As you can see, Stern is living the hard life after his disbarment. He now owns a series of 5 Guys Burger Franchises and is sipping Mojitos in Miami rather than doing time. Selling a home for $500k loss compared with the devastation and destruction of families lives by fraudulent foreclosures is an example of the judicial corruption and how lawyers escape criminal charges as this crime is conducted by the U.S. Cabinet members themselves.
Stern was disbarred by the Florida Supreme Court in 2014 for his Plantation-based firm’s alleged misconduct. The company at one time had a caseload of 200,000 foreclosures statewide, swelling Stern’s practice to 1,200 employees during its peak.
Once king of foreclosures, David Stern loses money on Hillsboro Beach sale
The disbarred lawyer sold the house for $7.5M, after buying it for $8M in 2008
Florida’s former foreclosure king sold a home in Hillsboro Beach at a loss for $7.5 million.
David J. Stern, a disbarred lawyer, sold the 5,275-square foot home at 925 Hillsboro Mile for $1,421 per square foot, records show. Thomas O. Katz of Boca Raton bought the home.
Stern had paid $8 million for the home in 2008, according to records.
The waterfront house has four bedrooms and four-and-a-half bathrooms and has more than 100 feet of ocean frontage. The home was built in 1986 and sits on a 1.5-acre lot, according to realtor.com. Records show Stern did not have a homestead exemption on the property, indicating it likely was not his primary residence.
Todd Kirkpatrick of Whitaker Real Estate represented the buyer. Michelle Howland of Compass represented the seller.
Stern was disbarred by the Florida Supreme Court in 2014 for his Plantation-based firm’s alleged misconduct. The company at one time had a caseload of 200,000 foreclosures statewide, swelling Stern’s practice to 1,200 employees during its peak.
In 2015, Stern sold his massive Fort Lauderdale mansion at 5 Harborage Isle Drive for $27.5 million.
The small town of Hillsboro Beach is home to some of the priciest residential properties in South Florida.
In 2017, Patrón Spirits Company CEO Edward Brown paid $20 million for a spec home at 1115 Hillsboro Mile. In 2018, a nearly 14,000-square-foot mansion at 995 Hillsboro Mile sold for $15 million.
MOTHER JONES ARTICLES ON STERN; In November 2009, MoJo reporter Andy Kroll received a tip about a little-known yet powerful firm, the Law Offices of David J. Stern, which handled staggering numbers of foreclosures in southeastern Florida—the throbbing heart of nation’s housing crisis. Among the allegations, the tipster had it from insiders that Stern employees were routinely falsifying legal paperwork in an effort to push borrowers out of their homes as quickly—and profitably—as possible.
Kroll spent eight months investigating Stern’s firm and its ilk—a breed of deep-pocketed and controversial operations dubbed “foreclosure mills.” After sifting through thousands of pages of court documents, interviewing scores of legal experts and former Stern employees, and attending dozens of foreclosure hearings in drab Florida courtrooms, he emerged with a portrait of a law firm—indeed, an entire industry—that was willing to cut corners, deceive judges, and even (allegedly) commit fraud—all at the expense of America’s homeowners.
When an earlier version of this story first broke online on August 4, it generated lots of buzz. Columbia Journalism Review called it the “must-read of the month” and “a great piece of muckraking journalism.” News sites from the Huffington Poston the left to the Daily Caller on the right featured it on their front pages. But the crucial response came from the authorities: Six days after Kroll’s story went live, Florida Attorney General Bill McCollum announced an investigation into Stern’s firm and two others. In September, the New York Times followed with a lengthy piece on Florida’s foreclosure mess and Stern’s operation in particular. A few weeks after that, further revelations of robo-signed paperwork and law firms gaming the courts have plunged the industry into chaos, with banks freezingforeclosures from Maine to California and members of Congress railing against the mortgage companies.
