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Judge: Foreclosure cases starting to clog the system

CLEARWATER — The chief judge for one of the busiest foreclosure courts in Florida told lawyers representing homeowners Friday that if they believe lenders are submitting fraudulent, "robo-signed" documents in a case, judges need to see evidence, not just news reports.

"I'm very concerned about activity by some I read about that do go to the integrity of the system," said Judge J. Thomas McGrady, who heads the Pinellas-Pasco court system. "But we're tied to (ruling on) what comes before us in a case. And if no one is there to say it's not true, we're in a tough position."

The growing controversy regarding the validity of mass-produced documents from lenders' law firms has thrown a monkey-wrench into an already overtaxed court system. In Pinellas and Pasco counties, McGrady said there are 31,000 foreclosure cases pending and new cases being filed at the rate of 1,000 per month.

Though that's down from June, the system is beginning to clog. There's recently been an increase in cancelled hearings — on Friday, one Pinellas judge saw 50 of 60 cases removed from his calendar. Even after a judge has ruled in favor of lenders and the court case is closed, a growing number of sales are being postponed, McGrady said.

"I don't know if the lenders are trying to work something out with the homeowner or taking a look back at the process because maybe there's a problem with the issue," he said.

The result: real estate limbo, with more foreclosure cases pending and houses unsold.

While most foreclosure motions are uncontested by the homeowners, McGrady said as people see publicity about questionable procedures they might reconsider and hire an attorney.

"Even when judgments have been entered and sales have happened, they may say, 'Whoa, that may have been sold improperly,' " McGrady said. "We're going to have title issues and all those things. And every motion, everything that's brought to the attention of the court will require a hearing of some sort. We're working through it, but it will take that much longer."

Michael Ziegler, a Palm Harbor defense attorney at Friday's meeting, said judges used to treat homeowners' lawyers as if they were impeding the foreclosure process.

"Now their point of view has shifted. They're encouraging us to properly examine the evidence," he said. "I'm relieved they now view the mismanagement of the plaintiff's work to be the primary problem as opposed to those defending these cases."

McGrady said he invited foreclosure attorneys together for the closed-door meeting Friday to remind all parties they need to follow the law. "Do what you're supposed to do so we as a court can get this resolved," he said. "Do it right the first time."

Kris Hundley can be reached at khundley@sptimes.com or (727)892-2996.

Bank won't buy bad mortgages

Bank of America on Friday said it will not buy back bad mortgages from a series of high-profile investors who complained defaults are being handled improperly and homes not being foreclosed upon fast enough. The complaining investors include the Federal Reserve Bank of New York, Freddie Mac, Pimco Investment Management and Blackrock Financial Management. The Fed is involved because it took over assets held by AIG, which faltered under the weight of bad home loans. The New York Times reported that the mortgages pooled in the securities total about $47 billion. It is unclear what portion of those loans is in default.

Associated Press

Judge: Foreclosure cases starting to clog the system 11/05/10 [Last modified: Friday, November 5, 2010 9:53pm]
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