Posts Tagged ‘Florida foreclosures’

CBS Spotlights Oppenheim Law: Strategic Defaults and Florida Foreclosure

Friday, November 13th, 2009

The face and shape of Florida foreclosure is changing by the day. The newest trend identified by Oppenheim Law is the idea of a strategic default, where homeowners who can afford to pay their mortgage are choosing to stop payments and voluntarily enter into foreclosure.

I discussed this Florida foreclosure defense strategy Wednesday night on CBS4 with local reporter David Sutta, and you can see the entire interview on the Oppenheim Law Home Page.

The interview was followed by a news article on CBS4.com as well as commentary from David Sutta on his CBS4 Blog.

What’s so fascinating about strategic default is that it is spurred by the fact that the social stigma of foreclosure is now gone in many parts of the country, especially in Florida. So many people have been affected by foreclosure that the public is actually beginning to see it as a form of liberation from banks and mortgages that have homeowners owing sometimes double what their homes are actually worth.

As with any Florida foreclosure defense strategy, it is important that you understand your legal rights as a homeowner and can protect yourself during the process. Feel free to contact me if you have any questions regarding strategic defaults or Florida foreclosure defense.

You can find Wednesday night’s video and many more on Florida foreclosure and South Florida real estate through the Oppenheim Law You Tube Channel: http://www.youtube.com/user/OppenheimRoy

Goldilocks and the Three Bears: Here We Go Again “The New Normal: Foreclosures Not Abating Until 2013

Friday, October 23rd, 2009

After reviewing the recent numbers for 2009 published by RealtyTrac, nothing is “just right” and won’t be for some time. With foreclosures on the rise in 2009, the new “three bears” to hit the market have nearly doubled the number of foreclosures this year, and the trend will not be ending anytime soon.

 

The highest growth in the foreclosure market has been a result of three types of foreclosures; (1) delayed sub-prime foreclosures from 2008; (2) higher default rates on Option ARM loans, and (3) a significant rise in unemployment related foreclosures.  With numbers indicating that 1 out of every 6-10 unemployed will face foreclosure, Goldilocks better find somewhere else to take a nap because there won’t be many family-owned homes left when the dust settles.

 

The “new normal” appears to be a staggering number of foreclosures, and is not expected to return to pre-recession figures until 2013. Foreclosures are expected to rise the rest of the year, and peak throughout 2010 and 2011. In Florida, we can expect to have about 40-50% of the foreclosures in the country, and half of these will be in South Florida. At this rate, Goldilocks will be old enough to buy her own house by the time the market rebounds.

 

The New Normal… NYT Reports: Expect Four Million More Foreclosures Despite Obama’s Mortgage Modification Policy

Friday, October 9th, 2009

In today’s New York Times (10/9/09) the lead story in the Business section is: “In Trial Phase, Mortgage Bills Fall for 500,000. Is that supposed to be good news or news at all? I am not sure. I guess it depends on whether you think the glass is half full or half empty.

The reality is that by now the Obama administration had anticipated (or promised) about 5 million modifications: not 10 percent of that number!

So the real news is that Mark Zandi, chief economist at Moody’s and one of the top real estate prognosticators in the US is fully anticipating another 4 million foreclosures, as reported in the article today. Now I call that News. That’s right four million! Thus, one can expect at least 35% of those foreclosures to occur right here in Florida.

Further Peter Goodman, the NYT’s reporter failed to actually discuss the percentage decrease that occurs s in modifications or whether there was material principal reduction to date. Well I will tell you: the average successful mortgage modification is between 20%-22%. Little if any principal is reduced. Thus we can anticipate that many of these half million modifications will become part of the 4 million in foreclosure. In fact, based on prior studies, modifications without principal reduction lead to foreclosure half the time.

