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Archive for May, 2011

Millions More Foreclosures Coming

U.S. Housing Market: 6 Million Final Stage Foreclosures by 2014 (Guest Post)

By Andrew Butter

A Bank Repossession (REO) is the final stage of the foreclosure process that typically requires three foreclosure notices in USA. The REO is the point at which the bank throws you out on the street; but when the media report “X” many foreclosure filings in a month, that’s a mix of the 1st, 2nd and 3rd (final) stages.

The best source of information on foreclosures in USA that is in the public domain is RealtyTrac who collect and collate information on filings which happen at a local level. They are a research company so you pay for the information which is not public-domain (so you can’t publish it), although they do release snippets of information that are drip-fed out to the media, this analysis is based on collating that (public) information.

Ironically, no agency of the US government collects or publishes data to document the extent of the fruits of the marvelous government funded market manipulation done, with the able assistance of Fannie and Freddie and attended by Wall Street.

Since the start of 2005 to the end of 2010, three million seven-hundred thousand American families have been kicked out onto the street. At an average of 2.3 people per household that’s 8.5 million Americans who have been directly, physically, affected by the popping of the US Housing Bubble, so far.

I estimate that by the time the “dust” settles on they myriad of personal tragedies that resulted from the misguided policies of the Clinton and more importantly the Bush era, to “promote” (i.e. subsidize) home ownership, six million American families will have been “de-housed” , that’s 14 million personal tragedies.

The last time I looked at that was in September 2009 using data up to June 2009.

At that point, after taking into account the dynamics of the foreclosure process, and the backlog that was obvious even then (in 2007 it took an average of 151 days from the 1st notice until the occupants were kicked out, in 2010 it took an average of 400 days), I estimated the cumulative would be six million. One and a half years later, the dynamic is pretty much in line with that forecast, although I reckon the total by end 2016 might reach 6.5 million.

The good news is that it looks like America has passed the half-way mark of that sad process, the bad news is that it looks like it will take at least until 2014 and perhaps a few years after that, for all of the “mal-investments” that were made, particularly in 2006 and 2007 to get “washed-clean”.

That projection is pretty much in line with the thesis that house prices in USA will not return to their “fundamental” until 2016 or so, which means that for anyone with money, now is a great time to buy, and for anyone who held on this long, it’s probably worth holding on “just” a few more years (years remember, not months).

About the Author – Andrew Butter is Managing Partner of ABMC, an investment advisory firm, based in Dubai that he set up in 1999, and has been involved advising on large scale real estate investments, primarily in Dubai.  Andrew’s email – hbutter@eim.ae.

Mark Stopa

www.stayinmyhome.com

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Appearance of Corruption

The phrase “appearance of impropriety” is used frequently when discussing the conduct of judges.  As everyone knows, judges are supposed to act to avoid the “appearance of impropriety.” 

When it comes to Broward County Chief Judge Victor Tobin (who recently resigned as judge to take a job with foreclosure mill Marshall Watson), my thought isn’t about the appearance of impropriety – it’s about the appearance of corruption.  If that sounds harsh, then consider the dictionary definition of corruption – “use of a position of trust for dishonest gain.”

Is that what Judge Tobin has done?  Before you answer, read this article (titled Before Joining Foreclosure Firm, Broward’s Chief Judge Created a System That Favors Banks).  As the author notes, Judge Tobin enacted procedures and rules as recently as this month – procedures which he’ll be able to use in his new job.  This begs the question – When did Judge Tobin begin negotiating for the job with Marshall Watson? 

It doesn’t take a conspiracy theorist to wonder if Judge Tobin was enacting procedures, as Chief Judge, knowing he would get to take advantage of these procedures in private practice with Marshall Watson. 

In my view, to avoid this appearance of corruption, Judge Tobin needs to be totally open and candid.  Tell everyone when the negotiating period began.  Show everyone.  If he’s done nothing wrong, then he should have no problem being an open book about all of this.  If he’s unwilling to do that, then reasonable people will have serious (and, in my view, justifiable) questions about judicial misconduct. 

Here’s the article. …  

If you’re a foreclosure defense lawyer doing work in Broward County, there are lots of reasons to think Chief Judge Victor Tobin doesn’t side with homeowners. In his tenure at the top of the county’s legal system, he has instituted rules that make it tougher on homeowners to fight foreclosures and resisted changes that would protect them from cases being rushed through the system.

The widespread belief that he’s biased toward banks seemed supported this week when Tobin announced that he’ll be leaving the bench for a job at the law offices of Marshall C. Watson, one of the largest foreclosure firms in the state. It’s a move that angers foreclosure defense lawyers who say it appears as if Tobin established a system that will favor his new position. Worse, Tobin may  have been negotiating his new job while creating rules that will benefit him later.