“Foreclosuregate,” as some have dubbed the crisis, may ultimately force David J. Stern to unload a few of his Ferraris. As Kroll noted in one of his many followupposts, Fannie Mae and Freddie Mac—as well as banks GMAC and Citigroup—recently stopped sending foreclosure cases Stern’s way. As of October 19, his publicly traded paper-pushing wing, DJSP Enterprises, wallowed around $1.30 a share, down from $6 in June. The company has reportedly laid off nearly 100 employees, and recently announced a major reshuffling of top leadership—with Stern himself relinquishing the chairmanship of DJSP’s board of directors. Here, then, is Kroll’s story much as it appears in our November/December 2010 print edition…]
LATE ONE NIGHT IN February 2009, Ariane Ice sat poring over records on the website of Florida’s Palm Beach County. She’d been at it for weeks, forsaking sleep to sift through thousands of legal documents. She and her husband, Tom, an attorney, ran a boutique foreclosure defense firm called Ice Legal. (Slogan: “Your home is your castle. Defend it.”) Now they were up against one of Florida’s biggest foreclosure law firms: Founded by multimillionaire attorney David J. Stern, it controlled one-fifth of the state’s booming market in foreclosure-related services. Ice had a strong hunch that Stern’s operation was up to something, and that night she found her smoking gun.
It involved what’s called an “assignment of mortgage,” the document that certifies who owns the property and is thus entitled to foreclose on it. Especially these days, the assignment is key evidence in a foreclosure case: With so many loans having been bought and sold, establishing who owns the mortgage is hardly a trivial matter. By law, a firm must compete, sign, and notarize an assignment before it attempts to seize somebody’s home.
A Florida notary’s stamp is valid for four years, and its expiration date is visible on the imprint. But here in front of Ice were dozens of assignments notarized with stamps that hadn’t even existed until months—in some cases nearly a year—after the foreclosures were filed. Which meant Stern’s people were foreclosing first and doing their legal paperwork later. In effect, it also meant they were lying to the court—an act that could get a lawyer disbarred or even prosecuted. “There’s no question that it’s pervasive,” says Tom Ice of the backdated documents—nearly two dozen of which were verified by Mother Jones. “We’ve found tons of them.”
This all might seem like a legal technicality, but it’s not. The faster a foreclosure moves, the more difficult it is for a homeowner to fight it—even if the case was filed in error. In March, upon discovering that Stern’s firm had fudged an assignment of mortgage in a case before her court, a judge in central Florida’s Pasco County dismissed the case with prejudice—an unusually harsh ruling that means it can never again be refiled. “The execution date and notarial date,” the judge wrote in a blunt ruling, “were fraudulently backdated, in a purposeful, intentional effort to mislead the defendant and this court.”
More often than not in uncontested cases, missing or problematic documents simply go overlooked. In Florida, where foreclosure cases must go before a judge (some states handle them as a bureaucratic matter), dwindling budgets and soaring caseloads have overwhelmed local courts. Last year, the foreclosure dockets of Lee County in southwest Florida became so clogged that the court initiated rapid-fire hearings lasting less than 20 seconds per case—”the rocket docket,” attorneys called it. In Broward County, the epicenter of America’s housing bust, the courthouse recently began holding foreclosure hearings in a hallway, a scene that local attorneys call the “new Broward Zoo.” “The judges are so swamped with this stuff that they just don’t pay attention,” says Margery Golant, a veteran Florida foreclosure defense lawyer. “They just rubber-stamp them.”
But the Ices had uncovered what looked like a pattern, so Tom booked a deposition with Stern’s top deputy, Cheryl Samons, and confronted her with the backdated documents—including two from cases her firm had filed against Ice Legal’s clients. Samons insisted that the filings were just a mistake, so the Ices moved to depose the notaries and other Stern employees. On the eve of those depositions, however, the firm dropped foreclosure proceedings against the Ices’ clients.
It was a bittersweet victory: The Ices had won their cases, but Stern’s practices remained under wraps. “This was done to cover up fraud,” Tom fumes. “It was done precisely so they could try to hit a reset button and keep us from getting the real goods.”
On August 10, just days after this story first broke at MotherJones.com, Florida Attorney General Bill McCollum launched an investigation of three of the state’s largest foreclosure firms, including Stern’s, citing dubious paperwork. “Thousands of final judgments of foreclosure against Florida homeowners may have been the result of the allegedly improper actions of these law firms,” he told the New York Times, which wrote about the state’s foreclosure mess in September.
