David Stern, Foreclosure King, a Deadbeat

If only David Stern were being treated as badly as he treats homeowners, this would bring real schadenfreude.

In a regulatory filing published today, Stern’s publicly traded company revealed that one of its subsidiaries failed to pay rent in November on its towering office building in Plantation, Florida, and had received a notice of default.


Stern’s financial troubles stem from the implosion of his foreclosure empire. In the months after Mother Jones published its investigation, he’s lost clients such as Citigroup, GMAC, Wells FargoFannie Mae, and Freddie Mac, and laid off nearly 450 employees. New business to his companies, he wrote in a recent letter, has declined by a staggering 90 percent in the past six months.

And it gets worse for Stern and his foreclosure operation. The same regulatory filing shows that another Stern subsidiary recently defaulted on a $15 million line of credit from Bank of America, on which the company still owes $12 million in principal.

Alas, Bank of America has given Stern another month to pay that bill (though it does sound like Stern is planning on going out of business at the end of the month, just in time for Thanksgiving).

So now, eight months after the Mortgage Bankers Association managed to negotiate a short sale of its new headquarters, the Foreclosure King is about to be foreclosed on. But both got far, far better treatment than the average homeowners who–unlike these MOTUs–had nothing to do with the crash of our economy.

I guess some deadbeats are more equal than other deadbeats.

Freddie Repossesses Its Files

Fannie Mae and Freddie Mac had already suspended all their work with David Stern. But now they’ve officially severed all relations with him and Freddie has taken their files away.

Freddie Mac took the rare step of removing loan files after an internal review raised “concerns about some of the practices at the Stern firm,” a Freddie spokeswoman said.

“We have begun taking possessions of all files on Freddie Mac mortgages simply to protect our interest in those loans as well as those of the borrowers,” the Freddie spokeswoman said. A Fannie spokeswoman declined to elaborate.

Fannie and Freddie said they will move those files to other law firms in the state but that they hadn’t yet identified where they would be redistributed. The firms said they had notified Florida’s attorney general about the decision to remove the files and that the Stern firm had cooperated with the action.

Let’s see. It’s November 2. On October 4, 29 days ago, the former assistant of the woman who oversaw Stern’s robosigner division testified that 1) Stern’s firm would routinely reclassify Freddie Mac loans as some some other firm’s loans when Freddie came onsite for an audit to hide those files from the firm, and 2) sometime in August, Stern reportedly packed up an eighteen wheeler full of documents and took them to an unspecified office in Orlando.

I can’t imagine why Freddie would want to take possession of its files, can you?

Problem is, it may well be far too late to prevent Stern from tampering with Freddie’s documents. Though it’s nice of them to start worrying about protecting the interests of their homeowners.

Foreclosure Mill King David Stern Announces Big Management Changes

David Stern’s company, the foreclosure mill that has removed thousands of Floridans from their homes, announced big management changes today. Otherwise known as abandoning ship:

DJSP Enterprises, Inc. (Nasdaq:DJSP) (Nasdaq:DJSPW) (Nasdaq:DJSPU) today announced that Stephen J. Bernstein, the Company’s Lead Independent Director, has been appointed as Interim Chairman of the Board of the Company. Initially, Mr. Bernstein’s role as non-executive Chairman will be a full time position as he provides Board support to the Company as it develops and executes plans to respond to recent developments impacting the Company and the industry. Mr. Bernstein replaces Mr. David J. Stern as Chairman of the Board. Mr. Stern continues in his role as Chief Executive Officer of the Company and will serve as its President.

The Company also announced the voluntary resignations of Richard Powers, as President and Chief Operating Officer, Kumar Gursahaney as Executive Vice President and Chief Financial Officer and Howard S. Burnston, as Vice President, General Counsel and Secretary, each of whom joined the Company in 2010. [my emphasis]

The only question is whether these guys were fired for being insufficiently loyal, or whether they’re trying to get out just before the sheriff arrives.

What Did David Stern Do with the Truck of Documents He Removed from His Office?

4ClosureFraud published another of the depositions from the FL investigation into foreclosure mill David Stern’s office. In it, Kelly Scott, the assistant of Cheryl Salmons–the woman who oversaw the robosigner aspect of their business–included details on how Salmons appears to have created her own lost title affidavits, how they would backdate affidavits of proof of service for foreclosures when the borrower hadn’t been served properly, and reclassify files to hide them from Freddie Mac when auditors would come for a visit.

But one of tidbits that seemed to surprise the lawyers had to do with Stern moving a truck load of documents offsite to another office.

Q. Did they say anything about what’s going on with Stern or Cheryl Salmons or anybody else?

A. The only concern was that they were moving files out of the office into a different office and that Eighteen Inch Freight, I think, was picking them up. Something like that. Trailer freight, something like that.

Q. Do you know where —

MS. CLARKSON: Eighteen wheeler?

THE WITNESS: Yeah, eighteen wheeler.

BY MS. EDWARDS: Q. Do you know where they were moving them?

A. Supposedly they were being moved to Orlando’s office.

Q. And do you know why they would do that?

A. No.

Q. Do you know how long ago this was going on?

A. I think a month and a half ago.

Q. What kind of office is Orlando?

A. David Stern has another law office in Orlando, Florida.

Q. What office is that?

A. I don’t know.

Q. And was it connected with the office here in Broward County?

A. Yes.

Q. And do you know which — what the office is there or what the location is?

A. No, I just know it’s another law office for David Stern that he’s opened for foreclosures in Orlando.

Q. And did he just open it a month and a half ago?

A. No. He opened it, I think it was either sometime at the beginning of this year or the end of last year. I can’t remember.

Q. 2010?

A. Yeah.

Q. Or December 2009?

A. It could be around that time. I just can’t remember.

Q. Well do you know if these files were being moved out over concern of the investigation?

A. Oh, I don’t know.

Q. Or just because they were moving files?

A. They were just moving a particular bunch of files to that office to be reviewed. That’s what — You know, my friend expressed that they were going to be reviewing them over there.

Mind you, this is hearsay, something Scott relayed that one of her friends still at the firm told her. And she has no reason to believe this is a response to the ongoing investigation into the case. (This deposition was taken on October 4, so the description of Stern moving files a month and a half ago would put it in roughly August.)

But this is the problem with the current treatment of all this fraud as mere “mistakes.” Because it leaves the chain of custody of such documents in the hands of the perpetrators to treat just as Enron did.