Mortgage Servicing Fraud
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The ‘straight talker’

Known for ‘whacking lenders’ and the lawyers who represent them, Bankruptcy Court Judge Joel Rosenthal says he’s just doing his job

By Julia Reischel
Published: May 4, 2009

On a recent Thursday morning in federal court in Worcester, Judge Joel B. Rosenthal is ripping into Thomas C. Tretter.

"I think you're wasting my time," Rosenthal snaps in response to the lawyer's request that his client, a bank, be allowed to foreclose on a piece of property. In the judge's opinion, Tretter's Woburn law firm, which regularly represents lenders in foreclosure proceedings, should know better.

"Under what possible interpretation of the law do you need relief from the stay to foreclose?" Rosenthal thunders. "Frankly, you could even argue that maybe someone is churning up some fees here. Motion denied. You're wasting my time."

Tretter seems unruffled by the tongue-lashing, perhaps because it's not his first. Rosenthal, who was appointed to the U.S. Bankruptcy Court in 2000, is notorious for unleashing diatribes against the lawyers who appear before him, especially those who represent consumer lenders.

In recent years, the judge has been on a tear, condemning the "sloppy" practices of lenders and mortgage processors that can't prove ownership of the mortgages on which they are foreclosing. In one case that sent shockwaves across Massachusetts, Rosenthal not only sanctioned a lender $750,000 for its haphazard recordkeeping and for attempting to foreclose on a mortgage it did not own, he also sanctioned the law firms that represented the lender, including Tretter's firm, Ablitt Law Offices.
As one bankruptcy lawyer succinctly puts it: "[Rosenthal] has ... become famous for whacking lenders."

Some even wonder whether the judge's scathing critiques of the consumer lending industry is evidence of an underlying bias.
But Rosenthal is unrepentant.
"I just call balls and strikes," he says. "I don't make the rules, but it seems to me that the rules should be no different for people who represent the small guy."

'Roll with the punches'

Those who know Rosenthal say what you see is what you get.
"He's a straight talker. There's no fiddling around and diddling around with Joel - never was," says Barry Y. Weiner, a partner at Boston's Ruberto, Israel & Weiner where Rosenthal practiced for 13 years and served as managing partner for five.

"But that was part of what clients and his colleagues found attractive about him," Weiner adds.

In 2000, Rosenthal was appointed to a vacancy on the U.S. Bankruptcy Court in Worcester created by the retirement of Judge James F. Queenan Jr. His brusqueness immediately made an impression.

"If you want something from him, you better be prepared; you better know what you're talking about and you better have your facts," advises Boston bankruptcy attorney David G. Baker.
An attorney who asks not to be named recalls being on the receiving end of a Rosenthal drubbing that actually made him consider leaving the practice of law. "You've got to learn to roll with the punches," says another lawyer who requests anonymity.

But there are those who insist that a soft side lurks beneath Rosenthal's gruff exterior.

According to Judge Joan N. Feeney, her colleague receives rave reviews from the schoolchildren who participate in the Bankruptcy Court's financial literacy project.

And Jacalyn S. Nosek, a debtor in one of his cases, says she felt little of the judge's characteristic sharpness. "He was very gentle with me," Nosek remembers. "He treated me very respectfully and never made me feel bad. He was very kind but very fair."

Weiner, meanwhile, says his former law partner has a razor-sharp sense of humor and "an ability to not take himself too seriously."

For example, the judge keeps a stack of envelopes addressed to the Worcester County Food Bank near the bench so that his clerk can hand them to lawyers when they are sanctioned. (Rosenthal jokes that the recent retirement of a local attorney dramatically affected the food bank's income.)

And tacked to the bulletin board near the entrance to Rosenthal's courtroom is an order from a Texas bankruptcy judge denying a motion for "being incomprehensible." The ruling is supported by dialogue from the movie "Billy Madison," in which the title character, played by Adam Sandler, is berated by a judge.
The film reference, laced with biting criticism, is a warning to lawyers: If you come unprepared, expect to be dressed down in Rosenthal's court.

On the forefront

Married with three grown children and as many grandchildren, Rosenthal guards his personal life closely. Citing the specter of angry litigants - Rosenthal currently is the named defendant in a lawsuit filed by a debtor and features prominently on the web page of at least one irate litigant - he declines to say where he resides or share much else about his life off the bench.
The most that can be gleaned about him is that he graduated from the University of Massachusetts in 1965 and earned his J.D. from George Washington University Law School in 1968. He spent his entire 30-year career in Boston, representing lenders and banks in commercial bankruptcy.

"I always represented big commercial banks," Rosenthal says. "And when they told you that you owed ‘X' number of dollars, you could count on their numbers being right."

But in 2006, as the economy shriveled and bankruptcies increased, the judge noticed that the business practices he remembered were starting to change.

With the rise of home-mortgage securitization, the business of lending to homeowners was becoming increasingly complex.

"Because mortgages have been sold and resold, sometimes it's unclear which institution actually owns the mortgage," explains Worcester bankruptcy attorney Mark W. Powers.

