Courtesy: New York Giants

The clock may have run out on this year’s Super Bowl (Way to go Giants!!) but there’s still a few minutes left in this year’s REAL grudge match, the Banks vs. the Attorney Generals.

It’s 4th and Inches, the score is tied, and it would be nice to avoid overtime.

Today we could learn whether the much-discussed robo-signing settlement with Wells Fargo, Bank of America, JP Morgan Chase, Ally Financial and CitiGroup will come to pass, and in what form.

With California AG Kamala Harris returning to the negotiating table, the deal looks closer than ever to being sealed. Harris, who represents the state with the largest amount of foreclosed homes, has rightfully been hesitant to sign off because her state has the most to gain, or lose, from this deal.

We were initially very hesitant to see this deal go through ourselves, but the time has come for it to put to bed.

Why?

Because we feel the deal in its current form does a lot. Does it help every single homeowner who’s underwater? Of course not. There is no deal that will.

But here is who it does help. The homeowners who have fought to keep their homes from day one, who were at the forefront of these legal challenges against the banks. Much of what we have learned about robo-signing and the lack of standing banks had to bring foreclosure, would not have come to light without these crusaders, and its time they got a reprieve.

In theory it also helps the responsible homeowners, the ones who paid their mortgages on-time and whose homes went underwater through no fault of their own. They too need to be rewarded.

The reported 25 billion dollars (perhaps more if all 50 states sign on) that the banks are putting up will finally offer these homeowners some principal reduction, and the chance to refinance, two things we have long sought to see.

For those who just walked away, who left their homes to fall into disrepair, it’s our opinion that they should not be a priority.

The longer this deal lingers without any hope of conclusion, the longer we face the chance of a social contagion where everyone decides to stop paying their mortgage.  That will not help the market, and more importantly it won’t help the homeowners who’ve truly been wronged by the banks.

There are some bloggers and commentators who are still urging the AGs to not sign this deal. Is is a slap on the wrist? Yes, but that’s all it can be. We must not forget that rob-signing is the tip of the iceberg.

Whatever state claims that might be washed away by this agreement will seem like small potatoes once Schneiderman and his team wrap their investigation.

In fact they’ll seem more like little potato crumbs. Trust us what lies ahead is far worse.

If this settlement is the homeowner’s Super Bowl, then what lies on the horizon is the Supercalifragilisticexpialidocious Bowl.

There is nothing more important to us than making sure the banks face punishment for their dirty dealings.  It is very important that people continue to challenge the banks by trying to flesh out whether they  truly have standing to bring foreclosure. There’s no reason why this should end with this settlement. When it’s said and done, we believe the banks will be punished.

So far Schneiderman has not not wavered in his efforts to go after the banks. His efforts in the last few weeks have them running scared for the first time. We’re confidant he’ll do whatever it takes to get the banks. He has been one of the holdouts against this deal, but he is starting to turn around on it.

If he can be comfortable with it, then so can we.

Photo Courtesy:Reuters

We’ve all been reading with horror about the developing situation in Italy with the Costa Concordia, the cruise ship that capsized last Friday, killing several people.

What really caught our attention is the actions of the ship’s captain Francesco Schettino, who reportedly abandoned ship in the middle of the evacuations. He’s been blamed for causing the tragedy by recklessly taking the ship off-course and too close to shore

We can not compare the loss of life with the foreclosure crisis, but an argument can certainly be made that there is a parallel between the captain’s actions and that of big banks.

Banks have also been reckless, taking the economy from its intended destination and showing a complete lack of disregard with their shady real estate and foreclosure practices.  We believe they have abandoned the homeowner and the taxpayer, while failing to consider their well-being and solely worrying about their own self-preservation.

Whereas the cruise line’s executives have quickly held the captain accountable, we’ve yet to see our federal government do the same to the banks, despite countless opportunities to do so.

In this excellent editorial published in the New York Times, the paper calls on President Obama to steer this ship back on course by forming an inter-agency task force to investigate the banks for their actions, many of which could be considered criminal.

Yes there’s been investigations and settlements, but there’s been very little accountability for the top executives, who’ve been rarely held personally responsible.  For example Angelo Mozilo, the former chief executive of Countrywide, didn’t have to admit to any wrongdoing when he settled civil fraud charged level by the SEC. Yes he had to pay a 67.5 million dollar fine, but that’s a fraction of the 521.5 million he’s reported to have received between 2000 and 2008, according to the NY Times.

Bottom line is we agree with the Times that unless the federal government gets more aggressive, and brings in everyone from the Department of Justice to the IRS and the state attorneys and gets them on the same page with an aggressive plan to weed out mortgage fraud, then the ship will never be righted. The banks have been steering us off-course for years, and it’s time for Obama and the government to take the steering wheel for this foreclosure crisis to finally end.

