This piece originally appeared in the January 2022 edition of DS News magazine, online now.
As a kid, I wanted to be an archaeologist or an FBI agent. My father was a medical doctor; my mother a professor. I learned firsthand what I did not want for myself. My first memories from my first year at Albany Law School were of sitting in Real Estate 101 with Professor Dubroff—a solid professor but hindered by boring material. Bank A assigns mortgage to Bank C. Bank C assigns to Bank D. Bank A then assigns to Bank B. “What the Heck?” “How could that ever be?” Apparently, those fact patterns turned out to be my life’s calling.
I moved to Florida after graduating from law school, and by total chance, a roommate worked for a bank/servicer. I got a position as a Foreclosure Coordinator in August 1997. It was a different era then, but the job is pretty much what you assume. I referred cases to outside counsel in Pennsylvania and other states while monitoring their timelines. We had some autonomy choosing firms, and the servicing technology was seemingly not much different than today, outside of the rows of fax machines. I would order the collateral from the vault and manually fill out the foreclosure referral with a pen to include the long FITNO with the trustee and securitization pool. I would ship all the referrals with collateral in a FedEx to the law firms with a coversheet attached. After that, the job was reporting, tracking, obtaining affidavits/assignments and attending meetings. I had to wear a suit every day.
We worked closely with the Loan Resolution Department (LRCs), which is where I would meet my wife. LRCs handled the deal-making on residential loans, whether it was forbearances, modifications, or short sales. They were much the same workouts as those used today, but without as many rules impacting how contact can be made, and workouts processed. CFPB, HAMP, and other familiar acronyms we use today routinely didn’t exist then. I eventually moved to the REO Department as Fannie Mae Coordinator, where I was the liaison responsible for REOs being sold and closed by Fannie Mae’s real estate department, as opposed to the in-house REO sales department. It was an uncomfortable position given that my success meant everyone else’s jobs could be outsourced to Dallas.
I later moved to the position of REO Closing Manager, with my own network of attorneys and title companies and a primary focus of closing the REO contracts by month’s end. The “closers” were in six cubes, surrounded by a sea of REO Sales Manager cubes “prairie dogging” daily, asking for status. This was my favorite position, and it gave me the experience needed to open my own department at a servicer in Miami.
My experience was that of a smaller servicer shop. It was more casual having the feel of a large family business rather than a large, publicly traded corporation. I was referring out a lot less work, and some attorneys definitely treated me differently as a result. I had an Access database system built for my REO Closing department to process our closings.
I opened my law firm in July 2004, following a couple years of private practice in local law firms handling foreclosures. My wife Antonella and I were the first two employees in our office—then in Hollywood, Florida. Having both started on the servicing side, we were now officially on the other side of the business as the vendor owner. It is a unique position because we have an idea what the servicing client expects from us, but that can be annoying and overstepping too.
A key focus of foreclosure departments in the late ‘90s and first decade of the millennium was the “first legal date.” This was more imperative on FHA loans due to the potential of “curtailment;" however, this extended to conventional loans as well, requiring the filing of the complaint/petition within five days from referral received. I highlight the “First Legal” issue because we can all relate to this throughout the country in both judicial and nonjudicial states. It is symbolic of how the law firms adjusted to industry priorities.
In 2009, the Florida Supreme Court created a Foreclosure Task Force to address issues it saw with the practice of foreclosures. As a result, they amended the Florida Rules of Civil Procedure. Starting February 2010, foreclosure complaints had to be sworn under penalty of perjury by the lender that all the facts stated herein are true. They made the express threat that they are doing this to sanction the lenders. A few years later, the requirement to certify actual possession of the original note in a separate instrument was added.
Nowadays, filing a complaint has gone from a simple, unsworn pleading that can be filed within a day or two to an investor-sworn document that includes multiple exhibits to include power of attorneys, assignments, note, and endorsement, along with a signed certification of original note possession. As an added bonus, the complaint-filing fees for foreclosures specifically changed. When we opened the firm in 2004, it cost $278 to file any foreclosure case. Now, the overwhelming majority of foreclosure cases fall under the $995-1,995 filing fee category, which does not include extra fees for recording, re-opening, indexing, etc.
In the early 2000s, the center of the default world was California—specifically Orange County with New Century, Bank of America, Countrywide, Ameriquest, and others. A decade later, there was a shift to Texas and the Carolinas, mostly in the Dallas area. Conference locations changed accordingly. There are definitely (and sadly) fewer conferences in Vegas or other locations that may have an image that can be portrayed negatively by the media. Overall, I think the industry has improved for the better. Although there still remains a need for efficiency and diligence, everyone understands there is a need to be thorough, precise, and without any shortcuts which can lead to problems.