Florida Judge Cancels Mortgage Debt

A Miami judge took the extreme action of wiping out the $207,238 mortgage debt of a borrower who was in foreclosure but trying to get a loan modification after HSBC Bank USA ignored a previous court order to post a bond. Miami-Dade Circuit Court Judge Jennifer Bailey cancelled the mortgage debt of a local teacher at a hearing May 6 to determine whether HSBC should be sanctioned for failing to post a $414,000 bond because it had lost the underlying mortgage note. The judge said she hoped to give "a wake-up call" to lawyers handling foreclosure cases that they need to know where the borrower and bank are in the process of loss mitigation. In a contentious exchange with HSBC's lawyers, Judge Bailey lambasted banks for the "chaos and disorganization" that has bombarded courts with foreclosure actions while banks simultaneously pursue loan mods. "Somehow in Foreclosure World everybody thinks that...you can know absolutely nothing about your files and walk in here and ask judges for things left and right without even knowing what's going on." Suzanne Hill, a lawyer who represents Florida Default Law Group in Tampa, the attorneys handling the foreclosure action for HSBC, said it was evaluating whether to appeal or file a motion for a rehearing before the same judge. The Florida Attorney General has identified the Florida Default firm as the subject of a civil investigation.