Judges try to get grip on foreclosure chaos
10/03/2010 © Bradenton Herald
MANATEE — The fifth time was the final straw for Manatee County Circuit Court Judge Janette Dunnigan.
Four times in a 2007 foreclosure case, a Fort Lauderdale law firm representing a bank scheduled a hearing and either did not appear or canceled it at the last minute without telling others. So when it happened again April 13, Dunnigan called Smith, Hiatt and Diaz P.A. and issued a warning: Stop it or I’ll hold you in contempt of court.
The threat didn’t work: The firm subsequently set two more hearings and didn’t show for either one. So Dunnigan found the firm in “deliberate, willful and flagrant” contempt after an Aug. 30 hearing and issued a $49,000 fine, which the firm is contesting.
Legal observers said they believe Dunnigan’s act is the first time a Florida judge has sanctioned a so-called ‘foreclosure mill’ for its practices. But they said it also illustrates a growing effort by judges to regain control of the foreclosure process after years of chaos.
“The system’s overloaded and they’ve got to do something about it,” said Dawn Bates Buchanan, managing attorney for Gulfcoast Legal Services’ Bradenton office. “The judges all are saying, ‘No more. We’ve had enough.’ ”
That frustration stems from a foreclosure crisis of historic proportions. Nearly 15,200 foreclosure suits have been filed in Manatee since 2008, according to court records. Mortgage lenders and servicers have initiated foreclosure proceedings against more than 1.33 million Florida homes and repossessed more than 197,300 during that time, according to RealtyTrac, a foreclosure tracking service. The state courts administrator’s office estimated in March that roughly 500,000 foreclosure cases in Florida were still unresolved. The office said it plans to release an updated estimate later this month.
The legal and financial systems were ill-prepared to handle the crush, resulting in massive court backlogs and delays. It also led to the rise of several law firms that file thousands of foreclosure cases a month, which critics have dubbed “foreclosure mills.”
Local court officials have tried various measures to streamline the foreclosure process, including requiring law firms to file suits electronically; file all relevant documents when scheduling a hearing; designate a primary contact person; and appear in person at all foreclosure-related hearings.
Court officials also set up an automated system for scheduling court hearings and established “rocket dockets” to expedite uncontested cases. But they acknowledge those efforts have had limited success and that problems with incomplete or missing paperwork, missed hearings and non-compliance with court procedures still persist. “We’ve been bugging these people to do it right and follow the rules for quite a while, but we’re still having issues,” said Chief Judge Lee Haworth, of the 12th Judicial Circuit, which encompasses Manatee, Sarasota and DeSoto counties.
For example, more than one out of every five expedited cases heard during a recent three-week period had some form of paperwork or procedural problem, he said. That has judges taking a harder stance on those who aren’t following the rules. On Sept. 17, Sarasota County Circuit Court Judge Harry Rapkin dismissed 61 of 258 cases on his docket because bank attorneys did not follow court procedures. Another 32 cases were continued because of similar but minor issues, Haworth said. The dismissals mean plaintiffs who want to resurrect their cases will have to re-file and pay filing fees of up to $1,900 for each case.
But Dunnigan’s contempt order and fine is the strongest rebuke thus far. Besides the missed hearings, she scolded Hiatt, Smith and Diaz for routinely not filing required paperwork. “The law firm’s lack of consideration for the court’s calendars, their disobediance for this court’s local rules and orders, and their misconduct in handling mortgage foreclosure cases is deliberate, willful and flagrant in nature, and as such is evidence of contempt,” she wrote in her Sept. 2 ruling. Besides the fine, she ordered the firm to pay $450 to the homeowner for lost wages and interpreter costs and pay the Barrington Ridge Homeowners Association’s legal costs for the missed hearings. Scott Petersen, the association’s attorney, later said those costs amounted to $840.
