This isn’t the first time Florida’s Judicial Ethics Advisory Committee dealt with the issue of judges’ use of social media and interactions with lawyers.  In a 2009 opinion, the same Committee ruled that it was not permissible for a judge to approve a lawyer who may appear before the judge as a “friend” on a social networking site such as Facebook.

The specific question before the committee in the LinkedIn inquiry was: “Whether a judge may add lawyers who may appear before the judge as ‘connections’ on the professional networking site, LinkedIn, or permit such lawyers to add the judge as their ‘connection’ on that site?” 

The inquiring judge summarized his proposed distinction between a Facebook friend and a LinkedIn connection by stating:

LinkedIn is designed for business and professional networking, and offers a profile and options to network in a business sense. Facebook, on the other hand is designed more to connect family members and personal friends. As an example that illustrates the difference, when a person wants to know where an old colleague is working now, they would use LinkedIn; when they want to find out if that same colleague is married and if they have kids, they would use Facebook.

The Committee determined that a judge can post information on Facebook and LinkedIn, but it is “the process of selection of ‘friends’ or ‘connections’ by the judge, and the fact that the names of those ‘friends’ or ‘connections’ are then communicated — often, but not always, selectively to others — that violates Canon 2B, because by doing so the judge conveys or permits others to convey the impression that they are in a special position to influence the judge.”

A close reading of the opinion is necessary since the opinion expressly states that it should not be interpreted to mean that the inquiring judge is prohibited from identifying any person as a “friend” on a social networking site. Instead, it is limited to the facts presented by the inquiring judge, related to lawyers who may appear before the judge. The opinion does not apply to the practice of listing as “friends” persons other than lawyers, or to listing as “friends” lawyers who do not appear before the judge, either because they do not practice in the judge’s area or court or because the judge has listed them on the judge’s recusal list so that their cases are not assigned to the judge.

The committee considered a California opinion which concluded that it is permissible for a judge to accept a lawyer as a Facebook “friend” or LinkedIn “contact” if that lawyer may appear before the judge. The California committee further concluded that a judge may not approve the lawyer, or have a lawyer as a friend or contact, if the lawyer has a case pending before the judge. The Florida committee deemed that approach to be too difficult to administer, as it “contemplates a judge constantly approving, deleting, and reapproving lawyers as ‘friends’ or ‘connections’ as their cases are assigned to, and thereafter concluded or removed from, a judge.”

In Pino, the Bank of New York filed a foreclosure lawsuit against Mr. Pino.  Mr. Pino’s lawyers challenged a document created by the bank’s lawyers (Law Offices of David J. Stern) and sought to question employees about the document’s veracity.  On the eve of the depositions, the bank voluntarily dismissed the case thereby blocking the court’s ability to address any sanctions.  [Under the Florida Rules of Civil Procedure, the court effectively loses jurisdiction over a case once it is voluntarily dismissed by the plaintiff.]  Pino’s lawyers sought to block the bank from re-filing the case, which it did several months later.  The trial court denied the request and Mr. Pino appealed to the Fourth District Court of Appeal.  The Fourth DCA certified the issue to the Florida Supreme Court.  In an interesting twist, the parties settled their dispute, but the Supreme Court still wanted to receive briefs and hear argument due to the importance of the issue.

Some of the questioning by the justices focused on the harm to Mr. Pino.  For example, Chief Justice Charles Canady posed this question to Amanda Lundergan, Mr. Pino’s lawyer, “What it seems like to me, you’re just looking for a ‘gotcha’ to get out of the mortgage.  Am I wrong?”

The bank’s argument was that voluntary dismissals in foreclosure cases should be treated the same as any other civil case and that rule changes aimed at voluntary dismissals in foreclosures could have far-reaching effects.

