Florida Kangaroo Foreclosure Courts Likely to Fold

We reported from time to time on the special foreclosure courts created in Florida to clear up its foreclosure backlog, and this horribly implemented experiment looks as if it is moving to a well deserved death.

In concept, creating a specialized court system to provide extra capacity and judges who focused only on that issue was a sound move. In practice, it was an embarrassment and a disaster for many borrowers. As we recounted last September:

These new foreclosure-only courts are special creations of the Florida legislature, funded separately from the usual court system. They are manned by retired judges, which means in many cases they are not familiar with real estate law.

But perhaps most important, the explicit objective of these courts is to clear up the backlog. And that is coming to pass not by the Legislature having thrown enough resources at the problem (that is, having greatly enlarged court capacity to process more cases in parallel) but by pushing for faster resolution. The problem is that an accelerated process runs roughshod over due process and allows banks to foreclose when they may not be the right party, or worse, when the foreclosure is the result of servicing error.

Let’s look at one example of banana republic faux justice in the US, via a speech by foreclosure court Judge Roger Colton to his court on how the day was going to go. It’s simply breathtaking. He says that if the bank is foreclosing, he’s not going to consider any evidence that the foreclosure is in error (servicing errors, plaintiff can’t provide proof it owns the note, which means it might not be the right party and procedurally, means it lacks standing to take action). He says he has already heard everything, there is a lot of unemployment in the area; he is going to schedule a court date, but that is merely a deadline for negotiation. In other words, he makes it abundantly clear he has no interest in hearing evidence. When he gets to seeing a defendant after his speech to the court (p. 13), he rubber stamps what the bank wants without even considering the evidence. And apparently his entire day went like that….

If you think this case is isolated, here are some reports via e-mail courtesy Lisa Epstein, who runs ForclosureHamlet. The first is from Miami-Dade (emphasis theirs):

I went with a family member to court in attempts to stop a foreclosure sale….we were there sitting in court waiting….I heard this judge take on other cases….Regardless of their issue this judge just kept on denying every motion that he was hearing. Not even taking the time not even a minute or a second to even glance at the documents these poor homeowners were bringing to him.

People were telling him that they have been approved and/or were being considered for a modification under HAMP and that they were there to ask to have the sale of their home stopped because apparently the plaintiffs attorneys were not aware of this information….

Once the homeowner left the court room the judge asked… “what is this HAMP that these people keep claiming they are approved for?” mannnnn I said to myself… “this judge must have been pulled from retirement from another part of this world, and to get put on the stand to make these decisions… the courts must really be desperate for not even taking the time to even educate them about the huge issue at hand with these foreclosures and modifications and fraudulent documents etc…. then after denying a few more cases in less than 2 minutes he said… “WOW… and i got paid to do this everyday 5 days a week?… this is easy.”

There’s is actually much more of the same, multiple instances with particulars, with the judge clearly operating from the presumption that the borrowers were all deadbeats and the sale would go forward.

We reported several times on abuses in these courts (see here, here, and here). The ACLU challenged the lack of due process in April of this year.

Today, in reporting that the courts will stop operating in July as their funding expires, American Banker makes it sound as if these process-abusing courts were a plus. Well if you are a servicer looking to save money and grab houses, I’m sure they were. From the start of the article:

The special “rocket dockets” established by the state last year to help slog through the backlog of foreclosure filings will be gone as of July 1, potentially paralyzing the already overloaded court system with an influx of cases and delays.

Already there are signs of disruptions.

In one case in Palm Beach County, a court order was issued May 12 canceling a calendar call on July 22.

The order said that, “because of the lack of funding by the Florida Legislature, judges are unavailable to preside over foreclosure trials beginning July 1, 2011.”

A calendar call is when trials and other proceedings are scheduled.

Last July, the Florida Legislature allocated roughly $6 million to the state’s trial courts to help speed up the foreclosure process by establishing special foreclosure-only courts that were overseen by retired judges.

Though that funding was meant to last for only a year, there remained a chance it could be renewed, Craig Waters, spokesman for the Florida Supreme Court, said Wednesday.

“The idea was that one-year funding would help the courts clear most of the backlog,” he said. “Obviously due to circumstances that nobody foresaw, that really didn’t happen.”

Waters added, “The Legislature was aware of the situation, but obviously the state is in fiscal straits so the program expires at the time it was originally intended to expire.”

There was evidence that the special foreclosure courts had been working.

According to a study by the Office of the State Courts Administrator, the backlog of foreclosure cases dropped by more than 65,000 from July 1, 2010, when the program started, to Sept. 30.

For foreclosures completed during the first quarter in Florida, it took an average of 619 days to work through the process, up from 470 days in the first quarter of last year, and nearly four times the average of 169 days it took in the first quarter of 2007, according to a recent report from RealtyTrac.

This report is badly distorted. In fact, foreclosures are way down in Florida due to the fact that servicers are now having to be more attentive to doing them properly, which means no phony affidavits, among other things. And the evidence is there is plain sight, despite the article’s efforts to depict the courts as having helped clear the backlog. The average time for a foreclosure to be processed INCREASED while the courts were still in operation. That’s due to the freeze in foreclosures last fall and the slow restart as banks are finding it difficult to do things correctly. In fact, in January, banks were halting foreclosures in parts of Florida.

Zach Carter at Huffington Post provided a different take on this development:

Florida created its special foreclosure-only courts in order to prevent the enormous load of eviction cases from overwhelming other judicial functions. These courts earned their “rocket docket” label as judges began pushing through foreclosure cases as fast as possible, under circumstances that consumer advocates claim make it difficult for borrowers to receive a fair hearing. Judges routinely hear hundreds of cases in a day, with some hearings last as little as 20 seconds. Attorneys for homeowners say the courts do not receive sufficient funding to handle their caseloads….

“Those foreclosure courts are a joke,” says Matt Englett, a partner at the Florida law firm Kaufman Englett Lynd PLLC. “The judges just ran ’em through. And we could appeal them and win. But if you can’t afford to appeal them, you’re stuck.” Englett notes that rocket-docket judges often don’t even review documents or evidence in the cases, but simply ask a few questions before making a ruling — generally in favor of the bank. “A lot of this robo-signing — if they’re in front of a real judge, they would have to look at these things,” Englett says.

In March, Republican Governor Rick Scott approved a $14 million loan to foreclosure courts statewide that must be repaid by the end of the state’s fiscal year on June 30. And the governor’s office says no additional funding will be coming on July 1. Judges are already cancelling hearings in anticipation of the funding shortage.

If the the Florida’s foreclosure courts shutdown, which attorneys in the state currently expect, the result may well be a heavy burden on its overall judicial system. But homeowners battling the banks will likely benefit. Many claim lenders’ lawyers have served them with fraudulent documents that overstate their loan balances and misrepresent their cases.