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Miami-Dade Circuit Court judge discovered more than 15,000 foreclosure cases filed this year haven’t been served.
It’s the latest shoe to drop in a foreclosure crisis garnering nationwide attention, and an unwelcome discovery in the face of state budget cuts that produced layoffs for courts and clerks.
The backlog is critical because cases where homeowners haven’t been served within four months are subject to dismissal.
Civil Division Administrative Judge Jennifer D. Bailey made the discovery last month as she was taking stock of the circuit’s foreclosure load. She noticed 15,219 cases with no letters of correspondence, no answers and no motions to dismiss.
“In other words, no service,” she said.
The circuit is scrambling to find the root of the problem, which could jeopardize most of this year’s 17,000 foreclosure filings. Most of the cases still fall within the four-month window, but no program is in place to speed things up.
If a foreclosure proceeds to a default judgment with no service on the defendants, it could lead to a title dispute down the road. Bailey said there is no sign that has happened so far but recognizes the potential for problems.
The circuit adopted a foreclosure mediation program for owner-occupied properties through the nonprofit Collins Center for Public Policy in Tallahassee on May 1. As the fledgling program moved forward, lenders argued the center should start contacting borrowers after they’ve been served, said Collins Center president Rod Petrey. 
But Florida circuits don’t keep statistics on foreclosure service, which is why Bailey requested the statistics last month.
“There’s no feedback loop that circles back to the court, and we were not able to wait,” Petrey said. The center contacts defendants in foreclosure after lawsuits are filed; it has received 1,689 Miami-Dade cases since May 1.
Petrey was at a loss to say why foreclosure service is so difficult.
Some, like Charles Taylor, president of Metro Process Servers in Miami, think the problem is on the clerks’ end.
“I don’t think the bottleneck is in service. I believe the bottleneck is that they’re not equipped to handle this stuff,” he said. The crushing volume of foreclosures combined with clerk layoffs conspired to swamp the system.
Home abandonment plays a factor in failed service, but the rate of home abandonment in foreclosure cases hasn’t been calculated.
“No one really keeps those statistics,” said Alex Sanchez, president of the Florida Bankers Association in Tallahassee. “You would have to call every FDIC-insured institution and every non-bank” to get it.
Fort Lauderdale foreclosure defense attorney Morton Antman, says the problem is that lenders and process servers don’t have the resources to pursue every foreclosure properly, and mistakes are made along the way. In Antman’s mind, volume is a factor, but chasing residents who don’t want to be found is a persistent problem. “The primary issue is that most of these people leave their house,” he said. “They just vanish, and how do you make service on these people? Constructive service is a lengthy process.”
And the high number of South Florida investment properties in foreclosure with absentee landlords further complicates service problems, said Marc Ben-Ezra, a Fort Lauderdale partner with Ben-Ezra & Katz, who represents lenders.
“A lot of people are making it difficult for the plaintiffs to serve them, or in other cases, people have just left the properties,” he said. “The plaintiffs have to do a significant amount of work in order for the plaintiffs to try to find them.”
Bailey speculates the problem is procedural. Summonses are issued by clerks after a lawyer files a foreclosure action and sent to process servers for service, which can take up to five business days. The proof-of-service materials then get sent back to lawyers as process servers serve the parties.
“Obviously, those numbers are staggering. Maybe their own internal systems are not able to keep up,” said Richard Burton, a Miami attorney who launched a pro bono foreclosure-defense project.
But the scope of the foreclosure service problems could be much worse than the 15,000 cases without service that Bailey discovered. Some foreclosure lawyers question whether there are more cases where service hasn’t been done, but court records show the defendants have been served.
Take a foreclosure case filed by Indymac Federal Bank against Ahron and Amitza Benvenisti, who bought a North Miami Beach condo for $177,938 in January 2006.
Indymac attempted to serve the husband through constructive service — or service by publication without actual notice — and the wife through a relative in Massapequa, N.Y.
The lender moved for a default judgment against the couple. Antman, who represented the couple, argued the process server contradicted himself by checking boxes stating he successfully served the wife through the relative, though Amitza Benvenisti doesn’t live at the relative’s address.
The relative, Gilan Benvenisti, swore in an affidavit that she doesn’t live with him.
A docket entry dated Monday said the clerk’s office was not authorized to enter a default because of a lack of service.
“I don’t know if this was intentional or not, but this isn’t the first time we’ve had situations where process servers do stuff like this,” Antman said. “I think it’s a mistake.”
Ron Rice Jr., a Plantation attorney with Kahane & Associates who represented Indymac, did not return calls seeking comment by deadline.
Bailey said she still is trying to interpret the data to determine the source of the problem and chart a new course.
But whoever is at fault, Bailey quickly notes the problem threatens to overwhelm a court system that already is strapped.
“The question I now face is what do I do with this?” she asked. The cases “would potentially be subject to dismissal,” but she noted many cases are recent enough that service within the four-month window is still possible.
“Let’s assume a third of these are subject to dismissal. In my spare time, I’ve got to figure out ways to generate orders in 5,000 cases and pay for 5,000 stamps and serve everyone,” Bailey said. “Are we going to do that? Yes. Am I trying to figure it out? Yes.”
“It all starts with service. If people don’t get served, all we’re doing is buying ourselves a bunch of title cases in six years,” the judge said.
Billy Shields can be reached at (305) 347-6649.
Jennifer Bailey photo by A.M. Holt |
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