Florida Is Still Letting Banks Break the Rules in Foreclosure Cases

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Judge's gavelOver the holidays, I wrote about judges in Lee County, Fla., and how they appear to prioritize completing foreclosures over the rule of law. The most extreme example was an order in one case by Judge James R. Thompson that specifically exempted banks from a rule on affidavits that all other Florida litigants must follow -- specifically, part (e), which requires claimants to provide legally valid documents to back up their claims.

Now, Judge Thompson has disowned the original order, replacing it with an order that claims banks do have to follow the rules. The problem? Even though he says the rules of evidence do apply to banks, the judge allowed the bank in that case to use an affidavit that obviously breaks the rule.

Apparently, the judge merely changed his public position: Rather than admit the fact that foreclosing banks don't have to follow the rules on affidavits and loan documentation, he'll say they do, then fail to make them comply. That smells like a cover-up, not a correction. Indeed, the clerk of the court told a Florida TV station that the court never makes the banks comply with the rules on documentation.

A Defense Against the Hazards of Robo-Signing

The rule at issue goes to the heart of the robo-signing crisis.

When a party in any kind of Florida lawsuit wants to submit an affidavit as evidence, rather than getting testimony from a witness, the rule requires the party to attach to it any documents the affiant (the person who's swearing to the affidavit) reviewed in order to make the sworn statement. The attached documents give the court confidence that the affiant did in fact know that what he's swearing is true, and they allow the other side a kind of "cross examination" of the affidavit.

By definition, robo-signers don't review any documents when they sign affidavits, which in the foreclosure context are routinely used to "prove" the amount the homeowner owes, and that the homeowner is behind on payments. Despite numerous claims by banks that their paperwork is always accurate, plenty of evidence shows that in many cases, the amounts affidavits allege homeowners owe are wrong. That means robosigning isn't merely a "technical" violation. Indeed, the homeowner in the Judge Thompson case reportedly has bank statements documenting payments the bank accepted but didn't credit her with making.

For evidence that the amounts and facts in the affidavits are frequently wrong, consider that in the Bogar case (about which I reported earlier), Bank of America's records were wrong in every detail about four payments the homeowners made.

Consider further that JPMorgan Chase's (JPM) serial bank acquisitions produced a poorly integrated database of credit card accounts made worse by Chase's internal practices, according to whistleblower Linda Almonte (read her letter, starting at bottom of page 2).

How likely is it that the parallel databases for homeowner indebtedness were integrated with 100% success at Chase -- or any of the other too-big-to-fail banks like Bank of America (BAC) and Wells Fargo (WFC) that grew through rapid acquisitions? Or that their related record-keeping practices are more sound than those Almonte describes?

What About Actual Malice?

Or consider all the homeowners in mortgage modification plans or seeking to get into them who are constantly told that their papers have been lost and need to be resubmitted, even while they are making modified payments. If a bank can't even keep track of basic paperwork, is it reasonable to presume its records are so accurate that no one need ever check them?

And this is merely questioning banks on competence, ignoring the possibility of active malice: At least one lawsuit has alleged the banks are deliberately playing nefarious games with homeowners .

Add to that the extreme stories of banks foreclosing on homes bought with cash and other nightmares showing that the banks' records -- and their attorneys' files -- are a mess.

Finally, the infamous Law Offices of David Stern routinely foreclosed in Florida with substantively incorrect documents according to the sworn testimony of former employees.

Blindly Believing the Banks in Lee County

In spite of all this, in Lee County, banks aren't being required to attach the records that document the debt. In the Judge Thompson case, the relevant part of the affidavit says: "I am Vice President of Loan Documentation for Wells Fargo" (no, that's not the kind of vice president who gets a corner office -- or even an office -- or a paycheck, or anything else from Wells Fargo). And it says:
"...I am familiar with the books of account and have examined all books, records, and documents kept by Wells Fargo...concerning the transactions in [this foreclosure case.] ...The books, records and documents which Affiant has examined are managed by employees or agents whose duty it is to keep the books accurately and completely. Furthermore Affiant has personal knowledge of matters contained in the books, records and documents kept by Wells Fargo ... I have personal knowledge of the facts contained in this affidavit. Specifically, I have personal knowledge of the facts regarding the sums of money which are due and owing ..."
The bank didn't attach copies of any of those "books, records or documents," despite the requirements of the rule. Moreover, the affidavit was signed by known robo-signer Xee Moua (see pages 28-29). So, Todd Allen, the homeowner's attorney, asked Judge Thompson to reject the affidavit. Judge Thompson declined that request.

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In his most recent order allowing the Wells Fargo affidavit, Judge Thompson explains that his earlier order -- which said banks don't have to attach the records -- was a mistake. He attributes the error, in effect, to "counsel," or the attorney who prepared the order for him to sign. (Having other attorneys prepare judge's orders is a common practice nationally.)

Besides, Judge Thompson notes, he didn't even have a chance to look at the order because
a different judge actually signed it. Then comes the meat of the second order: "It is and was the court's ruling and position that all parties are required to comply with [the rule.] The court ruled that Plaintiff's Affidavit of Indebtedness complied with [the rule]."

Note: When I first wrote this article, I mistakenly believed the bank's attorneys had authored the proposed order. They did not; however, they did review and sign off on it. Todd Allen, the homeowner's attorney, inserted the language in the original order because the statement had been made by the judge, but a court reporter had not been there to document it.

"Due Process Is Irrelevant and in Grave Danger"


Judge Thompson's second order and his explanation raise two key questions: Why did the first judge sign the order, if it's not Lee County's policy to exempt banks from the rules of evidence? Second, since no records were attached to the presumably robo-signed affidavit, why did Judge Thompson rule that the affidavit complied with the law?

Allen commented:
"I almost think this is worse than the first order. At least he was on record saying that banks are not required to comply. But now, instead of being "on the record," he's just looking the other way when banks submit their affidavits.
Now, you have to ask what is the point of the rules of civil procedure if the Judge is not going to follow them? Due process is irrelevant and in grave danger when Judges take action like this. Unfortunately, Lee County homeowners will continue to suffer unnecessarily under this judicial system. They will continue to suffer until the Florida Supreme Court takes a long look at what's happening here."
To its credit, the Florida Supreme Court, like its counterparts in New York and New Jersey, has been trying to defend the rule of law. Sadly, a more robust action seems necessary.

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