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.

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.

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

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.

Normally when some one has to give up their home through a short sale or just gave back the deed to the lender, they would suffer a hit of having to wait up to four to five years before they could re-qualify for financing to buy another home. Instead Fannie Mae wants to reduce that time to as little as two years. In a recent bulletin to lenders Fannie Mae said it was relaxing rules that prevented those that participated in a short sale or a deed in lieu of foreclosure from obtaining mortgages for up to five years.

There are some strings attached to this in order to qualify in two years. In order to qualify in two years most borrowers will need to put a minimum of 20% down, if they can only put down 10% then the wait could move back up to four years. And if they put down less than 10% the wait could be even longer. Those that can show that there were “extenuating circumstances” (like a loss of employment, divorce, or health issues), then they might be able to qualify for a new loan within two years. Fannie Mae isn’t helping out everybody, as those who lost their home to foreclosure will still have to wait a mandatory five years.

Before anyone can get to the point of how much money down they can put there is one substantial hurdle they must clear, they must be able to meet Fannie Mae’s rehabilitation requirements. In order to qualify for a new mortgage Fannie Mae wants borrowers to reestablish their credit sufficiently to get a passing score on the companies automated underwriting system. However, according to the bulletin, Fannie Mae wont consider applications with non-traditional credit.

This is great news for those who qualify and allows many people who have been able to recover a faster path to becoming a home owner again. These changes are set to take effect on July 1, and it will be of great interest to many annalists to see the impact it will have on the sluggish housing market.

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.