Foreclosure investigation growing, state official says

Plantation firm asks judge to toss subpoenas
By Diane Lade, Sun Sentinel

A lawyer with the Florida Attorney General's Office urged a Broward County judge Tuesday to allow the state to continue its investigation of a giant South Florida foreclosure law firm, saying regulators were uncovering "substantial, egregious activity."

Jeffrey Tew, representing the law offices of David J. Stern in Plantation, argued the state had no right to subpoena documents from the firm under the state's Deceptive and Unfair Trade Practices Act because the company did not advertise to or directly deal with borrowers. Stern's operation, one of four being investigated by the attorney general, prepares foreclosure paperwork for lenders and loan servicers.

"I think it's laughable to contend that any of [Stern's] lawyers engaged in trade or commerce with anyone who was being foreclosed on," Tew told Judge Eileen O'Connor.

But Theresa B. Edwards, assistant attorney general, said the state has the right to investigate after receiving 200 complaints. "It is a broadening investigation," said Edwards, noting regulators have taken 100 sworn affidavits and looked at complaints going back as far as five years.

One claim being examined was that the foreclosure firms were giving kickbacks to the loan servicers, Edwards said. Tew called the allegation "totally untrue."

O'Connor is expected to issue a ruling in several days.

Three of the four firms under investigation, which are believed to handle most of Florida's foreclosures, are fighting their state's subpoenas. Attorney General Bill McCollum lost the first round last week when a Palm Beach County judge denied the action against Shapiro  & Fishman of Boca Raton, saying, among other things, that regulating attorneys' actions was the responsibility of The Florida Bar or the court system.

Tew made the same claim Tuesday, although he focused on the deceptive trade statute. McCollum has asked for another hearing in the Palm Beach County case.

The state also is taking a hard look at lenders and servicing companies handling foreclosures and home loans. Complaints continue to mount about sloppy paperwork and "robosigners," the nickname for employees who have testified they signed documents — sometimes thousands a month — without verifying they were true or the figures accurate.

McCollum sent letters Tuesday to five major lenders and loan servicers: Bank of America, JPMorgan Chase, Ally Financial's GMAC mortgage unit, PNC Financial Group and Litton Loan Servicing. He asked them to meet with him in Tallahassee "as soon as possible."

The partial or complete halt some of these companies have placed on their foreclosures, evictions or sales over the past several weeks is "counterproductive to obtaining the swift solution necessary," McCollum said. Reopening the foreclosure cases "may take many months, even years, given the state of our overburdened court system," he said, stalling the state's economic recovery.

Banking officials earlier this week were predicting the foreclosure reviews could be finished within two weeks to a month.

Peter Zalewski, a principal at the Bal Harbour-based CondoVultures consulting firm, said the lenders' foreclosure moratoriums could seriously slow real estate sales in South Florida. A third of the listings here are foreclosures or short sales.

GMAC spokesman James Olecki did not comment on McCollum's request but said the company has hired independent consultants to review its foreclosure process nationwide. Representatives of Chase and Bank of America said they would work with state attorneys general nationwide. State regulators, led by the Iowa attorney general, are launching a foreclosure task force this week.

PNC Financial did not comment on McCollum's request but said the company was reviewing its foreclosure procedures. Litton could not be reached for comment after several attempts to reach the company by telephone.

Deerfield Beach foreclosure defense attorney Peter Ticktin said state or federal agencies were welcome to examine 150 depositions from cases his firm had handled over the past year and a half, each involving robosigners. Ticktin piled the files, forming a small mountain, on top of a glossy marble table before calling a news conference in his office Tuesday.

Ticktin said the employees mostly were unaware they were committing perjury when verifying documents they never had seen were true, in part because some were so poorly trained. One signing agent was a beauty school graduate, he said, another a truck driver.

The servicers "were looking for [employees] with little or no secondary education who wouldn't question the banks," Ticktin said. "What we are looking at is nothing less than a conspiracy."

Reprinted courtesy of Florida Sun Sentinel: http://www.sun-sentinel.com/business/fl-foreclosure-stern-20101012,0,6231808.story

Broward Law Firm Faked Foreclosure Documents?

Lawsuit claims that Florida's largest foreclosure firm faked documents

By Kimberly Miller, Palm Beach Post Staff Writer

Florida's purported largest foreclosure law firm filed thousands of documents to take people's homes that contained deceptive and intentionally ambiguous information, according to a proposed class action lawsuit.

The suit, filed last month in U.S. District Court, Southern District of Florida, says David J. Stern and his Plantation-based legal team violated the Racketeer Influenced and Corrupt Organizations Act by generating fraudulent mortgage assignments when pursuing foreclosures.

An assignment is held by the entity that has the right to receive mortgage payments.

Stern's practice, which the lawsuit claims filed up to 7,000 new foreclosure cases in Florida every month last year, also is alleged to have pursued foreclosures for lenders that didn't own the debt on the homes.

"There really is no proper plaintiff to sue and foreclose and that's what this charade is designed to cover," said Fort Lauderdale attorney Kenneth Eric Trent, who is seeking class action status and filed the suit on behalf of Oakland Park resident Ignacio Damian Figueroa. "There is no real holder of the note and the mortgage anymore because they broke it up and sold it to 10, 12, 20 people."

During the real estate boom, loans traded hands often, sometimes being bundled or split up and sold to investors.

Tracking the true owner of the debt sometimes can be a challenge. When pressed for proof of debt ownership, Trent said Stern's office would create an assignment signed by a Stern employee instead of a representative of the lender attempting to foreclose.

"The assignments were meaningless shells designed to pull the wool over the eyes of the judiciary and ease the burden upon the unknown real parties of interest," the lawsuit states.

Miami attorney Jeffrey Tew, of Tew Cardenas law firm, is representing Stern. He said Stern and his company have done nothing wrong, and that it is accepted practice for a firm employee to be given power to approve assignments.

"This foreclosure crisis was not created by David Stern, but it is so huge and a lot of people are in very bad shape, so some of the finger-pointing goes to him," Tew said.

Trent also named the Mortgage Electronic Registration Service Corp. as a defendant. The private entity, known as MERS, was created by banks in 1995 to track mortgage ownership electronically and reduce paper documents.

Trent says MERS helps hide the identity of loan ownership and that it conspired with Stern to "confuse everyone as to who owned what."

Tew called that claim "fantastical." He did acknowledge, however, that errors can happen.

West Palm Beach foreclosure defense attorney Thomas Ice found 21 examples last year of assignments from Stern's office that had been executed with a date before the notary's commission was issued.

In a deposition, a Stern employee agreed with Ice that "sloppiness" was to blame for the irregularity.

Palm Beach County Circuit Judge Meenu Sasser, who handles the county's foreclosures, said she's dismissed cases when she found problems with assignments. She wasn't speaking directly about cases filed by Stern, and said it's only happened a few times.

"I haven't seen any widespread problem," Sasser said.

Reprinted courtesy of The Palm Beach Post, original article appears here: http://www.palmbeachpost.com/money/lawsuit-claims-that-floridas-largest-foreclosure-firm-faked-839393.html