Just as Oppenheim anticipated, this year we’ve seen how big this foreclosure mess really is. There were numerous investigations, and a self-imposed moratorium on foreclosures during parts of 2011, resulting in a massive backlog of cases.

It was ludicrous, as Bank of America officials first said, that they would only need 60 days to review their inventory of files.

“It took them virtually a year to figure out that they were doing were just not kosher and had to stop,” Oppenheim explained.

There were several huge financial settlements offered to the banks over their illegitimate foreclosure practices, but the majority just did not stick. Judges told them the settlements were unacceptable and did not go far enough. With various attorneys general and the IRS among the agencies getting involved, these cases are nowhere close to settled.

“The banks literally got their hand not just caught in the cookie jar, but the lid was slammed on it, and everyone got to see the hand just hanging there,” said Oppenheim.

2011 is leaving us with a still unstable market, so people are looking for tangible investments, Oppenheim continued, and with the dollar still weak, Florida real estate is not a bad deal. When you add the fact that there is an excess of distressed properties, prices are not expected to rise anytime soon. he said.

Now every year there is an X-Factor, and this year it was Occupy Wall Street. It was a movement no one really saw coming, and despite some right-wingers attempts to limit Occupy as a fringe movement, Oppenheim said, there is no question the message of Occupy has resonated with middle America.

Why?

It brought to the forefront two huge truths. One being that there is a huge economic inequality between the so called ‘1%’ and the rest of us.

The 2nd is that the veil has been lifted on how intertwined the government, the big banks and the Federal Reserve have become.

“The banks have grown so big and so large that the government itself is afraid to really, truly regulate it, because you really can’t tell where the government starts, where the federal reserve ends, its a really ugly sight.”

Anyone looking for an example need look no further that the 7.7 trillion dollars the Fed loaned to the largest banks — at essentially 0 percent! And what did the banks do with those assets?

Well its not only what they did, Oppenheim said, but what they DIDN’T do.

“They didn’t lend it to mainstream America, which would have seemed like they were going to do to help reverse this deflationary cycle.”

Instead it only led to more profits,which “came off the backs of you and me” to pay themselves bonuses and to help elect officials that were sympathetic to the banks, and not the average Joe.

Some politicians have floated the notion that corporations are people, but then, Oppenheim asks, how do you arrest a corporation and hold them accountable?

He concedes that it’s possible that individuals within these companies may not have committed a crime, but it’s clear that some companies as a whole did.

“I don’t buy into the notion that a crime wasn’t committed,” Oppenheim said, “We have not advanced our legal system sufficiently to deal with these very complex financial crimes.”

While foreclosures may have slowed down in 2011 he expects them to pick up in the new year.

“There’s this new wave, It’s not going to be as large, but it’s going to be a continuous stream coming through.”

Then there is what he calls zombie foreclosures, which had been dismissed, but not permanently. Oppenheim would not be surprised to see them spring up in 2012.

“So far we haven’t seen them come back, but the banks have the right to bring them again,” he said.

If that happens, he fears the system would once again become bogged down with an overload of foreclosure paperwork, that will go through at a much slower pace.

The truth is, if banks brought all foreclosures to market right now it would crash the market, Oppenheim said, and the banks would become insolvent.

So what does Oppenheim predict for the real estate market in 2012? While he knows he can’t predict the future, Oppenheim says to expect the unexpected.

“I see that they’ll be something that we completely don’t anticipate,” Oppenheim said, “I’m not sure what it’s going to be.”

Coming up in our next blog, we’’ll review our top 10 stories for 2011. Happy Holidays!

Understanding deficiencies and the Florida rules which pertain to them are key to avoid getting a deficiency judgment.

What is a Deficiency?

The unpaid mortgage debt associated with a residence is a deficiency. A bank can foreclose and force a judicial sale of a home if the mortgage borrower fails to pay the associated mortgage debt. The deficiency is the difference between the proceeds from the sale and the remaining mortgage loan balance. A deficiency can also result from a short sale, which is an alternative to foreclosure.

