Miami judge warns big banks to stop playing cruel foreclosure games with people’s homes

By Noreen Marcus, FloridaBulldog.org

Miami-Dade Circuit Court Judge Beatrice Butchko is warning national banking giants and their counsel they’ll pay a hefty price if they commit fraud or violate due process or ethics rules to drive mortgage debtors out of their homes.

On June 2 Butchko took the extraordinary step of accusing Bank of America and Bank of New York Mellon of criminal contempt for allegedly offering perjured testimony in a foreclosure. She scheduled both for arraignment at a Zoom hearing on June 25.

Also to be arraigned that day for criminal contempt is the banks’ lawyer, Nathaniel Callahan, a partner in the Fort Lauderdale office of the Akerman law firm.

Late Thursday, however, an appeals court put all proceedings in the case on hold while it considers arguments from the parties.

The banks and their lawyer allegedly lied about whether Bank of America is still involved in servicing a mortgage loan. If it is, defendant Julie Nicolas can introduce Bank of America documents that may prove the foreclosure was fraudulent.

In her order, Butchko laid out the options for the banks and Callahan. If they plead guilty, she’ll hold a sentencing hearing where they can present evidence of mitigating circumstances. If they plead not guilty, she’ll set the matter for trial.

A contempt finding could result in “jail, adjudication, probation, a finding of unclean hands, monetary fines, injunctions, attorney’s fees, and/or other sanctions,” the order says.

Conviction would also trigger a Florida Bar ethics investigation into Callahan’s conduct. Callahan did not respond to email or phone messages from Florida Bulldog seeking comment.

Callahan’s Akerman colleagues reacted to the perjury accusation by asking Butchko’s supervisors on the Third District Court of Appeal to immediately order her off the ongoing case and all future cases with Callahan and his adversary, foreclosure defense lawyer Bruce Jacobs.

Akerman on the attack

The petition Akerman filed Tuesday accuses Butchko of “rubber-stamping” a contempt order that Jacobs drafted because she is “partial to Mr. Jacobs” and “he is in a special position to influence her.”

“There is a clear appearance of impropriety,” it asserts. “This Court should urgently hold Judge Butchko and Mr. Jacobs accountable for the harm they have unleased [sic] against Mr. Callahan. The media character onslaught alone could be irreparable,” the petition says.

Akerman’s petition offered no evidence to support its assertions.

The petition went on to note that Third DCA judges have twice referred Jacobs for Florida Bar ethics probes. In a disciplinary trial last month, he was found guilty of impugning the integrity of the courts by trying to disqualify two judges from hearing his foreclosure cases. The referee’s punishment recommendation to the Florida Supreme Court is expected next month.

‘This doesn’t fly’

Still, Butchko’s contempt action elevates the case of Bank of New York Mellon vs. Julie Nicolas. The judge is giving credence to what Jacobs and many others have argued for years: The predatory lending scandal of a decade ago has evolved into routinely abusive loan-servicing.

“This is the first time a judge has taken everything we said seriously and saw what was happening and said, ‘This doesn’t fly,’ ’’ said David Winker, a Miami lawyer who also represents defendants in foreclosure actions.

Defendant Nicolas, 58, a nurse and single parent, is trying desperately to hang onto her North Miami Beach home. She described many years of mortgage loan torment before her house was auctioned off in April.

Nicolas explained in an interview with Florida Bulldog that while she never stopped working, her employer held back her pay during a months-long audit. She had three sons to support and a commitment to her patients.

So she fell a few months behind on her monthly payments, prompting endless demands for loan modifications. The notorious subprime mortgage powerhouse Countrywide (now part of Bank of America) had originated her loan before it was bundled off to other servicers, each with its own complicated rules.

Meanwhile, a parallel process moved inexorably toward an end game of foreclosure, sale and eviction. No one ever offered to help Nicolas keep her home, she said.

Fear of a nighttime eviction

The company de jure would dangle a loan modification, use some bureaucratic excuse to snatch it away, and then move on to the next one. Faceless functionaries would reject the revised loan and repeat the process, refusing her payment attempts and finally auctioning the property, according to Nicolas.

The mortgage company “was always inconsistent on their side,” she said. “It was always, ‘You didn’t have this paper.’ Nobody called me. I would do another one, then another. Same thing, nobody called back.

“I’m always checking, I’m always calling. I’m just making sure we’re on the same page, but nobody’s ever on the same page,” Nicolas said.

“It’s more like they wanted the house,” she said. On paper they sold it for $260,000, but the new owner couldn’t take possession because Jacobs challenged the sale and blocked the title transfer.

Nicolas still could lose her home of 28 years. “I don’t get a good night’s sleep because I’m always thinking they might come in the middle of the night and say, ‘Get out,’ ” she said.

‘A little hope’

At the same time, Nicolas credits Jacobs and his staff with taking care of her and giving her “a little hope.” She knows that Butchko’s contempt action weighs in her favor.

And if Butchko grants a separate motion she is scheduled to hear Thursday, the day before the contempt arraignment, Nicolas’s mortgage will be stricken, allowing her to keep the house.

Jacobs is asking the judge to sanction the banks for allegedly defying a court order to answer questions about possibly fraudulent documents. Scrapping the mortgage would be part of the sanction, which could also spawn a second criminal case, this one for fraud.

Nicholas’s predicament is not uncommon, despite a 2012 deal between the U.S. Department of Justice and 49 state attorneys general, on one side, and the nation’s five largest mortgage servicers, Bank of America among them.

DOJ celebrated the record $25 billion settlement for its potential to end loan and foreclosure abuses like the modification dance Nicolas began at about the same time as the settlement.

The agreement “holds the banks accountable, it provides badly needed relief to homeowners, and it transforms the mortgage servicing industry so now homeowners will be protected and treated fairly,” Iowa Attorney General Tom Miller said in a DOJ media release.

Laura Wagner, executive director of the nonprofit Floridians for Honest Lending, tracks mortgage servicing abuses and publicizes individual horror stories. She doesn’t see them slackening.

“A lot of people assumed after the last crisis in 2008 and the changes at the federal level that they were going to solve a lot of problems, but unfortunately, I don’t think they solved enough problems to have a huge impact,” she said.

The average person who pays the mortgage on time every month doesn’t need to worry. “But if there’s any small hiccups in your life, if you ever have your loan go into forbearance, that’s when you start to see the flaws in the system,” Wagner said. “It can literally happen to anybody.’’