Backdated documents, according to a chorus of foreclosure experts, are typical of the sort of shenanigans practiced by a breed of law firms known as “foreclosure mills.” While far less scrutinized than subprime lenders or Wall Street banks, these firms undermine efforts by government and the mortgage industry to put struggling homeowners back on track at a time of record foreclosures. (There were 2.8 million foreclosures in 2009, and 3.8 million are projected for this year.) The mills think “they can just change things and make it up to get to the end result they want, because there’s no one holding them accountable,” says Prentiss Cox, a foreclosure expert at the University of Minnesota Law School. “We’ve got these people with incentives to go ahead with foreclosures and flood the real estate market.”
Stern’s is hardly the only outfit to attract criticism, but his story is a useful window into the multibillion-dollar “default services” industry, which includes both law firms like Stern’s and contract companies that handle paper-pushing tasks for other big foreclosure lawyers. Over the past decade and a half, Stern (no relation to the NBA commissioner) has built up one of the industry’s most powerful operations—a global machine with offices in Florida, Kentucky, Puerto Rico, and the Philippines—squeezing profits from every step in the foreclosure process. Among his loyal clients, who’ve sent him hundreds of thousands of cases, are some of the nation’s biggest (and, thanks to American taxpayers, most handsomely bailed out) banks—including Wells Fargo, Bank of America, and Citigroup. “A lot of these mills are doing the same kinds of things,” says Linda Fisher, a professor and mortgage-fraud expert at Seton Hall University’s law school. But, she added, “I’ve heard some pretty bad stories about Stern from people in Florida.”
Foreclosure King David J. Stern Disbarred
The long, legal saga of David J. Stern, the south Florida attorney who made a fortune off the wave of home foreclosures stemming from the housing crisis, has reached its end.
After years of court battles over the practices of Stern’s once-mighty, multimillion-dollar law firm, the Florida Supreme Court last week disbarred Stern. As the Palm Beach Post reports, a Palm Beach County judge who refereed Stern’s case and who recommended disbarment criticized the 53-year-old lawyer for failing to take responsibility or show “any remorse” for his firm’s actions. Mother Jones was one of the first news outlets to expose the shoddy and legally questionable work done by Stern’s army of lawyers and paralegals as it foreclosed on hundreds of thousands of Floridians, including backdating crucial documents used to foreclose on homeowners. Nancy Perez, the Palm Beach County judge, said the blame fell on Stern for that shoddy work. “The incidents were not isolated, but rather a representation of the culture of the firm, as to the low level of competence and ethics,” Perez wrote. “(Stern) is the lawyer. It was his firm. Mr. Stern is responsible.”
Stern’s firm, at its peak, was a juggernaut. In the mid and late 2000s, the government-owned enterprises Fannie Mae and Freddie Mac, as well as many of the nation’s largest banks, retained Stern’s firm to litigate an ever-growing pile of foreclosure cases in Florida, an epicenter of the housing meltdown. At one point, the Law Offices of David J. Stern handled as many as 100,000 foreclosure cases. Stern’s firm and others like it were dubbed “foreclosure mills,” employing hundreds and even thousands of lawyers and paralegals who pushed through foreclosure cases assembly-line-style. Incredibly, the federal government played a key role in creating foreclosure mills, as I reported:
Fannie and Freddie also reshaped the foreclosure industry. Their huge holdings meant they had to deal with thousands of foreclosures annually—even during time when relatively few loans were going bad. In the 1990s, the market expanded into subprime territory to feed the securitization beast, and borrowers began defaulting at higher rates. Hiring lawyers on a case-by-case basis was burdensome, so Fannie and Freddie put together a stable of law firms willing to litigate large bundles of foreclosures quickly and cheaply. They urged these handpicked firms to bring all foreclosure-related services—inspections, eviction notices, sales of repossessed properties, and so forth—in-house. Thus emerged the foreclosure supermarket.
…Stern’s company is one of dozens of mills that now churn through more than a million cases a year for Fannie and Freddie, big banks, and private lenders.
Built like industrial assembly lines, the mills employ small armies of paralegals and other low-level employees who mass-produce court filings, run title searches, and schedule scores of hearings and property auctions daily. Staff attorneys appear for dozens of court hearings in rapid succession, dashing from one courtroom to the next with rolling file cabinets.
Stern and his ilk typically create in-house subsidiaries that bill the parent law firm for the various paper-pushing tasks. “All sorts of crap is loaded on,” notes Irv Ackelsberg, a Philadelphia consumer-law attorney.
