Chain of Title

by David Dayen

  The campaign sprang from one of Lisa’s old habits. She used to write thank-you notes to the clerk at the dry cleaner’s or the waitress at the local diner, the invisible members of society who helped her inch through life. For years afterward, whenever Lisa walked into certain grocery stores or restaurants, she’d get treated like a visiting dignitary; the simple act of gratitude provoked an outpouring of kindness. Instead of thanking those anonymous Floridians, now Lisa wanted to fight for them.

  The first letter went to the Florida Supreme Court and became a template for all the others. “By way of introduction, I am a working mother and also a pro se litigant fighting a residential foreclosure, in a state that ranks among the hardest hit,” it began. “May I prevail upon you to read this lengthy letter, which I agree, may be too much to ask? I hope to shed light on what is befalling millions of us out here across the nation.”

  Lisa outlined the details of her case: the initial serving of papers by U.S. Bank, which she had no prior dealings with; her efforts at research, despite the lack of legal training; the fraudulent affidavits, unrecorded mortgage assignments, doctored notes, and sham pleadings submitted by Florida Default Law Group. She explained how the note was endorsed (using the legal term “indorsed”) to a party other than the bank doing the foreclosing. She showed how a notary in Ohio purported to witness in person the signing of a document from a company with an address in Texas. She described other affidavits with signers attesting to personal knowledge of facts that hadn’t happened until several months after the date on the document. She laid out the situation with Whitney Cook signing for MERS on one document and JPMorgan Chase on another. She ticked off all the financial institutions involved in her loan (“U.S. Bank NA, J.P. Morgan Mortgage Trust, Chase Home Finance, JPMorgan Chase Bank NA, MERS, DHI Mortgage . . . one could benefit from an organizational chart!”) and the mounting absurdities of the documents they spat out. “I naively had assumed fabricating evidence wasn’t a widely accepted practice, as surely it was punishable by appropriate jail time,” she concluded.

  Lisa attached the source documents from her case, along with other samples featuring the same signers representing themselves as officers of different banks. “May I assure you that my case is neither special nor unique, as I review hundreds of similar, local cases weekly,” she wrote. Lisa tied this fraud to the ongoing suffering of the Great Recession, and expressed shock at judges rushing through foreclosure cases without respect for due process, against defendants challenged to obtain counsel with limited resources. “What most galls me is that these ‘pretender lenders’ are working the odds to unjustly enrich themselves, betting through their rapacious law mills that the low-lying fruit—those who easily cave and do not contest foreclosure no matter how illegal or unjust—will far outnumber those who put up a credible fight.”

  Every night Lisa postmarked the letter to another five people. If a newspaper article reported on foreclosures, the writer would go on the list of recipients. If a lawyer or a politician or a regulator gave a quote in the story, they would go on the list. She included federal banking regulators, the congressional oversight panel for the Troubled Asset Relief Program, state attorneys general, the Justice Department, the Federal Reserve, members of Congress on the relevant financial services committees, and anyone with a fancy title and a desk. Five a night, every night.

  One morning in late September, while surfing the Web for scraps of information, Lisa found a short column in the Sarasota Herald-Tribune by Tom Lyons: “Filing Fake Documents to Establish the Right to Take Possession of Someone’s Home? That’s Not Something a Lawyer Should Do.” Harley Herman, an attorney in Orlando and a member of the Florida Bar Association, told Lyons he had begun pressing the state bar for a “special review of ethics violations in foreclosure cases.” Herman tried many foreclosure cases in central Florida, and the inattention to established principles of justice made him embarrassed for his profession. In his experience, judges and attorneys didn’t even bother to check the authenticity of the documents. “If the courts can’t depend on attorneys to a certain extent, the whole system breaks down,” Herman told Lyons.

