10/05/2012 - Myclipp

Reuters General/ - Article, Qui, 10 de Maio de 2012
CLIPPING INTERNACIONAL (Civil Rights)
Florida Supreme Court hears landmark
foreclosure suit
By Michelle Conlin Thu May 10, 2012 5:14pm EDT
n">(Reuters) - The Florida Supreme Court heard
arguments on Thursday in a landmark lawsuit that
could undo hundreds of thousands of foreclosures and
open up banks to severe financial penalties in the state
where they face the bulk of their foreclosure-fraud
litigation. Legal experts say the lawsuit is one of the
most important foreclosure fraud cases in the country
and could help resolve an issue that has vexed
Florida's foreclosure courts for the past five years: Can
banks that file fraudulent documents in foreclosure
proceedings voluntarily dismiss the cases only to refile
them later with different paperwork?The decision,
which may take up to eight months, could influence
judges in the other 26 states that require judicial
approval for foreclosures.The case at issue, known as
Roman Pino v. Bank of New York Mellon, stems from
the so-called robo-signing scandal that emerged in
2010 when it was revealed that banks and their law
firms had hired low-wage workers to sign legal
documents without checking their accuracy, as is
required by law.If the state Supreme Court rules
against the banks, "a broad universe of mortgages
could be rendered unenforceable," said former U.S.
Attorney Kendall Coffey, author of the book,
"Foreclosures in Florida."One issue in Pino's case was
an allegedly fraudulent mortgage assignment, the legal
document that binds a loan to a lender.Bank of New
York Mellon, as trustee of the mortgage-backed
security that owns Pino's loan, is the named plaintiff in
the lawsuit. But it was Pino's mortgage servicer, Bank
of America, that handled the loan's administration,
foreclosure proceedings and coordination of
litigation.The parties reached a confidential settlement
on July 22, 2011. That same day, Bank of New York
Mellon and Bank of America filed a mortgage
satisfaction on Pino's home with the Palm Beach
County Recorder's Office.Even though the two parties
settled the lawsuit, the Supreme Court is still hearing
the case. The court said the voluntary dismissal
strategy used by the banks was of great "public
importance" because so many foreclosures in Florida
had been tainted by fraudulent paperwork.Florida
homeowner defense attorney Thomas Ice has
represented Pino, a drywall hanger, since October
2008 when Pino received a foreclosure notice after
falling behind on his mortgage payments. Pino bought
the home in 2006 for $203,000. He put 20 percent
down and took out a loan from Bank of America for the
rest.An associate with Ice's firm, Amanda Lundergan,
made the oral arguments on Ice's behalf in Thursday's
proceeding. Lundergan is a recent graduate of the
Florida Coastal School of Law.Bank of New York
Mellon was represented by Bruce Rogow, an attorney
who has argued civil rights cases and defended
American Nazi Party members and Ku Klux Klan
Grand Wizard David O. Duke. He has also represented
consumers in the class action against banks for
overdraft fees.During the proceeding, which lasted less
than an hour, the justices asked the lawyers technical
questions."Voluntary dismissal shouldn't be used as a
shield for fraud," said Lundergan in one response. "It
sets up a system where every litigant is condoned and
encouraged to lie, cheat and steal, knowing that if they
are caught, they can simply voluntarily dismiss and
absolve themselves from that fraud."At one point,
Rogow said he believed that doing away with voluntary
dismissal altogether was simply too broad a remedy
because it would affect all cases, not just
foreclosures."There are sanctions that can be
imposed. We are not saying no sanctions if there are
improper submissions," he said.Voluntary dismissal is
the banks' main strategy in judicial states for dealing
with homeowners who challenge foreclosures, said
Adam Levitin, Georgetown University consumer and
housing finance professor, who has served as special
counsel to the Congressional Oversight Panel
following the 2008-2009 financial crash."If that fails,
strategy No. 2 is to buy them off," says Levitin.If the
court rules against voluntary dismissal, the banks face
the costly specter of not being able to simply refile
cases using new paperwork and expect homeowners
not to challenge the suits.In Florida, that's a lot of
cases. In the year through July 11, 2011, more than
104,000 foreclosure cases were voluntarily dismissed
from Florida's courts, according to the Office of the
State Courts Administrator.Attorneys who work in the
foreclosure field say such dismissals usually occur
because of the banks' legal document issues.A ruling
against the use of voluntary dismissal would mean that
the nearly 400,000 homeowners who are living in
Florida's foreclosure limbo would simply stay there.But
it would not affect Pino's confidential settlement. No
matter what, Pino, now 41, still owns his house.Palm
Beach County says it's now worth $32,915.(Editing by
Alwyn Scott and Kenneth Barry)
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