arms-length
transaction, savvy real estate investors can make a lot of money.
Flipping became a dirty word after the real estate downturn, when questionable deals
contributed to the housing and financial crises. A Herald-Tribune investigation into fraudulent
flipping published last summer found $10 billion in suspicious deals in Florida alone.
Officials that regulate the real estate industry are well aware of this new effort.
"We want all MLS listings, advertising and signage to be truthful and accurate at all times,"
said Michael Guju, a Palm Harbor-based real estate attorney and member of the Florida Real
Estate Commission. "Misleading advertising is improper and unethical. Buyers and potential
buyers are not to be trifled with in this difficult economic environment."
Guju said the arising disciplinary actions can range from license suspension to
revocation for a Realtor or anyone else holding a Florida real estate license. Depending on the
wording used in questionable listings or signs, they situation be merely ambiguous or blatantly
illegal, he said.
"This is stuff that is clearly inappropriate, clearly unethical and clearly dishonest," said
Margery Golant, a member of the Florida Bar's Consumer Protection Law Committee. "It's
another flipping scam."
'The short-sale game'
Rachel Oberlink placed a full-price offer of $71,000 -- financed -- on a short sale on
McCrory Street in North Port. The offer was refused, so Oberlink approached the owner to find
out why.
He directed her to call the number on a white sign in the front yard that read,
"Approved short sale $80,000." Oberlink said the man who answered would not give her his
full name and became "really defensive."
She asked him why her offer had been refused.

"He said, 'I am the owner of the house and I don't know anything about that,'"
Oberlink said. "He said he paid cash for the house and if we wanted to buy it we need to just
pay him because he does not go through banks, none of which made any sense."
The phone number on the sign is registered to Ronnie Christian Koelling, who is not
the home's owner of record, according to Sarasota County property records.
"I have no idea who you are talking about, and it kind of scares me that someone is
making up a story like that," Koelling told the Herald-Tribune. "I've never been the owner of
that property."
What it appears Koelling is doing is aggressively pre-marketing a short sale he has
under contract.
His sign -- he says the current owner let him put it in place -- lists a higher price than
he will pay and still reads "short sale" across the top. But when Koelling sells the property, it
will be a conventional transaction.
Kay Winefordner, the listing agent for the property with Sarasota-based Realty
Executives Solutions, said she completely adheres to strict MLS rules for short sales.
Winefordner confirmed that Koelling has the pending contract, but said she did not
know about his for-sale sign. She said a prospective owner placing a sign in the yard is not
unheard of in this environment and is allowed so long as it comes with the current owner's
permission.
"There seems to be a lot of investors out there playing the short-sale game,"
Winefordner said. "If an investor-buyer goes to contract and is going to close on that, he can
market the property in any way he wants.
"We can't stop investors from making money," she said. "That's very un-American."

Fort Lauderdale law firm in trouble with local court
10/15/2010 © Bradenton Herald

MANATEE - A Fort Lauderdale law firm fined $49,000 for not following Manatee
County Circuit Court rules has gotten itself into even more hot water with court officials.
The judge who fined Smith, Hiatt & Diaz P.A. dismissed one of its subsequent filings
because it contained several illegible signatures, court records show. And the firm didn´t pay
the required filing fee when it asked an appeals court to review Judge Janette Dunnigan´s
sanctions.
Roy A. Diaz, the partner representing the firm in the issue, did not return voice mails
left Wednesday and Thursday.
In a Sept. 2 order, Dunnigan found the firm in "deliberate, willful and flagrant¨ civil
contempt of court in a 2007 foreclosure case. She was upset with the firm, which represented
the bank in the case, for setting several court hearings and not showing up or not properly
canceling them in a timely manner. Dunnigan also scolded the firm for several incidences of
not filing required documents.
Besides the fine, Dunnigan gave the firm a Sept. 30 deadline to provide a signed
statement from its lawyers and support staff that they have read the local judicial circuit´s
rules of procedure or risk additional fines.

The firm beat the deadline by a day, filing a statement with a list of more than 40
signatures - most of them illegible and without any printed names next to the signatures.
Dunnigan dismissed it Oct. 4, saying the statement "is deficient because its attorney
and staff signers are not identified.¨ She also gave the firm a week to file an amended one.
It did - this time with the signers´ names printed underneath their signatures. The
statement also said the firm already had made internal changes to ensure its lawyers appear
at hearings or cancel them in a timely fashion.
While complying with that edict, the firm asked Dunnigan to either rescind her contempt ruling
and fine, hold another hearing or remove herself from the case. She refused, so the firm is
appealing to the Second District Court of Appeals in Lakeland.
It contends Dunnigan improperly referred to unrelated cases in holding the firm in
contempt, and that the fine - which it has paid to a court registry - is excessive.
But the firm did not pay the $300 filing fee when it filed the appeal Oct. 1. That
prompted the court clerk to send a warning letter that the appeal "may be subject to dismissal
without further notice¨ unless the fee was paid by Oct. 21.
The firm paid the fee Oct. 11, according to the court docket.
Duane Marsteller, transportation/growth and development reporter, can be reached at
745-7080, ext. 2630.

Before foreclosing, judges must hear out homeowners
Polyana da Costa
Daily Business Review
October 14, 2010

In a ruling likely to create more headaches for lenders, a state appeals court
Wednesday ruled that judges can't give banks the go-ahead to foreclose until they respond to
defenses raised by homeowners.
A three-judge panel of the 4th District Court of Appeal said that Broward Circuit Judge
Peter Weinstein erred when he granted Deutsche Bank a $337,000 summary judgment against
Margate residents Judith Alejandre and Sergio Terron, even though the bank ignored their
defenses. His decision allowed Deutsche to take title to the couple's property and evict them in
February.
The case has been sent back to the trial court.
Like many other homeowners fighting foreclosure, the couple raised several defenses.
But in what lawyers say has become customary in South Florida courts, the bank didn't
answer the defenses, and Judge Weinstein allowed the bank to take title to the house.
Jessica Ticktin, who represented Alejandre and Terron in the foreclosure case, said her
firm, Ticktin Law Group in Deerfield Beach, has filed several similar appeals in other cases and
that this is the first favorable ruling.
"All of our previous appeals were denied without an opinion," she said. "When they
were denied, we even asked the DCA to send us an opinion explaining why, but they refused.
The decision comes amid accusations that lenders, servicers and foreclosure law firms are
falsifying affidavits and forging signatures to speed the foreclosure process.
Many of the issues raised by Alejandre and Terron in defense of Deutsche's foreclosure
suit are similar to ones other homeowners have asserted against other lenders.
The couple said Deutsche failed to attach the original note and assignment of
mortgage to its complaint; that it collected payments but failed to credit the homeowners;
that it deceived the couple when they tried to modify their delinquent loans; and that it
"participated in a full-scale venture to induce the homeowners to borrow funds at exaggerated
rates."
Joshua Bleil, also with Ticktin Law Group, said the case illustrates the widespread
problems in foreclosure cases.
"It's the process of the motions for summary judgment that the banks have been
using to foreclose en masse, even though we file defenses," he said. "It's the rocket docket."
He hopes the 4th DCA decision will help reform the process.
"From now on, you have to do it according to the law," he said.
"If the defendant raises affirmative defenses, and there are factual disputes, the
defendant deserves a trial. That's all we are seeking."
The ruling gives Alejandre and Terron hope they may be able to get their home back.
They are living in a rental apartment in Margate with their four children.
"I would love to get it back if I could," Terron said.
"We can pay the mortgage if they lower our payments," he said. "We tried to work
that out before, but the lender wouldn't call us back."
Terron paid $95,000 for the house in 1997. In 2005, he refinanced the home for about
$200,000 and was paying about $1,500 per month.
Things began to go wrong in 2006 when he took out two mortgages with First NLC
Financial Services, a Deerfield Beach subprime wholesale lender.
NLC provided Terron and his wife with a first mortgage of $292,000 and a second
mortgage of $73,000. The couple's monthly payment jumped to $2,500.
Terron said he refinanced the house to try to keep his struggling restaurant business afloat.
But he had to shut down the restaurant and could no longer afford the payments. In 2008,
Deutsche Bank, acting as a trustee for a securitized mortgage trust, filed a foreclosure action.
The couple's home is listed for sale for $129,000 with Altisource. The listing agent in
charge of the property, Steve Sibiga, did not return a call seeking comment.
An attorney for Deutsche Bank did not return a call.
Ticktin said Terron and Alejandre may be lucky that their house has not sold, but that
won't be the case with many foreclosure cases that could end up being appealed and sent
back to a trial court.
The 4th DCA has typically refused to put foreclosure sales on hold while a case is
being appealed, Bleil said.
That was the case with Terron's foreclosure.
"What we commonly saw is the court would condition a stay upon the payment of a
large bond," Bleil said. "If the homeowner had the ability to pay this large bond, they wouldn't
be in foreclosure in the first place, so in essence it was a denial of the stay."
Wednesday's ruling could change how judges look at the cases, Bleil said. "While the
circuit court judges were thinking they could push these things through without getting
reversed, they weren't as worried, but this case is going to change things."
Polyana da Costa can be reached at (561) 820-2065.

