JUDGES GETTING ANGRY AT BANK LAWYERS

COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary

Neil F Garfield, Esq.

Judge Arthur Schack, left, of New York State Supreme Court, called one filing “outrageous.” Jonathan Lippman, the state’s chief judge, says lawyers must ask clients if their paperwork is sound

Ozier Muhammad/The New York Times

SHODDY AND FALSE PAPERWORK CITED

NEW YORK AND FLORIDA REQUIRE BANK LAWYERS TO VOUCH FOR PLEADINGS AND REPRESENTATIONS — OTHER STATES FOLLOWING

BAR ASSOCIATIONS GETTING READY TO DISCIPLINE OR REVOKE LAWYER’S LICENSES

NOTABLE QUOTES:

Judge Pfau said, “If you can’t get good information, you shouldn’t be filing the cases in the first place.”

[COLLATERAL BENEFIT FROM VIOLATION OF RULE OF LAW — FREE HOUSE] “One case involved Sunny D. Eng, a former manager of computer systems on Wall Street. He and his wife, who has cancer, stopped paying the mortgage on their Holtsville, N.Y., home after Mr. Eng’s Internet services business foundered. The mortgage was originally held by the HTFC Corporation, but the foreclosure notice came from Wells Fargo, a bank that the Engs had no relationship with. They hired an experienced foreclosure defense lawyer on Long Island, Craig Robins. The court ultimately ruled in favor of Mr. Eng.”

“the courts in New York State, along with Florida, have begun requiring that lawyers in foreclosure cases vouch for the accuracy of the documents they present, which prompted a protest from the New York bar. The requirement, which is being considered by courts in other states, could open lawyers to disciplinary actions that could harm or even end careers.”

“When the consequence of a lawyer plying his trade is the loss of someone’s home, and it turns out there are documents being given to the courts that have no basis in reality, the profession gets a very big black eye,” Professor Gillers said.

EDITOR’S COMMENT: Remember your goal is to establish contact with the true creditor. That is the only party WITH WHOM you CAN settle, mediate or modify your documents and obligation. Winning these cases merely means that you knocked out the intermediaries who had no right to enforce the obligation, note or mortgage in the first place.

That still leaves the true creditor. If the creditor chooses not to come forward because they are afraid of counterclaims and defenses for predatory lending and fraud, then the FREE HOUSE is merely a collateral benefit resulting from applying the rule of law.

Your object should NOT be in form or substance the pursuit of a FREE HOUSE. Your object, as the Judge must perceive you in order for you to win, is to CLEAN HOUSE.

Judges Berate Bank Lawyers in Foreclosures

By JOHN SCHWARTZ

With judges looking ever more critically at home foreclosures, they are reaching beyond the bankers to heap some of their most scorching criticism on the lawyers.

In numerous opinions, judges have accused lawyers of processing shoddy or even fabricated paperwork in foreclosure actions when representing the banks.

Judge Arthur M. Schack of New York State Supreme Court in Brooklyn has taken aim at an upstate lawyer, Steven J. Baum, referring to one filing as “incredible, outrageous, ludicrous and disingenuous.”

But New York judges are also trying to take the lead in fixing the mortgage mess by leaning on the lawyers. In November, a judge ordered Mr. Baum’s firm to pay nearly $20,000 in fines and costs related to papers that he said contained numerous “falsities.” The judge, Scott Fairgrieve of Nassau County District Court, wrote that “swearing to false statements reflects poorly on the profession as a whole.”

More broadly, the courts in New York State, along with Florida, have begun requiring that lawyers in foreclosure cases vouch for the accuracy of the documents they present, which prompted a protest from the New York bar. The requirement, which is being considered by courts in other states, could open lawyers to disciplinary actions that could harm or even end careers.

Stephen Gillers, an expert in legal ethics at New York University, agreed with Judge Fairgrieve that the involvement of lawyers in questionable transactions could damage the overall reputation of the legal profession, “which does not fare well in public opinion” throughout history.

“When the consequence of a lawyer plying his trade is the loss of someone’s home, and it turns out there are documents being given to the courts that have no basis in reality, the profession gets a very big black eye,” Professor Gillers said.

The issue of vouching for documents will undoubtedly meet resistance by lawyers elsewhere as it has in New York.

Anne Reynolds Copps, the chairwoman of the real property law section of the New York State bar, said, “We had a lot of concerns, because it seemed to paint attorneys as being the problem.” Lawyers feared they would be responsible for a bank’s mistakes. “They are relying on a client, or the client’s employees, to provide the information on which they are basing the documents,” she said.

The role of lawyers is under scrutiny in the 23 states where foreclosures must be reviewed by a court. The situation has become especially heated for high-volume firms whose practices mirror the so-called robo-signing of some financial institutions; in these cases, documents were signed without sufficient examination or proper notarization.

