TALLAHASSEE — TALLAHASSEE — The state Supreme Court year could rule on a foreclosure case this year that may affect thousands of cases in Florida and throughout the U.S.
Thursday, the state high court heard arguments over whether lenders caught forging documents can escape scrutiny by dismissing a foreclosure case and refiling it with proper documents. The state high court's ruling could reopen thousands of cases in which mortgage holders and their law firms are suspected of falsifying documents to speed up foreclosures as Florida's housing market went from boom to bust beginning in 2007.
The case is being closely watched by mortgage lenders and others involved in the foreclosure process.
Mike Schneider, a Naples foreclosure attorney, said he has some clients in Cape Coral and Lehigh Acres who owe $300,000 on $40,000 foreclosed homes banks own.
"They have properties where the banks won't foreclose," he said. "It's a big mess. The whole thing is idiotic. The banks are worse than dealing with the government."
Thursday, attorneys representing Palm Beach County homeowner Roman Pino presented how he bought his home in 2006 and, two years later, fell behind in his payments. Bank of New York Mellon then began foreclosure proceedings.
Pino's attorneys found the bank's law firm handling the case had backdated documents and had them signed by an employee of the firm. Some refer to this process as "robo-signing," where banks and their law firms hired low-wage workers to sign legal documents without checking their accuracy as required by law.
When it became known the worker had "robo-signed' the documents, Bank of New York Mellon dropped the foreclosure case and then refiled it with the appropriate paperwork.
Pino's trial attorney argued that the second lawsuit should be dropped as a sanction for producing fraudulent documents in the first trial. This practice came to light in 2010 as courts in Florida and other states dealt with a deluge of foreclosure proceedings.
Bruce Rogow, representing Bank of New York Mellon, said the issue is whether Pino suffered any damages. Since Pino had settled with the bank to their mutual satisfaction, the case is over and the courts have no reason to be involved, Rogow said.
Staff writer Dave Osborn contributed to this report.