TBO.com — AG investigating billings by foreclosure process-servers

Posted on December 29, 2010


Here’s a story on TBO.com that I thought you might like to read:

TAMPA – Florida Attorney General Bill McCollum has launched civil investigations into two of Florida’s major foreclosure process-serving companies.

The attorney general’s office is looking into questionable affidavits, concerns about service of complaints, and allegations of overbilling and back-dating documents.

The companies under investigation are Tampa-based ProVest LLC and Gissen & Zawyer Process of Service Inc. in Miami.

Both companies were routinely used by the law offices of David J. Stern to notify homeowners when a foreclosure lawsuit is filed against them.

The Stern office is also under investigation by the attorney general, accused of submitting fabricated or misleading documents in foreclosure cases. Mortgage giants Fannie Mae and Freddie Mac pulled all foreclosure work from the firm.

Critics say that in their haste to serve a rising volume of papers, as foreclosure actions grow with the housing crisis, process servers either fail to serve notice to homeowners or rack up exorbitant fees by trying to serve more papers than necessary.

Alan Rosenthal, a lawyer representing G&Z, said the company is willing to cooperate with the investigation.

“Gissen & Zawyer remains committed to doing their work with the highest ethical standards,” Rosenthal said. “That doesn’t mean there weren’t mistakes. Any time you have tens of thousands of papers prepared by humans, you have the potential for mistakes. If so, those deserve to be corrected.”

Jim Ward, ProVest president, said the company has met with the Florida Attorney General’s office and is cooperating fully with the investigation.

“ProVest is confident the vast majority of notifications are being conducted appropriately and where there are anomalies of inadequate service we strive to learn from those situations,” Ward said in a written statement. “ProVest will take action to stop working with any contractors not performing to our standards.”

The investigations are civil and not criminal, although if crimes are discovered the information could be passed along to the appropriate investigating agency, the attorney general’s office said.

Two former employees of Stern’s office recently said in sworn statements to the attorney general’s office that the law firm inflates bills by creating summonses for unknown spouses, unknown tenants and others.

These summonses are then passed along to process serving companies, such as G&Z and ProVest, to be delivered to homeowners, according to their statements.

Foreclosure defense attorneys, legal scholars, consumer advocates and some judges have criticized process servers, saying they take advantage of the housing crisis to hide sloppy work or boost fees. The consumer, the critics say, pays in either case.

Representatives from the law firms and process servers deny the allegations, saying they are merely seeking to make sure anyone with an interest in the property is served, as required to obtain a clear title.

They defend their service practices as a way to save time and money in the long run.

The former employees who gave statements said the service problems went far beyond overbilling. They said homeowners routinely complained they were not notified of lawsuits at all, only learning about a foreclosure after a judge approved it.

Fees for service-of-process typically run $45 and up.

But in reviewing internal billing records from Gissen & Zawyer in October, The Tampa Tribune found $5,000 was billed for process fees on a single property in foreclosure. There were 46 defendants in that case.

The company said the number is high because the defendant had a common name, making it necessary to serve anyone with a claim against someone with a similar name in case that person turned out to be the defendant.

Matt Weidner, a St. Petersburg foreclosure defense attorney, questions why serving foreclosure lawsuits grew into such a big business.

Before the foreclosure boom, Weidner said, lawsuits were served by local sheriff’s deputies.

But as the number of foreclosures increased, private companies took on the work and were awarded big contracts by the major law firms that handled foreclosures for lenders. Process servers, certified by the court, typically work as subcontractors for the large process serving firms.

Such a monopoly created an environment ripe for fraud, Weidner said, and took money from local municipalities.

“This is revenue that could have gone to the sheriff’s office,” Weidner said. “It could have been used to pay for police cars, salaries, etc.”

Axsmith Law