Foreclosure-Gate: The Falling Number Of Foreclosures Indicate What?

02-28-2011 • NakedCapitalism.com/

There are reasons why Florida might show a steeper fall than other states. First, the state AG has been investigating all the major foreclosure mills in the state. Some, like the Law Offices of David Stern, have effectively folded. So there could be a bit of disarray simply due to the loss of some processing capacity. Second, Florida, like New York, has implemented a rule requiring that attorneys verify information provided in foreclosures. That might seem to be merely ceremonial, since lawyers are already responsible for the accuracy of information provided to the court. But I am advised that this measure is more than mere belt and suspenders; it apparently would have the effect of lowering the bar for opposing counsel calling for Rule 11 sanctions if he thought the foreclosing attorney was submitting bogus documents or information. That rule did became effective February 11, 2010 (hat tip Lisa Epstein), and the foreclosure mills have tried to escape compliance. I’d imagine in the wake of the robo signing scandal, their clients are becoming less tolerant of this sort of thing. If this pattern holds across at least across judicial foreclosure states, it suggests what we have long argued: that failures to convey loans as required by securitization documents are widespread, if not pervasive.