I think we will be seeing more from Judge Bailey but bravo to the Judge for being so insightful. If memory serves me correctly she is Chairman of the Foreclosure Task force in Florida and this is a very good way of (a) demonstrating how the pretender lenders played fast and loose with basic law and procedure and (b) forcing the the real parties in interest in either put up or shut up. The tide is turning. And it is with great pleasure that we say “told you so!” 
Foreclosures
Judge grapples with her discovery of 15,000 unserved foreclosure cases
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| June 24, 2009 |
By: Billy Shields |
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Jennifer Bailey |
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Miami-Dade Circuit Court judge discovered more than 15,000 foreclosure cases filed this year haven’t been served.
It’s the latest shoe to drop in a foreclosure crisis garnering nationwide attention, and an unwelcome discovery in the face of state budget cuts that produced layoffs for courts and clerks.
The backlog is critical because cases where homeowners haven’t been served within four months are subject to dismissal.
Civil Division Administrative Judge Jennifer D. Bailey made the discovery last month as she was taking stock of the circuit’s foreclosure load. She noticed 15,219 cases with no letters of correspondence, no answers and no motions to dismiss.
“In other words, no service,” she said.
The circuit is scrambling to find the root of the problem, which could jeopardize most of this year’s 17,000 foreclosure filings. Most of the cases still fall within the four-month window, but no program is in place to speed things up.
If a foreclosure proceeds to a default judgment with no service on the defendants, it could lead to a title dispute down the road. Bailey said there is no sign that has happened so far but recognizes the potential for problems.
The circuit adopted a foreclosure mediation program for owner-occupied properties through the nonprofit Collins Center for Public Policy in Tallahassee on May 1. As the fledgling program moved forward, lenders argued the center should start contacting borrowers after they’ve been served, said Collins Center president Rod Petrey. 
But Florida circuits don’t keep statistics on foreclosure service, which is why Bailey requested the statistics last month.
“There’s no feedback loop that circles back to the court, and we were not able to wait,” Petrey said. The center contacts defendants in foreclosure after lawsuits are filed; it has received 1,689 Miami-Dade cases since May 1.
Petrey was at a loss to say why foreclosure service is so difficult.
Some, like Charles Taylor, president of Metro Process Servers in Miami, think the problem is on the clerks’ end.
“I don’t think the bottleneck is in service. I believe the bottleneck is that they’re not equipped to handle this stuff,” he said. The crushing volume of foreclosures combined with clerk layoffs conspired to swamp the system.
Home abandonment plays a factor in failed service, but the rate of home abandonment in foreclosure cases hasn’t been calculated.
“No one really keeps those statistics,” said Alex Sanchez, president of the Florida Bankers Association in Tallahassee. “You would have to call every FDIC-insured institution and every non-bank” to get it.
Fort Lauderdale foreclosure defense attorney Morton Antman, says the problem is that lenders and process servers don’t have the resources to pursue every foreclosure properly, and mistakes are made along the way. In Antman’s mind, volume is a factor, but chasing residents who don’t want to be found is a persistent problem. “The primary issue is that most of these people leave their house,” he said. “They just vanish, and how do you make service on these people? Constructive service is a lengthy process.”
And the high number of South Florida investment properties in foreclosure with absentee landlords further complicates service problems, said Marc Ben-Ezra, a Fort Lauderdale partner with Ben-Ezra & Katz, who represents lenders.
“A lot of people are making it difficult for the plaintiffs to serve them, or in other cases, people have just left the properties,” he said. “The plaintiffs have to do a significant amount of work in order for the plaintiffs to try to find them.”
Bailey speculates the problem is procedural. Summonses are issued by clerks after a lawyer files a foreclosure action and sent to process servers for service, which can take up to five business days. The proof-of-service materials then get sent back to lawyers as process servers serve the parties.
“Obviously, those numbers are staggering. Maybe their own internal systems are not able to keep up,” said Richard Burton, a Miami attorney who launched a pro bono foreclosure-defense project.
But the scope of the foreclosure service problems could be much worse than the 15,000 cases without service that Bailey discovered. Some foreclosure lawyers question whether there are more cases where service hasn’t been done, but court records show the defendants have been served.
Take a foreclosure case filed by Indymac Federal Bank against Ahron and Amitza Benvenisti, who bought a North Miami Beach condo for $177,938 in January 2006.
Indymac attempted to serve the husband through constructive service — or service by publication without actual notice — and the wife through a relative in Massapequa, N.Y.
The lender moved for a default judgment against the couple. Antman, who represented the couple, argued the process server contradicted himself by checking boxes stating he successfully served the wife through the relative, though Amitza Benvenisti doesn’t live at the relative’s address.
The relative, Gilan Benvenisti, swore in an affidavit that she doesn’t live with him.
