Archive for June, 2012
For reasons that should quickly become apparent, this is the most important blog I’ve ever written. Ever. I’m so angry that it’s difficult to write coherently, but I’ll do my best. …
I’ve often expressed my disgust at how Fannie Mae and Freddie Mac frequently pay banks 100% of their judgment amounts in foreclosure cases. It’s an appalling dynamic in foreclosure-world, one where banks often have no incentive to modify mortgages because “our” government will pay the banks in full once the foreclosure is over (and all the banks have to do is convey title to Fannie and Freddie). Incredibly, just when I thought I couldn’t be any more appalled, somehow, my disgust with this dynamic … with “our” government … reached a new level today.
I have it on good information (directly from someone personally involved) that Fannie and Freddie are selling foreclosed homes in bulk to third-party investors. Not one at a time, not several … dozens … at heavily discounted rates. In other words, many of the homes in Florida and elsewhere that have been foreclosed, with lower and middle-class homeowners thrown onto the streets and title transferred to Fannie or Freddie, are being sold to third-party investors in bulk.
If you think that sounds like an interesting investment opportunity, a chance to purchase a new home after you were foreclosed, let me stop you. Fannie and Freddie aren’t making these investments available to just anyone. To qualify … to even get inside the door to the auction room … you must have at least $10,000,000.00 in assets, and you must be able to prove the existence of those assets via bank statements and the like.
Ten million bucks, just to get in the door.
Is this what America has become? Throwing Americans onto the streets so “our” government pays the banks to foreclose and “our” government sells those houses in bulk at discounted rates to third-party investors with an eight-figure net worth?
You know what’s arguably even worse? Nobody is even talking about this. No news stories. No media coverage. Nothing. I mean, seriously … Would you have known about this if Mark Stopa – basically a nobody in the scope of national news and politics – hadn’t blogged about it?
Why such secrecy? Where is the media coverage? Where’s the outrage? Who is running our government, exactly? This is as big an issue as Obamacare … thousands of homeowners getting foreclosed and their homes being sold in bulk to the mega-wealthy … why is nobody even talking about it? Is America really a land where our government takes houses from the poor and middle class and sells them in bulk at discounted rates to the mega-wealthy … and it does so completely in secret? Does anyone care?
This is why I consider this the biggest post I’ve ever written. This is what is driving the whole foreclosure crisis, and nobody knows about it. Nobody’s even talking about it. Change is not possible without awareness, and right now, all Americans are totally in the dark about this dynamic. Well, all Americans except those who have $10,000,000.00.
May God help us all.
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I had a conversation with a banker today, and as I reflect on our conversation, I have an inescapable and overwhelming desire to take a shower. I’ve never rolled around in a pigpen for an hour, but that’s how I’d imagine it feels … grimy and dirty all over. It wasn’t all bad, though – I used it as a tool to learn more about the foreclosure process.
The conversation started as I headed to court for a foreclosure trial … except we settled the case on terms my client found acceptable. As opposing counsel and I sat around finalizing the settlement paperwork, I saw an opportunity to pick this banker’s brain. Basically, I wanted to understand his motives and thoughts with respect to the foreclosure process.
During the conversation, many of my beliefs about foreclosure were confirmed. For instance, this banker explained, just as I have believed for some time now, that banks are never going to offer principal reductions or other such settlements on mortgages that are insured by the federal government – what this banker called “GSEs.” In this banker’s words, banks have “no choice” but to pursue foreclosure on such mortgages, as they have to procure title, transfer title to Fannie or Freddie, and collect full payment on the judgment from the government. (Alas, banks do have a “choice” – they could accept less, but they’re so greedy that the greater good is never a consideration. They’re never going to give a homeowner a break or act for the benefit of society when they can foreclose and get the judgment paid in full by the government … “our” government, that is.)
This banker also confirmed my long-standing belief that all of the foreclosure sales we routinely see where the banks bid up to their judgment amount – even when the judgment amount far exceeds the value of the property – is a byproduct of the government insuring these mortgages. So if you’re not thoroughly disgusted already, take a look at www.pinellas.realforeclose.com or whatever website conducts the foreclosure sales in your county. Whenever you see a bank bidding up to its judgment amount – which is what happens the vast majority of the time – that probably means the bank is getting that judgment paid in full by you, me, and “our” government. It doesn’t matter that a house is worth $100,000 and a third-party investor is willing to pay $105,000 because he really likes that house – the bank is going to bid up to its $175,000 judgment because it wants to get title, convey title to Fannie, and have the government pay the $175,000 judgment in full.