“It’s a concern, and certainly I can tell you that it looks really bad,” said attorney Mike Wasylik, who has offices in Boca Raton and Dade City. “Judges are required to avoid even the appearance of impropriety, and I’m not saying what he did is improper, but certainly someone could look at it and say it appears that way.”

Tobin didn’t return a phone call to his office Thursday. But on Wednesday, he told the Pulp he’s going to Watson to help the firm’s quality control. Watson paid the state $2 million in March to settle an Attorney General’s Office inquiry into foreclosure paperwork that the firm pushed through without the necessary checks required by law. Watson has for months been at the center of criticism of Florida firms accused of rushing foreclosures on homeowners who may not have received notice in order to collect millions in fees from the banks.

Tobin’s reign at the top of the judiciary included several “administrative orders” changing the way the county handles foreclosures, many of them favoring lawyers representing the banks. The most contested of them forbids foreclosure sales from being canceled ten days before the auction is set to take place. That means homeowners who strike a last-minute deal with a bank to save their home have no choice but to watch their house go to the highest bidder. Wasylik says the rule solidified “the perception that Broward is a place where it’s easier for banks to litigate.”

Last summer, Tobin added to the pro-bank rules by instituting what’s referred to as the “rocket docket.” It requires foreclosure judges to move hundreds of cases a day with almost no discussion. Judges simply have no time to consider complex paperwork filed by foreclosure defense attorneys, says Fort Lauderdale lawyer Jason Weaver.

“It’s doubtful justice can be done in three and a half minutes in front of a judge who has to hear hundreds of cases in a day,” Weaver said.

Efforts to create a mediation program that could help homeowners settle with banks were also rebuffed by Tobin, attorneys say. He finally instituted a mediation program last year, but only after the Florida Supreme Court issued an administrative order requiring every circuit court to do so.

And just two weeks ago, Tobin instituted another rule hampering homeowners who want to fight foreclosures. Previously, attorneys representing homeowners could schedule online what’s called a “special set” hearing. The hearing allows homeowners’ attorneys to make complex legal arguments that can’t be heard during the rocket docket. Tobin’s new rule required that a hearing be set during the rocket docket in which attorneys must ask for a longer hearing. Homeowners typically have little money to fight foreclosures, and the extra bureaucracy means they must pay their attorney to appear at a hearing simply to ask for another hearing, says lawyer Margery Golant.

“In Broward, defendants have fewer rights and fewer due process options,” Golant said.

Judges in Palm Beach and Miami-Dade counties have worked to protect homeowners facing bogus foreclosures, attorneys say. Miami-Dade Circuit Judge Jennifer Bailey, for instance, famously threw out 15,000 foreclosure cases for filing irregularities, served on a statewide task force on mortgage foreclosures, and was recognized with a community service award for her work protecting homeowners from bogus cases.

Meanwhile, Tobin gave many signs that he favored lawyers from the banks, lawyers say. In foreclosure courtrooms, most bank lawyers sit in the front, with access to tables where they can spread out their paperwork, while defense lawyers are relegated to the back, Golant says. “When you’re told to go sit in the back of the room until your case is called and you see your opposing counsel sitting way up in the front of the room, you get the impression of bias,” she said.

Worse, lawyers say Tobin has been known to say things in open court that seem to show a bias toward the banks. Golant says she heard Tobin tell one homeowner: “Sorry, you’re not paying your mortgage. What do you want from me?”

The damage has already been done to the system, foreclosure defense lawyers say, but now they want Tobin to step down early. He agreed to continue on the bench until the end of June, but several defense lawyers say he can’t continue to serve as chief judge after taking the job at a firm that has regular dealings with the court.

“I don’t know how long he has been negotiating with Watson — a week, a month, a year — but it sure doesn’t look good,” Golant said. The only remedy now, she says, is for Tobin to leave.

If he does, he may find himself back in Broward courts arguing foreclosure cases for the banks — and he’ll find a system that he designed to make his new job easier

Mark Stopa

www.stayinmyhome.com

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Disparate Treatment of Foreclosure Cases

Foreclosure defense attorneys and consumer advocates throughout Florida have argued for a long time that judges treat foreclosure cases differently than other types of lawsuits.  The creation of “rocket dockets” and “senior judges” lend support to these arguments, at least on the trial court level.  But what about appellate judges?  Do Florida’s appellate courts treat foreclosure cases differently?  Unfortunately, I’m starting to think so.  If you disagree, I welcome your explanation on the following.   

