(OP-ED, first posted: September 7, 2018) —
The writer of this post is a paralegal and consultant to attorneys on matters involving chain of title, foreclosures and document manufacturing. The opinions expressed herein are that of the writer’s only and do not constitute legal or financial advice. Any use of the theories or ideas suggested in this post is entirely at your discretion and will probably result in disaster without the proper legal help.
Now comes the fun part!
It’s not the punch line … it’s the back end of the set-up!
This is where risk aversion and the filing of claims are twained!
When a real estate brokerage, title company, document mill or law firm is created, incorporated or organized by statute (an LLC, an LP, an LLP, a PA, a PC, etc.), these are statutory creatures of the state they are formed, organized or incorporated in. This means the state has jurisdiction over the “misbehaviors” of these entities and the agents-representatives-employees who represent them. Someone has to answer to somebody for something!
In a law firm, there are named partners, of which one of them is a managing partner or supervising attorney. That person generally is the contact person for not only service of process (can act as the Registered Agent or is in contact with the Registered Agent) but is also the individual that is named as the contact person for the firm’s errors and omissions (“E & O”) insurance. Law firm E & O insurance costs are hefty, depending on the number of attorneys, partners, etc. to be insured. It is implied here that each participating attorney has: (1) an education in law; (2) has passed the state bar exam; and (3) has applied for and received a license to practice law in that state for which he or she sat for the state bar in. Whether the attorney is a novice or a seasoned veteran, each attorney has to pass muster for moral turpitude and character before getting licensed. The state bars are generally the policing agency responsible for disciplining attorneys when they do something egregious or violate any of the Rules of Professional Conduct. In short, everyone in the law firm, including the partners and the supervisory attorneys are liable and held responsible by the disciplinary agency that governs their behaviors, namely, the state bar’s disciplinary committee. These committees are generally off-shoots of the judicial system of things in each state. The behaviors of lawyers are regulated by the states they practice in, so each state’s Supreme Court decides whether they practice law in their respective states or not. The supervising attorney is also responsible for the behaviors of all of the “non-lawyers” working in the firm. The foregoing is a restatement for insurance purposes … we’ll get to that in a moment.
UPL: THE UNAUTHORIZED PRACTICE OF LAW
Each state bar also has an Unauthorized Practice of Law Committee, which generally is an organized group of “henchmen” that investigate matters of relevance when non-lawyers either: (a.) attempt to represent paying clients as attorneys or advocates; and (b.) practice law, which is a statutorily-prescribed and heavily-regulated profession. Part of the problem with today’s society is that even though attorneys have to go through a lot of schooling and testing and licensing, a lot of the body politic doesn’t trust them. There have been numerous instances where malpractice has been committed and thus, a lot of attorneys have made a bad name for the profession. People don’t even trust the profession as a whole, because many state bar associations don’t discipline their misbehaving lawyers enough or to the degree that it satisfies the desires of the body politic. This is why non-lawyers have jumped into the legal fray. In real property law, lawyers are tasked with document review to make sure that everything contained within a document is legally sound. Because of the unveiling of illegitimate processes conducted by servicers and their lackeys in creating phony documents, everyone thinks they know how to read, analyze, interpret and determine various causes of action that will fall right in line with getting a paycheck equal to or better than a practicing lawyer. Promoting oneself as having the ability to review documents and give opinions about what’s in them had better have been followed with “J.D.” and “Esq.” (yes, I know, it’s a title of nobility … let’s not go there!); otherwise, the UPL Committee steps in when they become aware of the practice. You see, in the legal system, the UPL Committees were set up to protect the paychecks of attorneys and not the paychecks of non-lawyers! Most non-lawyer violators (for UPL) get ONE warning. If they keep doing what they were warned ONCE NOT TO DO, then felony charges are filed against them and they are prosecuted to the fullest extent of the law. The foregoing is a restatement for insurance purposes … we’ll get to that in a moment.
