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FORT LAUDERDALE, Fla. – During the structure crash, it was beatific to be a foreclosure king. king Stern was Florida's crowning foreclosure lawyer, and he lived same an oil sheik. He concentrated up a assemblage of trophy properties, glided finished municipality in a alacritous of six-figure sports cars and, with his bombshell wife, partied on an ocean cruiser the filler of a small hotel.

When homeowners lapse behindhand on their mortgages, the banks flocked to "foreclosure mills" same Stern's to nearby foreclosures finished the courts on their behalf. To his megabank clients — Bank of America, nihilist Sachs, GMAC, Citibank and author metropolis — Stern was the ultimate Repo Man.

At playing gatherings, Stern bragged in his young vocalise of taking mortgages from the "cradle to the grave." Of the federal government's disastrous possessor comfort plan, which was questionable to ready people from effort evicted, he quipped: "Fortunately, it's failing."

The worse things got for homeowners, the better they got for Stern.

That is, until terminal fall, when the nation's foreclosure organisation blew unconnected and Stern's golden concern came undone. Within a few months, Stern went from being the person of a running magazine profile to being the person of a Florida investigation, class-action lawsuits and blogger delectation that, at terminal long, the "foreclosure king" was dead.

"What Stern represents is an playing that was completely unrestrained, unchecked, unchastened and unsupervised," says Florida accumulation professional Matt Weidner. "This was playing absent wild."

The rise and start of Stern, today 50, provides an exclusive countenance at how the foreclosure playing worked in the terminal decade — and how it lapse apart. It also shows how banks, unitedly with their accumulation firms, built a quick-and-dirty foreclosure organisation that was designed to verify as some houses as alacritous as possible.

Not daylong ago, the concern of back-office slope procedures was of lowercase welfare to the public. But revelations terminal start most robo-signers powering finished hundreds of foreclosure affidavits a day, without verifying a single sentence, denaturized every that. Today the banking industry's coercion juggernaut is low pure work as allegations of systemic foreclosure humbug mount.

The 50 land attorneys generalized are conducting a foreclosure playing probe. So are land and federal regulators. Class-action lawsuits are gathering force, and, with crescendo frequency, land judges are tossing discover foreclosure suits in souvenir of homeowners. The developments are prolonging the structure mart depression, sportfishing uncertainty on mortgage control and occupation into question whether mortgage-backed securities are, in fact, backed by null at all.

The Florida professional general's scheme crimes division is work threesome accumulation firms, including Stern's, over allegations that they created fraudulent jural documents, gouged homeowners with increased fees, steered playing to companies they owned and filed foreclosures without proving the slope actually had a jural welfare in the loan. Florida polity characterize the foreclosure impact at these accumulation firms as a "virtual morass" of "fake documents" and represented Stern's operations as something akin to the TV show "Lost" — exclusive instead of people that went missing, it was paperwork. Stern's employees churned discover phoney mortgage assignments, faked signatures, falsified notarizations and foreclosed on people without verifying their identities, the amounts they owed or who owned their loans, according to employee testimony. The professional generalized is also looking at whether Stern paying kickbacks to bounteous banks.

"There's a king Stern in every state, sometimes more than one," says metropolis Legal Aid professional Apr Charney, who has successfully obstructed foreclosure for hundreds of Florida families.

Stern denied repeated requests for comment. He did not respond inquiries at his duty or at his main residence in Fort Lauderdale. Stern's lawyer, Jeffrey Tew, agreed to an discourse in late December at his Algonquin office, then canceled it the period before without further comment.

Stern's story, play with his accumulation honor in 1986 from the South Texas College of Law, crapper be pieced unitedly finished thousands of pages of suite documents, myriad depositions and scores of interviews.

After employed at a accumulation concern for mortgage lenders, Stern started his own practice in Fort Lauderdale in 1994. Four eld later, he got a massive break: the mortgage giant Fannie Mae, a government-backed authority that provides mart stability for mortgage lenders, titled Stern to its exclusive professional network. That meant Fannie directed banks to ingest Stern's concern when foreclosing in Florida. Fannie also titled Stern Attorney of the Year in 1998 and 1999. Employees from that epoch advert an duty that liked to band together. Stern enjoyed dressing up for his duty bashes. One instance he sauntered on initiate overturned discover same Michael Jackson.

Almost from the beginning, Stern visaged trouble. In 1998, he was titled in a class-action causa alleging that he padded fees on foreclosed homeowners. Stern effected for $2.2 million. According to jural evidence at the instance from a Fannie Mae official, Fannie was warned most troubles at the Stern firm. But Fannie continued referring cases to Stern. Fannie Mae spokeswoman Amy Bonitatibus says, "At every times, Fannie Mae has had a commonsensible belief that our servicers and the accumulation firms adhere to proper procedures and conduct low the law. In instances where we see that servicers or accumulation firms are not adhering to our requirements or practical law, we directly engage and verify appropriate action, which haw include termination."

Soon after, Stern was sued again, this instance for sexed harassment. A former paraprofessional questionable that Stern created a "sexually-laden" region in which he routinely "touched and grabbed and subjected to simulated intercourse" his employees. Stern effected that meet in 2000 for an covert amount.

By this time, lawyers and possessor activists were also warning lenders, federal regulators and the Florida Bar most Stern. In 2002, the Florida Supreme Court reprimanded Stern for submitting "potentially misleading" gift affidavits.

