Florida’s Foreclosure Mess

According to the St. Petersburg Times, there are more than half a million foreclosure cases pending in Florida’s courts.  Pinellas County alone has 33,000 foreclosure cases and there is no end in sight; the mortgage delinquency rate in Tampa Bay is one of the fastest growing in the country. With such a mind-boggling number of foreclosure cases clogging the courts, the obvious question is whether they are being lawfully handled.  A recent study conducted by a Florida lawyer answered that question in the negative and found that 75% of foreclosure cases were defective.  There are multiple reasons for defective foreclosures, but two oft-cited are “robo-signers” and “foreclosure mills.”

Robo-Signers

Robo-signers are individuals who work for the banks and allegedly sign legal documents all day (like robots) attesting they have knowledge about a particular foreclosure when, in actuality, they don’t.  This revelation recently caused several banks to halt or suspend foreclosure sales in Florida.  Those banks include:  JP Morgan Chase, GMAC and Bank of America.  If you are in the market to purchase a foreclosed upon home, this partially explains why you have likely seen a major reduction in bank-owned inventory.

Foreclosure Mills

Foreclosure mills are law firms that specialize in handling large volumes of foreclosure cases for banks.  Like the robo-signers, it is alleged they often have little or no knowledge about particular cases, but represent otherwise to the courts.   Florida foreclosure law firms have also been accused of forging documents such as Assignments of Mortgages in order to obtain foreclosure judgments.  According to the St. Pete Times, Florida’s Attorney General, Bill McCollum, is currently investigating the practices of four Florida foreclosure law firms:  The Law Offices of David J. Stern, The Law Offices of Marshall C. Watson, Shapiro & Freeman and the Florida Default Group.

The Bottom Line

It is possible that your foreclosure is/was fraudulently obtained.   Therefore, whether you are about to lose your home to foreclosure or are about buy a bank owned property, it is critical that you know your rights and safeguard yourself accordingly.  A recently filed case in Pinellas County is demonstrative. In that case, a Pinellas homeowner is alleging his house was foreclosed upon without his knowledge.  According to the homeowner, he was out of town and did not receive notice of the foreclosure proceeding until after the foreclosure judgment was entered.  He subsequently tried to work something out with the lender, but his house was sold at auction and a new homeowner took possession.  He is now seeking to set aside the judgment and regain possession of his home.  Meanwhile, the current owners, a husband and wife who thought they owned  the home free and clear, have had to hire an attorney to protect themselves against the possibility of being forced out.