Three times in the past two years I’ve filed a Petition for Writ of Prohibition in Florida’s Second District Court of Appeal (after the trial judge denied a Motion to Disqualify him/her as legally insufficient).  At this point, I think I’m quite good at handling this type of proceeding in the appellate court.  In fact, the Second District has agreed with my argument in two of these three cases, granting my petitions and ruling the trial judge should have granted my motion to disqualify.  The third time, in what I consider to be a very similar argument, the appellate court ruled against me (without explanation). 

Do you want to hazard a guess which case was a foreclosure case and which two were not? 

Sure, I suppose this could be a coincidence.  But having compared the merit of these three cases, I don’t think so.  I’m posting the motions and the appellate court petitions on this blog so you can be the judge. 

 Case 1.  I filed a Motion to Disqualify Judge.  My argument was centered around the judge’s announced predisposition to rule against my client.  When the motion was denied, I filed this Petition_for_Writ_of_Prohibition in the Second District.  Here, the appellate court agreed with my argument, granted the petition, and directed that the judge remove himself from the case.  

Case 2.  I filed this Motion to Disqualify Judge.  Again, my argument centered around the judge’s announced predisposition to rule against my client.  When the motion was denied, I filed this Petition for Writ of Prohibition in the Second District.  Here, the appellate court rejected my argument and denied the petition without explanation, allowing the judge to remain on the case. 

Case 3.  I filed this Motion to Disqualify Judge.  Again, my argument centered around the judge’s announced predisposition to rule against my client.  When the motion was denied, I filed this Petition for Writ of Prohibition in the Second District.  Here (just today, actually), the appellate court agreed with my argument, granted the petition, and directed the judge to remove herself from the case. 

I’m not trying to say the facts or the arguments in these three cases were exactly the same.  They weren’t.  However, they were pretty close, and the merits of these three petitioners were quite similar as well.  So why did I prevail in Case 1 and Case 3 (not foreclosure cases) but lose in Case 2 (a foreclosure case)?  

Again, maybe this is just a coincidence.  However, I have a hard time believing the judges in Case 2 didn’t view that case a bit differently because it was a foreclosure case.  I hate to say that, and I hate feeling that way – I really do.  But I don’t see any other reasonable explanation here. 

The point here is not to disparage any judge or call anyone out.  My point is that it’s time that all judges, including appellate judges, apply the law equally to all cases, including foreclosure cases.  After all, if attorneys like me feel this way, imagine how homeowners and other non-lawyers who are inexperienced with the legal system must feel.

Mark Stopa

www.stayinmyhome.com

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Stopa Law Firm Offering Free Seminar, Free Foreclosure Defense

Stopa Law Firm will be holding a free foreclosure seminar on Saturday, June 25, 2011 – the details are on the front page of this website.  I intend to discuss the foreclosure process in general, loan modifications, strategic default, and other “hot-button” issues currently facing Florida homeowners. 

Meanwhile, I’ve decided that I need to make this more than a seminar.  In addition to the free seminar, I will choose five homeowners for whom I will provide the same foreclosure defense I provide my other clients – for free. 

I see tragic situations every day.  I want to help our community.  I realize lots of people will want free representation, so, quite candidly, I’m going to choose those in the most dire of circumstances.  For instance, the email I just received talked about a family whose daughter is paralyzed, in a wheelchair, living in a home that has accommodations for her wheelchair, and are facing foreclosure because the bank won’t give them a loan modification.  I want to be able to help people like this.  I need to be able to help people like this.  So on June 25, in addition to the seminar, I’ll choose five homeowners for whom I’ll give free foreclosure defense representation. 

More details to follow; I’ll plan to see you on June 25.

Mark Stopa

www.stayinmyhome.com

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Attorneys Fees in a Foreclosure Case

At this point, there should be no reasonable dispute that when a foreclosure case is dismissed without prejudice (be it a voluntary dismissal by the plaintiff, a dismissal for lack of prosecution, or a dismissal without leave to amend after a defendant’s motion), the homeowner is entitled to prevailing party attorneys’ fees.  I’ve done this on several occasions and I know I’m not the only foreclosure defense attorney in Florida doing so. 

Apparently, Flagstar Bank was unaware of this basic principle of law, prompting the appellate decision, below.  Good stuff. 