FORECLOSURE COURT JUDGES
This body of “lawyers” have either been elected or appointed to serve on the bench because they have demonstrated the capacity in the understanding of the rules of civil procedure, the rules of criminal procedure, the rules of evidence and generally, the body of law that accompanies the field they serve as judges in. For the purposes of this article, I focus on the state judges and NOT federal (as they are appointed for life) because state judges are generally elected and thus responsible to voters and constituents alike. They are also responsible to the county they serve in while on the bench and hold themselves out as “employees” of the county, with the privilege of sovereign immunity from the decisions they make. These judges also have a Code of Conduct (or Judicial Canons) which they must abide by. In Florida, for example, when a judge is suspected of committing an infraction that harms the public or specific persons within the cases he or she rules upon in the process of presiding over a case, that judge can be brought up on disciplinary charges before the Judicial Qualifications Commission (the “JQC”). Every state has some sort of judicial disciplinary committee, even though they may have different names. The Supreme Courts of each state can also determine whether a judge remains on the bench, based on their behaviors or the lack thereof, albeit in their consideration of the recommendations of the judicial disciplinary committee.
EXPOSURE AND RISK
We now come to the part about how “state statutes” play into the mix. Virtually every state has “fraudulent document statutes”. Some have less severe penalties than others. I put them all into The Quiet Title War Manual under “state-specific resources”, which took up half the book, explaining in three paragraphs on actionable offenses in each state regarding the recording of false documents.
In Florida, for example, the state legislature enacted the Florida Criminal Code § 817.535, which makes it a third-degree felony to record a document known to contain false and misrepresentative statements for the purposes (intent) to steal the property (by and through the foreclosure process) … PLUS … a fine equal to the market value of the home! Missouri just recently passed a similar statute, which also allows for doing a Cancellation & Expungement action to clear title of bogus assignments and other related documents.
Interestingly enough, the foregoing Florida statute also has a “civil component”. This is equally important to understand, as the statute is interchangeable in concept, yet its meaning is clear … you record a phony document in order to create standing and further rely on it in court, you’re in trouble! This puts everyone whose name appears in the recorded assignment at risk. The subsequent filing of foreclosure complaint pleadings, which rely on false and misrepresentative statements in order to claim the right to foreclose, put the actors within the document at legal risk. Once the “assignment” itself (containing the false and misrepresentative information) is recorded, other documents can then be challenged based on the falsity of the information contained in the assignments, such as: (a.) Appointments of Substitute Trustee; (b.) Affidavits of Lost Note; and (c.) Notice of Default and Sale. Post-foreclosure, any transfer in title through Trustee’s Deeds or Clerk’s Deeds can also be challenged, predicated on the falsity of the statements contained within the assignment that was manufactured in order to create standing.
The county clerks are immune from suits in the removal of phony documents, as they are generally mandated by statute to record what is given to them, as long as it contains all of the elements of a proper recording (according to statute). Still, John O’Brien, the Register of Deeds from Southern Essex District in Massachusetts, will not record documents that contain the name of known robosigners. Some states’ clerks will turn over suspicious documents to their local DA’s for review before recording. This still does not absolve the wrongdoing if the documents contain false and misrepresentative information.
This is not the part where you read the foregoing and get mad. This is the part where you get “clarity”. It’s all about the assignments! It’s always been about the assignments! Any attorney, trustee, auctioneer or any law firm or title company attempting to transfer title as the result of either a judicial or non-judicial foreclosure has EXPOSURE and thus, inherent RISK of being attacked (“called on the carpet”) and held liable! These types of behaviors are what insurance companies are trying to avoid!
To finalize this section of my work, let’s posit for a moment that the attorney brought this assignment up in court (or attached it to his pleadings as an Exhibit) and got the court to rely on it’s validity, even though the other side brought in an expert witness attorney who testified as to the falsity of the document’s contents and the judge ignored the expert attorney’s testimony and awarded the property to the bank anyway. Let’s also include that fact that most of the time, it’s the mortgage loan servicer that is claiming to have authority to foreclose on behalf of the lender, with no Limited Power of Attorney (“LPOA”) to show for it. This document can also be challenged, because these documents are restrictive in nature and many times, there’s noting in the LPOA that allows the servicer to foreclose (but do everything else, which increases its exposure as well).
Everyone in the foregoing scenario has to answer to a higher authority There are title companies out there who help the banks foreclose on real property and they get to answer to the State Department of Insurance. Mortgage loan servicers have to be licensed and bonded and have to answer to the Department of Banking and Finance. If this wasn’t so, Fidelity National Financial wouldn’t have been so quick to “spin off” Lender Processing Services when the SHTF post-financial collapse of 2008 and DOCX became a 3-ring media circus, resulting in the prosecution and imprisonment of Lorraine M. Brown, it’s principal.
It is at this point that we start to create the biggest, baddest paper trail imaginable … and I will explain that paper trail in my next segment … stay tuned!!