FOR IMMEDIATE RELEASE - 1/14/2019                                                  Contact:  Rex E. Russo, attorney
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                                                                                THE CODE OF SILENCE

    It was with much skepticism that I read the Third District Court’s Order to Show Cause directed to Miami attorney Bruce Jacobs.  See, Bank of America v. Atkin, No. 3D18-1840, (December 14, 2018).  Most notably, I was concerned by the following statements:

    “Insults or disparaging comments by lawyers to courts in court filings cannot be justified as zealous advocacy because they risk alienating the very judge the lawyer was hired to persuade.”  

    “[T]his venting can come at a high cost to the client’s interests.”

Essentially, those assertions are an admission that the opinions of the court may be affected by disparaging comments.  Are judges not expected to rise above such comments in order to be truly judicious?  If a judge’s job is to seek the truth and apply the law, why should such commentary play any role?  Is venting not understandable when reason fails?  Shouldn’t strong words open a judge’s eyes instead of lead them to shut?

    Judge Logue goes on to write that insults “reflect–not attempts at persuasion — but the abandonment of any attempt to persuade.”  “Insults usually garner resistence to an idea...”  Is the court giving excuses for not giving the matter due consideration?

    The court then goes on to list what “insults” Mr. Jacobs allegedly committed.  Generally, they are:

•    Asserting that the Court violated the standard of review, ignored Florida Supreme Court precedent, and falsified the facts in contradiction to the record.
    
•    Questioning the ability of the Court to be impartial.  

•  Asserting that a circuit court judge acted with disregard for the rule of law and the client’s constitutional rights, only to have the District Court affirm.

•    Stating that a new circuit court judge who rotated into the division changed a favorable ruling because opposing counsel held a fundraiser for the judge.        

    What qualifies these statements as “insults” as opposed to “criticisms”?  Mr. Jacobs was not using profanity, nor name calling, nor making any threats.  So, where is the direct contempt upon the court that empowers it to have jurisdiction over the alleged acts?  Mr. Jacobs appears to have been merely pointing out what he believes he could prove.  If the court considers Mr. Jacobs to have violated the Rules of Ethics regulating attorneys then the court should defer the matter to the Florida Bar, not take it upon itself to make a determination.  

    I can not speak about the merits of Mr. Jacobs filings before the court, because unlike the Florida Supreme Court’s website which allows access to the briefs, motions, appendix, and records, the only way for the public to view those is to drive out to the court, make a public records request and hope for a favorable response, or persuade a party to provide them.  That unfortunately fits well with the code of silence enforced by the court.  Freeing access to the records filed before the court would allow for greater opportunity for independent public review, and review by others in the legal community.

    Presumptively, the reader is expected to believe that the court is correct and that Mr. Jacobs is wrong.  However, I for one do not make that assumption.  If allowed to make a presentation to a truly impartial panel, I could also show instances where the court looked past the standard of review on an appeal from a summary judgment and interpolated evidence contrary to the position of the appellant instead of taking the evidence in a light most favorable to the appellant.  I could show instances where the court has asserted matters to be “facts” because they were stated in the opposition’s brief – but were lacking in the record.  I can show where the court affirmed a lower court order awarding sanctions upon finding it frivolous to sue a lending institution for forged TILA disclosure documents.  I can show where the court did not realize that an order appointing a trustee over a condominium association’s property (i.e. over the common elements, rights to collect assessments, rights to enforce collection) did not, and could not, give the trustee immunity for the unconstitutional taking of a unit owner’s property — especially without serving process and allowing an opportunity for the unit owner to be heard in court BEFORE the taking.  Were those omissions and incorrect outcomes intentional?  I can only tell you what I think.  If my hands were not constrained by the court from uncovering likely facts, or if my resources were sufficient, or if someone with clout sided with me, then perhaps one day I could tell you what I know.

    So, what impartial panel would hear such complaints?  Not the Florida Supreme Court unless they have, and then take, jurisdiction.  Misstating facts does not give the Supreme Court jurisdiction.  Using an incorrect standard of review only gives the Supreme Court jurisdiction if the misapplication is apparent from the face of the opinion; and, even when jurisdiction is present the Supreme Court has the discretion to deny review, which they most often do.  Ignoring precedent does not give the Supreme Court jurisdiction — only stating an incorrect precedent or one that conflicts with another District Court could potentially yield jurisdiction to the Florida Supreme Court.