The business model is simple: to tear through cases as quickly as possible. (Stern’s company handled 70,382 foreclosures in 2009 alone.) This breakneck pace stems from how the mills get paid. Rather than billing hourly, they receive a predetermined flat fee for the foreclosure—typically around $1,000—plus add-ons for all the side services.
The more they foreclose, the more they make. As a result, say consumer attorneys and legal experts, even families who have been foreclosed upon illegally—and can afford to make good on their mortgages—end up getting steamrolled. “It’s ‘How fast can I turn this file?’” says Ira Rheingold, executive director of the National Association of Consumer Advocates in Washington, DC. “For these guys, the law is irrelevant, the process is irrelevant, the substance is irrelevant.”
The foreclosure mill model made Stern a very rich man. When I reported on him in August 2010, he lived in a $15 million, 16,000-square-foot mansion on the Atlantic Intracoastal Waterway in Fort Lauderdale. Docked on his property was Misunderstood, his 130-foot, jet-propelled Mangusta yacht—a $20 million-plus replacement for his previous 108-foot Mangusta. He also owned four Ferraris, four Porsches, two Mercedes-Benzes, a Cadillac, and a Bugatti.
But the cavalier, always-be-foreclosing attitude of his firm caught up with Stern. Days after I published my investigation into Stern, then-Florida Attorney General Bill McCollum opened an investigation into his firm and two other foreclosure mills for “allegedly improper actions.” Since then, Stern has been in and out of court fighting off lawsuits targeting him and his firm, which has since the vast majority of its business. The news of Stern’s disbarment is just the latest blow for the one-time king of the foreclosure business. The state Supreme Court ruling ordered Stern to close his firm within 30 days.
Stern, for his part, seems to have found a new calling after his foreclosure empire crumbled. He’s now an investor in Five Guys burger joint franchises.
Foreclosure Mess Draws in the Lawyers Who Handled Them
With the rash of foreclosures across the country in recent years, many lawyers have specialized in the lucrative business of handling cases for banks and loan servicers. And now that flaws are being acknowledged by big lenders in the processing of foreclosures, some of these lawyers are finding themselves in the cross hairs of investigators — and scorned by their former clients.
Consider the case of David J. Stern, a lawyer in Plantation, Fla., whose firm handled an estimated 20 percent of foreclosure-related proceedings in Florida, one of the states hit hardest by the housing crisis.
Mr. Stern is under investigation by the Florida attorney general and is a defendant in several lawsuits brought by homeowners. And in recent days, lenders and mortgage holding companies that had used Mr. Stern’s services, including Citigroup and GMAC Mortgage, said they would no longer do so.
Mr. Stern has not been charged with any wrongdoing and a lawyer representing him, Jeffrey Tew, said that he had done nothing wrong. But a former employee recently testified that Mr. Stern’s firm, in a rush to file and complete thousands of foreclosures, routinely violated procedures by having foreclosure-related documents notarized that were never checked for accuracy — all with the lawyer’s knowledge.
“Everything was about getting the judgment entered because we had to report back to the banks,” the former employee, Tammie Lou Kapusta, testified in a deposition last month given to the Florida attorney general, Bill McCollum.
Along with Mr. Stern, other lawyers affiliated with so-called foreclosure mills — the processing centers run by law firms — are coming under scrutiny. In addition, recent lawsuits filed in Mississippi and Kentucky have charged that lawyers handling foreclosures entered into illegal fee-splitting arrangements with two publicly traded companies involved in mortgage-related services, Lender Processing Services and Prommis Solutions. Officials of both companies deny the accusations.
In a lawsuit filed in Federal District Court in Manhattan, a major foreclosure lawyer in New York, Steven J. Baum, was recently accused by a homeowner of filing fictitious and false documents in foreclosure-related proceedings. Mr. Baum, whose firm is located in Amherst, a suburb of Buffalo, has come under repeated criticism by state judges for his practices.
Mr. Baum did not respond to a telephone call seeking comment. A spokesman, Earl V. Wells III, stated in an e-mail that Mr. Baum’s firm followed “the rules and regulations regarding the various processes involved in a foreclosure proceeding” and that it took “the utmost care” to do so.
