Banks Lie, Lawyers Defraud, Judges Don’t Care – A Typical Foreclosure Case

Banks, judges, and lawyers typically all work together to get through as many foreclosure cases a day as they can. After all, the judges get more filing fees for their court by handling a larger caseload, and lawyers can bill all the hours they want to a bank that can create money out of thin air. But even in such a scheme as this, the judges that may want to evaluate a foreclosure case on its merits have to deal with deceptive lawyers.

The Herald Tribune in Florida, the same state in which some judges are going through 800 foreclosure cases a day, giving homeowners less than thirty seconds to defend their homes, reports that, “A Sarasota attorney, Richard Kessler, enlisted a few friends to go through 180 foreclosure cases in Sarasota County looking for errors. They found three out of four cases proceeded with incomplete or improper documentation.”

So seventy-five percent of foreclosure lawsuits that banks initiate are based on wrong documentation. But too few homeowners even appear in court to defend their homes, and the ones do show up to a foreclosure hearing do not know enough about the law and their rights during foreclosure to mount a proper defense. Without pointing out the bank’s lawyers’ mistakes in just the right way, it would not matter anyway, with all of the procedural rules in courts.

The main finding in the study the report refers to is that few banks can prove that they actually own a mortgage that they are suing for foreclosure. The report states the following disturbing findings:

“For instance, the survey found that only one in 12 cases had the documents to prove the company foreclosing on the property was also the company holding the mortgage note.

“In half of the cases reviewed, the plaintiff said the mortgage note had been lost.”

But simply not being able to prove that it has the right to collect on a loan does not stop the banks from filing lawsuits anyway. And the threat of a lawsuit, any kind of lawsuit, is typically enough to scare most borrowers into abandoning the home and moving out before eviction.

Another lie that the banks have their attorneys participate in is undermining court-ordered mediation services. When courts mandate that homeowners and lenders meet to discuss alternatives to foreclosure, the lawyers are just stating that the borrowers “had ‘no interest in the program or declined,'” whether or not that is actually true. And it is often not true, despite the bank’s attempts at deception.

The news story details a long list of practices that mortgage companies and lawyers representing those companies engage in to deceive judges and foreclosure homeowners into unlawful foreclosures. The list proves again that the courts are simply set up as formalities to “give people their day in court,” while sabotaging any effort they may make in an actual defense of their home. A number of such legal frauds are listed below:

Judges simply take foreclosure attorneys’ at their word that all of the paperwork is in order and sign off on judgments and orders for sheriff sale or eviction.

Bank lawyers file foreclosure lawsuits involving properties in other counties that the courts have no jurisdiction over, thereby taking advantage of a large caseload to get these fraudulent foreclosure through an overworked system.

Lawyers file lawsuits on behalf of banks without documented proof the lender owns the mortgage or has the legal right to collect on it. In many cases, the bank simply says the note has been lost but still wants to go through with the foreclosure lawsuit. Judges comply.

Lenders ignore county rules mandating they meet with borrowers to discuss solutions to foreclosure outside of the court system. Even if homeowners want to participate in negotiations, lawyers file paperwork stating the owners had no interest. No negotiations are ever held.

Lawyers claiming that banks, in order to have the legal grounds to file a lawsuit against homeowners, have changed their names to the company that is shown as owning the loan, even if this is not the case at all.

Banks offer to negotiate with borrowers and put the foreclosure process on hold during negotiations — but file the lawsuit anyway and obtain judgments and orders against the homeowners, who were led to believe there would be no legal action.

The only really surprising aspect of the entire news article is that the Herald Tribune seems to believe that these lies are “a new tool in foreclosure.” Unfortunately, these and similar fraudulent practices have been going on for years now, long before the housing boom turned into a bubble and then collapsed. The only difference now is that, with more and more homeowners in foreclosure, there is more lying being done.

These and other practices are just one more reason that homeowners in foreclosure should consider hiring their own foreclosure attorney or personal bankruptcy lawyer to help them examine various legal options they may have. If 75% of foreclosure cases have serious errors that the bank covers up through fraud and deception, then more borrowers may be able to save their homes or live mortgage-free for years just by spending the money to hire a good attorney to help them.