Thursday, December 2, 2010

All is Quiet on the Foreclosure Front

As you know, the leading mortgage lenders imposed a national foreclosure moratorium in November 2010. That extension is providing extra time for the banks and mortgage services to review their foreclosure procedures, which hopefully includes the preparation of non-fraudulent documents. Of course that also means the extension is permitting homeowners to remain in their homes for a longer period of time while they try to get back on their financial feet. People have been calling me and asking what they should be doing now. I first tell them that while the moratorium may cause a delay in individual cases, due to title issues or shoddy paperwork, there are no guarantees that they will be one of those fortunate cases. I also tell them to use this time to pursue a loan modification or a short sale. I have a feeling that once the holidays have passed, and after retail sales get their artificial boost because people are using mortgage money to buy gifts, the foreclosures will resume in earnest. Just be prepared.

Tuesday, November 23, 2010

How Much Time Do You Have Once Your Home is Sold at a Foreclosure Auction

A question I am often asked by clients is how much time I have to stay in my home after my property is sold at a foreclosure auction. My answer is that it depends and then I go on to explain the post foreclosure sale process. In Broward County, when your home is sold at a foreclosure auction, the clerk issues a Certificate of Sale to the highest bidder. Ten days after the Buyer receives the Certificate of Sale the clerk issues a Certificate of Title, provided no objection to sale is filed. An objection to sale can be filed based on a limited a number of reasons such as if the plaintiff or their attorneys didn't follow the correct rules of procedure or didn't properly notify all defendants. If no objections are filed, then the new owner, usually the bank, will request that a Writ of Possession be issued by the clerk. The writ of possession directs the Sherriff to go to the property, serve the writ, and have the home owner vacate the property. Under normal circumstances, it takes 3-7 days for the Sherriff to schedule a time with the bank to accompany the Sherriff to change the locks, serve the writ and remove the homeowner. Nowadays, this process is taking up to 3 months but with the moratorium things could progress quicker. I hope this information has been helpful.

Tuesday, November 16, 2010

Robo-Signing Settlement – The Devil Is In The Details

Apparently, some of the largest banks are close to settling with the states on the issue of robo-signed foreclosure documents. CNBC's Diana Olick is reporting that although there is no single solution to the sloppy foreclosure practices, it seems that three of the largest mortgage bank servicers may be agreeing to the same solution. The plan is to create a fund that will be used to compensate borrowers who have already lost their homes to a wrongful foreclosure. Those homeowners will be required to prove they were wronged by the bank during the foreclosure process. The attorney general for each state will administrate the fund and will allocate the appropriate funds. A third party mediator will be put into service to review the claims made by borrowers to determine if a wrong had occurred.

Additionally, there are discussions centered around banks doing away with the dual track system of modifications and foreclosures; meaning, the foreclosure process will not begin until all options of modifications have been exhausted. I recently posted about a client who was in the midst of a modification and received a foreclosure notice. This all sounds promising, but like everything else, the devil is in the details. We will see.

Friday, November 12, 2010

More Foreclosure Sloppiness – Title Closing Agents?

I can't help but think that there remains much more sloppiness yet to be discovered related to the housing debacle. We all know about the appraisers, the banks who didn't properly assign the mortgages and the robo-signers at the law firms who are handling the foreclosure cases. Recently, we started hearing about issues with process servers who, in some instances, never served the foreclosure lawsuit upon the homeowner but filed an affidavit with the court attesting to the fact that they had. Everyone along the way was in a rush to get things done and move on to the next file because they were so overwhelmed and the money was easy. With that said, I'm beginning to wonder about the closing agents who closed all of those transactions. Did they really perform all of those title searches? Did they pay off all of those mortgages? Did they update their title searches? Did they follow-up with the banks to make sure they issued Satisfactions of Mortgages for all of those mortgages that were paid off? So many questions so few answers.

Wednesday, November 10, 2010

Online Foreclosure Auctions – Beware of The Hidden Risks

Recently, we've been receiving phone calls from clients inquiring about the legal issues surrounding buying property from online foreclosure auctions. Approximately 90% of those people purchased property thinking they bought it free and clear of mortgages and other liens. Unfortunately, that wasn't the case and there wasn't anything I can do for them. One person called in asking about obtaining title insurance. I told him that title insurance was available but it would require a lot of work because of the issues related to the mortgage mess, including the fraudulent affidavits. I further explained that the fraud causes buyers to assume additional risk even with title insurance. The risks relate, in part, to prior owners coming back and claiming that their home had been wrongfully foreclosed and wanting their home back. The lesson here is to be exceptionally careful when purchasing property from these online foreclosure auctions and that title insurance doesn't cure all that is ill. With all the issues surfacing related to the foreclosure process, what other risks are the buyers assuming?