What are the Florida ‘Rules’ on Deficiencies?

The rules pertaining to deficiencies differ from state to state. A deficiency judgment is when the bank is granted a court order against the borrower to collect on the deficiency amount. In Florida, if the bank is successful in obtaining a deficiency judgment, it will be recorded in the public records and collectable for up to twenty years. Until the remaining debt is paid, the bank can garnish your wages, bank accounts, and even collect against your estate after you die.

However in other states, all a bank can do is foreclose on your house. Although your credit score will be lowered, in these states they can’t come after you for the deficiency.

If you live in Florida or any state where assets can be seized, it’s crucial to get ahead of the situation. So what should you do?

When to Hire a Foreclosure Defense Attorney?

To avoid the possibility of getting a deficiency judgment, before deciding to walk away from your home, hiring a good foreclosure defense attorney is necessary. Do not simply avoid the bank notices as they come. There are many settlement options available and the last thing you want is to be subjected to the indignity of being enslaved to a debt for up to twenty years after you lose your home.

What Happens if you have a Deficiency?

South Florida Law Blog’s Roy Oppenheim believes if you are facing foreclosure a short-sale, is one such option. Loan modifications or structured foreclosures are other choices that can help you avoid a deficiency judgement. In the event your bank decides to obtain a deficiency judgment against you, Oppenheim says there are ways to protect yourself from the bank’s attacks.

Deficiency Judgments and Bad Credit Scores

Many strategic default options carry the possibility of lowering your credit score, however, a bad credit score, while certainly not desirable, will have less of an impact on important life events than a deficiency judgment. The outcome we seek is to make sure that your important events, whether be it a wedding, having kids, or sending them off to college, are not impacted. Your life should not come to a screeching halt because of a potential deficiency judgment, and nearly all of Oppenheim Law’s clients have been able to keep living their lives, provided they came to us early enough in the process.

If you have any specific questions on Florida deficiency judgments, feel free to leave a comment and we will do our best to link you into a future post.

Rumors are spreading about a new tax on real estate that is part of President Obama’s healthcare law.

The new tax, which has been dubbed a real estate “sales tax,” has a lot of misinformation out about it. For example, many blogs such as the Spokesman Review accuse the new law of imposing a 3.8% tax on the sale of all real estate. Email chains such as the one quoted in the Attack Machine blog claim that the tax will affect all real estate transactions, like “that’s $3,800 on a $100,000 home.”

Such claims are untrue.

In the old days, all real estate transactions were subject to the capital gains tax, a tax on income from investments. President Clinton introduced an exemption to the tax for primary residences with a profit of $500,000. Now, profits under $500,000 for couples and $250,000 for individuals are exempt from the tax, currently at 15%. The new tax adds an additional 3.8% surtax to those transactions that exceed the exemption. Additionally, you must make at least $250,000 if married or $200,000 if single to even have the surtax affect you. The surtax only comes into force in 2013, so it doesn’t affect people for several years.

The National Association of Realtors has provided several examples to help clear up the difficulties. The following is one of them.

“A couple filing jointly with an income of $325,000 make $525,000 when they sell their primary residence. If the profit on the home is less than the $500,000 threshold ($250,000 for single taxpayers), none of gain would be subject to the surtax. But since the taxable gain is $25,000 above the $500,000 threshold, it is added to couple’s income, bringing it to $350,000. That’s $100,000 above the $250,000 limit for couples filing jointly. But the $25,000 taxable gain on the sale of the property is the lesser amount in this case, so the extra tax that would be due in this case would be $950, or 3.8% of $25,000.”

So there you have it. The new surtax only affects people who make $200,000 or couples who make $250,000 and who make profits of at least $250,000 or $500,000 respectively on their houses. In the current market, not too many people fall under that category and the tax isn’t even in force yet.

