Orlando Foreclosure Defense

The internet has proven a useful tool in unloading foreclosed property in a quicker fashion than the old way of doing things. Online bidding on foreclosed property has allowed more people to get involved in the process from the comfort of their own home. It has also expanded the audience of potential buyers from local residents to anyone who has access to the internet.

As nice as this online bidding system has been it has also opened up many pitfalls for the novice buyer. One problem in particular is that the way that the website is set up does not indicate whether they are bidding on a second lien or an ownership interest in a condo. With the bidding it can seem like the buyer is getting a great deal for an ownership interest in a condo when in fact they have spend thousands to take the place of a second lien holder, and essentially wasted their money. Their interest in the condo can be wiped out once the primary lien holder forecloses on the property.

Essentially under this bidding system that doesn’t disclose if its a secondary loan or not people are paying a premium for a worthless secondary lien. The entire listing is very deceiving in that it shows the address of the property, Google satellite views, and a property appraisal, all of which is standard and can confuse the bidder into thinking that they are bidding on the primary mortgage. This is a classic example of “buyer beware”, those bidders who head into this complex world should not do so without doing their due diligence.

The obvious solutions would be to do one of two things. First these listings could have a more thorough description of what the bidder is actually bidding on, with a detailed description of whether its a primary ownership interest that they are bidding on or a secondary lien. The second way to address this problem is to just not place secondary liens in the system to bid on. Neither is likely to happen as the Clerk of the Court is content with the current system.

The best advice for any newcomer to the foreclosure game is to do your homework when looking to bid on a property and be skeptical of sweet deals because if you are one of only a handful of people bidding on a property then chances are most people know something you don’t.

The housing crisis is a multifaceted monster and one of the biggest facets is negative equity. Simply put, negative equity occurs when the value of an asset (a home) used to secure a loan is less than the outstanding balance on the loan. The common term for people finding themselves in this particular situation is being “underwater.” Those homeowners with negative equity are faced with an aggravating situation in which they are paying back their loan for property that no longer has the value that it had when the loan was created. Many will say to themselves “whats the point”, why should I keep paying for something that in some cases has lost up to half of its value.

As this line of thinking became more wide spread the housing crisis exploded and fueled a combustible environment. Recent numbers are now clearing up the picture as to how bad things have gotten, they show that in 2009 a quarter of all home owners owed more on their mortgage than their home was worth. The future looks grim for home owners who have lost half of the value of their home because it would take ten years at 5% growth to get back to the initial value. The more troubling developments is that there are many people who can afford their loans but are now strategically defaulting on the loan. “People who are vastly underwater will look at what they’re paying compared to what they can rent, and those people are throwing their keys back,” says Daniel Alpert, managing director at Westwood Capital. The numbers from 2009 to 2008 have doubled of those people who have strategically defaulted reaching almost 600,000. The negative equity problem is also hampering our economy in that homeowners dont have an equity in their home to borrow against and use that to invest in other areas whether it be opening up their own business or using it for home improvement.

The Federal Deposit Insurance Corp is currently working on a plan to help those homeowners who are in severe negative equity situations by reducing their mortgage balance. Borrowers would be eligible for a reduction in their mortgage balances if they kept up their payments on the mortgage over a long period. The only down side to the proposed program is that it would only effect mortgages from failed banks which is currently only one percent of outstanding mortgages.

We love the idea of a dream home, a perfect sanctuary from the hassles of work and society, a cozy den that makes all of the struggles in life worthwhile. It is strange how that for some homeowners that dream home becomes a loathsome object and the desire to do it harm boils over and into destructive actions.

Anger, fear, and resentment are powerful motivators in making some homeowners destroy the place they once called home. A foreclosure can do that to some and its easy to understand the desire to destroy something that was once so dear to them. Its an interesting reaction that people have, they would rather destroy the home than let someone else enjoy it; many also vandalize their home so they can teach the lender a “lesson.” Real-estate agents estimate that about half of foreclosed properties to be sold by mortgage companies nationwide have “substantial” damage, according to a new survey by Campbell Communications, a marketing and research firm based in Washington, D.C.

In Las Vegas the vandalism has been carried out with a special brand of venom and rage. Mr. Carver of Prudential Americana Group, who has been in the business of listing foreclosed homes, recounted one recent home that was the perfect example of vicious vandalism, “[l]ight switches, outlet covers and thermostats were smashed. There was what looked to be crowbar damage along the staircase. A large pool of paint had hardened on the living-room carpet. It appeared that someone had dripped motor oil in a trail that wound its way through every carpeted room. The appliances were gone, as were most light fixtures. A cabinet door had been removed and left soaking in a full tub of water. Not a wall was left without a hole the diameter of a closet rod, including the pink child’s room once carefully decorated with a floral wallpaper stripe.” Others have taken a more profitable approach to the destruction of their foreclosed home by selling off the oven, refrigerator, built in microwave, and the dishwasher, all of which are technically part of the home and are not separable.

Banks rarely pursue charges against destructive homeowners; it’s not worth the cost and trouble. Instead banks are now paying foreclosed homeowners to walk away without causing any problems. They have paid out as much as three thousand dollars to some home owners and the practice looks to be continued as the banks are desperate to avoid any unnecessary hurdles in selling off their foreclosed properties.

Crime does not always involve a gun, sometimes its the seductive words of a clever con artist that knows exactly what to say to a desperate person. The promise of professional help from supposed experts is always an alluring prospect. Most people are trusting and honest, they will take people at their word that this expert is licensed and sincere in their advances to help the homeowner out of their troubles. Con artists will falsely tell a desperate homeowner they have a special relationship with lenders and guarantee they can stop foreclosure. The promise to deliver on saving the homeowners home is seductive and blinding. These con artists have used this to their advantage to rip off unsuspecting homeowners.

One of the most popular ways the con artist will operate is by asking for money up front for their fees with the promises that they will negotiate with the lender on their behalf. These con artist, if they do negotiate with the lender are either doing the bare minimum phone calls or more likely doing nothing at all. It is a growing problem in the state of Florida, and has gotten the attention of the government. Since October 2008, Florida’s Economic Crimes Division has filed 17 civil lawsuits for mortgage fraud or foreclosure rescue violations, recovered $1.5 million in restitution for distressed homeowners and shut down several businesses. The Attorney General’s office has also investigated 83 businesses for potential violations of Florida’s Foreclosure Rescue Fraud Prevention Act. This problem is real and present in Florida, there are street signs on telephone polls promising the world to homeowners, or they prey on them over the telephone.

The most important thing for any home owner to be is skeptical of any one promising them help, especially if the person offering you help is contacting you over the internet or telephone. Having to pay for a service before you get it should always serve as a warning to any home owner that the person you are dealing with may be up to no good. “If consumers are asked for an up-front fee, are told to stop making their loan payments, or are guaranteed” a modified loan - it’s a tip off to a rip off,” said David Vladeck, Director of the FTC’s Bureau of Consumer Protection.