Miami-Dade Circuit Judge Beatrice Butchko.

Photo by J. Albert Diaz

Two attorneys for a loan servicer and a company representative are scheduled for a criminal arraignment in Miami for failing to turn over evidence in a civil foreclosure case.

The Dec. 14 contempt hearing was set after Ditech Financial LLC failed to comply with a Miami-Dade judge’s order to produce training manuals discussed by company representative Christopher Ogden in a deposition. Ogden and Boca Raton attorneys Yacenda Hudson and Amina McNeil of Tromberg Law Group were ordered to show why they shouldn’t be held in indirect criminal contempt of court.

The case is part of a broader issue in foreclosure litigation: Are loan servicers misleading courts about the process they follow to ensure records are thorough and accurate when mortgages are transferred from one servicer to another?

“I have been arguing for quite some time that there is a problem with what these banks’ witnesses are putting forward about the way that they get the prior servicers’ records into evidence,” said Miami attorney Bruce Jacobs of Jacobs Keeley, who represents the borrowers in the case.

Ogden testified, as many loan servicers’ representatives do, that Ditech uses “red-flag” software to catch any problems with previous servicers’ records during the loan boarding process, Jacobs said. Such problems could include errors or gaps in the payment history.

The witness said he saw training manuals that included a flow chart outlining the verification process, Jacobs said. But after he persuaded Miami-Dade Circuit Judge Pedro Echarte to order Ditech to produce the training manuals, things started to go awry.

Echarte instructed the parties to arrange a new deposition to go over the training manuals. The judge said if they could not agree on a time, he would set the deposition for a Saturday evening at midnight. It’s a tactic he uses to motivate litigants, and it’s always worked.

So Echarte was miffed to find the parties didn’t agree on a time and wound up dragging a court reporter to a deposition in the middle of the weekend.

“I want you guys to know that I’ve been doing that for 20 years and you two are the first that couldn’t agree on a normal, reasonable date and time for a deposition,” he told Jacobs and McNeil at a Nov. 16 hearing. “Shame on both of you. … Why did all of you idiots go to a deposition at midnight on Sunday?”

Then the parties told the judge Ditech, formerly Green Tree Servicing, did not bring the training manuals to the deposition.

After discussion with its legal department, the company decided not to turn them over because it planned to argue they were protected by work-product privilege, McNeil said. Echarte said that argument had not come up in any court filings and Ditech was disobeying his order to turn over the records.

“Who decided?” the judge asked. “Give me the name of a person because I want to know who goes to jail, along with the lawyer.”

Later in the hearing, when the judge announced he would issue a show-cause order, his words were more conditional: “If you’re found in contempt of court … you may be facing jail. You may be facing an adjudication. You may be facing probation. You may be facing other sanctions. If I find any lawyer to be in contempt of court, the matter is going to be referred to the Florida Bar.”

But Echarte’s earlier comments spurred Ditech to move for his disqualification, and he recused himself. The case was transferred to Miami-Dade Circuit Judge Beatrice Butchko, who on Thursday told the parties she would sign an order keeping the arraignment on the calendar for Dec. 14. A trial is set for Feb. 1.

In the midst of all this, Ditech produced a training manual: a 16-page document with no flow chart mentioning a “red-flag” system, according to the order to show cause Butchko was preparing to sign Friday.

McNeil and Hudson did not immediately respond to a request for comment. A message sent to Ditech also went unreturned.

Ogden is represented by Greenberg Traurig attorneys Patrick Broderick, Jason Okleshen and Brandon Leon of West Palm Beach, who did not immediately respond to a request for comment.

The legal dispute is all part of a broader industry problem, said Jacobs, who obtained an order from Butchko in a separate case against loan servicer Ocwen Financial Corp. finding ”this boarding process is a legal fiction.”

Jacobs said loan servicer representatives travel around the country testifying they know their records are accurate because they’ve been through a “vigorous” loan boarding process. These witnesses say they are familiar with the process, but they often cannot explain glaring errors in the records, he said.

“You don’t bend the hearsay rules for anyone, in civil or criminal, whether it’s murder or mortgage,” said Jacobs, a former state prosecutor who has been fighting foreclosure cases since 2008. “I think that we need to challenge the idea that wealthy people are above the law.”