    Intellectual deficiency is a serious enough problem, but if the court’s failure to be logical and precise goes beyond intellectual deficiency and rises to the level of intellectual dishonesty, that is a very serious matter.  Intellectual dishonesty will only serve to further encourage crony jurisprudence at the trial court level and disenfranchise the masses.  And, it is frustrating.  It is frustrating because most want to assume that the appellate court is correct.  It is frustrating because just about no one with the clout to do anything about intellectual dishonesty will give the matter sufficient time and consideration to derive whether an attorney’s gripes concerning problems with the appellate court have merit (thus the amplification of intention).  It is frustrating because many, while skeptical, have simply given up hope that the system will ever overcome highly political appointments to the bench, which itself entices intellectual dishonesty.  So, the court enforces its code of silence in the belief that failing to do so might encourage others to respond with open discontent.  Yet, all it takes to incite open discontent is for the court to be intellectually deficient, intellectually dishonest, remiss, condescending, obfuscating (ex. – altering the audio-video recording of oral arguments), conniving (ex. – a judge intentionally making their way onto an appellate panel), deprecating (ex. – asking an insinuating and off-beat question at the start of oral argument), or disrespectful (ex. – walking out on counsel abruptly during oral argument).  Although, for the appellate court judge who is intellectually dishonest, yet writes eloquent anti-consumer opinions, the reward might just be an appointment to the Florida Supreme Court.  

    God, save the State of Florida. 

yFOR IMMEDIATE RELEASE - 10/27/2018                                               Contact:  Rex E. Russo, attorney
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                                                                           OH! SAY, YOU CAN SEE!
                                                                                                                    or
                                                 TRY TO PIN THE TAIL ON THE DONKEY

    A blindfolded Lady Justice is emblematic of the concept that the law cares not about the irrelevant characteristics or traits of those appearing before her.  Whether wealthy or poor, politically powerful or common citizen, crony or stranger, educated or ignorant, tall or short, male or female, democrat or republican, black or white, lender or borrower, religious or not, from here or from there, all are endowed with the same rights under the law.  At least, that’s the concept.  But, is that fact or fiction?  Can we do better?

    Many litigants and their attorneys have mused about losses to those with more wealth, greater political connections, personal connections with the judge, reputation of the opposing attorney, unknown reputation of the complaining attorney, family connections of the opposing counsel (i.e. relative is or was a judge or politician) and every combination thereof.  Was there bias by the trial court judge?  If so, did the judge recognize the bias?  After all, judges are subject to the same human frailties as the rest of us.

    It really is not possible to eliminate all elements of bias at the trial court level.  Out of necessity, there must be a face-to-face interaction between the judge, counsel, the parties, and witnesses.  There is simply no other way to present a case and have it tried.  However, at the interim appellate levels (i.e. Florida District Courts) it is definitely possible to significantly reduce factors that could lead to judicial bias by putting a real blindfold on Lady Justice.  Of course, some bias would always peek through because of a judge’s proclivities as to the case presented.  If a judge is viewed as pro-business, and it is a business case, there is no practical way to avoid that potential bias.  

    Does an appellate court panel need to see counsel for the parties face-to-face?  Not likely.  If the appellate court has questions regarding the legal arguments, then it could ask for further briefing in response to those limited points.  That makes much more sense then using oral argument for that “gotcha” moment which a panel member might use to justify a position they hold — perhaps incorrectly.  In fact, there is no reason for an interim appellate court panel to know the names of counsel for the parties, or the names of the parties for that matter.  Briefs could be written in a highly standardized format with mere reference to party labels (appellant - appellee, petitioner - respondent, landlord - tenant, buyer - seller, etc.) and not to the actual parties names, nor the lower court case number, nor the name of the lower court case judge.  Names of counsel, proper names of the parties, and even the name of the lower court judge are all irrelevant, or at least should be, to the appellate decision making process.  Yet, each of those factors could render a potential bias.   Admittedly, although the same factors would apply to the Florida Supreme Court, because of the attention, public awareness and scrutiny given and received to their few decisions, and because their decisions derive for a full panel of seven judges and not three, there is much less reason to mask the parties and counsel appearing before the justices.

    If justice were truly blind at the district court level then only the clerk of the court would be privy to information regarding the names of the parties and their counsel, the lower court case number, and the name of the trial court judge, at least until such time as a final opinion or order was rendered.  Although, some government entities would, of necessity, be made known because of the nature of the case.  For instance, a statute particularly directed to a state agency would make it known that the agency was a party.  The same would be true of county and city codes in dispute.  Verification of the cited statutes and ordinances, and independent research by the court, would be impossible without such exact references.  