Homeowners' Robin Hood fights foreclosure giants
10/14/2010 © Palm Beach Post

Tom Ice was a desert boy who wanted to be Jacques Cousteau. He earned the degree
and everything, leaving his home in Santa Fe, N.M., to study ocean engineering at the
University of Miami.
But the former high school debater had an inexplicable change of heart, one that led
him from the rhythmic comfort of the ocean to the tense arguments of the courtroom.
Ice, 50, has emerged as a Robin Hood of sorts in the tangled world of foreclosures,
representing homeowners and fighting powerful law firms backed by big banks.
From his West Palm Beach home - he doesn't have an office at his firm in Ice's legal
wrangling is largely recognized for contributing to the nationwide suspension of foreclosures
enacted by several major lenders. On Wednesday, attorneys general from every state
launched a nationwide probe of loan servicers.
Ice credits his engineering background for his attention to detail and years of litigating
for his tenacity. He was trained, he said, to doubt everything the other side says and "look
under every rock."
What he and his wife, Ariane, found buried under boulders of foreclosure paperwork
were backdated documents, affidavits sworn to by bank employees processing thousands of
foreclosures a month, and questionable assignments of mortgages coming out of the Mortgage
Electronic Registration System, or MERS.
After the discoveries, Ice did what any good litigator would do: He asked to depose
employees involved in creating the documents.
Then he made the unusual move of posting the depositions on his website, a strategy
he credits for much of the snowball of foreclosure suspensions.
"None of this could have occurred without an exchange of information," said Matt
Weidner, a St. Petersburg foreclosure defense attorney. "Ice was absolutely instrumental and
an essential key."
Ice believes his firm was the first to depose GMAC Mortgage employee Jeffrey
Stephan.
Stephan was one of the first identified "robo-signers," attesting to the veracity of
10,000 foreclosure affidavits a month and swearing to the impossible feat of personally
reviewing support documentation on each.
GMAC, renamed Ally Financial Inc., announced last month it was suspending some
foreclosures. JPMorgan Chase, Bank of America, Litton Loan Servicing and PNC Financial
Services Group followed.
"We've studied this for two years and I fear we are just scratching the surface," Ice
said. "It is a rabbit hole."
Ice, who has been quoted by major U.S. newspapers about his foreclosure work, never
expected to be a foreclosure attorney. For most of his 25 years practicing law, he has worked
for large firms defending corporations.
But about 2 1/2 years ago, Ice, who has an 8-year-old son, decided to go out on his
own, opening a one-man bankruptcy firm. He soon realized he could better help his clients by
defending foreclosures in state court.
"The real estate attorneys would get an affidavit and say, 'OK, I guess we lose,' " Ice
said. "My thing was to say, 'Well, let's take a deposition and file for discovery.' "
Ice Legal, where the motto is "Your home is your castle, defend it," now has seven attorneys
working mostly on foreclosure cases.
Riviera Beach resident BarBara Williams, 57, has been an Ice Legal client since 2008,
when a work injury and subsequent income reduction led her into foreclosure.
Williams, a licensed practical nurse, said she's hoping to work out a new payment
agreement with her bank.
"I don't feel like they are just doing something to make a buck," Williams said of Ice
Legal. "I am very confident they are doing everything for my benefit and giving it 100
percent."
Ice has 400 active clients and said he has lost only a handful of cases. He admits to
workaholic hours, describing himself as an early riser and an insomniac.
"It was hard to get people to take us seriously in the beginning," Ice said.
He has undoubtedly stepped on toes.
He filed more than 100 motions to disqualify Palm Beach County foreclosure Judge
Meenu Sasser, alleging she was biased against his attorneys and gave preferential treatment
to lenders.
Several of the cases in which Sasser denied his motion to disqualify her went to the
4th District Court of Appeal. The appeals court sided with the judge, saying in one case that
Ice seemed intent on frustrating the "efficient function of the foreclosure division."
West Palm Beach attorney Gerald Richman of Richman Greer, P.A., has complained in
general about foreclosure defense attorneys using questionable tactics to stall cases.
"If someone is clearly in default and really doesn't have a valid defense, it's wrong to
go ahead and drag a case on," Richman said. "Some defense lawyers are basically creating
issues to delay for delay's sake."
But Ice said forging signatures, as is alleged to have occurred at one South Florida
foreclosure law firm, and swearing to things that aren't true are fraud upon the court that
should be exposed.
"Just because the bank says they own your home doesn't mean they do," Ice said.
"For too long, people were just hoping no one would look behind the curtain."



Florida Attorney General joins 39 states investigating foreclosure crisis
10/12/2010 © South Florida Sun-Sentinel

Florida Attorney General Bill McCollum has joined top regulators from 39 other states
in scrutinizng the banks, mortgage companies and loan servicers involved in the widening
foreclosure crisis.
But McCollum stopped short of calling for some or all lenders to temporarily halt to
foreclosures, short sales or evictions - something attorneys general in Massachusettes, Texas
and some other states have done within the past week.
"While this is no doubt a serious matter, there still exist valid foreclosures that need
not be delayed," said Ryan Wiggins, McCollum's spokeswoman.
Iowa Attorney General Tom Miller, who is leading the State Foreclosure Prevention Working
Group that Florida joined, last week asked that foreclosures by three major lenders be stalled
in that state: the GMAC Mortgage unit of Ally Financial, Bank of America, and JPMorgan Chase.
Chase and GMAC have stopped evictions and some foreclosures in Florida and 22
states where courts supervise foreclosures, to doublecheck for potentially faulty paperwork
and document reviews. Bank of America last week became the first lender to extend its review
to all 50 states.
Wiggins said rather than a blanket moratorium, McCollum's office will look on its own,
and with the working group, at "available options." While banks are federally regulated,
Wiggins said the states would have jurisdiction over mortgage servicers.
Wall Street and the White House also gave a thumbs down Monday to a total freeze on
foreclosures nationwide, saying clearing up faulty paperwork could take as little as two weeks.
A complete halt would be "catastrophic" for the U.S. economy and hurt home sales,
according to a statement from Tim Ryan, president of the Securities Industry and Financial
Markets Association, Wall Street's biggest lobby. A day earlier, David Axelrod, a senior adviser
to President Barack Obama, also said a moratorium would damage the housing market.
While some homeowners have criticized the Florida Attorney General for not taking a
more aggressive stand against servicers, Wiggins said McCollum did get involved months ago
by filing lawsuits against the four foreclosure law firms thought to handle most of the lenders'
cases against Florida borrowers.
Three of those firms - Shapiro & Fishman of Boca Raton, the law offices of David J.
Stern in Plantation and the Florida Default Law Group in Tampa - have fought state
subpoenas. McCollum's investigation took a hit last week when a Palm Beach County judge
ruled in favor of Shapiro & Fishman, saying the state's request was too broad, and that The
Florida Bar had jurisdiction over attorney conduct.
McCollum fired back on Monday, asking Palm Beach County Judge Jack Cox to rehear
the case on the grounds that the foreclosure firms were being investigated for allegedly
creating improper documents to hasten the foreclosure process - constituting fraud, which
would be handled by the Attorney General.
Gerald Richman, attorney for Shapiro & Fishman, called the action "a sad example of
the Attorney General's Office's continual fishing expedition that wastes the taxpayer's money."
Richman said the foreclosure firm was wililng to cooperate with state officials, if they narrowed
their request, and to "address and rectify any legitimate complaints."
The fourth firm under state investigation, Marshall C. Watson of Fort Lauderdale, is
cooperating, state officials said.
In the Stern probe, a former paralegal with the firm told investigators last month that
workers there routinely signed paperwork without reading it, misdated records and skirted
rules protecting homeowners
Tammie Lou Kapusta, who spoke under oath, said the Stern firm ballooned from 225
employees when she started in March 2008, to more than 1,100 when she was fired in July
2009. She described a disorganized workplace where documents got lost and mortgages were
misfiled.
Kapusta's statements were reported Oct. 7 in the Tampa Tribune. Jeffrey Tew, the
Miami lawyer representing Stern, denied her claims and said he wasn't aware of the interview
until it was released to the public.
"We didn't get a chance to cross-examine her," he said. "It was a one-sided statement
by a disgruntled employee."
There is a hearing in Broward County courts regarding Stern on Tuesday, as Tew
challenges the Attorney General's action. The motion argues that the state's request violates
attorney-client privilege and is too extensive.
Information from Bloomberg News Service contributed to this report.
Diane Lade can be reached at dlade@sunsentinel.com or 954-356-4295.

against the firms under investigation.

