Chain of Title (16 page)

April believed the mortgage market was ripe for collapse, with tragic consequences, and lawyers needed to be trained to protect clients. She went to Ohio, California, Minnesota, Missouri, South Carolina, wherever she was asked. She never took money for her seminars, charging only enough to recoup the cost of the facility. And she required that everyone taking the class perform
twenty hours of pro bono work.

Between 2004 and 2008, as foreclosures became a growth industry, fifteen hundred lawyers took April's seminars. Like Max Gardner, she also maintained an enduring relationship with those she trained, inviting attorneys throughout Florida and the nation onto two listservs where they could collaborate, share pleadings, and develop strategies. Between April's and Max's listservs, young attorneys could access the accumulated knowledge in foreclosure defense with the click of a mouse.

April produced results, albeit mixed ones. She froze dozens of cases in place because plaintiffs possessed no legitimate proof of ownership. In others, servicers agreed to loan modifications so her clients could afford the payments. In 2005 she got Judge Walt Logan to throw out twenty-four Florida cases in which MERS attempted to foreclose without possession of the note.
But an appeals court reversed the decision two years later; the banks had the means to keep trying until they found someone to wave cases through. The stops and starts angered April, who believed that any judges allowing foreclosures to advance by plaintiffs without standing failed to uphold their constitutional duty. But she was gaining a following; the
New York Post
dubbed her “the Loan Ranger.”

Among the many young Florida lawyers seeking guidance at the dawn of their careers was a lanky guy out of St. Petersburg named Matthew Weidner. His family had a tradition of civic engagement. His father joined the air force, one uncle became the executive director of the state Republican
Party, and the other liked to walk around in Benjamin Franklin costumes. After graduating from Florida State University, Matt did political campaign work, but found it laced with corruption, so he moved on to practicing law. He filed his first case while still in law school, over the denial of a public records request. It went nowhere because he didn't turn in enough copies for the process servers. The combination of earnest principles and reckless abandon never faded.

Matt thought of foreclosure defense as the subsistence farming of the legal profession: the $500 retainer he charged would barely cover expenses, and clients couldn't pay much more. When he realized he could get attorney fees from the banks instead, it changed his life. A couple of key moments stuck out. Once Matt sat in a judge's chambers before a hearing, reviewing a mortgage document. The judge pointed to one of the amount-due figures that looked improbable, and the plaintiff's attorney interrupted, “We can change that right away and give it back to you.” Matt wondered how much of the document could be legitimate if the attorney could alter it by snapping her fingers.

Later he hired a law school clerk, who ran down a provision in the rule book requiring plaintiff's attorneys in foreclosure cases to attach internal records for the borrower. Matt didn't believe him, but after looking it up himself, he agreed. Matt took it to a local judge, who immediately responded, “Weidner, what the fuck are you doing?”

“Look at the rule book!”

After the judge found the rule in question, he said, “Holy shit, you're right!” Not even judges with extensive experience in foreclosure cases knew the required steps to take away someone's home. And they didn't really have to know; until the crisis, most cases went untried. In fact, when Matt took April Charney's seminar, with her insistence that securitized mortgages constituted the largest criminal scheme in the history of mankind, most of the lawyers in the audience feared that judges would find such defenses frivolous. Lawyers often try to build relationships with judges; they don't want to be seen as wasting the court's time. If they believed they would lose and that judges would consider them ridiculous for even bringing the case, they would stay away from filing.

Matt didn't see it that way. April inspired him that the rule of law was at stake. He watched April's 2005 trial, in which
Judge Logan threw out all
those cases where MERS tried to foreclose in its name, as the smoke heralding the fire of the collapse. If the judges paid attention, the foreclosure crisis might have been avoided. And he'd be damned if he would keep quiet out of concern for career advancement.

April Charney's insistence that lawyers collaborate rubbed off on Matt. He met Greg Clark, a title attorney in Clearwater, who worried that broken chains of title would make existing homes unmarketable, creating ghost properties without resale potential. “The judges can do whatever they want,” Greg told Matt. “But I'm a title attorney. This is unfixable.”