    By blindfolding justice in this suggested manner, any tendency of an appellate judge to think favorably toward the position of a crony would be eliminated.  Those who would dare approach an appellate court judge and seek favor, or worse — tempt the judge with lucre, would find it near impossible; that is, provided secrecy and proper decorum is maintained within the appellate court itself.   

    Additionally, judges assigned to the appellate panel should be chosen from across the state instead of from the divisional district.  Divisional districts made sense when judges arrived at court on the back of a horse and needed to meet in a room in order to deliberate.  Today, district court judges could each be located anywhere and deliberate via live video chat.  That would provide another layer of impartiality and separation of potential influence on the panel members.  

    As a more basic measure, and as a first important step, we should insist upon laws, or better — a constitutional amendment, that gives independence to the clerk of the court and requires the clerk to make a random assignment of every case to a panel of appellate judges.  Presently, there is no such assurance.  Clerks of the several district courts in Florida are under the direct control of their district court, and most particularly the chief judge of their district court.  Clerks are not independent. Accordingly, the chief judge could decide to assign a panel of judges to a particular case.  Also, judges within the district could beg, bargain or negotiate their way onto a panel thus leaving the door wide upon for prejudicial influence.  

    As it presently stands, the Florida district courts are very vulnerable to improper influences.  Appellate court judges are, after all, also subject to human frailties like those of the trial court judges.  Yet, there is little oversight.  Instead of maintaining a strong appearance of impartiality, district court judges attend expensive lunches and dinners for free or at a substantial discount.  These events are typically sponsored by very large law firms, and powerful attorney organizations; in other words, those that cultivate influence.  While in attendance the judges hobnob with those who can afford to be there (i.e. politicians, the rich, the powerful, the influential, people who know people).  If a district court judge is very good at hobnobbing then they might even be invited to an event in their honor so that they can be bestowed with an award — just for having done their job.   Maybe (or maybe not) that is why opinions are written that refer to or imply nonexistent facts, or that badly misapply a law or constitutional provision, or are so wholly lacking in substance that further review by the jurisdictionally handcuffed Florida Supreme Court is impossible.
    
    While we are busy thinking about how to keep Lady Justice’s mind more focused on the issues, we should also consider a way to make her more revealing.  After all, obscurantism is not becoming.  Presently, if Joe and Jane Citizen questioned the decision of a Florida District Court of Appeal, they could do a  public docket search over the internet, but their search would provide them nothing more than a list of the documents filed.  Joe and Jane, from their computer, would not be able to read the underlying record nor review the briefs.  Of course, anyone can go to the clerk’s office and ask to see what is in the file.  However, the time that must be taken to go out to the court likely dissuades most from taking that step.  Only the Florida Supreme Court allows everyone computer access to every filed (non-exempted) document.  But, in order to have a full, open, and honest intellectual debate about whether a district appellate court’s decision is savory or unsavory, we must also see what went into their cooking pot.  No one should fully digest a district court’s opinion without a review of the underlying record and a reading of the briefs on file. 

 FOR IMMEDIATE RELEASE - 10/24/2018                                               Contact:  Rex E. Russo, attorney
Re-print, re-publish, re-post, or                                                                        Phone:  305-442-7393
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                                                      TILA TERRIBLE JUDGMENT - or - TOO RIGGED TO FAIL    
                                                          “DEFRAUDED BY LENDER – PAY BANK $40,000!”
                 Bennett v. GTE Federal C. U., No. 3D17-0001 (Fla. 3d DCA Sept. 6, 2017) (review denied)    

     Looking back, it was like drawing a very bad Monopoly card, but in the real game of life, while watching The Bullwinkle Show.  Homeowners defrauded by forgery were ordered to pay $20,000 to the person who was possibly, if not likely, responsible for the forged document.  Judgment for another $20,000 was imposed against the homeowners’ attorney.  
          
    John and Nancy Bennett, the homeowners, were defrauded by a forged federally required Truth-in-Lending (TILA) disclosure document that led mortgagee GTE Federal Credit Union to bill them over $100 more per month.  The Bennetts, having noted the error, retained counsel and demanded correction.  Full rectification was defined in the demand as:  a correction of the monthly billed amount, a return of the over-payments, and a payment of $500 in attorney fees — all to be completed within 60 days.  Although the Bennetts were immediately entitled to TILA’s statutory damages and rescission, they did not seek those remedies at that time, preferring a quick and sensible resolution.   
    