So don’t expect real estate values to start increasing any time soon as long as folks keep losing their homes. Yes, the economy is no longer in free fall and things are better than last fall: Stock market is rising, retail sales have stopped falling and job losses are decreasing. However, until people are employed and can afford their houses payments again and there are meaningful principal reduction or forbearance of underwater equity nothing much will change. The folks who brought us this mess: the politicians and regulators in Washington, the “bright minds” on Wall Street and the banks, will have to first realize that keeping people in their homes is better for them and for the rest of us too. Welcome to the New Normal.

From Deep in the Trenches,

Roy Oppenheim

Florida Court of Appeals Tells Judges: Stop Being Compassionate

Tuesday, October 6th, 2009

As discussed today in the Daily Business Review (see article below), the Third District Court of Appeals criticized a Miami Dade circuit judge for extending a foreclosure by one month. In essence, the Court reversed the judge’s opinion by stating that a courtroom is no place for compassion!

While it is inappropriate for an attorney to criticize the appellate court for possibly being uncompassionate, it is fair to say that a good foreclosure defense will go a long way in preventing a judge from having to attempt to be compassionate. Rather the Rules of Civil Procedure, the Florida Constitution, and the idea that the bank comes to the foreclosure with unclean hands will go a lot further than begging the court for mercy.

Typically circuit court judges were permitting extensions of foreclosure dates in order for homeowners to be able to complete a mortgage modification or a short sale. Ironically enough, if the banks didn’t drag their feet in approving short sales and approving modifications, the judges would never have been put in this terribly uncomfortable position in the first place.

Thus, in an ironic twist, we thank the appellate court for further justifying what we do every day and that is to defend homeowners with legitimate legal defenses in a foreclosure. The banks have done enough things incorrectly that will provide a trial judge an opportunity to delay a sale, should they want to, through the use of appropriate legal arguments.

The only unfortunate aspect of the appellate court’s ruling is that unrepresented clients will now be further churned and spit through a process that is only accelerating because of the increased workflow and reduction in court staff due to budget cuts. It is ironic that the bank even brought this action to the appellate court but it was through abuse by the homeowner that ultimately frustrated the bank in pursuing this appeal. Frankly, I would always prefer to have a strong legal argument than to beg for compassion from the court. So now you know the truth, don’t ever expect judges to be compassionate– even if it was their true desire.

From deep in the trenches,

Roy Oppenheim

Foreclosure Cases Appeal court takes judge to task for ‘benevolence’

October 06, 2009

By: Susannah A. Nesmith


Benevolence and compassion” have no place when it comes to setting foreclosure sales, a state appellate court ruled in a stern order.

The 3rd District Court of Appeal judges said they “thoroughly disapprove” of a decision by Miami-Dade Circuit Judge Valerie Manno Shurr to give an extra month to a couple trying to sell their home before a foreclosure sale, Senior Judge Alan R. Schwartz wrote for the panel last week.

Manno Shurr declined to comment on the decision, citing judicial rules that prohibit her from talking about specific cases. But in court, she made her position clear.

“People are having a hard time now. They are having a difficult time. Everybody knows it. Businesses are failing. People are losing money in the stock market. You know, unemployment is high,” Manno Shurr said. “Everybody knows that we are in a bad time right now, and I hate to see anybody lose their home.”

The appellate court found her reasoning flawed and said her decision granting extra time was “an abuse of discretion in the most basic sense of that term” because the bank had a right to the sale.

Several attorneys expressed outrage over the opinion but declined to go on the record, saying it could potentially be detrimental to them to openly criticize the judge or the court.

Mike Christiansen of Mastriana & Christiansen, a Fort Lauderdale attorney who has practiced real estate law for more than 30 years, was surprised by the tone of Schwartz’s remarks.

“It’s astounding to me, in the extraordinary times in which we find ourselves, that the court did not assert strong leadership and support the simple notion of compassion in cases where people and families are losing their homes,” he said.

“Compassion is what distinguishes a robotic application of the law from real justice. And justice is what we should — and do — expect from judges.”

Barry Simons of the Law Office of Barry L. Simons in Miami, attorney for Joseph and Blanca Doyle, declined to comment on the ruling against his clients.