We have not had problems.  This is, because it’s a mortgage foreclosure case, because there are a lot of those cases, it has attracted a lot of attention. But I think we have to look at this in the universe of general civil litigation. And this has not been a problem in general civil litigation. – Bruce Rogow, lawyer for BNY

Mr. Rogow’s point is well taken, but he overlooks the obvious.  Fraudulent filings in have not been a widespread problem in “general civil litigation,” but they do remain a very real (and widespread) problem in foreclosure cases.  The issues of robo-signing and fraudulent documents in residential mortgage foreclosure cases have been widely reported yet it continues to happen.

The underlying consideration should be preserving the integrity of the judicial system and the lawyers who are officers of the courts.  The existing rule structure provides an opportunity for unscrupulous banks or lawyers to submit fraudulent paperwork in the hopes of getting away with it.  When it appears the scheme didn’t work, they can simply dismiss the case and get a do-over.  Our judicial system should not let that happen.  We have a special rule of civil procedure for the verification of complaints which only applies in mortgage foreclosure cases.  Why shouldn’t there be a similar special rule for voluntary dismissals in foreclosure cases?

The Supreme Court took the first step towards limiting this fraud by requiring verification of foreclosure complaints.  However, much of the robosigning and fraud occurs in affidavits filed much later in the case.  The next step should be to allow the trial courts to retain jurisdiction after a voluntary dismissal in a foreclosure case, upon a proper showing, to consider sanctions against lawyers and lenders who submit fraudulent documents to the courts. Thus, it is still too early to determine what the Court will ultimately decide.

Court watchers will tell you not to read too much into the questioning by the justices.  The justices’ feelings can’t be assumed simply from their questioning, and the written opinion often reaches a completely different result than one would assume from the questions asked at the hearing.

We will post another blog on this issue once the Supreme Court issues its opinion.

For more background on the Pino case, here are links to articles in the Bradenton Herald and Palm Beach Post. You can also read the appellate briefs here.

Congratulations to John C. Primeau for recently being recertified by the Florida Bar as a specialist in real estate law.

Board certification recognizes attorneys’ special knowledge, skills, and proficiency in various areas of law and professionalism and ethics in practice.  It is a voluntary program for lawyers, approved by The Florida Supreme Court and administered by The Florida Bar.  Certification is the highest level of evaluation by The Florida Bar of the competency and experience of attorneys in the areas of law approved for certification.  Certified attorneys are the only lawyers allowed to identify themselves as “Florida Bar Board Certified,” as “specialists” or “experts” in a particular practice area.  Certification establishes standards for a lawyer’s education and competency, and the Florida Bar grants board certification only to lawyers who have been evaluated for experience and expertise in a particular area of law.  Only seven percent of eligible Florida Bar members are board certified.

Mr. Primeau became board certified in real estate law in 2001 and has been recertified twice since then.

According to the Florida Attorney General’s official press release, the settlement generally releases civil claims related to robo-signing, other foreclosure-related abuses, and loan origination misconduct, but it provides no release of criminal claims or of claims related to mortgage securitization.

So what does this mean for Florida homeowners and Florida’s housing market? That remains to be seen. According to the press release, Florida’s share of the total monetary benefits under the settlement will be approximately $8.4 billion.

• Florida borrowers will receive an estimated $7.6 billion in benefits from loan modifications, including principal reduction, and other direct relief.
•  Approximately $170 million will be available for cash payments to Florida borrowers who lost their home to foreclosure from January 1, 2008, through December 31, 2011, and suffered servicing abuse.
•  The value of refinanced loans to Florida’s underwater borrowers would be an estimated $ 309 million.
•  The state will receive a direct payment of $350 million.

Sounds like a lot of money, but how soon can we expect to see any actual relief? My prediction is that we won’t anytime soon. The Tampa Bay Times is reporting that at least one of the banks seems to agree.

‘The immediate results are not going to be all that pleasant,’ said Mark Vitner, an economist with Wells Fargo. His bank is one of the biggest lenders in Florida as well as a participant in the settlement. ‘The amount of foreclosures will actually increase and there will be some additional downward pressure on home prices.’

