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Defense attorneys say judges wrongly allow 'robo-witnesses'Many of the witnesses being called in foreclosure trials have no idea how documents — including notes and default notices — were created, which defense lawyers say violates court rules.
2013-02-13 12:00:00 AM
South Florida foreclosure defense attorneys object to the breadth of records introduced in foreclosure trials by business custodians of record, dubbing them "robo-witnesses."
The problem seems more prominent in Miami-Dade Circuit Court, where the court has placed a priority on pushing stalled foreclosure cases to trial. By late last year, Miami-Dade had 47,738 pending cases.
Defense lawyers claim circuit judges are under so much pressure to close cases that some are neglecting people's right to a fair trial by allowing witnesses who may not be legally qualified to testify on behalf of lenders.
"What's happening now is like someone is pushing the plunger down the toilet to flush all these cases down the system," said foreclosure defense attorney Bruce Jacobs of Bruce Jacobs & Associates in Miami. "The whole idea of making sure the procedures are afforded to both sides seems to have taken a back seat to clearing the backlog of cases."
Many of the cases on trial were filed in 2008, 2009 and 2010 when many big lenders were represented by some foreclosure law firms that succumbed during a state attorney general's investigation of fraudulent foreclosure filings.
A year after attorneys general signed a $25 billion settlement with the nation's largest banks accused in the robo-signing scandal, the landscape hasn't changed much for defendants in Miami-Dade, said foreclosure defense attorney Thomas Ice, founder of Ice Legal in Royal Palm Beach.
The national mortgage settlement put an end to the so-called robo-signing practices popular during the peak of the foreclosure crisis. Back then, lenders and their law firms hired people to sign thousands of affidavits without personal knowledge of the information they were attesting to.
Now, the robo-signers have morphed into the so-called robo-witnesses, defense attorneys claim.
"In short, the robo-signing has not gone away, it has simply moved into the courtroom," Ice said.
Under the law, witnesses called to testify about business records needed to meet certain requirements. For example, they need to have sufficient knowledge of their company's business operations and record keeping, said Bob Jarvis, a law professor at Nova Southeastern University.
Many of the witnesses being called in foreclosure trials have no idea how documents including notes and default notices were created. The foreclosure defense lawyers assert that violates court rules.
Ice claims judges are ruling against homeowners after hearing from custodians who don't meet the minimum criteria. He points to a deposition he took in 2011 in which Marcos Flores, a witness for OneWest Bank, said he didn't know who prepared a default notice that Ice's client received before the foreclosure suit.
The notice informed borrowers who are three months behind on their mortgage payments how much they need to pay to bring their loan up to date and avoid foreclosure.
"To be honest with you, I don't know," Flores said when asked who prepared the notice. "I think it's somebody in our foreclosure department, I believe."
He also had a hard time figuring out who sent the notice to Ice's client, Enrique Fabre.
"Typically, the sending of the letter I believe it occurs in our Kalamazoo office," he said during the deposition.
During trial, Flores said "he had the responsibility of testifying" and "had testified over 200 times in the previous 11 months."
Ice lost the trial and appealed to the Third District Court of Appeal, where the case is pending.
"Can these people, who are not qualified as record custodians, come in and read their records to the judge?" Ice asked. "Because that's what they are doing."
Jarvis said he often hears complaints that record custodians try to authenticate business records "that are in fact not very good" in foreclosure trials.
Objections To Note
Fort Lauderdale attorney Matthew Bavaro has two cases pending in the Third and Fourth DCAs questioning the validity of a witness testifying on documents prepared by a previous loan servicer.
"It happens you go to trial where the servicer who issued the [default notice] is no longer involved, so the new servicer brings a witness to testify on a document that wasn't prepared by them," he said.
At a recent trial, a witness for JPMorgan Chase testified about a copy of a note filed by the bank's former foreclosure law firm, Ben-Ezra & Katz. The Hollywood law firm imploded in 2011 during a state investigation of alleged fraudulent practices.
Foreclosure defense attorney Mark Hirsch of Temple and Hirsch in Aventura objected to Andrew Houser's testimony on the validity of a note filed years earlier by Ben-Ezra & Katz, according to a transcript of the trial last Dec. 11.
Senior Miami-Dade Circuit Judge Eugene Fierro overruled him.
Jacobs said he was not surprised at that outcome. He said lenders' witnesses often testify on documents that were created by others in an industry where mortgages were sold, resold and packaged into Wall Street investment vehicles.
"We see many of them comment on how the bank owns the note when there is nothing to prove that that is true," he said. Often those who filed a note on behalf of a lender at the height of the foreclosure crisis are no longer around.
"If this were criminal court and this were happening, people would have a real problem about it," he said.
Open To Appeal
Miami-Dade Circuit Judge Jennifer Bailey said business record custodians don't need personal knowledge of a case like the so-called robo-signers did.
"What they can testify to is the protocol for the creation of the business record and what the business records say," the judge said. Custodians can be cross-examined about the "procedure under which these records were created," something that didn't apply to the robo-signers.
Defendants who are unhappy with a judge accepting the testimony of a custodian have a remedy.
"If they believe that an injustice has been done, they can appeal," she said.
Bailey said senior judges called back into service to help clear the backlog are trained in foreclosure law.
"We make sure these judges have the training and the patience to deal with these cases because it takes a lot of patience," she said.
The fast-track foreclosure program she helped implement in July has been effective, she said.
In early July, the Miami-Dade Circuit Court had 52,211 cases. Late last year, the number dropped to 47,738, taking into account that an average of 2,051 cases are filed each month and an average of 2,878 cases are disposed of every month.
Defense lawyers assert some judges show little regard for homeowners' right to a fair trial because they presume people who aren't paying their mortgages should lose their home.
At a recent trial, Bavaro told a judge that his client received the wrong default notice. Instead of informing the owner to pay three delinquent months to avoid foreclosure as the law required, the notice said the borrower had the right to sue the lender to raise a defense. At a Dec. 18 hearing, Bavaro asked for a dismissal and said his client should get a chance to make overdue payments before a new foreclosure action could be filed. He said many appellate courts in Florida, including the Third DCA, had sided with homeowners on that question.
Rather than focusing on Bavaro's argument, Senior Miami-Dade Circuit Judge Alan Schwartz asked: "So they remain in the house without paying? … Is that true?"
Bailey said she doesn't have the "ability to address the specifics" of any particular claim, and judges can't comment on pending cases.
"These are all independent judicial officers," she said. "These are senior judges who have been asked to try these cases. We are trying to make sure that everybody has their day in court."
Jarvis said he understands the frustration of judges over foreclosure defense tactics. But he said court rules must be followed to preserve the integrity of the judicial system.
"In the short run, everybody is interested in justice, and nobody cares about the rules because if you owe the money you ought to pay it back," he said. "But if we start to ignore rules, in the long run it will guarantee that in the future there won't be justice for anybody."
He said once judges start ignoring one rule, they might ignore many other rules.
"Then suddenly you don't have a system of rules," Jarvis said. "And judges are just ruling based on their guts. That is not what our legal system is based on."
He said defendants should insist banks follow the rules.
"There is a process that is to be followed and if banks can't meet what the rules require, then that bank should be told 'tough luck,' " he said. "The next time, it will follow the rules."