Lee County foreclosures continue
10/13/2010 © Ft. Myers News-Press

Two giant lenders who said they´re freezing foreclosures nationwide are conducting
business as usual at the Lee County Courthouse.
JPMorgan Chase & Co. and Bank of America Corp., along with some smaller lenders,
have announced that they were holding off on court-based foreclosures until they could sort
out issues with them, such as whether attorneys actually read all the paperwork.
But in Lee County, court records show both of those banks have continued to get court
judgments allowing the sale of mortgages on foreclosed houses at public auction.
That´s despite statements from both banks that they stopped doing that about two weeks ago.
April Charney, a Jacksonville-area legal aid attorney who´s an expert on foreclosure
issues, said she´s hearing similar reports from around the country.
She scoffed at the banks¨ protests that they didn´t intend for the judgments to be
issued.
"It´s a farce,¨ she said. "We´re all being played.¨
JP Morgan spokesman Tom Kelly said Tuesday he didn´t know the bank´s attorneys were
continuing to get judgments allowing them to go forward with auctions.
Twelve judgments have been issued in Lee for JPMorgan since Oct. 2, the latest on Tuesday,
according to court records.
"We reached out to our local foreclosure counsel and asked them to ask the courts not
to enter judgments,¨ Kelly said. "I don´t know what happened there.¨
JP Morgan always intended to continue filing new foreclosure lawsuits, as it has been doing, he
said.
Bank of America spokesman Rick Simon said in an e-mail Monday night that "the bank
continues to process foreclosures on delinquent accounts, but will not take the process to the
point of judgment or sale.¨
However, county court records show judgments have continued for the bank, the
latest being issued Tuesday.
Simon said in an e-mail Tuesday afternoon that contributing factors "include that the
judgment might not have been a loan we serviced, but one we were the trustee or owner for.
Also, there are several reasons beyond our control that the Court might have gone ahead and
entered the order.¨
He continued that "if we find judgments have been entered against our instructions,
wishes and they are within our control, we will deal with those and postpone any sale until
after the review is completed.¨
Bank of America announced its freeze for Florida and 22 other states Oct. 1, but
continued through Friday to go forward with public auctions " the last step before people are
forced to leave their homes to make way for the new owner.
Simon said in an e-mail that after the bank´s Oct. 1 announcement of the freeze, it
continued with auctions that resulted from judgments before Oct. 1.
On Friday, Oct. 8, the bank expanded its ban to include all states and delayed future
auctions, he said.
No public auctions were held Monday or Tuesday in Lee County.
Kevin Jursinski, a Fort Myers-based attorney who handles foreclosure cases, said he
tries to resolve his clients´ cases well before a judgment and the ensuing auction.
"A judgment is pretty devastating to a lot of people,¨ he said.
"We´re all being played.¨
JP Morgan spokesman Tom Kelly said Tuesday he didn´t know the bank´s attorneys were
continuing to get judgments allowing them to go forward with auctions.
Twelve judgments have been issued in Lee for JPMorgan since Oct. 2, the latest on
Tuesday, according to court records.
"We reached out to our local foreclosure counsel and asked them to ask the courts not
to enter judgments,¨ Kelly said. "I don´t know what happened there.¨
JP Morgan always intended to continue filing new foreclosure lawsuits, as it has been
doing, he said.
Bank of America spokesman Rick Simon said in an e-mail Monday night that "the bank
continues to process foreclosures on delinquent accounts, but will not take the process to the
point of judgment or sale.¨
However, county court records show judgments have continued for the bank, the
latest being issued Tuesday.
Simon said in an e-mail Tuesday afternoon that contributing factors "include that the
judgment might not have been a loan we serviced, but one we were the trustee or owner for.
Also, there are several reasons beyond our control that the Court might have gone ahead and
entered the order.¨
He continued that "if we find judgments have been entered against our instructions,
wishes and they are within our control, we will deal with those and postpone any sale until
after the review is completed.¨
Bank of America announced its freeze for Florida and 22 other states Oct. 1, but
continued through Friday to go forward with public auctions " the last step before people are
forced to leave their homes to make way for the new owner.
Simon said in an e-mail that after the bank´s Oct. 1 announcement of the freeze, it
continued with auctions that resulted from judgments before Oct. 1.
On Friday, Oct. 8, the bank expanded its ban to include all states and delayed future
auctions, he said.
No public auctions were held Monday or Tuesday in Lee County.
Kevin Jursinski, a Fort Myers-based attorney who handles foreclosure cases, said he
tries to resolve his clients´ cases well before a judgment and the ensuing auction.
"A judgment is pretty devastating to a lot of people,¨ he said.

Foreclosure sales may stall if title insurance becomes scarce
10/09/2010 © South Florida Sun-Sentinel

Sales of foreclosed properties, already stalled by mounting evidence of widespread
flawed documentation practices by lenders and attorneys, may hit another roadblock: New
buyers might not be able to get the title insurance required for a mortgage.
New House Title, owned by a large Tampa foreclosure law firm under state
investigation, this week denied coverage for a 2009 Deerfield Beach condo foreclosure that its
own attorneys had handled, citing potentially defective court filings.
The New York Times last week also claimed Old Republic National Title, the fourth
largest title insurer in the country, had sent a memo to its agents in some states saying the
company would not cover homes foreclosed on by JPMorgan Chase until "objectionable issues
have been resolved." Earlier, the company had taken the same stand on homes foreclosed by
GMAC Mortgage, now owned by Ally Bank.
Louis Spagnuolo, vice president of mortgage banking at WCS Lending in Boca Raton,
said title insurers are becoming very selective about they'll cover as the foreclosure crisis
deepens. He predicted major underwriters soon will put a moritorium on policies for
foreclosures by troubled lenders.
Lee Huszajh, executive secretary treasurer of the Florida Land Title Association, said he has
not heard insurers stopping coverage on all foreclosures handled by specific lenders or law
firms.
But title examiners "are doublechecking everything now," he said. "It's a lot more
work."
Old Republic, in the Friday issue of The Title Report, said its notices had been
"misconstrued" to apply to foreclosure sales in general. The company "continues to insure
properties of all kinds" according to its usual guidelines "and will continue to evalute those
risks based on relevant facts," according to its statement in the trade publication.
Old Republic declined to comment to the Sun Sentinel.
Florida Default Law Group, which owns New House Title, is one of four foreclosure
firms being investigated by the Florida Attorney General for allegedly fabricating documents.
New House sent a notice this week to the Boca Raton attorney handling the Deerfield Beach
foreclosure sale, saying it could not proceed because of "potential defects" in affidavits
submitted by JPMorgan Chase.
Spokeswoman Lisa Nason said New House had no blanket policy freezing titles on
foreclosures, and made coverage decisions on a case by case basis.
PNC Financial Services Group Inc. on Friday became the fourth major lender to
temporarily stop or more closely review foreclosures, evictions or sales amid reports their
employees or attorneys improperly signed documents or never reviewed them. Some experts
have speculated the overarching crisis could eventually require hundreds of thousands of
foreclosures be reviewed.
Title insurers "need to limit their liablity going forward, there is so much uncertainty,"
Spagnuolo said.
Future foreclosure sales will stall or completely shut down if prospective buyers can't
get title insurance, Spagnuolo said. Lenders require it for a mortgage, as the policies protect
them against financial loss from unknown liens, errors or fraud that occurred prior to the
closing. Buyers usually pay for the lender policies, and can purchase coverage for themselves
as well.
The courts probably would need to determine exactly what the title insurer would be
responsible for if paperwork errors or forgeries were uncovered on foreclosures, Spagnuolo
said. "Nobody really knows how it will play out," he added.
Those who already have purchased foreclosed properties from lenders using "robo-
signers" - employees who signed as many as 10,000 documents a month that they never
verified - could file against their title policies. Shari Olefson, a Fort Lauderdale real estate
attorney and author of Foreclosure Nation, thinks underwriters will be inundated with claims
and some could go out of business.
The American Land Title Association, however, said the emerging foreclosure problems
should have little impact on new owners or on claims. If the courts did set aside a foreclosure
due to mistakes, it would be the lender, not the insurance underwriter, that would be
responsible for reimbursing the new property owner, the association said.
Association spokesman Jeremy Yohe said the title insurers are working with lenders to
obtain warranties, guaranteeing the proper foreclosure documents had been verified and were
accurate.
The Palm Beach Post contributed material to this report.

Diane Lade can be reached at 954-356-4295 or dlade@sunsentinel.com.


