Archive for March, 2011
I live and breathe the foreclosure crisis every day, but the following article was alarming, even for me. Who else is sick and tired of watching the banks get richer while everyday Americans continue to lose wealth at unprecedented rates? Perhaps the only thing more disgusting is the utter apathy of our nation’s “leaders” as banks take our money by the billions. When you read this article and ponder the facts and figures, it’s no wonder so many homeowners are choosing a strategic default.
Here’s the article…
The mortgage crisis in this country doesn’t get much attention in Washington these days, but it’s huge. It’s so huge, in fact, that it dwarfs most of the economic issues that have Washington in their grip. It’s so huge that it’s dragging down our entire economy. It’s so huge that the numbers can be difficult to picture.
The scale of the crisis is, in a word, staggering.
Here are seven charts (and another that was borrowed from the Wall Street Journal) along with some facts and figures that will help sketch out the scope of the problem. The numbers that follow are most likely understated, if anything, because we’ve left out some forms of reduced spending (like that which takes place when homeowners who have paid off their mortgages lose home value.)
The budget cutters push the idea that there’s a dichotomy between the heart and the brain, and that they’re on the “brain” side. But the numbers don’t lie: Ignoring the foreclosure crisis is both heartless and brainless.
See for yourself.
By the time you read this …
How big is the mortgage crisis? Pick an adjective: astronomic, colossal, enormous, gigantic, ginormous, humongous, jumbo, mammoth, massive, monstrous, mastadonic, monumental, prodigious, tremendous, vast, very big, very large, whopping. Here’s how big it is. Let’s assume that you’re reading these words one day after I wrote them. That means that:
By the time you read this, there will have been approximately 8,500 foreclosure actions in this country  – more than one thousand every hour during the working day.
By the time you read this, homes in the United States will have lost more than $13 million dollars in value.  During a 24-hour day, this figure comes out to more than $500,000 an hour.
By the time you read this, homeowners will have paid $750 million in mortgage payments for non-existent housing value– that is, the amount on their mortgages that disappeared when the bubble burst – according to our estimate. 
By the time you read this, the nation’s bankers will have earned nearly $400 million, of which $56 million will be bonus money.  Bankers like to say they work 24/7. (They don’t, but let’s say they did.) That means they will have collectively earned more than $16 million in salary and more than $2 million in bonuses during each and every one of the 24 hours hours before you read these words – morning, noon, and night.
And all of these figures for the last 24 hours will be reached again during the next 24.
Federal Spending vs. the Mortgage Crisis
How do the deficit and the mortgage crisis compare economically?
Here’s a fact for you: The amount of wealth American homeowners have lost over the least three years is much larger than this year’s entire Federal budget.
Even our conservative estimate shows that the debt that homeowners are paying off to the banks for no-longer-existing home value – “money for nothing” – is greater than the entire projected Federal deficit for 2011.
 Those figures could be a little misleading, since they compare a multi-year problem with a single year’s Federal budget. So let’s look at the mortgage crisis and its impact on 2011. This year’s estimated “money for nothing” payments dwarf the annual spending cuts that Washington’s fighting over right now:
They’re greater than this year’s projected savings from the President’s spending freeze, and much greater than the $30 billion in additional spending cuts which House Republicans initially demanded (and which they’re likely to get.)
What is the “Homeowner Bank Bailout”?
The first column represents my quite rough (but very conservative) estimate of the payments that consumers will make to banks in 2011 for home value that’s evaporated. That’s money to repay loans which banks often knew were likely to go bad when they issued. (If they didn’t know, they should have.) After their generous bailout (which was must costlier than has been acknowledged), the banks are still collecting payments for that portion of the loan that covers assets which no longer “exist.”
That amounts to an additional, invisible annual bailout every year for the US banking industry, funded by some of the people who can least afford it: struggling homeowners.  (This figure doesn’t even include people who’ve been foreclosed upon, which means the bank got to keep everything they’d paid into the house – and got the house, too.)
The “homeowner deficit” is strangling the country as the financial sector drains money from the overall economy for its own non-productive coffers. This chart illustrates that by showing that banks are once again grabbing an unhealthy share of our national wealth:
Source: Kathleen Madigan, Wall Street Journal
Without this drain, homeowners would be pumping hundreds of billions of dollars into the economy every year. Now that would be a stimulus.
