The Florida Supreme Court recently heard arguments in a landmark lawsuit that could end up undoing hundred of thousands of foreclosures.
The reason? Banks filing fraudulent documents in their foreclosure proceedings.
The case at hand is Roman Pino v. Bank of New York Mellon and stems from the robo-signing scandal, the fact that banks and law firms in Florida and in other states hired low-wage workers to sign legal documents without checking their accuracy. In Pinos case, the mortgage assignment that binds a loan to a lender.
Even though Pinos foreclosure case has already been settled out of court the Florida Supreme Court is hearing the case because the bank used a strategy that has been used by many different foreclosures in Florida. The strategy is called voluntary dismissal, and involves banks voluntarily dismissing cases that were tainted by fraudulent paperwork only to refile again later with different- legal- documents.
If the state Supreme Court rules against the banks, "a broad universe of mortgages could be rendered unenforceable," said Miami attorney Kendall Coffey, author of the book, "Foreclosures in Florida."
If the court rules against Bank of New York Mellon its likely that many different financial institutions could be affected. As it stands, more than 104,000 foreclosure cases were voluntarily dismissed from Floridas courts in 2011, often because of banks legal document issues. It also means that the 400,000 homeowners in Floridas foreclosure limbo will remain there, unsure of what is going to happen to them.
Kendall Coffey Attorney at Law, Author and Legal Analyst