Survey: Mortgage Foreclosure Scams Surge

Not only is America’s foreclosure crisis still going strong, it now comes with even more fraud and deception.

With heightened media coverage surrounding the recent national mortgage settlement and refinements to government assistance programs, experts say selling “the schtick” has only become easier for criminals. But there are red flags consumers can watch out for when trying to determine whether or not an organization is legit.

First, homeowners should never have to pay anything up front for a loan modification or information on how to negotiate with their lender, says Roy Oppenheim, whose Florida-based law firm Oppenheim Law has handled more than 1,000 mortgage and foreclosure fraud cases over the past 5 years.

“If you’re paying upfront to a non-lawyer who’s claiming they can modify your loan, that’s a big scam,” Oppenheim says.

Read More from US News and World Report

Short Sales Soar as Home Foreclosures Fall

The foreclosure crisis isn’t over, but a new trend in real estate sales could be the light at the end of the tunnel for many borrowers and lenders. Short sales, which occur when homeowners sell their homes for less than what they still owe, outpaced foreclosures for the first time ever in January,according to a new report from Lender Processing Services, Inc.

The Federal Housing Finance Agency announced this month that mortgage servicers will be required to review and respond to short sale offers within 30 days and make final sale decisions within 60 days. The new requirements, which take effect in June, have kept lenders busy expanding and training the staff needed to catch up with growing short sale demand.

“When the robosigning crisis hit, there was effectively an 18-month moratorium on foreclosures,” said Roy Oppenheim, a foreclosure defense attorney with Oppenheim Law in South Florida. “The banks got caught with their hand in the cookie jar and the lid slammed closed on it. Fraud, robosigning — it all came to a stop. But through this $25 billion settlement, they’re using the crisis to their advantage. The settlement creates a major incentive for the banks to do short sales.”

Read More from Lawyers.com

Short sales pick up in housing market

Lenders are pricing short sales more aggressively, RealtyTrac adds. In January, the average short sale price was 10% lower than a year earlier, exceeding the drop in U.S.home prices.

Some mortgage servicers started pursuing short sales more aggressively months ago. Bank of America says it did 107,000 short sales last year, up from 92,000 in 2010 and double the 2009 volume. New measures are also likely to boost short sales.

Freddie Mac and Fannie Mae, which own or guarantee 60% of home loans, will soon require lenders to decide short sale offers within 60 days. Realtors have complained that short sale offers often linger. The recent $25 billion mortgage settlement also encourages short sales.

New rules have slowed foreclosures in many states, increasing short sales, says Florida foreclosure defense attorney Roy Oppenheim.

Read More from USA Today

Maybe you weren’t convinced the first time I told you the era of the short sale was finally upon us.

I can’t blame you for thinking that banks were acting irrationally when it comes to the foreclosure process.

But Lender Processing Services just offered up the most convincing numbers to date that short sales are no longer just some pie-in-the-sky dream for distressed underwater borrowers.

For the first time in the US, LPS says there were more short sales in a single month then there were foreclosures.

In January short sales made up 23.9 percent of home sales, while foreclosure sales made up 19.7 percent of all home purchases.

Of course that means that over half of all real estate closings are for distressed homes.

A year before, the percentages were skewered in the opposite direction. In January 2011, 16.3 percent of home purchases came through short sales, and 24.9 percent were foreclosures.

Why are the banks now convinced, as I was long ago, that going through the long and harrowing process of a foreclosure is not their best option?

The proof is once again in the numbers. On average, foreclosed homes sold for 29 percent less than non-distressed properties in January.

Homes sold via short sale? They went for 23 percent less. Here in Florida, LPS says short sales have outnumbered foreclosures since July.

That means short sales are a better deal for the banks, plain and simple.

The truth is banks don’t want to own these properties, they certainly can’t handle maintaining these homes, and they just end up laying waste to neighborhoods by hanging on to them.

It’s just better for banks to sell the home and get a new buyer inside, rather than engage in a legal battle with a homeowner over whether they even have the right to foreclose in the first place!