  Lisa immediately sent Herman one of her letters, adding that she had also been badgering public officials to do something about the ghastly state of the Florida courts. Within a week or so Herman called Lisa back, thanking her for the letter, which he said showed a strong grasp of the situation. “We need citizens like you to provide a comment to the Florida Supreme Court; they’re looking into this,” he told her. The court had established a task force on foreclosure cases, and based on task force recommendations, were considering amendments to the state rules of civil procedure. According to Herman, nearly all of the previous public comments came from bank lawyers, who downplayed the problems and rejected any need to intervene. Herman wanted to push back, and he needed individuals, particularly people in foreclosure with firsthand experience, to contact the state supreme court and respond.

  The next day Lisa called the Florida Supreme Court, asking how she might submit a comment about foreclosures. The clerk had her hold for a minute; then she returned and said, “Miss Epstein, it says here you already made a comment.” It turned out that the Supreme Court used her letter, the first one she ever sent, as a formal comment, publishing it in the official record.

  “Well, if I did one accidentally, maybe I can do one on purpose!” Lisa replied. The clerk said the court could accept a more formal “formal comment.” Lisa redrafted her letter into a reasonable facsimile of a legal brief, urging the task force to force plaintiffs’ lawyers to verify their client’s document trail before filing cases, with real sanctions for failing to make the review. She even cited Florida law to show that the submission of false documents to courts constituted a felony. When she sent the formal comment to Harley Herman, he thought it read like the work of a competent second-year law student.

  Despite Herman’s admiration, Lisa’s letters met mostly with silence, if not with irritation. The chief judge of Palm Beach County sent back an angry missive, saying he couldn’t get involved in litigation and that if Lisa had a problem, she should report it to law enforcement; Lisa considered it odd for a chief judge to resist interfering with litigation. Robert Wexler, at the time Lisa’s congressman, referred her letter to the Office of the Comptroller of the Currency, where it fell into a black hole. But here was the state attorney general’s office, calling her back!

  The woman from the Economic Crimes division explained that her office opened a probe into foreclosure mill law firms. Lisa already knew this; she had found a press release about the investigation and called them almost every day trying to submit evidence, to no avail. But now they wanted to talk. Lisa set up an appointment for the following week to speak with a staff attorney. “Thank you for your attention to this terrible set of crimes,” Lisa said. After she hung up she allowed herself a little fist pump.

  Lisa went back into the conference and found her seat right as Michael’s presentation began. Michael approached the front of the room. During the hours of waiting, he brainstormed an idea. He dimmed the lights almost all the way down, ostensibly to get everyone to focus on the PowerPoint slides, but really to make sure nobody could see him as he spoke. Despite stepping into the spotlight, Michael made sure to keep the spotlight off himself.

  This calmed Michael’s nerves enough to get through the presentation. He’d been searching public records for nearly a year, so he could discuss the topic without notes. And the guide told the story: banks assigning mortgages to themselves, names repeatedly showing up as executives of multiple financial institutions, phony notarizations, blatant forgeries. The key point Michael wanted to get across was that this represented the beginning of the trail, not the end. There was enough intellectual firepower in the room to find enough irregularities to capture public attention and bring this whole scheme crashing to the ground. The Internet enabled them to collaborate, to use publicly available evidence to go where the traditional media and t
he judicial system refused to tread.

  “Okay, that’s about it,” Michael said, motioning to the attendant in the back to bring up the lights. Michael wasn’t prepared for what he saw next: an entire roomful of people standing and clapping. A crush of conference attendees swarmed Michael, thanking him for his work and asking a battery of questions. A lawyer from the Palm Beach area named Carol Asbury came up and gave Michael her card. “Maybe we can work together someday,” she said. The crowd made Michael slightly uncomfortable, but he managed.

  After the attendees began to scatter, Michael ran into Lisa again. They broke away from the conference and got into Michael’s car. There wasn’t much around the Sheraton; they had to go up the street to find a nice dinner spot.

  The Bonefish Grill, with its jaunty logo of a cartoon sea creature carcass, has locations across Florida. Lisa and Michael grabbed a table in the back, and for the next couple of hours they might as well have been alone. The other patrons, restaurant staff, everyone disappeared into the background. It was just these two people, strangers really, who only knew each other from a few months of exchanges on the Internet.

