[This opinion was affirmed by the Professional Ethics Committee at its June 24, 2011 meeting.]
The operative facts as presented in the inquiring attorney’s letter are specifically as follows:
Bank holds a large portfolio of mortgages and hires Lawyer to file foreclosure lawsuits on mortgages which fall into default. Lawyer files 1,000 foreclosure cases per year for 20 years. Only 2,000 cases are open and active. 3,000 cases were settled by voluntary payment of the mortgage debt or reinstatement of the mortgage loan. The remaining 15,000 cases had foreclosure judgments entered, and the mortgaged properties were sold at a judicial sale with a Certificate of Title issuing shortly thereafter to the judicial sale purchasers. These 15,000 sold properties are now almost all in the hands of subsequent third party purchasers.
Recently, Bank has instructed Lawyer to stop progress on all foreclosure actions due to potential defects with affidavits which Bank submitted to Lawyer and which Lawyer in turn filed with the court.
This is the first time Lawyer has heard of any potential defects with affidavits.
Bank explained that it had 2 employees signing affidavits for the past 20 years, Signer 1 and Signer 2. Both signers have assistants who present the affidavits to the signers together with copies of Bank’s business records which show the account-specific information contained in each affidavit. Both signers also signed Verifications of foreclosure complaints pursuant to Fla.R.Civ.P. 1.110(b).
Signer 1 has always personally verified the figures contained in the affidavits and the facts in foreclosure complaints by looking at the copies of Bank’s business records before signing. Signer 1 has always signed or acknowledged his signature in the presence of his assistant, who then notarizes his signature in his presence.
Signer 2 adopted Signer 1’s procedure for signing affidavits and verifications last month. For the previous 19 years and 11 months Signer 2 relied on his highly
experienced and conscientious assistant to check the figures in the affidavits and the information in the foreclosure complaints against Bank’s business records and make sure all information correctly reflected the information in Bank’s business records. Until last month Signer 2 signed the affidavits and verifications without personally looking at the copies of business records which were paper clipped to each affidavit and proposed foreclosure complaint and verified by his assistant. Additionally, until last month Signer 2’s assistant notarized all of Signer 2’s affidavits and complaint verifications whether or not Signer 2 was personally present. Fla. Stat. 117.05 requires notarization in the presence of the signer. Signer 2’s affidavits and verifications executed under the procedure of the previous 19 years and 11 months are referred to below as the ” old affidavits” and ” old verifications.” Bank has expressed confidence that the figures in all affidavits and the information in all proposed complaints were correct. Lawyer believes this situation presents a possible question of candor to the tribunal under Rule of Professional Conduct 4-3.3 which may or may not call for remedial action. Lawyer’s considered legal opinion is that replacing Signer 2’s old affidavits and verifications in approximately 1,000 pending foreclosure cases would raise red flags that would result in costly litigation contrary to Bank’s interests but which would have no reasonable likelihood of changing the outcome of the actions. With regard to the 18,000 closed foreclosure actions, Lawyer’s considered legal opinion is that raising an issue as to Signer 2’s old affidavits and verifications, if any, would also raise red flags, would be contrary to Bank’s interests, would cause instability in the title to those properties which are now in the hands of third parties, would lead to complicated and expensive litigation involving multiple parties and would have no reasonable likelihood of changing the outcome of those actions.
The operative facts as presented in the inquiring attorney’s letter are specifically as follows:
Bank holds a large portfolio of mortgages and hires Lawyer to file foreclosure lawsuits on mortgages which fall into default. Lawyer files 1,000 foreclosure cases per year for 20 years. Only 2,000 cases are open and active. 3,000 cases were settled by voluntary payment of the mortgage debt or reinstatement of the mortgage loan. The remaining 15,000 cases had foreclosure judgments entered, and the mortgaged properties were sold at a judicial sale with a Certificate of Title issuing shortly thereafter to the judicial sale purchasers. These 15,000 sold properties are now almost all in the hands of subsequent third party purchasers.
Recently, Bank has instructed Lawyer to stop progress on all foreclosure actions due to potential defects with affidavits which Bank submitted to Lawyer and which Lawyer in turn filed with the court. This is the first time Lawyer has heard of any potential defects with affidavits.
Bank explained that it had 2 employees signing affidavits for the past 20 years, Signer 1 and Signer 2. Both signers have assistants who present the affidavits to the signers together with copies of Bank’s business records which show the account-specific information contained in each affidavit. Both signers also signed Verifications of foreclosure complaints pursuant to Fla.R.Civ.P. 1.110(b).
Signer 1 has always personally verified the figures contained in the affidavits and the facts in foreclosure complaints by looking at the copies of Bank’s business records before signing. Signer 1 has always signed or acknowledged his signature in the presence of his assistant, who then notarizes his signature in his presence.
Signer 2 adopted Signer 1’s procedure for signing affidavits and verifications last month.
For the previous 19 years and 11 months Signer 2 relied on his highly
experienced and conscientious assistant to check the figures in the affidavits and the information in the foreclosure complaints against Bank’s business records and make sure all information correctly reflected the information in Bank’s business records. Until last month Signer 2 signed the affidavits and verifications without personally looking at the copies of business records which were paper clipped to each affidavit and proposed foreclosure complaint and verified by his assistant. Additionally, until last month Signer 2’s assistant notarized all of Signer 2’s affidavits and complaint verifications whether or not Signer 2 was personally present. Fla. Stat. 117.05 requires notarization in the presence of the signer. Signer 2’s affidavits and verifications executed under the procedure of the previous 19 years and 11 months are referred to below as the ” old affidavits” and ” old verifications.” Bank has expressed confidence that the figures in all affidavits and the information in all proposed complaints were correct. Lawyer believes this situation presents a possible question of candor to the tribunal under Rule of Professional Conduct 4-3.3 which may or may not call for remedial action. Lawyer’s considered legal opinion is that replacing Signer 2’s old affidavits and verifications in approximately 1,000 pending foreclosure cases would raise red flags that would result in costly litigation contrary to Bank’s interests but which would have no reasonable likelihood of changing the outcome of the actions. With regard to the 18,000 closed foreclosure actions, Lawyer’s considered legal opinion is that raising an issue as to Signer 2’s old affidavits and verifications, if any, would also raise red flags, would be contrary to Bank’s interests, would cause instability in the title to those properties which are now in the hands of third parties, would lead to complicated and expensive litigation involving multiple parties and would have no reasonable likelihood of changing the outcome of those actions.