In addition to representing plaintiffs and defendants in foreclosure cases, I am regularly appointed by our local court to serve as a Guardian Ad Litem, Attorney Ad Litem, or Administrator Ad Litem in foreclosure cases. A recent frustrating experience with a “foreclosure mill” in one of those cases prompted me to write about this issue.
You’re probably asking yourself, “What exactly is a Guardian Ad Litem, Attorney Ad Litem, or Administrator Ad Litem?” It is a lawyer appointed by the court to represent the interests of a defendant in a foreclosure case when the plaintiff is unable to locate and serve a copy of the foreclosure lawsuit on that defendant. The distinction between a Guardian Ad Litem, Attorney Ad Litem, and Administrator Ad Litem depends on who they were appointed to represent. A Guardian Ad Litem is appointed to represent the interests of an unknown minor or incapacitated person. An Attorney Ad Litem is appointed to represent the interests of an unknown entity or person, including someone who is in active military service. An Administrator Ad Litem is appointed to represent the interests of unknown heirs, beneficiaries, or personal representatives of a deceased person. In most cases, the plaintiff is not entirely sure of the status of the unknown parties, so they seek the appointment of an attorney to serve in all three capacities. That attorney is commonly referred to as a “GAL,” regardless of whether they are serving as a Guardian Ad Litem, Attorney Ad Litem, Administrator Ad Litem, or any combination of the three categories.
The GAL is appointed to try to locate the defendant and to ensure that the defendant’s due process rights are considered by the Court, even if the person cannot ultimately be located. The defendant may have moved without leaving a forwarding address or may be evading service of process. In other cases, the defendant may be in active military service or may have died.
Why do the banks seek to have GALs appointed in foreclosure cases? Typically, it isn’t because they’re concerned about the borrowers’ due process rights. They usually do it so they can get insurable title after the foreclosure is finished. In most foreclosures, the bank ends up owning the property after a foreclosure sale. If a bank finishes the foreclosure without serving the lawsuit on a particular defendant (typically the property owner or borrower), subsequent purchasers may have concerns about the possibility of a title dispute resulting from a claim being brought by the person who did not receive notice of the foreclosure. This concern limits the bank’s ability to sell the property. By having a GAL appointed to represent the defendant’s interests, the bank alleviates the title concern.
It should not come as a surprise that many of the large banks and their lawyers don’t really care whether the GAL actually finds the defendant; they just need to go through the process. The bank pays the GAL’s fees, so they want to keep the GAL’s fees as low as possible, regardless of whether the GAL actually locates the missing defendant. In fact, some bank attorneys prefer that the GAL not locate the defendants since it usually prolongs the foreclosure if the defendant is located and the bank is required to serve the defendant.
Most of the high-volume foreclosure law firms (a/k/a the foreclosure mills) have preferred GALs who agree to work within the law firm’s compensation requirements, typically under $350.00, in exchange for receiving a large number of appointments. Those plaintiff-friendly GALs will conduct a minimal investigation and routinely file a report stating that the plaintiff’s paperwork is in order and the plaintiff can proceed to a final judgment. What I find interesting is that in most of the cases where I have been appointed, there is a “standing” defense apparent from the allegations of the Complaint and the attached exhibits. There must be a statistical anomaly since the cases I am appointed on routinely have apparent standing defenses, yet this rarely occurs when the foreclosure mills have their preferred GAL appointed. I have discussed this issue with other attorneys who serve as GALs but are not on the preferred list, and they noticed the same discrepancy.
Plaintiff’s lawyers could minimize the cost of the GAL if they would simply respond to the GAL’s requests for the basic information needed to locate the missing party. It is not uncommon to request the information several times before finally receiving a response from the bank’s attorney. In some cases, formal discovery requests and Motions to Compel are necessary just to get the banks to provide the basic information needed for the GAL to conduct an investigation. Interestingly, the most non-responsive law firms are the same ones that usually object that the GAL’s fees are too high. In recent years, the foreclosure mills have been attempting to limit the GAL’s compensation to $350.00 In Broward County, that provision is usually stricken from the proposed Order appointing the GAL with good reason. Even at reduced hourly rates, it is difficult to do the GAL’s job correctly for $350.00. Every case is different, but it is impossible, in most cases, to review the foreclosure pleadings, research the property being foreclosed, and conduct an investigation to locate the defendant for $350.00. That assumes, of course, that the GAL takes the role seriously and is concerned with actually trying to locate the missing party. Sadly, that isn’t always what happens.
When defendants are unable to be located, one common reason is that the person may be serving in the U.S. military. Federal laws and regulations afford certain protections to service members while they are in active military service. Among those protections are limitations on foreclosures and collection matters against the service member. Therefore, plaintiff’s attorneys or the GAL must check with the Department of Defense to determine whether the missing defendant is in active military service. Unfortunately, that is not always done, and there have been recent reports of service members losing their homes due to insufficient efforts by the plaintiff’s law firm and the GAL. [See Matt Weidner’s excellent blog for a recent story on this issue. Caveat: I have not reviewed the case file, so I don’t know the particulars and am not rendering any opinion on the GAL’s efforts in that case.]
In my experience, the plaintiff’s lawyers could avoid the need for a GAL in most foreclosure cases if they simply conducted their own minimal investigation. There are financial reasons they don’t do that. I will explain why in my next post.