You thought foreclosure sales were to sell properties to the public? Think again. It’s “our” government foreclosing on homeowners so banks can get paid in full.
So if you’ve been unable to get a principal reduction, at least now you know why. Your bank isn’t going to reduce principal on your loan and accept payments over time when it can foreclose and get paid in full by the government. It’s quite a gig … if you’re a bank. Foreclose on Americans, then collect tax dollars from those same Americans to get paid in full. Disgusting, eh?
This banker went on to explain that for those mortgages which are not “GSE,” his bank has more “wiggle room” to negotiate settlements. Even then, though, his bank won’t offer principal reductions based on “principle,” which is his fancy way of saying they could, but they choose not to. Ahhh, yes … we can’t have all these “deadbeats” having mortgages that actually reflect what their houses are worth … we have to continue forcing them to pay more than fair market value.
Which foreclosures aren’t “GSE”? That’s easy – the ones where the banks don’t bid up to their judgment amounts. For instance, this banker told me that his bank routinely gets a BPO (that’s “broker price opinion”) and bids 85% of that BPO. If a third-party investor bids more than that, he/she gets the house. So those are the only cases where there’s a true “auction” – where the bank isn’t getting paid by the government.
The worst part? When this banker confused my friendly attempt to pick his brain about the foreclosure industry with a genuine interest in what he does, prompting him to suggest – totally unsolicited, of course – that I change teams and work for the banks. His pitch? Homeowners are “limited” in what they can pay, and his bank can pay as much as necessary if I’m working for them.
I was thoroughly disgusted at this proposition, of course, as it was all prompted by money and not at all about helping people or feeling good about my work. I wanted to tell him exactly what I though, but he was giving me useful information, so I responded with a polite “have you ever read my blog? I hate the banks, and they hate me.” His response? “We hate you because we like you, and we wish you were working for us.”
Eek, enough already. Please, someone pass the soap. I really, really need a shower. That said, it was worth feeling dirty, I suppose. The more I know, the more I can help homeowners understand just how corrupt and crooked the whole process truly is.
The other moral of this story? While I’m appalled at bank misconduct, I’m convinced the government is just as much to blame. After all, these perverse incentives to foreclose exist because “our” government insured these mortgages in full, creating a perverse dynamic where banks say they have “no choice” but to foreclose and get paid in full. I don’t care if you’re Republican or Democrat (or, in my case, neither) … the government isn’t supposed to operate in this manner.
It’s all so dirty … where is that soap already?
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What is foreclosure defense all about? Many have asked me that very question over the years, and I think I just found the perfect way to explain it … by showing what happened to me today.
I was at the Manatee County courthouse waiting for a trial to begin in a foreclosure case. My client was very reasonable – he had offered to consent to foreclosure if the bank waived deficiency. He was willing to walk away and move on with his life … he just didn’t want to owe additional money above and beyond losing the property. But the bank refused, offering my client nothing and leaving us with no alternative but to go to trial.
As I was waiting for trial to begin, the following exchange took place:
Plaintiff’s counsel: Do you want to consent to foreclosure judgment?
Me: Why would I do that? Are you giving a deficiency waiver?
Plaintiff’s counsel: No.
Me: Then no.
(A few minutes later…)
Me: Will you voluntarily dismiss? If you voluntarily dismiss then I won’t ask for fees.
Plaintiff’s counsel: We aren’t dismissing. Why should I be worried about your fees?
Me: You’ll see.
(about 90 minutes later, after the case was tried…)
Judge: I agree with Mr. Stopa. I think the Plaintiff’s evidence is insufficient. I will grant the motion for involuntary dismissal.
How does this show what foreclosure defense is all about? Simple. My client was very reasonable. He was willing to walk away from this property – let the bank take it – if the bank waived its claim to deficiency. He was willing to compromise, but the bank refused, so it left us with no alternative but to try the case.
