Seeing Through Data

Housing Wire published an article, Nightmare continues for Florida foreclosure system, that meant to blame foreclosure defense lawyers for slow foreclosure processing times. However, the article inadvertently highlighted a different but more genuine cause for the slowdown in the swamp.

Two lawyers are cited, David Rodstein of the Rodstein Law Group, and Jane Bond of McCalla Raymer.  McCalla Raymer is large foreclosure filer in other states, though they’re a relatively recent entrant to Florida.  The Rodstein Law Group is definitely a new firm, as I’ll explain later.

“It’s not as bad as it seems,” the article quotes Rodstein, speaking about the backlog of Florida foreclosures.  ”It’s much, much worse.”

Rodstein explains his reasoning: “Borrowers can hire these (foreclosure defense) attorneys for a small monthly payment — much less than the mortgage — and the attorney can come in and easily delay the case for a year plus.”

Bond notes the problem escalated after the firm run by disgraced lawyer David J. Stern blew up.  One bank went from having six lawyers in FL to 26, she adds.

Since I don’t know which servicer she is referring to I can’t check my database to see who these new firms might be.  I strongly suspect two of these new firms include McCalla Raymer and the Rodstein Law Group.

“The judges are frustrated,” Bond notes. “The attorneys are frustrated. The servicers are frustrated. Everyone is frustrated.”

I’m frustrated too because, you see, Rodstein worked for disgraced and shuttered law firm Ben-Ezra Katz, and whined about the pace that his former employer was forced to turn over files to government-owned Fannie Mae.  It was this slow, disorganized turnover — and the reckless lawyering that led to it — which sent our court system reeling and have caused massively higher loss severities to MBS investors.

“I really wish there was more time to do this in a more orderly manner,” said then Ben-Ezra & Katz attorney David Rodstein to the Palm Beach Post on Feb. 25, 2011, Fannie Mae wants files back from fired firm.

Let’s repeat that: the Mortgage Bankers Association asked a lawyer who worked for a firm that was shuttered based on ethical issues — and who then worked to delay handing files back to banks — to chair a committee and lie that it is foreclosure defense lawyers who slowed down foreclosures.

After almost exactly one year Rodstein apparently forgot that he actively worked to slow the transfer of files back to Fannie Mae, which as the Housing Wire article correctly notes, ground the entire FL foreclosure system to a halt.  Now a lawyer directly responsible for that slowdown blames the dysfunction on foreclosure defense lawyers rather than accepting any form of personal responsibility.

As for Bond she surely knows that the General Counsel of her new employer is former Fannie Mae lawyer Susan Reid, who had something to do with attorney supervision in Florida.  I’d like to be more specific on Reid’s responsibilities but the FHFA, the government agency overseeing Reid’s former employer Fannie Mae, refuses to answer Freedom Of Information Act requests.  Fannie argues that they’re a “private” company, albeit one who’s soaked up $180 billion in taxpayer dollars along with cousin company Freddie Mac, and not subject to FOIA disclosure.

I’m sure readers will be shocked — shocked! — to learn that Reid left Fannie Mae after just under 19 years there, in Sept., 2010, right after Stern’s firm was exposed as a fraud-factory and exploded Death Star style.  Reid worked for Fannie when they blew off a report from Nye Lavelle that decisively proved Stern was a crook.

It’s telling that these are the two lawyers the MBA chooses to chair a panel on the subject about why foreclosures linger in Florida.  But it’s even more insightful that neither Rodstein nor Bond told reporter Jon Prior about the role they or their firms played in the meltdown.

Bond is right about judges being frustrated.  Just today I heard a judge literally screaming at a foreclosure lawyer about her inability to “responsibly” handle these cases as she argued to delay a case.  As for the other two “frustrated” groups, foreclosure lawyers and servicers, they can find the source of their frustration in any mirror.

There are two groups notably missing in Rodstein and Bond’s list: investors, who actually funded the loans, and borrowers trying to bring their cases to resolution.  I realize that to Rodstein and Bond borrowers and lenders exist just to feed them fees but you’d think they’d throw them a crumb of sympathy, especially investors who’s losses continue to climb.

Bond investors, the organizations that wrote the checks, are entirely missing in their narrative.

Maybe Bond, Rodstein, and the MBA reason that both borrowers and lenders were dumb enough to trust servicers, so Rodstein, Bond, and the misnamed MBA — which doesn’t seem to hold any regard for bond investors whatsoever — believe neither has any rights.  Bond holders and borrowers, in their world, are supposed to pay endless fees to the irresponsible, dishonest, and reckless agents and their attorneys that have mangled the borrower-lender relationship beyond recognition.

Rodstein’s former employer has slowed down more foreclosure cases than any Florida foreclosure defense lawyer, and maybe more than all of them put together.  If Reid was overseeing FL attorney compliance during her time with Fannie Mae then the GC of Bond’s firm is responsible for slowing down even more cases than Rodstein.  Except for Stern and Ben-Ezra themselves it is difficult to think of a worse choice of mouthpieces to whine about the pathetic pace of Florida foreclosures than these two liars lawyers.

“Fool me once, shame on you; fool me twice, shame on me,” is an ancient saying.  By hiring the same people who caused the mess, rearranged at new law firms, who refuse to take any responsibility for the mess they caused, servicers are setting the system up for another meltdown.

I’d be happy to use my database to pull the Bar ID’s of any lawyer involved in the “old” system and deliver a list of lawyers — let’s call it a reputational background check .. OK, or maybe a blacklist — to investors who can and should insist servicers ban them from working on new cases.  Pursuant to 2008 HERA’s mandate to minimize taxpayer losses the FHFA is obligated to ban the GSE’s from hiring these reckless, irresponsible, and dishonest attorneys and any firm that would hire them.

The Florida Bar has obviously decided not to take any disciplinary measures against these lawyers.  Indeed, Stern himself still has a license in good standing to practice law; there has been no disciplinary action taken against him.  The FL Bar even threw out an ethics referral from an appellate court.

However, self-regulation can and should deliver a simple solution: fire foreclosures lawyers that had anything to do with creating the current mess, as well as any firm that hired them.  That alone will send a message for new firms, with new lawyers, to responsibly and respectfully respond to the judges frustration, a feeling which — despite being non-existent to mill lawyers — I can attest is shared by bond bond investors and borrowers.