Through my experience litigating foreclosure cases, I’ve become convinced that the plaintiffs prosecuting foreclosure lawsuits often don’t even realize those lawsuits are pending. Let’s say that again:
The Plaintiffs who have filed suit don’t even realize a lawsuit is pending.
How can that be? Simple. Third-party servicers retain a foreclosure mill, a.k.a. a plaintiff’s lawyer, and, without actually appearing as a party in their own names, direct the foreclosure mill to file suit on behalf of the plaintiff, i.e. the owner of the Note and Mortgage. Does the servicer actually have authority to do so? Honestly, who the heck knows. This strange phenomenon is something I’ve started to call the “Wizard Behind the Curtain.” The servicer isn’t named in the lawsuit, but it’s the one behind the scenes, calling all the shots, directing the foreclosure of thousands of homes throughout America.
I see a myriad of problems with this. In fact, just last month, I expressed my concerns when I saw a foreclosure mill’s written admission that it had no relationship whatsoever with the plaintiff it was purporting to represent. Think about that for a second:
The lawyer had no relationship whatsoever with the plaintiff it purported to represent.
Instead, the firm’s alleged authority to file the foreclosure lawsuit came from, you guessed it, the “servicer.”
I recently came across a document filed in a court case that sheds more light on this troubling phenomenon, and this document will provide a useful example to illustrate the problem.
Take a look for yourself … what do you see?
Obviously this document, which Shapiro & Fishman calls a “Non-Title Document Review,” is a checklist used prior to filing a foreclosure complaint. What really strikes me about this document (which Shapiro filed with the Complaint in this case and is a matter of public record) is that it has one box for the “Plaintiff” and the heading/style of the case, and an entirely separate box for the “Client.” Here, for instance, the “Plaintiff” is U.S. Bank, National Association, but the “client” is “Bank of America, N.A.”
Call me crazy, but shouldn’t the “client” and the “plaintiff” be the same? How can Shapiro & Fishman be filing a lawsuit on behalf of U.S. Bank when its “client” is Bank of America?
This may sound technical, and perhaps it is. But think about how this “wizard behind the curtain” phenomenon will play out in a foreclosure case. I see four huge problems.
First, the Florida Supreme Court requires via Fla.R.Civ.P. 1.110(b) that the Plaintiff verify its Complaint in all residential foreclosure cases. Given the relationship between the foreclosure mills and the servicers, it seems clear the required verifications aren’t being done by the plaintiffs, but by the servicers. Many learned judges in Florida before whom I appear have made it clear that verification by a servicer is insufficient – the complaints are supposed to be verified by the “plaintiff.” Remember, the Rule doesn’t permit verification by a third party, but by “the plaintiff.” In fact, Shapiro & Fishman moved for rehearing of the Florida Supreme Court’s ruling on this precise issue, and the Court rejected its motion.
This prompts a significant question – if verification is required by the plaintiff, and the attorneys representing the plaintiff have no relationship with the plaintiff, how on earth can they get the required verification? Undoubtedly, this is why the mills ask for 90 days or 120 days to get the requisite verification (when complaints are dismissed with leave to amend), as they often don’t even represent the plaintiff prosecuting the foreclosure case! Literally, the mills are in the position of calling up an entity who they don’t represent and saying “You don’t know me, but I’m representing you in this foreclosure case, and I need you to verify under penalty of perjury that the allegations we’ve raised are correct.”
A bit awkward, eh? Yet that’s the position in which the mills have put themselves (in a large percentage of foreclosure cases in Florida).
Second, I struggle to see how the mills can prosecute lawsuits on behalf of plaintiffs without the plaintiffs’ knowledge or consent in a manner consistent with The Rules Regulating The Florida Bar. I’ve spoken with the Bar on this, and given our conversation, I’m not prepared to say it’s impossible, but I will say this. Personally, I couldn’t imagine appearing as counsel for a party in any lawsuit without that party’s knowledge or consent, much less doing so on a widespread, systematic basis.
Think about it this way. An attorney is able to act on behalf of a client because the attorney’s actions bind the client. Stipulations, representations, court filings, etc. … we as attorneys are, quite literally, agents for our clients. If a client is going to be bound in this manner, the attorney’s authority to represent/bind the client must be clearly established. This is why, for example, there are strict rules about how an attorney may appear as counsel, failing which the attorney’s actions don’t bind the client. See Pasco County v. Quail Hollow Props., Inc., 693 So. 2d 92 (Fla. 2d DCA 1997).
If these foreclosure attorneys don’t have an attorney-client relationship with the plaintiff, it seems to me they cannot represent the plaintiff at all and should be disqualified from doing so. After all, how can an attorney bind the plaintiff when the attorney has no relationship with the plaintiff? Why should any court accept the representations or stipulations of a plaintiff’s attorney when that attorney has no relationship with the plaintiff?
There must be a better answer than “there are lots of foreclosure cases in Florida, and this is just how it’s done.”
Third, you want to know why the Florida Supreme Court’s mediation program failed? How can anyone expect to get a binding agreement with U.S. Bank when the attorneys prosecuting this foreclosure case don’t even represent U.S. Bank? Remember, Shapiro & Fishman’s client is Bank of America, so the contact person for Shapiro & Fishman on this file is undoubtedly an agent of Bank of America, not U.S. Bank. Again, how can anyone expect to get a loan modification under these circumstances, i.e. the appropriate parties aren’t even at the bargaining table.
Fourth, when the plaintiff alleges in the complaint that it is the owner and holder of the Note and Mortgage, what exactly does that mean? Taking plaintiff’s allegations literally, the plaintiff is the owner/holder. But in all of these cases where the entity driving the suit is actually the servicer, it seems that the servicer is the “holder” of the Note, not the Plaintiff. Remember, to be the holder, the “plaintiff” must be in “possession” of the Note. See Fla. Stat. 671.201(21). However, are these plaintiffs really in possession when they don’t even know a case has been filed? I suppose it’s possible, but when the Note is subsequently put into the court file, how did it get there? If it’s from the servicer, as I’d think it must since the servicer is the only one who knows about the case, then doesn’t that show the servicer was in possession, not the Plaintiff? And that the servicer was the “holder,” not the Plaintiff? Actually, no – where the Note is specifically indorsed to the plaintiff, the servicer isn’t the holder, either. In that situation, the servicer has possession, but the plaintiff has the indorsement, so neither one is the “holder.”
So what’s the solution to all of this madness? It’s two-fold: (1) Require verifications by the plaintiff (not the servicer, the plaintiff) and dismiss all cases without it; and (2) Require the foreclosure mills to have attorney-client relationships with the plaintiff (not the servicer, the plaintiff prosecuting the case) and disqualify all attorneys who lack such a relationship. That sounds harsh, but it’s ridiculous to inundate our courts with garbage pleadings that languish for years without a resolution when the parties prosecuting them don’t even know they’ve been filed.