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!

The Oppenheim Law editorial team found this ironic:  A drug dealer has more constitutional rights to protection from the government in his home than your average homeowner in foreclosure.

In a case being appealed to the United States Supreme Court, the Florida Supreme Court recently held that because the “home” has a long standing history of receiving additional constitutional protect

Interestingly enough, the U.S. government, through Freddie Mac and Fannie Mae, is the single largest investor of residential mortgages. So what this really means is that the government can steal your house through bad loan paperwork and fraudulent foreclosure practices, but the local drug dealer is safe from a sniff by Franky the Drug Sniffing Dog.ions, using a drug sniffing dog outside the front door of a drug dealer’s house constituted an illegal search and seizure under the Fourth Amendment. Yet this same court has allowed banks and investors to use the lower courts in Florida as their own private collection agency.

This is yet one more example of the absurd turn that this country has taken during the real estate crash and subsequent foreclosure crisis, putting the government into the position of protecting the sanctity of a home owned by a drug dealer violating criminal laws, while stripping the same protections from one who is just down on his financial luck, in part due to the banks themselves.

The English belief that “every man’s house is his castle” formed the basis of the Fourth Amendment, and yet now has been convoluted to only protect criminals from prosecution, while leaving homeowners in foreclosure high and dry against a system that steamrolls their constitutional rights in the interest of protecting big banks, Wall Street, and now Uncle Sam.

The Florida Supreme Court stated in its holding that a “dog sniff” was “a substantial government intrusion into the sanctity of the home and constitutes a ‘search’ within the meaning of the Fourth Amendment.”

Notably, numerous bank executives have been quoted as saying egregiously negative things about homeowners who admittedly cannot afford their payments, but who have legitimate defenses against banks who have attempted to ignore constitutional and statutory rights as homeowners.

Essentially, these lenders and their leaders who are paid tens of millions of dollars a year have taken the position that “these homeowners haven’t paid, so who cares about their rights and any defenses they may have.” Yet, for a drug dealing homeowner whose house is full of drugs, the fact that his house may have been subject to unlawful search and seizure is not only highly relevant, but in fact could prevent any prosecution of him, even though he clearly is guilty.

The question raised by this case is: how can the Constitution protect drug dealers from “Franky the Drug Sniffing Dog,” while leaving thousands of homeowners homeless at the hands of illegals seizures by “Freddie and Fannie – the government investors?”

The Constitution was not intended to protect only part of the population. The Court should interpret the Constitution evenly, and should not work to protect criminals over the average American taxpayer suffering at the hands of a broken economy.

If you are in or near foreclosure and need help keeping your home, please contact the team at Oppenheim Law.

The Florida Foreclosure Defense Headlines via Oppenheim Law

Notary behind robo-signing scandal found dead

A whistle-blower who brought a massive case to light was found dead inside her Nevada home.

Officers found the body of Tracy Lawrence, 43, after she failed to show up for a 8:30 a.m. court appearance, Las Vegas station KSNV reported.  She was supposed to be sentenced for her role in the fraud case, but she never arrived and her lawyer said he was concerned for her well-being, so the judge dispatched officers to her home.

Detectives have ruled out homicide, KNSV reported, but it’s not known if Lawrence died of natural causes or if she took her own life.

The week before, she pled guilty one criminal charge of notary fraud, after she admitted that she had notarized around 25,000 fraudulent documents as part of a foreclosure fraud scheme.

Prosecutors allege title officers Gary Trafford and Geraldine Sheppard of California are behind the scheme that involved Lawrence, both were indicted on more than 600 charges in a 439-page indictment filed on November 16. Both are still at-large.

Homeowners join OWS movement

Last week 60 Minutes shined a harsh light on the homeless problem in Florida, that one third of the homeless families in America are from the Sunshine State. And two-thirds of homeless families are living on the streets. For them ‘Occupy Wall Street’ has literally become ‘Occupy The Street’.

If there is any positive to be had from this difficult news, it’s that the social stigma attached to losing your home is now gone, Oppenheim Law reports.  For some underwater homeowners, foreclosure has become a form of protest, not unlike the OWS movement. But some are walking away willingly and protesting from their living rooms, while others are forced into their cars.

Says foreclosure attorney Roy Oppenheim, “in some cases we save people from being homeless by defending their homes through the foreclosure process . . . the flip side is that there are many families who did not seek legal advice and were handed walking papers by the banksters, who illegally foreclosed on and forced them onto the “street.”

