Michelle Garcia Gilbert, Esq., is a managing partner with Tampa, Florida-based Gilbert Garcia Group, P.A. She has practiced real estate and business law since 1989, specializing in default servicing legal work, including litigated foreclosures, real estate closings, evictions, and commercial litigation. Michelle works closely with the default industry by speaking at webinars and at conferences, as well as consulting on various issues relevant to the industry. She is an advisory board member of the Legal League 100. Michelle recently spoke with DS News about Florida's declining foreclosure volume and the challenges the industry is facing in that state.
In 2015, five or six years after the foreclosure peak, what is the biggest challenge your firm is facing in the default servicing space in Florida, which has consistently been tops among states in foreclosure rate?
The numbers in Florida are still, in terms of per capita, the highest or one of the highest in the country in foreclosure rate. But you need to take that in context, because it's a lot less than it was four or five years ago. Florida is a judicial state, so you've got a lot of activity in the court system and still a lot of incentive to capitalize on the regulatory nature of our industry and all the requirements, even though they're not in Florida, per se – they're on a national level. For example, the Consumer Financial Protection Bureau wants to impact the way those cases are handled, or the mortgage settlement agreements that our national clients have with the attorneys general. Those things impact our handling of the cases. I don't know that the judges always care what the federal regulators are requiring, but what that does is it delays the processing of the cases at the state level. We may not be able to get affidavits that are needed to bring a case to judgment, or clients may want to continually cancel or reset sales so they can look to make sure they've done what they're supposed to do with that loan to comply with those federal requirements.
There is tension between the state court judges who have jurisdiction over their cases and their courtrooms, and federal players who want to hold the industry accountable for perceived wrongs. The judges may not understand why the industry is doing what it's doing to manage judicial cases in Florida, and so they may do a couple of things: One, they want to speed the cases up, so they set them for trials. There were a lot of non-jury trials at the beginning of the crisis to clear the cases out. If you can't force them to move, then the judge is going to force them to move by setting them to trial. It's almost sort of passive-aggressive. Two, the media talks about the industry really being culpable, and therefore, there's sort of a penalizing approach. Judges seem to think if I get a borrower who comes before me, especially a borrower with a vocal attorney, and they can lay out for me all the perceived wrongs done to this borrower by their lender or servicer, then I will take measures to make this right such as awarding sanctions, dismissing cases, or awarding fees when the cases are dismissed.
Those are the problem areas in Florida: The tension between the requirements our clients are facing on a national level and the state players controlling their cases and wanting to get the cases resolved quickly, and using the cases to try to right perceived wrongs and being overbearing on the default servicing people. That being said, at our firm we see a lot of progress being made. Only a minority of our cases are giving us heartburn. The majority of our cases are moving through and we see a lot more workouts, so we see that those in the default servicing industry are trying to resolve cases. They are taking them to the judicial end, and that's helping with avoiding those problem areas.
Is the declining foreclosure volume in Florida an issue? Have you even noticed from your day to day business activities that the volume has declined?
Yes, we have noticed. As a firm, we have seen it as an opportunity to look at other ancillary practice areas. We have started a probate and estate planning department, a business law or corporate law department, and a standalone title company. We've been very fortunate in that we've been able to keep everybody gainfully employed. We have worked very hard to do that, and we hope we can continue to do that. We've been able to do that by looking for other business opportunities.
Our attorneys are a combination of younger, entry-level attorneys, and seasoned attorneys who have worked in other practice areas. One attorney was an in-house counsel for 15 years, and that's the attorney who is launching the business and corporate law department. Two of our younger attorneys have had experience in probate and estate planning, and we have a paralegal who concentrates in that area. We always dictate this work, but we're able to focus on it with the contracting of the foreclosure volume. It's hard when you're handling the high volumes and you're having to be reactive because there are so many moving parts. There are new servicers coming into the space, big box servicers are trying to get out, and then there is the transferring of files and network consolidations of attorney firms for the servicers. You have to be very responsive and adaptive.
One hallmark of our practice is high touch. People can get us on the phone, they can get us on our cell phones, and we're required to respond to our clients' emails within 24 hours. That's helped us remain nimble and keep those clients, especially the new servicers coming in that are looking for that high touch. The good news is, we have a little more time on our hands to where we're able to work on the new practice areas, so that's really exciting. We're purchasing a building, too, and that will give us our own place for the firm that we don't have to share with other tenants, and then we're going to have another place we're carving out for the title company. That's very exciting for us to be able to have that presentation in our local markets.