Banks dawdle in foreclosure court

Article Courtesy of The Palm Beach Post

By Kimberly Miller

Published March 13, 2013


Banks are the biggest barriers to speeding the foreclosure process in Florida because they let cases linger in the courts and continue to present flawed documents, the state courts administrator told a Senate subcommittee this week.

Lisa Goodner’s presentation, which included findings from the recently formed Foreclosure Initiative Workgroup, comes as Palm Beach County foreclosure attorneys scramble to respond to new local rules meant to hasten the rate of home repossessions.

Today is the first deadline in an administrative order issued last month requiring lenders and mortgage servicers to submit paperwork on aging Palm Beach County cases before potentially facing a court-forced trial date.

About 14,780 Palm Beach County foreclosures filed between 2007 and 2010 remain unresolved. There were more than 31,000 total pending cases as of the end of January.

The state has a backlog of 366,250 foreclosure cases and expects 680,000 more to be filed in the next three years, Goodner said.

“There doesn’t seem to be any motivation on the part of the plaintiffs (banks and mortgage servicers) to move the cases forward, and, as you can imagine, there is no motivation on the part of the (homeowners) to move the cases,” Goodner told the Senate appropriations subcommittee on criminal and civil justice. “The other challenges we have are paperwork problems.”

For example, foreclosure defense attorney Michael Wasylik said he has a 2011 case in which the mortgage changed hands several times and the bank’s documents contradict each other on who now owns the loan. In another case, he has evidence from the bank of mortgage payments that go back to 2007, but the mortgage was taken out in 2005.

“If the plaintiff does their job right, the longest a foreclosure case should take is a year,” Wasylik said.

The Foreclosure Initiative Workgroup, which was created in early January by the state’s Trial Court Budget Commission, is scheduled to release a report soon. But one conclusion, Goodner revealed, is that the courts’ ultimate goal should be to bring foreclosure cases in compliance with state time standards to complete a case. Those standards are 12 months for non-jury trials and 18 months for jury trials.

To do that, Goodner is asking for $9.9 million in additional money per year through 2016 to increase the use of technology and the number of case managers. She also suggested using magistrates in addition to senior judges to handle foreclosure cases. Goodner said the money could come from $200 million lawmakers took from Florida’s share of the National Mortgage Settlement.

Florida’s courts already got $5 million from the settlement, which became available Feb. 1. About $1.3 million was divided among the 20 circuit courts. The remainder will be used to help automate court records so judges can look at electronic filings instead of sorting through stacks of papers.

“First and foremost, everything is about due process, but judges also have an obligation to move cases to completion,” Goodner said.

Guy Cecala, publisher of the trade magazine Inside Mortgage Finance, said banks are “gun shy” about handling foreclosures after settling complaints with federal regulators and attorneys general last year for tens of billions of dollars.

“Their feeling is, when in doubt, move slow because you are less likely to make mistakes or more likely to catch mistakes,” Cecala said. “Banks aren’t 100 percent confident they’ve resolved all the paperwork problems.”

Lenders contacted for this story either did not respond by deadline or had no comment.

How the courts will manage speedier foreclosures is still unknown. Today’s deadline requires banks with cases filed in 2007 or earlier to provide documents to the court. For foreclosures pending 36 months or more, the court will schedule blocks of trial time, pushing both sides to present their case unless a judge agrees to a delay.

Wasylik said he had seven foreclosure trials in all of 2012. This year, he’ll top that number by April. And with judges setting trial dates without consulting attorneys, he already has several scheduled at the same time in different counties.

“I’m seeing the tip of the iceberg,” Wasylik said.

Palm Beach County pending foreclosure cases by year filed
2007: 323
2008: 2,830
2009: 5,822
2010: 5,808
2011: 4,172
2012: 10,807
2013: 1,284

Source: Palm Beach County Clerk & Comptroller