36 Fla. L. Weekly D1065a

Attorney’s fees — Prevailing party — Mutuality of obligation — Mortgage foreclosure — A defendant was entitled to recover attorney’s fees as a prevailing party under section 57.105(7), where mortgage entitled mortgagee to reasonable attorney’s fees for enforcement, after court granted motion to dismiss mortgage foreclosure and dismissed the case without prejudice — Pleading requirement — It was proper for defendant to seek attorney’s fees in a motion filed after entry of dismissal without prejudice where she had not yet filed a responsive pleading — Plaintiff’s voluntary dismissal makes a defendant a prevailing party even where plaintiff refiles the case and prevails

TATYANA NUDEL, Appellant, v. FLAGSTAR BANK, FSB, UNKNOWN SPOUSE OF TATYANA NUDEL, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. AS NOMINEE FOR FLAGSTAR BANK, FSB, PALM BEACH COUNTY, ADORNO & YOSS, LLP, UNKNOWN TENANT(S) IN POSSESSION, and ALL OTHER UNKNOWN PARTIES, including, if a named Defendant is deceased, the personal representatives, the surviving spouse, heirs, devisees, grantees, creditors, and all other parties claiming, by, through, under or against that Defendant, and all claimants, persons or parties, natural or corporate, or whose exact legal status is unknown, claiming under any of the above named or described Defendants, Appellees. 4th District. Case No. 4D10-3001. May 18, 2011. Appeal of a non-final order from the Circuit Court for the Fifteenth Judicial Circuit, Palm Beach County; Jack H. Cook, Judge; L.T. Case No. 502009CA023221XXXXMB. Counsel: Enrique Nieves of Ice Legal, P.A., Royal Palm Beach, for appellant. William T. Viergever of Sonneborn Rutter Cooney & Klingensmith, P.A., West Palm Beach, for appellee Flagstar Bank, FSB.

(Gross, C.J.) In this case we hold that a defendant is entitled to recover her attorney’s fees as a prevailing party under subsection 57.105(7), Florida Statutes (2009), after the court granted a motion to dismiss a mortgage foreclosure action and dismissed the case without prejudice.

On June 30, 2009, Flagstar Bank sued Tatyana Nudel to foreclose a mortgage. According to the mortgage, Flagstar was defined as the “lender” which lent Nudel $220,000; Mortgage Electronic Registration Systems, Inc., (“MERS”) was the “mortgagee” under the instrument, acting as a “nominee” for Flagstar; and Nudel was the “[b]orrower.” Under section 22 of the mortgage, the “lender” Flagstar was entitled to reasonable attorney’s fees and costs in foreclosure proceedings. MERS assigned the mortgage to Flagstar on August 21, 2009.

Nudel moved to dismiss the complaint, arguing that Flagstar lacked standing because MERS did not assign the bank the mortgage until after the bank filed the complaint. See Fla. R. Civ. P. 1.140(b). The circuit court agreed, granted the motion, and dismissed the case without prejudice on March 29, 2010.1 Nudel moved for attorney’s fees and costs on April 15, relying in part on the attorney’s fee provision in the mortgage. The circuit court denied the motion for fees, accepting Flagstar’s argument that Nudel had waived entitlement to fees under Stockman v. Downs, 573 So. 2d 835 (Fla. 1991), and Sardon Foundation v. New Horizons Service Dogs, Inc., 852 So. 2d 416 (Fla. 5th DCA 2003), because she had not sought attorney’s fees in her motion to dismiss.

Initially, we hold Nudel did not waive her entitlement to attorney’s fees. It was proper for her to seek attorney’s fees in a motion filed after the entry of the dismissal without prejudice, because she had not yet filed a responsive pleading. In Stockman, the supreme court set forth a general rule that attorney’s fee “must be pled” or else they are waived. 573 So. 2d at 837-38. Green v. Sun Harbor Homeowner’s Ass’n, 730 So. 2d 1261, 1263 (Fla. 1998), explained that when the Supreme Court used the phrase “must be pled” in Stockman, it referred to pleadings as those defined in Florida Rule of Civil Procedure 1.100(a) — complaints, answers, and counterclaims. Because a motion to dismiss is not a pleading, Stockman does not require the movant to raise the attorney’s fee claim in the motion; rather, “a defendant’s claim for attorney fees is to be made either in the defendant’s motion to dismiss or by a separate motion which must be filed within thirty days following a dismissal of the action. If the claim is not made within this time period, the claim is waived.” Id. Nudel timely moved for attorney’s fees within thirty days of the dismissal, so she did not waive her claim.

Additionally, Nudel was entitled to recover her attorney’s fees. The mortgage between Nudel and Flagstar entitled Flagstar to reasonable attorney’s fees for enforcement. By operation of subsection 57.105(7), the contractual provision also allows attorney’s fees to Nudel if she is the prevailing party. See § 57.105(7) (“If a contract contains a provision allowing attorney’s fees to a party when he or she is required to take any action to enforce the contract, the court may also allow reasonable attorney’s fees to the other party when that party prevails in any action, whether as plaintiff or defendant, with respect to the contract.”).

