By now, most people have heard of the robo-signing scandal in Florida foreclosure cases. For those who haven’t, here’s a brief recap: Lenders bringing foreclosure actions in Florida typically use an affidavit of a bank employee in order to obtain a summary judgment (a final judgment without trial). However, it was discovered that some of the affidavits used for this purpose (along with some other loan documents) were falsified (either by the lenders or their law firms).
Two of the most highly publicized firms accused of being robo-signing violators are the Law Offices of David J. Stern, who at one time handled nearly 20% of all foreclosures in the state and Ben-Ezra & Katz, who is currently trying to withdraw from 15,000 cases.
The robo-signing scandal has come to ahead and now many lenders are cutting ties with their attorneys and finding new ones. Fannie Mae spokeswoman has transfered foreclosure files from terminated firms to new lawyers. Fannie has approved 16 firms to handle its cases up from only nine firms last year. Freddie Mac uses 14 firms, up from four. Timiraos, Nick, Foreclosures Trapped by a Lack of Lawyers, WSJ, May 4, 2011.
The bottom line for the homeowner is that the experienced firms that have traditionally handled foreclosures in this state are being replaced by smaller, less-experienced firms. Spreading the foreclosure work so thin is both and blessing and a curse for lenders. On the one hand, they are trying to do things more responsibly, on the other, their ability to effectively and quickly communicate with their attorneys will be vastly diminished. For the borrower, this breakdown in communication will surely lead to frustration in dealing with loss mitigation.