    Since no correction was made within the demanded sixty days, nor within 100 days, the Bennetts sued GTE, LF Loans (a mortgage broker), and LF Loans’ principal Jamal Wilson.  GTE, LF Loans, and Wilson, united in defense, asserted that the Bennetts, who brought suit for rescission, recoupment of their over-payments, statutory damages, and attorney's fees — all of which are outlined under TILA — were not damaged.  

    The united defendants asserted that the Bennetts were not damaged because Wilson, in response to the Bennetts’ demand for correction, stated that there “would be” a correction of the monthly billed amount by the next billing cycle and a return of the over-payments.  However, GTE did not make the correction by the next billing cycle, nor the two after that, and, no defendant paid or ever agreed to pay the Bennetts’ $500 attorney’s fees incurred in calling out the forgery.  Just after suit had been filed, the Bennetts received notice that the amount was corrected just prior.  However, Defendants had already not only failed upon Wilson’s promise for correction by the next billing cycle, they also failed the requirements under TILA for correction, and they failed to meet the demands of the Bennetts for correction.  Without submitting any sworn statement by anyone on their behalf, the Defendants proceeded on a motion for summary judgment – which the trial court granted.
    
    On appeal, the Bennetts cited federal cases that led to rescission favorable to other homeowners who additionally received statutory damages, costs, and attorney’s fees.  Those federal cases remind us that TILA must be strictly construed in favor of homeowners.  Without mention of those cases, the Third District Courts of Appeals affirmed stating that “[t]he Bennetts (other than attorney fees) received everything they had asked for.”  In support, the Third District cited to a case that essentially stands for the proposition that if you make an agreement, the benefits you receive under the agreement are all that you are entitled to receive.  What agreement?    

     REMISS YET ELOQUENT

    A careful and studied review of the appellate court’s opinion alone reveals that the united defendants did not comply with the Bennetts’ demands; did not comply with corrective measures afforded under TILA; and did not even comply with Wilson’s own statement of what he said "would be done" — which fell far short of accepting the terms demanded by the Bennetts.  At the time they proceeded to file their action, the Bennetts had received nothing they had asked for.  Returning the benefit of the forgery, only after getting caught and sued, was not a contrition by defendants.  

    The Bennetts were damaged by incurring attorney fees to get back to the position they were suppose to be in under the mortgage contract.  The Bennetts were also damaged by having to pay court costs to get back to that position.  TILA’s statutory damages were also awardable to the Bennetts at that point.  Most importantly, the Bennetts were entitled to TILA rescission at that point (essentially resulting in an interest free loan for which the balance was then due) — as a matter of right — regardless of damages — as stated in the cited federal cases.  

    Even after getting caught committing a forgery of a TILA required disclosure document — or, at least getting caught relying upon the forged document — and then failing to make a timely correction — the defendants went unpunished despite TILA’s strictness.  That sounds more like the defendants got everything they wanted — an opportunity to commit forgery or at least rely upon a forgery — with no risk.  Perhaps defendants had benefitted from such forgeries hundreds of times and it was the first time they were caught.  Adding interesting commentary to the opinion, Judge Luck writing for the Third District quoted from Sophocles’ Antigone, a tragic play about how power corrupts men.  
                    
    The Third District also added a gratuitous (non-briefed issue) to their opinion stating that the rescission claim was, moreover, precluded by section 1635(e)(2) of TILA because the “Bennetts’ . . . mortgage was a refinance of their existing mortgage, secured by an interest in the same residential home.”  On motion for rehearing, the Bennetts’ pointed out, with supporting reference to the record, that the transaction was not a “refinancing” of their home with the same lender.  Only a refinancing of the same property, with the same lender, places the transaction under the preclusion of TILA’s 1635(e)(2).  Even when 1635(e)(2) does apply, it does not preclude the right to TILA’s statutory damages and attorney fees, both of which were ignored in the Third District’s opinion.  Bennetts’ motion for rehearing was denied.
    
    TILA was intended to encourage attorneys to undertake the very kind of action pursued by the Bennetts.  Such actions keep lending institutions in check.  Congress recognized that the alternative would be the creation of an expensive layer of bureaucracy to oversee proper lending practices for every loan.  In fact, at oral argument, Defendants’ counsel conceded that it was a TILA violation to have conflicting disclosure documents, but he argued — without any supporting case law — that such violations were too technical to be actionable.  Judge Ivon Fernandez, one of the panel judges on appeal, then stated that “a hyper-technical interpretation of the statute would create an industry of litigation based on technicalities.”  