Entitlement Cuts: Misguided Missiles
Instead of addressing the mortgage crisis, politicians (and the journalists who love them) are fixated on entitlement programs. How much sense does that make in dollars-and-cents terms?
The Best Stimulus: Homeowners or Corporations?
What’s the best way to stimulate the economy: By giving corporations tax breaks and regulatory relief, or by fixing the housing crisis? Both political parties are turning themselves inside out trying to please corporations – partly, they say, because reports say those corporations are sitting on nearly $2 trillion in cash. If we make the CEO’s of those corporations “feel better,” the argument goes, they’ll cut some of that cash loose for hiring and investment and the economy will pick up.
Let’s look at that $2 trillion in comparison to lost housing value, and to our estimate of the mortgages being paid on lost housing value:
Those corporations won’t really cut that cash loose until they know there are customers waiting to buy their products. There’s a great way to make that happen: by helping consumers (more than 20 million households altogether) escape the burden of all this underwater debt.
Less Is Less
The Administration’s response to this crisis has been woefully inadequate … and the Republicans are much worse than that. The GOP’s hard at work trying to end any assistance for underwater homeowners.
Administration programs were insufficient by design and then failed to meet even their own, overly modest goals. The HAMP program, for example, was never intended to help all of the homeowners who are still paying underwater mortgages. It should have been. Here’s how limited its goals were, when compared to the problem:
But even when compared to the number of homeowners facing foreclosure, it’s been a failure:
It hasn’t even spent more than a tiny fraction the money allocated to it!
And yet, incredibly, Republicans want to cut it. And the GOP’s Congressional leaders also want to kill several other programs for struggling homeowners, including a principal relief program that might help some of the 14 million underwater homeowners who haven’t yet missed a payment.
Source: New York Times
Despite the magnitude of the mortgage crisis, all we’ve been hearing out of Washington is endless chatter about “deficit emergencies,” the need for so-called “entitlement reform” (aka cuts), and the supposed “financial Armageddon” that faces us.  We’ve heard almost nothing about the crisis that is ruining millions of lives, costing us millions of jobs, and strangling the economy.
And by the time you read this, that won’t have changed.
 Based on February’s rate of foreclosures, rounded down to be make the estimate conservative. Foreclosure actions are defined as foreclosure filings and the sale of foreclosed homes.
 Based on January’s price decline of 2.5% in total value, divided by a 30-day month, using an estimated total residential real estate value of $16.3 trillion that was derived from Federal Reserve data.
 A very rough estimate. Assumes that roughly half of the total housing value lost in the bubble is included in mortgage principal that’s still being paid off (as opposed to foreclosures, etc.) This figure was derived from that amount, plus a rough calculation of the interest being paid and some assumptions about the remaining lifetime of the loan.
 Based on reported 2010 figures.
 It’s a critical battle, of course – especially to the people who are counting on the government to serve its function in time of need. This piece addresses our warped financial perspective, not the very vital role government plays in our lives. That should not be in question (although it is).
 But wait, as the ads say: There’s more. These homeowners can’t refinance, either, because they don’t have collateral (the houses aren’t worth as much as the new loan). Alll the “quantitative easing” in the world won’t touch them. So the banks are borrowing money cheaply and collecting it from these struggling borrowers at higher rates. 
 Nobody disagrees that it will be important to address the the Federal deficit over the long term, and Social Security’s funding issues will need to be addressed before 2037, when the program will only be able to fund 75% of its planned benefits. (Any plan that cuts those benefits below that amount, or cuts them by that amount even before 2037, is a hoax designed to raid the money that working Americans set aside for that program.)
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In response to my recent blog entitled Paying a Foreclosure Defense Lawyer, I received the following response (below) from Richard Shuster, a bright foreclosure attorney out of Miami. I thought his post, and my reply thereto, were worth sharing, as they discuss pragmatic issues facing homeowners. The issue, as you’ll see, is essentially a debate about how much foreclosure defense attorneys should be charging to represent homeowners.
My point isn’t to say “I’m right” and Richard is wrong, or anything like that. Rather, my hope is that it helps homeowners understand where I’m coming from in my defense of foreclosure cases and how other attorneys with a different approach view things.
