Courtesy of Channel 8 -- Rep. Shannon Behnken
Courtesy of The Tampa Tribune
December 19, 2012
-- As foreclosures hit unheard-of levels
in recent years, a handful of Florida law firms that operated as
foreclosure factories reaped millions in fees.
Tampa-based giant, Florida Default Law Group, had more than 1,000 lawyers,
non-lawyer paralegals and support staff processing legal papers as cheaply
and efficiently as possible.
However, some of those
same law firms later were at the center of a national
scandal in 2010 involving allegations of backdated and
"robo-signed" documents and overall sloppy
work. The Florida Attorney General investigated Florida
Default Law Group, but dropped the case without finding
Two years later, lawyers
and judges say the worst abuses have stopped, and some
of the mega-firms that dominated Florida foreclosure law
have broken up or shrunk. In Tampa, Florida Default has
changed its name to Ronald R. Wolfe and Associates,
changed ownership and is now a smaller operation.
Lynn Tepper, a circuit judge in Pasco
County, said the Tampa firm seems to want to leave the past behind.
"The attorneys seem to be doing a
better job," Tepper said. "(The attorneys) actually seem to
cringe when you mention Florida Default."
Well before the housing collapse, a handful
of law firms in Florida cultivated relationships with the banks that
service mortgages and with Fannie Mae and Freddie Mac, the
government-sponsored entities that purchase millions of home loans.
By the late 2000s, those relationships paid
off when masses of homeowners began defaulting on their homes. Some
foreclosure firms began filing thousands of foreclosures per month around
Florida, at negotiated rates of around $1,100 a pop.
The Tribune analyzed roughly 2,000 initial
foreclosure filings in Hillsborough County in October 2009 to see who was
filing the most lawsuits. The one-time king of foreclosures, Broward
County-based Law Offices of David J. Stern, filed the most at 352 cases.
Florida Default Law Group ranked second with 323 new foreclosures.
It's not clear how much money Florida
Default Law Group's made during the foreclosure boom, because it was a
privately held company.
However, the Stern firm spun off part of
itself into a publicly-traded corporation, giving a glimpse into its
finances. Regulatory filings show that Stern's revenues rose from $44
million in 2006 to $260 million by 2009.
Then, a massive scandal erupted around the
country. In Florida, judges began targeting the Stern firm, in particular,
and accused it of falsifying documents to speed up the foreclosure
process. Major banks came under fire and stopped foreclosing on people
until they could make sure the documents were authentic.
Finally, then-Florida Attorney General Bill
McCollum launched an investigation into the practices of four large
foreclosure firms: the Stern firm and Marshall C. Watson, both of Broward
County; Shapiro and Fishman in Boca Raton; and Tampa's Florida Default Law
That investigation eventually stalled when
a state appellate court ruled that the Attorney General's Office lacked
jurisdiction to investigate law firms' possible misconduct.
However, the scandal helped to change
Florida's foreclosure law business nonetheless.
Law firms resembling foreclosure assembly
lines still have a big share of the market, but judges and attorneys who
defend homeowners say the foreclosure mills aren't as dominant as they
were. New law firms have entered the picture and are helping to clean up
The Stern firm, by far the biggest
foreclosure mill in Florida, collapsed when Fannie Mae and Freddie Mac
told banks and mortgage service companies to stop hiring it in the wake of
the scandal. Suddenly, the 70,000 foreclosures that David J. Stern
processed per year were up for grabs. A second major Florida foreclosure
mill, Ben Ezra & Katz, collapsed for the same reason.
In Tampa, Florida Default Law Group went
through an ownership change that was a few years in the making.
Ron Wolfe, who had worked at the firm,
purchased it in January from founder and majority owner Michael Echevarria
and renamed it Ronald R. Wolfe and Associates. Today, he employs around
half of the roughly 1,000 people the firm once employed during the peak of
the foreclosure boom, Wolfe said by email.
Wolfe doesn't appear to have completely put
the foreclosure scandal behind him. The Florida Bar still has an open
probe into his firm for foreclosure misconduct, although a Bar spokeswoman
wouldn't go into details. Wolfe said he expects the file to be closed
without any finding.
A few judges around Florida, meantime, say
they're not seeing the widespread abuse that led to the national scandal.
Lee Haworth, chief circuit judge in
Sarasota County, said delinquent homeowners aren't challenging the
authenticity of foreclosure mills' documents anymore, suggesting things
have improved. However, the firms have done nothing to clear up a massive
backlog of foreclosure cases, he said.
"They went from like a D-minus to a
C-minus," he said.