“The abusive practices that the judge attacked have been a serious impediment to the progress of community associations in maintaining financial stability without the benefit of maintenance fees from ‘underwater’ units that have been abandoned by owners,” he said. Dunnigan also ordered Hiatt, Smith and Diaz to implement a system to assure its attorneys are adequately prepared for and attend scheduled hearings. The firm also was given a Thursday, Sept. 30, deadline to provide signed statements from its lawyers and support staff that they have read the local circuit’s rules of procedure or risk additional fines of $7,000 a day.
The firm disputed her characterization, saying the missed hearings resulted from the local court circuit’s rules not being completely loaded into its database. Partner Roy A. Diaz also said the firm has made “extreme changes” in its internal policies and procedures to avoid more missed hearings.
He filed motions asking Dunnigan to recuse herself from the original case because of “prejudice and bias” and either rescind the order or hold another hearing, which Dunnigan denied Friday. Consumer advocates and defense attorneys are hailing her contempt order and other actions against such large law firms, including judges in Miami-Dade County, Illinois and New York who wiped out homeowners’ mortgages because of misconduct.
Those firms’ assembly line tactics also have prompted at least three lenders — Bank of America, Ally Financial/GMAC and JP Morgan Chase — to temporarily suspend foreclosure proceedings in at least 23 states, including Florida.
“Crazy things have been happening and the judges are tired of hearing about it,” Bates-Buchanan said. “They’re holding plaintiff’s counsel to the fire. They’re trying to regain control of the process.”
Dismissing cases, issuing contempt orders and issuing fines aren’t the only tactics that local court officials are using, Haworth said.
They’re also spending more time reviewing inactive foreclosure cases. For example, the last filing in a foreclosure suit involving companies owned by U.S. Rep. Vern Buchanan and his brother was on May 19, 2009, records show.
In cases where nothing has been filed in at least 10 months, judges and clerks are telling lawyers to either get the case moving or it will be administratively dismissed. “Our judges are saying enough’s enough,” Haworth said. “We’ve heard every excuse and promise (from bank attorneys) under the sun, and nothing’s gotten better. We’ve had to take stronger measures.”
Duane Marsteller, transportation/growth and development reporter, can be reached at 745-7080, ext. 2630.
10/03/2010 © Bradenton Herald
MANATEE — The fifth time was the final straw for Manatee County Circuit Court Judge Janette Dunnigan.
Four times in a 2007 foreclosure case, a Fort Lauderdale law firm representing a bank scheduled a hearing and either did not appear or canceled it at the last minute without telling others. So when it happened again April 13, Dunnigan called Smith, Hiatt and Diaz P.A. and issued a warning: Stop it or I’ll hold you in contempt of court.
The threat didn’t work: The firm subsequently set two more hearings and didn’t show for either one. So Dunnigan found the firm in “deliberate, willful and flagrant” contempt after an Aug. 30 hearing and issued a $49,000 fine, which the firm is contesting.
Legal observers said they believe Dunnigan’s act is the first time a Florida judge has sanctioned a so-called ‘foreclosure mill’ for its practices. But they said it also illustrates a growing effort by judges to regain control of the foreclosure process after years of chaos.
“The system’s overloaded and they’ve got to do something about it,” said Dawn Bates Buchanan, managing attorney for Gulfcoast Legal Services’ Bradenton office. “The judges all are saying, ‘No more. We’ve had enough.’ ”
That frustration stems from a foreclosure crisis of historic proportions. Nearly 15,200 foreclosure suits have been filed in Manatee since 2008, according to court records. Mortgage lenders and servicers have initiated foreclosure proceedings against more than 1.33 million Florida homes and repossessed more than 197,300 during that time, according to RealtyTrac, a foreclosure tracking service. The state courts administrator’s office estimated in March that roughly 500,000 foreclosure cases in Florida were still unresolved. The office said it plans to release an updated estimate later this month.
The legal and financial systems were ill-prepared to handle the crush, resulting in massive court backlogs and delays. It also led to the rise of several law firms that file thousands of foreclosure cases a month, which critics have dubbed “foreclosure mills.”
Local court officials have tried various measures to streamline the foreclosure process, including requiring law firms to file suits electronically; file all relevant documents when scheduling a hearing; designate a primary contact person; and appear in person at all foreclosure-related hearings.
