And now the South Florida Law Blog is listed on this popular directory of top news sources. Fresh off the South Florida Sun-Sentinel Best of Blogs Awards, Oppenheim Law is proud to announce we are part of the feed to the AllTop Real Estate topic: http://real-estate.alltop.com/

What is AllTop?
The website helps users answer the question, “What’s happening?” Alltop prides itself on providing aggregation without aggravation, according to its homepage.

The “online magazine rack” collects the latest headlines from the best sites and blogs. Topics include celebrities, fashion, sports, politics – and real estate. The South Florida Law blog is in good company alongside news giants such as The Wall Street Journal, MSNBC and The New York Times and local blogs from Hanoi to Chicago.

The selection process for Alltop is “highly subjective and judgmental”, not based on an algorithm, as with search engines, so to be included is a special honor. South Florida Law Blog fans are now able to subscribe and view the latest real estate news and commentary alongside their other favorite blogs.

About Alltop and Guy Kawasaki
Named “the granddaddy of blog discovery tools” by Mashable, Alltop was founded by former Apple evangelist and Silicon Valley venture capitalist Guy Kawasaki. Kawasaki was one of the Apple employees originally responsible for marketing the Macintosh in 1984. Kawasaki is a renowned public speaker and best-selling author of 10 books including his latest, Enchantment: The Art of Changing Hearts, Minds, and Actions. Although he’s been described as a business legend, Kawasaki says that being a legend shouldn’t be your goal in life: “What you should do is create a great product or service…the goal is to change the world…if you do that, maybe you’ll be a legend.”

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.

The times they are a-changin’. And it’s about time.

Florida District Courts of Appeal are ruling in favor of homeowners when procedural due process has been violated as well as in cases where the trial court improperly granted summary judgment in favor of a bank based on lawyers’ assertions that have no evidentiary support on the record.

Recent decisions from the 1st, 3rd, 4th and 5th District Courts of Appeal can provide hope to homeowners and South Florida foreclosure defense attorneys that banks will be forced to start playing by the rules, or risk having their judgments reversed on appeal.

For example, the 5th DCA reversed a summary judgment decision in favor of a bank last month for a lack of evidence on the foreclosing bank’s standing to sue. The Court of Appeal found that documents submitted at trial contradicted the bank’s mere allegations that it was the holder of the note, and therefore allowed to foreclose.

“Taken together, these decisions are powerful evidence that Florida’s appellate courts are increasingly receptive to foreclosure defendants’ complaints that some trial courts are not holding foreclosure plaintiffs to the requirements of Florida Civil Procedure – and perhaps that they are also paying attention to the widely reported improprieties in the mortgage lending industry,” said Dan Bushell, a South Florida appellate attorney, on his blog, Florida Appellate Review.

We have seen the pace of foreclosure proceedings drastically slow in the past months due to the court’s heightened documentation standards. These recent decisions by the District Courts should pump the breaks even more on the banks’ steamroll approach to foreclosing South Florida homeowners. Banks better take note.

From the trenches,
Roy Oppenheim, P.A.

The IRS.

Last week, Reuters News Service published an exclusive article exposing yet another way the banks have been defrauding taxpayers. This time it wasn’t directly through improper lending practices, robo-signing or bad assignments of mortgage.

Now, the IRS discovered that banks acting as servicers for “REMICs”, otherwise known as Real Estate Mortgage Investment Conduits, have been claiming tax-exempt status on the income they generate under favorable tax code provisions.

So what is a REMIC? A REMIC is a passive entity where mortgages are pooled and securitized into investments. Generally, the investors in REMICs are large funds, pension plans, and 401ks.

Not only did the banks failed to comply in any manner with the requirements of the Internal Revenue Code that allow this favorable tax treatment, they have apparently decided to ignore the IRC altogether.

So what does this mean for taxpayers?

It means that the banks have been systematically ignoring IRC provisions, thinking the IRS is too sheepish to enforce the law. These entities, as a result of the actions of the banks servicing the mortgages, have failed to pay billions of dollars in taxes, and robbed the government, and thus the American people, of that money.