    In their brief, the Bennetts cited to case law stating that “hyper-technicality reigns in TILA cases” because TILA is supposed to be strictly construed in favor of the homeowner.  Consequently, a “litigation industry” enforcing TILA’s strict mandates already exists in the form of consumer attorneys throughout the nation.  Furthermore, a forged document that increases the monthly payments by more than $100 per month is not a hyper-technical violation, nor is it a common technical violation.  It is something much worse.  

        
(View referenced documents at:  RexAppeals.com --> under Conference-Room/Documents-on-the-Table)

FOR IMMEDIATE RELEASE - 10/11/2018                                               Contact:  Rex E. Russo, attorney
Re-print, re-publish, re-post, or                                                                        Phone:  305-442-7393
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      WHOSE VOICE IS NO LONGER BEING HEARD?
                                                    - or -
                      “WHO’S VOICE IS NO LONGER BEING HEARD!”
    
The number of filings before the Third District Court of Appeal has been in serious decline over the last several years.  In fact, 2017 saw about the same number of cases as were filed in 1992.  That was 25 years ago!  Yet the population in Miami-Dade grew by about 725,000 during that period of time, and by about 25,000 more for Monroe County, according to records kept by the U.S. Census Bureau.*  Certainly the interactions of an additional three-quarters of a million people should spawn a greater number of legal conflicts.  So, why the decline in appellate court filings?  It would be very interesting if a research study were to assign classifications to the appeals and look at the statistical break-down of those cases filed over the years to determine the category that has declined the most.  

Last year the Fourth District Court of Appeal saw 3,967 cases filed to the Third District’s 2,815.  Granted, the Fourth District has 12 judges to the Third District’s 10 judges.   However, that’s a ratio of 331 cases per judge in the Fourth DCA compared to only 282 cases per judge in the Third DCA.  On average Fourth DCA judges are reviewing 17% more cases than Third DCA judges.  In part, the Fourth DCA judges have to make up for the fact that there is only 1 judge to about every 330,000 residents within the district, compared to the Third DCA where there is 1 judge to about every 277,000 residents.  As a percentage, each Fourth DCA judge has to deal with about a 22% greater population assignment which likely explains their increased case load.  If the dynamics of cases filed within each district are comparable, then the Third DCA has more judicial resources to apply to each case than does the Fourth DCA.  That is not to say that the resources are sufficient for either district.  It also does not explain the significant drop in cases appealed to the Third DCA — a statistic that one suspects is repeated across the districts.  

In order to maintain the number of filings at these levels, as opposed to the number of filings we would expect to see given the tremendous increase in the population, some demographic of the population had to give way.  In other words, some of those litigants who filed cases 25 years ago, for whatever reason would not likely be filing those cases today in Florida’s Third District Court of Appeal.  The reason could be the increased costs of an appeal; the reason could be finding a competent attorney willing to take the appeal; the reason could be a perceived bias by the appellate court to certain issues and litigants thus lowering the potential benefit to cost ratio; the reason could be attorneys made fearful of filing appeals; or, it could be any combination of those and other matters.  However, we can fairly well hypothesize that banks, developers, insurance companies, government entities, and large corporations have not shied away from filing appeals.  Who then?     

    “They cried out in fear: “We are here! We are here! We are here! We are here!”  
                                                                                                                                                           Horton Hears a Who, by Dr. Seuss    

                                       NUMBER OF CASES REPORTED AS FILED BEFORE THE 3DCA**

1992    there were 2,776 appeals filed                    Lawton Chiles, Governor (Dem.)
1993    there were 2,987 appeals filed                                                 " " "
1994    there were 3,080 appeals filed                                                 " " "  
1995    there were 3,686 appeals filed    (Peak) Lawton Chiles, Governor (Dem.)
1996    there were 3,608 appeals filed                                                 " " "
1997    there were 3,667 appeals filed                                                 " " "         
1998    there were 3,432 appeals filed                                                 " " "
1999    there were 3,255 appeals filed                         Jeb Bush, Governor (Rep.)
2000    there were 3,654 appeals filed                                                 " " "    
2001    there were 3,597 appeals filed                                                 " " "
2002    there were 3,492 appeals filed                                                 " " "
2003    there were 3,388 appeals filed                                                 " " "
2004    there were 3,279 appeals filed                                                 " " "
2005    there were 2,968 appeals filed                                                 " " "
2006    there were 3,201 appeals filed                                                 " " "
2007    there were 3,335 appeals filed                      Charlie Crist, Governor (Rep.)
2008    there were 3,324 appeals filed                                                 " " "
2009    there were 3,531 appeals filed                                                 " " "
2010    there were 3,449 appeals filed                                                 " " " (switched to Independent -- April, 2010)
2011    there were 3,353 appeals filed                         Rick Scott, Governor (Rep.)        
2012    there were 3,426 appeals filed                                                 " " "
2013    there were 3,280 appeals filed                                                 " " "
2014    there were 3,148 appeals filed                                                 " " "
2015    there were 2,952 appeals filed                                                 " " "
2016    there were 2,932 appeals filed                                                 " " "
2017    there were 2,815 appeals filed                                                 " " "
2018    As of 09/30/2018 there have been 1,957 filed appeals – on track with decline.
               

