By Noreen Marcus, FloridaBulldog.org
Broward Circuit Judge Andrea Gundersen, who runs the court’s foreclosure docket, often rules for banks and against homeowners even when the banks use sketchy documents, a consumer watchdog charges in a recent report.
Released in May, the report got scant attention until Miami-Dade Circuit Judge Beatrice Butchko took the dramatic step of holding Bank of America, the Bank of New York Mellon and their lawyer in contempt for failing to answer questions about possible fraud in a foreclosure case.
The Third District Court of Appeal in Miami tabled the case. If the banks eventually win, nurse Julie Nicolas will lose her North Miami Beach home of nearly 30 years.
The report by the nonprofit Floridians for Honest Lending (FHL) targets robo-signing, the discredited and illegal practice of treating foreclosure papers like assembly line goods.
Endorsements that establish the lender’s legal right to foreclose are stamped and processed robotically. The “signer,” a bank executive, could not possibly know what’s in the papers and vouch for their validity, as is legally required.
In 2012, findings of mortgage loan misconduct, including robo-signing, were supposedly resolved with a $25-billion settlement between the five biggest mortgage servicers and, on the other side, 49 state attorneys general and the Justice Department.
Robo-signing never ended
The next year a dozen U.S. mortgage lenders, most prominently Bank of America and its subsidiary Countrywide Financial, agreed to end robo-signing as part of a $9.3-billion settlement with the Office of the Comptroller of the Currency.
But the FHL report based on 2019-2020 South Florida court records shows that illegal robo-signing persists. For example, stacks of mortgage loans originated by the notorious Countrywide bear the signatures of three bank executives–if the papers were legit, a trio that could boast of superhuman powers.
“It’s the same shit now,” said a foreclosure defense lawyer who practices in Broward and commented anonymously, fearing retaliation. “It’s the same names over and over. Clearly, from court records, what’s on the documents are stamps. That’s the evidence right there.”
Consumer activist Laura Wagner, executive director of FHL, drew a connection between the predatory mortgage lending that fueled the 2008 economic meltdown and current practices.
“The banks got caught buying subprime loans at a discount. They made a bet on it and then they realized they made a bad bet, but it was a whole lot of money,” she said.
Now the banks are using all available means, including robo-signing and other abusive tactics, to tap into the enormous value of outstanding mortgage loans, according to Wagner. “So they want everyone to turn a blind eye to it.”
Little media, regulatory scrutiny
The report states, “The banks’ reckless greed left millions of properties with mortgages and promissory notes corrupted and the chain of title on those properties broken, putting trial judges in the uncomfortable position of either taking the banking industry to task for these forged documents or kicking a family out of their home.
“Unfortunately, with little scrutiny from the media, legislators, or regulators, our court system has heavily favored the latter.”
FHL researchers looked at foreclosure complaints filed in Broward and Miami-Dade state courts in 2019 and found 369 with one of a handful of names stamped on the endorsement line. Gundersen handled 217 of the cases in Broward, closed 126 of them and never once ruled for a defendant homeowner.
Consistent with the numbers, Gundersen treats bank lawyers much more courteously than homeowners’ lawyers who challenge suspicious documents, according to the report. It describes how she sometimes orders boat-rocking defense lawyers to pay their wealthy adversaries’ attorney fees.
She doesn’t conduct foreclosure trials, but oversees pre-trial maneuvers and then sends a relatively few cases to Senior Judge Barry Stone for trial. “I respect him and like him and he actually tries to follow the law,” the anonymous Broward defense lawyer said.
The problem is that Gundersen skews discovery and other preliminary matters toward the banks, the lawyer said. “You have to deal with her first and she’s awful to borrowers’ counsel.” No one knows how many arguable defenses Gundersen derails so that they never reach Stone.
JQC investigation of Gundersen?
The FHL report says in April alone Gundersen disqualified herself 19 times when she was accused of pro-bank bias. It says homeowners complained about her to the Judicial Qualifications Commission, which investigates judges for ethics violations.
Confidentiality rules prevent Florida Bulldog from verifying the claim that the JQC is reviewing Gundersen’s actions.
Broward Chief Judge Jack Tuter, speaking for the court and Gundersen, responded to the FHL report. He did not address criticisms of her attitude and approach.
Tuter said he’s unaware of any problems involving questionable mortgage paperwork, but “this issue did arise some years ago during the foreclosure crisis. Several opinions from the Fourth District Court of Appeal in West Palm Beach regarding the trustworthiness of records custodians helped to give clarity to what judges could consider.
“I have every confidence Judge Gundersen is following that line of cases and if this is a significant issue again, we would hope the Fourth District would once again render decisions if we are not getting this right,” he said in a statement.
FHL also reviewed records in Miami-Dade Circuit Court, where foreclosure cases are blind-filed and assigned to whichever civil division judge’s name comes up, rather than going to a designated foreclosure judge.
The researchers found that since Jan. 1, 2019, 310 Miami-Dade houses with robo-signed endorsements were sold at auction — 21 of them during the pandemic, according to the report.
The Bruce Jacobs problem
Miami-Dade Circuit Judge Jennifer Bailey, who heads the court’s civil division, responded with this statement: “In each case where a house was sold, a presiding judge reviewed the evidence in the case and entered judgment, after which a foreclosure sale is set. If a party disagreed with the judgment and felt that the judgment was entered in error, the remedy is an appeal.
“To our knowledge, no error was demonstrated in any case that went to sale,” Bailey said in her statement.
Miami-Dade judges who look to the Third District Court of Appeal for guidance on how to deal with foreclosure fraud may see the Bruce Jacobs problem instead.
Jacobs, the Miami lawyer who represents Julie Nicolas in Butchko’s high-profile case, has made it his mission to expose any loan-servicing flaws that hurt his foreclosure defense clients. He has accused Gundersen and other judges of pro-bank bias and fought to disqualify them from hearing his cases.
The organized Bar doesn’t like Jacobs’ confrontational style and may be on the verge of silencing him. In an ethics hearing, Jacobs was found guilty of impugning the integrity of the courts; the referee will send a punishment recommendation to the Florida Supreme Court this month.
Conduct ‘beyond the pale’
Akerman, the law firm that opposes Jacobs in the Nicolas case, convinced the Third District to pause trial court proceedings while the firm attacks Butchko and her contempt order. Akerman lawyers were quick to note the fact that Third District judges have twice accused Jacobs of ethics violations.
This passage from the court’s 2018 opinion in Aquasol Condo Assn. vs. HSBC Bank suggests the judges will not listen dispassionately to his arguments in the Nicolas case:
“Mr. Jacobs’ conduct … violated not only the Rules Regulating the Florida Bar and the Rules of Appellate Procedure, but the most elementary norms of civility and professionalism.
“While judges and attorneys over the course of their career are subjected to isolated instances of incivility, the instant misconduct is beyond the pale, different not simply in degree but in kind. It is egregious misconduct which can be neither excused nor ignored.”
One has to wonder if the outraged response to Jacobs’ combative approach obscures his message: Mortgage banks are using abusive and illegal tactics to separate homeowners from their homes.