Archive for July, 2011

Is the 14th Amendment a Way Out for Obama?

Saturday, July 30th, 2011

As we race closer and closer to crashing the debt ceiling like Willy Wonka in the Chocolate Factory skyrocketing in his glass elevator, many concerned Americans are urging President Obama take matters into his own hands by invoking the 14th Amendment.

The critical portion of the 14th Amendment to this crisis is Section 4, which reads in pertinent part:

“The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”

Former President Bill Clinton and House Minority Whip Steny Hoyer have both come out publicly in favor of the President using this power. It would seem a bit odd for Congress to pass budgets and bills which create contractual obligations to then renege on such legally valid claims. These claims include pensions and wages to our soldiers and retirees, interest on the debt, as well as claims to third party venders who protect our shores and manufacture our tanks and aircraft.

So here’s your chance to be a Constitutional scholar.

Do you think Section 4 of the 14th Amendment authorizes the President to unilaterally raise the debt ceiling without the approval of Congress?

And if it does, should the President invoke this Section and thus require the Supreme Court to be the ultimate arbiter?

Let us know what you think!

Mortgage Servicers Turn Robo Signers, Original Docs Just Don’t Exist

Friday, July 29th, 2011

Carelessness, neglect and an utter disregard for proper procedures is something Oppenheim Law has come to expect from the mortgage industry.

So it is no surprise that mortgage servicers might have turned once again to robo-signing in order to foreclose on homes, according to Reuters. This time it’s because the original documents don’t even exist!

During the housing boom, over half of all mortgages issued were pooled together and sold by lenders to investors. When the lenders sold the mortgages, they were supposed to physically sign and endorse the mortgages over to the investors. In the rush, however, lenders simply overlooked the paperwork.

One of the best examples is New Century Mortgage, the second largest subprime lender until it collapsed in 2007. There are indications that New Century didn’t endorse almost all of the mortgages it sold to investors. A sampling of 50 mortgages in Duval County revealed that not a single of them was properly endorsed. Such oversights mean that it is difficult to pin down who actually owns a mortgage and that investors potentially paid lenders billions of dollars for nothing.

The former head of the FDIC, Sheila Bair, advocated for a widespread investigation to determine the extent of this robo-signing problem. Other regulators, however, don’t want to pick at the problem because they’re scared of what they might find and the resulting damage it could cause the housing market.

The problem could be good news for the homeowners who are facing foreclosure proceedings based on one of these notes. Issues with notes can extend the time a foreclosure takes to run its course and thus give homeowners valuable time. The problem does not, however, fully absolve a homeowner. If the mortgage note was not properly transferred, then the original bank still owns the mortgage and can foreclose on the home just like it would with any other house. The problem is, of course, that the owner of the note might not exist anymore or might be in bankruptcy themselves.
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Short Sale Deficiencies Now Illegal in California. What About Florida?

Thursday, July 28th, 2011

Welcome back to the Divided States of America.

Oppenheim Law has been discussing the chasm that exists in our country between recourse and non-recourse states for years. (Check out Roy Oppenheim’s Op Ed piece in the Sun-Sentinel) It now appears that rift is widening.

In non-recourse states, like California, a lender may not pursue a deficiency following a foreclosure sale for loans that qualify as “Purchase Money Mortgages.” For a loan to qualify as a purchase money mortgage in California, the loan must be obtained at the time of purchase of the borrower’s principal residence. This can also include a second mortgage obtained at the time of purchase. Lien holders of purchase money mortgages are also unable to receive a deficiency judgement against a California homeowner who executes a short sale.

And earlier this month California passed legislation giving even more protection to underwater homeowners. California Senate Bill 458 now provides that even junior lien holders, meaning mortgages not obtained at the time of purchase, no longer have any deficiency rights against the borrower after a short sale.

Recourse states like Florida provide no such protections to underwater homeowners. Banks are able to pursue deficiency judgments against Florida borrowers who are foreclosed on, or even Florida homeowners who execute a short sale. A key aspect of Oppenheim Law’s Florida real estate practice is defending homeowners from deficiency judgments by negotiating with banks during the foreclosure and short sale processes.

Proponents of Cal. Senate Bill 458 argue the legislation brings more certainty to the short sale process and is a valuable protection of homeowners’ rights. They argue that by removing the possibility of a deficiency judgement from the negotiating process, short sales will be executed more quickly and efficiently, helping repair the real estate market.
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Foreclosures to Rentals. Obama Finally Listens to Oppenheim Law

Wednesday, July 27th, 2011

Taking a cue from Oppenheim Law, the Obama Administration is mulling over plans to reduce the number of foreclosed homes on the market by renting them out, according to the Wall Street Journal.

As the large inventory of distressed homes on the market continues to push a reduction in home prices as well as an increase in rental prices, the government is thinking about renting the homes owned by Fannie and Freddie.

The proposal has two benefits:

  1. Reducing the amount of distressed homes for sale
  2. Clearing the surplus of homes currently unoccupied.

These benefits would be the keys to a successful housing market recovery. Increasing the amount of rental properties available can also stabilize rent prices, which have been going up as foreclosed families wait before buying another home.

