legal affairs

If we're to restore the rule of law in foreclosure cases, it's going to take a lot more than the fall of Stern's firm, which is just one of several "foreclosure mills" in Florida. Others are under investigation. Maybe some of them will fall too. Maybe not.

The startup, which was funded last month by Google Ventures and is currently housed in the incubator at the GooglePlex, is a Q&A site that aims to connect businesses seeking legal advice with attorneys seeking clients.

A Louisiana bankruptcy case involving a single foreclosure best illustrates the problems with the banks' outsourcing their mortgage default work to firms like LPS. The result of this money-saving maneuver by banks winds up costing everyone else dearly.

Among the state systems governing foreclosure, Hawaii has a particularly fraud-riddled, draconian process. Elderly Suzanne Bonds was unbelievably exploited by that process in 2004, but Hawaii's courts refused to help. Now, her attorneys have asked the U.S. Supreme Court to intervene.

Federal Circuit Court Judge Denny Chin has ruled that a class action can go forward against a law firm, a process-serving company and a debt-buying company that sues them for being a criminal enterprise under the Racketeer Influenced Corrupt Organization (RICO) law.

No longer such a high-flyer, the David J. Stern law firm is now being investigated and sued in a class action. The impact on pending Florida foreclosures and what the firm's underlying conduct means for the future of the state's real estate market will be felt for years.

Judges in several states are emerging as defenders of due process and the rule of law when confronted with the banks' rampant use of false foreclosure paperwork. Alas, that's not so true in Florida, where a foreclosure can be heard in seconds.

Now that N.Y. Chief Judge Jonathan Lippman has considerably tightened the state's foreclosure rules, his effort to eliminate robo-signing has greatly raised the stakes for the banks' attorneys. But what will the practical impacts be? Lawyers on both sides weigh in.

Attorneys will have to certify under penalty of perjury that they have personally reviewed all the key documents and that they have spoken directly with their clients, the foreclosing financial institutions. That will disrupt the state's foreclosure cases.

Court affidavits by Ally Bank subsidiary GMAC Mortgage were signed by people who didn't personally know if the information in the affidavits were true, and at times, didn't get the affidavits notarized.