*       https://www.census.gov
**     These numbers were generated by going to:  http://onlinedocketsdca.flcourts.org       
To determine the number of cases filed, you must do a check on the last active court date, then continue back-date checking from the bottom of the page for that date searching up until you get a “hit” for a new case filing (i.e. either a “notice of appeal” or “petition” for Miami-Dade; “acknowledgment letter” for Broward).  That last case number indicates the number of filed appeals for the year.   

Prior to any filing of a bankruptcy petition, careful consideration must be given to the anticipated benefits of filing, versus the costs and risks of filing.  This is so regardless of whether the possible bankruptcy petition will be filed on behalf of a corporation, a married couple, someone hoping to save real estate or other assets with a Chapter 13 petition, or someone with nothing more than a pile of unsecured debt and the clothes on their back.For small corporations, the reason for filing is usually to put an organized end to the business and thereby avoid a multitude of lawsuits.  Pesky lawsuits may require the officers and directors to respond to discovery requests, force them to appear at depositions to explain the downfall of the business, and may even require court appearances.  A bankruptcy could avoid it all.  However, prior to filing a corporate bankruptcy, it is very important to give close scrutiny to the company’s books and records.  Often, checks are written to the shareholders as “draws” or as undefined “distributions.”  This is perhaps the first concern we look at, and typically the most problematic.  Unlike regularly stated wages to employees, including shareholder employees, “draws” and undefined “distributions” often lead to action by the trustee against the shareholder for recovery of such transfers within the prior year.  The trustee may also attack payments made to family members and close friends or to trade suppliers to whom debt had been owing.  The “look back” period for such transfers may be as short as 90 days for payment of preexisting debts to trade suppliers, to a year for transfers to family and friends, to as long as four years if the transfer does not appear to have been in return for value that was received.  It does not matter whether the transfers were cash, cash equivalents, or hard assets.

Prior to any individual filing for bankruptcy, it is important that they are also screened for transfers to friends, family members, and others.  Individuals are also questioned methodically in order to ascertain all of the exemptions that are allowed them under the law, and to determine whether they are better off filing a Chapter 7 petition (liquidation, typically concluded in four to six months) or a Chapter 13 petition (wage earner plan, requires monthly payments to a trustee for what is usually 60 months).  If the individual has no real estate, then the hope and goal will be to file a Chapter 7 bankruptcy to rid you of all of the nagging debt.  Unfortunately, some debt cannot be discharged and it is essential that the client understand that before filing.  Additionally, available exemptions may not fully cover all of the property that the client wishes to keep.  Obviously, for those times it is important that the client also understand the risk of possibly having to either give up some of the property to the trustee or “buy back” the property by either invading an exempted asset (ex. an IRA), getting help from a friend or family member, or finding a way to pay over time.

Chapter 7 bankruptcy is not always available to those who wish them, nor are they the best alternative in many cases.  Depending on the income of the petitioning individual(s), Chapter 13 may be the only available option (i.e., when income exceeds a predetermined amount).  Chapter 13 is also the correct option when: (a) the debtor desires to force a reinstatement of a mortgage, or (b) wishes to strip-off completely underwater second mortgages and subordinate liens such as homeowner association liens, or (c) when their exemptions are not sufficient to allow retention of necessary assets as is the case with sole proprietors of businesses, or (d) when seeking to deal with certain debts that are not dischargeable such as many IRS debts.

While bankruptcy may remove all debt, if not severely reduce debt, there are many issues that must be considered before proceeding.  Sometimes it is best to wait before filing, and sometimes it is best not to file at all.  No one wants the bankruptcy to cause them an unanticipated problem, or possibly heartache.  A wrong decision early on could be very costly and upsetting down the road.  Only a full analytical consultation with an experienced bankruptcy practitioner is likely to yield the best result possible.

