Law Firms Representing Lenders Need To Get Their Act Together.
As foreclosure lawsuits overloaded the Manatee and Sarasota court system last year, the chief judge put in new rules to force the lenders’ law firms to meet with homeowners and discuss alternatives to foreclosing.
The lenders and their lawyers widely ignored it.
Last week, out of 79 cases set for hearings in Manatee County, only 5 lawyers for lenders followed the rules.
So 12th Judicial Circuit Chief Judge Lee Haworth now plans to hit the law firms in the pocketbook, with a new rule requiring them to show up in person — not just over the telephone — for all foreclosure hearings, starting in March.
“This is to get their attention, and I think we’re going to get it,” Haworth said Tuesday. “When a judge says you have to show up in court, that affects the bottom line. It cuts into their profit.”
Haworth’s order cites a more than 600 percent increase in mortgage foreclosures since 2006.
The come-to-court requirement is modeled after similar rules adopted in Lee, Collier and Charlotte counties. Haworth says foreclosures are overrunning the court system in Sarasota and Manatee.
In 2008, the Sarasota-Bradenton-Venice region ranked No. 11 in foreclosure filings among the nation’s top 100 metropolitan areas. Economists predict the tide of foreclosures will continue throughout this year.
There are only a handful of law firms filing foreclosure cases in Florida. They are not located in Sarasota and Manatee counties, so they usually appear in local courts via telephone to save money.
Those firms will now have to hire local attorneys to cover the hearings, but also spend more time on each case making sure the checklist of requirements are met — including the requirement to meet with homeowners within 45 days after the foreclosure is filed, Haworth said.
Now, homeowners, their attorneys — and even judges — rarely get a call back from law firms filing foreclosures.
The lack of communication makes it impossible for a homeowner to question a debt, or to work out an arrangement other than foreclosure until the case is in front of a judge.
“I just think it’s important homeowners have an intelligent conversation with guys from the other side to see if there’s a way they can save their home,” Haworth said. “It’s too important an issue to ignore.”
But the new rule is unlikely to slow the blistering rate of foreclosure filings in Manatee and Sarasota counties, attorneys familiar with the process say.
Often their clients asking for lower monthly payments or some other renegotiation have to wait months before someone from the company holding their mortgage will call back.
“It’s a logjam that’s never going to end without some legislation,” Sarasota foreclosure defense attorney Donald Tiller said. “They’re running over everyone, and the courts can’t do anything about it except these things, because the homeowners for the most part don’t show up.”
The law firms representing lenders take foreclosure cases in bulk at a flat rate, so they have a financial incentive to get them through the system as fast as possible, Haworth said.
Yet the line attorneys working these cases often do not have the authority to renegotiate mortgages or make other deals that could avoid foreclosure.
Largo foreclosure defense attorney Ben Hillard said it would take more than new rules in court to get mortgage lenders to renegotiate with people who cannot pay their loans.
Two-thirds of all the mortgages in the past eight years have essentially turned into bonds, said Hillard, a former investment banker.
A mortgage might be split between four different trusts that oversee the bonds, all of which might have different criteria for when to negotiate and when to foreclose.
“They would have to get authority from four different entities to settle these cases,” Hillard said.
Haworth said that just shows the law firms representing lenders “need to get their act together.”
Posted By George Beckus
