Orlando Foreclosure Defense

With the endless backlog of foreclosure cases sitting in the system, waiting for their turn in court, the state has finally decided to spend some money to help move things along. Recently a $6 million boost to trial courts and $3.6 million to court clerks has been granted by the legislature to help trim down the backlog of cases. The money is going to be used toward hiring more case managers, general magistrates, and additional senior judges.

The backlog of cases is one of the largest in the country with an estimated amount of 600,000 statewide. The stated goal with this money and additional hiring is to reduce the backlog by 350,000 cases by the end of June next year. Kristine Slayden, who works for the Office of the State Courts Administrator, has stated that, “The Legislature said we’ll never get out of the housing slump if houses are sitting out there vacant. This is going hand-in-hand with managed mediation that has a time frame goal of 120 days in resolving cases.” Additionally Slayden said, “Hopefully, this is providing an opportunity for homeowners to have a voice in what is important: to stay in their homes.”

As a means to supervise the progress of the courts and encourage monthly improvements the OSCA has outlined monthly progress reports that must be followed and reported back to the OSCA. So far one of the speed bumps to the plan has been that lenders are constantly asking to postpone sale dates on foreclosed properties. This has frustrated the OSCA as the increased funds have opened up more dates in the calendar, which the banks are not taking advantage of.

The goal of reducing this backlog by 62% is lofty, but the OSCA is rather confident that this injection of money and resources will be able to help reach that goal. Some counties are already reporting some gains in reducing the backlog in their areas because of previous steps, while others have reported little to no change. While it is commendable that the state is trying to address this problem, it is unlikely that it will be able to achieve their goals because the OSCA is depending on the amount of foreclosures to fall this coming year and that is a rather hopeful expectation.

It is getting harder and harder to keep up with all of the clever terms analysts have been coming up with in the foreclosure game. This new one, Jingle Mail, is clever and pertains to a particular sort of phenomenon, the commercial walk away. Jingle Mail, refers to when the commercial property holder sends the keys to the property to the mortgage holder, instead of making their monthly payments, even when they can afford to do so.

The reason why these commercial property holders are walking away is no different than the reason many homeowners are walking away, the loan is more than the property is valued. The biggest difference is that the values are not in the tens of thousands, as many homeowners face, but in the millions. A perfect example of the commercial strategic default occurred when Taubman Centers, Inc., walked away from the Beverly Hills Center when they stopped making interest payments on the $135 million mortgage, because the value of the property had fallen down to $52 million. The chief executive, Robert Taubman said, “we don’t do this lightly,” but it would be clear to anyone with any sort of business sense that this was the right move.

This brings me to the hypocrisy that the banking industry, and much of the public, has when an individual homeowner strategically defaults, opposed to a business. The banks tell us that the individual is duty bound and obligated to make payments when they can afford it, but they accept that a business will walk away from a multimillion dollar property in the same situation because “its business.”

In fact the system is complacent in allowing commercial property owners an easier time to walkaway because often the loan is nonrecourse. Which means that often the most severe penalty is the forfeiture of assets and cash flow they generate. The double standard goes deeper, as the industry is willing to accept a catastrophic 2014, in which $1.4 trillion of commercial real estate debt will come due and of those properties 52% will be under water. Of those under water the debt-analysis company Trepp LLC expects many to walk away.

Trying to guilt homeowners into paying their mortgage when it no longer makes any economic sense, is the last card that mortgage holders can play and it is slowly starting to fail as many are treating their lives with the business savvy of a major corporation.

Its no secret that Central Florida is at the forefront of the housing crisis, and that the area can serve as a measuring stick as to how the whole country is faring in the industry. So, it should serve as some positive news that recent reports are showing that the Orlando metro area has shown a jump in permanent mortgage modifications within the past three months.

In the past three months there has been about 7,800 permanent loan modifications in the metro Orlando area. This is a 65 percent increase from the previous three month period. The latest report also shows that Orlando is in the top of the nation for receiving loan modifications, showing that Orlando has had 15,130 through the end of June.

This recent report has also revealed that many more homeowners are willing to extend the terms of their loan for another decade, in order to secure their modification. The report certainly shows a jump in those willing to accept these terms from only 39 percent who were willing three months ago to 56 percent who are willing now.

Out of the entire US Department of Housing and Urban Development and the Department of Treasury report, the most encouraging numbers were that those who received permanent modifications, the median had $500 a month cut from their monthly payments.

As there was a fair amount of positive news in the report, there were still areas of concern which showed that the industry as a whole is still not moving forward at a quick enough pace to modify loans. An example that the report showed was that Bank of America, which is one of the largest mortgage holders, has only addressed 15 percent of the mortgages that are behind on their payments two months or more. While in comparison, the industry average is at 23 percent for conversions.

