Investigating Florida’s parallel legal system for foreclosures

Introduction

Defense motions that disappear after 60 days, unelected judges meant to rule on a quarter of a million cases a year, original documents gone missing — these are the realities facing families caught in a year-old initiative intended to accelerate Florida’s foreclosure process. As Florida tries to clear its courts of hundreds of thousands of pending foreclosure cases, a lingering reminder of the 2008 financial meltdown, homeowners trying to save their houses feel their rights come second in a state-sponsored, breathless rush to foreclose.

Senior Finance Reporter Alison Fitzgerald spent months investigating the underlying causes of Florida’s foreclosure frenzy, and we wanted to know more about the story behind that effort.

Your investigation found a foreclosure system riddled with red flags — what in your mind is the most egregious outcome of Florida’s foreclosure initiative?

What I saw is that the initiative tilts the legal system in favor of banks. For that small fraction of homeowners who are defending their homes, they are now fighting not only banks, but also the state. When a court or judge tries to move a case forward, they are by default working on behalf of the bank which brought the case. And they are giving the banks leeway in terms of evidence they would never give to a homeowner.

I reviewed dozens of trial transcripts, talked to more lawyers than I can count and at least a half dozen homeowners fighting foreclosure and then I went down there to see for myself. It all pointed to this conclusion.

I was actually a bit skeptical about what I was hearing from the defense lawyers about how judges were pushing cases through the system. However, after spending two days sitting in different foreclosure courtrooms in two different counties, I was convinced. I saw judge after judge ruling on case after case with little more than a glance at the docket. What stunned me was how often the judges — each one I watched — would say no when a lender and homeowner would together ask for a delay of a foreclosure trial or home sale because they wanted to work out a deal. I still don’t understand why a judge would rule against such a request, but it happened in every courtroom I visited.

As part of your reporting, you interviewed some of the defense lawyers working on behalf of homeowners. What lawyer willingly signs up for this kind of gig?

I wonder that myself, especially because I’m pretty sure there’s not much money in foreclosure defense. These lawyers were very angry about what was happening, however.

This photo is of the lawyer who is featured at the top of the story, Matt Weidner, sitting in a courtroom waiting for a hearing. The photo shows that he’s in that courthouse, and that specific courtroom, so much that it’s a bit like his living room. What’s interesting is that he’s kicking back in the photo, but when it came time to argue for Ricardo Lopez, he was so serious, and so angry that he wasn’t being heard.

When I was first reporting the story, [Weidner] was so passionate about the issue, and what it meant not just for his clients, but broadly about how the state was governing itself and caring for its citizens that I considered focusing the story on him.

Are any other foreclosure court systems in the U.S. similar to Florida’s?

There are 21 states that have judicial foreclosure systems, meaning the case goes through the courts instead of through an administrative process which is much quicker. The advantage of judicial foreclosure is that there is a higher burden on a financial institution that wants to take away a person’s home. During the recent financial crisis, it became clear how many things can go wrong if it’s too easy for a bank to foreclose.

What has Florida done to speed up the foreclosure system in its courts?

There are a number of things that have happened over the years as the state has struggled to keep up. The biggest problem for the state has been that its rules of evidence require that when a lender forecloses, they must prove they have the right to the money and the home. That means they have to have an original promissory note, signed by the borrower. They must also, traditionally, document exactly what they are claiming the homeowner owes, which includes all the payments, taxes, insurance and fees over the life of the loan.

That became problematic because the banks kept buying and selling the loans, and they didn’t keep the paperwork in order. So now the courts are giving the banks a series of shortcuts to allow them to go ahead and foreclose without that paper trail.

What is the role of a “robo-testifier”?

Robo-testifiers are a key to establishing the paper trail. They attest in court that the documents the bank is offering to prove a borrower owes a certain amount of money are accurate. These could be records from previous banks showing how many payments the borrower made or missed. The issue some lawyers have is that many of these people don’t actually know firsthand how the banks work — they are on the witness stand telling a judge what their bosses told them to say. In other areas of law, evidence rules are more strict.

Can you tell us more about this photo you took in a Florida courtroom? Because at first glance, it looks like a script.

It is, honestly. This has become so routine, almost like parking court, that there are sample procedures and systems for everything. In one courtroom that I observed in Pinellas county there was a sign taped to the front of the bench that said “Foreclosure Sale: 45 days, Sept. 16, 2014.” It was like those signs in a liquor store that read: “You have to have been born before this date … to buy alcohol.” I realized they must replace that sign every morning.

What surprised you the most?

Like many people, I was under the impression that most people in foreclosure bought expensive houses they couldn’t afford and that the problems were largely behind us.

What I learned was how many people were driven into foreclosure by their lenders, people like the Abdos who were unjustly charged thousands of dollars for insurance they didn’t need. I heard stories of people who hit hard times and asked their banks for modified payment plans, and were told they had to go into default to get help. When they followed those instructions, the banks foreclosed. There were so many crazy and sad stories.

You have another story on “zombie” foreclosures in Florida — can you give us a taste of what that piece will cover?

That story is almost the flip side of what we’ve been discussing. It looks at the problem of homes that no one wants, homes that were in foreclosure and abandoned. When foreclosures never go through, these zombies continue to haunt their owners who can’t afford to fix them and become a blight on their cities. It’s a huge problem in low-income areas of Florida and across the country.

Do you have any questions for Alison about her investigation? Please leave them in the comments below.

Check back Monday to read Alison’s piece on “zombie” foreclosures, or follow her on Twitter to get updates on her ongoing foreclosure reporting.