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.

That headline is the worst nightmare for any law firm, and for three of them in South Florida its a reality. The Florida Attorney General has recently issued a subpoena requesting thousands of papers from attorneys working on foreclosures. This investigation is targeting firms that handle a substantial volume of foreclosure cases for lenders, those firms are the Law Offices of David J. Stern in Plantation, the Law Offices of Marshall C. Watson in Fort Lauderdale, and Shapiro & Fishman which has offices in Tampa and Boca Raton.

Attorney General Bill McCollum has said that the reason for the investigation is that these firms may have presented fabricated documents in court to obtain get foreclosure judgments. The Attorney General has also claimed that these firms actions may have impacted thousands of cases in which the lender received a final judgment against the homeowner.

This whole situation has only just come to the attention of the economic crimes division because attorneys for homeowners brought it to their attention. The director of the economic crimes division, Mary Leontakianakos, has said, “I can tell you having seen some of this paperwork there is clearly some concern.”

The attorney who represents Stern’s firm, Jeffrey Tew, has said, “Every foreclosure is personally supervised by a circuit judge who is there to do one thing: Make sure the rights of the borrower or lender are protected.” In addition to this investigation by the state, Stern has also been sued by a homeowner who has accused them of generating fraudulent mortgage assignments.

This is the second time within the past year that the state has moved to investigate firms that handle foreclosures. As with the first time it will certainly take some time and effort to sort through the thousands of documents that will be involved with the investigation. These sorts of developments bring with it a great deal of anticipation to find out the end result, but as time is the enemy with these investigations it will be some time before we all find out the result. I will certainly keep abreast of any developments in this and hopefully update with a posting.

The man of steel is usually busy fighting off aliens, or Lex Luthor, but recently he showed that he is willing to help out a family facing the loss of their home. Now you might not think that Superman saving a home makes for an exciting story for a comic book, and you would be right. I doubt that even the biggest Superman fan would want to read a comic book about Superman’s legal battle to save a family’s home from foreclosure, its just not compelling.

However it is compelling when it actually does happen. You might be expecting that the last Superman actor, Brandon Routh, helped some poor family after hearing their story, but that’s not the case. Instead the comic book version of Superman came to the family’s aid in the strangest way.

A family living in the South was about to lose their home through foreclosure, it was an inevitability, there was no rich uncle to bail them out nor a technicality that could save them. In the family’s cleaning up of the house to start the process to move out they came across a box of old comic books. In that box they found the holy grail of comics, Action Comics #1, also known as the first appearance of Superman.

All along they had sitting in their basement one of the most valuable pieces of Americana pop art. Recent copies have sold at auction for $1 million to $1.5 million. The comic book graders believe that this family’s copy won’t fetch that amount at auction, but they still believe that it can bring it $250,000 at a minimum.

It’s heartwarming to read good news like this and realize that sometimes little miracles can happen. It also teaches a valuable lesson, don’t through away your kids comics; they could save his house one day.

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.

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

Its an interesting question, can you undue a foreclosure sale? The answer is yes, but a more interesting question is why would you want to prevent this? Well that’s a little trickier to answer. You might be a bit perplexed at this juncture so let me explain things.

There is this interesting case were Wells Fargo filed a mortgage foreclosure action against the homeowner for failing to keep up with the payments. The homeowners never filed any answer to the foreclosure, so Wells Fargo got a final summary judgment in their favor. Then before the foreclosure sale, Wells Fargo filed a motion to cancel the sale, because the parties had entered into a loan modification agreement.

So far this story isn’t that interesting, except that the court denied the motion to cancel the sale. This case takes a further twist when after the foreclosure sale, in which Wells Fargo bought the property for $100, the court denied an unopposed motion to vacate the sale. Another way of looking at this whole case is that the trial court wasn’t too interested in the parties working things out.

As you can imagine Wells Fargo appealed to the 5th District Court of Appeals. The 5th DCA was probably scratching their heads like I was when they reviewed the case, so they did the logical thing and asked the trial court to explain their denials.

The explanation that the trial court came back with, was less than convincing in the eyes of the 5th DCA. The trial court reasoned that because Wells Fargo didn’t attach a copy of the modification agreement to their motions, then that provided the court with a basis to deny the motions. The 5th DCA bashfully pointed out that a copy of the modification was never necessary, and that there was no basis to deny the motions.

Don’t worry this story has a happy ending because the DCA reversed the trial court, thus restoring balance to the force (law).

Judges can be an interesting lot, they have so much power and influence, and yet are often reserved. However, one thing is very clear, when a judge wants to drop the hammer it can come down with a furious anger that will leave everyone in the radius shell shocked.

Such an event occurred recently when a Miami-Dade Circuit Judge wiped out a $207,000 mortgage, when all the homeowner was looking for was a loan modification! Now your first question might be what argument did the attorney make to get such a result, but that isn’t the question you should be asking, instead you should be asking what did the plaintiffs due to upset the judge that badly?

The answer is simple, they didn’t do what the judge wanted them to do. Defiance has its price and for the plaintiffs it was having the debt canceled. This whole case started when the bank was granted a foreclosure sale on the homeowners condo. After this a problem arose when the bank lost the note, and so the judge ordered the bank to post a $414,000 bond to indemnify the homeowner in case another lender filed a claim against the condo.

As you might have guessed the bank never posted the bond, and then moved forward with a foreclosure sale. The defense tried to stop this by arguing that the bank did not follow a court order. The judge agreed and brought the hammer down on the plaintiff by dismissing the foreclosure case with prejudice, canceled the mortgage, and returned title to the condo to the homeowner.