According to the Tampa Bay Times article, here’s how the settlement will be carried out:

• Because of the complexity of the agreement — the second-largest civil settlement in U.S. history next to 1998′s tobacco industry deal — federal officials said borrowers will not immediately know if they are even eligible. And the timetable for a payout is lengthy.
• Over the next 30 to 60 days, negotiators will pick an administrator to handle logistics of the settlement and to monitor compliance.
• Then it will take another six to nine months for the administrator, the attorneys general of 49 states (Oklahoma did not participate) and the mortgage servicers to identify which homeowners would qualify for immediate cash payments, principal reductions and refinancing. Those eligible will receive letters.
• The settlement will be executed over the next three years.

Reaction to the settlement is mixed. Here are links to a few good articles which take a critical look at the settlement – huffingtonpost.com, firedoglake.com, and nakedcapitalism.com – 12 Reasons You Should Hate the Mortgage Settlement.

My predictions are:

• Florida homeowners are not going to be unhappy about this settlement a year from now.
• Those who lost their homes to robosigned (i.e., fraudulent or forged) documents are not getting their homes back and a check for a few hundred or a few thousand isn’t going to make them feel better about the experience.
• It’s going to be an uphill battle for anyone to actually receive the cash payments.
• The principal reductions and refinances are going to be just as frustrating and difficult to obtain as loan modifications are today.
• Even though the settlement doesn’t release the bankers from criminal liability, don’t hold your breath waiting to see any criminal prosecutions. If there are more than a handful, I will be shocked.

Check back here in a few weeks for a follow-up article once the actual settlement document is available.

I previously blogged here about the Florida Supreme Court’s termination of the statewide mandatory mediation program for residential foreclosures.  The new Administrative Order provides that circuit chief judges of each circuit may “adopt or employ any measures permitted by statute or court rule to manage pending and new residential mortgage foreclosure cases, including referral of cases to mediation on a case-by-case basis pursuant to section 44.102, Florida Statues, and Florida Rule of Civil Procedure 1.700(a).”

Broward County’s Chief Judge (Hon. Peter Weinstein), the Administrative Civil Judge (Hon. Jack Tutor), and the Foreclosure Division Judge (Hon. Marina Garcia-Wood) are considering different options for a new foreclosure mediation program.  To their credit, they were open to hearing recommendations from the various participants in the foreclosure mediation process before making a final decision.

The BCBA’s Real Property Section invited Judge Garcia-Wood and a cross-section of plaintiff and defense foreclosure attorneys, HOA/condo attorneys, and mediators to discuss the problems with the RMFM mediation program and suggestions to improve the foreclosure mediation process.  Following introductory comments by each attendee, the different groups met separately and discussed mediation issues from their perspective and offered a series of suggestions to improve the process.   Some excellent ideas were exchanged, and there was actually quite a bit of common ground among the various participants.  Judge Garcia-Wood appreciated the suggestions and is going to factor them into the decision making process for the new mediation program.

Special thanks to Gary M. Singer, Esq. (BCBA Real Property Section Chair) for inviting me to co-moderate the event with him.

I will post an update on this blog when the Seventeenth Judicial Circuit implements the new foreclosure mediation Administrative Order.

Bock also points out that lawmakers have kept in place a restriction keeping court records from public view online. Images of official records – deeds, marriage licenses, mortgages, plats, deeds and court judgements – have for years been available for public view online.

“We believe that the (Florida) Supreme Court should be looking at those issues again,” Bock said.

I agree with Ms. Bock. Are we supposed to celebrate because we don’t have to drive as far to see an imaged copy of a court document?  It’s 2012!  It’s time for the state government and the state courts to get with the program and make the images available online.  In federal court, you can go on PACER and see EVERY DOCUMENT on your computer while sitting in your office. This isn’t something new; it’s been this way for years. I am not aware of any reason to treat state court documents any differently, and I hope the state courts will finally change these archaic rules as e-filing is implemented.