Bankruptcy is a very complex area of the law.  Even a very lengthy article would not likely cover every possible issue that might apply to a particular case.  It is the facts and circumstances of the case that drive the analysis.  We typically charge for initial consultations because at times we give valuable advice on protecting assets when bankruptcy is not a reasonable option.  Often we spend more than an hour talking to the client in order to reach that determination.  However, for a limited time, a free initial consultation is available to former clients and their referred friends and family members for personal bankruptcy issues.  It is our way of saying “THANKS” for trusting us to give your referrals quality advice. 

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Many government-sponsored programs to help distressed homeowners, which are here now, have gone, or are on the way, get set up in conjunction with the lending institutions.  These programs are often stated to be designed for direct accessibility.  In other words – NO ATTORNEY NEEDED.  While it is very “noble” of the financial institutions to be offering this assistance, recall the fable of the Gingerbread Man.

I have an actual case in point.  My client was struggling to pay her mortgage.  Like many today she was squeezed, not because of any wrong decision she made, but because of an unexpected change in her life’s circumstances.  She did the right thing, picked up the phone, and called her mortgage lender to inquire as to whether there was an assistance program to help her.  So far — no harm, no foul.  She didn’t need an attorney to make that call for her.

My client learned that she might qualify for the Home Affordable Modification Program (HAMP) and a package was mailed to her.  A completed application was quickly returned following which my client received a congratulatory letter stating that she was accepted into the temporary program and could start making lower monthly payments.  Thereafter, month after month, for more than a year, she made the new lower monthly payments.  Imagine her shock when she received a pre-foreclosure letter.  She called and wrote the lender that there must be some mistake, but to no avail.  With little delay the bank then filed a foreclosure action even though she was up to date in her agreed payments.  Finally, she sought my assistance.

It became apparent to me that my client was supposed to return a second set of documents.  She understood the second set to be a different offer.  She considered the second offer less beneficial, especially because it required a “balloon payment” and that scared her.  A “balloon payment” is usually when the mortgage comes due for the full amount after just a few years.  In fact, the paperwork was to finalize the HAMP program.  The “balloon payment” term was misused by the lender.  The lender was trying  to explain that the difference in payments would be carried to the very end of the mortgage.  Monthly payments under the “final arrangement” would have been less than those of the “temporary agreement.”  Not one word in any of the paperwork suggests that the homeowner seek the advice of an attorney, despite the confusing language.   No one from the bank called to suggest she retain counsel.  No warning was given that the “temporary agreement” would end if she didn’t agree to the “permanent arrangement.”  It made no difference to the bank that for the last year she paid them more than she would have paid them had she signed the final HAMP papers.

So, I had to go to court and fight the lender that made the “noble” offer to assist.  Who needs that kind of assistance?  Had my client sought my advice in review of all correspondence received from the lender, she would have signed onto the lower monthly payment offered by the “permanent arrangement.”  Happily, following mediation, we obtained a successful resolution but at additional expense to the homeowner.
Do you ever scamper to avoid threats that pursue you?  If so, be careful not to jump on the back of a fox to cross any rivers. You might get eaten!  Please, call me before that happens or at least before you are completely devoured.

With so many real solutions available to distressed property owners, it’s sad that many fall victim to scams.  In one type of scam the “solution specialist” states that they have investment buyers for distressed property. The investment buyers state that they will allow the distressed homeowner to continue living in the subject property and even repurchase it in the future.  The homeowner enters into a short sale of the property with the investment buyer, but with an agreement allowing the homeowner to rent with a right to repurchase.  That is a classic “short sale fraud” situation.   While there may not be a state or federal law disallowing the homeowner to rent or buy from the investment buyer, it would almost certainly be a violation of the short-sale agreement.  Nearly every lender agreeing to be cut by a short sale requires an affidavit known as an “Arm’s Length Affidavit” or “Good Faith Affidavit” in which both buyer and seller agree to such terms as: the sale was negotiated between a buyer and seller unrelated and previously unknown to each other, the sales price was the best price received for the property or that all offers received were disclosed to the distressed homeowner’s mortgage lender prior to the short sale, that after the sale the homeowner will have no legal or beneficial ownership in the subject property, that after the sale the homeowner will not be reacquiring any legal or beneficial ownership in the property for at least two years, as well as many other terms.