Nudel is the prevailing party within the meaning of subsection 57.105(7). This court has held that a plaintiff’s voluntary dismissal makes a defendant a “prevailing party” in the dismissed action even where the plaintiff refiles the case and prevails. In Alhambra Homeowners Ass’n v. Asad, 943 So. 2d 316, 317-18 (Fla. 4th DCA 2006), an association sued some of its homeowners, but voluntarily dismissed its lawsuit without prejudice before a summary judgment hearing. The association subsequently re-filed the suit after unsuccessful mediation talks. Id. at 318. In the other, dismissed action, the homeowners moved for prevailing party attorney’s fees. Id. The circuit court found the homeowners to be the prevailing parties and awarded them fees. Id. Following Thornber v. City of Fort Walton Beach, 568 So. 2d 914 (Fla. 1990), this court affirmed. Id. at 318-20. We held that the homeowners were “entitled to recover attorney’s fees under a statute awarding fees to the prevailing party in litigation after the plaintiff took a voluntary dismissal without prejudice.” Id. at 317. This was so “even though the plaintiff subsequently refiled the identical lawsuit and ultimately prevailed.” Id.

For the purpose of determining a “prevailing party” under section 57.105(7), we see no reason to distinguish between a voluntary dismissal without prejudice and a court’s involuntary dismissal without prejudice. This same conclusion was reached in Bank of New York v. Williams, 979 So. 2d 347 (Fla. 1st DCA 2008), where the first district affirmed an award of prevailing party attorney’s fees on facts similar to those in this case. There, the bank sued the defendant to foreclose a mortgage. Id. at 347. The defendant moved to dismiss because the bank failed to show that it owned the mortgage and promissory note and, thus, it lacked standing to sue. Id. The court dismissed a complaint and amended complaint without prejudice; “[w]hen the Bank declined to file a second amended complaint, the trial court dismissed the amended complaint with prejudice.” Id. The bank did not appeal this order, but instead instituted a new foreclosure action. Id. In the first action, the court awarded the defendant prevailing party attorney’s fees and costs. Id.

On appeal, the bank argued that, “because the same factual and legal issues raised in the dismissed action [were] also the subject of the new litigation, [the defendant] [could] [not] be the prevailing party.” Id. at 347-48. Relying on a voluntary dismissal without prejudice case, State ex rel. Marsh v. Doran, 958 So. 2d 1082 (Fla. 1st DCA 2007), the first district rejected the bank’s argument. Id. at 348. “The refiling of the same suit after the voluntary dismissal does not alter the appellees’ right to recover prevailing party attorney’s fees incurred in defense of the first suit.” Id. (quoting Doran, 958 So. 2d at 1082 (citing, inter alia, Alhambra Homeowners Ass’n, 943 So. 2d at 319)). Accordingly, the court held that the defendant was the prevailing party and affirmed her award. Id. We agree with Williams and conclude that Nudel was a prevailing party entitled to recover attorney’s fees.

Finally, we reject Flagstar’s argument of estoppel. Flagstar and Nudel were described as the “lender” and “borrower” respectively in the mortgage and they are bound by it. Flagstar may not seek affirmative relief under the mortgage and then take the position that provisions of the mortgage do not apply to it. See Ross v. Hacker, 284 So. 2d 399 (Fla. 3d DCA 1973).

Reversed and remanded for further proceedings. (Polen and Damoorgian, JJ., concur.)

__________________

1We do not address the grounds for dismissal since Flagstar did not appeal that final order.

Mark Stopa

www.stayinmyhome.com

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Chief Judge Becoming Foreclosure Mill Attorney

Victor Tobin, the Chief Judge of Broward County, Florida, is resigning as a judge effective June 30 to go into private practice … but not just any job – with foreclosure mill Marshall Watson.

Look.  I recognize a judge’s right to resign as a judge and get a normal lawyer job.  However, I’m exceptionally concerned here about the appearance of impropriety.  Judge Tobin has been handling foreclosure-related issues for quite some time.  He acknowledges as much in the article below.  Hence, I think it’s abundantly clear that he must refrain from anything foreclosure-related immediately.  Hopefully, he’s already done so, but it should go without saying that since he’s leaving the bench, he shouldn’t be doing anything whatsoever foreclosure-related, as a judge, ever again. 

Also, this causes some tough questions.  For instance, for how long has Judge Tobin known he was going to work for Marshall Watson?  Has he done anything foreclosure-related, as a judge, during the “interview” process with Marshall Watson?  I’m particularly troubled by his quote, below, that he can “carry on” some of what he’s done as Chief Judge.  Respectfully, it doesn’t take a conspiracy theorist to be a bit unsettled at a quote like that. 