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Federal Reserve Wake-Up Call!

This week we blogged about the Federal Reserve finally coming around and looking out for the homeowners, instead of the banks. A 26-page white paper released by The Fed offered up their suggestions on how to fix the broken housing market. They also finally came to the conclusion that government MUST come down harder on lenders. Some of the ideas offered up by The Fed may be tough for Congress to swallow, but we believe they have a good chance of keeping more people in their homes.

We particularly liked the idea of turning more foreclosed and vacant properties into rental homes (so much better for the neighborhoods) and the need to offer principal reduction to more homeowners. Roy Oppenheim expands on this issue in his latest “From The Trenches” video.

Broward Foreclosures Down 67%

Foreclosures were in steep decline across the country in 2011, including a 67 percent drop here in Broward County, according to RealtyTrac. Thanks to the ‘robo-signer’ scandal, lenders were suddenly much more careful about bringing foreclosure cases to the courts.  While that is likely to continue in 2012, Roy Oppenheim told the Sun-Sentinel that things could start to pick up.

“It’s going to pick up, but it’s not going to be insane like it was,” he explained.

Palm Beach County also saw a significant drop last year, 58 percent, while Florida was down 63 percent, RealtyTrac reported.

Fannie Mae CEO Williams resigns

Fannie Mae and Freddie Mac are always at the center of the housing crisis, so we are very curious to see the fallout from Micheal Williams resignation, which came down Tuesday. He’s been with Fannie Mae since 1991 and been head of the company since 2009.

Who replaces him could have a huge impact on the direction of Fannie Mae, David Stevens, the president of the Mortgage Bankers Association told HousingWire.

“Depending on whom you’re hiring sends a strong message about where this institution is headed,” Sanders said.

This means both GSE’s will leadership changes this year, with Freddie Mac CEO Charles Haldeman set to leave his post sometime this year. Housing Wire reports both each made roughly $2.3 million in bonuses,

Big Banks Face Inquiry Over Home Insurance

The banks have been ripping off the homeowner six ways to Sunday, and here’s another disturbing example, courtesy of the New York Times.

The New York Department of Financial Services is investigating multiple banks, including many of the usual suspects like JP Morgan Chase and Bank of America, this time over their use of what’s known as force placed insurance, the Times Louis Story reports.  When a homeowner allows their existing homeowners insurance to lapse, something that is all too common these days, the banks step in, often with little notice, and take out new policies.

These end up costing the customer often double, triple, sometimes six times what they paid before. The article cites one unlucky State Farm customer whose policy skyrocketed from $2,000 to $6,000 dollars a year! Benjamin Lansky, the superintendent of the NYDFS, issued 31 subpoenas related to the case, according to Story, who said Lansky is looking to reports of kickbacks to the banks from the insurance providers. With more and more homeowners falling behind on their mortgages, this is another way the banks are engaging in price gouging.

We hope you’ve had a good start to your new year and hope you’ll keep up us here at the South Florida Law Blog so you can stay informed on the foreclosure issues you need to know about.

Have a good weekend!

In our last blog we talked about the stories that resonated with Roy Oppenheim in 2011, but what stories mattered to you?

We reviewed the most popular stories on the South Florida Law Blog this year and came up with our list of the top 10 posts for 2011

# 10 — Florida Deficiency Judgments FAQs . . . By Popular Demand

Some of Oppenheim Law’s most popular videos and blog posts this year were on the topic of deficiency judgements. Understanding deficiencies and the Florida rules which pertain to them are key to avoid getting a deficiency judgment.

The unpaid mortgage debt associated with a residence is a deficiency.  A bank can foreclose and force a judicial sale of a home if the mortgage borrower fails to pay the associated mortgage debt.  The deficiency is the difference between the proceeds from the sale and the remaining mortgage loan balance. A deficiency can also result from a short sale, which is an alternative to foreclosure.

The rules pertaining to deficiencies differ from state to state. In Florida, if the bank is successful in obtaining a deficiency judgment, it will be recorded in the public records and collectable for up to twenty years. To avoid the possibility of getting a deficiency judgment, before deciding to walk away from your home, hiring a good foreclosure defense attorney is necessary.

#9 — #Fail – Government Plan to Help #Florida Homeowners

At first glance, it looked  like Florida foreclosure victims were finally getting the help they need from the feds. Reading the fine print it looks like if we had to describe this in one tweet word: #fail.