Monday, November 8, 2010

The Foreclosure Moratorium - The New Client

I was thinking about how the foreclosure moratorium was affecting the types of new clients I was seeing. Most of my new clients are not those who have been recently served with a lawsuit. Instead it is the person who was served long ago. The law firms representing the banks are now dealing with the files that they had set aside to deal with at a later date. Before the moratorium, so few people were defending their foreclosure lawsuit and the bank lawyers were so busy with all of those uncontested foreclosures (a lawsuit where the defendant does not file an Answer to the lawsuit). Back then, if the homeowner filed any type of response to the lawsuit, the case would be placed at the bottom of the stack and it would not be actively pursued. Apparently, the moratorium has given the bank lawyers time to go back and purse those files that have just been sitting there. Hopefully, once the moratorium is lifted, more homeowners will realize that they have defenses to the bank's foreclosure and not just walk away from their homes. We will see.

Friday, November 5, 2010

Foreclosure Fraud Expanding to Process Servers

The foreclosure fraud apparently didn't begin and end with the robo-signing of Affidavits relating to how much the homeowner owes the bank. Now foreclosure defense attorneys are looking into whether there has been faulty service on clients by robo process servers. A process server is the person who is in charge of giving you the lawsuit. Those people may have filed fraudulent documents with the Court claiming they couldn't find a homeowner facing foreclosure, despite paperwork clearly setting out a homeowner's whereabouts.

The Florida Attorney General's Office has been asking questions about process serving as it investigates alleged sloppy or fraudulent practices by the four law firms handling the vast majority of foreclosures for banks: the law offices of David J. Stern in Plantation, Marshall C. Watson in Fort Lauderdale, Shapiro & Fishman in Boca Raton, and the Florida Default Law Group in Tampa.

Apparently, the law firms use outside process serving companies to deliver the lawsuits, that in turn contract with private independent servers.

Some Florida foreclosure defense attorneys are claiming that property owners never received a court summons even though they still were living in their home, or that servers never took required steps to find them. Some claim the process servers lied and/or filed false court affidavits about to whom or when they delivered the papers. Homeowners involved in foreclosures are required to receive a court summons, delivered in person by a process server. If no one is at the address, servers are required to repeatedly try to make face-to-face contact before getting the court's permission to publish a legal notice instead. I guess the process servers where just as sloppy as everyone else and it was easier to commit fraud than it was to do their job correctly. 

Read the Sun-Sentinel Story here.

Thursday, November 4, 2010

JP Morgan Chase – What the Hell is Going On?

We met a client today that recently lost his home to foreclosure. He hired two Miami attorneys who attempted and failed to negotiate a modification of his home loan. He brought with him today a letter he received, that was overnighted to him YESTERDAY, from Chase Bank. The letter was informing him about a mortgage program that they claim "they have been trying to reach" him about. The program offered to reduce the amount he owed, allow him to stay in his home after he sold it and pay him $9,000.00. All this was so he could avoid foreclosure. The funny part is he received this letter AFTER he already lost his home to foreclosure. How ridiculous is it that a man attempts to modify his loan, is denied by the bank, they take his home, and then they decide to extend a helping hand once it's already too late. I'm not sure how they will do it, but these banks need to reevaluate their system. There is something seriously wrong going on.

Tuesday, November 2, 2010

David Stern Stripped of His Fannie and Freddie Foreclosure Files

On October 20, 2010 I asked the question what would happen if big mortgage lenders decided to hire new counsel to take over the foreclosure cases being handled by David Stern's office. Well, it finally happened. The Wall Street Journal and ABC News reported that Mortgage giants Fannie Mae and Freddie Mac are transferring thousands of foreclosure cases from his office.

Both companies said they were starting to transfer files to other law firms. This process is going to prolong the foreclosure mess because not only is the transfer going to be a problem with more lost or misplaced documents but what about the time the new law office is going to have to invest to get up to speed on all of those files. That's going to be an administrative and scheduling nightmare.

Bank of America Modification Agreements – Be Careful - You are Waiving Your Rights

Recently, I was reviewing a Band of America Modification Agreement and I was surprised by a clause in the Agreement relating to consideration. Consideration is a legal concept that forms the foundation of an enforceable contract. It is a prerequisite to the formation of a contract that both parties offer something to one another (consideration) before a contract can be binding. In a loan modification agreement, the banks consideration is their agreement to reduce your payment to an amount you can afford.  What caught my attention is the consideration that the Bank is asking you to provide. In exchange for the bank reducing the payment, the borrower is waiving a right they would have in defending a foreclosure lawsuit where the note is lost or destroyed. This is a relinquishment of a right that could save your home from foreclosure if you re-default. Unfortunately, the facts are that 55% to 75% of modified loans are expected to re-default within 12 months. Be careful of signing anything Bank of America offers you. Have a professional review any agreement the Bank presents to you before signing it.


