• Banks make bad neighbors.

It’s been one of my mantras for years, and it’s a statement that is again reverberating across the country thanks to The Sun-Sentinel’s 3-part series “Bad Neighbor Banks”.

Thanks to the Sentinel, 60 Minutes, and the National Fair Housing Alliance, we are seeing the hard data that back up my assertion that banks, once they foreclose and take control of a property, just leave them to rot.

The grass no longer gets cut,the garbage accumulates, and before too long you end up with widespread blight not just in urban neighborhoods, but suburbia as well.

It’s the reason why I fight so hard to keep people in their homes. You and I are just better off when you have homeowners, vested in their houses and the neighborhoods they live in, keeping up their homes.

In the Sun-Sentinel’s series there is example after example of banks not doing even the most basic of maintenance. And their argument is usually, ‘It’s not our job’.

A bank has no investment in the neighborhoods you live in, beyond their own bottom line, and the banks have all but admitted it.

“The bank itself has no economic interest or ownership stake in the properties,” a spokesman for Deutsche Bank told the Sun-Sentinel.

So I ask you again, why would you ever want a bank as a neighbor?

The numbers don’t lie. The Sun-Sentinel found 10,300 code violations in bank-owned homes in South Florida since 2007. In the cities they tracked 40 percent of bank-owned homes were cited last year.

So chances are you are living next to one of these eyesores. And I’m betting you’re not too happy about it.

The threat of foreclosure blight is far from simply cosmetic. They become havens for illegal activity, for drug use and gangs.

The Sun-Sentinel cited a Miramar toddler’s 2009 death where a boy wandered into the backyard of an empty foreclosed house and drowned. The boy’s mom told the police the water was dark and full of garbage.

Foreclosure blight is just impossible to ignore, not that the banks and many at the top haven’t tried. Thankfully Florida governor Rick Scott finally took notice, not that I expect much to come from it.

On the one hand he sounded concerned, but in his very next breath he deflected blame from the banks, pointing instead to the poor economy as the reason for the rapid spread of foreclosure blight.

Last time I checked the economy doesn’t own these homes. Banks do.

Let’s not forget who put this governor into office. The banks fully supported Rick Scott’s campaign; I can’t imagine that he will do anything that will harm the banks.

Which means it’s up to the local cities and town to nail the banks and take back their neighborhoods.

Some municipalities are now trying more aggressive tactics, from issuing subpoenas to bank officials to citing banks before they have the title in their hands. But many just haven’t had the mustard to really go after the banks.

Most of the fines or liens issued against the banks just get ignored.

These are at best desperate tactics, if cities really want to get the banks attention, they should hire outside counsel and sue the pants off the banks.

Most local governments just don’t have the resources to take on the banks in a court of law, so just like homeowners, they need to lawyer up.

But the truth is most of these abandoned homes are just too far gone. We don’t have the luxury of waiting for banks to step up.

As I said in my last blog, Pam Bondi should be giving some of the $300 million Florida is getting from the foreclosure settlement to give to cities and towns, so they can raze these decrepit homes and take their neighborhoods back.

It’s time for the banks to stop being slumlords and rotten neighbors.

From The Trenches,

Roy Oppenheim

What would he have said about the banks fraudulent acts?

Last weekend Chuck Coulson, the man once called Richard Nixon’s ‘hatchet man”, passed away at the age of 80.

Known both for his being one of the ‘Watergate Seven’ and his subsequent 2nd life as a born-again evangelist, I can only wonder what he thought of of our current foreclosure crisis.

I don’t know if he ever gave it much thought, but I suspect there would be a level of amazement.

Watergate, which started over a single break-in, landed almost 50 men in jail, including many top Nixon aides like Coulson.

The banks have broken into thousands of homes in their efforts to secure ‘abandoned properties’. Except you and I both know that most of these homes were anything but abandoned.

Sometimes they weren’t even in foreclosure. I’ve had about a dozen clients who’ve had their locks changed or had their homes ransacked by repo agents who were hired by the banks.

The banks, playing the role of Nixon and his cronies, have used aggressive tactics that Coulson, in his days as Nixon’s legal counsel, might have employed.

