So Many Foreclosures, So Few Lawyers

The robo-signing controversy has slowed foreclosure filing to a crawl in Florida, one of 23 states that require foreclosures to be processed through the courts.   The Law Offices of David J. Stern were handling close to 20 percent of all foreclosures in the state until the firm was terminated by mortgage holders over robo-signing.   Nick Timiraos writes for the Wall Street Journal,

In March, the Stern law firm told judges across Florida that it was unable to file the necessary paperwork to withdraw from 100,000 cases. Florida’s attorney general is investigating allegations that the firm routinely forged notarized documents. The firm denies the accusations and is challenging the attorney general’s jurisdiction in court.

In the meantime, there’s not enough lawyers in the Sunshine State to pick up the slack.

Ally Financial Inc., which owns GMAC Mortgage, and happens to be owned primarily (73%) by the U.S. government has transferred its cases, but  an Ally spokeswoman says the “situation in Florida is challenging, given the large number of borrowers in foreclosure and the number of quality law firms to manage these cases.”

Palm Beach County Judge Peter Blanc plans to hold special hearings to reassign the hundreds of cases that are backlogged.   “If nobody shows up” on behalf of the banks, “we will dismiss the cases,” he says.

Doug French

Mises.org

Douglas French is president of the Mises Institute and author of Early Speculative Bubbles & Increases in the Money Supply. See his tribute to Murray Rothbard.

Article originally published on www.Mises.org. By authorization of the author