Mark… I really do not think you can lump an amazing foreclosure defense lawyer like Thomas Ice in with a factory like Ticktin. Our firm, like Ice Legal charges monthly. If we knock one out of the park and get somebody a free home (we have done it three times working on number four).. our retainer provides for a contingency bonus.. (usually $20,000) but to get it was not only need to get a dismissal with prejudice we have to file a new lawsuit for the client to quiet title. Only we get them the house free and clear are we entitled to the bonus. As I see it if we have a shot to get a dismissal with prejudice, but only by hopping on a plane to take a deposition, we can afford to do this for $500 a month if we have the potential for such bonuses. Thomas Ice takes half day depositions… when necessary to get the job done for his clients. If a lawyer’s fee is a one time fixed fee, or $500 a month it might be difficult to spend $1,600 of time (4 hours at $400 an hour) and $300 to $500 for a transcript to take a deposition
but lawyers like Thomas Ice can spend the money and time if the get a small portion of the benefit that comes form a contingency bonus for an exceptional result. That bonus when the amount is small not the shock the conscious high 40% charged by Tictin can align the lawyers interest with the clients and reward lawyers who go above and beyond to achieve a spectacular result.
I’ve thought a lot about this since I posted this blog. Upon reflection, I agree that you and Ice shouldn’t be lumped in with Ticktin. If that’s how it came across, I apologize. I respect the work that you and Ice are doing.
That said, I’ve handlled a LOT of foreclosure cases and I’m confident that $500/month is not necessary to defend foreclosure cases.
My firm has handled many foreclosure cases. In my view, it doesn’t take $500/month to defend them, it just doesn’t.
(In fairness, it does seem the market for fees in Miami is higher than in my areas, so that is part of the disparity.)
Anyway, does that mean I think you and Ice aren’t doing $500 per month worth of work? No.
I tend to believe you are, particularly if you’re doing depositions.
(And that’s a big reason where you’re different from Ticktin, in my opinion.)
As you suggest, depositions are expensive, particularly if you’re paying/fronting the costs.
Respectfully, though, I wonder what that work accomplishes in the grand scheme.
Three dismissals with prejudice/quiet titles is great.
But out of how many cases?
That’s not meant to be critical, it’s really not.
Those three clients will love you for life, as they should.
It’s just that I have a handful of quiet titles in the works right now, without the $500/month.
I just don’t think $500/month is necessary, particularly when coupled with a four-figure retainer and a contingent fee.
As I see it, by charging less, my firm appeals to many homeowners who would otherwise not be able to afford an attorney. And for me, that’s a huge part of the point.
Many people just can’t afford $500/month. Many of my clients tell me “If I could afford that, I wouldn’t be in foreclosure.”
My business model is predicated on “what do I really *need* to collect from each homeowner to adequately and competently represent them?”
I’m sure I could (and arguably should) charge more.
But I’d rather put my firm in a position to help as many people as possible, particularly those who cannot otherwise afford a lawyer.
You may argue you do a better job than me. In some respects, maybe you are. I don’t have any quiet titles (yet). But for most of my clients, that’s not even a goal.
Personally, I don’t think that is a reasonable goal for any particular person. From a numbers’ perspective, sure, if any lawyer has enough cases, some of them are going to result in quiet titles. I just don’t think the chances of that are significant enough in any one particular case to justify extra charges.
As for the contingent aspects, I’m not arguing with the contingency if you get a quiet title. If you get a client a free house, a reward like that is reasonable.
My concern is with contingent fee contracts which call for a percentage even upon a dismissal without prejudice (or a dismissal with prejudice against the wrong entity).
I’ve probably gotten 20 dismissals without prejudice (without leave to amend), maybe more. It doesn’t happen every day, but it happens often enough that I consider it just part of the job.
I don’t see that as a basis to get a contingent fee. Why should I pocket five figures when the client may well get sued again? That doesn’t seem fair.
It’s particularly not fair when you combine that contingent fee with $500/month and a four-figure retainer, as many lawyers are charging.
I guess when it comes down to it, I want to represent my clients as inexpensively as possible, help them get back on their feet, and when they encounter legal problems in the future, I’m hopeful they’ll remember how fair and reasonable I was with them and they’ll come back to me.