Coulson allegedly said he would walk over his own grandmother to get the president re-elected, which sounds appropriate because banks have done almost everything else in order to foreclose on homeowners who often didn’t deserve it.

Yet for crimes that would seem to fit in any file on Watergate, there is not a single banking executive who has been arrested.

I’ll bet good money Coulson would wonder why.

Coulson was convicted for his efforts in trying to discredit the man who leaked the Pentagon Papers, but what would he have said about the ‘hatchet job’ banks have done on homeowners?

False documents, forged signatures, tax fraud, all in the name of the mighty dollar. Coulson would likely have admitted that everything the banks have done since the bubble burst is 1,000 times worse than anything he and his cronies did.

There have been many great injustices throughout our nation’s history, and when the book is finally closed on this era of “Too Big To Fail”, I think the banks illegal foreclosures efforts and their bastardization of our legal system will clearly outweigh Watergate.

From The Trenches,

Roy Oppenheim

Man I just love it when the banks eat their own!

It’s even better when they start using MY arguments to do it. The very same arguments I’ve used to defend my clients.

The essential problem is this, securitized trusts, the ones your homes were bought and sold into, weren’t always mortgage-backed!

I’ve long had questions about the validity of these REMICs, and now the banks are making my case for me! Thanks guys!

HSH Nordbank AG is now suing Barclays N.Y. after they bought $46 million in residential mortgage-backed securities from them.

Investigators for HSH Nordbank claim that none of the 2,000 mortgage loans they sampled had actually been assigned into the trusts when they were sold.

So if they tried to foreclose on some of these properties, it made it very difficult for them to do so, the lawsuit alleges.

Had they realized the mortgages weren’t properly assigned, they never would have bought the securities in the first place, HSH Nordbank’s lawyers say.

As I’ve always said, it goes back to making the banks prove who owns your mortgage. HSH Nordbank basically is admitting that they couldn’t do exactly that! Now this isn’t exactly a new phenomenon.

I blogged about a similar lawsuit involving AIG and Bank of America last year. But the banks, it seems have, clearly have not learned their lesson.

According to the lawsuit, Barclays overstated the value of these loans in order to sell them off. It’s being alleged that these loans did not meet the underwriting standards of the mortgage securities that HSH Nordbank was buying into.

“For each of the securitizations, the offering documents materially overstated the percentage of loans that were owner-occupied, and thus materially understated the certificates’ degree of risk,” the lawsuit says, according to the Wall Street Journal.

Translation, Barclays was allegedly offering up homeowners as collateral.

Homeowners that didn’t always exist.

So don’t feel bad homeowners, you’re not the only ones who the banks will lie to or steal from in order to make a buck.

They are doing it to themselves too!

This is what Eric Schneiderman and his RMBS working group are now investigating.

I’ve talked about the robosigning scandal so many times I’ve lost count, but it’s with these securitized trusts where the banks culpability really lies.

The banks sold these mortgages into these very loosely bundled trusts so fast it makes a NASCAR race seem slow, and they needed robosigning to cover up that fact.

Banks got sloppy, didn’t do their homework, and now they are all getting called on the carpet for it.

But not just by me, by other banks!

These securitized trusts’ tax-exempt status are clearly now being put into question because of lawsuits such as this, and that’s where Schneiderman is going to get the banks.

Trust me, when the next settlement comes, and it is coming, no one is going to be talking about robosigning.

You can quote me on that!

Bill extends Mortgage Debt Relief Act of 2007

I warned you earlier this month that if you’re considering a short sale, the time to get the ball rolling is now.

That’s because the Mortgage Debt Relief Act, which was passed in 2007, is set to expire at the end of this year. If that happens you’ll have to pay taxes on any forgiven debt that comes out of a short sale.

I remain skeptical that Congress, in this election year, will come through and extend the MDRA, but at least some Congressmen haven’t forgotten how important this legislation is. Then again, in an election year anything is possible.

U.S. Reps. Jim McDermott, D-Wash., Shelley Berkley, D-Nev., and John Larson, D-Conn., have introduced the Homeowners Tax Fairness Act. It would extend the Mortgage Debt Relief Act for another three years.