Lawyers who knowingly file fraudulent documents or fail to properly oversee subordinates involved in the preparation of such records can face criminal charges or professional sanctions ranging from disbarment to suspension, said Raymond H. Brescia, a professor at Albany Law School in New York State.
The current furor over the submission of fraudulent or improperly signed foreclosure-related filings was ignited in September when GMAC Mortgage, now a part of Ally Financial, acknowledged that it had submitted inaccurate documents.
The nationwide investigation announced this week by the country’s 50 attorneys general is expected to focus in part on the role of lawyers in the submission of allegedly fraudulent mortgage records signed by robo-signers.
But there have been other instances in recent years in which lawyers have been accused of submitting false, inaccurate or incomplete documents in foreclosure-related proceedings so as to churn through cases and collect fees.
Kathleen C. Engel, a professor at Suffolk University Law School in Boston, says she believes that banks have been long aware of such questionable legal practices but choose not to challenge them for fear of slowing the pace of foreclosures.
“Instead of putting their money into cleaning up their acts, they put the money into salaries and bonuses,” Ms. Engel said in a telephone interview.
Years ago, lawyers once handled and verified most of the paperwork involved in a foreclosure. But the advent of mortgage securitization a decade ago, financial experts say, gave rise to a parallel legal industry. In it, a law firm is paid a flat fee by loan servicers to handle a foreclosure, which is lucrative for lawyers who process a high volume of cases.
“This is a very profitable business model,” said O. Max Gardner III, a lawyer in Shelby, N.C., who defends homeowners in foreclosure proceedings. “You’ve got five lawyers and four hundred people without legal training working for them.”
In an interview last month, Mr. Stern, the Florida lawyer, accused Mr. McCollum, who is standing for re-election as attorney general, of political motives in opening the inquiry into his firm and others.
“I can’t speak for the other firms but I can assure you that there has not been submission of fraudulent documents,” Mr. Stern said.
According to the lawsuits filed this month against Lender Processing Services and Prommis Solutions, plaintiffs’ lawyers accused the companies of using various mechanisms to steer legal work to foreclosure mills, then splitting legal fees with the lawyers running those operations.
In many states, it is illegal or unethical for lawyers to split fees with non-lawyers.
Both Lender Processing and Prommis essentially act as informational middlemen between mortgage servicers and law firms doing foreclosure work. Both have denied being involved in such practices.
Where the housing bust hurt most in South Florida: Prices by ZIP code
South Florida was “ground zero” for the housing real estate bust
August 2, 2010|Paul Owers, Sun Sentinel
Mike Larson gets right to the point.
“South Florida was definitely ground zero for the housing bust,” said Larson, an analyst with Weiss Research, a Jupiter-based provider of global investment information. “We had a lot of rampant speculation and fly-by-night mortgage lenders and when they went away, the market collapsed.”
The result: plummeting home prices that have hammered Broward and Palm Beach counties since 2005, when the housing boom peaked.
Single-family homes in the Pompano Beach and Lighthouse Point ZIP code of 33064 endured the greatest percentage decline in Broward over the past five years, according to MDA DataQuick, a San Diego research firm. The median price – meaning half the homes sold for more and half for less – of $75,000 in June was off 68.6 percent from June 2005.
The 33064 ZIP code includes Cresthaven and Pompano Highlands, low-income subdivisions hit hard by foreclosures in recent years, said Judy Trudel, a real estate agent for Balistreri Realty in Lighthouse Point.
In Palm Beach County, 33407 took the biggest hit. The median price for homes in the ZIP code covering West Palm Beach and Riviera Beach tumbled 77.4 percent to $43,000.
But some upscale areas avoided price declines. The ZIP code for west of Boca Raton, 33496, saw its median sales price soar 39.5 percent to $610,500.
Parts of Jupiter, Palm Beach Gardens, West Palm Beach and west of Delray Beach had smaller median price increases.
Broker Douglas Rill said Jupiter biotech giants Scripps Florida and the Max Planck Society have helped sustain home prices in the northern part of the county. “You have a bunch of highly paid people who don’t want to be far from work,” Rill said.
In the condominium market, only Palm Beach, South Palm Beach and parts of Fort Lauderdale avoided median price cuts compared with five years ago.