These are just my opinions. Reasonable people can disagree. This is just how I’ve chosen to do business.
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As a foreclosure defense attorney with cases throughout Florida, I encounter all types of judges. Some are very fair towards homeowners and their positions, recognizing that many have valid defenses to foreclosure. Other judges are, well, not so fair. And many others fall somewhere in the middle.
In recent weeks, some of the judges in Florida’s Fifth Judicial Circuit have begun taking actions that I deem particularly unfair, reflecting a level of judicial bias that, in my view, is unbecoming of the entire legal profession. To illustrate, in one recent case, I filed a motion to dismiss that has been routinely granted by other judges throughout Florida. No, it’s not granted every time, but I’ve had a fair amount of success with the arguments contained therein. Anyway, in this case, Judge Hodges in Marion County denied the motion, sua sponte, without notice, without hearing, and without apprising me that he may rule without giving me a chance to be heard. Perhaps worse yet, he did so when the plaintiff had filed no response to the Motion to Dismiss and had done nothing to advance the case towards judgment. Simply put, the judge took it upon himself to advance the case towards judgment by denying a motion (which is often granted) without notice or hearing.
I found this conduct to be out of line and indicated as much in this Motion to Disqualify Judge. Today, I received an Order in the mail denying the motion without explanation, so I wrote Judge Hodges this letter telling him my views and concerns about the situation and his procedures as a whole. The point of the letter is to try to make the judge realize that, from my perspective, his actions reflect a level of bias that should not exist among judges. To illustrate, I asked the judge:
– If you were the foreclosure defendant, would you find it fair that the judge was taking it upon himself to advance a case towards judgment, particularly where the plaintiff was the only party seeking relief?
– If you were the foreclosure defendant, would you find it fair that the judge was denying a motion that was essentially unopposed, without notice or hearing, particularly when you know that similar motions are often granted in other cases?
Is this a bit hypothetical? Sure. But motions to disqualify judges are supposed to be viewed from the perspective of a reasonable homeowner. And, unfortunately, I fear that Judge Hodges, among others, has not really taken the time to view foreclosure cases from that perspective.
I’m really not sure how Judge Hodges will react to my letter, if at all. However, we must force judges like this to think about these difficult issues if we’re ever going to make any headway in overcoming the biases that so obviously permeate their way of thinking vis a vis foreclosure cases.
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It was September, 2010. I was defending a motion for summary judgment before Judge Parsons (Volusia County). The argument was really strong. Yet when the hearing began, I felt like I was battling for my life. Judge Parsons’ displeasure with foreclosure defense oozed from every fiber of his being. He asked pointed question after pointed question, grilling me for cogent explanations why summary judgment should be denied. I left the hearing having prevailed, but having felt like I just ran a marathon. Even as he denied the MSJ, the judge made it clear he wasn’t pleased to have to do so.
Fast forward to today. I’m attending a hearing before Judge Parsons on a Motion to Vacate an Ex Parte Order (in an unrelated case). The plaintiff, a securitized trust, filed suit in the name of U.S. Bank, as trustee for X trust. (It wasn’t “X” but that’s shorter than typing the full name.) A Notice of Lis Pendens, Assignment of Mortgage, and Motion for Summary Judgment were all in that plaintiff’s name. In fact, in an affidavit supporting summary judgment, a representative testified that U.S. Bank, as trustee for X trust, testified that the plaintiff was the owner and holder of the Note. My client, pro se at the time, filed a motion to dismiss and motion to strike the complaint as a sham. Both were denied.
Months later, the plaintiff’s lawyer filed a motion to correct “scrivener’s error” on the Complaint, Lis Pendens, and Assignment of Mortgage. According to the motion, the Plaintiff, i.e. the securitized trust, “did not exist.” Did not exist! That bears repeating:
The bank’s lawyer admitted the securitized trust that filed the lawsuit, sought summary judgment, and filed an affidavit in support did not exist.
It wasn’t like the trust name was off by one letter, either (like could theoretically happen with a scrivener’s error – the name was totally different. Anyway, the Plaintiff asked the Court, ex parte and without hearing, to correct the alleged scrivener’s error by changing the name of the plaintiff as well as the assignee on the Assignment of Mortgage. Acting ex parte, Judge Parsons entered an Order granting the motion.
