President Barack Obama delivers remarks on the economy at Shaker Heights High School,Shaker Heights, Ohio, Jan. 4, 2012. (Official White House Photo by Chuck Kennedy)

We really haven’t seen President Obama insert himself directly into the housing crisis, but there are rumblings that he may do just that during Tuesday’s State of The Union address.

The fact is that is what homeowners have been clamoring for. A new USA TODAY/Gallup Poll found 58% of Americans want the government to do more to help people keep homes.

According to HousingWire, Ohio senator Sherrod Brown told reporters today that there was evidence that Obama would address the robo-signing case which involves several major banks.  A North Carolina congressman even said there were rumours that Obama would announce a settlement, something HUD secretary Shaun Donovan suggested last week was ‘very close’, as we mentioned in our Week In Review on Friday.

For the record, Obama’s press secretary refused to confirm any details, saying only that the President was “focused on the issue of housing”.

Between Dononvan’s comments and the recent white paper sent out by the Federal Reserve, it seems that more and more top government officials are finally realizing how important the housing market is to our economic recovery, not to mention their own political survival.

This is not news to us here at the South Florida Law Blog.

Deficiency judgments

experts quoted in a recent foreclosure defense Wall Street Journal article!

If Oppenheim Law had a warning label it might read:

Deficiency judgments can be hazardous to your financial health.  For best results hire a foreclosure defense attorney.

Deficiency judgments are today’s toxic wake up call.

Many Florida homeowners lost homes in the past year when they lost income and stopped paying their mortgage. In typical foreclosure cases, the bank takes the home back and sells it, meanwhile Florida homeowners think its over and life goes on. This is really the calm before the storm…

In likely scenarios, if the bank sells the house for less than what is owed, the bank can sue the homeowner for the balance.

The result is a foreclosure hangover! The remedy is more than Alka Seltzer and B12 can cure.

Foreclosure defense attorney Roy Oppenheim walks us through the scenarios of how to avoid a foreclosure hangover, also known as a deficiency judgment.

“What you should try to do at all cost is avoid a deficiency judgment,” said Oppenheim in a recent video interview.

According to a recent foreclosure story in the Wall Street Journal, 41 states and the District of Columbia permit lenders to sue borrowers for mortgage debt still left after a foreclosure sale. The economics of today’s battered housing market mean that lenders are doing so more and more.

Foreclosed homes seldom fetch enough to cover the outstanding loan amount, both because buyers financed so much of the purchase price—up to 100% of it during the housing boom—and because today’s Florida foreclosures take place following a four-year decline in values.

Ways to Avoid a Florida Foreclosure Hangover by Roy Oppenheim

Deficiency and Deficiency Judgement 101 from Oppenheim Law on Vimeo.

If a bank files a foreclosure they have approximately nine months to convert a foreclosure to a deficiency judgment, Oppenheim warns. So what are your options?

1.  Deed in Lieu or Structured Foreclosure - In this scenario, attorneys work with the bank and come to a settlement where the bank gets the property in decent condition and in exchange the bank waives the right for filing a deficiency judgment against you. Sometimes credit scores can even be protected…

2. Florida Loan Modification - This is many times a more likely scenario if you want to stay in the home.

3. Florida Short Sale – Oppenheim says banks find short sales most accommodating in many cases. A short sale is when you agree to sell the property for less than the bank’s mortgage and the bank agrees to accept the offer. A deficiency can be negotiated and is often waived or reduced and negotiated.

4. Bankruptcy - What options do you have if a bank is pursuing a deficiency in a foreclosure, another option is seeking a bankruptcy attorney, says Oppenheim.

Florida is one on the states where lenders can pursue deficiency judgments and loan deficiencies are yanking borrowers back to a nightmare they thought was over…meet the foreclosure hangover.

With a foreclosure fraud financial crisis this intense and prolific, there’s certainly enough blame to go around for everyone, but we have one more culprit to add to the list!  News broke this week that the SEC is investigating and considering civil fraud charges against credit rating companies for their role as “key enablers” of our country’s financial meltdown.

Critics of the leading credit rating companies like Standard and Poor’s argue that these firms fueled the $1 trillion Wall Street mortgage-securities machine before the boom ended.

Regulators, however, should not be free from blame: there is clear evidence of incompetence and deliberate neglect by the SEC in keeping credit rating companies in line.  The fact is that credit rating companies and the SEC itself have served as co-conspirators with Wall Street banks to bury us in this seemingly insurmountable hole.

