Bank of America Foreclosed on Home without a mortgage

Jason Grodensky had bought the Fort Lauderdale home with cash

last December, then says his home was sold out from under him.

(Robert Duyos, Sun Sentinel / September 22, 2010)

By Harriet Johnson Brackey, Sun Sentinel
September 22, 2010

When Jason Grodensky bought his modest Fort Lauderdale home last December, he paid cash. But seven months later, he was surprised to learn that Bank of America had foreclosed on the house, even though Grodensky did not have a mortgage.

Grodensky knew nothing about the foreclosure until July, when he learned that the title to his home had been transferred to a government-backed lender. "I feel like I'm hanging in the wind and I'm scared to death," said Grodensky. "How did some attorney put through a foreclosure illegally?"

Bank of America has acknowledged the error and will correct it at its own expense, said spokeswoman Jumana Bauwens.

Grodensky's story and other tales of foreclosure mistakes started popping up recently across South Florida. This week, GMAC Mortgage -- one of the nation's largest mortgage servicers and a major mortgage lender -- told real estate agents to stop evicting residents and suspend sales of properties that had been taken from homeowners in foreclosure. The company said it might have to "correct" some of its foreclosures, but was not halting those in process.
 
In Florida courts, which have been swamped with foreclosure cases for several years, mistakes "happen all the time," said foreclosure defense attorney Matt Weidner in St. Petersburg. "It's just not getting reported."
 
And the legal efforts required to resolve a foreclosure mistake are complicated. "Unwrapping it is like unwrapping Fort Knox," said Carol Asbury, a Fort Lauderdale foreclosure attorney. "It's very difficult."
 
The process is under increasing scrutiny, as Florida's court system struggles with the mountain of cases that have resulted from the housing crisis.
 
Grodensky said he spent months trying to figure out what happened, but said his questions to Bank of America and to the law firm Florida Default Law Group that handled the foreclosure have not been answered. Florida Default Law Group could not be reached for comment, despite several attempts by phone and e-mail. Grodensky said he has filed a claim with his title insurance company, but that, too, has not resulted in any action.
 
It wasn't until last week, when Grodensky brought his problem to the attention of the Sun Sentinel, that it began to be resolved.
 
"It looks like it was a mistake in communication between us and the attorneys handling the foreclosure," said Bauwens.
 
Court records show Countrywide Home Loans filed a foreclosure case in Broward County civil court against the former owner of the home on Southwest 14th Street in 2008. Bank of America took over Countrywide at the end of that year.
 
The following year, Grodensky and his father Steven bought the house for cash as an investment property. Jason Grodensky's brother Kenny Sloan lives in the house now. They negotiated a short sale, which means the lender agreed to accept less than the mortgage amount. Documents show the sale proceeds were wired to Bank of America. The sale was recorded in December 2009 at the Broward County Property Appraiser's Office.
 
But in court, the foreclosure case continued, the records show. There was a motion to dismiss the case in July, followed the next day by a motion to re-open it. A court-ordered foreclosure sale took place July 15. The property appraiser's office recorded the transfer of the title to the Federal National Mortgage Association (Fannie Mae) the same day.
 
Bauwens said the lender would go back to court to rescind the foreclosure sale.
 
Broward Chief Judge Victor Tobin, who set up the county court's foreclosure system, said this is the first he's heard of this type of mistake. "From the court's point of view we have no way of knowing that someone sells a house unless they tell us," said Tobin. "The bank would first have to tell the lawyers and the lawyers would presumably ask the court for an order dismissing the case."
 
Tobin said this is the first he's heard of this type of mistake. The court system is under pressure to clear up its foreclosure backlog. This year, the state court system pumped $6 million into the effort, hiring more temporary judges and staffers.
 
Some say there's too much effort aimed at simply disposing of the cases.
 
"The evidence doesn't matter, the proof doesn't matter, due process doesn't matter," said Asbury, the attorney. "The only thing that matters is that they get rid of these cases."
 
Mindy Watson-Cintron of Century 21 Tenace Realty said she was unable to stop a foreclosure even though she had a willing buyer for a Coral Springs home last summer. Watson-Cintron had a letter from GMAC Mortgage, agreeing to sell the house in a short sale. The letter indicates the deal would be accepted through Aug. 20.
 
Watson-Cintron said she called, pleaded and even spent three hours one day in the lobby of the law offices of David Stern in Plantation trying to get someone to agree to put the foreclosure on hold. Stern's office is one of the nation's largest foreclosure firms and, Watson-Citron said, represented GMAC in the foreclosure case.
 
But the foreclosure continued. The lender took back the home and now has it listed for sale – at a lower price than Watson-Cintron's buyer offered. "The bank's not talking to the attorneys and the attorneys are not talking to the courts," she said.
 
Stern could not be reached for comment despite several attempts by phone and email to his office. A spokesman for GMAC Mortgage promised to look into the case.
 
Florida Attorney General Bill McCollum is investigating Stern's firm, Florida Legal Default Group, based in Tampa, the Law Offices of Marshall C. Watson in Fort Lauderdale and Shapiro & Fishman, which has offices in Boca Raton. Officials have said the investigation centers on whether foreclosure documents submitted by these firms were false, misleading or inaccurate.
 
In announcing its decision this week to halt evictions and suspend sales in foreclosure cases, GMAC cited a deposition by Jeffrey Stephan in a Palm Beach foreclosure case in which Stephan said he did not verify all the documents and did not sign them all in the presence of a notary. Stephan said he signed as many as 10,000 documents a month.
 
Some foreclosure defense attorneys have questioned whether similar practices involve other lenders as they push huge numbers of foreclosures through the courts. In one South Florida foreclosure case, Chase Home Finance executive Beth Cottrell said in a deposition in May that her team of eight supervisors signs 18,000 documents a month. Chase's spokesperson did not comment.

Thanks to Barry Ritholz for the head's up and commentary

The Big Picture Site

 
What unmitigated incompetence. Here is how to make this right

• The attorney of record on this case should be suspended from the practice of law for 6 -12 months;
• Sue the *#*"*, Bank of America. For your lost time, inconvenience, emotional toll, damage to credit ratings, etc. The only way you can stop really bad corporate activities is by making it cost them money. Whack them for a few million dollars, and you will see less of this sort of egregious behavior.
•  Freeze the Florida foreclosure mills. IF A COURT CAN FORECLOSE ON A HOUSE WITHOUT A MORTGAGE, THERE IS SOMETHING TERRIBLY FATALLY WRONG WITH THAT COURT SYSTEM. They are administratively incompetent, and until they demonstrate they are not renegade organized criminals (i.e., have some basic competency), they must freeze what they are doing.
• The US Attorney General’s office should be looking into this disaster