The Mother of All Foreclosure Mistakes

Photo (cc) by stevendepolo

According to this recent press release from Realty Trac, during this year’s second quarter, about one home sale in every four was a foreclosure. In former bubble markets like Florida, Nevada, parts of California and Arizona, the numbers are even higher: 56 percent of home sales in Nevada were foreclosures. They also report that the sales price of a foreclosed home is about 26 percent below the average home’s market price, thus depressing the price of all homes in the market.

But while foreclosures have a negative impact on those losing their houses and those living nearby, not everyone is a loser in the foreclosure process. Some of the firms that produce and process the paperwork necessary to kick a homeowner out are making money – a ton of it. Of course, there’s nothing wrong with making money, including profiting from putting people out of their homes. After all, if homeowners can’t pay, they can’t stay – and somebody’s got to do the detail work of legally reclaiming the property for the lender so the house can be sold to offset their loan losses.

But as you read in the first article in this series, some foreclosure defense lawyers are now alleging that some of the law firms that file foreclosures are playing so fast and loose with the rules that people’s rights are being trampled and courts are being defrauded. Defense lawyers – at least, all three that I interviewed – are contending that law firms hired by banks to process foreclosures aren’t properly preparing the paperwork that separates home and homeowner.

For an example of what can happen when a law firm runs roughshod over a homeowner, meet Hugo San Martin. Watch the video below, then meet me on the other side for more.

Keep in mind that you’re not seeing this story simply because a law firm mistakenly sued an innocent homeowner for foreclosure – more on that in a minute. The reason Hugo’s story made the news is that the law firm in question – David Stern’s – not only erroneously filed a foreclosure, they didn’t correct their mistake until Hugo hired a lawyer. They could have answered any of his calls and avoided this bit of bad publicity. Why didn’t they? Perhaps because they were busy – extremely busy. According to their representative, lawyer Jeffrey Tew, David Stern employs more than 1,000 people (or did – since I talked to Tew, the firm is now apparently laying off people) and in 2009 alone processed more than 70,000 foreclosures. If all they earned in legal fees was $1,000 per foreclosure, that’s still $70,000,000.

In a recent deposition of a former Stern employee named Tammie Lou Kapusta, the Florida Attorney General unearthed a reason that may help explain why people working at Stern’s firm didn’t talk to homeowners like Hugo. Here’s some of Tammie’s testimony:

Tammie: “The problem is that the practice was so large that there was never actually — I had actually been yelled at for trying to talk to homeowners on the phone. You’re giving them too much time. Start working.

I worked for hospice for twelve years before I went to David Stern so I just thought that there might be some kind of compassion. I would try to deal with what wasn’t being done proper. We were directed that that was not what our job was to do. Our job was to run the team and type the MSJs (Motions for Summary Judgment), get them out the door. Get the judgments entered. Everything was about getting the judgment entered because we have to report back to the banks. “

So, if this sworn testimony is to be believed, helping homeowners with legitimate mistakes at Stern’s firm took a back seat to churning out the foreclosures.

Now, as to the mistake itself: there are two ways of looking at errors like this. The first is that in any high-volume office, legal or otherwise, mistakes will get made and perhaps not properly addressed in a timely fashion – that’s just the way it is. The second way of looking at it is that mistakes like this should never be made if the responsible parties act responsibly.

The other day I watched two people discuss this exact issue on a cable news channels. The guest took the position that these types of foreclosure mistakes were inexcusable. The conservative commentator countered that mistakes happen, and used as an example the fact that the police sometimes accidentally break down the wrong door and arrest the wrong guy. Oddly enough, I had used the same example with Hugo’s lawyer, Jeff Golant. His response? Well, watch it for yourself:

Was this mistake excusable? Is it just a part of doing business? I’m sorry I can’t include a rebuttal from Stern’s firm to help you decide, but it’s not because I didn’t ask for one: they refused to return multiple calls.

In the final installment: the three foreclosure defense attorneys I talked to for this series worked in – to put it politely – less than luxurious surroundings. In fact, we could barely fit our camera into their offices. In the final part of this series, you’ll see how the attorney on the other side lives.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
7 Secret Perks of Individual Retirement Accounts
7 Secret Perks of Individual Retirement Accounts

IRAs come with bells and whistles that many other accounts lack — including some perks you may not know exist.