 The Court has reviewed the reports on the program and determined it cannot justify continuation of the program. Accordingly, upon issuance of this administrative order, the statewide managed mediation program is terminated. Cases already referred to and pending in a mediation program on the date of this order pursuant to the statewide managed mediation program will remain in the program through completion of mediation. After the date of this order, no new cases may be referred to mediation pursuant to the statewide managed mediation program.

The end of the program was not a big surprise to anyone who has been following this issue.  The Court’s decision follows a panel recommendation from October that Florida’s twenty judicial circuits should be allowed to set up local mediation programs.  I wrote about the panel’s report and recommendations here.

Where do we go from here?  That depends on each circuit’s chief judge.  The Administrative Order provides that circuit chief judges may “adopt or employ any measures permitted by statute or court rule to manage pending and new residential mortgage foreclosure cases, including referral of cases to mediation on a case-by-case basis pursuant to section 44.102, Florida Statues, and Florida Rule of Civil Procedure 1.700(a).”

It remains to be seen how each circuit is going to react.  The logical question is whether circuit-by-circuit will be any more effective than mediations under the statewide program.  Unless those programs address the root causes in failed mediations under the statewide program, I don’t expect to the see the dismal mediation success rate improve much.

Don’t forget to check back to our blog for more information.  We also post a lot of information on our firm’s Facebook page, so don’t forget to “like” our page.

If you’re interested in Florida foreclosure issues, I also encourage you to check out the Palm Beach Post which continues to do an excellent job covering Florida’s foreclosure crisis. Here’s a link to the Post’s article regarding the end of the RMFM program.

For almost two years, real estate practitioners have been struggling with the new Good Faith Estimate (GFE) and HUD-1 Settlement Statements on all RESPA transactions.  The intent behind these revised forms was to make things “easier” for the consumer.  The result was, of course, the exact opposite.  The new forms are creating a host of compliance issues for lenders and settlement agents, while doing absolutely nothing to make things easier for the consumer to understand.

Only a government bureaucrat could come up with a form which makes things “easier” by requiring settlement agents to charge a seller’s closing cost (i.e., owner’s policy title insurance premiums) to the buyer, and then give a credit back to the buyer for the same item, regardless of how the contract between the parties allocates those costs.  Here’s a news flash for the folks in DC – that does not make things easier!  Buyers look at settlement agents like we’re nuts when we explain the charge/credit scenario to them, and it needlessly adds at least five minutes to every closing.

Well, the good news / bad news is that the government is revisiting this issue.  The Consumer Financial Protection Bureau is working on consolidating the Truth in Lending (TILA) Notice, GFE, and HUD-1 into a single document.   I am glad to see that they’re trying to simplify the current forms, but I fear that the “law of unintended consequences” may make the situation even worse.   I encourage you to review the two proposed forms and vote on which one you think is better.    Click here for instructions on how to vote on the proposed forms.

Mediation

In an earlier blog, I wrote about the Florida Supreme Court’s appointment of a “Statewide Managed Mediation Program Assessment Workgroup” to examine the statewide residential foreclosure managed mediation program data.  The Workgroup recently submitted its report to the Supreme Court.  You can obtain a copy of the report here.  The report is worth reading in its entirety, but I will touch on a few key points.

After consideration of the available program data, public comments, chief judge input, and other information, the workgroup voted to: (1) eliminate the mandate for a statewide managed mediation program; and (2) allow circuits to opt in to a new, revised uniform model administrative order, either as an exclusive approach or in addition to referral of cases to mediation on a case-by-case basis under relevant court rules and statutes.  The workgroup concluded that for those circuits that choose to continue a managed mediation program, adherence to a modified model administrative order is important to maintain consistency throughout the state. In those circuits that choose not to opt in to a modified model administrative order, the chief judge should be responsible for devising a plan for discontinuing the local managed mediation program.