I’m not trying to accuse anyone of anything, particularly since, at this point, I have no evidence upon which to do so.  What I am saying is that reasonable people can raise difficult questions about issues like this, and I hope this doesn’t become a bigger story than it already is. 

Here is the article. …

Broward Chief Circuit Judge Victor Tobin is leaving the bench to go into foreclosure law.
Tobin notified fellow judges by email Tuesday that he would be leaving at the end of June and planned to start working July 1 at the Law Offices of Marshall C. Watson, one of Florida’s biggest foreclosure law firms. 

The Fort Lauderdale law firm settled an investigation by the state attorney general’s office in March by paying a $2 million penalty. The firm cooperated with the investigation and made no admission of wrongdoing.

Tobin said today that he will have a supervisory role at the firm.

“Number one, it’s a firm that has a need. Number two, it’s a good fit for me. It’s an opportunity for me to carry on some of what I’ve done in the courthouse to see that best practices are used. They instituted a best-practices policy, and I’m going to make sure that is followed and make sure we do everything right,” he said.

Tobin became a peacemaker after taking over as chief judge in a contested election in 2007. He was reelected by fellow judges in 2009. 

Circuit Judge Peter Weinstein succeeds him as chief judge July 1.

Mark Stopa

www.stayinmyhome.com

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Another Perspective on Strategic Default

I get lots of good comments; here’s an interesting take on strategic default.  Let’s just say “I concur.” 

I’m no doubt a future “Strategic Defaulter”……..It seems to me that there is an aspect of the whole strategic default conversation that is conspicuously missing from the national discourse. It’s an analysis of how we ended up in the grossly over valued properties to begin with. In 2006 I bought my home in Florida (a modest condo) for $595,000 it’s now worth $300,000. When I bought my home I assumed the market value was legitimate and as a result was comfortable paying the price I did. Turns out the market value was not legitimate, in fact it was manufactured by the very same banks that lent me the $600,000. That’s right it was the years of phony and irresponsible lending practices of the these banks that drove up and created the false valuations to begin with. In essence my home was and has never been worth $600,000 my banks, Wells Fargo and their appraisers said it was. Said another way, by approving $500k loans for people who didnt have the financial wherewidthall or any business being approved for a second half million dollar vacation home in Florida the banks by definition controlled the market prices. My home which I love was $300,000 in 2001—–$600,000 2006—–$300,00 2011: The banks did this its like a shell game—–I trusted the valuation, I trusted the market, I trusted the appraiser

In short, I feel like I bought a diamond ring based on a trusted and certified appraisal only to find out 3yrs later that the appraiser, jeweler, and industry governing body where all in cahoots and in practice one big single entity that sold me a CZ! Strategic Default a moral issue, absolutely I agree the calculating immorality of the banking industry has brought the country to it’s knees…..damn right it’s a moral issue

Mark Stopa

www.stayinmyhome.com

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Obama – Starting to Get it?

I’ve been vocal for many months about the fact that the foreclosure crisis isn’t going improve in any significant way without huge changes by the government.  As I said, here, principal reductions on all mortgages of owner-occupied properties would discourage strategic defaults and cause more homeowners to make mortgage payments.  In other words, widespread principal reductions are necessary and beneficial for both sides of this ongoing battle. 

Today, President Obama made a few statements that suggest he’s begun to see the light.  Unfortunately, his statements aren’t nearly strong enough.  This is the quote that really bothers me:  “If we were there for you [banks] when you got into trouble, then you’ve got to be there for the American people when they’re having a tough time.” 

Newsflash, Obama – the banks aren’t going to act in the public’s best interest out of the kindness of their hearts, for moral reasons, or anything else.  All they care about is profits.  So if you think principal reductions are the way out of this mess, then it’s up to you to act. 

Here’s the article.

WASHINGTON (CNNMoney) — President Obama said that struggling homeowners need even more help from the banks, in a CBS town hall that aired Thursday.

Calling housing “the biggest headwind on the economy right now,” Obama broached two relatively new ideas for the White House: Longer-term mortgage modifications and principal reductions “in some cases.”

Both ideas would require Congress to pass laws to force the banks to cooperate.

“If we were there for you [banks] when you got into trouble, then you’ve got to be there for the American people when they’re having a tough time,” Obama said during the CBS program which was taped on Wednesday.

In response to a question posed by Nancy Logan of Virginia, an underwater homeowner whose three-year mortgage modification will expire in January 2012, Obama said that reducing some mortgage principals would benefit the banks as well as homeowners.

“In addition to these short-term loan modifications, we want to see if we can get longer-term loan modifications. And in some cases, principal reduction, which will be good for the … person who owns the home, but it’ll also be good for the banks over the long term,” Obama said.

