Saturday, July 5, 2008

MERS Learns The Hard Way: Unable To Prove Note Ownership In Foreclosure, Connecticut Court Tells It To Take A Hike

Connecticut & New York attorney Christopher G. Brown recently reported in

  • A Connecticut court recently joined what is becoming a national trend of road-blocking foreclosure of mortgages that have been traded in the secondary market, and the implications for mortgage servicers could be significant. In April, the Connecticut Superior Court in New Haven dismissed a foreclosure action that Mortgage Electronic Registration Systems Inc. (MERS), as nominee for Finance America LLC, had commenced against Anna M. Miller because MERS did not prove that it owned the note.


  • The court was very definite in its ruling that only the true owner of the loan can start a foreclosure, while imposters will be dismissed. MERS learned the lesson the hard way, pursuing the foreclosure for over three years and coming away empty.


  • [I]n today's environment every legal and factual detail in a foreclosure action is under tremendous scrutiny. Courts are declining foreclosure to those who do not play by the rules. Servicers need to understand that these decisions will make it harder for any servicer or mortgage loan owner to collect if and when the loan goes into default. The bottom-line message is that only the institution that can prove by irreproachable evidence that it owns the loan can foreclose. It may be a monumental task, but servicers will have to do their homework to identify the loan's true owner and secure its cooperation in establishing ownership before commencing a foreclosure. If not, the servicer may find that the bridge is out on the road to recovery.

For the details on this and other cases described in the article, see New Rules Toughen Servicers' Foreclosure Procedures.

For other posts that reference the failure of some mortgage lenders and their attorneys to file the required loan documents when starting foreclosures, Go Here, Go Here, and Go Here.

Friday, July 4, 2008

Effort To Defend Poor In Mortgage, Debt Collection Suits To Be Mobilized By Central Pennsylvania Attorney Groups

In Blair County, Pennsylvania, the Altoona Mirror reports:

  • The Blair County Bar Association, an organization comprised of 200-plus lawyers, is teaming up with MidPenn Legal Services to address a surge in mortgage and credit card defaults. The economic woes affecting many parts of the nation have crept into the county court system in the form of lawsuits with banks and mortgage companies suing those who owe them money. The deluge of new cases has alarmed court officials, and the organization that represents county lawyers is putting together a new program to provide free and low-cost legal services to residents in crisis.


  • Attorney Jeff Fleming, president of the bar association, and his board of governors voted to work with MidPenn, which provides aid to the poor, in obtaining a $9,800 grant from a fund known as Interest on Lawyers Trust Accounts. The state Supreme Court established the fund from interest earned by lawyers on escrow accounts, and the money is used to assist legal services statewide. The fund provides money for training attorneys and special programs.


  • Under the new program, Mid-Penn will select the cases and assign them to attorneys who volunteer to work with the poor. Mid-Penn will train the lawyers so they know the laws concerning mortgages and other lending practices. Attorneys will be expected to handle one case for free but in subsequent cases will be paid $30 an hour.

For more, see Lawyers team up to tackle defaults (Legal action on mortgages, credit cards skyrocketing).

Thursday, July 3, 2008

Central Florida Attorney Group Gears Up For Homeowner Foreclosure Defense

In Central Florida, the Orlando Sentinel reports:

  • Community Legal Services of Mid- Florida and volunteer lawyers from the Florida Bar are creating a "Foreclosure Defense Project" and this week launched a recruitment effort from the region's legal ranks to bring more firepower to bear on the growing threat to community stability. Bill Abbuehl, executive director of the Daytona Beach based Community Legal Services of Mid-Florida, put out a call for pro bono attorneys to "help meet the enormous legal needs arising from the current foreclosure crisis."


  • A training session for lawyers who will step forward to help low income homeowners, looking for signs of "predatory lending" or other legal shenanigans among lenders, will be held Friday, July 11, at the Albertson Room of the Orange County Public Library at 101 E. Central Blvd. in Orlando , from 9 a.m. to 3. p.m. Space is limited so lawyers are asked to register, by calling the legal aid group at 407- 708-1020, ext. 3101, or e-mailing to

For more, see Legal group to help more people facing foreclosure (if link expires, try this link).

Editor's Note:

As has been noted on this blog in the past, the term "pro bono" doesn't necessarily mean that an attorney doesn't get paid for his/her services. While the services may, in fact, be "free" to the client receiving the legal services, there is a distinct possibility that an attorney representing "prevailing party" homeowners in foreclosure actions can leverage his/her pro bono services into court-ordered attorney fee awards to be imposed on the losing mortgage lender, loan servicer, etc.(1)

For examples of attorneys seeking to convert their pro bono opportunities into legal fee awards, see:

Go here for other posts referencing legal fee awards in pro bono cases.