Charles M. Rosenberg, attorney for Republic Federal Bank, said his client decided to appeal Manno Shurr’s decision in part because the bank felt Miami-Dade trial judges “needed some guidance.”

“With all of the foreclosures being filed in this county, we thought that the trial judges needed some guidance from the court of appeal on under what circumstances they could grant extensions because it’s very common for people to run into court at the last minute asking for extensions,” he said.

With the foreclosure sale of the Doyle home scheduled for the day after the opinion was published, the appellate court’s ruling had little practical impact other than to chastise the judge and provide some guidance.

“Although we thus thoroughly disapprove of the order, in view of the fact that the postponed sale is due to take place within a short time of this decision, no useful purpose will be served by formally quashing the order or ordering the sale to take place on an earlier date with all the procedural complications which would then result,” Schwartz wrote, stressing, “There are to be no further postponements of the sale.”

Judges David Gersten and Barbara Lagoa concurred.

More than 100,000 open foreclosure cases are in Miami-Dade, according to Clerk of the Courts Harvey Ruvin. Many are taking years to resolve.

In the Doyles’ case, the bank filed suit to foreclose on their 8,300-square-foot home in Pine-crest in January 2008 and got a $2.5 million foreclosure judgment in November, according to records.

The case was delayed when the Doyles filed for bankruptcy, but a federal judge tossed their case as frivolous. The Doyles were barred from filing another bankruptcy case for six months, and the extension Manno Shurr granted got them past that date.

“The immediate reason we filed was because of their abuse of the bankruptcy system,” said Rosenberg, a Carlton Fields shareholder in Miami. “We understand that the court should have discretion to grant extensions, but there has to be some reason for doing it.”

The Doyles did not file a second bankruptcy petition, and the house sold at auction Thursday. Rosenberg’s firm submitted a $1.3 million bid on property with an assessed value of $2.64 million.

Foreclosure attorneys were predictably divided on the opinion. Attorneys specializing in defending homeowners were concerned that it takes away judicial discretion and leaves homeowners already in financial straits even more vulnerable to the whims of lenders. Those who represent banks said it would help them deal with homeowners who are abusing the process.

Peter Ariz, a South Miami solo practitioner who represents homeowners, said extensions often are necessary because the banks he deals with won’t negotiate mortgage modifications quickly.

“The judges here have really been the only ones defending the consumers because they’ve allowed the borrowers the time to negotiate,” he said. “There’s a lack of compassion on the other end when it comes to the lenders.”

“I deal with banks that delay the modification process for months before finally offering a modification that actually raises the homeowner’s payments,” he said. “And then they file a foreclosure while they’re negotiating the modification. That’s just unconscionable.”

On the other hand, lender attorney Zoe Krikorian of Weisenfield & Associates in Miami hopes the ruling will speed Miami-Dade foreclosure cases.

“If there are legitimate reasons — people really trying to modify the loan, or they have a valid contract for a short sale — that’s one thing,” she said. “But many times, it’s just a delay tactic so people can stay in their houses longer without paying.”

She said the earliest sale date she could get for foreclosure judgments issued now is next April. And it often takes months to get a judgment after a case is filed. Plus, lenders usually wait for several months of missed payments before filing foreclosure suits.

“When we reset a sale, think about it. They’ve already had as long as two years since they stopped paying,” she said.

Miami-Dade civil judges “are each carrying dockets of three to four thousand foreclosure cases,” chief civil administrative Judge Jennifer Bailey said by e-mail.

“As a result of the explosion of foreclosures, judges are routinely confronted by emergency motions, and each judge tries to do justice in the case before him or her according to the law and equity.”

The Florida Supreme Court Task Force on Residential Mortgage Foreclosure Cases speaks out: Chastises Banks and Banks’ Attorneys.

Monday, August 17th, 2009

Today, the Florida Supreme Court Task Force on Residential Foreclosure Cases issued their final report.  While the report is over 50 pages in length, they are making a number of very important recommendations that should help Florida homeowners.

