The foreclosure business is at a standstill in much of the country. Yes, banks are still sending out foreclosure and eviction notices but in courtrooms all across America, foreclosure cases have been stayed or frozen. The inactivity has been caused in large part by one lawyer, Thomas Cox, whose pro bono work on behalf of Nicolle Bradbury of Denmark, Maine, has revealed massive fraud in the paperwork relied upon by banks.
It seems that Cox used to specialize in foreclosing on small business loans that were almost always guaranteed by a lien on the business owner’s home; this is usually the only source of collateral small business owners have at the start of their company. As he says in Friday’s NY Times: “It was extraordinarily unpleasant, but it paid well. I had a family to support.” To make amends. after he retired from his company, he decided to do some pro bono work for a non-profit that assists folks facing foreclosures. When he was given Ms. Bradbury’s case she was 90% of the way to losing her $75,000.00 home to her mortgage holder, GMAC. But Cox saw something that caught his eye: Jeffrey Stephan, the person signing all the paperwork, had an unusual job title: “Limited Signing Officer.” Cox decided to take his testimony in a deposition. The bank’s lawyers apparently sent him an earlier deposition someone else had done in another case to see if that would satisfy Cox, but No, he had different questions he wanted to ask Mr. Stephan.
And ask he did. The answers revealed that:
When Stephan says in an affidavit that he has personal knowledge of the facts stated in his affidavits, he doesn’t. When he says that he has custody and control of the loan documents, he doesn’t. When he says that he is attaching ‘a true and accurate’ copy of a note or a mortgage, he has no idea if that is so, because he does not look at the exhibits. When he makes any other statement of fact, he has no idea if it is true. When the notary says that Stephan appeared before him or her, he didn’t.”
The deposition proved that Stephan prepared over 400 foreclosures a day -400 a day- for GMAC, all based on false affidavits and false notarizations. Stephan never reviewed the paperwork for accuracy because he never had it; all he did was sign and sign and lie and lie. Just to show you how the court system can be unfair, if Ms. Bradbury had falsified those affidavits or presented a notarized affidavit when she really did not sign in front of a notary, she would have lost her case automatically and been arrested. But while the judge had some harsh words for GMAC, the only repercussion was that it had to pay for Mr. Cox’s time, a bill that came out to $27,000.00.
The moral to the story is not just David triumphing over Goliath, its about the importance of lawyering diligently. Its about not taking anything for granted and digging deeply to look at every possible angle that can help the client. GMAC will likely end up with Ms. Bradbury’s house someday, but maybe the extra time she has will allow her to find work and get back on a payment schedule she can manage. Even if she doesn’t, its important that the system require all parties to play by the same rules and to play fairly.
This story reminded me of another that I always tell my law students. My International Law Professor Myles MacDougall represented the interests of New York in a case brought by the United States against the 13 States that border the Atlantic Ocean to determine whether the United States had exclusive rights to the seabed and subsoil underlying the ocean beyond three geographical miles from each State’s coastline. The court then had to determine what was the official coastline of each State. The US argued that obviously the body of water between Long Island and the actual coast of the US was where the line began. NY argued that it had to be three miles off the other coast of Long Island into the Atlantic Ocean. It looked like a simple case and a dead loser for NY. But MacDougall, in doing research on Long Island, discovered that the East River was only made navigable when it was dredged by the Army Corps of Engineers. He argued that Long Island was therefore made an island as one side of it was not naturally navigable. The Supreme Court ruled that he was right – that for legal purposes Long Island was actually a peninsula and was part of the mainland. MacDougall proved Long Island was not an island! An incredible victory was achieved just because MacDougall knew the devil was in the details and he had to do the tough grunt work of examining every possible avenue for his client.
These stories have a lesson for all of us – but especially for young lawyers and law students- that there is no shortcut. I see so many law students who think a law degree assures them of an easy, successful lifestyle. TV makes it appear glamorous and that if you look good, dress sharp, and can engage in witty repartee, that clients will be lined up outside your door after you rack up victory after victory. They don’t show the long, tedious hours of investigation, research and preparation that lead up to trial because that’s not commanding entertainment. But it gives a false impression to those who want a career in law. They will fail to understand that diligence and hard work are still the only roads to success.
Kudos to Thomas Cox for recognizing that the devil’s in the details!