In March, investor Eric Nathanson bought a four-bedroom foreclosure in Coral Springs for $178,500, renovated it and put it back on the market for $250,000. First-time buyer Jake Drop loved the house and immediately offered full price.
Later that night, his real estate agent, Marisa DiLenge, told him he needed to boost his bid because other prospective buyers were lurking.
“I wanted to wait and think about it, but I knew I had to act,” said Drop, 30, a nurse in Miami-Dade County.
The home drew six offers, including a few above the asking price, DiLenge said. Drop ended up buying it in June for $270,000.
Bidding wars could help bolster prices, albeit slowly. With foreclosures still a major problem and more expected to flood the resale market in the coming months, analysts say prices are likely to keep falling. A bottom may not occur until next year, and even then prices won’t suddenly shoot up again.
“Every day, Floridians can actually afford a house again, and eventually that will help restore some equilibrium to the market,” Larson said. “But it won’t happen overnight. It will be a process that will play out over several quarters or even years.”
A Florida Court’s ‘Rocket Docket’ Blasts Through Foreclosure Cases
2 Questions, 15 Seconds, 45 Days to Get Out; ‘What’s to Talk About?’ Says a Judge
FORT MYERS, Fla. — Hoping to save her house, Saundra Hill Scott arrived at the county courthouse clutching dog-eared mortgage bills and letters from her lender.
She need not have bothered. The foreclosure hearing lasted less than 20 seconds, with Judge John Carlin asking her two questions: Are you current on your mortgage and are you living in the home? She answered no and yes and then offered to show him her paperwork.
“I don’t need to see that. That’s between you and the bank,” he said as he gave Ms. Hill Scott, her husband and three grandchildren 60 days to work out a deal with their lender or vacate their three-bedroom house.
While the Obama administration prepares to unveil on Wednesday its plan to rescue the U.S. housing market, officials here in Lee County have come up with their own unique plan for dealing with the crisis. To clear a huge backlog of foreclosures, judges are hearing “rocket dockets” of nearly 1,000 cases a day and calling retired colleagues back to the bench to help ease the workload.
The housing crisis has been pounding the Florida court system like a Category 5 hurricane. Not only does the state have among the highest default rates in the country, its legal system, unlike many other states with devastated housing markets, requires judges to sign off on foreclosures. The combination has created a monster glut of cases that are overwhelming the courts. The Obama plan to encourage more loan modifications nationally may stem the flood of foreclosures in Florida somewhat, but Lee County officials say that the area’s large number of unemployed residents and housing speculators may end up losing their properties anyway.
Hard-Hit County
Charlie Green, Lee County’s clerk of the circuit courts, says the county is still on pace in February to exceed new filings in January and there’s a hearing on Thursday with 800 foreclosure cases. “All these plans that the government has come up with are great,” says Mr. Green. “But it doesn’t help us get these cases off our books.”
No area has been hit harder than Lee County, a largely working-class and second-home enclave, where Ponce de León is believed to have wandered in search of gold and conquest in the 16th century.
Modern-day treasure seekers invaded this area during the recent housing boom, snapping up houses and parcels of land, hoping to flip them to retirees and working families. Millionaire University, an unaccredited program in nearby Cape Coral, taught speculators from around the country how to buy and sell properties for huge profits. From 2000 to 2005, house prices in Cape Coral more than doubled.
Two years ago, the Lee County court system had about 1,900 foreclosure cases on the books. That number swelled to 24,000 by the beginning of this year. “We have to move these cases out of here,” says Mr. Green. “That’s how we get these houses back on the market and get to the bottom faster.”
Many defendants in Fort Myers are speculators who never lived in the houses and don’t bother to show up for the hearings or respond to court summonses. But some of the homeowners who do come to court are annoyed that they’re given only a few seconds to speak to the judge.
“The judge didn’t want to hear from me,” said a frustrated Reed Morgan, a self-employed business consultant, wearing loafers and a blue oxford shirt, after Judge Carlin gave him 60 days to work out a modification plan with his lender or vacate his three-bedroom house.
Minutes after the bailiff opened the courtroom doors at a recent hearing, every seat was filled with delinquent homeowners: a mechanic with two pierced ears and a goatee, a young woman in a car-rental uniform, a gray-haired landlord who rehearsed his lines with the woman next to him.