Specifically, they are requiring mandatory mediation for all homestead property in every county in the State of Florida.  Right now, only a few counties including Miami Dade and Palm Beach County have mandatory medication.  The report states that in those counties where there has been mandatory mediation, approximately 75 percent of all cases are settled in mediation.  Further, the Task Force is recommending that there be pre-suit mediation in order to reduce the clogging of the court system.  The Task Force is also requiring that the banks– not the borrowers— pay for the mandatory mediation.

The Report also mentioned that mortgage modifications are becoming more effective.  In fact, they mention that in those loans that have recently been modified, there has been a drop in the re-default rate by 31 percent.  Further, they indicated that loan modifications overall increased 55 percent from the fourth quarter of 2008 to the first quarter of 2009 and increased 173 percent over the past year.

The Task Force also took great issue with a number of tactics that have been used by the banks’ attorneys.  Specifically, in relevant part, the Task Force stated:  “A leading plaintiff’s lawyer and a major plaintiff’s law firm have been the subject of a public reprimand and sanctions due to untruthful filings with the courts.  Judges continue to see affidavits of amounts due and owing signed by law firm employees, and cost affidavits charging very high service of process fees for process serving firms owned by the law firm principals.  To some extent, it is fair to be concerned whether the press of the caseload is interfering with a judge’s ability to police the conduct of the firms before them in these usually uncontested, unopposed foreclosure cases.”

In essence, the Task Force is stating that because of the sheer volume of cases, judges have not been able to necessarily fulfill their judicial responsibilities to the fullest extent under the law.  In fact, the Task Force stated, “Judges should also recognize their responsibility to ensure that in uncontested cases the necessary evidentiary basis has been laid for the entry of Summary Judgment.  In particular, judges should take every step to insure that the original note is produced, that the note is held in due course by the plaintiff with a right under the note to foreclose, and that the note is canceled upon entry of the final judgment.  … Further, judges should to the fullest extent possible, control the behavior of lawyers before them through sanctions and attorney fees where there has been noncompliance with the Rules of Civil Procedure and with local rules requiring communication.”  Thus, the Task Force is further acknowledging that judges must do a better job to police the conduct of lawyers before them.

LOST NOTE CLAIM AND REQUIRED VERIFICATION OF COMPLAINT

Probably the biggest change in addition to the mandatory mediation will be the requirement that the banks verify their complaints.  That means that the banks must under oath state that the facts in the complaint are true.  Simply put, the banks can no longer say that their note is lost or stolen if in fact they subsequently are able to find it.  Since they have verified the complaint they will not be able to continue such a business practice.  In fact, the Task Force states that such a pleading of a lost note is effectively a “prophylactic” which is filed in most actions by the banks’ attorneys who are handling a high volume of foreclosure cases.  The Task Force took umbrage with this practice and stated, “This practice leads to confusion among defendants because they may not recognize the entity suing or be aware that this entity now owns or services the loan.”

In essence, the Task Force may be suggesting that continuing to plead a lost note when a note in fact is not lost may be an unfair and deceptive trade practice.  While it is unclear if the banks have been pleading the lost note because they are not sure if they own the note or rather because they have tried to create confusion may or may not be relevant.  What may be relevant is the fact that they knew or should have known that making a lost note claim, when the note in fact is not lost is a systemic, unfair and deceptive trade practice.

So now it is up to the Florida Supreme Court to adopt the final report and recommendations on residential mortgage foreclosure cases by the Task Force.  I am hopeful that based on the diligent work that has been done by the task force that the Florida Supreme Court now does what is right and best both for the court system in the State of Florida as well as for  all those of us who have property interests in Florida.

Deep Cleanings for Foreclosures

Friday, August 14th, 2009

Many people may be hesitant to believe that business is booming, but there is a particular profession that is; namely, Property Preservationists for distressed properties.

