Foreclosures in area surging under State Attorney General Pam Biondi
STORY BY STEVEN M. THOMAS, (Week of November 3, 2011)
Indian River County foreclosures jumped nearly 150 percent between February, when 50 houses were taken back by banks, and August, when there were 121 final judgments of foreclosure. Numbers stayed high in September and October, with more than 100 foreclosures per month.
The increase coincides with the tenure of Florida Attorney General Pam Bondi, who has been widely criticized for firing attorneys in her office who aggressively went after law firms engaged in allegedly fraudulent foreclosure practices.
Countywide, 1,127 homes were in some stage of foreclosure at the end of October, according to RealtyTrac, the leading online marketplace for foreclosures.
That includes 752 homes in default, 270 bank-owned properties and 80 properties scheduled for what is still called “sheriff’s auction” although sales are now conducted online by the Clerk of the Court instead of on the courthouse steps.
On the island, 64 homes are in default, 18 properties are owned by banks and seven homes are currently slated for auction with starting bids ranging from $47,000 to $2.35 million.
Lenders are in the process of taking 832 homes in Indian River County right now, including 71 on the barrier island. Most are probably legitimate foreclosures in which the homeowner has failed to make loan payments.
But bearing recent history in mind, it seems smart to have an objective third party watching over the proceedings to make sure they are fair and legal. The dramatic increase in final judgments of foreclosure in the county is part of a statewide trend that includes a 200-percent increase in bank repossessions in Miami-Dade County, where more than 25,000 homes are in the foreclosure pipeline.
“Banks are finally working through the problems associated with “robo-signing” that came to light last fall,” says Clay Collins, a loan officer at CenterState Bank. “There were extreme abuses in the foreclosure process, including fake signatures on documents and lawyers showing up in court to repossess homes without being able to prove ownership. Judges starting kicking them out of court. Banks had to go back and redo their whole process.”
In 2010, then Attorney General Bill McCollum launched investigations into allegations of unfair and deceptive actions by eight Florida law firms handling foreclosure cases, stating in a press release that “thousands of final judgments of foreclosures against Florida homeowners may have been the result of improper actions of the law firms under investigation.”
According to McCollum, “because many mortgages have been bought and sold by different institutions multiple times, key paperwork involved in the process to obtain foreclosure judgments is often missing. On numerous occasions, allegedly fabricated documents have been presented to the courts to obtain final judgments against homeowners.”
McCollum’s actions were part of a nationwide trend that forced big banks to suspend foreclosures in so-called “judicial states” where the process is overseen by courts.
Foreclosures, often with false or faulty documents, continued in states where courts do not review paperwork presented by banks and their lawyers.
In Florida, The Law Offices of David J. Stern, which had more than 100,000 foreclosure cases in the pipeline last fall, was forced to shut down its foreclosure business in March as a result of McCollum’s investigation, and banks statewide pulled back from their allegedly fraudulent practices.
Pam Bondi then was elected attorney general, taking office on Jan. 4, and the trend reversed.
According to numerous press reports, Bondi maintains she is pursuing bad actors in the foreclosure process but she has been harshly criticized by consumer groups and state lawmakers for actions that seem to indicate the opposite.
In May, June Clarkson and Theresa Edwards, state lawyers who led foreclosure fraud investigations under McCollum, were forced to resign from their posts in the Fort Lauderdale economic crimes bureau.
The two had received positive performance reviews from McCollum and were known for aggressive, effective action against shady foreclosure lawyers.
In March they extracted a first-of-its kind $2 million settlement from attorney Marshall C. Watson and his law firm, one of the largest foreclosure firms in Florida, for alleged improprieties in the prosecution of foreclosure cases.
"Obviously we did our job too well," Edwards told Orlando Sentinel columnist Scott Maxwell at the time. "We were making too much noise."
“We think the big banks and the financial industry have leveraged their enormous political power to have these attorneys removed,” Mark Ferrulo, executive director for Progress Florida, said after the firings.
Progress Florida is a non-profit organization that promotes progressive causes.
According to the Miami Herald, Jacksonville-based Lender Processing Services, one of the firms Clarkson and Edwards were investigating, gave $36,000 to the Republican Party of Florida and donated to Bondi’s campaign for attorney general.
Clarkson said she and Edwards were warned repeatedly by a Bondi lieutenant about interfering with the firm before being given the choice to quit or be fired.
“Public records indicate that these terminations occurred while [Clarkson and Edwards] were in the midst of successful mortgage fraud litigation and in spite of prior successful reviews," state Rep. Darren Soto, D-Orlando, wrote in a letter to Bondi. "As a member who represents an area ravaged by foreclosure fraud, these terminations present an overwhelming public concern."
In August, Soto and State Senator Eleanor Sobel formally asked U.S. Attorney General Eric Holder to launch a Department of Justice investigation to determine whether Clarkson and Edwards were forced out for political reasons.
“The last I heard, the Department of Justice plans to wait for the results of the state inspector general’s investigation into the firings before proceeding,” says Soto. “If there are any glaring violations in the inspector general’s report, they say we can refer it to the FBI at that time.”
A second major foreclosure controversy for Bondi ensued when assistant attorney general Andrew Spark released a letter in August accusing his boss of failing to aggressively pursue foreclosure malfeasance and consumer fraud cases.
His letter also notes that assistant attorney general Joe Jacquot left his job in the AG’s office in May to work for Lender Processing Services, the firm investigated by Clarkson and Edwards, and that Mary Leontakianakos, who was the head of the Economic Crimes Division, joined Marshall Watson’s law firm this summer.
“My concern is that Clarkson and Edwards were fired to help out the banks and my concern among some of the employees who left is at least the perception of coziness between the banks, the mortgage industry and the attorney general’s office.”
Bondi’s alleged bias for financial institutions over homeowners may be shared by Gov. Rick Scott and Republican legislators.
According to the St. Petersburg Times, Scott, House Speaker Dean Cannon and Senate President Mike Haridopolos say they are “considering legislation to change Florida laws so judges won’t have to referee foreclosures.”
Scott says he is considering eliminating court oversight to speed up a bogged down foreclosure process. Because of a backlog of cases, it takes approximately 600 days on average currently to complete the process in Florida, which is half again as long as in states without judicial review.
But forgery and deception practiced by banks and their attorneys to take homes they had no legal right to seize only came to light in Florida because of court review, so taking the courts out of the process might well unleash another round of widespread fraud, according to public advocates and legislators who oppose Scott’s idea.
"I don't think we need to be replacing people's rights with expediency, particularly when we're talking about property rights," says Soto. "This is a homesteader's right to access the courts. I can't think of any property right more important."
In recent years lenders have attempted to foreclose on homes purchased for cash. On other occasions two banks have foreclosed on the same home, both claiming ownership. Lenders have routinely and on a massive scale used documents that were false, including ones claiming to show recent transfer of ownership authorized by institutions such as Lehman Brothers and Countrywide Mortgage that no longer exist.
Bondi did not respond to a request for comment about her handling of foreclosure fraud.