Apparently, the bank and its lawyers arrogantly thought they didn’t need to compromise, as a foreclosure judgment was assured. They were so arrogant they asked me to consent to judgment, even as they offered nothing in return. But when the case got tried, they got kicked in the teeth – judgment for defendant, and now they’ll pay my fees, too. Again.
So what is foreclosure defense, exactly? Foreclosure defense is a bunch of lawyers, like myself, who fight for homeowners, trying to kick the banks in the teeth often enough that they finally get reasonable and offer fair settlements to homeowners facing foreclosure.
In other words, here’s how I summarize foreclosure defense …
How many times do I have to kick a bank in the face before it starts to make reasonable settlements with homeowners?
You want to offer my clients nothing and proceed to trial, banks? Go ahead. Just put your mouthpiece in first … or better yet, a helmet.
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In the wake of Roger Clemens’ acquittal, I feel compelled to write an open letter to the U.S. Government. (For those of you non-sports fans, Clemens was the best baseball pitcher of our generation, but like other star players such as Mark McGwire, Sammy Sosa, and Barry Bonds, is widely believed to have used steroids. The U.S. Government charged him criminally for lying to Congress about his past steroid use, and after his first trial ended in a mistrial, he was just acquitted of all charges.)
Dear U.S. Government,
Please stop wasting your time and our money trying to get convictions against former athletes. The public at large knows most of these athletes, like Roger Clemens, probably used steroids, and many of them lied about it. But we don’t care. Do you hear me? WE DON’T CARE. We might have cared, perhaps a little, but we’re too busy being thoroughly disgusted at how various criminal banksters have committed fraud and theft on a massive, widescale basis, prompting an unprecedented financial bailout and essentially destroying the world economy, yet there are no criminal prosecutions for that misconduct.
Why do you care so much about Clemens – whose impact on the world right now is zero – yet care so little about those persons who caused America to suffer through the Great Recession? Don’t you realize how badly this makes you look in the eyes of most Americans? (Well, those who are awake, anyway?)
Here’s an idea for you … take the resources you’ve spent prosecuting former athletes and apply them towards prosecutions of those persons responsible for destroying the world economy. If you do that, and you put these criminal banksters before a jury, trust me … unlike Clemens and Bonds, you’ll get convictions.
What’s that? You don’t want convictions of these criminal banksters? Why is that, exactly? (Crickets …)
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I’ve blogged about how to avoid foreclosure rescue scams in the past, and I’d hoped I wouldn’t have to again. After all, the one (and only) thing the Florida Attorney General will prosecute in foreclosure-world is a fraudulent defense. (Goodness knows the crooked banksters avoid prosecution.) Anyway, based on what Florida homeowners are telling me, these scam operations still exist, trying to take advantage of unsuspecting homeowners.
When I wrote about this in 2010, I saw six red flags – six factors that homeowners should look for in distinguishing those companies that can help homeowners prevent foreclosure and those which are, quite frankly, just trying to steal money. Unfortunately, it’s time to add a seventh.
Apparently, there are companies out there trying to convince homeowners that the way to avoid foreclosure is to deed their house to the company. That sounds nuts, right? Who’d fall for that? Deed your house? Come on. Who’d be foolish enough to relinquish ownership to their home as part of a “foreclosure defense?” After all, the very point of a deed is to give up ownership – how can that help anyone retain ownership and fight foreclosure?
Well, these companies make what might seem to be a pretty convincing pitch.
Company: “Deed me your house, and I’ll fight the bank, quiet title, and deed the house back to you for a fraction of the cost.”
Homeowner: “I’m not doing that. Mark Stopa is my lawyer, he’s representing me. I don’t need your help.”
Company: “Is Stopa suing to quiet title? Stopa’s an idiot. I can get your house free and clear. Here, see these documents; I’ve done it before.”
Please, folks. Please don’t fall for this. If it were that easy to “quiet title,” I’d be doing it, Weidner would be doing it, Chip Parker would be doing it … we’d all be doing it. I’d be writing about it on this blog, explaining how to stick it to the banking industry by getting free houses. And the media would have these stories plastered all over the 11pm news. It just doesn’t work like that. I mean, seriously. You’ve read my blogs. Do you really think I’d hesitate to get homeowners free houses if there were a legitimate way to do so? I’d love nothing more than to create the biggest consumer bailout in the history of the world, wiping out one mortgage after another. Unfortunately, it just doesn’t work like that.
