Polk Law Blog

Read all about it at the Daily Business Review out of South Florida.

Here’s what happened. The law requires a lender to produce the actual, original promissory note to foreclose on a mortgage. Because of the way mortgages are bought and sold these days, quite often the bank can’t do that because it has been buried in some filing cabinet somewhere, possibly still in the possession of the original mortgage holder. If they can’t produce it, they can still foreclose, but they have to post a bond. The bond protects the defendant. In the unlikely event that some other bank later says “Hey, that was my mortgage to foreclose on, see, I have the original note right here!” then the bond pays out to the defendant so that mortgage can be satisfied.

In the case, the note was lost, the judge ordered the bank to get the required bond, and the bank ignored her. They just didn’t do it. They proceeded to the foreclosure sale without it being done. The judge was not pleased. She ordered the bank to give the home back to the defendant and dismissed the case with prejudice, which means that the bank can’t refile it. (The bank can appeal, not sure if they will.)

The really interesting part had to do with the attorneys involved. The bank was represented by a well-known firm that focuses on collections work and foreclosures. They handle a LOT of cases. A LOT. They earn minimal flat fees for the work they do, and rarely do the attorneys have a working knowledge of their files.

The judge was upset with the attorney for letting it get to this point, and made sure the lawyer knew it, on the record. The transcript is a very good read, and a very good lesson for lawyers. An excerpt:

Well put. I’ve done some debt collection work, and found it very frustrating because the time involved to do it right was so great compared to the benefit to the client of attempting to collect on the bad debt. I’ve done foreclosures, but most of the ones I do are big enough and unique enough that I know the file pretty well. I have done a few “institutional” foreclosures, but I have been very fortunate to have responsive clients who run tight ships and don’t force me into these sorts of situations. I have also done foreclosure defense and dealt with the “foreclosure mill” firms that are doing work like this. My experiences have not been as bad as this one, but let’s just say, I understand exactly what the judge is frustrated about.

If you want an inside look at how the foreclosure crisis is playing out in court, this is a great chance to see inside one of its more frustrating corners. The transcript is definitely worth reading.  It’s not necessarily typical, but it is educational.

And, to my loyal readers, I apologize for my extended absence. I had a fairly substantial trial recently, and a fairly substantial work backlog to clear once I got done with it. Obviously, the blog kind of fell by the wayside.

If anyone has any experiences similar to the one of the defendant in this case, I’d love to hear about it in the comments. Please refrain from identifying the banks or attorneys involved by name.