Florida, which has been Ground Zero of the foreclosure crisis as well as a hotbed of judicial abuses, ranging from the biggest and most active foreclosure mills to kangaroo courts known as “rocket dockets”, has taken a surprising step in the right direction. The state bar association has told foreclosure lawyers in no uncertain terms that they have a duty to report fraud to the court, and that supersedes their responsibilities to clients. And even more surprising, the duty is retroactive: lawyers are supposed to inform judges even if the home has already been sold!
This move will have the very salutary effect, if the new order were actually followed, of having judges know the extent of servicer abuses. And the side effect would be even greater skepticism on the behalf of judges (well at least those judges not bought and paid for by the banking industry). Even if lawyers complied in only, say, one-quarter of the abuses, the effect on servicer credibility, which has already taken a big hit, would be considerable.
I would love to have been a fly on the wall in the meeting in which the decision to take this move was made. I can only infer that one impetus is the fall from grace of the formerly influential foreclosure mills, like the Law Offices of David Stern. Another may have been concern by attorneys with conventional commercial and consumer practices about the damage that miscreant foreclosure lawyers were doing to the already not-all-that-hot reputation of their profession.
Note that the recommended procedure, a private hearing with the judge, was clearly a compromise and some, perhaps many, may not consider that to be a legitimate course of action. This is gonna be interesting….
From the Palm Beach Post (hat tip Lisa Epstein):
In an opinion that could have unfathomable consequences in countless foreclosure cases, The Florida Bar says attorneys must notify a judge about potential fraud — including robo-signed affidavits and forged notary stamps — even if a foreclosure case is closed and the home has been sold at auction…..
No one knows how many cases could be affected or what judges will do when they are notified…
“There has never been a problem like this before or this kind of wholesale misrepresentation,” said Margery Golant, a Boca Raton-based attorney who teaches a portion of the Bar’s four-hour online course, which instructs lawyers to report fraud. “No one knows how this is going to turn out or what the right things to do are.”
While attorneys are instructed to report fraud, they should not to do so in a public court hearing without their client’s permission. Instead, the banks’ attorneys should ask for a private hearing with the judge, said Cynthia Booth, an ethics attorney with the Bar.
“You try to cause the least amount of harm as possible to the client,” Booth said. When fraud is suspected, an attorney’s duty to the court supercedes the attorney’s duty to the client, Booth said. Private hearings would allow the attorney to fulfill both duties, she added.
But the thought of private hearings about widespread fraud in foreclosure cases has some lawyers bristling. Robo-signers have admitted in depositions that they signed off on hundreds of thousands of foreclosures and major lenders have already acknowledged that court documents were not properly verified, said foreclosure defense attorney Thomas Ice of Ice Legal in Royal Palm Beach
“This is a very public problem and to try and address it in a private way is not going serve the court in its attempt to assure everyone about the integrity of the court system,” Ice said.
St. Lucie Circuit Judge Burton Conner, another instructor, said he was not aware of the Bar’s recommendation about private hearings. Conner, also a member of the Florida Supreme Court’s Task Force on Residential Mortgage Foreclosures, said private hearings, called in-camera hearings, are appropriate in certain cases but very rare.
“I’m not sure if that’s an appropriate procedure,” Conner said. “This is a civil court, and it is open to the public.”
When an attorney asks for an in-camera hearing, the judge must hold a public hearing to decide if the private hearing is necessary. That means more time and more delays in processing foreclosure cases…
As far as getting guidance from the court, Blanc said a judge has a range of options when a breach of ethics is revealed, including doing nothing to throwing out a judgment. In pending foreclosure cases, the judge could halt the proceedings while the fraud is investigated.
However, the biggest and most troublesome problem is what to do with cases that ended years ago. Can judges undo these foreclosures, and what happens in cases in which the home was sold to new owners without a clear title? As for discipline, the judges must decide what to do with fraud brought to their attention. Should they refer the cases to the Bar for further investigation or to legal authorities for prosecution?
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I suppose it’s progress, but it’s still farcical.
No one will ever just recover integrity and do the right thing in a strightforward uncomplicated manner (it’s a “delicate dance”, as another commenter put it referring to a different set of crimes).
They’ll now admit that there’s rampant fraud and that lawyers need to report it. But they can’t bring themselves to do it in public where it belongs. So they come up with a farcical private discussion of how much fraud the courts should allow. Then our betters will hand down a dispensation to we peasants. Only on a need to know basis, of course.
After all, it’s not like these courts and this system of law belong to us or anything.
And yet even critics of this will still claim we need the existence of these mediocre and destructive “elites” at all for some reason.
What are we learning from Egypt these days?
* That we don’t need “elites” at all.
* That the only proper response to any of their sham “concessions” is: GET OUT.
its turtles all the way down.
to paraphrase: Its fraud all the way up.
Where are the investigations (not the sham ones)
where are the prosecutions?
where are the convictions?
This is grossly unfair. How can you ask a lawyer to be honest and do the right thing? This is cruel. These poor people don’t understand right and wrong. Next you will be forcing Senators to stop screwing their underage pages.
A couple things about this concerns me, about the new requirement to inform the judge. A lawyer is properly prohibited from helping his client commit a crime. But a lawyer may (and should) defend a client from prosecution for a past crime, and has no obligation to assist its prosecution.
This is reflected in the one of the ABA professional responsibility model rule 3.1, giving the general rule that a lawyer mustn’t bring or defend proceedings frivolously or frivolously raise issues, but also adds that in any criminal case and any case involving potential incarceration, the defending attorney may require proof of every element of the case.
