Florida foreclosure saleDavid J. Stern of the eponymous Florida law firm has seen better days. Once known as the "foreclosure king," Stern was high-flying enough to buy his employees houses and cars, while snapping up several multimillion dollar homes for himself. Now his company's stock (DJSP) trades for pennies and faces delisting; his firm faces multiple lawsuits and an ongoing investigation by the Florida attorney general's office; and his companies have lost major clients and shed hundreds of employees.

The Florida AG's investigation also includes ProVest, a firm that tells homeowners they're being foreclosed on and Stern used so heavily that it shared office space with his company. According to at least one former Stern employee, problems with giving homeowners notice of the foreclosure were rampant, and related documents were falsified.

The most recent bad news for Stern includes a Florida appellate court just ruling that one of the lawsuits against his firm can continue as a class action. That suit claims Stern told homeowners hoping to avoid foreclosure to pay inflated and improper fees, including for ProVest's serving notice of the foreclosure. A call to the firm requesting comment wasn't returned by publication time.

Orphaned Cases

Other than delivering the joys of Schadenfreude, Stern's fall is newsworthy because of its impact on pending Florida foreclosures and what the firm's underlying conduct means for the future of the state's real estate market. As Kimberly Miller of the Palm Beach Post reported, the massive downsizing at Stern has led to many functionally orphaned cases, as thousands of foreclosures once brought by Stern are no longer handled by the firm. A Florida foreclosure defense blog describes the results this way:
"At its peak [Stern's] firm was handling more than 70,000 foreclosure cases and now that it no longer handles many of those cases, no one is showing up for the hearings from the lenders. Some foreclosure defense lawyers are having trouble setting hearings or even finding someone from the other side to even speak to about the cases! In those instances where other law firms have picked up Stern's old cases the firms are typically asking for continuances so that they can get up to speed, further delaying the foreclosure process."
Of course, the allegations about what went on at Stern's firm made in sworn statements by former employees are so grotesque that it's no wonder the firms that take over the files need extra time to sort things out.

One other consequence of Stern's fall that Miller reported: The banks aren't bidding on their properties at the foreclosure sales, leading to properties at least temporarily selling for as little as $200. Temporarily, because Stern's failure to represent the banks extended to failing to give proper public notice of the sales.

Why Not Do Things Right the First Time?

Given that Florida is also investigating three other "foreclosure mills" in the state, it's hard to imagine that Stern's firm will be the only one to get slammed. If that's so, it's hard to see the end of the Florida foreclosure mess. The practices at the Stern firm, like the robo-signing scandal nationwide, are proving to be classic examples of pennywise, pound foolish measures.

When all the dust settles, years from now, it's impossible to imagine that the final tally for straightening out all the consequences of the banks' and their attorneys' disregard for the rules will be cheaper than just having done things right in the first place. Of course, that's hindsight talking, and just a short while ago, things looked very different.

For example, when Louis Silber filed the 2007 class action that was recently given a green light by a Florida appeals court, Stern's firm was such a foreclosure juggernaut that Silber explained to the Palm Beach Post: "People told me you will never get anywhere, this is the way it's done, who are you trying to fool."

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It is always sad when companies are doing well and then crash because of things like this. It is sad because sometimes the company is doing shady things, but a lot of the time they are doing things just fine without breaking any laws. I just feel bad for the employees that get in trouble for what their companies did because that happened to my dad once.


May 09 2014 at 2:54 PM Report abuse rate up rate down Reply

>>>>>>>...Florida you need to get that debbie wasserman schultz out in the next election...she is a clone of pelosi....dont be like calif. voting the same trash...over and over again...........NO you are not like calif....you had a Repub sweep in Nov........so there is hope for your STATE.......but that wasserman should be your next target<<<<<<<<<<<<

January 05 2011 at 1:56 AM Report abuse +1 rate up rate down Reply
Thrift Store

To those who lost there jobs... Thats not my problem and not one penny of my tax money should go to mortgage problems. You read and signed your mortgage contract. You knew EXACLY what your responsibilities were whether you were employed or not. so stop crying and be an adult and stop mooching off the taxpayers

January 05 2011 at 1:20 AM Report abuse +1 rate up rate down Reply
2 replies to Thrift Store's comment

read my comment below Jackass!

January 06 2011 at 12:46 PM Report abuse rate up rate down Reply
Beach Realtor

But I guess you support the bailouts to the banks, insurance and auto companies as well with your tax dollars?

March 09 2011 at 1:37 AM Report abuse rate up rate down Reply
Thrift Store

What I am personally tired of are these DEADBEATS who dont want to pay there mortgages and what to get there house for free. These people are the lowest of Low. I own my house outright from hard work and being responable.