Happy Holidays from Fannie Mae and Freddie Mac

Both Fannie Mae and Freddie Mac are giving embattled homeowners a small present, announcing they are suspending evictions during the holiday season. From Dec 19th through January 2nd, 2012, the federal lenders will not kick out anyone who is being foreclosed on.

Some major private lenders, such as Wells Fargo, Bank of America and Chase, are also following suit, according to CNN Money.

“The holidays are meant for families to spend time together, especially if they’ve gone through the stress of financial challenges and foreclosure,” Terry Edwards of Fannie Mae said in a statement. “No family should have to give up their home during this holiday season.”

Before you think the Grinch’s heart grew three sizes, realize their good will isn’t halting the foreclosure process entirely.  Both companies admitted they may still continue legal and administrative proceedings during this time. And once the new year comes, they’ll be back in the foreclosure game big-time, as the inventory of foreclosed properties is up to an all-time high, according to Lender Processing Services, with 4.29 of all active mortgages in the foreclosure process.

Foreclosure timeline increases

However the length of time people are living in a foreclosed property has gone up. According to statistics just  released by the Mortgage Monitor, the average length of time a loan (as of October) has been in foreclosure is 631 days, nearly 21 months. That’s over 100 days more than average reported just last January, in January of 2008 the average was only 251.

Alison Rogers of Time magazine attributes this to the fallout from the robo-signing scandal, with banks now trying not to repeat their past alleged mistakes. Now banks are choosing to slow down the process to make sure every ounce of paperwork is properly processed, Rogers said, which results in a much more drawn out foreclosure timeline.

Mass. AG goes after five banks in foreclosure lawsuit

Finally, there’s more bad news for the nation’s top lenders, as Massachusetts’ top prosecutor is suing 5 banks she accuses of illegally foreclosing on homes and using deceptive loan servicing practices.

Attorney General Martha Coakley filed suit against Bank of America, Wells Fargo, JP Morgan Chase, Citigroup and GMAC.

Her 59-page complaint claims they used fraudulent documents and foreclosed on homes without holding the actual mortgage. They also failed to stick to loan modification promises they made Massachusetts homeowners, all in violation of state law, the complaint states.

“Our suit alleges that the banks have charted a destructive path by cutting corners and rushing to foreclose on homeowners without following the rule of law” Coakley said in a statement to MSNBC, “Our action today seeks real accountability for the banks illegal behavior and real relief for homeowners.”

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.

As Florida’s top prosecutor continues to investigate the state’s law firms for improper foreclosure work, a report has surfaced showing Fannie Mae was warned in 2006 of abuses in the way lenders and their law firms handled foreclosures, according to the Wall Street Journal.

The fraud-closure problem that’s been snow-balling could have been minimized, if only the government paid attention to documented reports!

This internal report, produced years before regulators began investigating the mortgage industry’s practices, said Florida foreclosure attorneys “routinely made” false statements in court attempting to process foreclosures more quickly.

The report said Fannie Mae officials “believe foreclosure counsel are sacrificing accuracy for speed” but did not name any firms, the Journal said.

How ironic that the government has essentially known of the fraudulent, illegal practices of banks and the mortgage industry for five years, and is still trying to fix these catastrophic wrongs.  Essentially, this equates to fraud, perpetuated by the idea that you can privatize profits and socialize losses.

And apparently this is what you get when the fox is asked to clean up the hen house.

It is also interesting to note that after the government took complete control of Freddie and Fannie in 2008 amid soaring loan losses, Florida foreclosure filings soared to unprecedented levels.  This report proves that the government is to blame for our real estate debacle as much, if not more, than the banks who have taken the brunt of America’s scorn for years.

Fannie Mae has been under investigation since September 2008 for its role in the mortgage crisis, but more recently, federal and state officials have been looking to see if banks and foreclosure law firms have improperly seized homes by using fraudulent or incomplete paperwork.

Two red flags raised by the report, which was produced at a time when national foreclosure numbers stood at relatively low numbers, include improper legal filings by foreclosure attorneys and questionable practices surrounding the Mortgage Electronic Registration Systems, an electronic-lien registry set up by the mortgage industry to reduce paperwork and lower costs.

According the Journal, the report said, “foreclosure attorneys may be taking short cuts by misrepresenting that [original loan documents] are lost.”  Nearly a year ago, Oppenheim Law wrote about the Florida Supreme Court was working to end the abusive practice of banks filing a foreclosure based on a “lost note.”

Over and over again, homeowners have been subjected to foreclosure proceedings when banks and the government knew full well there was no ground to foreclose.  It is appalling that the government had knowledge of these practices and still allowed gross infringements of Americans’ Constitutional right to due process.