Let’s hope Congress gets their act together and passes this bill.

NY Foreclosure Case Could Be A Game Changer

It remains to be seen if a foreclosure dismissal will have an impact here in Florida, but none the less it has the chance to be a real game changer.

The case is OneWest Bank, FSC vs Galli. OneWest had tried for a partial summary judgement against the Gallis, but the judge in the case denied it and instead ruled in favor of Mr. and Mrs. Galli.

As I’ve always said, you have to make the banks prove they own the note, but in reality it’s more than that. I could pick up a note off the street and say I owned it, but it wouldn’t necessarily be true.

But Judge John Maltese correctly pointed out that MERS (the illegal entity the big banks set up to subvert the recordation system of our country) had assigned this mortgage several times before OneWest even came into the picture, something the judge ruled MERS did not have the right to do.

By the judge’s own words, “How the plaintiff came into possession of the mortgages and notes in this case is suspect.”

We have rules in place for a reason, rules the banks constantly try to skirt, so thank you to Judge Maltese for not allowing it in this case.

How Quilting Can Explain The Foreclosure Crisis

I never thought I’d use the words quilting and foreclosure in the same sentence, but there’s a first time for everything right?

San Francisco artist Kathryn Clark once worked as an urban planner, and her response to seeing people losing their homes was to turn neighborhood maps into a quilt, with an empty spot representing a foreclosed home.

The result is simple, yet a haunting example of what foreclosure can do to a neighborhood.

Even if you’ve never had to face foreclosure up front, I doubt you can look at one of her quilts and not come away with an understanding of just how widespread the foreclosure crisis is.

Have a great weekend and we’ll see you soon in the trenches!

Photo by The-Lane-Team

Banks need to get their massive foreclosure backlog off the books. There are over 368,000 cases in Florida. I get that.

Getting these properties into the hands of families who can afford them, that is what I want to see. It’s needed to jump start the economy, and no one wants to see the banks out of the neighborhoods more than me.

But it can’t be allowed to happen on the backs of other homeowners plain and simple. Lenders have tried to thrust these homes back onto the market before, and that’s why they just shelled out $25 billion.

The banks were penalized for being unethical, untrustworthy and fraudsters, and it doesn’t look like they have learned their lesson.

Yet a series of proposed bills now making their way through the Florida House and Senate offer banks unjust control over the foreclosure process, all in the name of getting abandoned homes back on the market.

The Senate version, which would create the “Florida Fair Foreclosure Act”, was passed by a judiciary committee earlier this week by a 5-2 vote. There is a similar bill making their way through the House.

But are they really ‘fair’ to homeowners? Absolutely not.

These bills are being pushed by banking industry shills. They make it easier for lenders to foreclose, and allows them to do so faster.

Have the politicians in Tallahassee learned nothing from the settlement? The $25 billion isn’t even in the mail, yet some are back to their old tricks, turning a blind eye to the plights of their constituents and denying them due process.

Sounds awfully familiar to me!

What these bills do is allow for more expedited foreclosures. Under the Fair Foreclosure Act, if the banks consider a property to be abandoned or if the homeowner does not respond within 20 days of being served, a judge has no choice but to rule for a final judgment of foreclosure right then and there.

A judge’s gavel would be nothing more than a rubber stamp, yet again.

The language of what constitutes an abandoned home is just too vague, and it is vague because the banks crafted it to be that way.

What are these criteria? If there is too much trash, if at least two neighbors say the home is abandoned, and if no one can be reached at the home at different hours of the day over a 72 hour period are among a few of them. And only two of them would need to be met for a home to be considered abandoned.

The people who help determine if homes meet those criteria, they all work for the banks, not the courts, not you. This bill offers the banks impunity with absolutely no oversight.

It’s a classic example of the fox watching the henhouse. If the banks present faulty ‘criteria’ that they developed, what chance do you have?

Even if your home is later ruled to have been fraudulently taken, your only recourse under this the Florida Fair Foreclosure Act would be monetary. You don’t get your house back, and the banks would be the winners, yet again!