The reason that REMICs were afforded this massive tax break is due to the fact that they are meant to be vehicles for passive investing, and as such they have rules for strict compliance that require that all mortgages passing into a REMIC must be transferred into a trust within 90 days of trust formation.

The IRS confirmed to Reuters that an investigation is ongoing based on mounting evidence banks mishandled the transfer of mortgages and violated tax requirements.

The real question is, how was this discovered? In all likelihood the banks, in trying to cover up one misdeed, inadvertently tipped their hand to a much larger one. In order to foreclose on a home, the bank must show that they own the mortgage and the note. In order to prove ownership of the mortgage, if it was not the originating lender, the bank would have to show an assignment of mortgage. In many foreclosures, assignments are often executed and recorded just before filing the foreclosure, or sometimes even after the foreclosure has been filed. The problem: these assignments show that the mortgages could not have been transferred 90 days after the trust was formed, since they are being transferred by assignment now, often years later than the Code requirements.

This may be more bad news for the banks, but good news for the American people if the IRS can recover some of these taxes. Due to the strict compliance requirements under the REMIC code provisions, any transfer made outside of the requirements that produces income is subject to 100% taxation of that income. Essentially, this provision ensures that the REMICs cannot benefit at all from income earned on improperly transferred mortgages. Adam Levitin, a Professor at Georgetown University Law School, points out in the article that this could result in “potentially enormous tax revenue that would be passed on to the federal government . . . given the federal budget deficit that’s not something to sniff at.”

While other experts seem to be concerned about potential harmful effects on the investors, their fears are unfounded. In anticipation of such problems, there are very specific provisions in the REMIC pooling and servicing agreements which provide for indemnification by the servicing bank for any acts of the servicer which result in loss of the REMIC status by the trust. While no one really knows what the IRS will do with its investigation, it is clear that federal agencies are at least trying to stem widespread bank misdeeds outside of the court system. While it may or may not help struggling homeowners directly, it is nice to see one government agency that is finally not afraid to take on the banks.

Oppenheim Law continues to support the Florida homeowners through bank battles, Florida short sales and foreclosure defense.

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.

With the major banks virtually halting all of their foreclosures due to the document mill scandals, the fees have dried up and now we can see the impact of the courts falling asleep at the switch. The tremendous irony in the matter is that the failure of the courts to properly scrutinize fraudulent foreclosures, leading to the halting of new foreclosures and the drying up of the courts’ fees, would have lead to new foreclosures. Only this time, court employees would have been processing their own foreclosures. According to the Sun-Sentinel, most of the hardship of the court furloughs would’ve been felt by low income employees who are already struggling to make ends meet.

Thankfully the state has stepped in to avoid this mess and hopefully the courts will learn not to be too reliant on foreclosure filing fees in the future. Maybe they will even make sure that foreclosures aren’t fraudulent before kicking people out of their homes and denying them their constitutional right to due process.

While South Florida is #1 for mortgage fraud and foreclosure settlement talks between banks and the Obama administration appear futile at best, this week’s new was not all doom and gloom.

Check out Oppenheim Law’s and Weston Title’s picks in the week’s winners and losers for Florida foreclosure, real estate and the economy.

Winners

Pending home sales up 18% in Miami-Dade
Pending home sales rose 18 percent in Miami-Dade County over the course of the past month, according to new data released today by the Miami Association of Realtors.

Pending home sales, which include single-family home and condominium unit sales, were also up 3.24 percent month-over-month in March, the figures show.

“Increased pending sales reflect the existence of pent-up demand and should result in strengthening home values as distressed housing inventory continues to be absorbed,” said Jack Levine, chairman of the board of Miami Realtors.

Hiring Shows Growing Strength
The American job market is starting to show some muscle, according to The Wall Street Journal.

The jobless rate, our most politically salient measure of economic health, edged down to 8.8% in the fourth consecutive monthly decline despite the fact that more Americans entered the job market.
“It’s a very solid report that shows the labor market gaining momentum,” said David Greenlaw, an economist with Morgan Stanley in New York.

The public sector remained a weak point, as local governments shed 15,000 jobs last month in an effort to close budget gaps, but many other sectors showed strong growth, according to The Wall Street Journal.