I’m concerned both about an attorney being required to report his own wrongdoing in prior fraudclosure, and also an attorney being required to report fraudclosure committed by his client before employing the attorney.
A lawyer is properly prohibited from helping his client commit a crime.
Is this perhaps a desperate attempt to induce the banksters to stop committing fraud?
After all, if nothing else, obeying this order would mean an end to all foreclosures in Florida, since there’s fraud in all of them, and any lawyer who looks will be aware of it.
So at a minimum the lawyer would have to say, “I can’t represent you when the paperwork is like this. Technically I’m supposed to report you. Can you legitimize the paperwork? No? You can’t do it because either you can’t recover the note at all, or even if you could, conveying it now would expose the MBS trust? Then we’d better part company.”
For the bar to think lawyers can get a “Yes” answer to that question, they’d have to really believe in the “sloppy paperwork” propaganda. But surely they can’t really believe that.
So that brings us back round to why the sessions will be secret. Because nothing’s meant to actualy happen. This is just kabuki, a pretense, while the fraud continues as usual.
Presumably, this obligation to report client fraud is not limited to foreclosure cases. If that is the case it is likely to have a pervasive impact on so called ‘corporation lawyers’, whose primary raison d’etre is enabling corporate crime. Those who have any real world involvement in this game will tell you that the difference between corporation law and organized crime is the tailoring.
This is a very positive development. As far as the fate of innocent good faith buyers of fraudulently foreclosed properties goes, it looks like the Massachusetts SJC is going to make some more history with Bevilacqua v. Rodriguez. The lower court in this case ruled that the buyer is NOT the owner of the property, the title to the property goes back to the borrower who was fraudulently foreclosed upon, and that the buyer should seek damages from the entity that performed the bad foreclosure. It will be interesting to see if the SJC upholds the lower court again.
I read an excellent blog about this “story” a couple of days ago (http://bit.ly/gvReNs) which explains that this is not a “step-in-the-right-direction” story, but rather more of the same “hoodwink-the-sheeple” rubbish. The blog refereces an article from the Palm Beach Post (http://bit.ly/g6MGYA) in which the essence of what is going on here is described. Here’s the section of the article which is relevant:
“While attorneys are instructed to report fraud, they should not to do so in a public court hearing without their client’s permission. Instead, the banks’ attorneys should ask for a private hearing with the judge, said Cynthia Booth, an ethics attorney with the Bar.
“You try to cause the least amount of harm as possible to the client,” Booth said. When fraud is suspected, an attorney’s duty to the court supercedes the attorney’s duty to the client, Booth said. Private hearings would allow the attorney to fulfill both duties, she added.
But the thought of private hearings about widespread fraud in foreclosure cases has some lawyers bristling. Robo-signers have admitted in depositions that they signed off on hundreds of thousands of foreclosures and major lenders have already acknowledged that court documents were not properly verified, said foreclosure defense attorney Thomas Ice of Ice Legal in Royal Palm Beach
“This is a very public problem and to try and address it in a private way is not going serve the court in its attempt to assure everyone about the integrity of the court system,” Ice said. “
Wow. Lawyers have to do what they’ve always had to do — tell the truth and speak up when others are lying. Revolutionary.
I think Troy McClure teaches one segment of that four hour online (!) course.
well said John.
This just reeks of SB 94 in California. They said the same thing about it going after loan servicers when it fact these punitive measures just give banks and servicers more weapons to deter and obfuscate foreclosure defense attorneys from helping homeowners.
http://www.courthousenews.com/2010/12/29/32946.htm
Loan Servicer on hidden fees or fraudulent affadavits? compliance misunderstanding. Call your bank.
Individual attorney misunderstanding revealing client confidences? Disbarred. You misred the rule.
This is getting ridiculous. And the fact that this is seen as a “positive development” is a joke.
Most if not all federal and state courts prohibit fraud on the court and mandate that attorneys advise the court of fraud or perjury. Fraud on the court is generally defined as a material misrepresentation of fact or law. Perjury is lying while under oath.
While I am not familiar with the Fla. state bar rules, I would be amazed if this is a new rule. Rather, I suspect that it is a bar opinion on the meaning of an existing rule/rules.
All federal courts and most state courts require all attorneys and pro se parties to sign all court pleadings verifying the validity of the facts asserted in the pleadings. Violation of Rule 11 includes sanctions.
The issue is not the existence of the law and or rules; it is as always the enforcement. For example, the affidavits of robo signers are not a technicality or mere paper work mistake. An affidavit is a sworn statement that is a substitute for live testimony in court. Affiants, swear that they have personal knowledge of the facts in the affidavit or that the facts are true. If one has not read the documents underlying the affidavit then they do not have personal knowledge or know if the facts are true and have committed perjury. Perjury is a crime.
As Dan, John and Ella note above, this is merely a restatement of an existing obligation. It will change nothing going forward.
Moreover, an invitation to report prior frauds appears to be an invitation for lawyers to implicate themselves in committing those frauds. Again, I don’t see this bearing any fruit.
The real invitation here is to the lawyers of the victims. And, a potential future positive aspect of this is that it may lead to the ability to make ethics complaints not just by clients, but by adversaries – if this is currently prohibited in FL, as it is in nearby states.
My sense is that it is slowly dawning on attys. that many of their kind may be facing disbarment and even jail time. Those who have not committed crimes will seek to separate themselves from those who have committed hundreds of easily (?) provable crimes upon the Courts. Good way to reduce the competition, as well.
Or, it could all be theater.