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.

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.

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.

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.

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?

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.

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.