Justifiably feeling like he wasn’t getting a fair shake, the homeowner hired Stopa Law Firm. We moved to vacate the ex parte Order, arguing we should have had a chance to contest the motion to correct the purported “scrivener’s error” at a duly-noticed hearing. Today, Judge Parsons granted that motion. The hearing was brief but very interesting. With very little argument, the judge apologized for entering the Order ex parte, noting that such matters are often uncontested and he did not realize this one was contested. Quickly, the issue became whether the motion to correct the alleged scrivener’s error should be heard right then or at a future hearing.
The bank’s lawyer asked it to be heard right then, arguing the case had been delayed. The judge interjected, saying something to the effect of:
The bank is complaining about delay? I find that ironic. In October, I was handling 40-50 foreclosure cases at a time. Nowadays, I can’t get a bank to come have a hearing. The banks all shut down in October, stopped prosecuting these cases. I don’t see how the bank is now in a position to complain about delay.
From my perspective, it wasn’t just the ruling in this case, or what Judge Parsons said. It seemed to me that his entire approach/perspective on foreclosure cases had changed. Apparently, he realized that the banks chose to shut down operations due to their ongoing, systemic fraud and he wasn’t letting them get away with it any more. Maybe I’m reading too much into it, but the ruling and the commentary were a stark contrast to his demeanor prior to October and a refreshing change.
So as things now stand, the plaintiff is prosecuting a case on behalf of a trust that its lawyer has admitted does not exist. The hearing on the motion to correct “scrivener’s error” should be fun!
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The Tampa Tribune has a fascinating yet sickening story about a lawyer for BB&T who sent a Florida homeowner a demand letter requiring payment of the balance of her mortgage within 30 days. Threatening letters like this are common; where this one is so different is that the lawyer attached it to a document that looks like an official court filing in a pending foreclosure lawsuit … only it’s not.
Take a look …
At first blush, this looks like a typical Notice of Appearance by a law firm in a pending foreclosure case. Closer inspection, though, shows the document has no case number – and every pending lawsuit always has a case number. In fact, closer inspection of the Hillsborough County clerk’s website reveals there is no lawsuit pending at all against this homeowner; the lawyer just made it appear that way. Quite simply, as the article indicates, the letter and form are totally bogus!
So the question becomes – did the lawyer create the bogus form intentionally? Let’s put it this way. I’ve been a lawyer for ten years. I’ve represented Plaintiffs and Defendants in thousands of lawsuits of various types. I cannot fathom a circumstance where I’d sign a paper like that accidentally. I don’t see how it’s possible. How does one go about drafting a Notice of Appearance with that homeowner’s name on it, as a Defendant, if there is no lawsuit against that homeowner? Clearly the lawyer didn’t have copies of a court file or anything to that effect – there was no court file.
Unfortunately, a Florida Bar investigator seemed quick to let the lawyer off the hook, saying “I could see how with thousands of cases, a mistake like this could happen.” (BTW, that’s an odd comment to make about what is sure to be a pending investigation.) Anyway, as a lawyer, how do you sign your name on a court document and not realize there is no lawsuit pending? How does that form ever get drafted? Even if the lawyer cut and pasted from a similar form (not uncommon for this type of practice), why did the lawyer write that homeowner’s name as the defendant if there was no lawsuit pending? I just can’t fathom how it could be accidental.
Another telling factor – the letter attached demanded payment of the mortgage within 30 days. This is a very typical, pre-suit demand letter. Most mortgages have a provision requiring notice to the homeowner of the default on the mortgage payments and an opportunity to cure that default prior to filing suit. If that is the letter that was attached, then the lawyer had to know a lawsuit had not been filed; that’s the entire point of the letter – it’s sent prior to any lawsuit!
Now for a little fun.
Lawyers are generally immune from being sued for actions taken as a lawyer under a legal doctrine called the absolute litigation privilege. I’m simplifying, but this basically means that a party can’t sue the opposing attorney for defamation, or anything like that, merely because the lawyer is asserting a legal position in a pending case. However, this doctrine typically applies only to actions taken by lawyers during the course of pending lawsuits. Here, there was no lawsuit pending, so it seems to me that this homeowner has grounds for a lawsuit against the lawyer, the law firm, and BB&T, if she so chooses! Or if the homeowner doesn’t want to be a plaintiff in such a suit, it can assert defenses/counterclaims predicated on this issue if/when BB&T files a foreclosure lawsuit!