Oppenheim Law says that there is nothing to get too excited about.

The results leaned toward favoring home ownership as part of the classic U.S. lifestyle. But there could be new rules for the American Dream in the future.

Jody Cohen believes home ownership is indeed still the American dream despite the state of the economy. “The dynamics have changed somewhat,” she says, “but people are very creative when they need to be. I know I have.”

As Alan Schneider sees it, home ownership is keeping the economy afloat. In an interesting perspective on strategic defaults, he figures people who are living in homes they own—and who aren’t paying their mortgage, taxes and insurance—have plenty of available cash to spend. In other words, government policies are allowing people to milk the system and stay in their homes free for extended periods of time, as well as cash in on welfare, unemployment, Section 8 housing, food stamps, Medicaid, and so on.

“Heck, I’m thinking of laying myself off and collecting all of these benefits. Too bad since my divorce I have been renting from people that don’t have mortgages on their properties that are in foreclosure,” Schneider says sarcastically. “I could have been living rent free and saving up lots of money to buy a nice foreclosed property at one-third of its previous price …”

Ronald Louis has a slightly different view: home ownership is an important part of life everywhere—not just in America. The American Dream, he says, is freedom and equal justice, not the material things consumers covet.

“When the Clinton and Bush administrations promoted home ownership as part of the American Dream, that got us into trouble, didn’t it?” Louis asks. “The opportunity to save enough money to purchase a home safely needed to be provided, not just cheap, unsafe loans to people who really weren’t qualified—including many middle class people. As a lawyer (and educator), we should be focusing on the ‘American Dream’ theme of your question, in order to learn from our recent mistakes.”

South Florida Law Blog’s Roy Oppenheim says we’re not out of the woods yet! A second wave of Florida foreclosures will hit in the third quarter of this year, Florida Double Dip? Foreclosures, Zombie Foreclosures, Fraud-closures from Oppenheim Law on Vimeo.

Oppenheim Law Predictions:

1. Government programs such as unemployment benefits as well as the reduction in payroll tax benefits are coming to an end.
2. Florida banks have supposedly gotten their “fraud-closure” crisis and issues of robo-signing under control and are going to submit many new foreclosures.
3. If that wasn’t enough, foreclosures that were initially dismissed by the courts due to incomplete and inaccurate paperwork are now being “revived” and will also contribute to the tidal wave of foreclosures.
4. Sustaining housing prices will be difficult with the ending of government programs, new foreclosures hitting, and “Zombie” foreclosures coming in because there simply isn’t enough economic support.

Oppenheim Law would never accuse the banks of committing fraud, perjury, impersonation, notary fraud, contempt of court, lying, violating Constitutional protections, or being tax cheats. Nevertheless, we do make this advisory: Be careful of what you sign.

Why?

As soon as you think the coast is clear, it’s the return of the robo-signers.

Suspected robo-signed documents are cropping up again in county deed records, according to the Associated Press. These new documents suggest the previous document mill scandals are part of an endemic problem at banks, not a one-off affair like the banks would have you believe.

In explaining the document mill scandals, banks claimed they were crushed by a gigantic amount of paperwork. It was while attempting to deal with such a large amount of paperwork that “mistakes” were made, according to the banks. Such claims are now being met with a raised eyebrow.

Registrars in several states have reported seeing suspicious documents. But now, the banks can’t claim they are under a mountain of paperwork: foreclosures, sales, and refinances are all at lower levels than they were in the past several years. Most of the documents under suspicion now are not even related to foreclosures. Rather, they mostly deal with new home purchases and refinances.

The banks are even using some of the exact same names heavily publicized when the scandals first broke like Linda Green and Crystal Moore. Such behavior points to an industry that sees itself as untouchable: too big to fail and too big to be regulated.

The proposed settlement between the banks and the states includes no criminal charges. Critics say that such slaps on the wrists only foster a culture of impunity, and they appear to be right.