A docket entry dated Monday said the clerk’s office was not authorized to enter a default because of a lack of service.
“I don’t know if this was intentional or not, but this isn’t the first time we’ve had situations where process servers do stuff like this,” Antman said. “I think it’s a mistake.”
Ron Rice Jr., a Plantation attorney with Kahane & Associates who represented Indymac, did not return calls seeking comment by deadline.
Bailey said she still is trying to interpret the data to determine the source of the problem and chart a new course.
But whoever is at fault, Bailey quickly notes the problem threatens to overwhelm a court system that already is strapped.
“The question I now face is what do I do with this?” she asked. The cases “would potentially be subject to dismissal,” but she noted many cases are recent enough that service within the four-month window is still possible.
“Let’s assume a third of these are subject to dismissal. In my spare time, I’ve got to figure out ways to generate orders in 5,000 cases and pay for 5,000 stamps and serve everyone,” Bailey said. “Are we going to do that? Yes. Am I trying to figure it out? Yes.”
“It all starts with service. If people don’t get served, all we’re doing is buying ourselves a bunch of title cases in six years,” the judge said.
Billy Shields can be reached at (305) 347-6649.
Jennifer Bailey photo by A.M. Holt
Filed under: CDO, CORRUPTION, Eviction, GTC | Honor, Investor, MODIFICATION, Mortgage, Servicer, foreclosure, securities fraud | Tagged: disclosure, foreclosure defense, foreclosure offense, fraud, Lender Liability, lost note, predatory lending, securitization, trustee
Linda:
I’m an attorney in Plantation and was a guest speaker at the recent Orlando seminar. You first must make sure that the docket sheet in the courthouse of your property does not show anything but the complaint filed. Many times the bank will say they served you when they did not.(Left you papers at the front door). If you know a lawsuit has been filed against you than it becomes a judicial case and must be defended. You can not allow the case to reach the DEFAULT stage. You must monitor by going on to the local clerk of court website. If you see that a lawsuit was filed and it is more than 120 days and they have not served you Only than you can move to dismiss the complaint by filing a Motion toDismiss Foreclosure Action and a Notice of Hearing with appropriate notice to the BANK attorney. If you would like a free consultation you may send me an e mail with your name and phone number and I would be happy to discuss your current options with you. My e mail is fsflaw@gmail.com
Linda,
Send me your email address. I may have a motion you can use.
Marcus (info@foreclosureProSe.com)
I am in Fl. and would like to know how to go about filing a dismissal on my un-served foreclosure property. Would the lender be notified of a dismissal procedure? What legal form would be used? Would it be a court case? Any help would be appreciated. Thank You.
I check it several times a week…still nothing. I also have set up a google search for my name, spouses, subdivision to see if anything has been published….nothing. How long can this go? Is there anything I should do. I have “loads” of stuff on this loan and problems both with TIL, the fact I have 5 first loans done in 14 months and none of these should have been approved, and within the 4 corners of the loan app, this loan should have never been approved in the first place. Should I just sit or should I push it? Any advice?
JT:
Your case is NOT dead. First and foremost you must pull the docket sheet for your case to see exactly what is going on or I suggest you go to the courthouse where your case was filed and look at the court file. Be aware and alert of the fact that the clerks at the courthouse are behind schedule in filing of documents into the official court file. The fact that you were not served the next step the BANK will do is publish the lawsuit in the local newspaper and serve you by what is called constructive service. Please see if this has occurred. If not you must monitor your case to make sure the Bank does not try to pull a fast one on you. I hope my advise has helped you to be AWARE.
Intersting article… I am in FL and Countrywide filed to foreclose in Mid November ‘08. I was not served and according to the clerk’s office, the summons was returned “non-served” in mid April. Now that we are into July, isn’t this case dead? I had received an “interesting” response to my QWR in April indicating my house had been sold on the court house steps August of ‘08. Obviously, they don’t have a clue. My question is this, isn’t this case dead (there are no other filings other than what I mentioned). Would there be a way to make this cose go dead for sure?
Thanks
http://www.nytimes.com/2009/07/01/business/global/01eurobanks.html?_r=1&dbk
Bank Woes Deepening in Europe
By LANDON THOMAS Jr.
Published: June 30, 2009
When the financial crisis struck the global economy last autumn, European governments moved swiftly to keep their biggest banks from falling into an abyss — never mind fears over nationalization.
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Related
Europe Competition Chief Sets Sights on U.K. Banks (July 2, 2009)
But now, as big banks on this side of the Atlantic show signs of recovery, a number of their counterparts overseas are sinking into a spiral of deepening losses that has prompted the European Union to consider a more aggressive approach to cleaning up its banking system.
Few people outside Belgium have ever heard of KBC Bank. But the travails of this lender, based in Brussels, highlight the broader challenges Europe is facing by not having more fully confronted the deteriorating health of its financial institutions.