None of the accusations stalled the firm's endocrine growth. After the frugalness crashed in the start of 2008 and ravaged the structure market, Florida, along with Nevada, Arizona and California, became foreclosure central. Stern's caseload chromatic from 15,000 foreclosures in 2006 to 70,400 in 2009. His body tripled to more than 1,200. To ready up with demand, Stern set up offices in the Philippines. When the U.S. body responsible for entering slope data in the foreclosure files logged off, the offshore workers logged on.

Revenue proud from $41 meg in 2006 to $260 meg in 2009, according to an SEC filing. The concern moved into a plush, marble-floored headquarters nearby Algonquin that was every glass and fountains. By today Stern was dynamical a Bugatti and had bought at small $60 meg in property, including a 16,000-square-foot island bilobed that sits behindhand digit section gates.

But every the paperwork Stern's concern was cranking discover to make this phenomenon would presently come backwards to area him. The foreclosure playing is a volume game. phytologist typically clear accumulation firms same Stern's most $1,400 for apiece successful foreclosure. But the banks crapper clear a lot less if the concern doesn't successfully foreclose within a destined instance frame, commonly around sextet months.

With so some foreclosures high in, Stern's concern couldn't ready up. Stern took shortcuts by hiring the young and cheap. "The girls would come discover on the story not lettered what they were doing," says Tammie Lou Kapusta, who worked in Stern's foreclosure department in 2008 and 2009. "Mortgages would intend settled in assorted files. They would intend thrown out. There was meet no actual methodicalness when it came to original documents."

Employee depositions paint a picture of a concern low constant push from the banks to advise faster. The longer it took to foreclose, the more money the banks stood to lose. Like so some in the industry, Stern had a strategy to cope with every the volume and velocity: robo-signing. One employee testified that Stern's honcho lieutenant, a one-time enter salesperson titled Cheryl Samons who chromatic to embellish the firm's honcho operative officer, subscribed as some as 1,000 foreclosure affidavits a day without reading a single word. The employee said Samons' assistance got so tired that she told threesome another employees to forge her signature. Samons also subscribed numerous mortgage assignments with a functionary walk that didn't modify exist at the instance of signing. Notary stamps are exclusive valid for quaternary years. The exclusive artefact Samons could hit subscribed mortgage assignments at the instance they were supposedly notarized was if she had been confident of instance travel.

Stern rewarded Samons with a newborn BMW SUV every year, paying every her bills and took care of the mortgage commercialism on her home, according to evidence from digit employees. Samons did not respond to request for comment.

Billings surged. So did the dysfunction.

Kapusta testified that she conventional 100 sound calls a day from people who never conventional their foreclosure notices or who wanted give modifications but couldn't intend finished to the banks. If she talked too daylong on the phone, Kapusta testified, Samons would yell at her. "Everything was most effort the judgment entered because we had to report to the banks," Kapusta said.

Stern battled to ready the confusion exclusive his concern a secret. In 2008 and 2009, whenever the Fannie Mae auditors were most to contact downbound in Algonquin for their turn monitoring, Stern's employees sometimes toiled finished the night, cacophonous the stickers and client codes soured of Fannie files and exchange them with those of a assorted lender. Then, as an extra precaution, they hauled the covert files to a far backwards room.

Stern then gave Fannie officials the white-glove treatment, with catered meals and chauffeuring. The half files stayed unseeable until the auditors mitt town.

Fannie Mae's Bonitatibus says that, "To our knowledge, no digit at Fannie Mae has had their expenses paying by the Stern Law firm."

Early 2010 brought Stern's large coup. He spun soured a accumulate of his playing titled DJSP that performed mortgage impact services same title searches and lien monitoring and took it public. The care reportedly made Stern $146 million, including $55 meg cash.

DJSP hit started trading in Jan at most $10 a share. Within months, maltreated by rumors of indiscretions at Stern's firm, it was worth half. On July 20, digit investors filed a securities-fraud collection land alleging that Stern knowingly misled them by imperfectness to disclose the problems within the business. "DJSP was a scam," says Bill Warner, a Sarasota private eye who successfully defended himself against a foreclosure meet brought by Stern.

At the modify of July, Florida professional Kenneth Trent, who had blocked Stern from foreclosing on a possessor who was current on his mortgage, filed a federal causa against Stern's concern low a enactment normally distant for gangsters, the Racketeer Influenced and Corrupt Organizations Act--or RICO. Days later, the Florida professional generalized launched an enquiry against Stern's concern and threesome another foreclosure mills. The AG's arguments were similar to those brought in Kent's collection action.

At first, Stern railed against the media, locution he would indorse the company and its reputation against the allegations. Then, in September, he dropped discover of sight. Equally artful is Cheryl Samons, who is no longer with the firm. She mitt no contact information.

In October, digit by one, the megabanks started to withdraw their cases from Stern's firm. Fannie fired Stern on Oct. 22. Stern's body of 1,200 has dwindled to 200. DJSP's stock, worth as such as $13 in April, today trades for pennies.

The firm's start has spawned more confusion in Florida's circus-like foreclosure courts. A slew of homes Stern foreclosed on that sold for $240,000 apiece during the assign eruct sold at auction as orphaned cases for $200. Recently, modify the most disreputable "rocket docket," in Lee County, where judges were reportable to hit subscribed soured on a foreclosure every 30 seconds, ground to a virtual halt as the Stern concern withdrew from housing after case. Some of Stern's remaining lawyers show up suite with unclean hair, pelage jackets and food-stained clothing. As for Stern, if federal and land prosecutors enter criminal charges, he could modify up in prison.

Meanwhile, Stern's commercialism on his $12 meg distinction of assign with Bank of America is late. So is the lease on his headquarters.

He's today in default.

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