According to the Wall Street Journal, SEC officials are finally investigating whether the ratings companies committed fraud by failing to do enough research to be able to adequately rate the pools of subprime mortgages and other loans that underpinned mortgage-backed securities.

Allegations continue to swirl that the credit rating companies relied on incomplete or out-of-date information about the pools of loans in the mortgage-backed securities or ignored obvious problems among subprime loans to give unduly high ratings to slices of deals, known as collateralized debt obligations (CDOs), that were then sold to investors.

The ratings firms assigned coveted triple-A ratings to many of these CDO slices in the run-up to our real estate and national financial crisis, before doing mass downgrades when the housing market collapsed and the subprime mortgages soured, according to the Wall Street Journal.

Whether charges against the credit rating companies are ever actually filed or not, the blame game is in full swing and doesn’t appear to be stopping any time soon.

From The Trenches

Roy Oppenheim

In an era in which almost every bank on Wall Street was entangled in financial scandal, millions of Americans are left in an impoverished hole and billions of dollars in wealth has been destroyed, no one has been held accountable.

Considering these circumstances, Rolling Stone Magazine Writer Matt Taibbi begs the question, “Why isn’t Wall Street in Jail?”

Today’s article highlights a corrupt government culture in many of the agencies that were supposed to protect Americans from banks like AIG, Goldman Sachs, Lehman Brothers, JP Morgan Chase, Bank of America and Morgan Stanley. Particularly, there is a glaring problem at the SEC where a revolving door that sends government employees out into to private practice and then back to the government, blurring loyalties and breeding distortion.

And Wall Street’s punishment for their brazen schemes and artificial financial boom?  According to Taibbi: “carefully orchestrated settlements — whitewash jobs that involve the firms paying pathetically small fines without even being required to admit wrongdoing.”

Americans who sense two sets of laws in this country are completely correct.  One set has developed for the masses, and a second special set of rules exists for the wealthy and powerful.  This is not the America many of us remember growing up in.

Join Oppenheim Law next Wednesday, March 9 at 6 PM as Roy Oppenheim 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.

Tomorrow, we will examine the perspective of arguably the poster child of Wall Street greed with Bernie Madoff’s jailhouse interview.

The tides turned from mortgage crisis to foreclosure financial crisis in October 2010. Florida Attorney Roy Oppenheim made the call three days before the bank fraud story broke in the Wall Street Journal. He reflected on that day with leading Asset Protection Attorney Douglass Lodmell in a recent interview on the talk show “Mind of Money.”

On September 28th at a Florida Assets Protection seminar, Oppenheim predicted: “In the next 72 hours the news you are about to hear, not about the mortgage crisis, but what will be called the foreclosure crisis will make most attorneys in this country question what they learned in law school and why they became lawyers.”

“It’s the tip of a very ugly iceberg,” Oppenheim says about the foreclosure crisis

“The crisis has moved from the debtors to the banks. It’s the repercussions of the banks not playing fair–basically cheating with sloppy and fraudulent paperwork including backdated affidavits, forgeries, and notary fraud.”

While yes, banks did this to try to cut corners, what the banks actually did was cut the corners of the Constitution. Banks were missing essential documentation and denying homeowners of their fundamental constitutional rights.

“Like Humpty Dumpty, the mortgage note is broken up and cannot be put back together again,” Oppenheim points out.

Is 2012 the bottom of the market? Not yet. Most economics are saying in 2019 the homeowners will still owe more than what their homes are worth, considering the banks currently have 107 months worth of inventory in foreclosure.

Millions of people have been illegally foreclosed or are in the process of being foreclosed. The bottom line: banks did not have the right to bring these foreclosures and homeowners now have the ability to push back.

Will this affect fundamental ownership rights? What does it mean for the banks foreclosing? What does it mean for the homeowner who has not paid their mortgage for six months? Oppenheim has answers…

Roy Oppenheim wrote a letter to the editor of The Wall Street Journal in response to its The Politics of Foreclosure editorial that ran Saturday, October 9^th. Oppenheim’s letter pointed out how the opinion article missed a number of significant legal, as well as macro-economic issues, that South Florida Law Blog will post if it is not printed by The Wall Street Journal.

Yesterday’s Wall Street Journal article: Foreclosures, Forestalled by reporter Robbie Whelan discusses the cause and effect this moratorium could have on the housing recovery.

Here is an excerpt:

Consumer advocates say the judicial process gives consumers a better chance to work out their problems. But Florida’s court system is so overwhelmed with foreclosures that last year it began calling judges out of retirement to handle hundreds of foreclosure cases a day in a forum that became known as the “rocket docket.”