The two agencies that are in charge of overseeing the Independent Foreclosure Review went  have gone out of their way to keep the details of this program secret.  The most alarming issue is the possible conflict of interest between the consulting firms that were chosen by bank regulators to administer the foreclosure reviews. The fact is these consulting firms are actually getting paid by the banks.

The same banks that ultimately led the economy into the mortgage crisis were placed in control of deciding which homeowners are entitled to compensation for the banks own wrongdoings.  It is doubtful homeowners will receive any meaningful relief from this program.

#8 — Law Review Executive Summary: Black Magic of Securitized Trusts

Deconstructing the Black Magic of Securitized Trusts by Roy D. Oppenheim and Jacquelyn K. Trask-Rahn gives an in-depth analysis of the process of securitizing mortgages and how it has gone awry. The article begins with a focus on the rise of subprime lending, the impact that subprime loans, such as “interest-only” and “negative amortization,” had on the American Dream of home ownership, and how “securitizing” these loans led to a false sense of security for homeowners and investors during the housing bubble.

During the spike in foreclosure filings that followed the implosion of the market, in an effort to prove proper standing to bring the action, banks began producing tens of thousands of assignments predating the filing of the foreclosure action. This mass production of assignments proved that trustees had not properly transferred the mortgages from inception thus the banks laced standing to foreclose.

#7 — Banks Desperately Seeking Short Sales

Oppenheim Law has represented hundreds of homeowners’ short sales over the past few years and as a result has seen millions of dollars of homeowner deficiencies waived by the banks, who are becoming more eager to avoid foreclosure and complete short sales.

On New Year’s Eve we’ll post our top 5 stories for 2011 — Happy Holidays!

Just as Oppenheim anticipated, this year we’ve seen how big this foreclosure mess really is. There were numerous investigations, and a self-imposed moratorium on foreclosures during parts of 2011, resulting in a massive backlog of cases.

It was ludicrous, as Bank of America officials first said, that they would only need 60 days to review their inventory of files.

“It took them virtually a year to figure out that they were doing were just not kosher and had to stop,” Oppenheim explained.

There were several huge financial settlements offered to the banks over their illegitimate foreclosure practices, but the majority just did not stick.  Judges told them the settlements were unacceptable and did not go far enough. With various attorneys general and the IRS among the agencies getting involved, these cases are nowhere close to settled.

“The banks literally got their hand not just caught in the cookie jar, but the lid was slammed on it, and everyone got to see the hand just hanging there,” said Oppenheim.

2011 is leaving us with a still unstable market, so people are looking for tangible investments, Oppenheim continued, and with the dollar still weak, Florida real estate is not a bad deal. When you add the fact that there is an excess of distressed properties, prices are not expected to rise anytime soon. he said.

Now every year there is an X-Factor, and this year it was Occupy Wall Street. It was a movement no one really saw coming, and despite some right-wingers attempts to limit Occupy as a fringe movement, Oppenheim said, there is no question the message of Occupy has resonated with middle America.

Why?

It brought to the forefront two huge truths. One being that there is a huge economic inequality between the so called ‘1%’ and the rest of us.

The 2nd is that the veil has been lifted on how intertwined the government, the big banks and the Federal Reserve have become.

“The banks have grown so big and so large that the government itself is afraid to really, truly regulate it, because you really can’t tell where the government starts, where the federal reserve ends, its a really ugly sight.”

Anyone looking for an example need look no further that the 7.7 trillion dollars the Fed loaned to the largest banks — at essentially 0 percent! And what did the banks do with those assets?

Well its not only what they did, Oppenheim said, but what they DIDN’T do.

“They didn’t lend it to mainstream America, which would have seemed like they were going to do to help reverse this deflationary cycle.”

Instead it only led to more profits,which “came off the backs of you and me” to pay themselves bonuses and to help elect officials that were sympathetic to the banks, and not the average Joe.

Some politicians have floated the notion that corporations are people, but then, Oppenheim asks, how do you arrest a corporation and hold them accountable?

He concedes that it’s possible that individuals within these companies may not have committed a crime, but it’s clear that some companies as a whole did.

“I don’t buy into the notion that a crime wasn’t committed,” Oppenheim said, “We have not advanced our legal system sufficiently to deal with these very complex financial crimes.”

While foreclosures may have slowed down in 2011 he expects them to pick up in the new year.

“There’s this new wave, It’s not going to be as large, but it’s going to be a continuous stream coming through.”

Then there is what he calls zombie foreclosures,  which had been dismissed, but not permanently. Oppenheim would not be surprised to see them spring up in 2012.

“So far we haven’t seen them come back, but the banks have the right to bring them again,” he said.

If that happens, he fears the system would once again become bogged down with an overload of foreclosure paperwork, that will go through at a much slower pace.