(1) It may be that these cases could be better described as "contingent fee" cases; attorneys taking on these cases may be well advised to have contingent fee retainer agreements with their "pro bono" clients). legal fee pro bono

Wednesday, July 2, 2008

North Florida Attorney Group Gears Up For Homeowner Foreclosure Defense

In Northern Florida, WCTV Channel 2 reports:

  • Legal Services of North Florida says the rising number of foreclosures is putting Florida homeowners in a crisis. About one hundred attorneys from across Florida attended a seminar [Wednesday] to defend foreclosures and to try to help homeowners who are facing financial difficulties with home loans.

  • Paul Levine, the Legal Services of North Florida Director, says Florida has the second highest foreclosure rate in the nation. He said, "I got 14 foreclosures in one week. Sometimes that's about what I would get in a whole half of year. So we are definitely in a lot of trouble with a lot of our clients. We're hoping this seminar will be a start to try to alleviate some of these problems. The day-long seminar was led by nationally known attorney April Charney from Jacksonville.

Source: Building Defenses Against Foreclosure.

Tuesday, July 1, 2008

Attorney Fee Awards For Successful Foreclosure Defense In Florida

A 1999 court decision by a Florida appeals court illustrates how attorneys representing homeowner/defendants in a foreclosure action can, if successful in their defense, request and may be granted court awarded legal fees, the liability for which will be imposed on the losing foreclosing plaintiff, the mortgage lender.

In that case, Landry v. Countrywide Home Loans, Inc., 731 So. 2d 137; (Fla. 1st DCA 1999), a mortgage lender filed a foreclosure action against homeowners Dale and Ulrike Landry. In response to the lawsuit, the Landrys, through their attorney, filed their answer and affirmative defenses, with attached exhibits. They also requested an award of attorney's fees under the reciprocity provisions of what was then section 57.105(2), and is now section 57.105(7), Florida Statutes. (In this case, the mortgage agreement required the borrower to pay the lender's attorney fee if there was a default and the lender retained an attorney to enforce collection thereof - a requirement that is common in the typical home mortgage). The concluding paragraph of their pleading stated in pertinent part:

  • . . . [Landry] respectfully prays . . . for an award of attorneys' fees and costs from Plaintiff pursuant to Section 57.105(2), Fla.Stat. (1995), . . .

After the filing of a motion for summary judgment by the Landrys against the mortgage lender, Countrywide Home Loans, Countrywide filed a voluntary dismissal of the foreclosure action. The trial court then issued an order dismissing the summary judgment motion as moot, granting the Landry's motion to tax costs, but denying their motion for an award of attorney's fees.

The Florida appeals court, in reversing the trial court's denial of the Landry's request for attorneys fees, addressed the "prevailing party" issue in the case where a plaintiff files a voluntary dismissal of a lawsuit, and the entitlement of attorneys fees to a prevailing party defendant. The court made the following observations:

  • The general rule is that "when a plaintiff voluntarily dismisses an action, the defendant is the prevailing party." See Thornber v. City of Ft. Walton Beach, 568 So. 2d 914, 919 (Fla. 1990). Further, "it is well established that attorney's fees are properly awarded after a voluntary dismissal where such award is provided for by statute or agreement of the parties." See Century Construction Corp. v. Koss, 559 So. 2d 611, 612 (Fla. 1st DCA 1990), review denied, 574 So. 2d 141 (Fla. 1990). See also Boca Airport, Inc. v. Roll-N-Roaster of Boca, Inc., 690 So. 2d 640, 641 (Fla. 4th DCA 1997), review dism'd, 698 So. 2d 543 (Fla. 1997)("for purposes of a prevailing party attorney's fees statute, a voluntary dismissal by the claimant makes the opposing party a 'prevailing party' as to the issue of entitlement to fees").


  • The trial court's denial of a prevailing party attorney's fee was based, in part, on the court's finding that the decision whether to award an attorney's fee under section 57.102(2) is a matter of discretion. We recognize that section 57.105(2) uses the permissive "may" with regard to the trial court's ability to award a prevailing party attorney's fee. However, we believe the discretion granted by use of "may" pertains to the determination of a prevailing party in an action founded on a contract. See Hutchinson v. Hutchinson, 687 So. 2d 912, 913 (Fla. 4th DCA 1997). Once the prevailing party determination has been made, we believe section 57.105(2) "now mandates that contractual attorney's fees provisions be reciprocal obligations." See Jakobi v. Kings Creek Village Townhouse Ass'n, 665 So. 2d 325, 326 (Fla. 3d DCA 1995). See also Oakwood Plaza, L.P. v. D.O.C. Optics Corp., 708 So. 2d 959, 960 (Fla. 4th DCA), review denied by D.O.C. Optics Corp. v. Oakwood Plaza, L.P., 725 So. 2d 1107 (Fla. 1998)(unless defendant was not the prevailing party due to plaintiff's refiling its action, petitioner entitled to attorney's fees as prevailing party where plaintiff voluntarily dismissed its suit); Lanahan Lumber Company, Inc. v. McDevitt & Street Company, 611 So. 2d 591, 592 n. 1 (Fla. 4th DCA 1993)("The intent of § 57.105(2) is to provide mutuality of attorney's fees as a remedy in contract cases.").

