Niurka Fernandez Asmer, Esq.

• Law suit is commenced by the filing of a Complaint and recording a Lis Pendens

• Lis Pendons notifies the world that a foreclosure is commencing on property.

• The lender has the burden of proving it has the right to force the note and mortgage against the property.o The nature and amount of the defaulto Satisfaction of conditions precedent

• Attorneys must carefully review the note and mortgage to determine whether the current lender has standing to sue

Judicial foreclosure in the State of Florida

• Attorneys must carefully review the note and mortgage to determine whether the current lender has standing to sue.o Is the original lender listed on the note and mortgage, the plaintiff suing

your client?o If they are not the original lender, was the note endorsed over to the

Plaintiff? Was it a blank endorsement or was it endorsed to the Plaintiff Who signed the endorsement? Robo-signers? Look online for large bank robo-signers.

o Is there an assignment of mortgage? Look to see if an assignment was filed and recorded? Was it mentioned in the complaint? When was the assignment signed? Was it properly recorded and notarized?

o Who has your client in making payments to?o Has the lender filed a “Lost note” count in the Complaint?

Look to see if they assert they are the owner and holder of the note. How can they be if they lost the note?

Pleadings and PracticeThe Summons and Complaint

• Motion to Quash Serviceo Several times your client will not be properly served. o Look to see who the process server is. Plaintiff’s counsel may own the

company.o See Rule of Procedures 1.070 and 1.080

• Motion for Enlargement of Timeo File a Demand for Written Verification of Debt pursuant to the Fair Debt

Collection Practices Act ("FDCPA"), 15 U.S.C. 1692 et seq. and a request for production of documents.

Collection process stops until verification is provided. Base your enlargement of time on this request. They must comply. You are disputing the amounts claimed owed in the Complaint.

Pleadings and Practice Motion Practice

• Motion to Dismisso Failure to post non-resident cost bond.

• File Notice of Recession under the Federal Truth in Lending Act, 15 U.S.C. §1635 and 12 C.F.R 226.23 and the Florida Fair Lending Act Fla. Stat. §494.00792(d) o Must be done within first 30-days of the lawsuit being filed.o Do this immediately.

Motion Practice Cont….

• Motion to Set Aside Defaulto 9/10 times your client will wait months before retaining counsel. o A default is entered and needs to be set aside.o Must attach an affidavit from you client as to why they failed to

timely respond to the complaint. o Fla. R. Civ P. 1.160o If at MSJ the Plaintiff failed to issue a default, Judge will usually

not enter judgment. File an answer with affirmative defenses or response to complaint

with Motion to Dismiss and file objections to MSJ

Motion Practice Cont…

• Lack of Standingo Is the original lender listed on the note and mortgage, the plaintiff suing

your client?o If they are not the original lender, was the note endorsed over to the

Plaintiff? Was it a blank endorsement or was it endorsed to the Plaintiff? Who signed the endorsement? Robosigners? Look online for large bank robo signers.

o Is there an assignment of mortgage? Look to see if an assignment was filed and recorded? Was it mentioned in the complaint? When was the assignment signed? Was it properly recorded and notarized? If Assignment filed AFTER complaint, no standing to sue.

o Who has your client making payments to?o Has the lender filed a “Lost note” count in the Complaint?

Look to see if they assert they are the owner and holder of the note. How can they be if they lost the note?

Was the note attached to the complaint. Must be if they have it.

Motion to Dismiss

• General denial of allegations regarding lost note is not enough.

• Defendant must deny lost note allegations• You may file a counterclaim with the affirmative defenses

because the lender then cannot take a voluntary dismissal without court order and the SOL may expire for the TIL claim. You also have more control of the lawsuit.

Answer & Affirmative Defenses

• Accountingo Banks are the worst at keeping track of their payments.o Saxon mortgage and Wells Fargo Loans in particular.

• Loan Modificationo Was the client in a loan modification when the complaint was

filed. o Where they making their trial payments or awarded permanent

loan modification?• Partial Payments

o Did the Bank collect partial payments after the initial date of default?

• Fraud in the Inducemento Did the Defendant get TILA disclosures?o Must be specific with Facts to allege fraud under Rules of

Procedure• Failure to disclose the whole truth• Unclean Hands

Answer & Affirmative Defenses Cont…

• Bank’s Fraud rendered a deficiency judgment invalid.• Mortgage and note are voidable due to misrepresentation• Overreaching created unjust and undeserved advantage. • Improper Notarization of mortgage and note• Bank failed to mitigate damages• Bank fraudulently induced Defendant not to make

payments in the hopes of loan modification.