Since October, KBC Bank has had to seek government relief three times. In all, it has received $41.5 billion in financing and guarantees to recover from disastrous mortgage bets that its financial engineers and traders made when times were good. For a bank with a balance sheet of just $425 billion, it is an astounding sum, exceeding the bailout of the Royal Bank of Scotland.
KBC is not alone. Souring loans and festering portfolios of securitized mortgages still plague a number of national banks.
Moody’s, the rating agency that recently issued a warning about the credit risk at 30 Spanish banks, is expected to lower its outlook for the Greek banking sector because of a sharp rise in nonperforming loans. In Ireland, the nationalized Anglo-Irish Bank still has a contaminated loan book that has emerged as threat to the country’s sovereign credit rating.
Nonperforming loans at Russian banks are even more worrisome, composing about 10 percent of the average bank’s books, a figure expected to balloon to 25 percent by the end of the year, forcing banks to raise as much as $80 billion in new capital. And in Sweden, the imploding Latvian economy has hobbled Swedbank, a huge provider of loans in the Baltics.
Scott Bugie, a European bank analyst at Standard & Poor’s, said it would be “a multiyear process” for these and other European banks to improve their capital positions and return to sound financial footing. He predicted that bad loan write-offs at Europe’s 50 largest banks would double next year.
The growing losses have raised calls for several new approaches, including a more aggressive approach by the European Union to diagnose banks’ creditworthiness. Now, regulators are debating whether to impose a regionwide stress test for banks, like the ones the United States required of its 19 largest banks.
But the European proposals have raised questions bordering on incredulity with some critics.
“This has the feel of a Magritte painting,” said Karel Lannoo, chief executive of the Center for European Policy Studies in Brussels, comparing the European Commission’s approach with the surrealism of the Belgian painter. “This is Belgium’s third-largest bank,” he said of KBC, “and it has had three successive rounds of aid, and they still can’t target the problem.”
KBC does not fit the profile of the classic overreaching bank. Its core business is serving Belgian corporations and individual investors. But as the credit boom approached its zenith, a small team of designers of exotic securitized investments pushed the envelope much further.
Whether it was manufacturing high-yielding collateralized debt obligations, leveraged lending to hedge funds or buying up life insurance policies and securitizing them, these bankers, based in London and New York, cultivated an anything-goes aura that was at odds with the bosses in Brussels.
So eager were KBC salesmen to sell high-reward products like collateralized debt obligations that they effectively promised risk-free returns, which lured a number of nonexpert investors.
A group of European companies that said it was told that the investments were marketed as risk-free is suing the bank.
Luc Philips, the chief financial and risk officer of KBC, said, “the decisions made by KBC FP were preapproved and vetted by the market and credit risk committees at the KBC Group headquarters in Brussels.” As for the lawsuits, Viviane Huybrecht, a spokeswoman, said the bank was examining them on a case-by-case basis.
The financial products team leaders, Darren Carter and Thomas Korossy, came to KBC in 1999 when the bank bought the equity derivatives business from D. E. Shaw, an American hedge fund.
The atmosphere was loose and geared toward risk-taking. Employees would come to meetings dressed in shorts and flip-flops, and if a business proposal did not meet the internal standard of a 22 percent return, it was discarded, former executives say.
Angry investors claim the unit was unsupervised. They point to the bank’s unusual practice of combining the roles of chief financial and chief risk officer, a policy that is in stark contrast to the most basic of corporate governance standards. In an interview, Mr. Carter said the bank’s collateralized debt obligations were of the highest quality, and were insured by the bond insurer MBIA.
When the mortgage market collapsed in late 2007, KBC, which had one of the highest ratios of collateralized debt obligations to bank capital of any institution in Europe, soon found itself close to insolvency. In October 2008 and again this January, KBC received 7 billion euros in public funds. When MBIA said in February that it could not pay off on its riskier positions, KBC was suddenly responsible for another 14.5 billion euros in collateralized debt obligations.
In May, André Bergen, the chief executive, turned to the government again, this time for a bailout of 22.5 billion euros.
The week before the latest infusion was announced, Mr. Bergen, 60, was rushed to the hospital for open-heart surgery. Late Tuesday, the bank said it was splitting the role of chief financial officer and chief risk officer, and that Mr. Bergen would step down permanently to recover, to be replaced by the interim chief Jan Vanhevel. Another crucial player, Guido Segers, resigned as the head of merchant banking, and traders and bankers have left as part of the inevitable downsizing. Still, the executives behind the collateralized debt obligation strategy remain in charge.
Ms. Huybrecht said the bank was trying to put the past behind it. But in two and a half years, if its investment is converted into KBC stock, the Belgian government could end up owning as much as 25 percent of the bank.