This doesn’t mean some are not trying to fight back. The Michigan state attorney general filed criminal subpoenas against several mortgage servicers after 23 counties filed complaints. John O’Brien, the registrar of Essex County in Massachusetts, and Jeff Thigpen, the registrar of Guilford County, North Carolina, have both refused to accept documents suspected of being robo-signed. Mr. O’Brien even demanded a signed affidavit from Bank of America after he received several documents signed Linda Burton, another name that popped up in connection with the document mill scandal. Bank of America refused to handover the affidavit, and instead resent the paperwork signed by someone else. According to Mr. O’Brien, such behavior is evidence of “consciousness of guilt” on behalf of the bank.

Just like acid reflux, robo-signing doesn’t seem like it’s going away without a fight!

The latest New York Times/CBS poll shows that nearly 90% of those polled believe that it is important to own your own home, even though less than half of them think owning a home is a safe investment.

Public sentiment in favor of support for homeowners in trouble is also high. More than half of those surveyed believe that the government should provide direct financial assistance for homeowners in financial trouble.

The poll provides a fascinating insight into the American psyche: home ownership remains the number one factor in defining what it means to be successful in America. This is a representation of America’s intrinsic unease with renting. The idea of paying someone money every month and having nothing to show for it at the end of the day still reigns powerfully over the American mind.

There is also a strong belief that the economy will eventually get better. Taking a cue from Annie, this belief in the ability of our country to bounce back shows that the current crisis has not permanently scarred us.

Americans are still an optimistic people, and traditional values like home ownership and a belief that things will always get better remain strong. This is the magic and mystique of America!

No matter what, Americans still believe “the sun will come out tomorrow.”

From The Trenches,

Roy Oppenheim

Is homeownership still part of today’s American Dream? A recent article in the Wall Street Journal shared some old school advice on buying a home in today’s economy, more along the lines of Depression Era thinkers versus Baby Boomer spenders.

1. Buy what you can afford without scrimping on other needs. If you need to save for retirement or college, save. Don’t think your Florida home is going to pay for them.

2. If you need to move in less that seven years, then rent, don’t buy. You will be hard pressed to break even on your Florida home unless you live in it for a long time.

3. Values could stay depressed for many years. The only way you can plan to build equity in your Florida home is to pay down the mortgage.

Whether buying or selling a Florida short sale or foreclosure or renting; make smart decisions in light of today’s economy. Today’s housing market is still unraveling.

Florida Real Estate Goes From Bad to Worse…

Securitized Trusts Face Scrutiny and Housing Crisis Now Worse Than the Great Depression Questions Roy Oppenheim.

From Bad...
Florida real estate is not alone. Serious questions are being raised about the validity and legality of mortgage backed securities, the negotiable instruments at the center of our country’s mortgage boom and subsequent bust.

Now, the state attorney generals of New York and Delaware, the two states whose laws govern the trusts in charge of mortgage backed securities, are investigating whether Wall Street properly bundled and documented the loans that they turned into securities.

The two attorney generals are investigating Bank of New York Mellon and Deutsche Bank, the two largest firms acting as trustees, who were supposed to be responsible for ensuring that the documentation of the securities was proper and complete.

Rules governing the securitization process are very complex, and there are specific steps to be followed to ensure the trusts comply with federal tax laws.

Serious consequences would result if the banks did not follow the proper procedures for establishing a chain of ownership of the loans through the securitization process including the rescission of beneficial tax treatment that trusts are normally given.

These Trusts actually put form over substance to the extent that form is the substance. If the Trustees really did not follow the law, the damages would likely be devastating.

To Worse…
Florida real estate can get worse? The housing crisis that resulted from these mortgage backed securities and Wall Street greed is now worse than the Great Depression.

Home prices have fallen more than 33% since the market began to collapse in 2006, which is more than the 31% hit the market received in the 1930s.

