Chain of Title (14 page)

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 the 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.
Someone 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.

But when Lisa called back later to make the appointment, the office had no recollection of a June Clarkson. She left messages and never heard back. The brief hope had been extinguished. “They acted like I was some kind of
crazy person,” she told Michael. “I mean, all right, so I'm a little different, but I'm not crazy!” Michael turned to the possibility that Cullaro quashed the investigation and that Lisa was now being targeted. “We have to be careful,” he said.

Meanwhile, Michael tested his newly won fame by contacting Susan Martin of the
St. Petersburg Times
again. He forwarded her links to the guide he had created, the pickup from Karl Denninger and other websites, and his presentation at the
Living Lies
conference. “Perhaps this information, growing in acceptance and renown, would be of more interest to you now as a true investigative journalist who has published articles denouncing foreclosure fraud,” Michael wrote.

Susan Martin wrote back, thanking Michael for the links. But her tone had changed since the summer. “My problem with all this, however, is that too many distressed homeowners are jumping on these ‘foreclosure defense' tactics thinking that they will be able to save their homes when in reality they are just prolonging the inevitable,” she wrote. She criticized lawyers who asked for too much money from homeowners, as well as
pro se
litigants with their incoherent, “frankly ridiculous” motions. These were practical points—homeowners were paying lawyers when they could pay down their debts—but to Michael, it ignored the widespread fraud Martin herself had documented.

What really got to Michael, though, was this statement by Martin: “Frankly, too, it is extremely complicated to write about for a daily newspaper of general circulation.” She was implying her own readers were too stupid to understand foreclosure fraud, and it wasn't worth the effort to get them to understand.

“It's too complicated to write about in a newspaper?” Lisa raged in an email. “The news is ‘TOO COMPLICATED'? WAS 9/11 ‘TOO COMPLICATED'? WAS THE EARLY STAGE OF THE HIV EPIDEMIC ‘TOO COMPLICATED'? WAS WATERGATE ‘TOO COMPLICATED'?”

Michael shrugged it off. “On to the next arena.”

Lisa saw the problem not as stupidity but as ignorance, and thought that ignorance could be reversed. After attending court hearings for months, she was convinced that judges weren't paying attention to the fraud. Lisa had no access to judges, but attorneys had the respect of the court, what with
their diplomas and fancy initials after their names. If Lisa could teach them about the fraud and have
them
teach the judges, they would get more of a hearing. And everything would get resolved.

If it sounded deceptively simple, that's probably because it was. Lisa and Michael's lack of experience with political and social movements allowed a certain naïveté to creep in. They were appropriately cynical about Wall Street's land grab depriving millions of a basic human need and profiting massively off economic dislocation, but they had no problem thinking they were just a few allies away from fixing it. Moreover, they believed that if someone in power prevented banks from using fraudulent documents, their sharp executives would surely devise a reasonable solution that gave people a fair shot at saving their home. And then Michael and Lisa could go back to their lives.

Lisa had met a number of attorneys at the Palm Beach County courthouse. Most of them came out of real estate law and weren't trained trial lawyers, with no grasp of the epidemic of fraud or how to present it to the court. Whenever she showed attorneys false assignments and notarizations, they reacted with total shock. Instead of instructing them one by one, Lisa wanted to bring them together in one space. She envisioned an informal gathering where foreclosure victims and lawyers could have a few beers, discuss the issues, and maybe spark something more, without the intimidation factor of a lecture. The shame and humiliation attached to foreclosure demanded safe spaces, where people desperate to hide their financial catastrophe from the neighbors would feel comfortable unburdening themselves and sharing their stories. She wanted an offline version of her
Foreclosure Hamlet
chat room: a foreclosure fraud happy hour.

At the courthouse, Lisa started to approach lawyers she knew, asking them, “If we had a get-together, would you come?” The lawyers, almost all men, would always respond the same way: “Are there going to be any women there?”

Lisa would answer, “Hey, I'm a nurse, I've got women!”

So the first step in the movement to expose the largest consumer fraud in U.S. history resembled a matchmaking event for young professionals. Lisa chatted up her single nursing friends, who were happy for the chance to meet successful potential mates. That was the origin of the Nurses' Coalition
Against Homelessness, official sponsor of the foreclosure fraud happy hour.

Lisa called Michael and said, “I have a crazy idea.” The only problem was that she knew nothing about the local drinking scene. “I don't think I have ever gone to a bar by myself in my life.” Fortunately, Michael's instinct about the two of them having complementary skills was accurate—he spent plenty of time at happy hours.