 

As reported in the August 13th Sun-Sentinel, foreclosures have tripled across the nation since 2005.  More and more of these properties are becoming REOs, or “real estate owned,” meaning the bank holds the deed. Before hitting the market, these foreclosed properties need a visit from a Property Preservationist for a ”deep cleaning.”  “Property Preservationists” swoop in to handle various tasks such as removing trash, mowing the lawn, boarding up windows, even asking squatters to find a new place of residence. One such Preservationist “deep cleans” between 10 and 20 REOs in a typical week, in addition to inspecting 90 structures and securing 20 others.

 

“Nobody likes to see me. But when a house’s teeth go bad, who else is going to clean out the rot,” states Nick Hazel, one such Preservationist. In 2009, 1 in every 33 homes in Florida is at risk for a visit by Hazel as 3 out of 100 homes are in foreclosure. Nationally, 1 in 84 is at risk.

Statewide Solutions for Florida Foreclosures?

Wednesday, May 13th, 2009

Today’s Daily Business Review includes Roy Oppenheim discussing the possible Florida Supreme Court task force to regulate the process of foreclosure.  Read on for the full story.


dbr_logo_print_media_events

Florida Supreme Court
Task force hopes to standardize management of excessive foreclosures

Florida Supreme Court task force on home foreclosures plans to propose uniform case management and design a model mediation program to deal with the glut of foreclosure cases tying up the state’s legal system.

In an interim report released this week, the task force said uniform statewide solutions are needed “to avoid a patchwork of independent and confusing requirements.” But the task force is short on details, making it difficult for those working on foreclosure cases to comment on the proposals.

“At this point, it’s a little uncertain how things are going to proceed other than we expect some time in August to have a final recommendation from this task force,” said Fort Lauderdale attorney Eric Schwartz, who represents licensed mortgage lenders.

The 14-page report plus attachments notes the obvious: mortgage foreclosure filings have exploded. In three years, state courts have seen filings increase by 400 percent, and Florida has the fourth highest foreclosure rate nationally.

But instead of receiving increased infrastructure or funding, the court system has suffered cutbacks as the economy plummeted, and judges are juggling a backlog.

Supreme Court Justice Barbara Pariente said the court must try to balance the interests of lenders and borrowers when drafting a plan, and she emphasized the need for statewide standards.

Pariente, who had not seen the report when she was interviewed, said she does not know what the answer is but knows it’s important that the process be efficient and guarantee each borrower who wants a day in court can have one.

She also knows task force recommendations won’t make everyone happy.

“We’re studying it. We hope to be proactive to create a statewide order,” Pariente said.

The 15-member task force chaired by Miami-Dade Civil Administrative Judge Jennifer Bailey voted to design an alternative dispute resolution program for foreclosures that would be considered by the state’s high court. The program would be limited to cases filed in court because judges lack jurisdiction over other disputes.

The task force plans to offer recommendations that would be cost-effective and affordable while staying consistent with existing laws and policies. A pending issue is the “clarification of legal and ethical obligations of circuit judges in hearing uncontested securitized mortgage foreclosure cases.”

Homeowner defense attorney Roy Oppenheim of Oppenheim Pilelsky in Weston seized on that point, claiming the constitutional rights of distressed homeowners may be sacrificed at the hands of overworked judges.

“Why do we need clarifications if judges are really, really doing their jobs?” he asked. “It’s saying in a nice way that judges are not fulfilling constitutional obligations to protect those people not represented by counsel.”

On Sunday, the Sarasota Herald-Tribune reported foreclosure lawyers for lenders are giving false statements in court and the lies and errors are slipping past overworked judges.

The task force created nearly two months ago by Chief Justice Peggy Quince to assess whether the court system could find more efficient ways to handle foreclosures plans to deliver a final report Aug. 15.

Bailey said the goals of case management and alternative dispute resolution are to ensure cases that can settle do so early to avoid clogging courthouses.

Bailey compared the court system to a highway running at maximum capacity.

“With foreclosure cases, it’s like that highway during a hurricane evacuation in a rainstorm with two lanes closed for construction because of the budget cuts that have affected the court system,” she said. “Our job is to create off-ramps for those cases … and try to keep the traffic moving because it’s not just affecting foreclosure cases. It’s affecting every case filed.”