Challenges mount at law firm
10/12/2010 © Miami Herald

A Plantation-based law firm is struggling to deal with a state investigation and foreclosure
freezes that threaten its bottom line.
By Toluse Olorunnipa
tolorunnipa@MiamiHerald.com

The Law Offices of David Stern, which rode a wave of growth by processing
foreclosures during the financial crisis, is now dealing with its own distress, as the foreclosure
freeze has added to the firm's growing list of problems.
On Tuesday, the law firm's lawyers plan to challenge a state investigation into Stern's
foreclosure practices in Broward County circuit court.
Florida's attorney general's office, leading the state's investigation of Stern and three other
foreclosure law firms, announced Monday that it would press forward with its probe, despite a
Palm Beach County judge's ruling against the state inquiry last week. Attorney General Bill
McCollum also said he was joining 39 other states in a national investigation of shoddy
foreclosure practices.
But the legal fight with Attorney General Bill McCollum is only one of the Plantation-
based firm's many problems.
In addition to the state's investigation, a whistle-blowing former employee has claimed
forgery and numerous other crimes are rampant at the firm. The firm is also facing declining
revenue and a number of lawsuits.
LAYOFFS?
And a freeze in foreclosures by some of the firm's biggest clients threatens to further
stall business and may have already set in motion emergency cost-cutting measures, including
layoffs.
Rumors have swirled that the embattled firm let go a large number of workers last
week, but Stern's legal counsel declined to comment.
"Lawyers have to hold themselves up to a higher standard, and [Stern] hasn't done
that,'' said Thomas Ice, a foreclosure defense attorney who has investigated questionable
activities at the law firm. "To get where we are today you have to have a lot of failures in the
chain.''
Armed with the sworn testimony of a whistleblower who once worked at Stern, the
attorney general is looking to move forward with collecting evidence that could implicate the
firm.
PARALEGAL'S TESTIMONY
The whistleblower's testimony, released last week, is a jarring account alleging
widespread fraud and criminal activity at the law firm. Tammie Lou Kapusta, a one-time
paralegal at Stern's office, detailed a corporate environment where tampering documents and
forging signatures were normal practices, endorsed by high-level executives.
"They wanted us to start changing the documents and stuff and doing stuff that we
weren't supposed to be doing as far as service,'' Kapusta told McCollum's staff.
Jeffrey Tew, lawyer for Stern's law office, has dismissed Kapusta's testimony as
categorically false.
"It's not true what she says,'' he said. "She was terminated for cause. It sounds like a
cliché but it's a disgruntled employee out for revenge.''
Because of a cooling foreclosure market this year, referrals were already falling, even
before foreclosure freezes and fraud investigations.
The firm grew five-fold in the past five years as foreclosures skyrocketed and launched
a publicly traded offshoot to handle its 70,000-case-a-year foreclosure-processing operation,
but in the past few months, things have begun to unravel.
PROFITS DOWN
As a result, profits are down at Stern's publicly traded foreclosure processing
company, DJSP. Adjusted net income for the first half of 2010 was $7.8 million, down 50
percent from $15.8 million in the first half of 2009, according to company filings.
With some of Stern's largest clients listed among the group of lenders halting
foreclosure processes -- and with the bad press from a fraud investigation -- its foreclosure
processing unit is vulnerable to even more declines in net income.
The DJSP foreclosure processing operation got a glimpse of the effect of foreclosure
freezes in April, when one of its clients halted foreclosures to update its electronic system. The
company announced a drop in foreclosures in May, and its stock price began to drop as well,
sliding from $11.18 on May 17 to $5.45 on June 9. Lawsuits followed in July, with investors
claiming that Stern failed to disclose the foreclosure suspension.
Since foreclosure freezes began last month, DJSP's stock price has dipped more than
20 percent. It closed at $2.97 on Monday, down 6 percent for the day.
Miami Herald business writer Ina Paiva Cordle contributed to this report.

"Rocket Docket" rushing foreclosures, lawyers say
10/11/2010 © Florida Times-Union
By Roger Bull

The cases go quickly through the conference room on the fifth floor of the Duval
County Courthouse. That's where a special foreclosure court has been set up to hear
foreclosures and nothing but.
With 15,000 open foreclosure cases in Duval County, it's staffed by retired judges with
a goal of resolving 25 cases an hour, leading some critics to label it the "Rocket Docket," and
there are harsher descriptions as well.
"The fundamental problem," said Chip Parker, an attorney who specializes in
foreclosure defense, "is that for the first time, this court was created with the specific goal of
reducing foreclosures 62 percent."
"If they find for the defendant, the plaintiffs [usually lenders] just refile," he said. "The
only way to reduce [the case load] is to give it to the plaintiff. It's designed with a result in
mind, and that's not how justice is supposed to work."
With millions of Americans facing foreclosure, much of the foreclosure process itself is
in well-publicized disarray. At least seven states are investigating allegations of wrongdoing
involving bogus signatures and missing documents.
On Friday, Bank of America announced that it was stopping foreclosures in all 50
states after evidence that employees and lawyers signed documents without verifying them.
JP Morgan Chase & Co and Ally Financial have stopped foreclosure proceedings in some states
after similar evidence surfaced.
Several cases have been tossed out by Florida judges who found fraud. Duval Circuit
Judge Jean Johnson declared that one South Florida law firm under investigation, Shapiro &
Fishman, had "committed fraud on this court" on behalf of Chase. She dismissed the case in
August, finding in favor of Parker's client, because of fraudulent documents.
"We have not encountered any fraud yet," said Judge A.C. Soud who is in charge of
the newly created foreclosure division. "If we encountered fraud, it would go to [State
Attorney] Angela Corey, I can tell you that."
The special foreclosure courts that began operating July 1 are funded by $9.6 million
budgeted by the state Legislature.
In the Fourth Circuit, four judges rotate in Jacksonville, one at a time working a four-
day week. Clay and Nassau counties each have one judge working two days a week.
So far, they have been losing ground: There were 12,104 open cases in Duval County
on July 1, now there are 15,088. But Soud said the court started slowly because banks were
not ready to proceed in July.
But now, with all the questions, Soud said plaintiffs are now cancelling their hearings,
including 40 to 50 that had been set for Thursday, to verify their documentation.
Starting in January, Soud plans to add a second judge for two days a week in
Jacksonville and reduce the staffing in Clay and Nassau to just one day a week.
The goal, Soud said, is to resolve 25 cases per hour, which includes uncontested cases
which make up 98 percent of them. Usually, it's lawyers who come to the conference to
present their motions, but occasionally, a homeowner comes to represent himself.
The court, like other foreclosure courts in Florida, has harsh critics among some of the
attorneys who make regular appearances.
Parker said that in the three years before the foreclosure court was established, his
firm participated in about 100 hearings for a contested final summary judgment and never lost
one. With the new court, they are 1-for-15, winning their first last week in Clay County.
"For the first time, they're not even pretending to be unbiased arbiters of justice,"
Parker said.
Mark Kessler, who is in the Duval County foreclosure court almost every day
representing plaintiffs/lenders, disagreed.
"I take great issue with some of those comments," he said. "These judges are
extremely fair. It's not like it's a steamroller, they pay close attention to each of the cases."
Victoria McNair, an attorney with Three Rivers Legal Services won a case for her client
last week - the foreclosure was dismissed. She and Parker think it's the first one that's been
dismissed since the court began in July.
"They're under a lot of political pressure to move so many cases so fast," she said. "There's
the sheer volume of having to deal with all the stuff these foreclosure mills have filed. And the
law is changing so fast, maybe some of these judges need some learning curve time.
"If they've been out [off the bench] for more than three years, they've missed all the
changes in the foreclosure law."
At the heart of the foreclosure controversy are the affidavits that the plaintiffs file
which says who owns the note, how much money is owed, etc. Employees at several major
lenders have admitted signing the affidavits without confirming the information was correct.
"The foreclosure mills take these cases by the thousands," McNair said, "and they do it
by cutting all the corners and all the laws. When they file these things, they're all defective.
They just don't have the elements that law requires."
Among Parker's concerns is that affidavits are routinely accepted in foreclosure court
without the supporting records to show that they're correct.
"I really believe we're subverting the rule of law for the convenience of clearing the
docket," he said "There is clearly a second set of rules being followed by the foreclosure
judges."
But Soud said that's not true, and that the required records are included.
"What we have is affidavits that are attached and filed in these hearings that are
signed by people who are custodians of the records," he said.
"We're following the law as we understand it," he said. "We're just not doing it the way
they think it should be done. If they don't like it, that's what the First District Court of Appeals
in Tallahassee is for."
While most of the business in the courtroom is done by lawyers, homeowners do show
up.
Wednesday, Robert E. Lee came in with a stack of medical records to explain why he
hadn't made the payments on his house since 2008. On disability, the 59-year-old retired
railroad worker had been in the hospital five times in the past two years. And he knew he'd
overpaid when he agreed to pay $90,000 for his house off Kings Road near Edward Waters
College when it was appraised at half that.
But after the deaths of his wife and daughter, he really wanted to be in a
neighborhood where he had so many relatives. That's what he said he wanted to explain to
Judge Aaron Bowden.
"I didn't get a chance to tell him anything," Lee said. "I tried to tell him what was
going on and he told me to stop whining. He gave me until Dec. 2 and that's enough time for
me to find a place to stay."

roger.bull@jacksonville.com, (904) 359-4296.