January 05 2011 at 1:17 AM Report abuse +1 rate up rate down Reply
2 replies to Thrift Store's comment

you have no idea of reality. wanting a house for free makes someone the lowest of the low? wanting a place to be warm and protected from the elements for free or low prices doesn't seem scummy to me. you should be glad that you got your house from hard work and not the ability to know the difference in using the word there vs their when talking about what makes someone deserve a house. be happy its not based on being super intelligent because a construction worker type or physical labor guy or whatever it is that you do would be screwed. I'm no commie, and i ain't a liberal this is just a response to a stupid comment you made. lowest of the low are kid killers, child molesters, liars and thiefs. not people who don't have as high a work ethic as you do. some people have more ambition than others, but we should all be living in homes by this point, and not from government housing, its just that this should be so much not an issue anymore, we can put the man on the moon but we would rather put the man on the street. its easier. i own too, and i am a DEADBEAT. i don't own much and i enjoy the little things. thats the worst thing you can think of? me not hurting anyone watching cartoons?

January 05 2011 at 3:52 AM Report abuse +2 rate up rate down Reply

Dont be an Idiot, Banks predatory lending caused most of this and where in the T&C did it state " I Hereby sware to pay back this loan in full by such and sucha date UNLESS THE WHOLE ECONOMY COLLAPSES AND CAN NOT DO SO. and see where it got them, now the lawsuits are going to condem most surviving banks. GREED IS EPIC I'll bet your a money lover too, you'ed rob your own mother wouldn't you.

January 06 2011 at 12:44 PM Report abuse rate up rate down Reply

Swamp land for sale!

January 05 2011 at 12:58 AM Report abuse +1 rate up rate down Reply

The FEDERAL RESERVE NEEDS to go. When silver and gold was taken out of the bills things have gone in the crapper sence. ED

January 04 2011 at 10:46 PM Report abuse +3 rate up rate down Reply

Some people think the Federal Reserve Banks are United States Government institutions. They are not Government institutions, departments, or agencies. They are private credit monopolies which prey upon the people of the United States for the benefit of themselves and their foreign customers. Those 12 private credit monopolies were deceitfully placed upon this country by bankers who came here from Europe and who repaid us for our hospitality by undermining our American institutions.
The FED basically works like this: The government granted its power to create money to the FED banks. They create money, then loan it back to the government charging interest. The government levies income taxes to pay the interest on the debt. On this point, it's interesting to note that the Federal Reserve Act and the sixteenth amendment, which gave congress the power to collect income taxes, were both passed in 1913. The incredible power of the FED over the economy is universally admitted. Some people, especially in the banking and academic communities, even support it. On the other hand, there are those, such as President John Fitzgerald Kennedy, that have spoken out against it. His efforts were spoken about in Jim Marrs' 1990 book Crossfire:"
Another overlooked aspect of Kennedy's attempt to reform American society involves money. Kennedy apparently reasoned that by returning to the constitution, which states that only Congress shall coin and regulate money, the soaring national debt could be reduced by not paying interest to the bankers of the Federal Reserve System, who print paper money then loan it to the government at interest. He moved in this area on June 4, 1963, by signing Executive Order 11110 which called for the issuance of $4,292,893,815 in United States Notes through the U.S. Treasury rather than the traditional Federal Reserve System. That same day, Kennedy signed a bill changing the backing of one and two dollar bills from silver to gold, adding strength to the weakened U.S. currency.

January 04 2011 at 8:15 PM Report abuse +7 rate up rate down Reply

Alot of people have commented how people shouldn't buy houses they can't afford. Although that is true, alot of the problems came from people loosing jobs, the bread winner of the family dying or becoming unable to work. Don't expect any help from the banks when you fall into hard times, they don't care. I was fortunate enough to come from a family with money and I had purchesed my home with a trustfund. However there are good people in my neighborhood who held very good paying jobs who suddenly found themselve laid off, or their company closed. These people are over qualified for McDonalds so they cant apply there. We gave the banks billions, it's about time they sell their corporate planes, cancel their vacations, say "lets help our customers keep their homes" "lets lower their interest rates automatically, no paperwork, no approvals, just lower the damn rates. Then.....MAYBE, i'll find some respect to have for the banks.

January 04 2011 at 7:45 PM Report abuse +10 rate up rate down Reply

get your facts strait salmo, the economy is drivin by confidence, when obama tossed in his hat and with his bigger govt ideas, people lost confidence.and it WILL NOT come back until the lib dems are out.

January 04 2011 at 7:41 PM Report abuse rate up rate down Reply

"The Taking of Property Without Just Compensation" was never created to protect the Bankers, or their Lawyers. Regardless how you feel about the People who have fallen behind on their mortgage Payments, the fact remains, they too have a investment, and a huge one at that.

January 04 2011 at 5:57 PM Report abuse +5 rate up rate down Reply