Banks in SW Florida Dropping Foreclosure Lawsuits

As published in The News Press Feb 12, 2011

Interestingly enough, instead of facing defendant and attorneys, many banks have been dropping their Southwest Florida foreclosure lawsuits. This information comes to us from local attorneys and court records. However, as to whether or not this is a permanent drop is questionable. The point that is in question here is whether or not these banks just taking a break before refilling or are they giving up for good because cases are seriously flawed?

It may be appropriate to ask the question first of what constitutes flawed. Some foreclosures at large law firms were never actually read by the attorneys who filed them here and elsewhere, and some of the mortgages that ended up in mortgage-backed securities sold to investors were never legally transferred by the banks, defense attorneys have alleged.

The Lee County Clerk of Court, Charlie Green, seems to think they will come back to refile. However, foreclosure suits carry a hefty filing fee: about $1,900 for a $250,000 house, for example, which may be a roadblock to refilling. Many lawyers are asking judges to dismiss their cases, which is not typical.

Here in Southwest Florida, foreclosures were rare until the housing market crashed at the end of 2005, bringing on waves of mortgage defaults by investors and homeowners. It is unknown how many of these cases are being dismissed, but eight voluntary dismissals were filed Tuesday alone by seven different banks including Bank of America, one of the largest filers of foreclosures in this area. Bank of America has not publically submitted a response to this.

At one court hearing alone, attorney Kevin Jursinski said, one of his associates watched as "50 in a row" were withdrawn. "Can they re-litigate?" Fort Myers-based attorney Carmen Dellutri asked. "I don’t think so." It seems that most of the mortgages in dispute were sold to Wall Street and sold in bundles to investors as mortgage-backed securities, and with so many errors in the process, it’s unlikely the banks can win those cases.

Overshadowing this recent new of banks dropping forecloses in Southwest Florida is the Florida Attorneys General (FLAG) office which recently released a slide presentation highlighting findings from their investigation into potentially fraudulent foreclosure practices that may have illegally evicted families from their homes.

These recent events signal that banks are coming to recognize that the pushback in the court system against poor securitization practices is only going to become more concerted.

So, what about the rest of the country? Twenty-three states have laws that require lenders to file an affidavit with the court before they foreclose and take somebody’s house. The person signing the affidavit is swearing under oath that he or she has reviewed the case and that everything is accurate. But bank employees admitted in depositions that they were not actually reviewing the documents — but were signing off anyway. Oops… The lenders — GMAC Mortgage, Chase and Bank of America — in written statements basically say that the underlying facts behind these foreclosures were sound, and that they weren’t taking people’s homes for no reason.

So, in Southwest Florida and nationwide, is this just a problem of the banks being sloppy and too casual with the paperwork? Many say no. Many believe it’s lying under oath and this seems to have been an industry-wide practice, where the companies encouraged this and required it of their employees — to commit deliberate fraud on the court in case after case after case. Similar
to the industry-wide sanctioning of mortgage fraud that helped create the foreclosure crisis? Some say yes.

While all of this is interesting news to say the least, it should not thwart your plans of becoming a homeowner OR selling your property this year. All of this is scary, but when you deal with a professional realtor and mortgage firm, you’ll never have to worry about a bad process! Let me help you sell your property or find a new one in 2011, and connect you with my team of professionals who can lead you down the RIGHT road!