Friday, April 30, 2010
Foreclosure Mill's Revenue Skyrockets Law Offices of David J. Stern Revenue Has Multiplied Sixfold But Judge Lynn Tepper Says Stern Law Office Presented Falsified Mortgage Documents.
TAMPA TRIBUNE MICHAEL SASSO, Foreclosure mill's revenue skyrockets, Published: April 22, 2010. TAMPA - The housing crisis has been good for Florida's biggest processor of foreclosure lawsuits: Its revenue has multiplied sixfold since the housing bust began.
In recent years, the Law Offices of David J. Stern, a Broward County-based foreclosure law firm, has become the largest filer of foreclosure suits in Florida. It also is the biggest filer in Hillsborough County, according to local court records.
Along the way, though, it has picked up critics across Florida for the factorylike way it removes homeowners from homes. One circuit court judge in Pasco County recently accused the law firm of fraudulently backdating a mortgage document.
Stern's law firm isn't alone. Across the country, the unprecedented housing bust and backlog of foreclosures have turned specialty law offices such as Stern's into efficient paper processors called "foreclosure mills." In Stern's case, he's grown so large that he recently spun off part of his foreclosure law firm into a publicly traded company.
In January, Stern separated his firm's lawyers from the back-office clerks that prepare foreclosure paperwork, research title documents and do other duties that don't require a lawyer's touch. This back-office staff now is called DJSP Enterprises and trades on the Nasdaq-GM stock exchange.
PRIVATE INVESTIGATOR BILL WARNER BROKE THE STERN NASDAQ STORY, Tuesday, March 30, 2010, NASDAQ, DJSP Enterprises Major Shareholders David J. Stern (Law office Foreclosure Mill) and Kerry S. Propper Subject of Department of Justice Investigation And SBA Law Suit. Foreclosure Mill Law office of David J. Stern is now DJSP Enterprises, Inc. "DJSP" (David J. Stern Processing)...their revenues increased from approximately $116 million in 2007 to an estimated $259 million in 2009; EBITDA adjusted on a pro forma basis increased from approximately $44 million in 2007 to an estimated $68 million in 2009; Net Income adjusted on a pro forma basis increased from approximately $28 million in 2007 to an estimated $43 million in 2009.
For the six months ended June 30, 2009, the company, DJSP Enterprises, generated revenue of approximately $117 million, EBITDA adjusted on a pro forma basis of approximately $35 million and net income adjusted on a pro forma basis of approximately $22 million. So how does the 'foreclosure mill" of the David J. Stern law office net $49 miilion in 2009 when they bid on and obtain "bundles" of foreclosures from Wells Fargo Bank or Deutsche Bank and process's each foreclosure for a flat fee of $1,400 which covers the cost of an associate attorney, processing, service of complaint, office help etc.? I know for a fact that the cost of processing a Foreclosure Complaint has increased since 12th Judicial Circuit Chief Judge Lee Haworth stopped Attorneys "calling in" on Foreclosure Complaints in Feb. 2009 and forced Stern Associates to actually drive from Plantation Fl to Bradenton or Sarasota to appear in person.
It's separate from Stern's law practice, but Stern still is chairman and chief executive officer of DJSP Enterprises, and Stern's law practice relies on DJSP to process all its paperwork and handle its real estate duties. Because it is publicly traded, DJSP must file financial reports with the Securities and Exchange Commission. These reports provide a glimpse into Stern's foreclosure empire.
According to DJSP Enterprises' recent annual financial report, the back-office operation had profit of about $44.6 million in 2009 on revenue of $260.3 million. That means the company's revenue increased sixfold as the foreclosure crisis worsened. In 2006, the company reported profit of $8.6 million on revenue of $40.4 million, its recent SEC report states.
The SEC report does not include financial information for Stern's separate law practice, which is not publicly traded and does not report its financial information. DJSP's chief financial officer, Kumar Gursahaney, confirmed the amount of his company's profit and revenue in the SEC report. Stern could not be reached for comment.
Today, the company processes more than 5,800 foreclosure files a month and more than 70,000 a year on behalf of the Law Offices of David J. Stern, its SEC filing states. As of Dec. 31, the company had 950 employees and offices in Plantation and Louisville, Ky. It also outsourced work to the Philippines.
DJSP Enterprises' stock closed at $13.45 a share on Wednesday. Locally, DJSP Enterprises and Stern's law practice handle the most foreclosure cases in Hillsborough County. The Tribune looked at 1,994 initial foreclosure documents filed in October to see which foreclosure firms were the busiest.
Stern's office filed 352 cases in Hillsborough County that month, beating out second-place finisher Florida Default Law Group of Tampa, which filed 323 cases. Even with its business boom, companies such as DJSP and its chief customer, the Law Offices of David J. Stern, are picking up more critics lately.
Dubbed "foreclosure mills," these firms are known for steering foreclosure lawsuits through the court system as efficiently as possible. They often charge a cut-rate price to their banking and mortgage-servicing clients, typically about $1,200 for a foreclosure. Most of the legwork of filing lawsuits is handled by clerks and paralegals rather than lawyers.
The Wall Street Journal wrote last week that Tepper accused Stern's law firm and a banking client of submitting a fraudulent document in a foreclosure case. According to the article, the judge found Stern's office presented a mortgage document with a falsified notary stamp. In an interview with the Tribune on Monday, Tepper said it appeared the document had been backdated to give a bank legal standing to foreclose on a home.
"This isn't a clerical error," the judge said. "It wasn't a mistake. A notary isn't supposed to notarize that someone swore an instrument in front of them if, in fact, they didn't sign it in front of them." In a roundabout way, a significant investor in DJSP Enterprises appears to be the U.S. government.
When the Wall Street crisis hit, the government bailed out insurance giant AIG. The government remains the company's biggest investor. According to the Bloomberg business news service, AIG owns stock in DJSP Enterprises worth about $4.6 million through a mutual fund, MORE FROM THIS SOURCE........
Bill Warner Private Investigator, SEX, CRIME, CHEATERS & TERRORISM