The part of the whole proceeding that the court could have charged admission to see, was when the judge dressed down the attorney for the plaintiff. The judge is quoted as saying, “Some day, this foreclosure crisis is going to be over, and you need to decide what kind of lawyer you are going to be.” She went on to say, “Because at the end of the day, you are responsible for your client’s compliance with court orders.” The attorney tried to apologize and said that this was all a misunderstanding of the order, but the judge had none of that and stated, “I don;t want apologies… I want performance. I want responsible attorney who meet the basic standards of know what … is going on in their files.”

The whole article is linked below, its definitely a good read and serves as a wonderful example of what not to do when a judge tells you to do something.

http://4closurefraud.org/2010/05/25/whoa-florida-judge-wipes-out-homeowners-207000-mortgage/

Public perception can be a hard thing to break, once a popular view is established the public is typically unwillingly to change their view on this perception. Some popular ones are that, “carbs are bad”, “politicians are corrupt”, and my favorite “Revenge of the Sith is better than Return of the Jedi.” Many are comfortable with broad assessments of people and situations, and to a degree many public views have their merits.

A newer public perception deals with how many view strategic defaulters. Ask your average person about how they feel about someone who can pay their mortgage, but has decided not to, so as to save themselves money, and they wouldn’t have kind things to say about them. Certainly, many would call them cold and calculating, or that they should honor the contract that they signed because to not do so is dishonest. Simply put, there is strong negative public perception of strategic defaulters.

That perception could be ready to change, as there is new research that has gone into the motivations of strategic defaulters. The findings are surprising and show an emotional complexity that most people have not considered. The research by Brent White, an associate professor of law at the University of Arizona, has found that the decision to strategically default is mostly motivated by emotion and not from financial considerations.

He found that these borrowers, “feel great anxiety about their financial situation, are overwhelmed by a sense of hopelessness and are angry” about how the lenders are refusing to help or that the government is not taking any action. He also found that many of these people are fearful with proceeding with a strategic default because of the social stigma that attaches with those that foreclosed on, and often go to great lengths to avoid the default option.

Mr. White also found that many strategic defaulters were more likely to default if they knew someone who had already done so. Additionally, in his research Mr. White has found that many strategic defaulters feel frustrated and angry with a system that they perceive to favor those who were not responsible with their money, and feel “left out while the less deserving get help.”

Overall these strategic defualters shouldn’t be ashamed for what they are doing, often they are making a sound financial decision that is in their best interest. Large companies walk away from bad investments all the time in order to survive and make their business work, why should the individual be any different. The idea of paying full value for something that is now only half value, is absured.

Flippers, (not the ones who love your driving), have been both celebrated and despised by the general public. Many feel that flippers are the reason why the housing market went into the tank, while others have applauded them as being shrewd business people. However you may feel about them, there is one couple in south Florida who wants to take them to court.

They are suing the builders of their town home community, they say that it is filled with transients, who party all night, park all over the place, and worse of all have installed unauthorized satellite dishes. (I’ve lived in communities where satellite dishes are banned, and let me tell you, if they find out you have put one up they are hunting you down with a zeal that would make Jack Bauer proud.)

They want to be reimbursed for the purchase price of their home and are also claiming to be suffering from emotional distress, embarrassment, and a loss of capacity for the enjoyment of life.

When the couple originally bought their home in 2004 they paid about $360,000 for it, and it is now valued at $160,000. They feel that part of the reason for the decrease in value is due to the constant flipping of houses in the neighborhood. They claim that perpetual flux that the community was in damaged its reputation, and created an environment in which transient owners would destroy the neighborhood.

Of the 157 lots that were sold in between 2005-2006, 78 were relisted within 18 months. Those numbers certainly support the couples portrayal of a transient neighborhood. The couple claim that the builders had stressed to buyers that they had to stick around for at least 18 months, in order to facilitate a stable community, and are angry that the developer did nothing to prevent this situation from occurring.

The couple say that they feel misled and duped into joining a community of real estate speculators.

The big news of the day, at least in Central Florida, is that the Attorney General’s Office has opened an investigation into Florida Default Law Group. The investigation began this past October, but has become public just today. This investigation is particularly newsworthy because of the position Florida Default has in Florida, it is one of the largest, if not the largest, foreclosure law firms in the state.

The main point that the Attorney General’s Office is alleging is that it appears that the firm is filing faulty bank paperwork in thousands of foreclosures a month. The Attorney General’s website has expanded on this by alleging, “these documents have been presented in court before judges as actual assignments of mortgages and have later been shown to be legally inadequate and/or insufficient.”

The Attorney General’s Office is also alleging that Florida Default is working closely with Lender Processing Services, a company that is being investigated by the Justice Department. Lender Processing Services, process and at times produces documents needed by banks to prove that they own the mortgages.

“You see all these documents time and time again which on their face are not possible,” Tampa attorney Matthew Weidner said. “The Judges cannot just ignore this. They cannot ignore blatant fraud in front of their faces.”

It is too early to tell what effect this investigation will have on current or future foreclosures in Florida, but Twelfth Judicial Circuit Chief Judge Lee Haworth said news of the investigation could prompt judges to look more closely at filings. However, Judge Haworth also lamented that many judges don’t have the ability to check documents as thoroughly as they would like.

The Attorney’s General Office has noted that this investigation is a civil investigation, not a criminal investigation, and the fact that they are being investigated does not prove any violation of the law.