Foreclosures in Florida

MUST BE PRESENT TO WIN

This is the story of how WACHOVIA BANK managed to win a mortgage foreclosure case that it shouldn't have won because the parties on the other side didn't defend themselves in time.

Lets start with some basic "who can you sue" Florida foreclosure law. The owner of a mortgage that's in default can foreclose out the borrower and also anyone who has a lien on the property that's "inferior" or "junior" to that mortgage, but not anybody with a lien that's "superior."  Superior and inferior are usually based on the time when the mortgage is recorded. A first mortgage can foreclose out a second mortgage, but a second mortgage can't foreclose out a first.

In December, 2002, Bruce and Melissa Henry gave a first mortgage to MERS as nominee for Southshore Mortgage Company on property in Sarasota County. WACHOVIA BANK got second and third mortgages on the same property from them in July, 2003. Eventually the Henrys stopped making payments. 

In August 2006, Wachovia filed a foreclosure lawsuit against Mr. and Mrs. Henry and also against MERS and Southshore. Wachovia claimed that the first mortgage was "not based on a bona fide loan." There's nothing in the public records or the court file to back up that claim, but it didn't matter because neither MERS nor Southshore answered the complaint. 

Wachovia won defaults against MERS and Southshore in May, 2007 and a Summary Final Judgment that foreclosed out MERS and Southshore along with the borrowers in July, 2007.

There's more to this story, but this is the part that's important to you if you are facing foreclosure: A mortgage company WILL win a foreclosure case if the other side doesn't defend itself, even if the mortgage company has no right to win. 

Back to the rest of the story. Not surprisingly, the folks with the first mortgage were not happy when the court said they were too late to foreclose their mortgage. They appealed. A few weeks ago the 2nd Circuit Court of Appeals sent the whole thing back to the foreclosure court with instructions to have a hearing on the evidence. Wachovia will lose if it can't prove that the the first mortgage is "not a bona fide loan," but for now Wachovia is still the winner.

As for Mr. and Mrs. Henry, they still have the right to stay in the property until after the battle of the banks is over.

One of the lessons from the Henry case is that banks and their lawyers can make mistakes. Don't assume that you have no defenses just because you've missed some payments. Think about the rules in a poker game: a full house beats three of a kind unless the player with the full house folds. Don't fold without finding out what your rights are. 

Schedule a consultation with a mortgage foreclosure defense lawyer. And don't wait until it's too late.

4 REASONS WHY ITS A GOOD TIME TO SELL

Not everybody who is facing foreclosure will be able to keep their homes. For some people, selling the the house can be the best alternative to foreclosure. And right now could be the best time to put the house on the market of any time in the recent past.

Even if you had your home listed with a realtor for 6 months last year and didn't get a nibble, here are some reasons reasons why you might be able to sell it now:

• Florida home prices are not in free-fall any more. In some counties, prices have leveled off or increased slightly. Even in parts of the state where prices are still going down, the rate of decrease is much slower than it used to be. Buyers who have been waiting impatiently for the market to bottom out are ready to start bidding.

• Interest rates have started to go up. The consensus among experts is that they will keep going in that direction. Smart buyers are going to want to sign contracts and lock in the low rates now.

• New government rules will supposedly make it easier for would-be buyers to shop for funding. HUD is requiring changes to the "Good Faith Estimate" form that lenders give to mortgage applicants. There's now a 3-page standard format that banks and mortgage brokers will have to give consumers with three days of receiving a loan application. The government estimates that the average borrower will save $700 by using the revised form to shop intelligently.

• Some banks are starting to "soften up" when it comes to approving short-sales as an alternative to foreclosure. They already hold substantial inventories of houses they seized from homeowners and haven't been able to sell. They're under pressure from the government to comply with the HAMP rules. Some of their investors are even pushing them to cut their their losses. Sure, there are still plenty of lenders and processors acting like pigheaded fools when it comes to making a deal, but their numbers are beginning to shrink. 