Whether mediation would be mandatory or case specific is still being debated. Miami-Dade County opted for mandatory mediation last month after a circuit court in the Florida Panhandle did the same.

Bailey said the task force is developing criteria for what would be subject to alternative dispute resolution.

The task force also is trying to determine where the court process breaks down and how to better move cases. It could propose administrative orders and forms to use statewide.

The biggest complaint is a lack of communication between the two sides, Bailey said. The task force intends to provide the circuits with a uniform set of forms that also would give circuits flexibility.

“Coming up with one static plan that doesn’t allow for any ingenuity would be unintelligent,” Bailey said. “The idea is to come up with a basic plan that we would build on that’s relatively uniform throughout the state.”

The task force is soliciting public input but won’t hold any public hearings because of time and budget constraints.

Oppenheim called the lack of public hearings “garbage.”

“It’s the biggest problem to hit Florida in 50 years, and they’re not going to have public meetings,” he said incredulously.

If mandatory mediation is recommended, Oppenheim said he would want lenders to pay for it to ensure everyone has their day in court.

“I really get a sense that our judicial system has become a gigantic collection agency for the banks,” he said. “There definitely needs to be some creativity and some oversight here.”

Schwartz of Weitz & Schwartz in Fort Lauderdale would be happy to see uniformity among circuit courts, saying the hodgepodge of administrative orders around the state makes it difficult for practitioners who work in a variety of jurisdictions.

But he wants mediation to be addressed on a case-by-case basis.

“It takes two to tango, and oftentimes we have files where the defendants are totally unresponsive and are not living at the property any longer,” Schwartz said. “To have [mediation] applied in those types of circumstances would be a waste of everyone’s time and money.”

He advocates having procedures in place allowing parties to request mediation. He opposes Miami-Dade Circuit Court’s policy requiring lenders who file homestead residential foreclosure actions to pay $750 to the Tallahassee-based Collins Center for Public Policy for mediation in addition to foreclosure filing fees.

In a speech last Friday in Fort Lauderdale, Pariente worried the public would stop “seeing courts as protectors but facilitators for the powerful.”

Bailey said the task force is trying to put together the best system for what is “fundamentally a problem that extends so far beyond what the court system is designed to respond to. There are community stabilization issues, huge economic issues, homelessness issues, job issues, mortgage fraud issues, bank regulatory issues, most of which is outside our control. We’re just where the buck stops,” Bailey said.

“The really hard work is now ahead,” Schwartz acknowledged.

Jordana Mishory can be reached at (954) 468-2616.

Foreclosure Defense Rights and Wrongs: Squatters, Ejectments and Constitutional Rights

Monday, April 13th, 2009

Over the past few days it seems that the informal name of this blog: “From the Trenches” is becoming more and more fitting. Florida foreclosure defense has become part of our everyday life – radio, TV, Internet, print.

Let me explain. On Friday on the front page of the New York Times headline Squatters Call Foreclosures Home one could not help to miss an unbelievable story about folks in Miami who squat in foreclosed homes. They move in — usually at night — after the bank takes ownership. They sign contracts with the electric company, water and maybe even cable TV. The banks are slow to throw them out and so is the sheriff. In fact various advocacy groups help people move back into their “own” home after they have been foreclosed.

Maggie Steber for The New York Times

Maggie Steber for The New York Times

Arguably, the homes and the neighborhood are better off having the homes occupied than having an abandoned home without any electric power rotting on the block. Legally, it can get interesting because after a few days the banks can lose the power of the sheriff and the squatters need to be legally ejected through a formal court proceeding called an ejectment.

In fact we had a case recently where after a sale the seller was informally permitted to stay in the home for a few days past the closing date. Soon the few days became weeks and the weeks became months. The police refused to get involved and we had to bring an ejectment action to get the old “owners” out of the residence.