The New York Times article: A Foreclosure Tightrope for Democrats had some profound quotes worth sharing.

“Irresponsible banks need to be held accountable, but if we have not found a problem with a bank’s process we do not believe that we should impose a moratorium where that can hurt the market and hurt individual buyers,” said Shaun Donovan, secretary of Housing and Urban Development.

Advocates for homeowners, however, say that the pattern of sloppiness allows and encourages more serious abuses. They point to a growing number of documented cases in which lenders mistakenly seized homes.

Bank of America apologized last month for foreclosing on a home in Fort Lauderdale, Fla. The homeowner didn’t even have a mortgage. The bank had failed to notice that the previous owner had repaid the mortgage loan.

Last year the company’s contractors entered the home of a Pittsburgh woman, changed the locks, cut off the utilities and seized her pet parrot. The bank later acknowledged that the woman had not missed any mortgage payments.

Other companies including Citigroup and JPMorgan Chase also have apologized

for mistaken attempts to seize homes they didn’t own.

Oppenheim Law continues to follow the unfolding developments of this nation’s bank fraud and foreclosure crisis and how it impacts the Florida homeowner. Let us know your comments.

Fort Lauderdale, Florida – September 11, 2010 – First loan modifications, then short sales…now it’s the short refi. Officially known as FHA Short Refinance Program, it’s the latest band-aid in Obama’s bailout plans aimed at resuscitating Florida’s underwater homeowner facing foreclosure.

Introduced this week, the FHA Short Refinance Plan offers aid to people who owe more than their mortgage is worth. Will it bring life back to the real estate market and stimulate the economy? This is the question market analysts and legal bloggers like Florida Attorney Roy Oppenheim are debating.

One of the biggest dangers facing the housing market is the glut of underwater homeowners who could default if their financial situations or home prices worsen. About 11 million borrowers, or 23% of households with a mortgage, were underwater as of June 30, according to CoreLogic Inc. That number is expected to double next year.

“This is a much needed program, but just might be a case of too little, too late,” says Oppenheim who continues to help Florida homeowners navigate through the tides of the real estate market. “Servicers will not be highly motivated and sometimes inclined to steer towards foreclosure.” In addition the program, at best, is designed to help about four million homeowners according to the U.S. Housing and Urban Development (HUD) Website.

The FHA Short Refinance option is targeted to help people who owe more on their mortgage than their home is worth—also known as being ‘underwater’—because select local markets saw large declines in home values. Unlike the first two waves of bailouts, the short refinance program is aimed at homeowners who are NOT currently behind on their mortgages.

Criteria for FHA Short Refi Program

• Must occupy subject property as their primary residence
• Must be current in your mortgage loan
• Must be in a non-FHA loan
• Credit score must be at least 500
• Bank must agree to write off at least 10% of principal and
• Second mortgage must be willing to cooperate (if applicable)

For two years, Oppenheim Law has advocated a much broader and bolder refi program pushing for an FDR style program modeled after the Homeowner’s Loan Corporation that assisted underwater homeowners during the Depression.

“History proves it’s always the refinance market leading the country out of recession. This time because the banks have absolutely no incentive to refi;  they will not,” said Oppenheim. “A strong government program could easily and quickly pump $50 billion back into the economy.

William H. Gross, managing director at Pimco, a giant manager of bond funds, has also proposed the government refinance   millions of mortgages at lower rates.

“A more comprehensive short refi program would increase jobs and improve consumer sentiment,” noted Oppenheim.

Recommended Reading:

The Wall Street Journal has an informative post on FHA’s Short Refinance Frequently Asked Questions, recommended reading by Roy Oppenheim.

For more up-to-date news on Foreclosure news follow @Oplaw on Twitter and “Like” Oppenheim Law on Facebook.

In fact, the Wall Street Journal reported that 18 percent of all U.S. households will refinance in 2009. That is a whopping 72 percent increase from last year or almost $2 trillion! Interest on these loans will average about 4.7 percent – rates I have not seen in my entire career nor has anyone since the 1950s!

So let our homeowner self-bailout begin! I always said it would be South Florida’s new home buyers and the folks who had maintained good credit that would lead us back to normalcy. But, don’t kid yourself… without the stimulus package the lenders would still be on life support. Now at least we are all seeing and feeling less of a chill as the spring thaw begins. So start shopping around for what will likely be the best mortgage deal you will likely see in your lifetime!

Interested in buying or selling a home in South Florida? Take advantage of these low South Florida morgage rates and contact us at Weston Title for more information.