Editorial: A job for the state's top cop: If fraud is an issue, attorney general should
have power to probe
10/08/2010 © Palm Beach Post

Florida Attorney General Bill McCollum should appeal the ruling by Palm Beach County
Circuit Court Judge Jack S. Cox that the attorney general's office lacks the authority to
investigate law firms suspected of fraudulent foreclosure practices.
On Monday, Judge Cox granted a request by Shapiro & Fishman to quash a subpoena for
information from the Boca Raton firm, saying that the Florida Bar is responsible for
investigating allegations of misconduct by attorneys. Shapiro & Fishman is one of four firms
under investigation for allegedly doctoring foreclosure documents to get quick judgments on
behalf of lenders. The fraud scandal has forced the nation's biggest banks to halt foreclosures
in 23 states, including Florida. On Tuesday, judges in Palm Beach County canceled half of the
150 scheduled foreclosure auctions.
In his ruling, Judge Cox took a circuitous route to conclude that the attorney general's
office must back off. The investigation centered on Shapiro & Fishman's legal representation of
lenders in foreclosure matters. The office initiated the investigation under the state's
Deceptive and Unfair Trade Practices Act. Judge Cox noted that the activities of entities
regulated by the Office of Financial Regulation, such as banks, are exempt under that law.
"The enumerated list of exempted activities does not specifically include attorneys, law
firms or any person or entity that is regulated by the Florida Bar," Judge Cox wrote. "However,
the Legislature knew that the authority to regulate and discipline the conduct of attorneys has
been exclusively reserved to the Supreme Court."
The Florida Constitution does give the Supreme Court exclusive authority to admit
attorneys into the practice of law and to discipline them. That authority, however, does not
preclude law enforcement from investigating allegations of illegal conduct. The attorney
general is the state's chief legal officer.
To cite one extreme example, the Florida Supreme Court didn't take down Ponzi-
scheming Fort Lauderdale lawyer Scott Rothstein, who defrauded investors out of $429
million. Nor did The Florida Bar. The U.S. Attorney's office did. The Florida Supreme Court
disBarred Rothstein, at his request, while he was under investigation.
Further, the state Office of Financial Regulation does not regulate national institutions
such as Bank of America, JPMorgan Chase, and Ally Financial, on whose behalf the law firms
are alleged to have filed fraudulent documents. Maryanne Downs, president of the Florida Bar,
said her organization does not investigate complaints against law firms, just individual
attorneys.
So if the state's top cop can't investigate, who can? Florida's courts have issued
thousands of foreclosure judgments, many in recent weeks after the Legislature last spring
appropriated $9.6 million to expedite the cases. Defense attorneys say many of those
foreclosures were the result of falsified documents.
Lenders have halted foreclosures while they try to correct the paperwork. That delay is
making it harder for Florida to get through the foreclosure backlog and revive the real estate
market. No one, however, should be defrauded out of a home. Florida should be able to go
after those who have gamed the system and tried to profit from a crisis.

Rhonda Swan, for The Palm Beach Post Editorial Board.

Clerks' date stamps not definitive, court says
October 07, 2010
By: Adolfo Pesquera

The Florida Supreme Court reopened a closed case based on an apparent docketing
delay by the Broward clerk´s office.
A Lauderhill plastic surgery clinic appealed to the Supreme Court after the 4th District
Court of Appeal ruled the clinic was bound by the time stamp from the clerk´s office. The clinic,
Strax Rejuvenation, wanted to contest a trial court decision rejecting arbitration in a patient
dispute.
A Strax attorney submitted affidavits stating a notice of appeal was delivered by
courier to the clerk´s office Aug. 19, 2009, or one day before the filing deadline. The clerk´s
office stamped the filing on Aug. 21.
"It was a very big issue because an appeal had been dismissed that actually had been
timely filed, according to the evidence,¨ said BarBara A. Eagan, an Orlando attorney who filed
an amicus brief in her capacity as then-chair of the Orange County Bar Association appellate
practice committee.
Orlando had a similar controversy, and her friend-of-the-court brief was submitted to
offer insight into "our experience and to tell them how the process flowed,¨ she said.
The Supreme Court took the case because the 4th District opinion conflicted with
decisions in the 3rd and 5th districts.
Dinah Stein, a Miami attorney who wrote the appeal for Strax Rejuvenation, noted the
4th DCA cited its denial in Strax Rejuvenation to dismiss another case.
The foreclosure case of Carlos and Nora Soledispa was dismissed in April. Their
attorney maintained a courier delivered court papers Feb. 11, which was within the 30-day
window to file after final judgment. But the item was date-stamped Feb. 23 by the clerk´s
office.
The 4th DCA determined the date stamp was valid.
But the other two districts concluded clerk´s stamps are not conclusive if there is
contrary evidence.
"Procedural rules should be given a construction calculated to further justice, not to
frustrate it,¨ Justice Jorge LaBarga wrote for the unanimous high court last week.
The justice said a filing is accomplished when the clerk actually receives the document,
regardless of whether it is stamped the same day.
Stein said she was aware of cases alleging delayed stamps only in Broward County.
Eagan, however, said the issue could arise in any county.
"It is not commonplace, but it happens,¨ Eagan said. "Most every attorney has had at
least one similar experience throughout their career.¨
Broward County Clerk of the Court Howard Forman said the Supreme Court decision
appeared to be a recognition that legislative budget cuts have hurt the efficiency of court
clerks.
"I think the Supreme Court probably found a way to make the definition more liberal,¨
Forman said. "When you go through 17 percent budget cuts, even with technology, things are
going to happen a little slower.¨
Forman noted most of the cases where date-stamping became an issue were in
counties with large populations.
"The larger these offices are, the slower they´ll be because of the volume of work,¨ he
said.
Forman´s office came under heavy criticism last year from Broward Chief Circuit Judge
Victor Tobin, who was in turn responding to a flood of complaints from lawyers and judicial
staff that the clerk´s system of processing files had become unreliable.
Staff took too long to update dockets, file court papers and stamp documents, the
critics asserted.
An audit by the Florida Clerks of Court Operations found Broward was the slowest of Florida´s
seven largest counties in processing records. Forman said Wednesday that no substantial
changes had taken place in the process this year and nothing dramatic would happen until a
state-mandated electronic filing system is implemented.
"By this time next year, the legislature wants electronic filing in five divisions. One is
civil. That should alleviate some of the problems,¨ Forman said.
LaBarga directed the 4th DCA to remand the Strax case to the trial court for an
evidentiary hearing on the timing issue. Strax must overcome the clerk´s date stamp by
showing proof that the clerk´s office received the appeal within the filing deadline.

Adolfo Pesquera can be reached at (954) 468-2616.

Florida foreclosure firm's title insurer won't insure firm's foreclosure titles
10/08/2010 © Palm Beach Post

The title insurance arm of one of the state's largest foreclosure law firms is refusing to
cover properties foreclosed on by its own attorneys citing potential defects in court filings.
New House Title, which is owned by the same people who run the Tampa-based
Florida Default Law Group, sent notice to a Boca Raton real estate attorney Wednesday that a
2009 foreclosure was off limits.
What Attorney Robert Feldman found interesting in New House's denial for the
Deerfield Beach condominium is the foreclosure was handled by the Florida Default Law
Group.
"It is somewhat surprising that now they won't even insure their own work," Feldman
said.
The New House email faults JPMorgan Chase for the rejection.
Chase is one of three national lenders, including Ally Financial Inc., and Bank of America, that
has suspended some foreclosure proceedings to review and correct flawed documents that
may have been used to take people's homes.
"We have become aware of potential defects with affidavits submitted by the servicer,
JPMorgan Chase or an affiliate, in foreclosure actions, which raise concerns about the
insurability of the title of the subject property," said the e-mail sent by Fran Morrison, a
closing processor with New House Title. "Until these defects have been remedied, we are
unable to proceed with the sale or closing of the foreclosed properties."
Title insurance protects homeowners against financial loss from defects in the title,
liens on the title or if the title is not what it is represented to be.
Last week, Old Republic National Title Insurance, the fourth-largest title insurer in the
country, directed agents in some states not to write new policies for Ally foreclosures because
of concerns over court filings.
Lisa Nason, a spokeswoman for Florida Default, said New House makes title insurance
decisions on an individual basis and does not have an "official policy or opinion."
The document problems acknowledged by the banks include the use of so-called
"robo-signers" to approve tens of thousands of foreclosure documents that they claimed to
personally verify, although they did not.
In many instances, those affidavits were then filed with the court by the state's large
foreclosure law firms.
Florida Default, which has filed a motion to quash an investigative subpoena by the
state attorney general's office, has been withdrawing affidavits statewide on foreclosure cases
claiming previously submitted information may have been inaccurate.
Tampa-based attorney Mark Stopa said Florida Default should have known the affidavits were
flawed. One Ally employee said under deposition that he signed as many as 10,000
foreclosures every month.
"They're the ones who prosecuted the foreclosure case. If there's no clear title, it's
because they did it wrong," Stopa said. "They're acknowledging their own incompetence."
It's not unusual for foreclosure firms to also have title companies.
Attorney David J. Stern, whose Plantation-based law firm handles a large number of
foreclosures, is chairman and CEO of DJSP Enterprises. The publicly traded company, which
issues title insurance as well as handling other mortgage processing issues, reported $56.1
million in revenue for the second quarter of this year.
Stern's firm is also the subject of a state investigation, although it has also filed a
motion quash the state's subpoena.
Attorney Jeffrey Tew, who represents Stern, said they have no comment on the title
insurance issues.

