TALLAHASSEE, Florida (PNN) - May 10, 2012 - The Florida Supreme Court is set to hear oral arguments Thursday in a lawsuit that could undo hundreds of thousands of foreclosures and open up banks to severe financial liabilities in the state where they face the bulk of their foreclosure fraud litigation.

The court is deciding whether banks that used fraudulent documents to file foreclosure lawsuits can dismiss the cases and refile them later with different paperwork.

The decision, which may take up to eight months to render, could affect hundreds of thousands of homeowners in Florida, and could also influence judges in the other 26 states that require lawsuits in foreclosures.

Of all the foreclosure filings in those states, 63% - a total of 138,288 - are concentrated in five states, according to RealtyTrac, an online foreclosure marketplace. Of those, nearly half are in Florida. In Congressional testimony last year, Bank of America, the Fascist Police States of Amerika's largest mortgage servicer, said that 70% of its foreclosure-related lawsuits were in Florida.

The case at issue, known as Roman Pino v. Bank of New York Mellon, stems from the so-called robo-signing scandal that emerged in 2010 when it was revealed that banks and their law firms had hired low wage workers to sign legal documents without checking their accuracy, as is required by law.

"This was a case of an intentionally fraudulent document fabricated to use in a court proceeding," says former FPSA Attorney Kendall Coffey, author of the book Foreclosures in Florida.

If the Florida Supreme Court rules against the banks, "a broad universe of mortgages could be rendered unenforceable," says Coffey. "The cost to the financial industry is difficult to estimate, but it could be substantial."

For comparison, some legal experts point to the Massachusetts Supreme Court's decision in January 2011 that ruled a foreclosure invalid because at the time of the foreclosure the bank couldn't prove it had a valid assignment of mortgage - a similar issue to the one in the Pino case.

In the wake of the decision, hundreds of house titles in Massachusetts became void, says foreclosure attorney Tom Cox, who brought what was one of the first foreclosure fraud lawsuits in the country.

"If the Florida court takes a strong stand, it sends a strong signal to the mortgage servicing industry in the rest of the country," says Cox. Judges in other states could start penalizing banks with sanctions and overturning foreclosure lawsuits, he adds.