Of course my usual disclaimer applies - no two situations are identical. There are lots of reasons that make a house easy - or difficult - to sell. But if you decided selling was the option for you, this might just be the right time for it to happen. Go for it!

THE MEDIATOR MADE ME DO IT!

I have had more than one person tell me this, and it still surprises me. I meet someone at a party who is complaining about the terrible results he got in his divorce case. When I inquire about the trial, he says the decisions were made at mediation. Instead of smiling politely and nodding sympathetically, I ask why he would have agreed. And then I hear it. "The mediator made me do it!"

The new rules in Florida require mediation in every home mortgage foreclosure case. If your home is about to go into foreclosure, you may be worrying about what mediation is. Can the mediator force you to accept an agreement that just won't work for you? If you say something in mediation, can it be used against you if you don't reach a deal and the case goes to trial? The answers are no and no.

Here are some basic facts about mediation.

• The purpose of mediation is to help both sides of the dispute reach an agreement that they can put up with. This means neither party is going to get everything he wants. But both sides get some benefit, or there's no point in agreeing.

• The mediator sets the rules for the proceedings. No interrupting, no shouting, no profanity, things like that. She may discuss the case with both parties in the same place, or she may caucus with one side at a time while the other side is out of the room. 

• Mediators do not decide who is right or wrong. They don't make recommendations to the judge. And they don't give legal advice. They do ask questions. Sometimes they offer opinions or make suggestions, but they don't give orders. 

• Everything that is said in the mediation is confidential. So are any documents that either side brought to the mediation. Whether or not the parties reach agreement, the mediator is not allowed to tell the judge anything that happened in mediation, and neither are the parties or their lawyers.

• The mediation ends when the parties reach an agreement or an impasse. If both sides agree, the mediator will write up the terms and the parties will sign a proposed final judgment containing the terms of the agreement. The judgment isn't actually final until the judge signs it. Even then, homeowners still have a right of redemption if they can come up with the money to pay the amount of the judgment before the property is sold and a certificate of title is issued. 

• There is no penalty for not reaching an agreement. The mediators feelings will not be hurt and his job will not be in jeopardy if the two sides never get together.  If the negotiations come to an impasse, the parties just go back to court.

To repeat, the mediator does not have the power to make you agree to something you don't want to do. So if you don't think you're getting a deal you can live with, just say no.

FLORIDA SUPREME COURT REQUIRES MEDIATION FOR HOME MORTGAGE FORECLOSURES

On December 28, Chief Justice Peggy A. Quince of the Florida Supreme Court announced the adoption of a statewide plan for "managed mediation" of home mortgage foreclosure cases. Here are the highlights:

•    The order applies to all residential mortgage foreclosure cases filed against homestead property involving loans that originated under federal truth in lending regulations.

•    The mediations will be conducted by mediation managers who are “independent, nonpartisan, nonprofit organizations” with “demonstrable ability to assist the courts with managing the large number of residential mortgage foreclosure actions” that have recently been filed.

•    Borrowers can “opt out” of the program directly or by failing to attend foreclosure counseling or by failing to fill out the financial reports.

•    If certain conditions are met, parties can “opt out” who have been through mediation before the suit was filed.

•    The mediation manager must contact the borrowers  to explain the program and refer them to HUD-certified foreclosure counselors.

•    The mediation manager must schedule the mediation no earlier than 60 days and no later than 120 days after the suit is filed.

•    The plaintiff has to pay the cost of mediation, which will be no more than $750, but can recover part or all of the cost in some instances. 

If you are a homeowner who gets sued for foreclosure, DO NOT opt out of mediation. Yes, filling out the paperwork will be a pain, but you need all that information for other reasons anyway. This is a golden opportunity to deal with the mortgage company in a situation where you can get answers and explanations. Don't be afraid to take advantage of it. 

The next post on this blog will let you know how mediation works and what mediators can and cannot do.

FORECLOSURE, HOLIDAYS AND FEELING HORRIBLE

No, the holidays are not over. For some people, the New Year holiday is huge and horrible. New Year's Eve has trouble living up to the hype at the best of times. Making New Year's resolutions can bring up a lot of gloomy thoughts about things that didn't go right in the year that's ending. Even folks who aren't dealing with a mortgage foreclosure can have a tough time with this one. 

