Law Firms

Law Firm, Paid for Volume, Had 12 People Handling 12,000 Foreclosures at Once

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Companies that handled foreclosure paperwork were paid for volume and penalized for delays, creating a system that was vulnerable to errors.

The financial incentives extended to virtually everyone involved in the foreclosure process—including law firms, the Washington Post reports. “Law firms competed with one another to file the largest number of foreclosures on behalf of lenders—and were rewarded for their work with bonuses” for meeting deadlines, the story says.

At the law firm of David J. Stern in Plantation, Fla., 12 people were assigned to handle 12,000 foreclosures at once, the story says. The pay for a foreclosure without any challenges was $1,300. According to the Post, “it was an unusual arrangement in a legal profession that normally charges by the hour.”

In 2009, the Stern law firm handled more than 70,000 foreclosures. Tammie Lou Kapusta, the senior paralegal in charge of the foreclosures, testified in a deposition about a pressure-cooker atmosphere where paperwork got misplaced and bosses yelled at each other in daily meetings for not moving foreclosures fast enough, the story says.

“The girls would come out on the floor not knowing what they were doing,” Kapusta said. “Mortgages would get placed in different files. They would get thrown out. There was just no real organization when it came to the original documents.”

Earlier coverage: “After Initial Nix by One County Court, Fla. AG Wins Subpoena for Law Firm Docs From Another” “Fla. AG Probe: Did 3 Law Firms Get 1,000s of Foreclosure Judgments By Possible Wrongdoing?” “Layoffs of Perhaps 100 Follow Work Slowdown at Fla. Foreclosure Law Firm” “Fla. AG Can’t Probe Law Firms in ‘Foreclosure Mill’ Investigation, Judge Says”

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