Decline in foreclosure backlog may give false hope

Article Courtesy of The Palm Beach Post

By Kimberly Miller

Published December 26, 2012


More than 40 percent of foreclosures cleared from Florida’s courts in recent months were dismissals, cases that likely will boomerang back into the overloaded judicial system when lenders are better prepared to continue their pursuit.

In a four-month period beginning July 1, the state’s foreclosure courts disposed of 69,513 cases — a laudable number helped along by a $4 million state stipend. But the achievement is dampened by the fact that nearly as many new foreclosures were filed during the same time period and by a new concern that 43 percent of the cases were dismissals.

While a dismissal can occur because a short sale, deed-in-lieu of foreclosure or loan modification has been negotiated, foreclosure defense attorneys say the majority are voluntary dismissals taken by banks that don’t have their case in shape to proceed. The foreclosure can then be re-filed at a later date.

“The voluntary dismissal is an off-ramp for a plaintiff that is being forced to trial, but doesn’t have his or her evidence ready,” said Royal Palm Beach-based defense attorney Tom Ice. “Again, this means the numbers (of closed cases) is deceptive because the cases will be coming back.”

As of Oct. 31, Florida’s 20 circuit courts had 377,272 pending foreclosure cases, according to the state courts administrator. That’s a net of just 432 fewer cases than July 1 because of the 69,078 new foreclosures filed in the four-month span.

Florida’s foreclosure pipeline has slowed since the worst of the meltdown in 2008 and 2009, which created a backlog of 462,339 cases by June 2010. But recent studies show it continues to flow at a higher pace than other states. On Thursday, RealtyTrac again ranked Florida top in the nation for foreclosure activity in November.

The foreclosure cat and mouse can be a harrowing experience for homeowners trying to defend their case or just wanting to get on with their lives.

Paul Rogers knows this well. The suburban Jacksonville resident’s foreclosure case has been dismissed twice. The first time it was canceled for lack of prosecution after it sat idle for more than a year. It was re-filed, but voluntarily dismissed by the lender in August 2011, court records show.

“The plaintiff’s attorney would give the judge no reason,” Rogers said. “I presume it was because they knew their own paperwork was fraudulent.”

Rogers was served his third foreclosure summons in mid-September by Bank of America. Less than two weeks later, he said the bank accepted him for a loan modification and principal reduction under the National Mortgage Settlement signed in March. He made his first payment under the agreement, but when he tried to make the second payment, he was told it couldn’t be accepted because his home was in foreclosure.

“This is so ridiculous that I hardly know what to say,” Rogers said. “It’s been a rough patch, and our faith keeps us strong, but someone needs to hold these banks accountable for what really amounts to emotional abuse.”

After being contacted by The Palm Beach Post, Bank of America said it is resolving the case and will accept Rogers’ second payment.

“We will ensure that the payment is documented as not being late and that he doesn’t incur any fees associated with the delay,” spokeswoman Jumana Bauwens said. “We sincerely apologize to Mr. Rogers for this situation and we are working quickly to resolve it.”

The one-time, $4 million stipend awarded by state lawmakers has added staff to process foreclosures and some courts are attempting new tactics to speed along cases. The guideline in Florida for courts to close a foreclosure case is 18 months. The average foreclosure case in Florida takes about 29 months, according to RealtyTrac.

In Miami-Dade, where judges are setting foreclosure cases for trial to hasten their closure, more cases were dismissed between July and October than disposed by a judge in either a default or non-jury trial. It was the only circuit court with more dismissals than judge dispositions. Palm Beach County had 2,218 dismissals and 3,157 cases disposed by a judge.

“Had the banks just kept their paperwork in order, they could get foreclosures processed,” said West Palm Beach-based defense attorney Brian Korte. “I have to ask the banks for discovery over and over and over again, for years.”

At the same time, some homeowner attorneys complain that lenders have gotten used to winning in Miami-Dade’s courts and are heading to trial whether their evidence is admissible or not. When a case goes to trial when the sides say they are not ready, the judgment may be appealed, rejoining the backlog of foreclosure cases to be heard.

“By and large if people are saying they need more time to get ready, and it’s been sitting there for three or four years, three or four years is enough time to get ready,” said Miami-Dade Circuit Judge Jennifer Bailey, who sat on the state’s foreclosure task force. “The only way out of this is through it, but it’s more important to do it right than fast.”