Orlando Foreclosure Defense

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).

In this bloggers humble opinion, central Floridas biggest city needs a new identity. The latin fever that has swept most of the country, needs a permanent imprint on Orlando. A name change needs to reflect the true feel of the city, while also showing to the rest of the world that it is a true international city. The best way to do that is by borrowing the name from one big city and applying it to Orlando, but with a twist. Thus, I have come up with REO de Orlando, rolls of the tongue doesn’t. Say the name to yourself a couple times, and you get a wonderful mixture of images from the real Rio and Central Florida, its a Mickey and samba fusion that no one can deny!

The name REO in our case has a slightly different meaning than Rio de Janieros, but just slightly. While their Rio, is translated to river, our REO stands for Real Estate Owned. (We might as well embrace our standing in the home foreclosure mess while we capitalize on a name change.)

New numbers from the Orlando Regional Realtor Association have shown that two thirds off all central Florida home sales were distressed sales, with REO sales accounting for half of the total sales activities. The exact percentages break down as follows, 46% were REO listings, 31% were short sales, and 31% were traditional sales.

The ORAA has not been too surprised with the amount of the market that REO homes have taken up, but has been surprised with how well they have been selling. The ORAA chairman of the board, Kathleen Gallagher, has said “foreclosures are selling quickly, especially in the lower price ranges that are attractive to first time home buyers.”

The best news out of the enitre report is that there seems to be more demand for these foreclosed properties, which the ORAA believes is a sign of slow progress to the entire Central Florida housing market.

This name change can work, and it would serve a dual purpose of increasing tourism while serving as an ever present reminder of the economic mess we were in.

You might be asking yourself what is PACE? I know I did. It stands for Property Assessed Clean Energy, and its a federal initiative aimed at reducing the high upfront costs that home owners encounter when they are trying to make energy saving retro fits to their homes. Under the program the homeowner borrows money from their local government to pay for the retro fits and will then have to repay the local governments over a 15 to 20 year period through a special assessment that is added to their property taxes. The local governments fund the program by selling municipal bonds to local developers.

So far it sounds like a pretty rock solid plan. Homeowners get to modernize their home, electrical consumption goes down, more trees are saved, and local investors make a little money. The only problem is that Fannie Mae and Freddie Mac have concerns.

Their concerns stem from the fact that under this program PACE liens become senior to existing mortgage debt. Fannie and Freddie have gotten so concerned that they have sent letters out to banks that reminded them that they cant purchase loans that have senior liens on them.

Additionally, these letters are suggesting that Fannie and Freddie wont allow borrowers with PACE liens to refinance their homes or sell their homes until the lien is paid off.

Many supporters of PACE are concerned that if Fannie and Freddie still hold this view that the program will effectively be killed. They believe that because Fannie and Freddie control about two thirds of all the mortgage lending, and practically control what goes on with the market. Critics have their concerns as they believe that the program does little to ensure that borrowers can repay their loan.

What will happen with PACE? It looks like the writing is on the wall, if Fannie and Freddie don’t like it, then its as good as dead. I think PACE is a victim to bad timing, had it come out six years ago I’m sure it would have been a reasonably successful program that would have helped with our mounting energy problem.

Divorce was once simple, noble even, but things change. It used to be a grinding, bloody, take no prisoners affair, an inter family “Battle of Somme”, no one really wins but each side perceives a victory. The one item on every divorce that is the single most fought over property, is the home. Many going through a divorce would rather have their dog go to the other spouse than the home. The goal for most is to keep the house at all costs a sort of “don’t give up the ship” mentality that allows the person who gets to keep the home a sense of victory over the other spouse.

Today the world is upside down as the new norm in a divorce has the spouses fighting over who doesn’t get the house. Its a mad world we live, but there is a reason why these spouses are playing hot potato with their home, its negative equity. Before the housing crisis and in most situations the house was an asset which could be divided between the spouses. The big problem now is that the homes at issue between the divorcing spouses are worth less than the mortgage they are paying on it, and the idea is to not get stuck owning the house when its going to be a financial burden.

“I had some folks that bought a home and then ended up splitting up, and the home hasn’t been worth enough to sell. They ended up renting it for a loss,” said Chris Upham, a Coldwell Banker real estate agent who works throughout the Washington D.C. region.

