Legal Ethics

Foreclosure Firm Collapse Creates Court Chaos; Stern Lacks Staff to Move to Withdraw from Cases


Courts that oversee the thousands of foreclosure cases being pursued by the Law Offices of David J. Stern are reportedly in chaos, following news this week that the firm is suddenly shutting down.

His firm is handling some 10,000 cases in Hillsborough County alone, not to mention another 10,000 cases or so in neighboring Pinellas-Pasco,.reports the St. Petersburg Times.

Stern notified Pinellas-Pasco Chief Judge Thomas McGrady and his counterparts throughout the state in letters sent earlier this month that he won’t be able to do any further work on some 100,000 foreclosure cases, due to of a lack of staff following massive layoffs, according to the article.

“We have been forced to drastically reduce our attorney and paralegal staff to the point where we no longer have the financial or personnel resources to continue to file motions to withdraw in the tens of thousand of cases that we still remain as counsel of record,” he wrote in a 251-page letter to McGrady dated March 4 that listed all of the Pinellas-Pasco cases. “Therefore it is with great regret that we will be ceasing the servicing of clients,” apparently by the end of the month.

Calling the situation “a mess,” McGrady says court employees are working to put together orders requiring the lending institutions that brought the cases to show cause why they should not be dismissed. Meanwhile, some attorneys reportedly may be seeking to take over the cases without a paper trail clearly authorizing them to do so.

But, Chief Judge Manuel Menendez Jr. of Hillsborough tells the Times, “you can’t just walk away. I think he’s written the letter in attempt to circumvent the rules of judicial administration.”

Although some delinquent borrowers apparently will benefit from the delay that’s bound to ensue, others seeking to come to terms with their lenders will potentially be hurt by not being permitted to mediate their cases in a timely manner.

Additional coverage:

ABAJournal.com: “Law Firm of Fla. ‘Foreclosure King’ to Close; It and Affiliated Company Once Had 1,200 Workers”

Sun-Sentinel: “Foreclosure lawyer’s publicly traded company to delist itself from stock exchange”

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