And it’s better for homeowners who want to walk away from their homes, because they can do so legally, and leave the threat of foreclosure behind for good. It’s simple logic, yet it took the banks eons to come to this conclusion.

At Oppenheim Law we’ve saved homeowners over 22 million dollars in deficiencies. Homeowners are able to walk away from their obligations without any lingering repercussions of a deficiency judgement chasing them around for 20 years.

The bottom line it’s just sound business sense for banks, and its the best way to legally walk away from your underwater mortgage.

From The Trenches

Roy Oppenheim

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!

It’s a great time to do a short sale.

Banks have finally realized they have much more to gain by agreeing to a short sale rather than allowing a home to go through foreclosure.

Data released by RealtyTrac today shows pre-foreclosure sales, which are often short sales, were up 15% in the fourth quarter of 2011.

It’s easier than ever before to walk away without a deficiency and maybe even thousands of dollars in your pocket.

And to top it off you usually don’t have to pay taxes on the debt you walked away from when you agreed to the short sale on your primary residence.

If you can’t stay in your home, this is frequently the best possible scenario.

You don’t have to pay taxes on that debt because of the Mortgage Forgiveness Debt Relief Act, which was enacted in 2007 as President George W. Bush was leaving office.

But like all good things, it may not last.

There is growing speculation that this tax break, which will expire at the end of 2012, will not be renewed.

Even though the bill passed with overwhelming bipartisan support and was enacted by a GOP President, tea partiers and Republican strategists alike seem fixated on the ‘moral contagion’ factor as well as the program’s $2.7 billion price tag.

Which means that if you agree to a short sale on your $200,000 home for only 150K, you could have to cough up taxes on the $50,000 of forgiven debt.

Currently the Debt Relief Act allows for up tax relief on up to $1 million of debt if you’re single, $2 million if you are married.

Once again there’s a lot of talk from some conservatives about the cost to the taxpayer. Never mind the fact that President Obama and the $25 billion settlement has made principal reductions and loan modifications the centerpieces for stabilizing the housing market.

So even the idea that this tax break might not see the light of day in 2013 is a slap in the face to everything the Attorneys General spent months haggling over.

The same government that is dangling the carrot of refinancing in front of you might very well bat it away with a massive tax bill.

Bottom line, if you’re thinking about a short sale, get started NOW. Short sales can sometimes take months to complete, and if you wait til one minute after the clock strikes midnight on December 31st, you run the risk of your beautiful stage coach turning back into a pumpkin.

It is of course an election year, so this lame brain duck Congress cannot be counted on to come through for homeowners. I thoroughly expect them to let the Debt Relief Act lapse, and once again you’ll be on the hook for taxes on ‘loan forgiveness income’.

Loan forgiveness income. If that’s not an oxymoron, then I don’t know what is!

So if you like to gamble, wait until 2013. I however, would not.

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.

All of these ideals probably sound fantastic to an underwater homeowner, but this bill has a potential unintended consequence. Junior lien holders in California might end up being less likely to approve a short sale now that they cannot pursue a deficiency judgement.

Currently, only purchase money mortgages used to buy your primary home are non-recourse following a foreclosure sale in California. Mortgages obtained after the purchase of the home are still vulnerable to deficiency judgments against borrowers who are foreclosed on following judicial foreclosure proceedings. The mortgagees who hold liens acquired after the purchase of a home could decide to deny short sales, which usually only pay them a small percentage of the remaining loan balance, and instead force homeowners into foreclosure where deficiencies are still allowed.

If junior lien holders start denying short sales, foreclosures could skyrocket in California. What was intended as a protection for underwater homeowners has the potential of making them worse off than ever before.

In Florida, homeowners still have the ability of negotiating greatly reduced deficiencies, and in many cases homeowners are able to have deficiencies waived all together.

Only time will tell which side of the Divided States of America is managing this housing crisis best.