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Experiencing financial difficulties can put anyone on a downward spiral of unpleasant emotions. There's plenty of fear of what might happen next. There  certainly is grief for all the losses. Anger can take a variety of directions: outward at people and institutions responsible for our problems; in toward ourselves for getting into this mess; and sideways at the people who love us or even perfect strangers who just happened to get in our way. There's shame. There's embarrassment. And of course there's depression.

So here are a some tips for getting through the next few days without going into a total funk.

• Don't expect to feel great. You are not required to be in the holiday spirit. You are allowed to feel whatever it is that you're feeling. You just aren't allowed to ruin everybody else's mood by acting miserable.
• Don't try to do too much. Give yourself permission to do without celebrations that take more time, energy, and money than you really want to spend. Skip the resolutions! So what if they are traditional? But don't use this as an excuse to hide under the covers until the holiday is over.
• Take care of yourself physically. Eat right. Get some exercise and fresh air. Drink plenty of water. Get enough sleep. If you are supposed to be on medication, take it. Don't overdo it with alcohol. The stuff is a depressant, and a hangover is a rotten way to start the new year.
• Take care of yourself spiritually. Count your blessings. Tell the people who are important to you how much you care about them. Make time to pray, meditate, or participate in religious services that are meaningful to you.
• Reach out for help. You don't have to go through this alone. If you can't talk things over with you family and friends, there are counselors and support groups that can help you.

Telling you not to get discouraged would be asking way too much. Try not to stay discouraged. Life will go on. There will be a lot of things to look forward to. If nothing else, the holidays will be over in a few days. 

CITIGROUP HALTS FORECLOSURES & EVICTIONS FOR 30 DAYS - BIG WHOOP!

Citigroup Inc. announced that it will suspend foreclosures and evictions for 30 days as a temporary break for homeowners during the holiday season starting today. How generous is that? Nowhere near as generous as it sounds.

According to the Associated Press, the suspension means the company will halt foreclosure sales on loans that are actually owned by Citigroup Inc. and stop evicting homeowners from properties it has already seized from now until January 17. The company claims that this will help 2000 homeowners with scheduled foreclosure sales and another 2000 who were scheduled to receive foreclosure notices.

Sanjiv Das, head of Citigroup's mortgage division, admitted that "moratoriums are not permanent solutions." Das said in an interview "we want our borrowers to have a much less stressful time, to spend their time with their families during the holidays as opposed to worrying about their homes."  Does anyone really think people who are about to lose their homes are going to stop worrying because the timing has been postponed for a few weeks?

The AP article cites a Treasury Department report saying that Citigroup has enrolled about 100,000 borrowers in the Obama program, but has made only about 270 of those modifications permanent as of the end of November. Citigroup says the low number is the result of "a reporting error."  Even if the number of permanent modifications was supposed to be ten times as high, that's still a ridiculously poor conversion rate. And what's wrong with Citigroup that it can't give accurate reports to the Treasury Department? 

Let's take another look at those numbers. The 30 day period includes five weekends and three legal holidays plus Christmas Eve and New Years Eve. Nobody was going to be doing legal work on 15 of those 30 days anyway. Citigroup has about 100,000 borrowers in trial modifications. Lots of people who apply for a trial modification get turned down and most of them will get sued for foreclosure before next summer. 

The families who are scheduled to receive the benefit of Citigroup's "generosity" have a tiny fraction of the loans Citi should restructure if it really wanted to help its mortgage customers keep their homes. Citigroup wouldn't be receiving any money from those 4000 homeowners between now and the Martin Luther King Jr. holiday in any event. This moratorium is great public relations for Citigroup, but it isn't costing the company much, if anything.

DON'T COUNT ON BANKRUPTCY

Almost everyone who talks to me about mortgage foreclosures mentions bankruptcy as an alternative. And there are people offering bargain-rate bankruptcies who make it sound as if that's the pill that will cure every ill. 

