Last week, the Florida Supreme Court sided with banks in a closely-followed foreclosure lawsuit that could have affected thousands of home repossessions in the state. The state's highest court upheld a rule that allows banks to voluntarily dismiss foreclosure lawsuits as a way to avoid facing penalties for filing fraudulent documents.
In other words, Florida homeowners who were the victims of fraudulent foreclosure cases cannot re-open the foreclosure case after it was dismissed by the lender. Instead, banks are allowed to drop the faulty case and then re-file a new foreclosure case against the homeowner with the proper documentation.
Foreclosure defense attorneys throughout the state expressed great disappointment that the bench sided with the lenders. A disgruntled Royal Palm Beach-based foreclosure defense said the court "spoke loud and clear that it doesn't care about litigants that abuse of the court system and that fraud is OK." He said banks now have free reign to file fraudulent documents with the court and if they get caught they can just dismiss the case and start over.
Although, a University of Florida law professor pointed out that there are still some consequences banks could face for filing fraudulent documents. For one, attorneys could be referred to the Florida Bar and could face sanctions or a licenses suspension or revocation. Additionally, homeowners could ask for attorney fees in cases that are voluntarily dismissed.
The state Supreme Court case, Roman Pino v. the Bank of New York, was actually settled before trial between the homeowner, Roman Pino, and his lender, Bank of New York. However, the Supreme Court decided to rule on the issue anyway, saying that it could affect the "mortgage foreclosure crisis throughout this state."
Source: The Palm Beach Post, "Florida justices side with bank in foreclosure fraud case," Kimberly Miller, Feb. 7, 2013
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