Judges may not like seeing a logjam in their courts, but there is a reason a foreclosure takes a long time. It’s to prevent homeowners rights from being trampled.

Now the Florida Fair Foreclosure Act does have some provisions that are beneficial, namely that they would greatly reduce the amount of time that banks would have to recoup any unpaid mortgage debt, otherwise known as a deficiency.

Banks would have only one year, as opposed to the 5 they now have to seek a deficiency judgment.

That’s not worth the chance that even one homeowner might unfairly lose their house. Once again expediency is being promoted in exchange for fairness, dues process and constitutional rights.

Let’s hope the Florida Fair Foreclosure Act dies a quick death. I doubt it though.

Humpty Dumpty has had his great fall, thanks to an outstanding bankruptcy judge who has all but dismantled the Mortgage Electronic Registration System (MERS) thanks to his recent ruling.‪​‪

Last week New York Judge Robert Grossman ruled that all of MERS’ business practices are illegal.

It’s a staggering blow to the banks and their endless efforts to circumvent due process. ‪​‪It has the potential to once again slow down the foreclosure process. ‪​‪

The foreclosure registry was set up by the banks with one purpose in mind, to make securitizing mortgages easier for them.

And homeowners, as is usually the case with matters relating to bundled mortgages, were getting screwed. ‪​
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Here’s the short explanation. MERS allowed the banks to bypass public record keeping, all in an effort to streamline the records that banks were using to foreclose.

Local record keeping regulations might have been cumbersome for the banks to keep up with, but it protected the homeowners and provided transparency. ‪​‪

By allowing the banks to essentially hijack an important part of the record keeping process, namely the recording of each time a mortgage was sold to a different investor, banks had much greater control then than they ever should have been allowed to.
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Banks can talk about streamlining the process as the reason behind MERS all they want, but the effect was that it was much more difficult for homeowners to see who currently owned their mortgage, and it just allowed the banks to be sloppy with their records, and they were. ‪​‪

MERS was separating the notes from the mortgages, again so they could be securitized, yet in the case that was brought before Grossman, their lawyers argued they could still foreclose because in theory, the mortgage follows the note. ‪​

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Except in in this case it didn’t.

MERS was doing one thing, but telling the courts they weren’t.

They tried to have their cake, and eat it too.

Thankfully Judge Grossman didn’t buy any of their arguments; and now the banks are reeling.
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Almost all of the fraud I’ve seen perpetuated by the banks comes back to their efforts to service the Wall Street mortgage packaging machine in some form or another, and MERS is no exception.‪​

Once again the banks tried to deny homeowners their rights, and forgot that the homeowners are their customers!!! ‪​‪

Any other business that showed such blatant disregard for their clientele would have never had survived.

Judge Grossman saw through MERS thinly veiled attempt of a business model, and ripped it to shreds.
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Don’t expect me to be among the King’s Men. I will not be putting MERS back together again.

If there was anything positive that came out of the prolonged discussions between the states and the banks on the mortgage servicing settlement, it was that banks were reluctant to go full steam ahead in the foreclosure process while talks were ongoing.

But even before the settlement was announced, we saw signs that pointed to more foreclosures in 2012.

According to RealtyTrac, there were 24,783 foreclosure filings in the state of Florida in January, a 14% percent rise from January 2011, the first year-over-year increase in over a year.

Now that the settlement has been agreed to, the training wheels are off.

It’s petal to the metal folks. One thing that the settlement does for the banks is provide them a blueprint for how to proceed in the foreclosure process without getting their fingers stuck in the cookie jar.

Which means borrowers will once again have to defend themselves just as rigorously as they did pre-robosigning.

I’ve been asked if the settlement changes my advice to homeowners, to which I reply, ABSOLUTELY NOT!

You must continue to stand your ground. If you are in foreclosure or about to enter foreclosure, I will say what I have always said, you must fight the banks and force them to kick you out of your home.

The settlement may have changed the rules for the banks, but it shouldn’t change the rules for you, the homeowner. The banks will not transform into wonderful and charitable companies just because the settlement might penalize them.