Another trend we have discussed repeatedly is the fact that most folks do not hire an attorney during a foreclosure. Maybe five percent do. The courts throughout the country are finding this a disturbing trend as was also discussed in Friday’s NYT. I have been a strong advocate that judges and the clerks need to be more even-handed to ensure a fair outcome even when folks appear pro se (without counsel). However, we repeatedly see judges not digging into a file if a person is not represented to make sure that such individual’s procedural and constitutional rights are not trampled upon. I know for a fact that at a least some judges here in Florida do not believe it is their role to ensure that a pro se litigant’s rights are protected if they are inadequately or not represented in a civil matter. I take deep umbrage with that position and have made my position well known.

So it is great to hear the Chief Justice of New Hampshire, John T. Broderick state that to ensure fair outcomes, courts must do more to help people navigate the courts. As quoted in NYT the Chief Justice states: “If you and I went to hospital and they said, ‘Do you have insurance’? and we don’t, and they said, ‘There are some textbooks over there with some really good illustrations’, we would think that was immoral.”

Well I agree with the good judge! I know some of my judge friends in Fort Lauderdale would agree with me, but I also know how overworked their case load is. Some judges have over 4,200 foreclosures files in their court room in addition to everything else. In fact, in Broward County they are creating a special early morning rocket docket for foreclosure files where individuals are not represented by counsel.

So be warned… do not get on that rocket docket or you too will soon be squatting in your own foreclosed home.

Roy Oppenheim … From the Trenches.

Today’s NYT Foreclosure Policy Editorial; My Thoughts Exactly

Friday, March 6th, 2009

Déjà vu. I awoke this morning to today’s New York Times top editorial Helping the House Poor . It was a direct reflection of my Florida foreclosure defense concerns discussed at length last night over the Obama Foreclosure plan. We had a full house of Florida homeowners facing foreclosure, real estate professionals dealing with the foreclosure and short sale markets,  as well as WSVN’s Andre Hepkins reporting on this national economic foreclosure crisis.

The Obama Foreclosure plan problem:  it does little for people who have a small amount or no equity in their homes.

The reason is simple: When you have little or no equity in your homes you have little or no incentive to keep the mortgage current.  “Owner” becomes “renter”… of his or her own home. Meaning that at the end you will have built zippo equity after making your mortgage payments.

Thus, the consensus is building fast. The stock market too seems to be speaking. Until the markets and government address a way to eliminate the negative equity in the mortgage market we will likely not get through this foreclosure mess.

The House of Representatives spoke yesterday too! They passed a major change in the bankruptcy rules allowing a judge to alter the principal amounts of outstanding principal balances of mortgages when it exceeds the market value of homes. We all call that a “Cram Down”. Because the judge is cramming down the principal reduction down the throat of the banks. In other words it’s a forced modification. Some people consider it a cram up… but I won’t go there!

As a foreclosure defense attorney, I’ve been strongly advocating for the judges to have this new authority since it gives us attorneys a new weapon to negotiate with the banks. In my opinion, the threat of the cram down is as important, if not more important, than actually going through the whole bankruptcy process.  In fact, just last night I noted this the missing “club” in the weapon’s arsenal of foreclosure attorneys to help level the negotiating playing field.

I must say it has been rather lonely out there– with little support from anyone including the courts. So, it’s great to see we finally we are getting some help from The President and Congress. But the law has not passed yet. The Senate still needs to vote and things are less certain there.

What can you do?

Do what we’ve been trained to do. Call BOTH your United States Senators and tell them what you think. And remember, if you live in one of the hard hit states for foreclosure: California, Florida, Arizona, Nevada, Michigan and a few others. This new law may determine you, your family’s and your State’s financial health.

For those who joined me last night at the Foreclosure and Bailout Workshop… I thank you for your time and input. Be my guest at my up to the minute Foreclosure Defense Workshops on the first Thursday of Each Month. Next one is schedule for Thursday April 2, 2009 at my office.

Foreclosures Defense Close-Up: Ponzi Nation or Musical Chairs?