  • In the instant case, appellants specifically requested attorney's fees pursuant to section 57.105(2) in their answer to Countrywide's complaint. Countrywide voluntarily dismissed the complaint with no suggestion of any intent to refile the action. By virtue of the voluntary dismissal, appellants are the prevailing parties. n1 See Thornber v. City of Ft. Walton Beach. Pursuant to section 57.105(2), the contractual attorney's fee provisions included in the underlying mortgage note are reciprocal obligations. Therefore, we conclude the trial court abused its discretion in denying appellants' request for attorney's fees.

    n1 Moreover, it appears the trial court implicitly recognized appellants' prevailing party status in its award of costs.


In addition to the ruling that the homeowners were entitled to an attorney fee award, the decision contains some instructive language emphasizing the requirement that a defendant's claim for attorney's fees must be pled, and how an attorney fee entitlement can be deemed waived if not pled properly (see also The Florida Bar Journal: Pleading Requirements for a Claim for Attorneys' Fees (added 9-22-10)).

To read the court decision, see Landry v. Countrywide Home Loans, Inc., 731 So. 2d 137; (Fla. 1st DCA 1999).


For a case where a prevailing defendant in a Florida foreclosure action successfully availed itself of Florida's offer of judgment statute, section 768.79, to obtain an attorney fee award against an unsuccessful foreclosing plaintiff, see Novastar Mortgage, Inc. v. Strassburger, 855 So. 2d 130 (Fla. 4th DCA 2003). An excerpt from this decision:

  • The trial court ruled that this was not a "civil action for damages" under the statute, because it was a foreclosure. Novastar concedes, however, that it was seeking damages in the form of reimbursement for attorney's fees and costs. In addition, the Strassburgers point out that the promissory note secured by the original mortgage had already been paid, and that this lawsuit was only about money. We agree with the Strassburgers that this was in fact an action for damages and that the offer of judgment statute accordingly applies.



Three quick points to be made:

1) The Landry decision may provide a basis for private attorneys in Florida, who may otherwise be willing to take on a foreclosure defense case on a pro bono basis, to convert a pro bono opportunity into a fee paying, contingency fee case if the case is considered successfully defended for purposes of the "prevailing party" rules.

2) If, as part of defending against a foreclosure action, counterclaims are filed against the foreclosing lender and/or servicer for violation of Federal (ie. Truth In Lending Act - 15 U.S.C. Sec. 1501 et seq., Fair Debt Collection Practices Act - 15 U.S.C. Sec. 1692 et seq., etc.) or state (ie. Florida Deceptive and Unfair Trade Practices Act - F.S. 501.201 et seq.) consumer protection statutes, the points made in this post may be moot inasmuch as these statutes contain their own attorney fee provisions that allow attorney fees to be awarded to a successful plaintiff (in the case of the Federal statutes) or successful party (plaintiff or defendant) in the case of the Florida statute.

Where no counterclaims are filed, say, in a case where the foreclosure defense primarily involves a demand that the foreclosing mortgage lender produce the promissory note and prove that it has legal standing to bring the case, the Landry case could support the proposition that a homeowner in foreclosure may be entitled to an attorney fee award where the court refuses to allow the foreclosing lender to proceed with its case as a result of it being unable to produce or re-establish a lost or destroyed note, or prove that it has legal standing (ie. that it is a "party in interest") to bring the case.

3) A reminder to Florida attorneys on a point indirectly related to this post: The general rule in Florida is that a decision on a particular issue by any Florida intermediate appeals court, unless reversed by the Floida Supreme Court, or absent interdistrict conflict with sister appellate courts, is binding on all trial courts throughout the state.

I mention this only because there is an apparently incorrect belief among more than a few Florida attorneys and trial judges that a Florida state trial court is only bound by decisons of the appeals court having jurisdiction to hear its appeals, and can ignore the decisions of other appeals courts. So, for those cases outside the First District Court of Appeal of Florida (the court deciding Landry), unless there is a conflicting decision from a sister appeals court, a case can legitimately be made that Landry is binding on the trial courts all throughout Florida, and not merely those trial courts within the First District.