Greg assembled a group of local attorneys in St. Petersburg, and Matt joined up. They called themselves
Jurists Engaged in Defending Title Integrity, or JEDTI. The whole thing was vaguely related to the concept of Jedi knights; maybe the membership had seen
Star Wars
too many times. They bought a broadsword, engraved it with the initials “JEDTI,” and held round-table meetings where only the attorney in possession of the broadsword could speak. They found a meeting room on the twenty-sixth floor of the county administration building in downtown Tampa, which took two elevator rides to reach. They even had a JEDTI motto: “The light of truth, the strength of defense, the heart of passion, and the leadership that follows from integrity.”

Matt built a website to market his law practice, and colleagues convinced him to include a blog. In fact, before Lisa and Michael published their blogs,
Matt Weidner started his own, in July 2009. Matt filled the blog with the kinds of rants he couldn't say out loud in court: contempt for the Great Foreclosure Machine and the judges' nonchalant acceptance of bank attorney lies.

Judges initially viewed Matt and his JEDTI friends as clowns fighting the equivalent of traffic tickets. But inside the system, clerks who worked with mortgage documents on a daily basis knew something was tragically wrong. They were disquieted by the behavior of the foreclosure mill law firms, filing hundreds of cases a week in the sloppiest way imaginable. They thought the courts desperately needed the leadership that follows from integrity. As the crisis raged and the lost notes and fabricated documents mounted, judges in the Tampa/St. Petersburg area began to listen.

When people around the state discovered what was happening in St. Petersburg, new faces would show up at JEDTI meetings. Once an attorney
stood up and said he had to come to Florida's west coast to see JEDTI for himself. He'd driven four hours from Palm Beach, known locally as
“Corruption County,” where he couldn't get anything done because the judge who handled all the cases wouldn't listen to foreclosure defenses. In fact, she would sanction attorneys for stepping out of line.

As the attorney from Palm Beach discussed his litigation strategies, Matt immediately recognized him as a much higher-caliber advocate than the JEDTI lunatics, someone with deep experience. The attorney's name was Thomas Ice.

Tom Ice started as a corporate lawyer, spending twenty years defending companies in accident cases, eventually becoming a partner with the international firm Holland & Knight. But he got burnt out and decided that early 2008 was the perfect moment to put out his own shingle, recession notwithstanding. He opened Ice Legal in Royal Palm Beach, in a strip mall on Okeechobee Road, one of those six-lane Florida boulevards with a continuous loop of car dealerships and chain stores. His wife, Ariane, formerly an executive director at nonprofits, joined the firm as part paralegal, part researcher, and part counselor. Tom would joke that Ariane knew more about the law than any attorney.

Tom originally planned to try consumer bankruptcy cases, as his brother did. But the first client who walked into Ice Legal was a trucker who couldn't declare bankruptcy because he'd lose his truck, and therefore his entire livelihood. He wanted to mount a foreclosure defense to save his home. As far as Tom Ice knew, there wasn't any such thing as a foreclosure defense; if you didn't pay, that was it. He sent the trucker on his way, apologizing that there was simply no way to help. He thinks about that guy a lot.

The next person also wanted to fight a foreclosure, as did the next, and the next. Since primary mortgages couldn't be modified in bankruptcy and practically every homeowner in Florida was deeply underwater, most clients would have no chance to make payments in a
Chapter 13
workout. Tom realized that he'd better research foreclosures. He read English case law, like the 1677 Statute of Frauds, and dove into the various requirements for bank repossessions. Early on, Ariane kept alerting Tom to outlandish add-on charges from mortgage servicers for things like property inspection. Tom would ask for documentation to prove the charges, and the creditors would
immediately drop the claims, saving his clients $5,000 to $10,000 by making a phone call. That made the Ices recognize they couldn't trust bank figures.