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In today’s Palm Beach Post, Kim Miller explains how The Florida Bar has an increasing number of grievances it is investigating regarding foreclosure-related issues. Will anything become of these grievances? Who knows. What’s discouraging in that regard is how David Stern is still able to practice law despite abandoning clients in thousands of cases and suing clients who he currently represents. I’m quoted in the article on that issue.
Here is the article…
Florida Bar President Mayanne Downs predicts some Florida attorneys will pay the ultimate professional price for foreclosure-related wrongdoing – disbarment – as investigations mount statewide. “It’s the death penalty of the legal profession,” said Downs, who spoke to The Palm Beach Post’s editorial board this week about legislative proposals affecting the courts and the state’s ongoing foreclosure tumult.
The bar, which is responsible for investigating complaints of attorney misconduct, has 222 foreclosure fraud cases open on 157 lawyers. Those numbers are up from the end of 2010 when there were just 69 cases pending on 48 lawyers.
While specifics of the cases are not public, complaints generally about the handling of foreclosures have included knowingly forged signatures on court documents, bad notarizations on assignments of mortgage and shortcuts taken that led to illegal home repossessions. There are also 28 open bar investigations on 23 attorneys stemming from foreclosure defense complaints.
Although homeowner advocates have grumbled at what they say is a lack of action taken by the Florida bar, Downs assured that her group is taking accusations seriously, even hiring Sunrise-based attorney Joel Klaits to work specifically on the investigations. “We wanted a consistent approach,” Downs said about hiring an outside attorney. “No one has suggested we should slow down our efforts to discipline lawyers involved in this and we haven’t.”
The bar’s investigations are separate from inquiries the state attorney general’s office is making of eight Florida law firms that represent banks in foreclosure proceedings. Five of the firms, including the once mammoth operation of David J. Stern in Plantation, have full-blown investigations ongoing by the attorney general’s economic crimes division.
Still, some defense attorneys question why leaders in the so-called “foreclosure mills” have not been suspended pending the outcome of the investigations.
“Stern should absolutely be on emergency suspension,” said Tampa-based foreclosure defense attorney Mark Stopa. “He is counsel of record in numerous cases, and has admittedly abandoned his clients in those cases. This has caused untold chaos for courts and litigants throughout the state.”
Earlier this month, Stern notified judges he would no longer handle foreclosures as of March 31, leaving as many as 100,000 cases statewide in limbo as they are transferred to other law firms. Palm Beach County’s share of those cases is nearly 9,000.
“We have been forced to drastically reduce our attorney and paralegal staff to the point where we no longer have the financial or personnel resources to continue to file Motions to Withdraw in tens of thousands of cases that we still remain as counsel of record,” Stern wrote.
Stern’s firm lost most of its foreclosure business in the fall following allegations that employees mishandled court documents.
Downs said much of the lawyer-related foreclosure problems stem from a lack of education and oversight of young attorneys.
In January, the bar began offering a free online course for attorneys on handling foreclosures. It has been downloaded 3,500 times, Downs said.
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David Stern has filed suit against many of his former clients, the banks who helped him earn more money than most Americans can only dream about.
I had two interesting thoughts as I read the story; hopefully these make you crack a smile in the midst of an anger-provoking, sad, twisted situation.
1. Apparently, Stern is suing the banks for breaching their contract to use his services. Presumably, the banks will defend on the basis that Stern committed various nefarious acts of which we are all far too accustomed. But that creates an obvious problem – do the banks really want to shine a light on all of the misconduct that Stern committed on their behalf? When you think about it like that, it makes sense for the banks to pay Stern to go away.
To put it differently, how interesting would be it to be a fly on the wall for the discovery process in that lawsuit?
Stern: You breached our contract by not using my services.
Bank: You committed fraud on thousands of homeowners. You were a scam artist. A con. We had to stop using your services.
Stern: That’s not true. Prove it.
Bank: (providing documentation and other proof)
2. Is Stern going to demand a jury trial? Somehow, I don’t think a jury pool in South Florida will think too fondly of him. Of course, Stern’s only other option would be a bench trial, and I don’t think any Florida judges are particularly fond of his act, either.
