Servicers in three states must contend with a growing army of lawyers who are offering pro bono services for borrowers facing foreclosure. In some cases, borrowers are successfully fending off foreclosure by demanding a copy of the note.
Indiana Chief Justice Randall T. Shepard recently announced a plan to train more judges, mediators and lawyers about dealing with foreclosure cases. Indiana Lieutenant Governor Becky Skillman is leading a statewide effort, and an education session was co-sponsored by the Indiana Supreme Court, Indiana Legal Services Inc. and the Legal Aid Society of Southwest Ohio.
“The Indiana Supreme Court will offer scholarships to private attorneys who complete the training and agree to handle one mortgage foreclosure case on a pro bono basis,” the announcement said.
The Florida Bar and Florida Legal Services launched a similar effort last year dubbed Florida Attorneys Saving Homes, or ‘FLASH.’ In 2007, Ohio Supreme Court Chief Justice Thomas J. Moyer called on Ohio attorneys to offer their services pro bono to assist in addressing the increasing number of foreclosure cases
Many delinquent borrowers contest their foreclosures as a tactic to avoid paying their loan while still living in the property, according to attorney Christopher E. Thorsen with Bradley Arant Boult Cummings LLP. Thorsen, who represents servicers in foreclosure litigation, noted that the borrowers are just working the system.
But he identified one tactic works well for servicers.
“We’ve found having the court order the borrowers to pay all or a significant portion of their mortgage payments into court while the case is pending can resolve the matter very quickly,” he said in a statement. “If borrowers object to paying their mortgage payment into court, judges usually ask if they really intend to live in their house without paying anything.
“Generally, if a borrower is just looking to get out of their payments by filing a lawsuit, requiring them to meet their obligations by paying their mortgage amounts into court brings the case to a quick conclusion.”
Thorsen is up against law firms like Oppenheim Pilelsky, P.A., which claims it was able to extract a $200,000 principal modification from a lender that was unable to produce the note in a foreclosure. Attorney Roy Oppenheim, who holds free workshops for delinquent borrowers, noted that Florida faces a backlog of foreclosure cases because of economic cutbacks.
In a February statement, MFI-Miami LLC claimed that Deutsche Bank does not have a legitimate claim on many minority borrowers facing foreclosure because it rarely produces — or refuses to produce — the original note, mortgage or a valid note transfer. Instead, Deutsche allegedly retains counsel to intimidate borrowers, obtain default judgments and complete the foreclosure as quickly as possible.
“These mortgages have been traded by fund managers like baseball cards,” MFIÂ said. “Deutsche Bank is named as the trustee on nearly 50 percent of the fraud investigations we have done in the past six months.”
The Associated Press reported that an increasing number of delinquent borrowers appear to be delaying the foreclosure process by requesting a copies of their notes. The first time the strategy was employed was in 2007 against Deutsche Bank in Cleveland. A federal judge dismissed 32 foreclosure cases filed by Deutsche Bank, Wells Fargo and others because the paperwork filed with the court did not establish the history of the mortgages’ ownership.