Ice Legal rapidly changed focus from bankruptcy to foreclosure defense. The main judge in the Palm Beach County foreclosure division at that time, Jeffrey Colbath, personally asked Tom to take cases, saying that homeowners needed lawyers. The evidence Tom encountered looked suspicious: bad signatures, vice presidents signing for multiple banks, the whole bit. He and Ariane got sucked down the same rabbit hole as so many other lawyers, victims, and activists, scouring the public records, amazed by the systemic misconduct of the nation's largest financial institutions. So when Tom first went into court on a foreclosure case, despite no experience in this area, he felt enormously confident that the judge would nail the other side. But it was the exact opposite. The judges were where Tom had been a few months earlier: if the homeowner didn't pay, there was no defense.

Tom observed cases across the state and decided that the best way to fight was to litigate. He started with the process service defense. When a defendant is served with a summons, the process server must include four separate items on the document: their initials, their ID number, date, and time. Ariane was doing document intake, and the information was consistently missing. Tom at first balked at the idea, saying, “I don't see a court getting excited about this.”

Ariane said, “Come on! Tell me why you can't raise that!”

Upon further research, Tom learned that defendants weren't getting served the papers. The point of the notations was to prove whether process servers did their job. Foreclosure mill law firms often owned the process servers, and therefore had an interest in failing to inform defendants about their court cases—it meant uncontested foreclosures and pure profit. Investors in mortgage-backed securities paid for process service, and they had no way of knowing whether the charges were legitimate.

Ariane talked Tom into filing one case,
Vidal v. SunTrust Bank
. Palm Beach County judge Diana Lewis, who initially heard it, indignantly grabbed the copy of the process server's papers and wrote the notations in herself, saying, “There, does that satisfy you? Now stop all this quibbling!” But where Judge Lewis saw quibbling, Tom and Ariane saw a legal process that should never be defied for convenience's sake.
Vidal v. SunTrust Bank
ended up
going all the way to appellate court, and Ice Legal won.

Tom discovered that some process servers “cleaned up” the documents by testifying they couldn't locate the defendants. Dozens of affidavits outlined the same scenario, where the server would talk to a neighbor who hadn't seen the defendant in months. It was always fictitious. Others would have managers forge signatures for the process servers, whether they went out and served papers or not. Ice Legal obtained an affidavit from Liz Mills, a process server whose name appeared on hundreds of papers in Lee County.
She swore that she had never visited Lee County in her life. Ice Legal prosecuted many of these cases, finally prompting the companies to bother to serve papers correctly.

There were other defenses. The standard mortgage contract included paragraph 22, which required that the borrower get written notice of default and guidance on how to cure it before filing for foreclosure. This was the delinquency letter defense April Charney had been using since 1992, but even in 2008, servicers failed to provide all the required elements on the letter. The Ices, along with lawyers across the state,
made numerous paragraph 22 defenses.

Plaintiff's attorneys attacked Tom for his motions, which they said clogged the courts and delayed the inevitable. But simply by doing some real lawyering, Tom succeeded in breaking the stranglehold that bank attorneys had over the foreclosure process. Ice Legal spent most of 2008 and 2009 in discovery, filing motions to compel depositions. They wanted to talk to the employees who signed assignments of mortgage and other documents, to see if they could live up to their claims. Tom and his colleagues traveled across the state to locate judges who would order depositions. Ice Legal lawyers were prepared to go wherever necessary to depose employees, even after the judges would ask, “You really want to fly to Michigan for this case?” Tom and Ariane hired a couple of paralegals whose entire job consisted of answering emails about the four hundred or so deposition requests the firm had open. Everyone spent long nights at the office. And gradually it paid off.

The first deposition was with Erica Johnson-Seck, a “vice president of foreclosure and bankruptcy” with OneWest Bank, formerly the subprime lender IndyMac. Tom had a client named Israel Machado; IndyMac, his servicer, sued him for foreclosure, and Johnson-Seck's signature appeared on the
assignment of mortgage (as a vice president for MERS), the affidavit of amounts due and owing, and a response to a defense motion.
Johnson-Seck turned up in a case thrown out by Brooklyn judge Arthur Schack because she had both assigned a mortgage to Deutsche Bank and executed an affidavit on behalf of Deutsche Bank. This was a similar instance, with Johnson-Seck appearing as multiple officers in the same case. But nobody, to Tom's knowledge, had deposed her.