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Judge Axes Foreclosure, Bans Do-Over, Holds Lawyer in Contempt; Fannie Mae Pulls Files from Firm

By Martha Neil

February 14, 2011, 5:17 pm CST

Updated: Last week clearly was not a good one for Ben-Ezra & Katz.

The south Florida law firm was terminated from the mortgage foreclosure cases in which Fannie Mae is involved. And on Friday a Miami-Dade Circuit Judge held the head of the firm in contempt over its handling of a foreclosure complaint, reports the Palm Beach Post.

Meanwhile, this week began badly for hundreds of law firm employees, who were laid off as a result of the sudden slashing of its foreclosure work.

Although Marc Ben-Ezra, 44, was not directly responsible for the case at issue, Judge Maxine Cohen Lando held him in contempt Friday as the head of the law firm, the Sun-Sentinel explains. He has no prior disciplinary history.

Lando also dismissed the foreclosure case and barred refiling, after finding multiple problems with the supporting documentation.

After originally saying the original note and mortgage were lost, the firm then filed the so-called original note and original mortgage months later, said the judge. She called this issue alone “a fraud upon the court” in a show-cause order requiring the law firm to explain why it should not be held in contempt.

However, that issue “pales in comparison” to further problems–the mortgage and note are for a different property, and are improperly signed and notarized, she wrote.

The judge made a verbal finding of contempt on Friday but said she will soon issue a written order.

The law firm acknowledged “technical paperwork issues” in a written statement last week, the Post reports. But it then went on to say “there is no issue of whether the information in the affected files is correct. No homeowner has been hurt because of this.”

It also says it has a plan to resolve the issues but was not given a chance by Fannie Mae to execute its plan.

Fannie Mae gave mortgage servicers until tomorrow to find new counsel, and the newspaper article suggests the transition could be chaotic. The Ben-Ezra firm has at least 18,000 mortgage foreclosure cases statewide and while not all of these, presumably, are ones for which Fannie Mae is responsible, many likely are.

Over three months ago, Fannie Mae withdrew all files from the law office of David J. Stern, in Plantation, Fla., which had the highest-volume foreclosure practice in the state. And to this day some cases are unstaffed by any plaintiffs lawyer at court hearings, says attorney Tom Ice of Royal Palm Beach, Fla. He had one such case dismissed last week, and wonders whether it will be refiled.

“It’s absolute pandemonium,” he tells the Post.

Related earlier coverage:

ABAJournal.com: “Stern’s Law Firm & Related Co. Cut Staff By 70% After Fannie and Freddie Pull Foreclosure Files”

Updated at 6:38 p.m. to include information about today’s layoffs.