While the benefits of the proposal are obvious, it is still just a proposal. It’s too bad the Administration did not listen to Oppenheim Law back in 2009 when we advocated using the inventory of foreclosed homes to benefit communities, instead of just letting them sit unoccupied and cause suburban blight.

The Government could easily enact the proposal by ordering Fannie and Freddie to sell their foreclosed homes to investors who promise to rent them out. The investors could then hire management companies to look after the houses. If the Administration decides to follow through with the plan, the Government might actually make money on the deal and help the housing recovery at precisely the right time for it: before the next wave of foreclosures hit. That way, the market can be more resilient when the next hit comes and absorb more losses.

Foreclosure Notice by Facebook: Banks New Advantage Over Homeowners

Tuesday, July 26th, 2011

What does the digital future of foreclosures look like with social networks like Facebook? Oppenheim Law explores how living in a gated community or hanging out on Facebook may impact the foreclosure process.

In the never-ending battle by the banks to make things just a little easier for them, courts in Australia began to authorize banks to serve foreclosure proceedings via Facebook.

In order to begin Florida foreclosure defense proceedings, it is necessary for banks to prove that a homeowner has been successfully served, or notified, before proceeding in court. Service is usually carried out by process servers who try to physically track down the homeowner in order to give them the initial paperwork. Now, not only have banks in Australia gotten authorization to serve via Facebook, but banks in New Zealand, Canada and England have also obtained authorization from courts to serve foreclosure notices using Facebook, in addition to the traditional means.

Why is such a new method undesirable here in Florida? Because banks in the rest of the world didn’t have the document mill scandals that plagued Florida.

Currently, electronic service is only permitted when people have authorized it beforehand. However, it is easy to envision a future where lenders will require borrowers to allow themselves to be electronically served. If banks cannot even be relied upon to properly keep track of legal documents and not to commit fraud, then they should not be given yet another potent tool to put in their arsenal.

Florida Foreclosure Law Changes: Gated Communities and Condominiums

A potent tool that banks in Florida did get, however, is a change to the law regarding service of process to gated communities and condominiums. Before July 1st, gated communities and condominiums did not have to allow process servers in unannounced.
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Robo-Signing Returns, Raising Eyebrows and Acid Reflux

Sunday, July 24th, 2011


Oppenheim Law would never accuse the banks of committing fraud, perjury, impersonation, notary fraud, contempt of court, lying, violating Constitutional protections, or being tax cheats. Nevertheless, we do make this advisory: Be careful of what you sign.

Why?

As soon as you think the coast is clear, it’s the return of the robo-signers.

Suspected robo-signed documents are cropping up again in county deed records, according to the Associated Press. These new documents suggest the previous document mill scandals are part of an endemic problem at banks, not a one-off affair like the banks would have you believe.

In explaining the document mill scandals, banks claimed they were crushed by a gigantic amount of paperwork. It was while attempting to deal with such a large amount of paperwork that “mistakes” were made, according to the banks. Such claims are now being met with a raised eyebrow.

Registrars in several states have reported seeing suspicious documents. But now, the banks can’t claim they are under a mountain of paperwork: foreclosures, sales, and refinances are all at lower levels than they were in the past several years. Most of the documents under suspicion now are not even related to foreclosures. Rather, they mostly deal with new home purchases and refinances.

The banks are even using some of the exact same names heavily publicized when the scandals first broke like Linda Green and Crystal Moore. Such behavior points to an industry that sees itself as untouchable: too big to fail and too big to be regulated.

The proposed settlement between the banks and the states includes no criminal charges. Critics say that such slaps on the wrists only foster a culture of impunity, and they appear to be right.
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Oppenheim Law Warns: Expect Double Dip for Florida Housing Market

Friday, July 22nd, 2011

The double dip makes its way to Florida in a new shape and size. Without miracle jobs numbers, the expiration of emergency benefits is leading to a double dip in the Florida housing market. Meager gains of the market will be washed out by the next tidal wave of foreclosures and only a surge in new construction can save us, predicts Oppenheim Law.

The housing market is in even more danger of a double dip considering emergency government benefits like extended unemployment and the payroll tax cut are scheduled to expire by the end of the year. The expiration of these benefits is expected to leave the most vulnerable Americans in a bind, unable to find jobs and with limited government assistance. Cuts like these will directly impact the economy at a time when it’s already extremely fragile. Money spent on benefits goes directly into the economy; resulting in two dollars of economic activity for every one dollar spent.

Hiring is the solution, but also the problem (especially in Florida)

The only remedy for less government benefits is an increase in hiring. But…the job market is dismal. Employers added only 18,000 jobs last month, with millions still unemployed.

The situation is even worse in South Florida, with above average unemployment in both Broward and Miami-Dade counties. While nationally, employers are adding miniscule amounts of jobs, Miami-Dade lost 3,500 jobs and Broward remained flat.

Oppenheim Law’s prediction

All of the cuts will result in more Floridians unable to stay in their homes. The more people unable to stay in their homes, the more foreclosures Florida will have. In addition to the foreclosures that will be caused by the benefit cuts; Oppenheim Law is still seeing a new tidal wave of foreclosures due to the restarting of the foreclosure process halted by the document mill scandal. Also, expect the previously dismissed “zombie” cases to rise from the dead.
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