Archive for February, 2009

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President Obama Speaks about the Economic Crisis as Lost Promissory Note Defense to Foreclosure Tops Google Searches

Wednesday, February 25th, 2009
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The President made it abundantly clear last night that one of the bailout’s fundamental purposes is to help troubled homeowners who need to refinance their homes, thereby preventing foreclosure.   Yet one of the most popular Google searches yesterday concerned one’s ability to delay or stave off a foreclosure by demanding the foreclosing bank produce the original Note.

In fact the other day in the same chamber where the President spoke, Congresswoman Marcy Kaptur from Ohio begged residents throughout the US to not just walk away from their foreclosed homes, but  to fight and hire a “good lawyer” that  can go up against the Wall Street attorneys! The video is circulating the internet like wildfire and the related search terms have hit the top of the Google Chart. See the video for yourself.

I was flawed to see a Congresswoman advocating our hypothesis or thesis on the floor of the United States Congress! Nothing feels better than a little positive reinforcement.  The issue of lost notes and lost mortgages is a fundamental constitutional issue concerning due process and jurisdiction.


So as President Obama tries to tackle energy independence, education and healthcare… all at once, the public is trying to figure out how to keep their families from losing their homes to foreclosure since the President has little to offer those folks in the stimulus package for now.  So… it is for the time being up to the lawyers to fight this battle.  As the President noted, as Americans, we are up to the challenge.

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Posted in Entrepreneurial News, Florida Law News | 1 Comment »

Academy Awards, Super Bowl and Loan Modifications

Monday, February 23rd, 2009
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Last night I actually watched the entire Academy Awards with my family. I don’t remember the last time I ever did that… from the opening number to the Best Picture. This year, I also watched the entire Super Bowl… This is very unusual for me. Then again… we are in truly unusual times. Both of these national events somehow seemed to bring comfort… like apple pie, or chicken pot pie to the national ethos. It felt like we are all one and share a common past time. Last night was truly entertaining, no unnecessary bad jokes or deriding cracks about our government.

But enough of that… lets get back to the issues at hand. On March 4, the Obama Administration will release its details concerning how folks will be able to modify or refinance their mortgages. According to the Sun-Sentinel and Zillow.com, only about 17 percent of South Florida will have enough equity in their homes to refinance. Of course, those won’t be the people facing foreclosure.

You can’t be more than 5 percent underwater. In other words, if your outstanding mortgage principal balance substantially exceeds the value of your home, you will either have to hold on for dear life, do a short sale, or hope that your bank comes to its senses and realizes that a foreclosure is not the answer and will modify your loan by taking a principal reduction haircut.

In fact, we are seeing an entire new industry emerging. Former mortgage brokers, bankers, realtors, real estate attorneys, and appraisers are beginning to organize to assist homeowners with their loan modification needs, especially once the government’s program is announced on March 4, 2009.

In fact on March 5, 2009 we will be conducting one of our monthly free Florida Foreclosure Defense Workshops.
In the mean time, it appears the new government program will be of no use to you if you fall into one of the following categories:

  • Investor Property
  • Second Mortgages, Equity Lines
  • Second Homes
  • Jumbo Mortgages
  • Too Little Income
  • Too Much Income

So… continue to stay tuned! In the interim, continue to enjoy events like the Oscars as they provide a good escape.

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Posted in Florida foreclosures | No Comments »

Obama to Florida’s Foreclosure Rescue? or Not?

Wednesday, February 18th, 2009
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Today the Obama Administration dipped its big toe into the foreclosure quagmire by announcing a number of moves that will try to keep people in their homes who still have jobs or income. Therefore, residents experiencing Florida foreclosure will be able to modify their loans, refinance, or with Congressional approval, modify the amount owed to the banks in bankruptcy.

President Obama’s plan is real and politically, a good start, but the announcements today will most likely not fully abate the real problem .

Here’s why:

The residential real estate market lost $8,000,000,000,000. Yes. $8 trillion in equity! Caused by lots of irresponsible borrowing, lending and speculating.  There is enough blame to go around here. So lets stop playing the blame game.

The government’s plan is, of course, trying to reward the homeowners that have continued to make their monthly payments even if they are under water. That is a great thing, even admirable.  It addresses the whole moral hazard issue of not rewarding the rascals – like the government initially did with Wall Street.  But $75 billion is less than 10 percent of the amount of the problem. I am not saying that the Obama Administration should do anything different, just that it’s amazing that this wound has taken until NOW to be tended to! Now, that does not mean that the patient is getting better .  Just maybe… NOT ANY worse.

I still say it will be the first time homebuyers, the bottom fishers, and the people who keep paying their loans that will truly bail out the economy. So thank you President Obama on behalf of my friends in the title business and the refinance industry for putting life back into our livelihoods.

What this all means for the guy who lost his job and really can’t afford his old lifestyle I am not sure. Actually I am sure; it means too little too late.

We will be addressing the foreclosure rescue plan and how it can help YOU at our monthly foreclosure workshops. The first one is March 5th 2009. For more information read our foreclosure workshop press release.

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Posted in Florida foreclosures | 2 Comments »

Mortgage Forbearance on the Horizon: Obama Following His Gut and Major Banks Follow

Friday, February 13th, 2009
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It appears that the financial markets are taking their cues from the President as opposed to the Treasury Secretary. This week we saw the major equity markets tumble as the Treasury’s half-baked Bailout II Plan was partially unveiled.  But most importantly, the markets started to respond– first yesterday- after the President began to dust off the history books and talked about some kind of mortgage forbearance program and an allocation of $50-$100 billion from the Bailout. Today, interestingly enough, Citi Bank and JP Morgan Chase agreed to follow suit and hold off on filing new foreclosures for three weeks until the President announces his new program.

So what can we expect in such a program? If we let history be our guide, during the Depression the government guaranteed a number of home loans that were under water through the Home Owners’ Loan Corporation (HOLC). Its purpose was to refinance homes to prevent foreclosure. The HOLC granted long-term mortgages to over a million people facing the loss of their homes. HOLC was only applicable to owner occupied homes and additionally assisted mortgage lenders by refinancing problematic loans and increasing the institutions liquidity. When the HOLC ended its operations and liquidated assets in 1951, HOLC turned a small profit. Over a period of 12 years or so, the government recouped about 80% of the money they guaranteed.

So how will the Obama administration implement such a program?  Here are my thoughts–in brief.

Today I would run the program as follows:

  1. Owner occupied homes only.
  2. You must be at least 60 days late on your payment.
  3. All homes will need to be appraised in the program.
  4. Banks will need to absorb the first 20% loss of equity. If the banks foreclose, they will lose that money regardless.
  5. The Government will then effectively guaranty a second mortgage that would only be paid back if at the time of a bonafide sale of the home the property had increased in value above the first mortgage. Otherwise, the bank would be reimbursed for the loss of the second mortgage.

If the government follows this game plan it will likely not lose much of its equity, provided the loans are modified with low interest rates and people have income from jobs to support the loans.

Maybe this is what the markets and banks are waiting to hear from the Obama Administration. After all, I thought the purpose of the bailout was to help the economy. Well… there is no better way to help the economy than to stem the flow of foreclosures. We all know that… the President speaks of it, the Banks now recognize it… and so does the market!

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Posted in Florida Law News | 1 Comment »

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