Referring to the industry in general, Elizabeth Warren, the White House adviser in charge of establishing the new Bureau of Consumer Financial Protection, said that with proper oversight, “the problems in mortgage servicing would have been exposed early and fixed while they were still small.”

A month ago, Oppenheim Law asked, “Why isn’t Wall Street in Jail?” After today, it looks like the banks should be sharing a cell with the feds.

Why isn’t Wall Street in Jail? Is our government a giant Ponzi scheme?

These are the questions Roy Oppenheim asked during Wednesday night’s Short Sale and Foreclosure Defense seminar.

During the webcast, Oppenheim discusses how with the departure of Fannie Mae and Freddie Mac also goes the traditional 30-year mortgage, paving the way for a new 20-year mortgage, higher interest rates and larger down payments. In other words, buying a house just got harder.

Roy also touched on recent news headlines, including the 60 Minutes piece titled Homeless Children: The Hard Times Generation, New York Magazine’s jailhouse interview with master manipulator Bernie Madoff, and scathing commentary by Rolling Stone Magazine’s Matt Taibbi on Wall Street’s modus operandi.

If you missed this hour of economic insight from a leading industry expert, the replay will be available on Oppenheim Law TV and the Oppenheim Law YouTube channel for the next 30  days! We want to remind you that as the short sale market heats up, Oppenheimlaw and Weston Title are here to service all your legal and title insurance  related needs.

Homeownership will no longer define the American Dream. That’s because 30-year, fixed-mortgage loans that we’ve known since the 1950s may become a luxury if the federal government tightens constraints on Fannie Mae and Freddie Mac—the two lenders that historically backed home loans for the masses (even with far less than perfect credit scores). Indeed, a private mortgage finance market could emerge with entirely new rules—rules that make it harder and more expensive to get a loan.

Next, consider convicted Ponzi scheme mastermind Bernie Madoff’s comments from his prison cell. Madoff told New York magazine that Goldman Sachs, Merrill Lynch and Morgan Stanley Smith Barney knew all along that he was working the system—and did nothing. Madoff suggested that the entire government is a Ponzi scheme. What if Madoff is right? It’s a disturbing thought…

That leads us to the question, “Why isn’t Wall Street in Jail?” Where’s the accountability? Clearly, greedy banks did their dirty deeds and clearly American taxpayers are footing the bill. Wealth has been destroyed. Lives ruined. Yet Wall Street—and the prominent firms that make up the financial services industry—seem to be living above the law.

What’s an American homeowner—or foreclosure victim—to do?

Join Oppenheim Law tonight, March 9 at 6 p.m. Roy Oppenheim is holding a real estate workshop where he discusses how the aftermath of Wall Street’s greed is still affecting homeowners across the country and what you can do to pull yourself out of the hole the banks created. Oppenheim will also share how rising oil prices, continued unemployment and the possibility of an American double-dip recession is impacting the South Florida real estate market, as well as the pros and cons of how changes to mortgage options could impact South Florida foreclosures and short sales.

What: Global Impact on Florida Short Sales and Foreclosures Workshop

Where: Oppenheim Law TV

Or come in person: 95 NW 11th St., Boca Raton, FL 33432

Cost: Free with advanced registration

RSVP: To register, email jackie@oplaw.net or call 954.384.6114

While risk is high, so are the stakes… and the fees! Higher down payments, a lower cap on the guaranteed mortgage amount, and higher risk fees on associated with Freddie and Fannie.

What does this mean to you? If you are:

Cash buyer:
Home prices may have hit bottom, so now is a time to leverage the power of a cash offer in negotiating with desperate sellers who just “want out”, taking advantage of the banks’ desire to get short sales done NOW rather than later.

Financing:
Rates are also likely to rise as the economy improves and the rock-bottom interest rates that have been protected by the Federal Reserve Board edge up. Like we said in our post this week, millennials have a better chance to get a return on investment over time, while baby boomers and Gen X might not ever recover.

Renting:
This just may be the sweet spot with the best value for some.

Selling
It’s still a Buyer’s market, but with banks ready to deal on short-sales now is the time to get on with your life.  Further, in some cases it may be possible to figure out a way to do a short sale and still take advantage of the attractive prices that the market has to offer.

We thought this video was appropriate, considering the lastest news on Freddie Mac and Fannie Mae:

Wael Ghonim, the Google engineer who was kidnapped and eventually released by the Egyptian regime, be nominated for the Nobel Peace prize

In Egypt President Mubarak resigned, but while a military government is not American-style democracy; it shows the power of a thought connected to millions of people through social media such as Facebook and Twitter and good old fashioned passive resistance.