Make no mistake about it, they will continue to come at you and come at your hard.

So allow me to reiterate my advice to you, the borrower.

Get legal representation if you need it and force the banks to kick you out. Settlement or no settlement, you still have the choice to modify or do a short sale or stay and fight.

Just because the settlement exposed much of the banks misconduct does not mean you will automatically be off the hook.

Unless there is a sheriff’s deputy at your door, do not give in.

If there is proof your mortgage was caught up in a fraudulent securitzied trust, you have a much better chance now of halting the foreclosure process outright. Courts have finally caught on to the banks illegal behavior and they can’t hide behind the bench as they have done before.

Of course you won’t have your case dismissed if you don’t, say it with me now, STAND YOUR GROUND.

If a dismissal seems unlikely, then you should look at a short sale. They are on the rise and many banks will offer you substantial cash, as much as $35,000, if you agree to sell your house back to the bank.

Lenders are willing to let you walk away from your underwater mortgage if you do so legally.

That way you can get a fresh start in a more affordable home or in a rental property. But don’t expect them to make such an offer if you move out the minute you are unable to afford your mortgage. State your case, and STAND YOUR GROUND.

Your third option is to seek a loan modification or mortgage relief from the government. There are more government programs than ever, in part because of the mortgage settlement.

While many of them have not been successful in the past, the settlement has pumped more money into these programs and you have a much better chance of qualifying and ultimately staying in your home.

But remember you can’t qualify for these programs if you move out.

Stand your ground, and fight the banks.

In The Trenches

Roy Oppenheim

Like the characters in "The Blair Witch Project", the banks are running scared!

Well what a wild week it has been. When we came to work on Monday we feared President Obama would put the housing crisis to bed without ever holding the banks’ feet to the fire.

The settlement with the banks, which we have blogged about ad nauseam this week, seemed as sure as a chip-shot field goal.

But thanks to President Obama’s suddenly get-tough approach, as evidenced by his State of the Union speech, we’ve seen the banks’ kick go wide-right and now all bets are off.

Can There Be Real Change In Mortgage Industry?

Now we are not completely sold that things will play out exactly as homeowners would like, this is of course the federal government we’re talking about, but for the first time we have a true sense of optimism. The President may finally be seeing things our way, and we want to throw our full support behind him.

There is no doubt cages have been rattled in the mortgage industry, and nerves have been frayed. If Obama’s plan to re-write the foreclosure rules didn’t have some kind of teeth, then we doubt we’d be seeing the type of reverberation thorough the media and the top echelons of government that we’ve detected in the last few days.

Banks Are Fearful of Settlement Collapse

The settlement could be falling apart at the seems, at least JPMorgan Chase CEO Jamie Dimon thinks so. He told CNBC this morning that Obama’s announcement to investigate the packaging and servicing of mortgage loans could stop the settlement cold.

“It has a pretty good chance of derailing it,” Dimon said in a televised interview from Switzerland, adding later, “I think it would be better for America if the settlement took place.”

Guess Dimon hasn’t been reading the South Florida Law Blog. You and I know it would be better for the BANKS if a settlement took place now, and we suspect Dimon knows that too.

From the moment the details of the settlement became public, there was push back from some of the Attorneys General, the legal community, and the media.

The New York Times mirrored our thoughts, in this Op-Ed piece published in Thursday’s paper they also wondered if this was finally the investigation that would end with criminal prosecution and dare we say, jail time.

New York AG Promises to Leave No Stone Unturned

The importance of the appointment of New York AG Eric Schneiderman, which we mentioned yesterday, can not be understated. His new unit, which will answer to the existing Financial Fraud Enforcement Task Force, will be composed of members of the Department of Justice, the SEC and the IRS. It will also be working with the existing hierarchies of those organizations. So his reach will be far and wide, and we believe this investigation has the potential to do some real good.

Schneiderman, along with California AG Kamala Harris, have been some of the most outspoken critics of the settlement, and he is promising a thorough investigation of ‘every aspect of the conduct that created the bubble and crash’.

To us, those words ring true. Obama is embracing real change with his appointment, and we can’t wait to see what happens next.