Editorial: Mortgage fraud prosecutions must continue
The News-Press
Oct. 7, 2010

Federal prosecutor Robert O´Neill was sworn in Tuesday as the new U.S. Attorney for
the Middle District, and he should continue - and strengthen - ongoing efforts to root out
and prosecute mortgage fraud in Southwest Florida.
Former U.S. Attorney A. Brian Albritton resigned to become a partner at a private legal
firm. Albritton oversaw efforts to go after fraud.
In Southwest Florida Chief Assistant U.S. Attorney Doug Molloy has been our local
champion. O´Neill should support his efforts.
The Middle District serves 35 counties from Jacksonville to the north, Orlando in the
center of the state, through Tampa on the west coast, and south to the Fort Myers area.
Florida has three federal districts: the Northern, the Southern and the Middle District.
O´Neill will supervise a staff of 255, including 110 prosecutors, with offices in Tampa,
Orlando, Jacksonville, Ocala and Fort Myers.
In 2009, the Middle District with the cooperation of the FBI launched the Mortgage
Fraud Surge, a multi-agency effort to fight mortgage schemes in response to the epidemic of
mortgage fraud throughout the state which began during Florida´s real estate boom.
By November 2009, more than 100 defendants had been charged with mortgage fraud
crimes involving more than 400 properties and $700 million in loans.
One of consequences of the subprime mortgage crisis, mortgage fraud has become a
fast growing threat to the Florida economy. Schemes such as builder-bailouts, real estate
short-sale fraud and foreclosure rescue scams are becoming more prevalent now that the
housing crisis is hitting bottom.
The Middle District has begun this year "Phase II¨ of its mortgage fraud initiative,
leveraging information and techniques developed during the Surge phase to prosecute
increasingly complex mortgage fraud schemes.
The district´s Mortgage Fraud Initiative has been the subject of congressional
testimony and an important source of information for the president´s Mortgage Fraud Task
Force designed to combat mortgage fraud across the country.
In fiscal year 2010 alone, the Middle District opened 128 mortgage fraud cases -
nearly one in four of the 554 cases opened in all 94 districts in the U.S.
This is commendable and speaks well for Albritton´s leadership.
We are confident O´Neill will continue to prosecute to the full extent of the law those
who profit on the tragedy of others.





AG investigation into foreclosure law firms dealt blow
October 04, 2010
By: Julie Kay

Palm Beach Circuit judge dealt a blow today to Florida Attorney General Bill
McCollum´s investigation of foreclosure law firms by quashing a subpoena issued to one of the
firms.
Judge Jack Cox in a sharply worded order said it´s up to the Florida Supreme Court
and The Florida Bar to regulate attorneys, not the attorney general. He also called the
attorney general´s subpoena of Shapiro & Fishman "overbroad, vague, inconsistent and unduly
burdensome.¨
McCollum´s office had no immediate response.
The office had subpoenaed three of the state´s largest foreclosure law firms - the Law
Offices of David Stern in Plantation, the Shapiro firm with offices in Boca Raton and Tampa,
and the Law Offices of Marshall Watson in Fort Lauderdale - as part of a wider investigation
into foreclosure firms.
Critics including consumer advocate groups and foreclosure defense firms have alleged
the firms targeted by McCollum´s office filed incorrect or even phony paperwork to achieve
foreclosure judgments in the state courts. The plaintiff law firms have denied wrongdoing.

Paperwork problems put foreclosures in limbo
10/05/2010 © Tampa Bay Online

ST. PETERSBURG - Gale Green says she never missed a mortgage payment on her St.
Petersburg home, but that didn't stop GMAC from filing for foreclosure last year.
The lender returned one of her checks in some sort of mix-up and then stopped taking
her payments while it tried to figure out what had happened, she said.
Without any warning, she says, the lender moved to take the home back a few months
later.
"The next thing I knew, there was a knock at the door, and it was foreclosure," Green
said.
That's when Green's foreclosure case became one of tens of thousands now in limbo,
while lenders review problematic paperwork.
An affidavit detailing the facts in Green's foreclosure case was signed by the same
processor whom GMAC says it now knows did not read foreclosure documents he signed.
Two weeks ago, GMAC's parent company, Ally Financial, said it discovered the
processor signed off on key documents without making sure they were accurate. Federal
lawmakers and state officials have said such practices could be fraudulent.
Last week, JPMorgan Chase and Bank of America said the same thing was happening
at their companies.
It's not clear how many loans are affected, but the three lenders are some the largest
in the nation. All three also service loans owned by other lenders. Those loans are included in
the foreclosure moratorium.
Bank of America, the biggest U.S. bank in terms of assets and deposits, estimated it
will be reviewing tens of thousands of documents.
The law requires the lender's processor to personally verify that the lender has the
right to foreclose on a home. The processors, though, signed more than 10,000 documents a
month, and some have given sworn testimony that they relied on other staff members to
verify the documents.
Foreclosures involving all three lenders are now on hold in 23 states, including Florida.
The lenders have all said the problems were "technical" and that they don't think any
of the foreclosure documents contained errors. They say they plan to resubmit documents
properly and then proceed with foreclosures.
Homeowners such as Green are wondering what will happen to them now. Green hired
an attorney to fight the foreclosure, but the bank didn't respond until the scope of the
paperwork problems came to light. Still, the only response she's gotten so far is a temporary
halt to the foreclosure.
Her lawyer, Matt Weidner, said he wants to get Green's case dismissed and expects
other foreclosure defense attorneys to try the same for their clients.
"Because of this document they've filed, they are not going to be able to proceed with
this case," Weidner said. "I'm not going to allow them to get a judgment in this case."

Reporter Shannon Behnken can be reached at (813) 259-7804.

Judges try to get grip on foreclosure chaos
10/03/2010 © Bradenton Herald

MANATEE - The fifth time was the final straw for Manatee County Circuit Court Judge
Janette Dunnigan.
Four times in a 2007 foreclosure case, a Fort Lauderdale law firm representing a bank
scheduled a hearing and either did not appear or canceled it at the last minute without telling
others. So when it happened again April 13, Dunnigan called Smith, Hiatt and Diaz P.A. and
issued a warning: Stop it or I´ll hold you in contempt of court.
The threat didn´t work: The firm subsequently set two more hearings and didn´t show
for either one. So Dunnigan found the firm in "deliberate, willful and flagrant¨ contempt after
an Aug. 30 hearing and issued a $49,000 fine, which the firm is contesting.
Legal observers said they believe Dunnigan´s act is the first time a Florida judge has
sanctioned a so-called `foreclosure mill´ for its practices. But they said it also illustrates a
growing effort by judges to regain control of the foreclosure process after years of chaos.
"The system´s overloaded and they´ve got to do something about it,¨ said Dawn Bates-
Buchanan, managing attorney for Gulfcoast Legal Services´ Bradenton office. "The judges all
are saying, `No more. We´ve had enough.´ ¨
That frustration stems from a foreclosure crisis of historic proportions.
Nearly 15,200 foreclosure suits have been filed in Manatee since 2008, according to
court records. Mortgage lenders and servicers have initiated foreclosure proceedings against
more than 1.33 million Florida homes and repossessed more than 197,300 during that time,
according to RealtyTrac, a foreclosure tracking service.
The state courts administrator´s office estimated in March that roughly 500,000
foreclosure cases in Florida were still unresolved. The office said it plans to release an updated
estimate later this month.
The legal and financial systems were ill-prepared to handle the crush, resulting in
massive court backlogs and delays. It also led to the rise of several law firms that file
thousands of foreclosure cases a month, which critics have dubbed "foreclosure mills.¨
Local court officials have tried various measures to streamline the foreclosure process,
including requiring law firms to file suits electronically; file all relevant documents when
scheduling a hearing; designate a primary contact person; and appear in person at all
foreclosure-related hearings.
Court officials also set up an automated system for scheduling court hearings and
established "rocket dockets¨ to expedite uncontested cases. But they acknowledge those
efforts have had limited success and that problems with incomplete or missing paperwork,
missed hearings and non-compliance with court procedures still persist.
"We´ve been bugging these people to do it right and follow the rules for quite a while,
but we´re still having issues,¨ said Chief Judge Lee Haworth, of the 12th Judicial Circuit, which
encompasses Manatee, Sarasota and DeSoto counties.
For example, more than one out of every five expedited cases heard during a recent
three-week period had some form of paperwork or procedural problem, he said.
That has judges taking a harder stance on those who aren´t following the rules.
On Sept. 17, Sarasota County Circuit Court Judge Harry Rapkin dismissed 61 of 258
cases on his docket because bank attorneys did not follow court procedures. Another 32 cases
were continued because of similar but minor issues, Haworth said.
The dismissals mean plaintiffs who want to resurrect their cases will have to re-file and
pay filing fees of up to $1,900 for each case.
But Dunnigan´s contempt order and fine is the strongest rebuke thus far. Besides the
missed hearings, she scolded Hiatt, Smith and Diaz for routinely not filing required paperwork.
"The law firm´s lack of consideration for the court´s calendars, their disobediance for
this court´s local rules and orders, and their misconduct in handling mortgage foreclosure
cases is deliberate, willful and flagrant in nature, and as such is evidence of contempt,¨ she
wrote in her Sept. 2 ruling.
Besides the fine, she ordered the firm to pay $450 to the homeowner for lost wages
and interpreter costs and pay the Barrington Ridge Homeowners Association´s legal costs for
the missed hearings. Scott Petersen, the association´s attorney, later said those costs
amounted to $840.
"The abusive practices that the judge attacked have been a serious impediment to the
progress of community associations in maintaining financial stability without the benefit of
maintenance fees from `underwater´ units that have been abandoned by owners,¨ he said.
Dunnigan also ordered Hiatt, Smith and Diaz to implement a system to assure its
attorneys are adequately prepared for and attend scheduled hearings. The firm also was given
a Thursday, Sept. 30, deadline to provide signed statements from its lawyers and support staff
that they have read the local circuit´s rules of procedure or risk additional fines of $7,000 a
day.
The firm disputed her characterization, saying the missed hearings resulted from the
local court circuit´s rules not being completely loaded into its database. Partner Roy A. Diaz
also said the firm has made "extreme changes¨ in its internal policies and procedures to avoid
more missed hearings.
He filed motions asking Dunnigan to recuse herself from the original case because of
"prejudice and bias¨ and either rescind the order or hold another hearing, which Dunnigan
denied Friday.
Consumer advocates and defense attorneys are hailing her contempt order and other
actions against such large law firms, including judges in Miami-Dade County, Illinois and New
York who wiped out homeowners´ mortgages because of misconduct.
Those firms´ assembly line tactics also have prompted at least three lenders - Bank of
America, Ally Financial/GMAC and JP Morgan Chase - to temporarily suspend foreclosure
proceedings in at least 23 states, including Florida.
"Crazy things have been happening and the judges are tired of hearing about it,¨
Bates-Buchanan said. "They´re holding plaintiff´s counsel to the fire. They´re trying to regain
control of the process.¨
Dismissing cases, issuing contempt orders and issuing fines aren´t the only tactics that
local court officials are using, Haworth said.
They´re also spending more time reviewing inactive foreclosure cases. For example, the last
filing in a foreclosure suit involving companies owned by U.S. Rep. Vern Buchanan and his
brother was on May 19, 2009, records show.
In cases where nothing has been filed in at least 10 months, judges and clerks are
telling lawyers to either get the case moving or it will be administratively dismissed.
"Our judges are saying enough´s enough,¨ Haworth said. "We´ve heard every excuse
and promise (from bank attorneys) under the sun, and nothing´s gotten better. We´ve had to
take stronger measures.¨
Duane Marsteller, transportation/growth and development reporter, can be reached at
745-7080, ext. 2630.

