Foreclosure Mill Does The "Affidavit Two-Step" In Central Florida; Begins To Flood Court With Letters Requesting Judges To OK "Document Do-Overs"

In Central Florida, the St. Petersburg Times reports:

• Judges in Pinellas-Pasco Circuit Court say they've never seen anything like the letters they've been receiving over the past few weeks from the South Florida foreclosure law firm of David J. Stern.

• Referring to Florida Bar rules that say lawyers have a duty to disclose false evidence presented to the court, the letter said that unbeknownst to Stern's attorneys, previously submitted affidavits in foreclosure cases "may not have been properly verified" by the lender. But no worries: Substitute documents, this time "verified," would be forthcoming.

• This highly unusual move — call it the affidavit two-step — is hitting foreclosure courts around the country as lenders try to regroup from revelations that employees never read or properly notarized critical loan documents that were processed at mind-boggling speed.

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• The legal system is trying to figure out how to respond to lenders' requests for do-overs while foreclosure cases continue to clog the courts. In Maine, a judge ruled that GMAC's submission of a [robosigning Jeffrey] Stephan affidavit amounted to "bad faith" and ordered the lender to pay the homeowner's attorney fees and costs.

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• McGrady, the chief judge, said the timing of when substitute affidavits are filed could determine their impact. "If the affidavits differ and there's a contradiction in facts, that could prevent a summary judgment and then it would have to go to trial or it could be dismissed," McGrady said. "But if the case has already gone to summary judgment or sale, there could be a motion to vacate the judgment, then a hearing and we'll start all over again. There will be a problem where the house has already been purchased by a third party."(1)

For more, see Robosigning in Florida foreclosure cases leads to requests for affidavit 'do-overs' in local courts.

(1) If the bogus affidavits are found to be absolutely void (as opposed to merely voidable), the foreclosure judgments based on the void affidavits could arguably be found to be absolutely void as well. In this case, any innocent third party would be out of luck regarding the ownership of their home (even if they had no knowledge of the facts surrounding the dubious documents), and would have to rely on their title insurance policies to obtain indemnification for their losses.

Alternatively, if the bogus affidavits are found to be merely voidable, the foreclosure judgments would probably found to be voidable as well, in which case, a third party purchaser's ownership claim to the home will withstand an attack, if and only if, said purchaser qualifies for protection as a bona fide purchaser.

The distinction between void and voidable judgments in Florida was described by a state appeals court deciding a mortgage foreclosure case in Sterling Factors Corp. v. U.S. Bank Nat'l Ass'n, 968 So. 2d 658 (Fla. App. 2d 2007):

• There is distinction between a judgment that is "void" and one that is "voidable." See generally Malone v. Meres, 91 Fla. 709, 109 So. 677 (Fla. 1926).
  
  A void judgment is so defective that it is deemed never to have had legal force and effect.
  
  In contrast, a voidable judgment is a judgment that has been entered based upon some error in procedure that allows a party to have the judgment vacated, but the judgment has legal force and effect unless and until it is vacated. Id.; see also State v. Chillingworth, 126 Fla. 645, 171 So. 649, 652 (Fla. 1936); Chisholm v. Chisholm, 98 Fla. 1196, 125 So. 694 (Fla. 1929); Paleias v. Wang, 632 So. 2d 1132 (Fla. 4th DCA 1994) (Klein, J., concurring).
  
  A voidable judgment can be challenged by motion for rehearing or appeal and may be subject to collateral attack under specific circumstances, but it cannot be challenged at any time as void under rule 1.540(b)(4).
  
  A trial court's lack of subject-matter jurisdiction makes its judgment void. N.W.T. v. L.H.D. (In re D.N.H.W.), 955 So. 2d 1236, 1238 (Fla. 2d DCA 2007). So, too, a judgment that is entered against a defendant when the court has no personal jurisdiction over the defendant is generally regarded as a void judgment. Great Am. Ins. Co. v. Bevis, 652 So. 2d 382, 383 (Fla. 2d DCA 1995).

For a survey of court rulings from across the U.S. on void judgments, see:

• Everything You Always Wanted To Know About Void Judgments But Were Afraid To Ask!,
• LibertyForLife.com: Law of Voids (if link expires, TRY HERE).
• For those of you in Virginia, see The Difference Between Void and Voidable Judgments In Virginia.