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Bankers love to argue the way to improve the economy is to accelerate the foreclosure process so as to “get foreclosed homes onto the market faster.” They argue, in response to stories like this, that homeowners defending foreclosure cases only extend the economic downturn.
My response? Read this. Incredibly, at present, 18% of Florida homes are vacant. 18%!!!
Think about that for a moment. It’s not “one in five homes are in foreclosure.” It’s not “one in five homes are behind on mortgage payments.” It’s “one in five homes are vacant.”
Do you think vacant homes help the economy? Obviously not. In fact, I’d argue vacant homes harm property values more than anything else. After all, vacant homes become eyesores, are not maintained, encourage break-ins, and decrease the values of neighboring properties.
Now ask yourself this – do you think my clients leave their homes vacant? Let me answer for you – heck no. My clients live in their homes and maintain them. Typically, if you drove by, you’d never know my clients were facing foreclosure. By contrast, when you drive by a vacant home, you almost always know.
So why are houses vacant? Easy. It’s because of banks. Banks foreclose, and then they don’t sell the houses to anyone – often because they never even list the house for sale. So the houses sit, vacant, for weeks, months, even years …. to the point that 18% of homes in Florida are vacant.
So you tell me – how is rushing through foreclosure cases – and creating even more vacant homes – going to help the economy?
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In its ongoing coverage of Florida’s foreclosure crisis, today’s St. Pete Times has a good article about an under-reported aspect of the foreclosure process – the sheer length of the process and the ability of homeowners to save money in the meantime, potentially getting back on their feet while their foreclosure case is pending.
At present, 633 days pass, on average from the time a Tampa-area homeowner misses a mortgage payment to the end of the foreclosure process. Bear in mind – that’s the average, i.e. it includes all of the cases where the homeowner does not even try to defend. Hence, undoubtedly, the number is larger for some homeowners, particularly those who defend the foreclosure lawsuit.
I’m quoted in the article, and while I can’t say I use terms like “free rent,” I think the article conveys the point pretty well – it can be a long process, so defend your case and save your money.
Amid the foreclosure epidemic, this might pass for good news: a nationwide report says Tampa Bay homeowners can skip 21 mortgage payments before getting booted to the curb. That’s a benefit, if you want to call it that, of the staggering number of foreclosures in Florida.
The bay area ranks among the worst areas in the country — 633 days — in the length of time from missing a mortgage payment to the end of the foreclosure process, defined as when a bank takes possession. The Cape Coral-Fort Myers region is longest with 675 days.
“My clients love it,” said Mark Stopa, a Tampa Bay foreclosure defense attorney. “I encourage them to take of advantage of the free rent.”
Six other Florida metro areas rank in the top 10. The Sunshine State ranks second in the country with an average foreclosure process of 638 days to New York’s 664, according to LPS Applied Analytics, which tracks 40 million mortgages. The national average in January was 507 days; it was 251 in January 2008, according to LPS.
With 2.2 million mortgages now delinquent by 90 days or more, foreclosures will take even longer to process, said Herb Blecher, LPS senior vice president. The focus so far has been on preventing foreclosures, he said.
“At some point it has to peak,” Blecher said. “We need now to clean out the pipeline.”
Experts say an increase in mortgage defaults, clogged court systems and lengthy loan modifications prevent lenders from processing cases quicker. And they point to other factors as well: The foreclosure moratorium imposed last fall by banks amid allegations that thousands of legal documents were signed improperly; and more defense attorneys fighting to keep homeowners in their houses. The moratorium added 21 days to the foreclosure process, according to LPS.
Stopa said his business has boomed since 2008.
The firm currently represents 1,000 homeowners in foreclosure cases, and Stopa said none have lost their homes yet. But he warns them to save cash in case they’re evicted.
More people, Stopa said, are fighting banks as they learn about missteps by lenders. “The public has become aware of their rights,” Stopa said. “The banks have been forced to do their job better. It’s just a slow process.”
The foreclosure process in Florida faces another drag.
With the collapse of the David J. Stern Law Firm, once Florida’s most prolific foreclosure mill, 100,000 cases statewide could be in jeopardy.
