Livinglies's Weblog

Missouri law has long upheld properly conducted foreclosure sales, even if the sale price seems unusually low. In good news for lenders, and indeed for all parties to a sale, another court of appeals has rejected a borrower’s effort to overturn this policy and upheld a challenged foreclosure sale. The Missouri Court of Appeals for the Southern District just confirmed that a borrower cannot void a foreclosure sale even if the foreclosure auction price is deemed to be so low as to “shock the conscience.” Arvest Bank v. Emerald Pointe, LLC, et al., Case No. SD36959 (Mo.Ct.App., Jan. 13, 2021).

The current dearth of lawyers willing to accept engagements to defend against foreclosures is a threat to our democracy and our survival.

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Consumers are currently deprived of reasonable access to lawyers and the courts by a phenomenon that makes an unfortunate appearance in the cases of several lawyers who came under fire from Bar associations or even the FTC, to wit: attorneys who are successful in foreclosure defense have become targets of overly aggressive tactics by Bar discipline procedures and even government regulators (e.g. FTC) resulting in suspensions, revocation and even judgments that grossly exceed the punishment or discipline for claimed violations that occur in cases not dealing with attorneys who have practiced foreclosure defense.

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The effect on homeowners, consumer wealth, and the legal system has been profound. This has been exacerbated by the judicial drift toward allowing the use of legal presumptions arising from documents prepared by or on behalf of entities who have been repeatedly sanctioned, accused, investigated, fined, and accepted judgments for fabricating false documentation — a condition precedent that negates the use of such legal presumptions.

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Homeowners are thus faced with the prospect of paying high legal bills, investigative expenses, and related costs to reveal the fact, at the very end of a case, that the claim had an insufficient evidentiary basis to have been brought in the first instance. With current judicial doctrines denying the recovery of attorney fees, lawyers are either forced out of the marketplace or lawyers who are socially committed to justice, take what fees the client is able to pay and continue litigating on a partial pro bono basis.

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Typical fees in South Florida, when fee awards were still available ranged between $35,000 and $65,000. Most homeowners cannot pay that expense and thus most homeowners faced with foreclosure walk away from the single most valuable asset they ever owned without ever recovering any of their investment. In state after state, the last successful foreclosure defense lawyer has been forced off the stage.

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This unequal treatment of lawyers charged with violations of disciplinary codes in lieu of statutory rules has created several adverse effects on our society and the confidence of citizens in their court system.

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I have conducted surveys of homeowners faced with foreclosure in many states including most recently the State of Hawaii. The chilling effect on lawyers who would otherwise consider accepting engagements to represent homeowners is obvious. There are virtually no lawyers with litigation experience who are willing to contest foreclosures on behalf of homeowners who are threatened or served with foreclosure papers.

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And there are few homeowners who have the financial resources to mount a proper defense to the improper use of fabricated documents from which the court applied legal presumptions. Lawyers are therefore required to raise highly technical issues requiring extensive litigation, discovery, motion practice, and trial techniques to defeat bogus claims.

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I have not found a single lawyer left in most states who understands the basic elements of foreclosure defense and the rights of homeowners to defeat such claims — even though history shows in all states of the union that the homeowners who have the time, money, and energy to litigate to the end usually (65%) win the case.

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In my opinion, that percentage would be much higher if the drift toward the improper application of legal presumptions was stopped. In more than 25,000 cases reviewed by Affiant, there has not a been single instance in which any testimony or exhibit proffered to the court was an exemplar of any loan account receivable maintained on the accounting ledger of anyone, much less the claimant, who in many cases has no legal existence. This context requires lawyers that have highly developed litigation skills and trial techniques to nudge the court toward the inevitable conclusion that the evidence is insufficient to support the claim. Faced with the financial security of their clients, lawyers are forced to chip away around the edges of a claim that has no basis in reality.

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This latest case out of Missouri is an example of how far off the tracks the judicial system has gone. I have no doubt that it will eventually return back to the real world, but most consumers won’t be financially or literally alive to see that. This case stands for the proposition that once blocked from seeing the actual financial loss of the party claiming relief the defendant property owner may not use an obvious low ball price at auction as evidence that the representation of facts by the foreclosing attorney was false. Once again the court bars investigation into the reality of the transaction.

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see https://www.lexology.com/library/detail.aspx?g=e8dd16bd-4d54-4d35-97bb-1396cef6b792

https://casetext.com/case/arvest-bank-v-emerald-pointe-llc?resultsNav=false&tab=keyword

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• But challenging the “servicers” and other claimants before they seek enforcement can delay action by them for as much as 12 years or more.
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Filed under: foreclosure |