Sunday, November 13, 2011

Judge To F'closure Mill: “We All Assumed You Took Your Ethics Rules Seriously When You Started...We No Longer Have A Presumption That We Can Rely On!”

In Buffalo, New York, The Buffalo News reports:

  • Attorneys for New York State and a delinquent Buffalo borrower facing the loss of her home squared off in court Monday against Steven J. Baum PC, as the state’s biggest foreclosure law firm sought to have a new court mandate for accuracy of documents declared unconstitutional.

  • The Baum firm wants a state court in Buffalo to overturn a statewide administrative rule, which the firm contends is impeding the rights of its bank and mortgage servicing clients, and intruding on the power of the local court.

  • The Amherst firm’s attorneys describe a “procedural” but illegal regulation as the only remaining barrier to having the Black Rock home of Shauna M. Foster seized and sold at public auction to satisfy a debt.

  • This creates a procedural hurdle [that] prevents them from going to sale,” said Baum attorney Tracy M. Fourtner. “My client’s statutory remedy is being impaired. . . . The only thing that is holding up the plaintiff’s right is this order.”

  • The firm doesn’t say why it can’t or won’t comply with the rule. But Baum’s attorneys contend that the state’s chief administrative judge exceeded her legal authority when she issued the rule in October 2010. They cite a February 2011 decision by a state judge in Suffolk County who found the rule unconstitutional.

  • However, the state Attorney General’s Office, intervening in the private case because of the constitutionality issue, said the rule is needed to protect the integrity of the legal system, by guaranteeing factual papers.

  • Lawyers for the state insist that Chief Administrative Judge Ann T. Pfau was well within her right under the State Constitution and laws when she issued her regulation “to curb documented widespread abuses in mortgage foreclosure proceedings,” according to a legal brief by Laura Etlinger, the state’s assistant solicitor general. She said identical or similar rules are in effect in other states. “There is authority for the order and rule,” Etlinger said. “The existing requirements weren’t sufficient. Information was being relied upon that wasn’t checked for accuracy.”

  • The lawyers for both sides faced pointed questioning by State Supreme Court Justice Timothy J. Walker, who said he was also on a statewide judicial committee that helped draft the rule. “Are the courts supposed to rubber-stamp the filings, to . . . just sign off?” Walker asked. “How can the court rely on good faith, knowing what the court knows of robo-signing?

  • He noted that lawyers have long had an obligation to bring problems with documentation to the court’s attention when they discover it in a pending case. But he said that never happened in New York with foreclosures.

  • We all assumed you took your ethics rules seriously when you started,” Walker said to Fourtner, representing Baum. “But now you the lawyer are on notice, and we’re going to actually hold you to that.” Walker said he would issue a decision within 20 days.

  • At stake is the future of a year-old effort by the state’s top judges to reassert control over a well-established but recently troubled legal system. That system, which underlies how foreclosures are handled in New York State, relies on the presumption that court documents submitted by lawyers on behalf of clients are correct and truthful, Walker noted. But there have been revelations nationwide that false or improper documents have been submitted to courts to support foreclosures.

  • We no longer have a presumption that we can rely on,” Walker said. “It’s a reasonable exercise of the court’s authority.”

  • Pfau, directed by State Chief Judge Jonathan Lippman, issued the order “to protect the integrity of the foreclosure process and prevent wrongful foreclosures” and ensure “the documents judges rely on will be thoroughly examined, accurate and error-free before any judge is asked to take the drastic step.”

  • Under the rule, banks’ attorneys in each foreclosure must affirm in writing that they communicated with their clients, that the client reviewed the documents and that the documents are accurate. The attorneys must also affirm, under penalty of perjury, that the papers are correct. Otherwise, the foreclosure can’t proceed.

  • But Fourtner and colleague Amy L. Rohe-Kipp, a Baum lawyer who submitted the motion to the court, asked Walker to allow their client to proceed with foreclosure, without filing the affirmation.

  • The Baum attorneys argue that Pfau, who recently stepped down to take a new court position, only had authority to issue rules governing the “orderly transaction of business” and administration of the courts, such as involving the finances, hours, education and training, law libraries and court records.

  • Instead, they say, the rule creates a new procedural burden of proof, preventing the lender from exercising its rights to the property and interfering with the authority of the local court and the foreclosure referee, whose job is to carry out the sale.

  • Attorneys for Foster and the state, however, argued that the new rule reinforces rules of conduct and ethics that are already expected of lawyers, and is not a new requirement. It also doesn’t mandate new evidence to prove the case, but is just an affirmation that the documents have been reviewed for accuracy, they said. In addition, they said the rule doesn’t change the power or authority of the local court.

  • Finally, they asserted that the rule is administrative and ensures efficiency in the court system because judges would only have to deal with cases in which the lenders and their attorneys have all the facts and paperwork in order. That, in turn, saves time and resources that otherwise might be wasted. “We don’t believe it’s an additional requirement or affects the burden of proof,” Etlinger said.

Source: Foreclosure law firm is battling rule on accuracy (N. Y. ‘procedural hurdle’ called unconstitutional).

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