  Lisa and Michael got to know each other and their foreclosure cases. Michael explained his rituals: the $1,600 a month in his safe, the daily search for foreclosure news. Lisa had her own routines: the five letters a night, the lunch hours at the courthouse. She explained how bank plaintiffs started producing more “found” notes, conjured up in time for a motion for summary judgment. Florida Default Law Group submitted two notes in Lisa’s case, each of them different yet both claiming to be “true and correct copies” of the original documentation. Any effort to ask which note was authentic or where the mortgage traveled in the securitization process got this reply: “Defendant seeks confidential, proprietary, or trade secret information.”

  They swapped horror stories about fraudulent foreclosures and loan rescue scams. Because of their newfound notoriety, Lisa and Michael were hearing directly from borrowers in the trenches about lost paperwork, bait-and-switch schemes, and patterns of abuse. Mortgage servicers negotiated modifications with borrowers and simultaneously placed them into foreclosure, an activity known as “dual tracking.” They used the HAMP program to create false promises and push homeowners deeper into debt. The two bloggers ticked off case studies: “Ever heard of this?” “Ever see this one?”

  One case broke Lisa’s heart. Isaac Dieudonné was two years old, a child of Haitian immigrants. When his family moved into a new home in Miramar, Florida, on October 11, 2009, he bounded out the front door in search of fun. The parents found young Isaac several minutes later, floating dead in the fetid pool of a foreclosed house. Foreclosures didn’t just damage property values; they turned communities into deathtraps, attracting mosquitoes and rats, danger and tragedy. Incidentally, the Dieudonné family wanted to sue the owner of the foreclosed property for negligence, but they couldn’t figure out from the public records who held title.

  Michael told Lisa unusually personal details (for him, anyway) about the house he built from scratch, his wife’s reluctance to default, his newborn child. Lisa and Michael’s children were born a year apart, it turned out. Michael mentioned that he sold his property in Lake Worth right before the bubble collapsed. Lisa told Michael that the devastation there resembled the aftermath of Hurricane Andrew. The most depressed part of Lake Worth, not coincidentally the part with the largest population of people of color, was adjacent to Lisa’s condo. Many lower- and middle-class African Americans there owned their houses outright before the bubble; cash-out refinances sapped their equity and made them vulnerable to collapse. In the crisis, families of color lost more of their homes, more of their wealth, more of their opportunity. Lisa made a habit of driving through Lake Worth, particularly the so-called alphabet streets, littered with boarded-up homes under sunken roofs, surrounded by overgrown weeds. The banks couldn’t resell the properties, so they sat empty, becoming modern-day ghost towns, a visual depiction of the aftermath of fraud. Parts of Port St. Lucie, Michael’s home base, looked just as bombed out.

  Lisa’s recent obsession was the imminent paralysis of the land transfer system once the cycle of false documents and inadequate standing to foreclose reached its conclusion. Buyers could purchase a home the seller had no right to sell. Titles would be permanently clouded. Properties would become monuments to the bubble, frozen in amber. Florida represented the greatest opportunity to force a reckoning, for one reason: banks still had to come before a judge and prove they could foreclose. The other hard-hit sand states—California, Arizona, Nevada—had non-judicial foreclosure processes. Only in Florida were the courts involved.

  And then, over their seafood platters, Michael came to what he really wanted to say.

  “Look, I don’t know you from anybody, but we’re obviously compelled to do this work. And we both know this is really, really big.”

  “I agree,” Lisa replied.

  “I want to dedicate my time and effort to this, and it seems like you do, too. I think we can work on it together. But we have to be very focused. We need to just commit ourselves to breaking the story. No bullshit, no drama. We can do this.”

  Michael had never been so blunt in his entire life. But he envisioned the makings of a great team. He had computer and research skills and could get information out fast. Lisa was personable and well-spoken and could present a public face for their actions. He couldn’t pinpoint why, but he thought they could join together, educate the public and expose the truth.