Bank of America slows foreclosures as Fannie Mae steps in
10/02/2010 © South Florida Sun-Sentinel

Bank of America said late Friday it is delaying foreclosures in 23 states, becoming the
third major lending institution to acknowledge mortgage documentation problems. Meanwhile,
Fannie Mae stepped up efforts to hold lenders accountable, saying it will warn loan servicers to
report problems with cases that may violate financial laws.
Bank of America -- one of the largest mortgage lenders in Florida and the nation's
largest bank -- did not give an estimate for how many homeowners' cases will be affected in
South Florida and elsewhere.
Bank of America spokesman Dan Frahm said the institution was "assessing our
existing processes" and would be delaying some actions..
The Federal National Mortgage Association - commonly known as Fannie Mae -- said it
is alerting 1,400 loan servicers nationwide that they would be in violation of their contracts on
federally-backed Fannie Mae loans if their foreclosure processes don't comply with state and
local laws.
In two South Florida cases, representatives of GMAC Mortgage and JPMorgan Chase
have said under oath that they signed tens of thousands of documents in foreclosure cases
every month without having personal knowledge of the information that they contain, which is
required by state law. Both companies said they have halted some foreclosure procedures as
they review those cases in question.
The new twists in the foreclosure crisis concerned South Florida real estate executives,
lawyers and lenders.
For homebuyers, there may be a slowdown in processing loans if they're using one of
the large banks that's in the regulatory spotlight, said Claudine Claus, president and chief
executive officer of Home Financing Center, a mortgage servicer that operates throughout
South Florida.
She said Fannie Mae "won't mess around."
Rashmi Airan-Pace, a foreclosure defense lawyer in Coral Gables, said this crisis may
give "more leverage to the average homeowner" in reaching a solution other than foreclosure
- such as a short sale or a reduction in the principal amount owed on a mortgage.
Attorney Gary Handin of Coral Springs said, "These are not good things for the real
estate market, but they are a good things for people in danger of losing their homes." Handin,
who said his firm has handled hundreds of foreclosures, short sales and loan modifications,
added: "If proper procedures aren't followed, we don't have due process in the law."
Fannie Mae, which purchases mortgages from lenders, has $189 billion in single-family
residential mortgages from Florida in its portfolio.
In other developments Friday:
Federal bank regulator, the Office of the Comptroller of the Currency, confirmed that it
instructed the nation's seven largest mortgage loan servicers to review their foreclosure
procedures. A spokesman said as soon as the GMAC announcement was made, "OCC
examiners immediately contacted senior management at our largest mortgage servicers to
determine whether procedural breakdowns could be resulting in foreclosure affidavit problems
similar to Ally Bank." The banks contacted were JP Morgan Chase, Citigroup, HSBC,PNC, Wells
Fargo, Bank of America and U.S. Bank.
Chase spokesman Tom Kelly said the lender had no comment. Jason Menke,
spokesman for Wells Fargo/Wachovia, said the company continues to stand by the documents
its employees have signed and "if we find an error, we will take the appropriate corrective
action."
Neil Brazil, spokesman for HSBC North America, said the company had not altered its
mortgage practices, "which is always to regard foreclosure as the last resort."
Amy Vargo, spokeswoman for PNC Mortgage, said no one was available for comment.
Spokemen for U.S. Bank and Citigroup could not be reached for comment despite several
emails and one phone call.
Bank of America announced it is delaying foreclosures in 23 states - including Florida -
- after the Associated Press reported that a bank official acknowledged in a legal proceeding
that she signed up to 8,000 foreclosure documents a month and typically didn't read them.
Maine homeowners filed a lawsuit seeking class action status charging that GMAC
Mortgage, a subsidiary of Ally Financial, routinely files false certifications that it has a right to
foreclose on Maine homeowners. It was not immediately clear whether the suit - which must
be certified by a judge for class action status -- might extend to Florida borrowers.
Old Republic National Title Insurance, a major title insurer in Florida, told its agents it
would not issue title insurance policies for some GMAC Mortgage-owned properties, according
to Weston attorney Roy Oppenheim. Old Republic refused to comment. Spokeswoman Jodi
Fredericksen said the company had "a policy of not speaking to the press."
California Attorney General Edmund G. Brown Jr. said he has demanded JP Morgan
Chase prove immediately that the company is complying with state law or halt its foreclosures
in the state. Brown had sent a similar letter to GMAC last week, according to California
officials.
The questions surrounding the foreclosures could have both positive and negative
ripple effects on the housing market in South Florida and across the nation, lawyers and real
estate agents say.
The immediate result is that thousands of foreclosures are being delayed, meaning the
market won't be flooded with these properties for resale. That, in turn, could help stabilize
prices in the near term.
But Shari Olefson, a real estate lawyer in Fort Lauderdale, said this recent firestorm
won't suddenly reverse or eliminate foreclosures. The problem is a procedural one that doesn't
have anything to do with delinquent borrowers, she said.
"You still owe the money to someone," said Olefson, who has represented banks and
borrowers. "All the i's will be dotted and t's crossed, but we're still going to have the same
outcome. It's just going to delay the process by a couple of months, and it'll cost a lot more
money. And we all know who's going to pay those costs."
A mountain of lawsuits likely will be filed on behalf of clients alleging that they lost
their homes to improper foreclosures. Those people will have a hard time getting the homes
back, especially if they've been resold, but the homeowners still will be seeking damages, said
Jerron Kelley, a foreclosure defense lawyer in Delray Beach.

Diane C. Lade contributed to this article.
Harriet Johnson Brackey can be reached at hjbrackey@sunsentinel.com or 954-356-4614.
Paul Owers can be reached at powers@sunsentinel.com or 561-243-6529.

Sarasota judge simplifies foreclosure cases
10/03/2010 © Sarasota Herald-Tribune (Requires Login)

COURTROOM: A checklist of filing errors can bring a case to a halt
By Todd Ruger
Published: Sunday, October 3, 2010 at 1:00 a.m.

SARASOTA COUNTY - Criminal defense attorneys used to call Judge Harry Rapkin
"Hang 'Em High Harry" for his tough prison sentences, and his latest crackdown in foreclosure
court might have home lenders trying to come up with a similar nickname.
Rapkin unleashed a new order last week, aimed at attorneys for lenders who are still
making the kind of simple errors that would be considered ridiculous in any courtroom. A lot is
at stake; Rapkin sees hundreds of cases where the lender is minutes away from taking
someone's property.
Rapkin's new order completely dismisses foreclosure cases when they do not follow
the simplest of rules.
The judge's new order has nine check boxes listing the most common mistakes he sees in
foreclosures. The most basic -- not showing up for a hearing -- is listed first. Then there is one
for attorneys who filed a motion to win a case that they had previously dismissed, and one for
attorneys who filed a motion to win a case they had already won.
If one these boxes gets checked, the judge dismisses the case.
The obviousness of the errors is one outcome of the mass volume of foreclosures
running through Florida courts and the desire by large legal firms to handle foreclosures en
masse, resulting in shoddy practices.
"This isn't brain surgery," said Sarasota attorney Michael Belle, who reviews
foreclosure filings for the judges as part of a court-sponsored program.
On Sept. 24, the day Rapkin debuted the order, a quarter of the 250 cases seeking his
permission to retake property made one of the errors, 61 in all.
Rapkin's checkboxes give him a quick way to make rulings on the cases. But it also
has a twinge of ridicule: as in, can you believe professional attorneys can get things this
wrong?
Belle said it is a sad commentary about how a judge feels he must hold the hand of
these attorneys just to meet elementary standards.
"Judge Rapkin is now finally saying I can't trust these guys anymore, so here's what
I'm going to do," Belle said.
The most direct message gets sent right to the lenders' pocketbooks. The order
dismisses the foreclosure, meaning the lender must pay a filing fee up to $1,900 again if it
wants to try to foreclose on the property again.
Attorneys in at least 15 of the 61 cases Rapkin dismissed with the new order have
already tried to get a rehearing to try to save their case.
The foreclosure system is still overwhelmed by cases, with attorneys for some lenders
each handling thousands of cases.
Foreclosure defense attorneys have decried the paperwork from lenders for years.
Now, problems with paperwork have led some lenders to halt foreclosures in up to 23
states, and the Florida Attorney General's Office is investigating possible fraudulent documents
being used to retake homes.

