THE
MORTGAGE CRISIS
Foreclosure
defense buys homeowners time
Homeowners
facing foreclosure are hiring lawyers to defend
them in court against their lenders, during which
time they can stay in their homes without paying
a cent.
By
MONICA HATCHER
mhatcher@MiamiHerald.com
Posted on Fri, Jul. 18, 2008
Although
the chances of ultimately keeping a foreclosed home
are slim, for $1,500 to $3,000 some lawyers are offering
to defend borrowers in court, causing the wheels
of justice to turn more slowly.
Duking
it out can add months and sometimes years to a foreclosure
process that in Florida already takes an average
of seven months to complete. Homeowners can use the
extra time to save for a move, sell the house or
mull other options.
Investors
can continue collecting rent from tenants, recouping
at least some of their losses.
Foreclosure
defense is proving popular enough that some South
Florida bankruptcy and real estate lawyers said they
were refocusing their practices to meet the growing
demand.
As
with many issues surrounding foreclosures, the practice
is not without controversy. Delaying the inevitable
is costly for lenders and for taxpayers who fund
the court system, according to some lawyers who represent
lenders. The process may also be unethical, they
claim, and can put delinquent borrowers into a deeper
financial hole.
Florida
is a ''judicial foreclosure'' state, meaning a lender
must sue to force the sale of a property. Yet the
majority of cases are tried without the defendant
-- the borrower -- even showing up in court, said
Timothy Kingcade, a prominent bankruptcy attorney
who also defends foreclosures.
'If
you are accused of murder and you are guilty, you
don't walk into court and say, `I did it!' You make
the prosecuting attorney prove their case,'' Kingcade
said.
While
a foreclosure may seem straightforward -- a borrower
doesn't pay and the bank takes back the home -- lawyers
say there are numerous ways to fight.
THE
PAPER CHASE
One
way is forcing the lender to prove it owns the debt
behind the mortgage by producing a promissory note.
A mortgage is a security instrument pledging property
as collateral for a loan if a borrower defaults,
but it is not the promissory note itself.
As
mortgages were bought, bundled and sold off to investors,
notes got lost in the shuffle, landing in vaults
or warehouses around the country. Physically retrieving
them can be difficult and sometimes impossible.
About
80 percent of the time, lenders fail to attach a
copy to the lawsuit, Kingcade and others said.
When
lenders can't prove they own the loan, lawyers can
get cases dismissed, said Peter Ticktin of the Ticktin
Law Group in Deerfield Beach, whose firm has advertised
foreclosure defense services on television.
He
began taking foreclosure clients about eight months
ago. So far, none of his cases have gone to trial.
His clients are still in their homes.
Some
lawyers also ask lenders to produce all the documents
in a loan file, transcripts of phone conversations
with the borrower and copies of written correspondence,
which can take up to a year or more to compile. Several
businesses are involved, and some may have gone out
of business.
Kingcade
said requesting and reviewing a complete file could
turn up fraud or other inconsistencies leading to
a successful defense, though ``the bank may be entitled
to its money, and 99.9 percent of the time the bank
is absolutely right.''
Neither
Kingcade nor other attorneys interviewed said seeking
out such documents was intended only to stall the
process, which could be considered unethical.
''I
hold the banks to their burden of proof in court,''
Kingcade said. ''Of course justice isn't doled out
in a day. It takes sometimes six, eight to 12 months
for that to happen,'' Kingcade said.
Ticktin
said many borrowers were duped by dishonest brokers
and took on loans they could never afford. They could
have their cases successfully mediated. Some borrowers'
payments were misdirected and not properly credited
to their accounts.
''People
think I am dealing with a bunch of con artists,''
Ticktin said. ``I'm talking about families, innocent
kids, people who got led into deals that are causing
them trouble.''
Angela
Bellsanctious, of Lauderhill, is an example. She
admits she is careless about opening her mail and
said her mortgage was bought by a new servicer without
her knowledge.
Because
her payments were automatically withdrawn from her
bank account, she didn't know her loan wasn't being
paid until it was too late. On June 12, the home
she had lived in since 1990 was sold. Last week she
got notice from the Broward sheriff that she had
48 hours to move.
''I
was freaking out. I was praying and praying, and
this lawyer came on the TV and said something about
foreclosures,'' Bellsanctious, 58, said.
It
was Ticktin, who for $360 got a judge to waive the
writ of possession while he tries to sort out the
problem with the lender.
''I
have no idea where I would have gone,'' Bellsanctious
said.
ABUSING
THE SYSTEM
Yet,
for every legitimate miscommunication and misconduct
by a mortgage lender, dozens of bogus defenses are
filed, clogging up the courts, some lawyers said.
Iris
Hernandez, a lawyer who files foreclosures on behalf
of lenders, said some local attorneys were known
for filing boilerplate defenses without supporting
their positions, acting for borrowers seeking to
take advantage of the system.
'Some
people feel that ` If I don't pay for a year, I'm
getting my down payment back,' '' Hernandez said.
Furthermore,
not all clients deserve or need a foreclosure defense,
Hernandez said. Some lawyers, she noted, appeared
to be using it as a way to bilk clients for fees
-- once with an unnecessary defense and again after
persuading the client to file bankruptcy.
What's
more, Hernandez said, a borrower can easily extend
the sale date of a home by up to 90 days by showing
up at the last hearing and explaining to the judge
why more time is needed.
NO
FREE RIDE
Marc
Ben-Ezra, who also files foreclosures statewide for
lenders, said the borrower who seeks to delay the
inevitable can face consequences.
Interest
rates and other costs continue to pile up as the
process drags on. Borrowers could be liable for the
difference between what the lender recoups from the
eventual home sale and the amount owed on the loan.
Plus, homeowner and condo fees aren't being paid,
which places hardships on people who are paying their
debts.
''With
every single day that goes by, they could be helping
their clients get into bigger and bigger debt, rather
than if they face the problems head on and resolve
them as quickly as possible,'' Ben-Ezra said.
#
# #
Oppenheim
Pilelsky, PA (www.oppenheimlaw.com)
is a real estate and litigation boutique
law firm focused on high profile cases
often involving medical malpractice,
serious bodily injury, and unfair and deceptive
trade practices. Oppenheim Pilelsky, PA is
located at 2500 Weston Road Suite 404, Ft.
Lauderdale, FL 33331 (954) 384-6114. |