In fact, let’s be the first to suggest Wael Ghonim, the Google engineer who was kidnapped and eventually released by the Egyptian regime, be nominated for the Nobel Peace prize for such meritorious peaceful activism through the application of new social media technology.

The Egyptians would make Gandhi, King and Mandela proud as yesterday ironically marked the tribute to Mandela’s 21st anniversary of his release from prison.

Mr. Mubarak’s resignation opens a period of uncertainty not only for Egypt and countries such as Saudi Arabia, Israel but also the U.S., for whom Mr. Mubarak has been a key anchor of Middle East policies.

The real estate market braces itself for the outcome of this black swan and what’s next.

The week’s next big story is that the entire method by which mortgage loans are funded and the future of Fannae and Freddy are in play. This is a $7 trillion question mark.

Finally, a second major foreclosure mill fell this week  as  Fannae Mae  announced that the Fort Lauderdale firm of Ben-Ezra & Katz, P.A. was fired due to various improprietes.That announcement came as a surprise to some considering the Ben-Ezra firm seemed to do better quality work than many of the other “mills” that have not yet fallen.

The Oppenheim Law Take Away

All the foreclosure mills will likely be gone by next year and the foreclosure crisis will take even longer to fix due to the banks’ own folly for having tried to make too many short cuts. Maybe the banks will learn and next time try and do things right the first time.  

Finally, mortgage interest rates are beginning to rise again as cash remains king in this buyer’s market.

“The future depends on what we do in the present.” – Mahatma Gandhi

Small wonder that HAMP has turned into an embarrassing failure for the Obama administration.

This past weekend, I was in our Nation’s capital. It is always interesting to see things from the inside looking out, as opposed to from the outside looking in. It is like being in a house of mirrors.

One thing is apparent: the Beltway economy is not suffering like places such as Florida, Nevada, and Detroit. As a result, our elected representatives and the administration may not truly understand the depth of the housing crisis. I think they still blame the greed of “over ambitious” homeowners and speculators as opposed to the real driving force: Wall Street, the over-sized “too big to fail” banks and themselves. The buzz, of course, was the fact that Fannie Mae may have been playing its own political three card “monty” with homeowners over the past year. Simply put: whistleblower Caroline Herron, a former Fannie Mae executive and consultant, is suggesting the administration pushed for temporary modifications knowing full well that many of the loan modifications would fail prior to becoming permanent. In fact, Congress is now pushing for hearings.

Fannie Mae executives bungled their responsibilities of the federal government’s massive foreclosure-prevention campaign, creating a bureaucratic muddle characterized by “mismanagement and gross waste of public funds,” according to the suit Herron filed. The suit alleges that the homeowner-relief effort was marred by delays, missteps and executives’ preoccupation with their institution’s short-term financial interests. “It appeared that Fannie Mae officers were focused on maximizing incentive payments available to Fannie Mae under various federal programs – even if this meant wasting taxpayer money and delaying the implementation of high-priority Treasury programs,” Herron claims in the lawsuit.

The problem started with a skewed financial incentive at the heart of HAMP. The government paid Fannie bonuses for trial modifications that lasted three months, but apparently provided no incentive to move those homeowners into permanent modifications. Under pressure to show that they could turn a profit after the massive bailouts of 2008 and continuing bailouts in 2009, Fannie Mae executives apparently focused on earning those bonus payments.

The result: very few permanent modifications.

Herron charges that Fannie Mae continued in headlong pursuit of “trial mods” knowing many had little chance of becoming permanent. As late as September 2009, barely one percent of trial modifications had converted to permanent modifications by the end of their three-month trial, a Congressional oversight panel found. Nevertheless, Fannie Mae preferred doing trials, Herron alleges, because it was eligible to receive incentive payments from the Treasury Department for trial modifications booked before the end of 2009.

As of February 2010, 83 percent of the one million active modifications being handled by HAMP were trials rather than permanent arrangements. The allegations suggest that the modifications resemble the sub-prime loan market prior to 2008. Government incentives pushed Fannie not only to prioritize trial mods over permanent settlements, but also to pull borrowers with no hope of rescue into the program in order to profit off of them.

Herron’s lawsuit accuses Fannie executives of “actively working against” the borrower. In fact, she alleges that Fannie was reluctant to move quickly in processing the modifications.
Small wonder that HAMP has turned into an embarrassing failure for the Obama administration. Although the President promised 3 million modifications, only now approximately 300,000 have been successful.

Roy Oppenheim
From the Trenches