The truth is, if banks brought all foreclosures to market right now it would crash the market, Oppenheim said, and the banks would become insolvent.

So what does Oppenheim predict for the real estate market in 2012? While he knows he can’t predict the future, Oppenheim says to expect the unexpected.

“I see that they’ll be something that we completely don’t anticipate,” Oppenheim said, “I’m not sure what it’s going to be.”

Coming up in our next blog, we’’ll review our top 10 stories for 2011.  Happy Holidays!

That’s what the team at Oppenheim Law realized after watching 60 Minutes’ latest piece on the foreclosure crisis. This time Scott Pelley focused on a neighborhood in Cleveland where               officials  has resorted to tearing down what were once perfectly good homes.

Why? Because the banks that control the homes have been acting as terrible irresponsible neighbors.  The end result is too many neighborhoods are littered with abandoned      properties,   many of which have been stripped to the bone by thieves. As many as 25 percent of these homes are now empty, according to Pelley. These neighborhoods, of which there are far too many,   have fallen into a state of disrepair, where a total tear-down is the only option.

You don’t have to be underwater to get splashed

Probably the most disturbing revelation to come out of the 60 Minutes story was the foreclosure crisis has impacted all homeowners, regardless of whether they are in danger of losing their homes or not. In fact their homes didn’t even need to be underwater to feel the pinch of the housing mess.

With countless homes now empty and transformed into eyesores, those who remain are seeing their property values sink faster than the Titanic.  People are left with homes that are virtually worthless and unsellable, so even if they wanted to buy a home somewhere else, it’s unlikely they could.

Once such woman featured in the story, Roberta Bryant, when asked what her home was now worth, replied “30 dollars.”  She might have been laughing when she said it, but she wasn’t joking.

Banks leave communities behind, while homeowners rally behind them

While there has been plenty of debate whether people should walk away from a house that is underwater, 60 Minutes revealed a dirty little secret, banks have been doing just that.

When you look at the condition of some of the abandoned homes seen in the story, one needs look squarely at the banks for blame.  They should be maintaining these homes after they foreclose on them, but instead in many cases they do nothing, allowing these homes to become blights on the neighborhood and a haven for squatters or criminal activity.

The fact is, banks are cheap too. For all the the talk about financial responsibility, Jim Rokakis, a former county treasurer who spoke to Pelley said banks sometimes won’t go through with a foreclosure to avoid spending the $8-$10,000 to tear the house down. A cost the government is often left to pay.

Which is why we’re proud of homeowners like Linda Bizzelle. She was one of many homeowners interviewed, who despite having a home that’s now worth half of what she paid for it, refuses to walk away. People like her are the reason this epidemic hasn’t spread.

Monica Hubbard, another such homeowner, was asked why she continued to pay her mortgage.

“Because I signed on the line. I made a promise”, she replied. When asked if her signature still meant something, she answered “It does.”

Now when was the last time you heard a bank say that?

The ‘Principal’ Solution

Rokasis didn’t flinch when asked what it would take to keep more homes from meeting a wrecking ball. To the surprise of no one — he puts the responsibility, as he should, on the banks.

“You’re gonna have to write down principle balances,” Rokasis told 60 Minutes, “Because if you don’t write down the principle to something that’s more realistic, it just guarantees that more people will walk away and more people will default.”

We couldn’t agree more. The banks have often taken an all-or-nothing approach to foreclosure, which is akin to putting a square peg in a round hole.  It just won’t fit anymore. If the banks won’t accept responsibility for mess they created, than they at least should lessen the burden on today’s homeowner. It makes no sense why they wouldn’t want to keep people in their homes, even if they take a loss.

Isn’t getting 75,000 dollars back on a 150,000 loan better than having a homeowner walk away and getting nothing in return?

Foreclosure is a troublesome virus that is on the verge of becoming a pandemic, banks have the cure — now if they would only use it.

Roy Oppenheim
From the Trenches

Owning a home in Florida continues to become the more affordable option  relative to renting, but several obstacles prevent many from taking the plunge according to a recent Florida real estate article in the Wall Street Journal.

The inventory of unsold homes has declined sharply from one year ago in many markets including Florida. While Oppenheim Law agrees price declines and low mortgage rates have pushed affordability to its best level in the past decade, the prospect of falling prices, more Florida foreclosures, and economic uncertainty continue to hold back the demand of leery wanna-be homeowners.

What makes this a Florida real estate buyer’s market?

• Home values have declined
• Apartment renting is expected to escalate in price
• Mortgage rates are at the lowest in six months, hovering at 4 percent
• Inventory in markets such as Miami are down by almost half compared to last year