Taking a page from Cuba Gooding, Jr. in the movie Jerry Maguire, a new rule in South Florida courts has homeowners and foreclosure defense attorneys screaming: “SHOW! ME! THE! NOTE!!!”

Until now, banks have been abusing a Florida statute allowing them to file a foreclosure based on a “lost note.” The problem: the notes aren’t lost; the banks are just too lazy to look for them. This new rule is halting foreclosure filings in their tracks, as banks scramble to find the notes so they can foreclose.

Before, foreclosure mills were simply filing a complaint and claiming a ‘”lost note,” without actually ever looking for it. Now, the courts are requiring attorneys to prove the banks have at least attempted to find the note. Prior to this rule, banks would file the complaint, and the note would always mysteriously appear four months later IN ALMOST EVERY CASE.

An article published today in The Sun-Sentinel found foreclosure filings have dropped 36% since last month in South Florida. Local attorneys and judges are attributing this to the colossal mess at the banks, as they scramble to find the notes.

Before, they had plenty of time to look for it. Now, they can’t do anything without it. While this might seem like good news for the overwhelmed court system, in reality it is simply delaying the inevitable. Like the receding waters before a tsunami, we can expect a substantial increase in filings once the banks begin finding these “lost notes,” and then the entire system could drown.

Anthony DiMarco of the Florida Bankers Association sees it a bit differently, claiming the decrease in filings is due to the banks’ increased number of loan modifications, and an increased willingness to approve short sales.

GIVE ME A BREAK!

Based on raw numbers, DiMarco is dead wrong! Although Obama’s Making Home Affordable plan had promised over 3 million loan modifications by now, in reality the banks have accepted only 300,000. Furthermore, of these 300,000, only 13,059 were in South Florida. Thus, it is ridiculous to say the banks are being more cooperative.

Maybe DiMarco has never tried to call a bank to discuss a short sale or loan modification. If he had, he would likely find that being on hold for hours at a time, having the bank tell you they have lost your sensitive financial documents, and being constantly hung up upon, is not exactly “cooperation.” If DiMarco actually believes what he is saying, he should stand by the receding waters until he is swept out to sea by the forthcoming foreclosure tsunami.

From the Trenches,

Roy Oppenheim