Nicole DePuy secured a loan modification with Bank of America, but the bank never instructed the courts in Lee County to halt the foreclosure process. As a result, she lost her home and her good credit rating.
Nicole DePuy secured a loan modification with Bank of America, but the bank never instructed the courts in Lee County to halt the foreclosure process. As a result, she lost her home and her good credit rating. Greg Allen/NPR
Two of the nation's largest mortgage lenders, Bank of America and GMAC, say they're resuming foreclosures with new procedures in place to ensure their paperwork is legal and accurate.
Those banks, and several others, froze foreclosure proceedings when evidence emerged that employees were falsifying affidavits and cutting corners to speed along the legal process.
In Fort Myers, Fla., the number of foreclosure cases being heard immediately fell by at least a third. Even so, this is still one of the nation's busiest foreclosure courts.
A 'Rocket Docket'
Among attorneys, homeowners — and even the judges — it's known as the "rocket docket." Since 2008, courts in Lee County have been hearing as many as 200 foreclosure cases each day.
On a recent day in Judge James Thompson's courtroom, proceedings were a little more measured. Thompson is one of four senior judges brought back from retirement specifically to hear foreclosures in Fort Myers.
He's hearing a request from defense attorney Ryan Dugan to dismiss a foreclosure. It involves a property on which Wells Fargo says it has the mortgage. Dugan points out to the judge that the documents indicate it's owned by another company.
"My point, your honor, is that there's nothing that was attached that shows anything to support the transfer from United Mortgage Corp. to Wells Fargo," the attorney says.
This kind of missing paperwork is routine in foreclosure courts in Florida and across the country. Dugan says requiring the banks to find the missing documents buys time for defendants to try to negotiate with their lenders or stay a few more months in their home, but rarely changes the end result.
Now it appears some problems with mortgage documents may be more widespread and more systemic than previously suspected. Multiple federal agencies and attorneys general of all 50 states are investigating — with Florida taking a leading role.
The allegations led Bank of America and other lenders to temporarily suspend foreclosures. But in Fort Myers, even attorneys who represent homeowners say the new questions about mortgage documents are likely to do little to slow the momentum of the rocket docket.
"It is going to be a road bump," Dugan says. "The question is, is it only a pebble? Or is it a large speed bump? But, either way, it's only going to delay it for a while."
A Surprise Home Sale
That's not to say that everyone in Fort Myers is happy with how the courts handle foreclosures.
After Nicole DePuy was forced to take a pay cut in her job with the Lee County schools, she began having trouble making her mortgage payment. So she began negotiating with her lender, Bank of America. In January, after more than a year of talks, the bank finally agreed to modify her loan to a monthly payment she could afford, DePuy says.
She began sending in her payments and was thrilled until she came home from work one day. "I had a note stuck on my door from a gentleman that had bought my home at auction the day before," DePuy says. "So, Bank of America [had] never contacted the courts to let them know we were in a modification and not to sell my house."
DePuy immediately hired a lawyer and went back to the rocket docket with a motion seeking to overturn the foreclosure. The judge ruled against her — and said it was a justified sale. "The judge actually admitted she had not read my affidavit or any of the information because she had too many cases to listen to that day," DePuy says. "So, I think that's a big part of the problem right there."
Losing A Home, Good Credit
DePuy lost her home and her good credit rating.
Judges and other officials in Lee County are unapologetic about the rocket docket. They point proudly to the backlog of foreclosures they've cleared. From a high of 25,000, the courts are now down to about 14,000 foreclosures.
Charlie Green, Lee County's clerk of courts, says processing foreclosures quickly gets the properties back on the market, where they can be resold and help Lee County begin rebuilding its battered economy.
He sees the freeze and the issue of false affidavits as just a temporary setback to that effort. For homeowners facing foreclosure, Green says, there really is just one pertinent question: "Did you make your payments in a timely manner and have you been a good mortgagor? If you haven't made your payments, you're in default by definition."
Green says the issue with the faulty affidavits doesn't change that basic determination. "Now, if here's some technicality that the bank should have done, shame on them and they probably should be punished for that," he says. "But the underlying thing is, did you make your payment?"
A 'Blemish' On A Court System
Real estate attorney Kevin Jursinski, who has practiced in Lee County for nearly 30 years, takes a different view. "With all due respect to the judiciary," he says, "I think it's a blemish on our court system."
Jursinski says Lee County's rocket docket takes shortcuts that deny many homeowners their right to due process.
Disclosure of the new problems means homeowners and their attorneys can no longer automatically accept affidavits as fact, Jursinski says. Now, he adds, he'll have to begin routinely requiring bank officers to appear for depositions.
And that, he says, prolongs the process.
"We're going to have to take a deposition, wherever they're from," Jursinski says. "If they're from New York, they're going to have to fly here. Again, more cost, more delays."
Even with those delays, court officials say they expect that Fort Myers' rocket docket will soon return to its normal speed and efficiency.