  “Great—that’s what I’m looking for, too,” Lisa said almost immediately.

  Years later Lisa could not adequately describe the weirdness of that moment, any more than she could explain her transformation from bystander to activist. It fit with nothing in her character; she wasn’t wired to be an extrovert, gadfly, or change agent. She didn’t know this man across the table, and up until a few months ago, she hadn’t shown the slightest interest in asset-backed securities or judicial rules of civil procedure or four-hundred-page pooling and servicing agreements. But with powerful certainty, Lisa realized this was her calling, her life’s purpose, the only thing she should be doing.

  8

  HAPPY HOURS

  The thing about making a pact to wage war on the banking industry is that at some point you have to figure out what to do. Lisa and Michael already had a full plate: websites, outreach to government and media, contact with other victims and activists, research, courtroom visits, and so on. What more could they juggle on top of their overstuffed schedules?

  Besides, even the activism Michael already shouldered was taking a toll on his relationship. Jennifer was unhappy about Michael leaving her alone for two days. He tried to explain how exposing fraudulent foreclosures could get them their financial stability back. But Jennifer insisted that Michael not abandon her and the baby again. Michael decided to make another pledge, this one to Jennifer: the informal rule about keeping the weekends for the family would be made official. He wouldn’t schedule any extracurricular activities for Saturdays and Sundays.

  As for Lisa, she was focused on her call with the state attorney general’s office, her first opportunity in front of anyone with real clout. But a chance bit of research threw that into disarray. Among the many documents in Lisa’s case was a seemingly perfunctory affidavit establishing that attorney’s fees in conjunction with the case were reasonable. A witness named Lisa Cullaro signed the affidavit, and Erin Cullaro notarized it. The handwriting looked like it came from the same person, but Lisa figured if they were related, maybe that made sense. In fact, she didn’t think much about the affidavit at all, just because it seemed so tangential. How could the law firm foul up an affidavit about reasonable attorney fees? Wouldn’t that be the one document they’d get right, the one that guaranteed payment?

  But one night after wrapping up her tour through the Web, Lisa didn’t feel like sleeping, so she Googled Erin Cullaro. Up came a link to the Florida attorney general’s office. Someon
e with the name Erin Cullaro was working as an assistant attorney general in the Economic Crimes division, the very division Lisa was scheduled to speak with. In fact, Lisa was planning to tell them about fraudulent foreclosure processes at Florida Default Law Group, where Cullaro apparently moonlighted as a notary. It had to be the same person; how many Erin Cullaros could there be in the legal community in Florida?

  Reasonable attorney fee affidavits were not online, available only at the courthouse. So she frantically Googled the Cullaros to find out everything she could about them. One link seemed to confirm her suspicions. It was from the almost comically titled U.S. Foreclosure Network, a coalition providing resources for the mortgage servicing industry. A short piece about the “right of redemption” (whether a defendant could redeem property by paying off the arrears after a foreclosure sale) was written by Erin Collins Cullaro, listed as a “USFN-FL” member with the foreclosure mill law firm of Echevarria, Codills, and Stawiarski. That was the former name of Florida Default Law Group. And the link was dated 2006. So Cullaro had been with FDLG for at least a few years, while working for the Florida attorney general’s office simultaneously.

  The day of the call, Michael gave Lisa some advice over email: “It might be a good idea to ask outright if Erin Cullaro is in the room.” A little after three o’clock, after her patients had gone home for the day, Lisa’s phone rang. The woman on the line introduced herself as June Clarkson, a new attorney with the division who had come from the private sector. June joined law enforcement because she wanted to catch companies who tried to steal from their customers. Lisa had plenty of information on that. They talked for ninety minutes about document fraud, the corruption of public records, and the situation in Florida courts. June asked good follow-up questions, and Lisa got the feeling she really wanted to help. She put the Erin Cullaro thing out of her mind. When June suggested that Lisa come into the offices for a video deposition, Lisa eagerly accepted.