What happens when you run a fast food restaurant; let’s say an ice cream stand that makes a wonderful sundae; with handmade ice cream, carefully and lovingly crafted with the finest ingredients, local fruits and nuts, interspersed with handmade cookies, meticulously assembled, beautifully presented and sold for a very fair price. You are reviewed by a food critic, or better yet, your ice cream stand is featured in one of the ubiquitous national television food programs where it receives justifiable loving praise and exposure.
Result?... instant riches? More likely, the sundae, the product, suffers and may in fact lose its uniqueness under the crush of relentless demand.
Here is the foreclosure analogy; law firms, or as we call them on the foreclosure defense side, “foreclosure mills,” consisting of lawyers and paralegals who do nothing but represent lenders in foreclosures, (usually on residential properties) are able to churn them out (in the old days) on a consistent basis for a very reasonable fee; but then something terrible and unusual happened.
Mortgage loans, thousands of them, went into default, primarily because they were made to people who could not afford them from the beginning. This combined with the real estate market, where year after year, prices increased completely disproportionate to any type of inflation; and suddenly, the proverbial bubble burst, real estate values plummeted, and the number of foreclosures doubled, and continued to increase tenfold, twentyfold.
The result: these law firms (even if they hire more people and the foreclosure departments within the mortgage companies hire more people) must increase productivity geometrically. The only way to keep up is, like in the ice cream business, to employ short cuts.
Now, we have law firms (lawyers) doing bad things and/or knowingly letting their clients do bad things…like lying to a court.
The ROBO signing scandal manifested itself by the filing of false affidavits. The mortgage foreclosure business uses a lot of affidavits. These are sworn statements that are made under oath and are used to prove the facts in a foreclosure case. There is no way that it would be economically feasible to have trials with live witnesses in every foreclosure case. It would use too much attorney time, too much bank employee time, and most of all, it would literally bury the court system. The nature of what has to be proven in a foreclosure lends itself to the use of affidavits. These sworn statements establish the ownership of the mortgage and note, the status of payment or non-payment, and the amount of the principal, interest, and other monies that are due. Simple enough and normally not a problem because there is an old rule of evidence that business records, exactly the kind of records that mortgage servicing companies maintain, can be used to establish these facts.
Here is the rub. In order for these affidavits or sworn statements to be admissible in evidence and useable by a court, they must be sworn by a person who has actual personal knowledge of the information contained in the affidavit. In order, however, to process literally tens of thousands of these affidavits, the mortgage servicers and their lawyers decided that they would use Henry Ford’s invention of the assembly line and assign a “specialized” person to sign all of these affidavits. The problem is that the people who sign the affidavits prepared by others, and would swear that they have actual and personal knowledge of the facts asserted in the affidavits actually don't. In fact, the only personal knowledge they have is what they ate for breakfast.
There are various other deficiencies in these affidavits, but the bottom line is that the term ROBO comes from the word “robot,” and literally there was a person, sometimes even employed by the law firm, that would take the information generated internally by the mortgage companies, through mysterious and unknown processes and procedures, and fill in the blanks in a form affidavit when, if they had been a live witness, any first year lawyer would be able to establish that they lacked personal knowledge of the facts they were putting down on paper. Sometimes the paperwork that they would attach to the affidavit (if they bothered to attach any paperwork) would be documents generated specifically for a mortgage foreclosure affidavit which, at least in Florida, does not constitute a business record admissible in court.
From the beginning, defense lawyers would complain but mostly be ignored until we were able to establish that some of these affidavits were actually false or inaccurate. Initially, most of the errors concerned assertions regarding who the true owner of the mortgage or note was, which is a minor detail that has to be established because it is only the owner of the mortgage or note that is entitled to be a plaintiff in a mortgage foreclosure; one of those legal technicalities.
One of the other abuses was that the mortgage companies would routinely claim that they lost the original note, and include it in their foreclosure complaint as a separate count asking the Court to reestablish the missing note. It turned out that the note wast missing at all, but that in many cases the plaintiff didn't even bother to look for it. The problem was of course that, at least in Florida, and practically every other “judicial foreclosure” state, the existence and tendering of the note, or if it’s really lost, the reestablishment of the note, is a requirement to foreclose. In order to reestablish, the mortgage company had to file an affidavit saying they looked for the note and could not find it.
The problem was that they were being disingenuous when they filed these affidavits. Sometimes they lied when they stated in the affidavits what they did to look for them. Sometimes the affidavits were disingenuous when they stated who owned the note, and every once in a while, an attorney defending the homeowner was able to prove these affidavits were inaccurate.
When it was disclosed that the lawyers who were representing the banks were part and parcel of this process, some judges got upset, and when it became clear that these affidavits routinely contained falsehoods, even with respect to actual facts, or, in most cases, that the person signing these affidavits did not have personal knowledge of the contents, a great hue and cry was heard throughout the land.
To the best of my knowledge, I do not know of any lawyers or bank representatives who have been arrested or charged with perjury like Mr. Zimmerman’s wife, but I do know that congressmen, senators, judges and other very important people demanded an end to this. Low and behold the “ROBO signing” scandal.
Moral of the story? I don’t know if there is one. But I do know, that any time in the mortgage foreclosure process, when a defendant encounters a sworn statement, it would behoove that person to scrutinize the statement with a skeptical eye and make sure that every fact asserted therein is true, accurate, complete, and made by someone who has actual and personal knowledge of the statement that he or she is making. This is something that is easier said than done, which is why sometimes having a lawyer or consulting one is useful.
As that insightful observer of the American scene, Jerry Seinfeld said, “…a lawyer is basically the person that knows the rules of the country. We’re all throwing the dice, playing the game, moving our pieces around the board, but if there is a problem, the lawyer is the only person that has read the inside of the top of the box.”
No comments:
Post a Comment