Through a post on Yves Smith’s Nakedcapitalism.com this morning I learned of a new Florida court ruling that could throw a monkey wrench into thousands of foreclosures across the state of Florida. Kimberly Miller of the Palm Beach Post also has a pretty good write up of the ruling today. From the article:
“In a decision that could have staggering implications on foreclosure proceedings statewide, an appeals court ruled Wednesday in favor of the owners of a Wellington home whose bank filed documents sworn to by employees with no personal knowledge of the case.”
“The ruling from the 4th District Court of Appeal reversed in part a 2010 Palm Beach County Circuit Court summary judgment that said homeowners Gary and Anita Glarum owed LaSalle Bank $422,677.”
“That amount was based on an affidavit of indebtedness signed by loan servicer employee Ralph Orsini, who pulled the information from a company computer – a move that appeals court judges said amounts to hearsay.”
In a nutshell, it appears that the ruling says that in order to foreclose, the foreclosing party must have an affadavit of indebtedness that is sworn to by whomever originally entered this information into the computer system. In her analysis of the ruling, Yves Smith mentions that the turnover rate at mortgage servicers tend to be high, and the likelihood that the original employees still work at the servicer are low, and that finding former employees could be difficult to impossible.
This ruling seems very broad, and could very likely be narrowed upon appeal. Nevertheless, it places additional impediment on the path to foreclosure, and throws into question many foreclosures that have already occurred in Florida.
Florida has seen tens of thousands of foreclosures since the mortgage bubble popped in 2007. As of August, about 14.4% of Florida homes with mortgages were in foreclosure, and the backlog of foreclosures numbers about 260,000.
While this new issue is not the same as robo-signing, it kind of stems from the same issue, the slipshod handling of documentation and paperwork by major banks and mortgage servicers. These issues are going to cloud the titles of thousands of foreclosed homes for many years to come.
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