Florida homeowners get $9.2 billion in home help

The following article was written by Kimberly Miller – Palm Beach Post and republished with excerpts by Roy Oppenheim, Oppenheim Law on behalf of the South Florida Law Blog. 

WEST PALM BEACH — Florida homeowners received more than $9.2 billion in home loan help through the historic National Mortgage Settlement negotiated last year, exceeding expectations by $800 million, according to a final progress report released Thursday.

The payouts, which came in the form of reduced loan debt, lower interest rates and allowing for short sales, were shared by 119,411 borrowers statewide, resulting in an average savings of more than $77,000 per homeowner.

Florida Attorney General Pam Bondi was a lead negotiator on the settlement made with the nation’s five largest banks to atone for mortgage- and foreclosure-related offenses. It is heralded as a real estate rejuvenator by some _ allowing borrowers to stay in their homes with lower mortgages, or facilitating short sales.

But others in Palm Beach County said the awards seemed arbitrary and that success was like winning a golden ticket.

“In many cases, the clients didn’t need the help. In other cases, they had already lost the home,” said Kevin Maher, community outreach director for West Palm Beach-based DebtHelper.com. “To be honest, it seemed almost random.”

Still, the agreement was the broadest effort yet to help the nation’s struggling homeowners. Nationwide, $51.1 billion in mortgage relief was doled out to 642,130 borrowers with the average homeowner receiving $79,704 in savings.

The five banks in the settlement — Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial _ were responsible for awarding varying amounts of relief. Bank of America gave the most at $27.8 billion.

Much of the aid came in the form of forgiveness of second loans. In Florida, $3.4 billion in second mortgages was erased for 49,808 borrowers.

Banks faced criticism early on for focusing on the secondary liens because it was money they likely would have lost anyway in a foreclosure, but it also allowed borrowers to more easily negotiate a loan modification on their primary mortgage, said foreclosure defense attorney Roy Oppeheim.

“We had a lot of second mortgages wiped out and that was like manna from heaven for my clients,” said Oppenheim, who is still critical of the settlement for being too lax on banks. “They got credit for things they would have already done without really paying for the robo-signing fraud that they committed.”

Delray Beach homeowner Jerry Rappelets said he was shocked when Bank of America hacked $120,000 off his primary mortgage, reducing his monthly payment by $900.

In the construction business, Rappelets and his family suffered financially when he was laid off and then got into a car accident that kept him from working for eight months. The mortgage reduction allowed him to stay in his home.

“It’s the house that my son came home to when he was born,” Rappelets said. “We’ve been there eight years.”

Thursday’s report was the fifth from the settlement’s monitor Joseph Smith. It covered the period from March 1, 2012 to June 30.

Because lenders do not earn a dollar-for-dollar match on relief provided to borrowers, the nationwide $25 billion deal has provided much more in mortgage aid to homeowners. For example, for every dollar forgiven by a lender on a second mortgage, it receives only a 10-cent credit toward its required settlement amount.

Smith cautioned that Thursday’s numbers were self-reported and had yet to be confirmed by his office.

This summer, banks were scrutinized by attorneys general for failing to meet customer service requirements that are outlined in the settlement.

In June, Bondi wrote Bank of America that she was ready to go to court to enforce the customer service side of the agreement after hundreds of homeowner complaints and affronts to her own staff. She said her office is having to get involved in cases where there are common-sense solutions that should be easy to reach.

In one situation, Bank of America allegedly refused to speak with a homeowner’s Legal Aid lawyer because of a “simple dispute over a ZIP code.”

On Thursday, Bondi said she will remain “diligent” in her efforts to ensure banks meet their obligations.

Real estate attorney and foreclosure defense attorney, Roy Oppenheim left Wall Street for Main Street, founding Oppenheim Law along with his wife Ellen in 1989 in Fort Lauderdale, Florida, and is vice president of Weston Title and creator of the South Florida Law Blog, named the best business and technology blog by the South Florida Sun-Sentinel. Follow Roy on Twitter at @OpLaw or like Oppenheim Law on Facebook .