Answer & Affirmative Defenses Cont…

• Propound Interrogatories and a Request for Production.o Bank’s are swamped with litigation and will take forever to

produce these documents.• Also serve a Notice of Taking Plaintiff’s Deposition Duces

Tecum. Gives more control over the case.• Usually lender will call you and ask:

o What do you really want? Extended Sale date? Waiver of deficiency Rescind for client

o Can I have more time answero Can I have more time to find you a witness?

Answer to both above: Sure, as long as no dispositive motions are set for hearing. After, I take the bank’s deposition and avoid an expedited deposition fee.

Discovery

• Lender’s depositiono Preserve it for trial. o 75% of the time they are not available for trial and will settle the

case.o However, rep usually doesn’t have the info you need or the

documents you’ve requested.o Lender will usually admit that they did not verify the documents

attached to compliant or exhibits attached to affidavits in support of MSJ.

• Closing Agent Depos• Mortgage Broker Depos

Very rare to depose these individuals. Usually say “I don’t remember. It was years ago.” The key is what was given to the client at Closing Compare the documents in all the closing packages: Lenders

underwriting, closing agent and mortgage broker.

• Client’s depositiono Very important if the case turns on what was provided at closing.

Have your client prepared to give accurate and precise answers.o Client may also testify to account blunders.

Discovery Cont…

• Lenders counsel may move to strike your affirmative defenses. Set it for hearing!o These motions are usually not well taken and prolong the case.

• Two Rules: 1.140 (f) and 1.150o A party may move to strike redundant, immaterial, impertinent,

or scandalous matterso Sham pleading: request the court to hear motion, take evidence.

Motions to Strike

• Rule 1.510: it will issues the best in the slightest doubt remains, the court must resolve the doubt in favor of the non—moving and deny summary judgment.o Manning v. Clark, 71 So.2d 507 (Fla 1954),

• The facts are undisputed the conflicting issues arise over the inferences, the court must deny summary judgment. o Distribution company v. Sav-A-Stop, Inc. 124 So.2d 753 (Fla. 1

DCA 1960)

Motion for Summary Judgment

• Be mindful of timeline deadlines pursuant to Rule 1.510 (c.).

• Bank’s attorney will file MSJ, usually including the affidavit of the servicing agent who has reviewed the file, many times not attaching the documents that he is a testing are true and accurate.o Argument: The affidavits are hearsay and lacking foundation or

predicate because the Afghan in summarizing the legal import of documents, usually trust agreements and servicing agreements without attaching copies.

Motion for Summary JudgmentObjections

• Standing:o Does the lender have the original note? If not, have they

properly reestablished it under Florida Statuteo Has the Plaintiff filed an affidavit of lost or stolen note? Look to

see if the proper plaintiff is signing the affidavit. • Assignments:

o Was the assignment properly recorded and notarizedo When was the assignment recorded, if it was recorded? o If After to the law suit was filed, they do not have standing to

sue. Must refile the case.• Endorsements :

o Was the note endorsed in blank? o Look to see who signed the note. Research on the internet who

this person is and if they’ve admitted to be a “robo-signer”• Allonges:

o Was the allonge signed by a bank representative?o Usually these allonges are prepared by Plaintiff’s law firm and

have no date, signature or valid authenticating evidence.o If there is room for an endorsement on the note, argue the note

needs no endorsement. The bank is trying to hide the fact that they don’t have the proper documents to foreclose.

Motion for Summary Judgment Objections:

• Plaintiff has not properly reestablished the noteo Cannot reestablish a negotiable instrument under Fla. Stat.

71.011. Must be under Fla. Statute 673.3091 and person suing to foreclose must have the right to foreclose and reestablish when he files the lawsuit.

o Post lawsuit, assignments establish the lender did not own at time of suit unless pre-suit equitable assignment. Mason v. Rubin, 727 So. 2d 283 (Fla. 4th DCA 1999) National Loan Invest. V. Joymar Ass., 767 So. 2d 549 (Fla. 3rd

DCA 2000) State Street Bank v. Lord 851 So. 2d 790 (Fla. 4th DCA 2003)

Motion for Summary JudgmentObjections

• Your client may have just realized they are being foreclosed on. Why?o Failure to properly serve.o Mistake, error or newly discovered evidence.