Saundra Hill Scott, left, with her 4-year-old grandson, has less than two months to move out of her house after a lender moved to foreclose on her Lehigh Acres, Fla., home.
“It’s like the Exodus,” said Ms. Hill Scott, a middle-school teacher who went into default after her monthly payments on her adjustable-rate mortgage reset. She now owes $3,300 a month, up from the $1,600 she was paying a year ago. She says she hasn’t made a mortgage payment since January 2008 and is in negotiations with her lender seeking a modification.
During a break in the hearing, lawyers used dollies to wheel in boxes containing hundreds of case files, which they piled onto tables and on the floor.
One lawyer, wearing a dark suit and untucked white shirt ran between the judge’s bench and the dozens of open boxes on the floor. His colleagues sat cross-legged on the courtroom floor, sorting through files.
The judge signed dozens of them without discussion and passed them to a row of court employees to process the paperwork.
“Case No. 136,” the clerk intoned. “Wells Fargo versus Edward Callahan.”
Judge Carlin asked whether the man was living in the house and was current on his mortgage. He answered no to both questions.
“Your house will be sold in 45 days,” said the judge. “That’s all for today.”
Case time: 15 seconds.
Judges’ Sympathy
The judges say they sympathize with the homeowners’ hardships, but often the cases can be decided after a brief hearing because there are no legal issues in dispute which would warrant a lengthy trial. Some homeowners don’t understand they are required to file paperwork before the hearing to challenge the lender’s case. Many of them never file the documents or hire lawyers, the judges say.
Many judges, including Judge Carlin, are giving homeowners much more time to stay in their houses than the law requires.
“That’s pretty humane considering that many homeowners have been living rent-free for more than a year,” says Robert Hill Jr., a Fort Myers lawyer who represents lenders.
Lee County judges say they are trying to screen for cases that would benefit from mediation, but Chief Judge G. Keith Cary opposes making such a requirement. “A guy hasn’t paid his mortgage in over a year,” says Judge Cary. “What’s there to talk about?”
Homes around Lee County have suffered one of the steepest price drops in the country, down almost 50% from the peak. Empty houses and shuttered storefronts line city streets.
In nearby Bonita Springs, Mr. Morgan says his neighbor vanished from his house in the middle of the night. “He loaded up a U-haul and was gone,” Mr. Morgan says. “I have known him for six years and he never said goodbye.”
The court itself hasn’t been immune to the pain. The county clerk’s budget is shrinking even as overtime has added about $60,000 in costs since October.
To save money, Mr. Green, the Lee County clerk, has removed light bulbs from around the court building, put printers on draft mode to save ink and forbidden employees from making long-distance phone calls, even business calls.
The lawyers are doing well, though. They can earn as much as $100 per foreclosure to present cases to the judge that have been prepared by big law firms in Miami and Tampa, which are hired by out-of-state lenders.
But speed is of the essence. Lee County lawyers speak in hushed tones of one firm that made the mistake of not being organized enough at a rocket-docket hearing. The judge postponed their foreclosure actions for an additional 60 days. “Lenders don’t like delays,” says Mr. Hill, who averages 1,900 foreclosure cases a month.
Economists say Florida’s housing recovery will likely be stalled until the properties stuck in legal limbo are cleared. In California, where judges are typically not involved in the foreclosure process, some housing markets are showing some signs of stabilizing.
Mr. Green says his courts are making progress. They cleared more cases out of the backlog last month than they received in new foreclosures. In light of President Obama’s plans, it’s possible that lenders could cancel the foreclosure even though the judge has signed off. “The problem is that the lenders have spent all this money on attorneys and filing fees,” says Judge Cary. “You are so far into it, would you really stop it at that point? It’s an expensive proposition.”
The last homeowner to show up in Judge Carlin’s courtroom spoke through a Spanish interpreter. She said she wasn’t current on her mortgage, but was living in the house. The judge gave her 60 days to vacate. She didn’t say anything and returned to her seat “That’s all for today. Thank you for coming in,” the judge said.
The woman sat in the empty courtroom, covered her eyes and cried. Judge Carlin called a brief recess and returned to his chambers. Lawyers stacked more foreclosure cases on his bench for him to sign when he returned.
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