Professional and business services gained 78,000 jobs. Factories added 17,000 jobs, while health care added 37,000. Over the past 12 months, health care has added an average of 24,000 jobs a month.

Losers

South Florida is #1 for Foreclosure Fraud
South Florida is first in the country for the number of mortgage fraud suspicious activity reports per capita, according to a new report from the Financial Crimes Enforcement Network and The South Florida Business Journal.

The region, which recorded 11,833 such reports last year, also leads the nation in Medicare fraud and auto insurance fraud.

Overall, mortgage fraud reports rose significantly in 2010, with 70,472 reports filed last year, up from 57,507 in 2009.

In Foreclosure Settlement Talks With Banks, Predictions of a Long Process
Little was settled in the first round of foreclosure settlement talks, according to The New York Times.

As negotiations begin over new rules for homeowners who are in default, experts all agree that progress is going to take time.

But lengthy negotiations work to the banks’ advantage, according to The Times.

“The banks’ strategy is to run the clock,” a Georgetown University law professor, Adam Levitin, said. “The chances of a settlement that meaningfully reforms mortgage servicing and makes the banks pay an appropriate price for illegal conduct are rapidly slipping away.”

Draw

Subprime Bonds Are Back

As the economy recovers, long-term investors are willing to take on more risks and subprime and other residential mortgage bonds that helped trigger the financial crisis are back in vogue, according to The Wall Street Journal.

The stock market ended its best first quarter since 1999 last week, with the Dow Jones Industrial Average closing up 6.41% on the quarter.

The willingness to take on risk is helping ordinary borrowers, too, by leading banks to make more nontraditional loans, such as jumbo mortgages, and to charge lower interest rates for them.

While it is encouraging that the markets are continuing on an upward swing, cautious optimism is needed any time subprime bonds are involved.

So, while it looks like housing values keep dropping around the country and new construction is also off, South Florida real estate may have hit rock bottom or close to it.

It seems that South Florida’s position as an international location is encouraging foreigners to swoop in and purchase homes and condos that based on an international standard are outright cheap. Of course; a strong stock market, a dollar that is fairly weak and the prospect of huge government defecits that forshadows inflation, only helps.

That was then, this is…then or now?

Last week, The Wall Street Journal published an article about Debtors’ Prisons in 2011. Currently, several U.S. states allow borrowers who are behind on credit-card payments, auto loans and other bills to be jailed. However lawmakers, judges and regulators are beginning to crack down on this practice, which Foreclosure Defense attorney Roy Oppenheim calls “illegal, unconstitutional and un-American.” In this video, Oppenheim explains how that happens and how to make sure that that doesn’t happen to you.

So how can Florida homeowners avoid becoming a part of this debtor nation? Roy Oppenheim says, “Don’t put your head in the sand, by ignoring the situation. If you’re in foreclosure, for example, make sure that deficiency judgment isn’t entered against you. Get legal counsel and make sure you know your rights.”

Well, that seems to be the case here in Florida as it relates to real estate and foreclosures. The news this past week has been that median prices have increased by approximately 22 percent in the past year in South Florida and sales of homes actually also has increased 12 percent from last year.

During the past six months, however, there has been a drastic reduction in the number of foreclosures that have been processed and brought to market due to the fraud-closure crisis that became apparent last fall.

Fast forward to today and we’re seeing the resurgence of the foreclosure crisis. Many of the foreclosure mills have shut down and are being replaced by new firms, many of whom will not process as many cases. Just in the past ten days we have seen an increase in the number of people served in foreclosure and the scuttlebutt is that the process this time around will be faster and more furious.

The unfortunate aspect of all this is just as the real estate market was starting to find its footing, and some even would say slightly rebound, these new foreclosures will either reduce the price of existing real estate or, in fact, bring down prices another 10 or 20 percent. Of course no one knows for sure how buyers will react. Will such additional foreclosures encourage even more buyers to come into the market because they’re getting even a better deal – or will the number of buyers in the market be somewhat fixed or stagnant; increasing supply and reducing the market price of homes?

So it seems that only one thing is now certain – when there is any kind of certainty you can expect to be surprised or to be unnerved.

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.