Mortgage document troubles holding up foreclosures
10/02/2010 © Palm Beach Post
Posted: 1:52 p.m. Saturday, Oct. 2, 2010

The technical glitch that Ally Financial is citing for freezing portions of its foreclosure
machine could keep Susan Carlsen in her million-dollar Jupiter home for another year.
Or, even win her the court case all together.
Carlsen's attorney, no doubt like many foreclosure defenders nationwide, plans to take
full advantage of the acknowledgments by Ally, JPMorgan Chase and now Bank of America,
that legal documents used to repossess people's homes were flawed.
Attorneys for Ally, formerly GMAC, withdrew an affidavit stating how much Carlsen
owes on the house last month as it was revealed bank employees swore to personal
knowledge of foreclosure documents when they had no such knowledge.
The unexpected reprieve for tens of thousands of delinquent borrowers opens legal
avenues to slow Florida's so-called "rocket docket" - a blur of quickie foreclosure judgments
aided by a summer infusion of $9.6 million to hire additional judges and court employees.
"This whole thing has been treated like they're going to a fast food restaurant to buy a
hamburger," said Carlsen's Attorney Peter Snyder, adding that a loss of income hurt his
client's ability to pay the mortgage.
"They tried to trick the court," Snyder said referring to lenders, "and if you try to trick
the court, the court should deny the foreclosure."
Conventional wisdom has been that to speed economic recovery, Florida needed to
speed the foreclosures, getting them back on the market to reinvigorate communities. It was
one of the fundamental reasons the state gave $9.6 million to the courts. Also, new online
foreclosure sales in many counties, including Palm Beach, were developed to help move
homes in eBay-like fashion, hastening their return to the market.
But now, economists say the foreclosure mire will actually help the real estate
recovery.
While some may feel it morally unsavory to allow people to continue to live in their
homes for free, the slowdown means discounted foreclosures will trickle into the market,
instead of gush.
"It will be better for housing prices in the near term," said Chris Lafakis, a Moody's
economists who studies Florida's economy. "If this gets dragged out, by the time the homes
end up on the market, the economy will be stronger and better able to handle the supply."
Industry experts say the practices that led Ally, Chase and Bank of America to halt
some of their foreclosures are widespread. Banks and servicers are undoubtedly reviewing
their foreclosures, even if their efforts have not become public.
Lake Worth resident Roberto Sanchez had an affidavit withdrawn from his two-year-old
foreclosure case last month.
He hopes it means he can stay in his home.
"I want to keep the house," Sanchez said. "I tried to talk to the bank in the beginning
and they wouldn't help me. That was three years ago."
Boca Raton real estate Attorney Marlyn Wiener said her foreclosure clients are
clamoring for information on how the freezes will affect them.
"There is no way to know how big and bad this is going to get," Wiener said. "This is going to
be a huge mess for the courts, which are going to be inundated with lawsuits and motions to
reopen foreclosure cases, perhaps even requests to unwind sheriff's sales that have already
been completed."
A lot of what happens will depend on the judge.
A defense attorney could ask the case be thrown out based on the flawed documents.
If a judge agrees, he or she could dismiss it with prejudice, an unlikely ruling that would
award the home free and clear to the owner.
If dismissed without prejudice, the bank would have to start the foreclosure again
from the beginning.
Judges may also decide to force the case to trial, instead of the abrupt summary
judgments where details of the case are accepted as fact and a ruling is made.
Sanctions on the banks' attorneys are also possible if it's believed they knew they
were filing faulty documents with the courts.
Or, judges could simply allow the banks to re-file corrected affidavits without penalty
and the case would move forward.
"We don't believe you should be able to file false evidence with the court and basically
withdraw it and say no harm, no foul," said Chris Immel, a defense attorney with Royal Palm
Beach-based Ice Legal. "They were doing this in a great number of cases and it was done
willfully and intentionally."
Ice Legal took depositions of employees of Chase, Ally and OneWest Bank, formerly
IndyMac. In each case the employee said he or she signed thousands of foreclosure-related
documents every month without personally verifying them. OneWest has made no statements
regarding its foreclosure process.
The maelstrom has led to attorneys general investigations in several states, a federal
call for all banks to review their procedures, and a Treasury Department request that
regulators look into the issue.
GMAC, which was renamed Ally in May, has received $16.3 billion from the U.S.
government.
The bailout is one argument made by homeowners in foreclosure as to why they
should not be rushed through the courts.
"The banks have already been made whole by the U.S. government," said Snyder.
"They were reckless in their lending, but no one's throwing them out on the street."

Lawyers fight AG inquiry
10/02/2010 © Miami Herald
TOLUSE OLORUNNIPA
tolorunnipa@MiamiHerald.com

South Florida law firms being investigated for shady foreclosure practices are fighting
back by challenging the attorney general's jurisdiction, refusing to cooperate with parts of the
probe and gearing up for a legal showdown.
A Palm Beach County judge is expected to rule Monday on a motion by Shapiro &
Fishman of Boca Raton to ``quash'' the subpoena issued in August by Attorney General Bill
McCollum. The motion calls the investigative subpoena ``overly broad, unreasonable and
unduly burdensome.'' The subpoena demands the firms -- Shapiro, the Law Offices of David J.
Stern and the Law Offices of Marshall C. Watson -- turn over five years worth of documents
and e-mails, and copies of all contracts between the law firm and the lenders that hired it to
handle their foreclosures.
The Law Offices of David J. Stern has decided to partially cooperate, its legal counsel
said. The Plantation-based firm handed over some of the requested documents to the
attorney's general office, but not all of them, according to Miami attorney Jeffery Tew, who
represents Stern's firm. Tew said he believed that the attorney general's subpoena was too
broad, but that Stern's firm had provided three years worth of documents that were relevant
to the investigation.
"We went ahead and voluntarily produced documents that we thought were relevant,''
he said. "We filed a motion to modify our production, and we produced [documents] within
those parameters.''
The attorney general's office has not yet responded to the partial submission of
requested documents, Tew said.
The Law Offices of Marshall C. Watson in Fort Lauderdale did not return a call seeking
comment. Tampa-based Florida Default Law Group is also under state scrutiny.
All of these firms, which handle about 80 percent of the state's foreclosure cases, are
operating at a tempestuous time in the foreclosure world. Three major lenders have admitted
flaws in their foreclosure filings in the last two weeks.
Ally Financial, formerly GMAC, JPMorgan Chase and, on Friday, Bank of America have
all put the brakes on portions of their foreclosure operations, after employees admitted to
signing affidavits without reviewing the details of the cases. The Connecticut attorney general
issued a moratorium on all bank foreclosures on Friday, and California's attorney general has
placed a stop-order on all foreclosures involving Ally Financial and JPMorgan Chase.
A congressman's effort to halt foreclosures in Florida was turned down by the state
Supreme Court this week.
In Shapiro & Fishman's motion to quash, the firm's counsel claims the subpoena was
aheavy handed response. ``My client is not behind a nefarious plot or scheme in foreclosure
actions,'' Shapiro & Fishman's legal counsel Gerald Richman said in a statement. The attorney
general's office declined to comment before the judge rendered his ruling. The investigations
have given distressed homeowners additional ammunition to challenge foreclosures linked to
these law firms.
"Defendants have begun to file Motions to Stay or Motions to Abate the foreclosure
proceedings solely because of the announced investigation,'' Richman wrote in the motion.
Miami foreclosure defense attorney Dennis Donet said his clients have become
increasingly interested in fighting foreclosures handled by these firms. He said many
homeowners have come in to his office asking whether their foreclosure cases were linked to
any of the firms being investigated, and if that would increase their chances in court.
"I've been receiving calls about the four law firms being investigated, but not about
the banks,'' he said. Shapiro & Fishman's motion alleges the subpoena, in addition to being
overly broad, lacks jurisdiction.
The Florida Bar should be handling any investigations of malpractices, Richman
argues. Tew agreed that the case lacked standing.
"We don't think [McCollum] has jurisdiction over what he's looking for,'' he said. ``But
we wanted to defer that fight until later.''

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