Foreclosures crush home prices

Obama’s mention of principal reduction, in particular, is sure to stir Wall Street banks. When Obama campaigned, he had talked about pushing for policy to give bankruptcy judges the ability to write down principal owed on homes whose owners are bankrupt.

But when he took office, the president stood on the sidelines of legislation that would have allowed principal reductions, and his administration said that current housing policy was good enough.

Since then, the president rarely, if ever, publicly discussed principal reductions.

Big banking groups have traditionally lobbied hard against any new policy that would open the door for more principal write downs.

At least one banking group said they weren’t opposed to a policy that would open the door for mortgage modifications that spanned longer periods, but they can’t support legislation that invites more principal write downs.

“Banks are committed to helping Americans struggling with their mortgage,” said Scott Talbott, senior lobbyist with the Financial Services Roundtable, a bank lobbying group. “Banks have already worked directly with over 4 million Americans to make long-term mortgage modifications.”

During the town hall, Obama also defended his administration’s housing programs, which one independent inspector general had criticized as a failure. House Republicans passed a bill to kill the administration programs that give banks incentives to modify mortgages.

“The problem is .. that the need is so great. So it’s like you have a huge pothole, and you only have so much gravel,” Obama said. “If you’re talking about $5 trillion worth of home value, and a program that only has a few billion dollars, then there are a lot of people who are not going to be helped.”

Mark Stopa

www.stayinmyhome.com

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Strategic Default – a First-Hand Account

Below is a comment I received in response to a blog.  I’m fascinated by the sentence “If enough homeowners keep paying, the banks win.”  It makes a lot of sense, no?  Think about it:

If enough homeowners keep paying, the banks win.

Here is the comment…

If more people in California walked away from negative equity, banks would start offering REAL modifications, adjusting to current market value (which is in fact the value of the assets on their books), but it suits them to retain what they know are falsely elevated values. If enough homeowners keep paying, the banks win.
My condo bought in 2005 with no downpayment is $150,000 underwater and would take 16 years to have any equity at all, even if the market rises by 2% per year. I can pay and have been paying all along, cherishing my 800+ credit score, but I’m finally doing the math and realizing it makes no sense. For more than two years I’ve tried to get BOA to modify it to a fixed rate (no change in principal) and they have refused because it’s not more than 31% of my salary. The business sense of their decision baffles me, because now I’m walking away in a non-recourse state and we BOTH lose. I lose the home I love and they’ll have to sell it well below even the current value. I’ll be renting for 7 years, just down the street.
To the person who compared this to a car loan. Car loans don’t contain clauses that require the bank to take the car as full payment.
To those who think I’ll celebrate “beating the system”. You haven’t been with me on all the nights I’ve cried over the struggle to choose between a rock and a hard place. I choose not to spend 16 years underwater.
One irony: In 2005 when I (newly graduated) assumed I’d spend a few years saving for a downpayment, BOA sent targeted fliers to my office OFFERING me a no-down 100% mortgage and explaining why this made much more sense (tax-wise) than renting. Had I taken the $900,000 home loan they were willing to allow, I would now qualify for the modification. Alas, I chose the $550,000 home I could afford. No help for me now.
I’m out. And not sure I EVER want to re-enter the housing market.

Mark Stopa

www.stayinmyhome.com

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Foreclosure Trial in Lee County

I was in court for today’s trial for less than an hour, but it was such a bizarre experience that I found myself taking notes to document the details.  As I told my bright associate, Philip Healy, on our return trip, it was nothing like a “normal” trial, i.e. a trial in a non-foreclosure case, but I guess there’s nothing “normal” nowadays, especially in Lee County. 

Anyway, the day started with 108 different cases being assigned a number and all parties/attorneys “checking in” with the clerk to announce their presence.  Incredibly, 108 cases were to be tried, all at once, before just two judges! 

When the judge arrived, he started by asking that anyone who thought their trial would be more than a couple of minutes stand up and say so (apparently with the intent that these “contested” cases be moved to a different room with a different judge).  Incredibly, I was just one of two people to stand up.  “Really?” I thought to myself.  “Just two people think their case will take more than a couple of minutes?” 

When I announced “Number 53,” a local attorney who is not counsel of record who I had never seen before announced himself as opposing counsel, saying the bank was seeking a continuance.  Before I could respond, the judge said that motion would be adjudicated by the other judge.  The local attorney said he couldn’t leave that room yet, though, as he was counsel in several other cases which were still to be called up.  So I found myself waiting and watching the other cases get “adjudicated.” 