Court officials also set up an automated system for scheduling court hearings and established “rocket dockets” to expedite uncontested cases. But they acknowledge those efforts have had limited success and that problems with incomplete or missing paperwork, missed hearings and non-compliance with court procedures still persist. “We’ve been bugging these people to do it right and follow the rules for quite a while, but we’re still having issues,” said Chief Judge Lee Haworth, of the 12th Judicial Circuit, which encompasses Manatee, Sarasota and DeSoto counties.
For example, more than one out of every five expedited cases heard during a recent three-week period had some form of paperwork or procedural problem, he said. That has judges taking a harder stance on those who aren’t following the rules. On Sept. 17, Sarasota County Circuit Court Judge Harry Rapkin dismissed 61 of 258 cases on his docket because bank attorneys did not follow court procedures. Another 32 cases were continued because of similar but minor issues, Haworth said. The dismissals mean plaintiffs who want to resurrect their cases will have to re-file and pay filing fees of up to $1,900 for each case.
But Dunnigan’s contempt order and fine is the strongest rebuke thus far. Besides the missed hearings, she scolded Hiatt, Smith and Diaz for routinely not filing required paperwork. “The law firm’s lack of consideration for the court’s calendars, their disobediance for this court’s local rules and orders, and their misconduct in handling mortgage foreclosure cases is deliberate, willful and flagrant in nature, and as such is evidence of contempt,” she wrote in her Sept. 2 ruling. Besides the fine, she ordered the firm to pay $450 to the homeowner for lost wages and interpreter costs and pay the Barrington Ridge Homeowners Association’s legal costs for the missed hearings. Scott Petersen, the association’s attorney, later said those costs amounted to $840.
“The abusive practices that the judge attacked have been a serious impediment to the progress of community associations in maintaining financial stability without the benefit of maintenance fees from ‘underwater’ units that have been abandoned by owners,” he said. Dunnigan also ordered Hiatt, Smith and Diaz to implement a system to assure its attorneys are adequately prepared for and attend scheduled hearings. The firm also was given a Thursday, Sept. 30, deadline to provide signed statements from its lawyers and support staff that they have read the local circuit’s rules of procedure or risk additional fines of $7,000 a day.
The firm disputed her characterization, saying the missed hearings resulted from the local court circuit’s rules not being completely loaded into its database. Partner Roy A. Diaz also said the firm has made “extreme changes” in its internal policies and procedures to avoid more missed hearings.
He filed motions asking Dunnigan to recuse herself from the original case because of “prejudice and bias” and either rescind the order or hold another hearing, which Dunnigan denied Friday. Consumer advocates and defense attorneys are hailing her contempt order and other actions against such large law firms, including judges in Miami-Dade County, Illinois and New York who wiped out homeowners’ mortgages because of misconduct.
Those firms’ assembly line tactics also have prompted at least three lenders — Bank of America, Ally Financial/GMAC and JP Morgan Chase — to temporarily suspend foreclosure proceedings in at least 23 states, including Florida.
“Crazy things have been happening and the judges are tired of hearing about it,” Bates-Buchanan said. “They’re holding plaintiff’s counsel to the fire. They’re trying to regain control of the process.”
Dismissing cases, issuing contempt orders and issuing fines aren’t the only tactics that local court officials are using, Haworth said.
They’re also spending more time reviewing inactive foreclosure cases. For example, the last filing in a foreclosure suit involving companies owned by U.S. Rep. Vern Buchanan and his brother was on May 19, 2009, records show.
In cases where nothing has been filed in at least 10 months, judges and clerks are telling lawyers to either get the case moving or it will be administratively dismissed. “Our judges are saying enough’s enough,” Haworth said. “We’ve heard every excuse and promise (from bank attorneys) under the sun, and nothing’s gotten better. We’ve had to take stronger measures.”
Duane Marsteller, transportation/growth and development reporter, can be reached at 745-7080, ext. 2630.
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