In the most publicized example, David J. Stern, a lawyer whose Florida firm has been part of an estimated 20 percent of the foreclosure actions in the state, has been accused of filing sloppy and even fraudulent mortgage paperwork. Major institutions have dropped the firm, which has been the subject of several lawsuits, and 1,200 of the 1,400 people once at the firm are out of work.

The Florida attorney general’s office is conducting a civil investigation of Mr. Stern’s firm and two others.

“There’s been no determination” in a court that Mr. Stern or his employees “did wrong things, said Jeffrey Tew, Mr. Stern’s lawyer, adding that the impact was nevertheless devastating.

“There are groups in society that everybody likes to hate,” Mr. Tew added. “Now foreclosure lawyers are on the list.”

Such concerns have, in recent months, brought a sharp focus on activities in New York State, and in particular on the practice of Mr. Baum, a lawyer in Amherst, outside Buffalo. Judges have cited his firm for what they call slipshod work that, in some cases, was followed by the dismissal of foreclosure actions.

One case involved Sunny D. Eng, a former manager of computer systems on Wall Street. He and his wife, who has cancer, stopped paying the mortgage on their Holtsville, N.Y., home after Mr. Eng’s Internet services business foundered. The mortgage was originally held by the HTFC Corporation, but the foreclosure notice came from Wells Fargo, a bank that the Engs had no relationship with. They hired an experienced foreclosure defense lawyer on Long Island, Craig Robins. The court ultimately ruled in favor of Mr. Eng.

“You want to call it God, you can call it God,” Mr. Eng said. “You want to call it luck, you can call it luck. We just followed the system, and thank God the system worked.”

Through a spokesman, Mr. Baum said, “The foreclosure process in New York State is extremely complex and subject to extensive judicial review. We believe this review respects the due process of anyone who challenges a foreclosure. Consumer activists and attorneys representing homeowners have their own agenda in this process, including degrading the legal work we conduct on behalf of our clients by using terms like ’foreclosure mill,’ which I find personally and professionally insulting.”

He added, “What is important now is that all parties attempt to work together to resolve issues amicably. The barrage of accusations and litigation does little to help the underlying problems.”

Cases across the nation like Mr. Eng’s have led New York’s judicial system to take a hard look at the 80,000 pending foreclosures in the state and demand that the paperwork be sound, said the state’s chief judge, Jonathan Lippman. “Knowing what we know, our only option — at least from my perspective — is to turn to the lawyers who are officers of the court and say, ’You’d better go to your clients and find out if these cases are real,’ ” he said.

The court devised a two-page affirmation to be signed by lawyers in foreclosure actions saying they had reviewed the documents and had “confirmed the factual accuracy” of any allegations with the clients.

Ann Pfau, deputy chief administrative judge for New York State, who has worked directly with the state bar to carry out the plan, said, “We need to know that this is a court process that has some integrity.”

Judge Pfau said, “If you can’t get good information, you shouldn’t be filing the cases in the first place.”

To address some lawyer concerns, the judiciary issued a modified version of the affirmation in November but said that the alterations were minor. In the end, the lawyers are vouching for their filing, Judge Pfau said. “They are absolutely still on the hook.”

While lawyers are being implicated as part of the problem, they should also be part of the solution, said Stephen P. Younger, the president of the New York State Bar Association, which has not taken an overall position on the foreclosure matter. Foreclosure defense lawyers, he noted, have led court proceedings to throw out flawed cases.

“The real problem is that there are thousands and thousands of people who are unrepresented by lawyers,” Mr. Younger said.


16 Responses

  1. I don’t know how a “nominee” can transfer rights under the note, rights that they do not own, to another. I am not a lawyer so maybe I am not supposed to understand.

    It seems that the nominee for hire is really equivalent to the concept of a bailee in the sense that physical (or electronic) possession of the note changes while real ownership, with rights to benefits under the note, does not.

    MERS “ownership” is therefore a fiction and the real transaction can only occur between (the transferer and the transferee) members of MERS with unrestricted rights. Therefore, chain of title on the note will always be broken at the moment MERS becomes a nominee. Or am I missing something here?

  2. Most of us will recall that the DC upheld the BK
    court decision in Mitchell / Hawkins. A most interesting read regarding MERS can be found in
    the LV NV DC case, 09-00668, at dkt 40 – a transcript of a hearing held in DC on 11/10/09. MERS’ attorney told the court the notes were held by Mers. If what he actually meant is the notes are (allegedly) being held by the Mers (straw) certifying officer / servicer’s employee, was he playing fast and loose with the court?
    A case I found to have an interesting discussion of whom may enforce a note is In re Wilhelm, BK Idaho 08-20577. The decision is at dkt 82.

  3. Judge Schack issued a strong warning to Aurora Loan Services, LLC and its attorneys in October of 2007, but apparently that hasn’t stopped them.
    The case is Aurora Loan Services, LLC v. Sattar.

  4. but where do you find a lawyer that knows how to fight!! instead many are still taking your money and you could end up paying more then before it happened to me! I live on long island new york does anyone know a good lawyer on long island please email me at mercadocarmen@live.com

  5. this is good we should all write to the bar demanding action because these lawyers know its wrong but they are bribed with big bonuses and greed is the name of the game!!!!!!

