David Miller
Mortgage crisis

“The ones that caught my attention very early on were the ones that said they didn’t have driver’s license information or they didn’t have employment information for the borrower,” the judge said in an interview.

“Did someone just walk in off the street and say, ‘Gimme money?’ ” the judge asked sarcastically. “I don’t think that’s possible.”

Increasingly, banks are struggling to locate defendants to serve them with formal notices. Whether the banks are performing their due diligence to find the defendants or whether the defendants are being evasive is anyone’s guess. But the judge has begun to appoint guardians ad litem in some foreclosure cases to help the lenders locate the borrowers.

Miller started contacting attorneys such as Houck & Anderson shareholder Raul Chacon in Miami late last year to canvass people with receivership experience to act as guardians ad litem in foreclosure cases. Guardians ad litem generally are appointed to represent incompetent parties or minors. But as foreclosures pile up in the state court system, judges such as Miller are seeking quality help to deal with mounting piles of cases.

Miller “just wanted to ensure that a proper search was done on certain cases,” Chacon said. “He was concerned there wasn’t enough effort on the part of the lender” to locate borrowers.

In a multilingual, international city like Miami, not contacting a borrower about the foreclosure of their homes can have a dramatic effect on a household. But as Miami Beach solo practitioner David Alschuler points out, such foreclosures fall into two categories.

“There’s probably two types of foreclosure cases: the person who took out a good faith mortgage and because of some tragic situation caused the property to go into foreclosure.

“Then you probably have people who took out $600,000 mortgages to buy property worth $350,000,” he said. He’s one of the attorneys serving as a guardian ad litem in Miller’s court.

“My guess is most of the people who cannot be located took out fraudulent mortgages.”

Alschuler said in one case he worked, he located a woman in Colombia by telephone and talked to her with the help of a translator. He also described a case where a due diligence affidavit stated there was no driver’s license on file, even though the driver’s license was part of the defendant’s loan application.

“I don’t think there’s any intent to not find people. But I’m sure due to the large number of foreclosure actions, these investigative agencies are overburdened,” Alschuler said.

“The quality of these investigations is directly proportionate.”

The guardians are paid a fee by the court and write investigative reports that make determinations about what occurred or should have occurred during the foreclosure action.

A recent example illustrates how Miller’s guardian ad litem idea works:

Jorge Carcases got a $240,000 mortgage from WMC Mortgage, then part of General Electric, in September 2006 for a three-bedroom, two-bath home in Homestead. He began defaulting on his mortgage less than two months later, according to a foreclosure complaint filed by WMC last July.

WMC, a victim of the subprime fallout, attempted to serve Carcases last September with the foreclosure notice using his work address and an address listed on car loans for a 2003 Mercedes-Benz C240 sedan and a 2002 Land Rover Freelander SE sport utility vehicle.

Afterward, WMC’s attorney Tara N. Castillo with the Law Offices of Marshall C. Watson in Fort Lauderdale, swore in an affidavit that her client made a diligent effort to locate Carcases.

In February, Akerman Senterfitt shareholder Michael Chavies, a former Miami-Dade Circuit judge, investigated WMC’s efforts as a guardian ad litem appointed by Miller.

“Based on the results, it is possible that Carcases is evading service,” he wrote. “Despite this, the undersigned would recommend attempting to locate [him] by way of one more address.”

Chavies searched the easy-to-use Web site of the state Division of Corporations and found Carcases listed as president of Excellent Treatment Givers in Miami and suggested WMC should search for him there.

A message left by a reporter at the number listed in corporate records was not returned.

Chavies charged the court about $920 for the three hours he spent on the report, and WMC foreclosed on Carcases’ home last month.

“In some cases, we find that the bank diligently pursued service. In other cases, while the bank may have made attempts, they may have not made attempts at alternate addresses,” said Michael Sayre, an Akerman Senterfitt associate who works with Chavies.

While there are only an estimated dozen or so guardian ad litem cases involving foreclosures, Chacon said the program has the blessing of Chief Circuit Judge Joseph P. Farina, and other judges are considering the program.

The lenders are mum.

Castillo, who represented WMC in the Carcases foreclosure, declined to comment.

Attorneys representing Countrywide, a lender with thousands of mortgages in South Florida, cited a blanket corporate policy against commenting on foreclosure matters. Contacted directly, Countrywide officials also declined comment.

Officials with Washington Mutual, another big mortgage lender, deferred comment to the company’s Miami-based public relations staff. They deferred comment to the company’s national staff, who responded by e-mail that they had no comment.

Billy Shields can be reached at bshields@alm.com or at (305) 347-6649.

David Miller photo by A.M. Holt