Homeowners lose in landmark foreclosure decision, attorneys say

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Homeowners lose in landmark foreclosure decision, attorneys say

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Piggybankblog posted on 02/07/13

Cross linked with palmbeachpost.com

A Florida Supreme Court ruling involving a Greenacres foreclosure allows banks to get away with fraud, as long as they voluntarily dismiss the case, attorneys said today.

 

The case, Roman Pino v. the Bank of New York, was the first significant foreclosure complaint heard by the high court since the state’s legendary housing collapse.

At issue was whether a bank can escape punishment for filing flawed or fraudulent documents in a case by voluntarily dismissing it. A voluntary dismissal allows the bank to refile at a later date.

Royal Palm Beach-based foreclosure defense attorney Tom Ice, who represented Pino, had challenged a document created by the former Law Offices of David J. Stern and sought to question employees about its veracity. On the eve of those depositions, the bank moved to dismiss the case, blocking the court’s ability to address any sanctions.

“I would say the Supreme Court has spoken loud and clear that it doesn’t care about litigants that abuse the court system and that fraud is OK,” Ice said about the ruling. “There are no ramifications if you get caught defrauding the court. Just take a voluntary dismissal and start over.”

The case was unusual because the Supreme Court decided to pass judgment on the case even after Ice had negotiated a settlement with the bank that allowed his client to keep his house.

Florida law professors said the case, which was heard by the Supreme Court in May, was significant because it speaks to the integrity of Florida’s judiciary.

The 4th District Court of Appeal had previously agreed that a voluntary dismissal couldn’t be reversed, but said it wanted the high court to weigh in because “many, many mortgage foreclosures appear tainted with suspect documents.”

Banks warned of a “widespread financial crisis” if the Supreme Court rules in favor of Pino.

They argued banks will cut back on awarding home loans and be discouraged from filing legitimate claims if, when they find a paperwork error, they can’t voluntarily dismiss the case, correct the error and refile.

“With large numbers of defaulted loans in their portfolios, members of the Mortgage Bankers Association and Florida Bankers Association no doubt occasionally will make clerical errors, lose promissory notes, or discover other deficiencies in their foreclosure complaints that mandate correction in the interest of fairness,” the brief states.

Ice made headlines with the Pino case in 2010 when he was featured in a national magazine article about Florida’s so-called “foreclosure mills” and the discovery of allegedly fraudulent documents.

The robo-signing scandal was just breaking at the time, Florida’s foreclosure “rocket dockets” were full speed ahead, and David J. Stern’s Plantation-based firm was a foreclosure empire handling more than 100,000 cases statewide. It has since closed after losing most of its clients in the wake of the scandal.

Lenders halted home repossessions to revamp and rework cases. Beginning last year, foreclosures ramped up again.

“The banks won again, and like everything else in this state, we missed the chance to just say ‘stop,’” said St. Petersburg defense attorney Matt Weidner about the Pino ruling. “This is the final piece, we have legalized bank fraud and we now have a court system, an entire judicial system, that supports fraud.”

 
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