• The note properly reestablished?• The affidavits filed in support of MSJ are fraudulent.

Executed by Robo-signers• The assignment of mortgage is invalid and Plaintiff has no

right to foreclose.

Motion to Strike Final Judgment

• Certificate of title issued on the date of sale. You have 10-days to object to the sale.

• Title does not pass to the bank until the Certificate of Title is issued by clerk and recorded.

• During that 10-day period, the Defendant may object to the sale pursuant to §45.031 (5), Florida Statute

• The purpose of §45031 (4) Fla. Statute, is to afford a mechanism to assure all parties and bidders to the sale that there is no irregularity at the auction or any collusive bidding, etc. Emanuel v. Bankers Trust Co., 655 So. 2d 247, 249-50 (Fla. 3rd DCA 1995)

• “If a party files an objection to the foreclosure sale and the court determines there is a valid basis for the objection, the property is re-advertised and resale begins anew. Upon the re-advertisement and resale, a mortgagor’s lost redemptive rights temporarily revest.” YEMC Construction v. Inter Ser, U.S.A. 884 So. 2d 446 (3rd DCA 2004), citing JRBL Dev., In. v. Maiello 872 So. 2d 362, 363 (Fla. 2d DCA 2004).

Objection to Sale

• If your client is still in the house, the bank or 3rd party purchaser MUST file a writ of possession with the clerk and the sheriff will remove them.

• Valid basis for objection to sale:o Current in loan modification with lender in review. Lender stated

they would not foreclosure during loan modification review.o The 3rd party purchaser or bank has changed the locks on the

Defendant’s property thereby denying access to the home to remove their personal property.

o There was fraud involved in the sale at auction.

Objection to Sale

• Need to determine what your clients’ goals are. o Keep the home?o Strategically defaulto Short sale

• Consider client’s financial conditiono Can they afford the home?o Do they qualify for a loan modo Have they experienced a financial hardship?

• Prepare your client for the hard truth based on the financial data you’ve reviewed.

Foreclosure Alternatives

• Loan Modifications• It’s a numbers game!!!!• Don’t promise your client’s a loan mod.

o Must review their financial information.o Pre-qualify your client's on the phone with the lender before

taking on this task.• Do NOT tell your client's to stop paying their mortgage in

order to qualify for loan mod!

Foreclosure Alternatives cont…

• HAMP: Obama plan or “making homes affordable.”o Primary residence. Must be living in the residenceo Mortgage pre- January 1, 2009o Total mortgage payment exceeds 31% of gross monthly income o Owes less than $729,750.00o Has a documented financial hardship.

• Must complete a 3-month trial period. • Investors govern whether to approve loan mod. • Foreclosure SHOULD be suspended, but normally is not.

Foreclosure Alternatives cont…

• Internal Modification:o If client does not qualify for HAMP, lender will run application for

internal modification.o If they default on HAMP, client will be reviewed for internal

modification. RARELY Reduces principal balance. Reduce interest rate Extend term to 40 years Forgive arrearage-not normally. Will be put on the tail end of the

mortgage

Foreclosure Alternatives cont..

• Mediationo Client has the right to mortgage mediation during the first 120-

days after the complaint is filed.o This is a glorified loan modification. o Each county has RMF program

Hillsborough County: Hillsborough County Bar Associations

Pinellas & Pasco County; Mediation Managers, Inc.

o All communication is confidential. Make sure you go through the roll call at beginning of mediation to determine bank has full authority to settle and all documents were produced.

Foreclosure Alternatives

• Deed in Lieu of Foreclosureo Investor must offer to client. o Title must be clean. No 2nd liens or mortgageso Cash for Keys if lender wants to negotiate a settlement

• Short Saleso This is also a numbers game.o 10% contribution for investment propertieso Investor determines contribution at closing if primary residence

based on client’s financials and hardship.o You must be a licensed attorney to conduct a short sale.

Recent article publish by the Florida Bar. Legal and tax advise must be provided to short sale Client.

o Waiver of deficiency-make sure it is contained in acceptance letter.

o Property must be listed for 3-months prior to SS approval.

Foreclosure Alternatives cont…

• Tax implicationso DO NOT GIVE TAX ADVICE! You are not an accountant.o Put it in your retainer agreement that you cannot give tax advise.o The lender will issue a 1099 for any debt forgiveness.