Mortgage Rates Set Fresh 2011 Low After Jobs Report

Fixed rate home mortgage loans dropped for the eighth straight week to a new low for 2011 amid concerns of another economic slowdown this year, according to data from Freddie Mac and a report by The Wall Street Journal.

The 30-year fixed-rate mortgage averaged 4.49%, down from 4.55% last week and 2010’s 4.72% average. Rates on 15-year fixed-rate mortgages fell from 3.74% to 3.68%. 15-year fixed-rate mortgages averaged 4.17% in 2010.

Lawyers Get More Time to Finish Foreclosures

Florida foreclosure defense is translating into more time for plantiff bank attorneys to complete a foreclosure, according to an article in the Palm Beach Post.

Due to the reality of Florida’s overloaded court system and swirling questions surrounding the validity of foreclosure paperwork, Fannie Mae is now allowing bank attorneys up to 450 days (about 15 months) for lawyers to complete a foreclosure before fines are levied. The previous time limit was 185 days, or about six months.

The increased time needed to complete a foreclosure legally and correctly against a homeowner is due in large part to Florida foreclosure defense attorneys working to protect the rights of South Florida homeowners, according to Roy Oppenheim.

Obama Blames Wells Fargo, Bank of America, Chase for Modification Failures

The three largest U.S. mortgage lenders are getting some heat from the Obama administration for the failures of the federal foreclosure-prevention program, according to The Associated Press.

The lackluster performance of Wells Fargo, Bank of America and Chase with helping homeowners lower their mortgage payments has led the Obama administration to remove financial incentives it had given these lenders.

Only about one-third of the 1.4 million people who applied for mortgage modifications through the federal program have had their payments lowered permanently.

Angry Homeowners ‘Foreclose’ on Lenders

Owners of a house in Florida have engineered a “reverse foreclosure” against a Bank of America branch in Naples, according to The New York Times.

The homeowners paid $165,000 in cash to buy their home from the bank and never borrowed against it. But last February, the bank began foreclosure proceedings against them. The homeowners hired a Florida foreclosure defense attorney and the case against them was dropped, however they were able to recover a judgment for $2,500 in attorney’s fees against the bank.

When the bank didn’t pay, the homeowners’ lawyer showed up at the bank with sheriff deputies and a moving truck to clean out the building.

The bank eventually settled with the homeowners for more than $5,700 to cover the fees and additional costs.

Nearly 40% of homeowners who took out a second mortgage are underwater on their loans, but the news surrounding second mortgages isn’t all doom and gloom for Floridians, says Florida foreclosure defense attorney Roy Oppenheim.

Second mortgages refer to any loan taken out on a property that is subordinate to the first mortgage, and include home-equity loans or lines of credit.

According to data from CoreLogic and The New York Times, homeowners with a second mortgage are two times more likely to be underwater on their property. CoreLogic’s data also shows that homeowners with second mortgages are facing deeper levels of negative equity in their homes – $83,000 compared with $52,000 – than borrowers without second mortgages.

The bright side is that Oppenheim Law is seeing massive principal reduction on second mortgages through loan modifications, according to Oppenheim. It’s becoming common for the Florida foreclosure defense law firm to negotiate up to 80% in principal reductions of second mortgages, a far greater percentage than first mortgages.

A vast majority of first mortgages were cut up, bundled and sold to investors as mortgage backed securities, the process that played such an enormous role in the Florida real estate crisis. On the other hand, nearly three-quarters of second mortgages are still held by the banks that made the original loans.

The good news for Florida homeowners is that these banks are beginning to treat second mortgages similarly to consumer credit card debt, accepting minimal “pay offs” to settle up with homeowners.

Homeowners who are willing to negotiate a “short payoff” can have tremendous success reducing their second mortgage principal by 50% to 80% and then paying off the remaining balance in cash. Banks are even starting to solicit Florida homeowners with second mortgages to make initial offers for 40% to 50% reductions, which Oppenheim Law is then able to negotiate to as much as 80%.