He immediately thought of the perfect location: E.R. Bradley's Saloon. The huge, beachfront-style bungalow with the bright green canopy in downtown West Palm Beach faced the Intracoastal Waterway and the marina yachts. The outdoor tables were protected from the sun by umbrellas made of old palm fronds, the kind of thing Jimmy Buffett would write a song about. Almost everyone in the area knew Bradley's, especially the legal community, since it wasn't far from the county courthouse. Lisa and Michael talked to the manager, and he offered half-price appetizers for the event. The drink prices were a little high, but Michael considered Bradley's welcoming vibe enough of a draw to attract people.

Lisa and Michael promoted the happy hour in true grassroots fashion: with flyers at Starbucks. Jim Chambers, a
Foreclosure Hamlet
regular, made the flyers. In fact, visitors to Lisa and Michael's websites became unpaid volunteers for the cause, using fax machines to spread the information to area law firms. The first happy hour was scheduled for November 18, 2009.

A few days before the happy hour, a homeowner emailed Lisa with a question. The bank hadn't moved on her case in nearly a year, and she wanted to know how she could get it out of the court system. This was a common query—lots of people experienced long delays, with the banks making no effort to foreclose. It caused tremendous stress, because homeowners never knew when they would have to find somewhere to live or scrounge up a security deposit. For all the claims by banks about “improper” defense motions clogging up the courts, their inaction had much more to do with it.

Lisa thought the homeowner raised an interesting question, so she set out to find the answer at the county courthouse. While riding the escalator to the fourth floor, she approached the man in front of her, whose suit gave him away as an attorney. “Are you a lawyer?” she asked. The man's eyes
nearly bulged out of his head at the prospect of having to listen to some civilian's horror story.

“Don't worry, I don't want legal advice,” Lisa said, “I just have a question.” The man relaxed, and Lisa continued. “If a bank files a foreclosure case and doesn't do anything to it, is there a way to take it out of the court system?”

The attorney looked at Lisa. “Come with me.”

They ran down two floors into the law library, which was filled with recitations of Florida statutes and case law. The lawyer pulled out a book and flipped through the pages. He came to a stop and said, “This refers to exactly what you were talking about.”

According to rule 1.420(e) of the Florida court rules of civil procedure, if there's been no docket activity on a case for at least ten months, any “interested person,” whether party to the case or not, can file a notice of lack of prosecution. “You have to send a certified copy of that notice to all the parties in the case,” the attorney said. “And if they still don't file anything in sixty days, you can set a hearing for dismissal. And the judge has to dismiss it. Says it right here—the action shall be dismissed.”

Lisa discovered her newest project.

She did some research, finding
Chemrock v. Tampa Electric
, an opinion out of the Florida First District Court of Appeals. Tampa Electric filed a motion to dismiss for lack of prosecution, under rule 1.420(e). Within sixty days, Chemrock filed a motion in opposition to the motion to dismiss for lack of prosecution, but the district court sided with Tampa Electric and tossed the case. The appeals court ruled that any filing in the sixty-day grace period would have to be “an attempt to move the case toward conclusion on the merits,” not just a dummy motion to restart the clock. Everything checked out: not only the rule but case law supporting it.

Lisa called up Michael and said she wanted to run reports throughout the state for all cases with no docket activity for ten months, and then file motions en masse. Maybe they could get local law school students to help, telling them that if they wanted to acquire experience, this was a way to appear before a judge and get a case dismissed. “This is it,” Lisa enthused. “All we need is a practice case to see how this goes.”

A couple of days later, Michael told Lisa that he found the practice case. His receptionist at the Toyota dealership had a daughter, Tami Savoia, who
was in foreclosure on a home in Greenacres, southwest of Palm Beach. Tami and her husband actually abandoned the home in 2007 and moved to North Carolina, but the case, brought by U.S. Bank (as trustee for First Franklin Mortgage Loan Asset-Backed Certificates, Series 2005-FF7), was still in the courts, lying cold. Michael asked the receptionist if they could give this motion a try, and she handed over the keys. Lisa filed the notice that month:

PLEASE TAKE NOTICE that it appears on the face of the record that no activity by filing of pleadings, order of court, or otherwise has occurred for a period of 10 months immediately preceding service of this notice, and no stay has been issued or approved by the court. Pursuant to rule 1.420(e), if no such record activity occurs within 60 days following the service of this notice . . . this action may be dismissed by the court on its own motion or on the motion of any interested person. . . .