Marooned at Home? Earn Some Cash Playing on Your Computer
Marooned at Home? Earn Some Cash Playing on Your Computer

Earn cash by reading emails, taking surveys, playing games, shopping and signing up for offers through this website.

Homeowners Say These 2 Kitchen Appliance Brands Are Best
Homeowners Say These 2 Kitchen Appliance Brands Are Best

One brand takes five of the top honors, while another ranks highest in three categories.

The Worst Nursing Homes in America Are Revealed
The Worst Nursing Homes in America Are Revealed

The nursing homes with a history of providing subpar care previously hadn’t been identified for a government list.

7 Common Online Shopping Mistakes That Will Cost You
7 Common Online Shopping Mistakes That Will Cost You

How many of these costly online shopping missteps are you making without realizing it?

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
11 Things Retirees Should Always Buy at Costco
11 Things Retirees Should Always Buy at Costco

This leader in bulk shopping is a great place to find discounts in the fixed-income years.

Over 50? The CDC Says You Need These 4 Vaccines
Over 50? The CDC Says You Need These 4 Vaccines

Fall is the time to schedule vaccines that can keep you healthy — and even save your life.

9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

11 Senior Discounts for Anyone Age 55 or Older
11 Senior Discounts for Anyone Age 55 or Older

There is no need to wait until you’re 65 to take advantage of so-called “senior” discounts.

8 Things You Can Get for Free at Pharmacies
8 Things You Can Get for Free at Pharmacies

In this age of higher-priced drugs and complex health care systems, a trip to the pharmacy can spark worry. Freebies sure do help.

These Are the 4 Best Medicare Advantage Plans for 2020
These Are the 4 Best Medicare Advantage Plans for 2020

Medicare Advantage customers themselves rate these plans highest.

The 10 Most Commonly Stolen Vehicles in America
The 10 Most Commonly Stolen Vehicles in America

A new model parks atop the list of vehicles that thieves love to pilfer.

11 Household Items That Go Bad — or Become Dangerous
11 Household Items That Go Bad — or Become Dangerous

When you get the impulse to stockpile these everyday items, pay close attention to their expiration dates.

7 Ways to Boost Your Credit Score Fast
7 Ways to Boost Your Credit Score Fast

Your financial security might soon depend upon the strength of your credit score.

19 High-Paying Jobs You Can Get With a 2-Year Degree
19 High-Paying Jobs You Can Get With a 2-Year Degree

These jobs pay more than the typical job in the U.S. — and no bachelor’s degree is required.

5 Ways to Get Amazon Prime for Free
5 Ways to Get Amazon Prime for Free

Hesitant to drop $119 a year on an Amazon Prime membership? Here’s how to get it for free.

10 Reasons Why You Should Actually Retire at 62
10 Reasons Why You Should Actually Retire at 62

If you can, here are several good reasons to retire earlier than we’re told to.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

14 Things That Are ‘Free’ With Medicare
14 Things That Are ‘Free’ With Medicare

These services could save you money and help prevent costly health problems.

5 Keys to Making Your Car Last for 200,000 Miles
5 Keys to Making Your Car Last for 200,000 Miles

Pushing your car to 200,000 miles — and beyond — can save you piles of cash. Here’s how to get there.

26 States That Do Not Tax Social Security Income
26 States That Do Not Tax Social Security Income

These states won’t tax any of your Social Security income — and in some cases, other types of retirement income.

5 Things That Make Life More Meaningful for Retirees
5 Things That Make Life More Meaningful for Retirees

Retirees agree: These are the things that give them purpose and fulfillment in their golden years.

10 Things You Should Never Do With Bleach
10 Things You Should Never Do With Bleach

Does the pandemic have you reaching for bleach more than ever before? Learn the ins and outs of using this powerful disinfectant.

15 Amazon Purchases That We Are Loving Right Now
15 Amazon Purchases That We Are Loving Right Now

These practical products make everyday life a little easier.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.