Ironically, the first key to success in dealing with a Florida loan modification on a second mortgage is to stop making your monthly payments.

The bottom line is that while a second mortgage is a strong indicator of negative housing equity and can complicate the process of completing a Florida loan modification or short sale, Oppenheim Law is having continued success negotiating principal reduction of second mortgages for South Florida homeowners.

For more information on second mortgages and Florida loan modifications visit oppenheimlaw.com.

Will April flowers bring May showers for Florida real estate sales? While some U.S. economists are still singing doom and gloom when it comes to the real estate market, TODAY show contributor and real estate mogul Barbara Corcoran sees some positive signs for prospective buyers and sellers, South Florida Law Blog shares this optimistic outlook.

During a recent appearance on the Today Show, Corcoran talked about her optimism, and why she thinks the spring season could be a great time to buy that dream home.

She sternly disagrees with some economists opinions that real estate prices will fall another 15 to 20 percent. Well, the jury is still out on that one, but let’s look at her glass half full.

“I think they’re dead wrong,” she told host Matt Lauer, “If you actually look at all the major markets in the U.S., more than half have already come off the bottom and prices are rising.”

For buyers who are thinking of playing the waiting game hoping for lower home prices, Corcoran says don’t. While interest rates are below 5% now, she feels with the anticipated demise of Fannie Mae and Freddie Mac, they won’t stay that low for long.

The reality is, prices will likely not increase for years considering about nine months of shadow inventory that the banks must still unload! In fact, if the banks did not manage the inventory prices would indeed still be dropping.

Tips for buying and selling in today’s competitive spring market

Buying

• Buyers have tremendous negotiating power right now, so rather than stay on the side lines strike while the iron is hot.
• If you’ve got the stones for it, you should bid low and play hardball during negotiations
• Buyers can also ask for, and often get, lots of extras included with their homes

Selling

• Sellers should price ahead of the market to get the best chance of completing that sale.
• If prices are still falling in your area, price your house 5% lower than what the last similar house in your neighborhood sold for.
• And if you are fortunate enough to be in a market where prices are going up, price it in the other direction
• The best person to be right now is the seller trying to upgrade to a better neighborhood or school district. What you lose on the sale will more than be recouped on your next home purchase, she said.

“You might take 10% less on your house and resent it, but you’re going to get a 10% discount on the next house and you’re going to be ahead of the game,” says Corcoran.

Lastly, a better indicator of how the real estate market is doing is the amount of open houses taking place, Corcoran said. While these homes won’t show up as sales for several months, the amount of homes garnering interest from buyers will give you great insight into the local market.
If you’re ready to take her advice and trade up to that better home, we are here to help you. Since 1994 Weston Title has been helping Florida homebuyers with real estate closings, title and escrow services.

Good Luck!

There is an interesting practice developing at our nation’s big banks. Borrowers who are in or nearing foreclosure are being offered thousands of dollars to short sale their homes. Some are even being offered $35,000 to get rid of their homes, and quickly. This situation presents an intriguing insight into the way banks are thinking at the moment. Banks would rather pay you and take a loss rather than foreclose on homes.

Do such offers signify that banks have learned their lesson and are trying to get out of sub-prime loans, or are they looking to just prevent further losses? Perhaps the answer is that the banks are concerned about existing home prices. Bank of America’s chief economist, Mickey Levy, while speaking privately, spoke of the concern that the 1.8 million bad loans in the nation will drive down the market if they go into foreclosure. Such fears help explain why the banks are desperate to avoid foreclosing on homes. They don’t want the rest of their loans to become vulnerable: the more foreclosures, the more house prices fall, therefore, the value of the banks’ loans go down and more people want to walk away from their homes, causing the banks even more losses.

In the end, this situation is a win-win. Not only do banks protect home prices, but they stand to get back more money quicker from a short sale than a foreclosure and the good publicity would be a nice change of pace for their PR departments. Homeowners in trouble are also helped because they can get out of their houses with some cash in their pockets and get on with the rest of their lives.