Be careful! Make sure you know what you're getting into. And what you're getting out of. 

Yes, bankruptcy is the solution for some people. I refer folks to a lawyer I know who is a board certified bankruptcy law attorney. I have been referring people to him for years and I've never heard any complaints about his ability, his attitude, his ethics or even his fees. And he even tells some of the people I send that bankruptcy won't solve their problem.

Last week the House of Representatives voted against a bill that would have given bankruptcy trustees more power to help homeowners who are danger of losing their homes to foreclosure. The bill would have extended the "cram-down" option to primary residences. Right now, when an owner owes more for some kinds of property than the property is worth, the bankruptcy trustee can "cram down" the amount of the debt to equal the value of the property. It can be used to reduce the balance due on a yacht, a private airplane, a vacation house, but not the mortgage on your home.

So, see a board certified bankruptcy lawyer if you think bankruptcy may help your overall financial situation. Get a second opinion if you aren't comfortable with the advice you get from the first one. You can e-mail me if you're in Southeast Florida and you want the name of the person I refer my clients to.

Don't go to somebody who staples their ads to telephone poles or puts up little plastic signs on median strips of divided roads. And if you haven't consulted an expert, don't assume that bankruptcy is the long-term solution to your home mortgage foreclosure problem.

TAKE A CLOSER LOOK

If you are tempted to believe that what you see is what you get, take a look at the photo in http://www.wired.com/medtech/health/magazine/17-05/st_alphageek#. When I sit in front of my computer, this is a slightly fuzzy picture of Albert Einstein. But certainly Einstein. No doubt about it.

When I stand 10 feet away from the monitor, the picture is blurry, and it’s not just because I’m nearsighted. By the time I’ve stepped back 12 feet, the person in the picture is definitely Marilyn Monroe. I’d recognize her anywhere, unless I moved closer to the computer again.

Yes, I do have a reason for mentioning this in a blog about real estate mortgage foreclosures. Lenders are offering “deals” to homeowners with distressed loans in much larger numbers than ever before. Banks are under pressure from the government to give borrowers alternatives to foreclosure.

Your mortgage company, or the company that processes your loan, may have contacted you about a foreclosure alternative in the past month or so. These letters and e-mails are almost always written in language you would expect from a used-car salesman. “Urgent!” and “Act now!” and “Limited time offer!” they scream.

Frequently, they ask you to send a reduced payment now, and they promise to send you the paperwork to apply for more reduced payments in the future. The prospect of lower payments is terribly tempting. Even if you haven’t made a payment in months and you’re already in foreclosure, the idea of making lower payments and keeping your home is almost irresistible.

Take a second look. Look more than twice, and ask questions. Ask a foreclosure defense lawyer. When you get a high-pressure sales pitch at the car lot, you know that the first price mentioned is not the best deal they can offer. Don't you think it might be the same when you’re dealing with the bank? 

Find out what they’re really offering. Ask if the payment reduction will be permanent. Will they dismiss your foreclosure, or promise not to start one? Does the reduced payment amount still include items that were escrowed – taxes, insurance, association fees? If not, you could actually end up paying morew

We have learned that what looks like a beautiful, sexy young woman at a distance can turn out to be a wild-haired old man with a mustache when you take a closer look. Let’s apply this lesson to mortgage modification and forbearance offers.

Thanks to Washington, D.C. criminal defense attorney Jon Katz, who posted the picture in his blog, http://katzjustice.com/underdog/ last week.

 

 

TRIAL MORTGAGE MODIFICATION REALLY CAN BE A TRIAL

If you are among the some 728,000 homeowners who who managed to get one of the trial mortgage modifications designed to keep people from losing their homes to foreclosure, you know what a pain the application process can be. Despite the huge amount of paperwork involved, over 20,000 borrowers are entering trial modification programs under the Making Homes Affordable program every week. The Treasury Department says homeowners who have been approved are experiencing monthly savings that average $550. 