Another type of short sale fraud is the flop-flip.  Usually, the flop-flip involves an unscrupulous real estate agent who convinces the short sale seller that a low ball offer is the best or even the only offer received for the property.  The fraud may involve manufactured low ball comparables and an unscrupulous appraiser suggested by the agent.  Higher offers for the property are withheld from disclosure to the seller, and consequently from the seller’s mortgage lender whose repayment gets cut short at sale.  Thereafter the property is sold to the low ball buyer who is actually a straw buyer.  The sale is a “flop.”  Actually, seller’s real estate agent either has some ownership interest in the buying entity or receives an illegal commission from the scam buyer.  Soon after the property is purchased, or as soon as possible thereafter, the property is “flipped” for a much higher price, possibly to one of the same entities that had made a higher offer than the scam buyer’s offer.

Homeowners with equity facing foreclosure may be subjected to a different scam.  They are easily targeted because readily available public record information will disclose that they are in foreclosure proceedings, and that they have equity in their property.  The “solution specialist” in this situation might also state that they have investors available who will allow the homeowner to stay in the property after sale.  But, instead the fraudulent scheme does nothing more than result in the equity in the home being skimmed off.  Sometimes, the underlying mortgage is not even satisfied and the pending foreclosure action proceeds along.

Yet another type of fraud involves entering into a complex trust agreement.  The “solution specialist” in this type of scheme convinces the property owner to transfer title in the property to a trust carrying a very prestigious sounding name.  In return, the trust makes the property owner the beneficiary of the trust and simultaneously agrees to use its lawyers, accountants, appraisers, analysts and experts to fight with the mortgage lender to lower the principal balance and payment terms.  This is meant to attract property owners who see the trust transfer as a way of separating themselves from the resolution process thereby avoiding the frustration, time and effort that go with resolution. Often very boisterous claims are made that the trust is then able to void or cancel the outstanding mortgage.  These trust instruments are often missing some important terms, like who receives rents from the property, who decides whether to sell the property, when to sell, how much to sell the property for, what to charge for rent, who pays for insurance, who pays for taxes, what the tax consequence is to the transferor (the prior title owner), who the trustee is, and how the trustee is compensated.  As you might have guessed, the terms are missing because the trust then controls the property, receives the rents, and so forth.  When such terms are stated, it is no different.  Making it more outrageous is that many times the trust receives a payment in advance from the transferring property owner, and does nothing in return because the trust agreement never says that the trustee necessarily needs to do anything.

There are so many types of fraud committed against distressed property owners and so many variations of those types of fraud that an entire book could be written about the topic.  Crooks who commit fraud are also fond of using lofty names like “short sale specialist,” “distressed property specialist,” “underwater property expert,” and at least another twenty like names.  While even those with a law license, real estate license, or mortgage broker’s license sadly also involve themselves with such scams (rarely though), many times the “solution specialist” refers to no such license nor to any recognized certification.  That should be a big red flag warning.

My use of the term “solution specialist” is both facetious and general.  The wolf wears many styles of clothes, uses many different names, and is seen in the most unusual places.  Don’t be a sheep.  Ask lots of questions.  It is possible to be both polite and firm while being suspicious, especially when it seems too good to be true.  When it seems too good to be true, it’s almost certainly not real.  “Get real!”  If you or someone you know has the slightest doubt at any time before, during or even after a transaction, do not hesitate to call for a consultation.

Vidal -v- Liquidation Prop., No. 4D10-3358, slip op., (Fla. 4th DCA, October 31, 2012)
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Following entry of summary judgment of foreclosure for the lender, the Vidals appealed arguing that affirmative defenses precluded such judgment.   Among the defenses were lack of standing, Truth In Lending Act (TILA) violations, and two types of fraud.  Having untangled the facts, the appellate court agreed with the Vidals that for the lender to have standing, the lender had to prove ownership and possession of the note on the date suit was filed.  An assignment of mortgage was produced, but it transferred only the mortgage not the note, and as all should know “the mortgage follows the note.”  An allonge to the note was produced but it was not dated.  An affidavit by the lender attesting that it received transfer of the note prior to filing would have evidenced standing.

The appellate court also combed through Vidals argument as to the TILA defense and agreed with them.  While the remedy of rescission has a three year statute of limitations, there is only a one year period for the remedy of recoupment unless brought by way of defense, as it was.

The defense of fraud allegedly arising from the lender’s knowledge that income was overstated was cut because one suffering from fraud cannot recover when they knew the statement to be false.
On the second fraud defense, wherein it was alleged that the lender had orally represented that the loan was a fixed rate when in fact it was adjustable, the appellate court found that such contention was expressly washed out by the written contract.