Thursday, October 28, 2010

Bank of America Mortgage Modifications – Homeowners Need Your Help Not Your Red Tape

Recently, a client approached me concerned about her recent mortgage modification situation involving NACA and Bank of America. The Neighborhood Assistance Corporation of America ("NACA") is a non-profit, community advocacy and home ownership organization. NACA's primary goal is to build strong, healthy neighborhoods in urban and rural areas nationwide through affordable home ownership. NACA has said that they have conclusively shown that when working people get the benefit of a prime rate loan, they can resolve their financial problems, make their mortgage payments and become prime borrowers. The problem is that home owners can't resolve their financial problems if Bank of America makes it difficult to do so. According to my client, NACA assisted homeowners who borrowed from Bank of America are getting stuck in a "Catch 22". Homeowners who have gotten help from NACA are being required by Bank of America to have a NACA representative conferenced in to any phone conversation with the Bank. It is difficult enough to get one party on the phone, let alone to coordinate two unrelated parties. Bank of America's procedure in regards to NACA assisted homeowners is problematic. The banks should be doing everything they can to assist homeowners in this current economy. Bank of America needs to adopt a slice of NACA's primary goal and eliminate the red tape and focus on helping working people to resolve their financial problems, not exacerbate them.

Wednesday, October 27, 2010

Reopening a Florida Foreclosure Case Due to Alleged Bank Fraud – Counterclaims and Damages

We met with a client yesterday that lost several properties in Florida to foreclosure. Among the many files was a case, we believe, is ripe for filing a Motion to re-Open an old foreclosure lawsuit and to set aside the judgment. The basis for us to re-open the case is our allegation that the lender committed foreclosure fraud by filing a defective Affidavit in support of its case. We have done exhaustive research on this issue and on the issue of the type of counterclaim(s) we bring against the bank for wrongful foreclosure. What we found is that there isn't a lot of case law on the subject of damages in a wrongful foreclosure case. If we are successful in recovering for our client, I imagine we will be contributing to the establishment of precedent in this evolving area of the law. This is very exciting stuff. I will keep everyone posted as things progress.

Friday, October 22, 2010

Bank of America Makes Deal with Title Insurer - Foreclosure Title Issues

The latest issue that I find interesting relates to title insurance and how the title insurance companies stopped issuing title insurance for any bank owned property. In an effort to address this issue, Bank of America agreed with Fidelity National Financial to cover all court costs and settlements related to any lawsuits and Fidelity agreed it would defend new homeowners in court for any claims that arise related to a foreclosure in the chain of title. Apparently, Bank of America is working on similar agreements with other title insurers. I'm not quite sure how this is going to work in the long run for Buyers and housing prices. It still sounds to me like if someone buys a bank owned property they are still buying a home with built in litigation. I can't see how home prices won't be impacted. And the plot thickens!

Wednesday, October 20, 2010

Will Layoffs at David Stern’s Office add to the Foreclosure Mess?

I was reviewing a foreclosure complaint today and I noticed that the case was filed by David Stern's office and it made me think. If the reports are true about layoffs and employee exodus from his office, how on earth is he going to be able to handle his existing case load? Also, what happens if the banks decide to retain other counsel to take over their existing cases? Are there going to be further delays in the foreclosure cases because of the logistics of transferring files? Will documents get lost or misplaced and who is going to oversee that undertaking? I can't imagine how difficult that's going to be. Further, are there going to more delays slowing the housing recovery in Florida? All new questions in a time where there are a shortage of answers. What a mess!

Tuesday, October 19, 2010

2010 Foreclosure Mess - Homeowners are not to Blame

Recently, the message about the 2010 foreclosure mess has changed. Somehow, homeowners are now the bad guys. They are the new scapegoats for the foreclosure mess. Now borrowers who are delinquent on their mortgage payments are being viewed as ” trying to get their home for free without a mortgage.” I believe the focus should also be on the banks and other mortgage servicers who failed to provide the required homeownership counseling, including default counseling, when a borrower was in trouble as is required under their own documents and federal law. I don’t know if the message change is the result of the bank’s p.r. or just confusion caused by information overload. Either way, its troubling.

Read the rest of the story here:

Homeowners Are Not to Blame for the 2010 Foreclosure Mess

Sunday, October 17, 2010

Mortgage Foreclosure Clients are Changing and the Temporary Boost to Our Economy

Since Bank of America, JPMorgan Chase and GMAC have come forward and decided to halt foreclosures the type of clients I am seeing is changing. My new client is someone who is confused and wondering why they are being sued if the banks allegedly stopped filing foreclosures. The other clients we are seeing, is the person who has lost their home and is interested to learn more about how they can be compensated for their home being taken based on fraudulent Court documents. It seems that the people, who are on the verge of being sued, are less inclined to contact an attorney with the banks halting foreclosures. I can't say I blame those people. Why would they need to hire an attorney at this point?

I imagine that the people who are on the verge of foreclosure are walking around with some sense of relief and extra money in their pocket. I believe that one consequence of halting the foreclosures is that there is going to be a temporary positive boost to our economy. Those people, who are not paying their mortgage, will probably be spending more money to buy other things, boosting our economy. That's a good thing, I think?

At the end of the day, the banks and the mortgage company screwed up. That's why this mess is going to linger and possibly still bring down our economy. If they weren't sloppy and in a rush to make a dollar, we would be closer to the end of this nightmare instead of on the verge of reliving it.