ACLU Suit to Bar Florida Foreclosure Rocket Docket

Yesterday the ACLU filed a petition for a writ of prohibition in the Florida Court of Appeal, to enjoin the truncated procedures being used in Lee County to dispatch thousands of judicial foreclosure cases in Fort Myers.  According to the petition, homeowners are routinely denied due process, and the generally applicable rules of procedure have been illegally suspended, in the name of rushing foreclosures to judgment.  In particular, the petition asserts that homeowners who assert defenses and are seeking discovery are having summary judgments entered against them while their motions and discovery requests are still undecided.

The robosigning scandal brought to light the shortcuts and fraud used by mortgage servicers and lawyers in order to circumvent judicial processes designed to protect defendants from wrongful loss of their property.  In many cases, judges have severely rebuked attorneys for abusing the foreclosure process.  It will be fascinating to see how the Florida judiciary responds to the accusation that its own judges are more or less engaging in a form of robosigning.

One interesting note regarding moral hazard and mortgage modifications:  the plaintiff in the ACLU suit alleges, as many others have, that Countrywide/BofA told her to stop paying her mortgage so that she could qualify for a mortgage modification.  Those who claim that mortgage modifications create "moral hazard" and will cause home owners to stop making payments often cite the fact that many Countrywide borrowers stopped making mortgage payments shortly after the 2008 announcement of Countrywide's deal with the Attorneys General to do more modifications.  The surge in Countrywide's delinquencies was, in all likelihood, self-inflicted.  Homeowners who fully intended to continue paying as long as they could were misled by Countrywide's poor customer service training and communication (borrowers did not have to be delinquent to get modifications, but they did have to be experiencing genuine hardship.)

Comments

[Thomas Wicklund]

I'm struck by your last paragraph about people "told" to stop paying their mortgage. This shows one of the real problems in today's society. Written records are disappearing. Telephone customer service is much more convenient but it lacks the record of written correspondence. These "stop paying" claims end up being the individual's word against the bank. It would take a very few written letters from banks saying to stop paying in order to get a modification for the issue change dramatically.

Reading between the lines of some of these cases, I'm also guessing that many people no longer have their original mortgage loan documents. So when the bank forecloses or comes up with bogus loan terms, it's again back to verbal statements and memory.