For the authority on this point, see Pardo v. State, 596 So. 2d 665 (Fla. 1992), in which the Florida Supreme Court stated:

  • Initially, we note that the district court erred in commenting that decisions of other district courts of appeal were not binding on the trial court. This Court has stated that "the decisions of the district courts of appeal represent the law of Florida unless and until they are overruled by this Court." Stanfill v. State, 384 So. 2d 141, 143 (Fla. 1980). Thus, in the absence of interdistrict conflict, district court decisions bind all Florida trial courts. Weiman v. McHaffie, 470 So. 2d 682, 684 (Fla. 1985). The purpose of this rule was explained by the Fourth District in State v. Hayes:

  • "The District Courts of Appeal are required to follow Supreme Court decisions. As an adjunct to this rule it is logical and necessary in order to preserve stability and predictability in the law that, likewise, trial courts be required to follow the holdings of higher courts--District Courts of Appeal. The proper hierarchy of decisional holdings would demand that in the event the only case on point on a district level is from a district other than the one in which the trial court is located, the trial court be required to follow that decision. Alternatively, if the district court of the district in which the trial court is located has decided the issue, the trial court is bound to follow it. Contrarily, as between District Courts of Appeal, a sister district's opinion is merely persuasive." 333 So. 2d 51, 53 (Fla. 4th DCA 1976) (footnote and citations omitted).

By the way, the Federal courts, when deciding on issues of Florida substantive (as opposed to procedural) law, are similarly bound by the same requirement. For authority on this point, see McMahan v. Toto, 311 F.3d 1077; (11th Cir. 2002), which is simply one of many cases of the 11th Circuit Federal Court of Appeals (the court having jurisdiction over appeals from the lower Federal courts in Florida) that cite the Florida Supreme Court decision in Pardo for the foregoing proposition.

For an earlier post touching on these points, see Binding Effect Of State Court Decisions On Federal Courts On State Law Issues.

Monday, June 30, 2008

Convicted Northern California Foreclosure Rescue Operator To Give Deeds Back To Eleven Victimized Families

In Stanislaus County, California, The Modesto Bee reports:

  • Eleven families will get their home deeds back, according to a restitution deal signed Thursday by convicted swindlers who prayed with some victims before duping them. Lonni Ashlock, 57, of Waterford also agreed to pay a total of $120,000 to 10 others, most of whom were evicted from their homes before they were sold to third parties. Ashlock and his partner, Ronald Buhler, 27, of Riverbank pleaded no contest in September to six fraud and grand theft felonies. [...] Their victims included an 86-year-old woman with dementia, a schizophrenic, a woman with brain lesions and several other disabled people, according to court documents and testimony..


  • The Bee in July 2005 chronicled several lawsuits against Ashlock, Buhler and their many corporations and eventually tracked 142 properties the men had acquired.
For more, see Waterford swindler must pay victims $120,000.

Go here for earlier posts on Ashlock & Buhler.

Sunday, June 29, 2008

USA Today Highlights Mortgage Servicing Fraud & Abuse Cases From Around The Country

USA Today recently ran a story describing various court cases around the country involving the grievances of homeowners against the companies that service their mortgages, the billing and collection practices these firms engage in, and the abuse of the bankruptcy process that they have been reportedly engaging in. The following excerpt describes a couple of the cases:

  • In New Hampshire, Michael Dillon, a handyman and former freelance stage technician, won a 2005 state court decision upholding his allegations that Fairbanks Capital improperly tried to foreclose on his Manchester home. Judge Gillian Abramson issued a contempt ruling after concluding Fairbanks had "created a predatory scheme of penalties," in part by billing him for fees for which Dillon "did not receive any notice." The ruling ordered the firm to give Dillon a chance to reinstate the mortgage "without penalties." The litigation is continuing.

  • In Louisiana, a bankruptcy-court review of accounting by Wells Fargo Home Mortgage found the firm's servicing arm collected nearly $25,000 more from Michael Jones than he owed on his Mandeville home. Judge Elizabeth Magner ordered a refund and told Wells Fargo to pay more than $67,000 in sanctions and damages. The firm has appealed.

  • [I]n Illinois, a lawsuit that consolidated 18 cases from 10 states accuses Ocwen Financial of engaging in a "nationwide scheme of illegal, unfair, unlawful and deceptive business practices" involving improper fees, costs and other charges. The case is in settlement negotiations, court records show.

For more, see Hitting Home: Homeowners fight for their mortgage rights.

Go here, go here, and go here for posts on questionable mortgage servicing practices. questionable mortgage servicing practices tactics xero