Tuesday, March 3rd, 2009

Sharing my thoughts on Florida foreclosures yesterday with the NBC Nightly News team really brought back some past real estate scenarios.

Long before the Florida foreclosure meltdown and “double sold mortgage” became a widely used term, I represented a commercial pilot for a major airline who owned real estate in the Florida Keys. This client had a great house but wanted to live closer to mainland Florida so that he could be closer to work.

His decision? To sell his house. Nothing unusual… right?
Back then it took a few months to find a buyer, for the buyer to find a mortgage and then a few more weeks to close.

As the closing agent at Weston Title, my staff requested a pay-off letter from the lender and – to our utter surprise and the first time in my career – two banks lay claim to the loan.  In other words the originating bank had sold the loan at least once, or twice, or maybe even more. Who really knows?

But as this client’s real estate defense counsel we could not figure out who owned the loan. Well… the real estate client lost the sale. We advised for him to rent out the property and place the monthly mortgage payments in escrow. He basically followed our advice, save the escrow.

Soon after, the banks started foreclosure. It became ugly and quite a mess. We counter-claimed and got real nasty. Even the judge and mediator could not believe the story. How could a well respected national bank have lost control of their real estate collateral and literally throw their good customer, a well respected professional, under the bus without any concern?

The banks ended up suing each other in federal court. It took years for the matter to resolve itself. In the interim, my client’s credit went down the tubes, his wife got terribly sick from the stress and little did I know it would take until now for me to start connecting the dots.

Yes we settled… my client was appropriately awarded damages, the house eventually sold, and I was paid well for my efforts too!  This scenario should have been a one-time case in my career… an honest mistake by a large bank that mishandled the matter. Ok. That is how I viewed this case for ten years. Well I was wrong.

That was then…this is now.

What we had was the “tippy tip” of a massive iceberg completely submerged and covered by a real estate market that had run amuck due to unfettered greed, poor regulation, complacency, and out right corruption.

So you say what is he talking about? The story is slowly breaking… It started this past Sunday in Gretchen Morgenson’s column on the front page of the New York Times Business Section. She alleges that due to “sloppy bookkeeping” surprise, a few sub-prime mortgages, or for that matter, mortgages were maybe sold more than once into investment pools.

WHAT??  Just bad paperwork?? Fat chance!

According to the well-respected foreclosure defense attorney, April Charney, quoted in the Times piece, and with whom I spent eight hours with in a foreclosure crisis seminar yesterday, these loans were sold systematically and more than once into different investment pools.

It was simple. No one was checking… no one really cared. All incentives, all the way down the line, encouraged this trangressive behavior. Remember how Wall Street bonuses were always paid at year’s-end not after a loan was seasoned? Meaning after a borrower has paid on the loan for a year or two!  In fact, on Wall Street, a loan was seasoned and bonuses paid all the way down the line after a borrower made even one payment!

Do I hear Madoff on steroids? Maybe? Maybe definitely! Maybe that is why Madoff is still at home and not in jail. What does he really know about a ponzi scheme that makes him look like yesterday’s news?

Bear Stearns in the fall of 2007 started seeing the writing on the walls. Internally warning of “double sold mortgages.” Well, I guess they rang the alarm a little too late.

In fact, Aunt Fanny and Uncle Freddy are refusing to buy back loans unless the lender can prove they, and only they, own the loan. That means the lender needs to produce the original note along with all the assignments appropriately endorsed. Shouldn’t be hard?

Why then, should the federal government all of a sudden be concerned if the lender has the note? Judges, until recently, didn’t seem to take notice, except for a few bankruptcy judges in California. The answer is simple. They are slowly catching on that the new money in the investment pools was simply being used to pay for loans that did not exist.

While the party music played and everyone kept on dancing… then all a sudden, the music stopped… oops not enough chairs for everyone.

NBC Nightly News new media journalist Mara Schiavocampo will be exploring these issues deeper this week. So, I guess you can say you heard it here first — from the trenches.