Once the housing crisis settles and things return to normal so too will divorcing spouse battle to keep the home from the others hands. This period will likely serve as a strange tail to upcoming divorce attorneys, and even possibly serve as the premise for a romantic comedy film in which a divorcing couple rekindles their love through their exploits of tricking the other to take the house.

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.

In this volatile real estate market and recession economy, many homeowners are faced with the difficult decision of choosing between filing a bankruptcy and defending a foreclosure. Unfortunately, the dominant thought among most attorneys is that bankruptcy is the proper remedy to address foreclosure. Our law firm handles both foreclosure defense and bankruptcy, so we have the benefit of seeing both sides of the coin.

For many individuals with extensive consumer debt or medical debt, as well as debt relating to real estate, bankruptcy is an option. (however, one should never forget the power of negotiating debts).

For those individuals who are mainly dealing with debt relating to their real estate holdings, it is often a poor decision to file a bankruptcy prior to defending a foreclosure.

For those individuals trying to save their homes or real property, a Chapter 7 bankruptcy will do little to save a home, except briefly delay a foreclosure case. In fact, Chapter 7 is designed to liquidate debt. For those individuals considering Chapter 13 bankruptcy, they will be met with an often difficult and lengthy repayment plan. Bankruptcy judges are not endowed with the authority to modify mortgages; therefore, Chapter 13 is often not helpful to homeowners.

A clearer way to protect a home is to pursue one of the many foreclosure alternatives including loan modification, reinstatement, or refinancing. Often these alternatives take time and may take skilled legal advice. While in the process of pursuing foreclosure alternatives, property owners may be sued for foreclosure. A skilled foreclosure attorney can help defend the foreclosure and advise borrowers regarding foreclosure alternatives.

Many people are not interested in saving their homes. Perhaps they have no equity or are upside down, where they owe far more than the property is worth. Perhaps they do not have the financial means to qualify for a loan modification, reinstatement, or refinancing. Or perhaps they are simply tired of the system- they are fed up with dealing with banks. Many people fear a deficiency judgment more than anything else. A deficiency judgment may arise where a borrower’s property sells at a foreclosure auction for less than the amount that is owed on the loan. In such a scenario, the borrower could be held responsible for the difference owed or the “deficiency” amount.

While the potential for a deficiency judgment is a valid fear for homeowners, there are tools and options that will avoid a deficiency without filing bankruptcy. First, the homeowner may enter into a short sale, where the bank approves the sale of a home for less than the amount owed. In a short sale, the bank forgives the difference owed and the borrower is relieved of any liability.

Another solution to avoid a deficiency judgment is a “deed in lieu of foreclosure.” In a deed in lieu scenario, the borrower turns the deed over to the lender in lieu of foreclosure; this means that the lender promises they will not file a foreclosure or seek a deficiency judgment against the borrower. A deed in lieu avoids a deficiency judgment, without the need to file bankruptcy.

Finally, for those individuals already facing a foreclosure lawsuit, a skilled foreclosure lawyer should be able to defend foreclosure cases and negotiate a favorable “consent judgment.” In such a consent judgment, the borrower consents to the entry of a foreclosure judgment in exchange for the banks promise and guaranty to waive any deficiency against the borrower. Many of our clients want us to time the entry of such a consent judgment so that they are able to get the maximum time in their home. This arrangement affords our clients the maximum use of their property and also allows our clients the opportunity to pursue other options as they see fit, including loan modification or reinstatement. There is a great deal of value for those borrowers that choose to pursue a consent judgment- the borrower essentially walks away from the property without owing money to the lender, and without having to file a bankruptcy.

While not every homeowner may be able to pursue a loan modification, short sale, deed in lieu or consent judgment, these are excellent options to avoid debt and avoid filing a bankruptcy. Moreover, while borrowers pursue these options they are able to continue living at the property, or renting the property to tenants. This usually means that money is saved or money is earned. Finally, if these foreclosure options do not work out in the long run, bankruptcy is always a failsafe option- it can always be filed if everything else fails.

The Kramer Law Firm defends foreclosure and represents individuals in bankruptcy throughout Florida. For more information on mortgage foreclosure defense, please visit http://www.mykramerlawfirm.com/Foreclosure-Defense-Overview/Foreclosure-Defense.shtml. For information concerning bankruptcy, please visit http://www.mykramerlawfirm.com/Bankruptcy-Overview/Bankruptcy.shtml. The above article is not intended as legal advice and should not be taken as such. Always consult with an attorney of your choosing concerning any legal questions that you may have.