The latest foreclosure snapshot comes at a time when homes sales are inching up, but sales prices keep dropping. Experts caution that prices would plummet if banks flooded the market with more seized homes.
But the housing market cannot recover until homes exit foreclosure, said University of Central Florida economist Sean Snaith. The foreclosures are a necessary step, but the lengthy process hurts the economy, he added.
“In the big picture, it’s bad,” Snaith said. “It keeps us in the housing purgatory.”
Once homes exit foreclosure, real estate agents prefer them over short sales, where a bank agrees to accept less for the home than is owed on the mortgage. Leslie Griffin, managing broker at Prudential Tropical Realty in Tampa, said buyers usually walk away frustrated after waiting months for a bank to accept offers on a short sale.
“It impacts our job,” she said. “A foreclosure is easier to sell.”
The process is quicker in other states. Foreclosures bypass courts and judges in 27 states. Court action isn’t needed in Michigan, Arizona, California and Nevada — other states with high foreclosure rates. The process ranges from 392 days in Arizona to 511 in California. Florida requires judges to referee the foreclosure process.
Last year, the Florida Bankers Association tried unsuccessfully to change the law so judges didn’t need to sign off on foreclosures.
Another downside to lengthy foreclosures is that more homeowners could enter the process through “strategic default.” The term describes borrowers who can pay their mortgages but stop because they owe more than the home is worth.
Scott Samuels of Remax Metro in St. Petersburg deals with bank-owned properties. He noted the large subdivisions in Hillsborough County where borrowers bought similar-sized homes just before the bubble burst. Some owners have defaulted and live rent-free while others keep paying their mortgages, he said.
“Psychologically, it’s got to have an effect on the neighbors who pay,” he said. “It has to make them wonder why they keep paying.”
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Below is an article about Hardest Hit, a new program designed to help homeowners. However, I strongly urge you to be careful – this program will not stop a foreclosure lawsuit against you, even if your application is being reviewed/processed. Hence, just like with loan modifications, you could be foreclosed upon while you’re waiting for an approval!
A much-anticipated state program to help homeowners avoid foreclosure has been revised and now is expected to debut statewide in mid-April, Florida housing officials announced Friday.
Changes to the Hardest Hit Fund will mean less money for those who qualify, but Florida Housing Finance Corp. will be able to help about 40,000 homeowners, twice as many as expected, spokeswoman Cecka Green said.
“There were more people in need out there than we expected,” Green said. “It only made sense that we tighten the parameters a bit and help more people.”
Hardest Hit will cover mortgage payments for single-family homeowners who are unemployed or in jobs with salaries below what they need for basic living expenses. Money also will be used to bring delinquent mortgages current for homeowners who have returned to work or found higher-paying jobs.
The revisions call for homeowners to share in the cost of the program. They will contribute at least $70 per month or 25 percent of their monthly incomes, as determined by eligibility advisers. Also, the changes will reduce to six months from 18 the amount of time homeowners can receive mortgage payments.
They can receive as much as $12,000 in mortgage payments and up to $6,000 to make mortgage payments current. Previously, they were eligible for up to $35,000 under one or both programs. Last year, Florida received about $1 billion as part of a federal initiative to help states hit hard by the housing crash. Michigan and other states that received funds already have implemented their programs.
Florida Housing Finance began testing Hardest Hit in Lee County last year. More than 1,100 applications were received, with payments made on behalf of 126 homeowners. The agency still is reviewing 235 applications.
Florida Housing said last month that it expected to open applications statewide by the end of March. Gov. Rick Scott‘s office announced recently that Hardest Hit was under review. U.S. Sen Bill Nelson said this week he wrote to Scott, seeking answers about the future of the program.
Bryan Gulley, a spokesman for Nelson, said the senator is pleased that Florida Housing Finance “took action to move the program forward.”
A spokesman for Scott could not be reached for comment Friday, despite attempts by phone and e-mail. Florida Housing’s Green insisted there was no delay in implementing Hardest Hit and said the governor did not require the changes.
“Everyone is on the same page,” she said. “We all worked together.”
South Florida homeowners are eager to apply for the program, but some fear the help won’t come soon enough.
“If it ever finally comes to pass, that would be great,” said Barbara Mullenix of Sunrise.
For more information on Hardest Hit, visit flhardesthithelp.org.
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