New Questions Being Raised About Court Filings in Foreclosure Cases

The expanding investigation into Florida's foreclosure crisis has turned up a new problem that may involve a number of cases: Individuals hired by law firms to notify struggling homeowners when their foreclosure cases are to be heard in court may have filed faulty or false documents.

Foreclosure defense attorneys and consumer advocates say they have documented a number of foreclosure cases where "process servers" filed questionable paperwork. State investigators who are examining foreclosure documentation problems -- involving law firms that employed "robosigners" to rapidly process claims -- are also taking a close look at process servers, court documents show.

According to lawsuits filed on behalf of homeowners, some individuals appear to have violated the rules of process serving: the personal delivery of legal papers, required by law, notifying people that a foreclosure action has been filed against them. Like "robo-signing" -- the mass signing of foreclosure documents without review by loan servicers -- it's an alleged practice that is putting lenders, and the foreclosure law firms serving them, under fire.

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Million Dollar Connecticut Marshal

John T. Fiorillo is the million-dollar marshal.

Boosted by his ties to the state's two major foreclosure firms, Fiorillo, a Hartford County marshal, reported a net income of more than $1 million for delivering court papers in 2008, according to disclosure forms filed with the Office of State Ethics.

Law firms paid Fiorillo more than $3 million to serve legal papers last year. But he reported spending nearly two-thirds of that on employee and office expenses, leaving him with a bottom line of $1,119,706. Fiorillo's take was more than double the next-highest-earning marshal.

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Bankruptcy Judges to Rewrite Mortgages?

Some Democrats in Congress are pushing to allow bankruptcy judges to rewrite mortgages as part of the proposed $700 billion bailout for financial institutions that are straining under the weight of failing home loans.

The goal is to allow homeowners facing foreclosure to seek a reduction in their mortgage debt when they file for bankruptcy. Some analysts say it makes no sense to spend billions of taxpayer dollars to buy toxic mortgages without also extending aid to households at risk of losing their homes.

“Right now the pain is with people who are having difficulty making their mortgage payments, and that is a leading reason why people would go down the bankruptcy route,” said Paul Leonard, director of the California office of the Center for Responsible Lending.

Groups that counsel people facing foreclosure long have complained that banks and loan servicers are slow to respond to requests for loan modifications. Consumer advocates hope that if bankruptcy judges are given the ability to compel lenders to reduce debt, consumers will have more negotiating clout.

Forclosure Economy Still Keeping Process Servers Busy

The crumbling housing market is bad news for homeowners who overextended themselves during the boom, but it's good news for some lawyers and associated businesses.

Law firms representing lenders, condo associations and, to a lesser extent, homeowners, have been extremely busy with foreclosure cases over the last few months.

Attorneys aren't the only ones who have been busy with foreclosure cases. Process servers, the people who go out and hand-deliver notices of foreclosures and other lawsuits, also have been swamped.

In the last year and a half, the Gissen & Zawyer service firm, for instance, has roughly doubled in size. The company had about 15 process servers 18 months ago, but now it has about 30, said co-owner Sean Zawyer.

Bad News Is Good News For Them

No one is ever happy to get a visit from process server Tammie Culligan.

"It's always a challenge, it's definitely a challenge," she said.

Tammie spends her busy day serving people with a notice to appear in court. She says foreclosures and short sales are through the roof in Hillsborough County.

It seems, these days, business is good for those in the business of delivering bad news.

Economic Downturn is an Upturn for Some

A bad economy isn't bad for everyone.

While business may be booming, serving evictions and foreclosures exacts a toll on employers like Ody Eire, who owns Ody's Professional Process, a process server in Lehigh Acres.

"It's pretty sad," she said. "I've served people where I've sat down with them for an hour, telling them it will get better. I've cried with people. It's tough because I'm a female and we're emotional."

Wants Process Server Rules

Four years ago, the Smith brothers, Tyrone and William, had plans to develop a condo project on property they inherited at Fulton and Dwight streets.

But a foreclosure notice involving their property at 110 Fulton Ave. - that was either properly served or not - killed those dreams.

Based on his belief that the foreclosure notice was mishandled, state Assemblyman L. Harvey Smith, D-Jersey City, has proposed legislation aimed at regulating process servers.

There are currently no requirements to become a process server.

Negotiating the Path to Keeping a Home

Paul Helikson stepped into the swirling snow on the steps of the Deschutes County Courthouse on a Thursday morning just before Christmas and barked out the legal singsong that brought an all-too-familiar end to a homeowner’s dreams.

Another day, another foreclosure auction.

Helikson, a legal process server, works with most of the trustee companies that handle foreclosure operations in Central Oregon for the country’s major lenders, and business has been booming. The frequency of his legally scripted courthouse-steps auctions has gone from one every few days to about 15 a week as the real estate market has worsened, Helikson said. Still, it’s something that no one connected with the process enjoys.