See Mortgage Debt Relief Act of 2007 forgives “phantom income” Applies to primary residence only.

o The IRS treats as income.o Cannot have a 1099 issued and later collect on deficiency. One

or the other.

Short Sales cont…

• Must reside in State where you file. • Can only file Chapter 7 every 8 years, chapter 13 every 6

years (certain exceptions).• State law applied for residency during previous 180-days

of domiciliary.• Take credit counseling course • Means Test-looks at 6 month average of all household

income to determine whether debtor may file Chapter 7 or Chapter 13.

• Automatic Stay: once you file, all collections cease and desist. Violations award sanctions

• Reaffirm secured debts (car or house). Beware!

Bankruptcy

• Chapter 7:o Complete discharge of all debt including deficiency and

judgments.o Lien is still valid and lender can continue foreclosure.

If client surrendering property, lender will seek to lift stay.

o Not given an opportunity to catch up on mortgage arrearage.

o Do not file bankruptcy JUST because there is a foreclosure on client’s credit. There should also be unsecured debt.

o Client should be aware that even after surrendering the property in BK, they will still be title owner of property and responsible for any debts incurred after the bankruptcy petition is filed (HOA, condo dues, etc..) Suggest the client short sale the property. Lender will

easily approve it after a bankruptcy discharge is entered.

o Client should understand reaffirming a debt means it is non-dischargable.

Bankruptcy

• Chapter 13: personal reorganizationo If income exceeds family median income test, you will be put in a

Chapter 13 plan to pay a % of debt based on DMIo Feasibility test: Must be able to make payments proposed by

attorney and confirmed by the Trustee. o Able to pay mortgage arrearage over 3-5 year period.o Can strip off 2nd mortgage liens.o Can cram down mortgage note to fair market value of property

only on investment (also on vehicles). o Debts are capped: $336,900 for unsecured debt and

$1,010,650.00 for secured debt. Problem for debtors with several properties who want to keep their

investment, but cannot due to cap. Usually advise short sale of some properties before filing BK

Bankruptcy Cont…

• Defense attorneys must be alert of sloppy work by Lender and their counsel.

• Two law firms have gone under due to fraudulent filings in open court o Ben Ezra Katzo Law office of David Stern

• Courts are issuing sanctions against the attorneys and banks for sloppy paper work.o Look at the affidavits?o Is the complaint verified ?o Have defaults been entered against Defendants?o Fla Bar has issued new rules, which obligate Plaintiff’s counsel

to notify the client of improperly executed documents and provide them with a chance to correct. If not the lawyer is obligated to notify the court.

Ethics

• Competencyo Legal knowledge o Skillo Thoroughnesso Preparation

• Fl Ethics Rule 4-1-1o By taking this course, all are furthering knowledgeo Enlist an attorney with knowledge in this fieldo Evaluate the complexity of the case. If not up to it, get out!

Ethics cont…

• Frivolous Claims and Defenseso Do not file pleadings without having evidence to back up your

facts.o Plaintiff counsel are now filing Section 57.105 sanctions against

defense attorneys for filing frivolous pleadings as well. Delay for sake of delay Frivolous claims or defenses Lack of candor Falsification of evidence (mostly plaintiff’s issue)

Ethics Cont….

• FTC and State Attorney General are cracking down on loan mod fraudscams

• Only an attorney can collect fees up front for loan mod.• NEVER promise your client a loan mod. You cannot

guarantee this• NEVER instruct your client to stop paying their mortgage

to get a loan mod.• NEVER split fees with a non-lawyer. • ALWAYS communicate with your cleint

Loan Modification Scams

• Biggest complaint by Florida Bar is that the attorney does not communicate with their clients.

• With today’s technology there is no reason why you can’t fire off an email with documents received or a status update.

• If you can’t return calls, schedule a telephone conference when you are in the office.

Client Communciation

• Fla. Bar rules regarding advertising have changed over the last year.

• Internet recommendations must have a disclaimer at the very top of web page or as a pop up. o Must be the first thing the prospective client sees.

• Have all advertisement approved by the bar.

Advertising….

• ALWAYS have your client sign a fee agreement• Lay out the terms and conditions of representation• Amount of Fees and what case is covered by the fee

paid.o Hourlyo Flat Feeo Monthlyo Mixed feeo Loan modification

Fee Agreements

• Questions?

Closing..