Next up was an attorney from one of the foreclosure mills; she must have had 15 cases set for trial.  One by one, she repeatedly announced that voluntary dismissals had been filed in most of those cases.  In others, she sought a continuance, which, when unopposed, was granted.  As she concluded, the judge stated (and I wrote it down, I was so troubled):

“Do we give her some sort of award for resolution attorney of the day?”

This prompted applause from two of the clerks seated to the judge’s right. 

As I felt like I was in some bizarro-world, up marched a Florida default attorney.  Philip knows her, and it’s clear she’s fairly green, yet it appeared she was handling all of the FL Default cases – I’d estimate 25 or so.  Clearly, though, she wasn’t about to try 25 cases.  One by one, she announced her intentions to the court with these cases.  Many of them were voluntary dismissals.  No explanation was given; no rationale provided – just a voluntary dismissal.  In others, she sought a continuance, which, when unopposed, was granted without argument. 

As I watched, I was struck by the randomness of it all.  There seemed to be no rhyme or reason why some cases were being dismissed, whereas others were proceeding forward.  One defense attorney didn’t seem to mind, as she left the courtroom with the case against her client having been dismissed without her having to say one word. 

FL Default didn’t dismiss all of the cases, though.  For some, they asked for a continuance.  For others, the judge instructed counsel to submit a Final Judgment ex parte

One exchange between the FL Default attorney and the judge bothered me so much I wrote it down.  The attorney asked for a continuance because she did not have the original note, saying it was still with David Stern’s office.  (Apparently, Stern is the go-to excuse for any mill that is missing evidence.)  However, the judge wasn’t going to be deterred by missing evidence.  Realizing the defendant was not present, the judge said it made “no sense” to amend the pleadings when the defendant was not present at trial and that there were “other ways” to win at trial when the plaintiff did not have a lost note.  Apparently, the attorney didn’t get the hint, so the judge spelled it out for her: “Prepare an affidavit of lost note and submit it to me, along with an affidavit of fees and costs and an ex parte judgment packet.” 

I was horrified.  Was this a judge?  Or the supervisor of Florida Default Law Group (counseling the young attorney on how to prosecute the case)? 

A few cases later, the same attorney asked for a continuance.  A fellow foreclosure defense attorney objected.  The judge then said, not to the entire courtroom but not trying to keep it quiet, either, that if a defendant opposed a continuance that the court would enter a dismissal.  The judge then dismissed that case. 

I was stunned.  Remember, I was one of two people who stood up at the beginning, and the judge said the motions for continuances in those cases would be heard by the other judge.  But sensing the opportunity, that attorney and I both walked up to the front of the line and announced our case numbers.  The other attorney also had a FL Default case, so he went first, saying “Judge, my situation is exactly the same.  They are seeking a continuance, I’m opposing it.  And this is the third request for continuance.”  With very little argument, the judge dismissed that case. 

I was next.  I said “Case 53, I’m in the same situation, judge.”  The judge asked the local counsel the reason for the continuance.  He said it was a VA loan (without explaining why that meant they needed a continuance).  Before I could get into my many arguments against a continuance (he was not counsel of record; in fact, there was no counsel of record, and the motion for continuance did not even come close to complying with Rule 1.610), the judge announced he was dismissing the case. 

The fill-in attorney then said he would file a notice of voluntary dismissal without prejudice, to which I responded “it’s too late, trial has started, and the judge has already dismissed the case.”  The judge interjected “it doesn’t matter, you’re the prevailing party,” not realizing that an involuntary dismissal under 1.420(b), as opposed to a voluntary dismissal without prejudice, should operate as an adjudication on the merits, i.e. a dismissal with prejudice.  But that wasn’t the time for that fight.  Figuring I could submit a written Order, I gladly left, having prevailed at trial in a foreclosure case. 

As I left, I felt a warped sense of justice.  My client’s Motion to Quash Service and Motion to Dismiss had never been heard, yet we had to attend three docket soundings and a trial, all of which were clearly premature.  The procedure was totally perverse.  Yet the court had pushed the case so quickly that even the Plaintiff wasn’t prepared to proceed, prompting the request for a continuance and the dismissal. 

What was perhaps even more bizarre, though, was how the court automatically presumed the case must be dismissed merely because the continuance was denied.  In a normal situation, where a continuance is denied, the next thing that happens is the Plaintiff tries the case!  Here, though, it was so clear the Plaintiff was not prepared to try the case that the judge automatically parlayed the denial of a continuance into a dismissal. 

Was this brilliant lawyering?  Not really.  Rather, this was another illustration of what I’ve been saying for a long time – if you fight foreclosure, and defend your case, you never know what good things may result.

Mark Stopa

www.stayinmyhome.com

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