  6. I don’t understand how this MERs nominee thing works even if it was on the note and not the DOT or mortgage. It seems similar to the concept of a bailment in that no real form of ownership is being conferred, at least to the extent where MERS would have benefits under the note.

  7. Hello everyone,

    Anyone knows a very, very good foreclosure defense attorney in Columbus OH? I need a hired gun not afraid of filing whatever is needed with the appropriate court. A solid, heavy lifter with a proven track record of success.

    Here is my situation: I purchased a house in january 2005. I took 2 mortgages, a small one and a large one. At the time, no specific bank was listed on my MERS mortgage agreements. I immediately started receiving 2 different monthly bills from Bank X for both mortgages. In 2007, Bank Y took over the large mortgage and I started paying them no question asked. I couldn’t pay the small one to Bank X which had kept it and I stopped in August 2008, hoping that it was temporary and my situation would improve. It hasn’t and I am considering filing for BK and having the small mortgage discharged, since the property value has gone down.

    I researched the county recorder’s office files and found no trace of Bank X under either mortgage until September 2009, the official date at which MERS assigned my mortgage to Bank X (3 years after the fact!!!) Bank X is not listed anywhere under my large mortgage and neither is Bank Y. I am behind with Bank Y (which turned me down for a HAMP, alleging that my 3-year long financial struggle is not permanent) and am starting to receive nasty letters and threats of foreclosure.

    My question is this: since there is no document confirming any Bank X interest and involvement in the property until September 16, 2009, do I have a claim for misappropriation of my hard-earned money for three long years by a party that had no interest? Are there cases of homeowners suing to get all their money back on the basis of the written records or lack thereof and, in the affirmative, does anyone know if it flies in Columbus, OH? When Bank Y decides to foreclose, can I sue them to get back all the money I already paid into my mortgage, long before its predecessor, Bank X, had ever officially received the assignment, and claim the Bank Y has no interest and involvement absent the real documents to the contrary?

    If anyone has successfully dealt with this situation, please let me know who the attorney was so that I can retain him/her. I am not looking to get a free ride but since Bank Y has turned me down for HAMP after telling me that I qualified, I need to defend myself and salvage what I worked for for many years.

    Thank you in advance.

  8. I don’t think that the “lack of funds” should allow the scumbags to walk all over our rights and most importantly our sacred constitution, I think that regardless of one’s financial situation our rights MUST be preserved and protected by the people we have elected to do so, I believe it’s disgusting that someone with the financial resources will have their rights looked over while some others that don’t have those resources will get the shaft; furthermore I despise entirely the people in our judicial that choose to look the other way while one is being financially raped, the excuse that they don’t understand the way “securitization of mortages” works it’s completely unacceptable! if they don’t get it well then consult someone that does before allowing a PRETENDER to take someone’s house away just because they can get away with it.

  9. Mr. Younger is right.

    “The real problem is that there are thousands and thousands of people who are unrepresented by lawyers,” Mr. Younger said.

    In our situation…NO FUNDS!! Attorneys want thousands up front. I don’t blame them, but there’s got to be some temporary assistance for us to get started.

    You guys are right about California.

  10. Meant last email for kickboxer — not Kim Thomas — Sorry Kim.

  11. Kim Thomas

    California was start of foreclosure fraud — many of first decisions came out of CA. CA has problems — needs to get it’s act together. Foreclosure fraud will NOT solve CA’s problems.

  12. Rhode Island Attorney George E.Babcock with using Ibanez case from Massuchusetts today on special MERS Calendar in Superior Court in Rhode Island stops foreclosure dead in its tracks..: http://www.facebook.com/l.php?u=http%3A%2F%2Fwww.babcocklawoffices.com%2F&h=911e4

  13. As usual California isn’t doing squat to halt, curtail, or slow foreclosures. We are dying here.

  14. I think lawyers have also been harmed by the economic downturn. Some may be taking clients they should not take. Some of the servicing companies (AHMSI) act like the Mafia–extortion, threats, theft, lies, coercion. They are probably not going to tell the truth to their lawyers either.

    Attorneys need to be very careful with the representations by these servicing companies and the bogus documents they will dump on the lawyer, which, in turn, gets to be fraud on the courts. Beware!
    http://www.challengingforeclosure.com sirak@challengingforeclosure.com

  15. […] This post was mentioned on Twitter by Teri Sherwood. Teri Sherwood said: JUDGES GETTING ANGRY AT BANK LAWYERS: http://t.co/rnSYsIh #Foreclosure #Fraud #RICO #Corruption […]

  16. neil
    for other readers [esp homeowners] in foreclosure.
    Recent Trial Court Decisions on HAMP Enforceability as Foreclosure Defense.
    http://www.nclc.org/issues/recent-trial-court-decisions-on-hamp-enforceability-as-foreclosure-defense.html

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