On August 17, 2009, The Florida Supreme Court Residential Mortgage Foreclosure Task Force published its Final Report. The report, the full text of which can be found at http://www.dailybusinessreview.com/images/news_photos/56852/MASTERDRAFTAug14.pdf offers a blistering commentary on many of the fraudulent, unethical and illegal tactics being employed by lenders and Plaintiffs firms who are pursuing foreclosure cases on behalf of lenders. Contrary to some misconceptions and incorrect characterizations made of the profession, attorneys are officers of the Court and they are not permitted to make false or misleading misrepresentations to the Court. A lawyer cannot make untrue statements and he cannot knowingly permit his client to make misrepresentations. An attorney that does so faces potential sanctions including suspension and fines.
Because of this well understood principle, it has been shocking for me to experience first hand a pattern and practice of attorney behavior that violates the “Thou Attorney Shall Not Lie” principle and many other important ethical and legal rules that govern the profession. Bottom line is I’ve personally caught attorneys and firms engaging in outright lying and perpetrating fraud on the courts by filing cases and submitting evidence that is false or misleading. Believe it or not, attorneys practicing in other areas of the law, even family law and criminal law, will tell you that they’ve been practicing for years and are not aware of other attorneys engaging in patterns of willfully misleading and unethical practice.
The Supreme Court report cited above acknowledges that the fraudulent, unethical and illegal conduct in foreclosure cases is occurring on a wide spread basis. Local judges who hear these cases know that many of the thousands of files contain false and misleading information. While the report details a wide range of improper conduct, and specifically identifies many of the firms who are engaging in this conduct, it fails to provide clear guidance on what will be done to put an end to these practices. (An excellent report that details the pattern of fradulent practices can be found here at http://www.heraldtribune.com/article/20090929/COLUMNIST/909291036)
After reviewing the report and based on my personal experiences in foreclosure cases, I submitted comments to the Florida Supreme Court urging stronger action to curb abusive Plaintiff practices. The primary focus of my comments was to protect the consumers I represent everyday, but the larger purpose is a greater respect for the court system and the financial system as a whole. I’m pleased to report that my comments were one of only 39 comments that were published by the Task Force in its Final Report and Recommendations.
The bottom line is the country got in this mess because the entire mortgage industry became infected with fraud, lies and misrepresentations on a massive scale. The same behaviors that got us all into this mess are now being perpetrated on our court systems and in the long run they are going to cause similar disastrous consequences.
The problems that are being created in courtrooms today when judges grant foreclosure to Plaintiffs based on improper and incorrect evidence are eventually going to bankrupt the title insurance industry.
A similar situation occurred shortly after the Great Depression, and this collapse led to the creation of the current land title insurance system. The reserves of the major title insurers are shrinking as fewer new “clean” closings are occurring and the bulk of new policies are being written on new “dirty” foreclosure and short sale cases. We can all only hope that the judges who are controlling this current phase of the crisis will recognize the long-term impact of these practices and stop them in their tracks!
If you have questions regarding foreclosure, real estate or the law, contact Matt Weidner at www.mattweidnerlaw.com