That issue has caught the attention of bankruptcy judges across the country, who have begun asking questions, Powers says. In Massachusetts, the judge doing the asking has been Rosenthal.

"He was one of the first to identify this issue," says Powers.
According to Rosenthal, he initially became aware of the problem in 2006 when a Russian concert pianist and debtor named Sima Schwartz appeared before him pro se. The heavily accented, elderly woman told Rosenthal she didn't know why Deutsche Bank was foreclosing on her house.

"She'd never heard of Deutsche Bank," Rosenthal says. "I had a hearing, and Deutsche Bank told me that they had bought the mortgage recently, and [Schwartz] had received notices etcetera. When I put Deutsche Bank to the test and asked them to submit all of their paperwork ... they could never satisfy me that they owned the mortgage that they had foreclosed on. And I declared the foreclosure void."

Ever since, the judge has routinely asked lenders to prove that they own the mortgages on which they are foreclosing. When they can't, he often rules in favor of the debtor, applying sanctions in the process.

For example, In Nosek v. Ameriquest last year, he fined Ameriquest and Wells Fargo $750,000, and the attorneys representing them $150,000. In his ruling, which was reported in the Wall Street Journal, Rosenthal wrote that "the link between lender and borrower in the current residential mortgage industry is a multilayered, tightly - if not hopelessly - entangled ‘assembly line,' the purpose of which seems to be the avoidance of responsibility."

Such rhetoric has helped raise the issue of mortgage ownership across the state. The matter of loan assignments is currently the subject of a class action lawsuit filed in Suffolk Superior Court against GMAC Mortgage, Deutsche Bank and the law offices that represent them. And last month Land Court Judge Keith C. Long followed Rosenthal's lead by ruling that two foreclosures were invalid because they had not been properly assigned.

Rosenthal attributes his harsh criticism of the lending industry to his background representing creditors.
"If the commercial [lending] world acted the way the consumer [lending] world has acted for the last couple of years, I probably would not have represented those people," he says.

'Enough is enough'

A lawyer who asks not to be named says the judge's attitude toward creditors today is: "They should know better."
Whether that attitude constitutes bias is something that bankruptcy practitioners discuss among themselves.
"I might not agree with every position that every bankruptcy judge takes," says an attorney who represents lenders. "Every judge has opinions, and some people are going to have a more consumer bent to them."

Walter C. Oney, a Fitchburg lawyer who represents consumers, says he does not consider Rosenthal biased. "I see it as exhaustion of patience. He's seen what a mess securitization has created," Oney says. "He's a judge who wants to apply normal rules of evidence, and they're making that hard for him."
Rosenthal says that he is not alone in his stance on mortgage assignments.

"I think there are hundreds of judges around the country that are frustrated by the quality of the paperwork they're seeing," he says. "And they're saying, ‘Enough is enough.'"

Other Massachusetts bankruptcy judges contacted by Lawyers Weekly confirm that assessment.
"It is a hot issue," Judge William C. Hillman says. "I don't think he's out in front; I think he's right at the front."

By some accounts, however, Rosenthal has pushed too hard. The sanctions levied against the lenders in Nosek were overturned by the 1st U.S. Circuit Court of Appeals last October, which found that the fees "did not justify the remedy that [they] invoked."
Rosenthal is unbowed by the 1st Circuit's ruling, which he calls "unusual."

"They said that because the plan did not have certain provisions in it, the banks couldn't be responsible for keeping books that way," he says. "I have trouble with that decision."

Some lawyers are even more unsettled by the sanctions he imposed on the law firms involved in Nosek, which are currently being appealed in U.S. District Court.

"He may have set the bar too high for attorneys representing mortgagees," Oney says. "I do see that there are things that these attorneys can't help."

But Rosenthal is unapologetic about his tough stance on attorney responsibility.
"The lawyers who represent lenders in consumer bankruptcies, particularly mortgage holders and mortgage services, just have not, in my judgment, met their responsibility as lawyers," he says. "They accept what their clients say at face value, knowing that it's very unlikely that what their clients are telling them is true. Don't fall into the trap of making yourself a bad guy if your client is a bad guy."

To debtors, meanwhile, Rosenthal is nothing short of a hero.
"I think he is a very fair judge, and I think he is very frustrated by what the banking industry has done to the people in this country," says Nosek, who notes that she will be unable to make her mortgage payments in the wake of the 1st Circuit's ruling.

"I'm going to be homeless," she says, her voice breaking. "I really think that he wanted to say to the banks, ‘Enough. You can't do this anymore.'"
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He's a fluke.

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I sure hope other judges are hearing about this and at the very least, considering his stance. 

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i called barney franks office yesterday and they said they did not see this article or the one about judge long either
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angry n not taking it
someone needs to clue this guy in!
Cormac J Carney California Central District Judge
is kicking Families out of their homes without any question!!
anyone have info on him?post the info
this explains alot... nominated by that idiot President George W. Bush on January 7, no family has done more to hurt .steal. murder. insult the USA
then the BUSH FAMILY.
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