The dip in prices has resulted in historic highs for the measure of home affordability. Still, the brisk rate of foreclosures continues to push more homes into the market, while underwater Florida homeowners are stuck in houses worth sometimes half of what they paid for them.

As long as nearly 4.5 million American households are either three payments late on their mortgage or in foreclosure, home prices are going to continue to fall. Prices are likely to fall another 10-15% over the next two to three years.

From The Trenches,

Roy Oppenheim

The President is well aware of the uphill battle he faces when it comes to convincing voters and campaign financers that his economic policies and regulations have not only been what we needed the past three years, but also what we need in the next four. According to The New York Times, President Obama has already started reaching out to the skeptical financial industry on Wall Street, hoping to win back one of his most vital sources of campaign cash.

While many on Wall Street view the President’s financial rhetoric as unfair to their industry, his apparent goal is to prove that his fiscal policies have helped to bring the banks and financial markets back to health and toward sustained growth.

The argument goes that the economy would have been dramatically worse at this stage had the Obama administration not taken the action it did in the wake of the real estate and financial crisis.

But how do you prove a negative? You can’t.

Historically, recessions have been ended by a wave of homeowner refinancing that predictably follows a lowering of interest rates. The President faces a number of obstacles to accomplishing a refinancing boom, however.

First, the number of homeowners who are underwater continues to rise.

Second, the banks have no motivation to lower interest rates of homeowners who are stuck in their homes.

Our current refinancing and banking system is stacked against the premise (and promise) that refinancing would push cash back into the economy, spur a consumer stimulus, and in turn promote spending, job creation and financial growth.

Too many people with good credit and jobs are stuck with high interest rate loans. The President would be wise to focus on developing a system for refinancing homeowners to stimulate an organic bailout of our financial crisis.

The fact that the President has more work to do to bring the country out of its funk and needs a different path to economic growth is backed up by a recent Time Magazine article debunking the myths of the new American economy.

Myth #1: This is a temporary blip, and then it’s full steam ahead.
The vast majority of economists do not believe we are on the way to a double-dip recession, but avoiding a double-dip is not the same as stimulating economic growth strong enough to revive the job market. The fact is that estimates point toward a five year recovery time before we return to a healthy unemployment rate of 5%.

Refinancing borrowers with strong credit and jobs could help speed up the process.

Myth #2: We can buy our way out of this.
Widespread government stimulus for loan modifications isn’t effective if homeowners don’t have jobs that allow them to make payments at all. There has been a decline in foreclosures, but the supply of foreclosed homes continues to undermine the national real estate market and dampen consumer spending.

The previous federal stimulus attempts have focused too much on homeowners who were already in trouble with their mortgages. While these homeowners certainly need help, shifting the focus to encourage refinancing of borrowers not underwater on their mortgages would allow this group to put its savings back into the economy. As the saying goes, “A rising tide lifts all boats.”

Myth #3: The private sector will make it all better.
Companies are making plenty of money. The problem is that they aren’t spending it to hire American workers. According to Time, American companies generated $1.68 trillion in profit in the last quarter of 2010 alone. Clearly, it’s a myth that American companies are waiting for economic and regulatory “certainty” before investing at home.

Myth #4: We’ll pack up and move for new jobs.
Most people couldn’t afford to move if they wanted to because they are underwater on their mortgages. While there are currently 3 million job openings, an additional problem is that the current labor pool’s skill set doesn’t match up with available jobs.

Myth #5: Entrepreneurs are the foundation of the economy.
New business creation has been shrinking since the 1980s. Is it coincidence that this started just when the financial sector began to explode? Lenders still aren’t lending, and the old methods of self-funding new business ventures through home equity loans or maxing out credit cards are no longer viable.

‘Hope’ was the foundation of President Obama’s victory in 2008.

The reality is Americans are still hoping for change.

The question is whether the President, or anyone for that matter, will be able to deliver.

Right now, it looks like if you want a bailout you better have your own plan in mind.

From The Trenches,

Roy Oppenheim