These trial modifications are supposed to last three months. Most of the modifications just involve a reduction in interest rate although the program also permits extending the term of the loan and even allows a reduction in principle. If the borrower meets all the requirements during the trial, the modification is supposed to become permanent.

By the end of this year, almost 375,000 of these loan modifications will have completed a three month trial period. The Department says it's disappointed in the number of permanent modifications. A lot of homeowners must be disappointed too. According to the figures that were released today, the number of trial modifications that had been converted to permanent status was only 31,382, which means that the success rate in converting modifications to permanent is just over 8 percent.

So whose fault is it that hundreds of thousands of trial modifications have not been converted to permanent reductions in the amount the homeowner has to pay every month? Lenders complain that the borrowers are not keeping them supplied with updated information. Housing counselors and homeowners report that loan servicers are losing the documents they send. 

Last week the Department of the Treasury launched a "Mortgage Modification Conversion Drive" that it hopes will increase the number of trial modifications that become permanent. Herbert Allison, Treasury Assistant Secretary for Financial Stability, delivered a written report to the House Financial Services Committee on Tuesday outlining the following steps that Treasury plans to take in hopes of solving or at least reducing the problem.

• Providing standardized application forms so everyone will know what's expected;
  

• Posting an instructional video with links to necessary documents and a conversion guide for borrowers on the Treasury Department website;
• Sending "SWAT teams" of Treasury and Fannie Mae staff members to visit the seven largest loan servicers; 
• Publishing conversion rates that will be specific to each servicer; 
• Requiring servicers to report twice a day on their progress in converting loans;
• Punishing uncooperative servicers by withholding their incentive payments.

I love the mental image of the SWAT team visiting the loan servicers.  A group of government accountants, wearing Flak Jackets and armed to the teeth, bursts into the bank and sits down for tea and cookies with the loan officers. That's about as likely to happen as a sudden major increase in the number of trial modifications converting to permanent. Nonetheless, don't stop trying. Check out the website,   http://www.makinghomeaffordable.gov/

Watch the video. Don't give up. Squeaky wheels do get attention.

What Happens When The Fed Closes The Bank?

    If your real estate mortgage is in foreclosure, is it bad luck when the government closes the bank on Friday, the 13th?

    On November 13, 2009, the Federal Deposit Insurance Corporation (F.D.I.C.) announced that the Office of Thrift Supervision had closed some banks, including a couple in Florida. This was not exactly a surprise - so far this year the government has closed 116 banks.

     The Florida banks that closed were Century Bank in Sarasota and Orion Bank in Naples. They weren't very big banks, but when it's your mortgage, it's a very big deal.

    All the deposit accounts of both banks, such as personal and business checking accounts, CD's and Social Security direct deposits, have been transferred to IBERIABANK of Lafayette, Louisiana. Branch offices have reopened with the IBERIABANK name. So, if IBERIABANK got the deposits and the buildings, it must have the mortgages too, right? No, that's not what happens.

    The F.D.I.C is appointed to be the receiver for the banks that close. Think of a receiver as something like a trustee or a manager. The F.D.I.C. is the federal agency that insures savings deposits in banks and savings associations all over the country.

    If you have ben working on getting a modification or waiting for approval of a short sale or a deed in lieu of foreclosure, a bank failure can undo all the negotiations. A deal that was almost closed is probably out the window. Instead of dealing with a small loss-mitigation department at the bank, you will be negotiating with a huge federal agency. If you were hoping for a speedy resolution, this is bad luck.

    Maybe more time is just what you need. When the plaintiff in a foreclosure lawsuit goes out of business or merges with another bank, the case can't proceed to judgment until the new owner of the mortgage enters the case. It can take quite a while for that to happen. If you have some equity and are applying for a reverse mortgage, for example, or if you're still trying to save enough for first, last, security and moving expenses, getting a few more months can be really good luck.

    Consult a licensed Florida mortgage foreclosure defense attorney to find out what effect the bank closing will have on your mortgage. When the government closes the bank, your real estate mortgage foreclosure isn't going to go away just because the bank did.