The workgroup recommends that the Supreme Court establish a separate workgroup to develop modifications to the order, including the following:

• Require borrowers to affirmatively opt in to the program upon service of suit papers

• Develop steps to improve the integrity of borrowers’ financial information and to identify the appropriate lender contact

• Develop steps to improve performance on document exchange and document review

• Review and update document exchange requirements for both parties

• Clarify the correlation between bankruptcy and participation in the program

• Explore options for sanctions for noncompliance by either party

• Explore fee reductions, including borrower contributions to fees, borrower payment of foreclosure counseling fees, and reduction of overall program costs

• Develop data mechanisms to track post-mediation settlements

• Shorten the time frame for completion of mediation

• Eliminate the mandate for referral of all residential mortgage foreclosure cases to the program.

• Examine the manner in which the results of mediation are reported

Interestingly, the Report states anecdotal evidence suggests that the percentage of foreclosure cases resulting in settlement would “materially” increase if data could be obtained for cases at which an impasse is declared at mediation. Later, the Report states that other features of the managed mediation program explain why a “significant” number of cases settle after impasse is declared at mediation. That is not consistent with the anecdotal evidence I have heard, but I also recognize that most of what I have heard comes from the 17th Judicial Circuit in Broward County.

It should come as no surprise that the comments from the plaintiffs’ lawyers are mostly in favor of ending the mandatory mediation program. Conversely, the comments from mediators and defense lawyers are overwhelmingly in favor of continuing the mediation programs.

A more successful mediation program would benefit both homeowners and lenders, but it remains to be seen whether the suggested changes will actually translate into positive results.

Earlier this week, the Florida Supreme Court released Administrative Order SC11-33.  In its Administrative Order, the Florida Supreme Court noted that more than one year of data has been collected on the statewide managed mediation program for residential foreclosures, and the Court wants to examine whether the mediations are effective.

The Court appointed a “Statewide Managed Mediation Program Assessment Workgroup” (the “Workgroup”) comprised of five judges and one court administrator, to examine the program data, consider other relevant information including the reduction in the backlog of foreclosure cases by other means, and make recommendations to the Court regarding the continuation, modification, or elimination of the statewide program.

Specifically, the Workgroup is charged with addressing the following two issues:

1. Assess the success of the statewide managed mediation program in resolving cases as evidenced by data collected to date, as well as any other relevant information, including current foreclosure filings and other measures that have been taken to reduce the backlog of residential mortgage foreclosure cases, and make recommendations to continue, modify, or eliminate the statewide program; and

2. Recommend steps to be taken to manage pending and new residential foreclosure cases if the mandate for managed mediation in these cases is eliminated.

Comments from interested persons concerning these two issues only may be submitted to the Workgroup.  You must use the form located here.  Interested persons must electronically submit the comment form by October 3, 2011. Here is the e-mail link, but don’t forget that it is mandatory that you submit your comments using the approved form which you can get here. No comments will be accepted in any other format, or after October 3, 2011.  The Workgroup will present its report to the Florida Supreme Court by the end of October.

Although the mandatory mediations sounds like a great idea on paper, the results have been less than impressive.  The Palm Beach Post reported this week that only 3.6 percent of all cases referred to mediation statewide in a yearlong period ended in a written agreement between the lender and homeowner.  In Palm Beach County, the success rate is even lower – only 1.6 percent of the 4,632 referrals made ended in a written agreement.  Both sides in the foreclosure cases blame the other for the low success rate at mediation.  Regardless of the cause, this preliminary data suggests that the managed mediation program should be significantly retooled or dropped entirely.

Lawyers and litigants on both sides of foreclosure cases will be watching to see if there will be any statewide changes as a result of the Workgroup’s examination and report.  Check back here at the end of October for an update after the Workgroup submits its report to the Florida Supreme Court.