While this report is a positive sign that modifications are happening in Central Florida, one can only hope that this report shows the begging of a trend upward in helping out homeowners.

Its hard to appreciate a mountain when your standing on top of it, sure the view is nice but you don’t get a feel of how big and tall it really is until you step away. The new US housing market was such a mountain, which achieved monstrous heights just five years ago and has now been humbled down in size.

A recent report from the Commerce Department has put into numbers what everyone has already known, we aren’t building new homes at the pace we used to just 50 months ago. In fact activity is at its lowest level since the Second World War.

The report shows that this year we will build 454,000 single family homes, which is just slightly more than the 442,000 we built in 2009. The Department has put these figures into context by showing that the US is producing new homes at a third of the level we did in 2007, when we made 1.3 million new homes, and less than a quarter of the level in 2005, when we produced 2.07 million new homes.

Analysts have compared this report with previous data and have come to the conclusion that this is the longest and deepest housing downturn on record. While that information isn’t too surprising, the fact that many analysts remain hopeful for a coming recovery is surprising. Some view the data a stabilization of the industry, with this years uptick in building as a sign that a slow upswing is on the horizon. Others are maintaining that the market has bottomed out and that in the next year or two the upswing in home building will see sizable increases.

While some are looking at the news with a silver lining, most maintain that this data is troubling. Especially since Wall Street had low expectations to begin with and anticipated numbers of around 730,000 in new homes being built.

Pop quiz hot shot. There’s a DC-9 jet landing just outside of Mexico City, the landing crew refuse to let soldiers near it because of a “dangerous oil leak,” what do you do? Well first you should be suspicious when you hear something like that, especially in Mexico. (Where do you think the X-Files came up with their saying “Trust No One.” A day trip to Tijuana will provide that sort of life lesson.) Next you should search the plane, so you can help out with this “dangerous oil leak.”

Luckily for all of us the Mexican military did search the plane and found 128 black suitcases filled with cocaine. A total of 5.7 tons of cocaine was found on the plane at a value of $100 million. (5.7 tons! I’m not an aviation expert, but how did they even get that plane to fly?)

This story isn’t that noteworthy for the amount of drugs seized, as I am sure the Mexican military get huge drug busts at least once a month, however it is noteworthy because of the DC-9 jet. That jet that the smugglers used was purchased from laundered money transferred through two US banks, Wachovia and Bank of America.

Wachovia has admitted that it failed to monitor its currency exchange houses, and that some of the cash was used to buy four jets that have shipped 24 tons of cocaine into Mexico. Wachovia has also admitted that it didn’t do enough to monitor for elicit funds during its handling of over $378 billion in currency exchanges between 2004 and 2007.

The federal prosecutor who is handling the case characterized Wachovia’s conduct as a “blatant disregard for our banking laws.” He went on to say that Wachovia’s conduct gave “cocaine cartels a virtual carte blanche to finance their operations.”

It is absolutely shameful that a bank like Wachovia, who is a primary player in the mortgage business, has been mixed up in laundering drug money and indirectly financing a brutal drug war south of the border. Where is the accountability? Who is in charge? Reading this story just adds to the gray hairs. (The irresponsibility of banks no longer surprises me. I’m looking forward to the day when the news breaks that a 12 year old successfully got a loan of $17 million to finance his start up professional tether-ball league.)

http://www.bloomberg.com/news/2010-06-29/banks-financing-mexico-s-drug-cartels-admitted-in-wells-fargo-s-u-s-deal.html

Most people think of mortgages as they functioned thirty years ago. A prospective homeowner goes to the bank, takes out a loan and pays the bank a mortgage payment every month. In thirty years, once the loan is paid off, the bank gives the homeowner a satisfaction of mortgage and everyone is happy.

This was before the rise of modern securitization, pooling and bundling shemes where mortgages were traded, sold, transferred, raided and pillaged- these are the same schemes that have left our economy in shambles.

I also hear many people express the belief that banks do not want their homes when they are discussing the current foreclosure crisis. They mention that banks are not in the business of owning and selling real estate. They discuss how their home is worth so much less than what is owed on the home, and assume that any bank must be suicidal if they proceed to obtain a judgment for foreclosure.

However, just like the mortgage securitization and trading schemes, there is more that meets the eye when it comes to what the bank wants. There are reinsurance agreements, reimbursement agreements and a host of offerings by the Treasury, FDIC and Federal Reserve designed to cushion the blow that this housing crisis has dealt to the banking industry.

The video link below represents one individual’s opinions on behind the scenes dealings between the banking industry and government. Please feel free to email us if you have any information or ideas on what is going on behind the scenes.

Everything is not as it seems. Just start digging a bit and you will find yourself tumbling down the foreclosure rabbit-hole.

Indymac and One West Video Link