To be clear, winning a “quiet title” is possible. It’s extremely rare, and I’m not going to bother explaining it on this blog (so as to tip off the crooked banksters on how it’s done), nor am I going to explain it to anyone except existing clients whose cases have evolved in a way that I think this is a realistic possibility. So yes, it’s possible, but deeding your house to another company is unequivocally NOT how it works.
My point here is this …
Don’t fall for any “help” or “deal” that entails you deeding your house to somebody else. If you’re walking away from your house and don’t care any more, then perhaps that’s a different story. But if you want to own your home and/or fight a bank that’s trying to foreclose, then deeding it to some “foreclosure rescue” company is the last thing you should do. Anyone who says otherwise is very likely trying to con you – sort of like selling oceanfront property in Kansas.
And as for those documents that they show you? I can create a document that shows I own the White House; it doesn’t make it real.
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Someone accused me today of helping homeowners live for free. My response?
I don’t help homeowners live for free. I merely strive to take money out of the pink piggy bank and give it to the families standing next to it (to the greatest extent allowed by law and consistent with any ethical obligations, of course).
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I recently had a hearing on my client’s motions to compel discovery before Judge Rondolino in St. Petersburg. When nobody appeared for Plaintiff, the judge was courteous enough to call Plaintiff’s counsel. Finally, a lawyer for the plaintiff got on the phone, but he was obviously unfamiliar with the file and unprepared to argue. Incredibly, he tried to suggest my clients’ motions should be denied (even without knowing what the motions were about) because foreclosure cases are “routine.”
The judge’s response? This written Order, where the judge rescheduled the hearing but required Plaintiff’s corporate representative and plaintiff’s counsel to personally attend. Oh, and there’s this little nugget to dispel counsel’s argument that foreclosure cases are “routine”:
Though [plaintiff’s counsel] argued that foreclosure cases are often “routine,” the only thing the Court finds “routine” is the banking industry’s failure to comply with discovery in foreclosure cases and its failure to attend duly-noticed hearings.
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I had a hearing yesterday, and it prompted me to re-assess what foreclosure defense is all about.
When opposing counsel failed to attend, even by phone, the judge was understandably perturbed. The judge couldn’t reach that attorney by phone, so another lawyer from that office who had no familiarity with the file got stuck trying to cover the hearing. He was obviously unprepared to argue, so, hoping to pounce on the opportunity, I offered not to seek fees if the plaintiff dismissed the case. The Judge seemed shocked. “Whoah, that’s a good offer.”
I’m glad the judge got to see I was willing to walk away from any fees if the case got dismissed. I’d like to think that’s an image that will stick in his mind – “Stopa was fighting for a dismissal, not fees.” That said, I was disappointed at the judge’s surprise. Why was he so surprised? Is he used to seeing foreclosure defense lawyers fighting foreclosure just so they can recover attorneys’ fees? Is that what foreclosure defense has become, lawyers fighting for the fees that come with cases getting dismissed instead of the dismissals themselves? I can’t help but think there’s more to foreclosure defense than prevailing party fees.
Remember, for example, this post, where I encouraged those in the St. Pete area to support local businesses like Ferg’s and announced my season-long give-away of Rays’ tickets? I just received this email from a local consumer who received a few of those tickets …
Dear Mr. Stopa,
I wanted to thank you for the Rays tickets for June 2nd and June 3rds games.
We received the tickets from Mark Ferguson of Ferg’s restaurant in St. Pete. We
enjoy the games tremendously and the view from the third deck over home plate
Your kindness of the tickets enabled myself and my fiance to take a disabled
young man named Anthony to the games. He just had to have his third brain
surgery several months ago. This young man, Anthony, has had a lot of medical
issues during his lifetime since being diagnosed with a rare type of cancer as a
very young child.
He is cancer free now but the cancer and chemo/radiation complications have
cause him to need seven operations to date. This morning he is about to go
through another surgery which although minor will be the eighth surgery he has
had to indore.
These tickets could not have come at a better time. The Saturday tickets had
an even bigger surprise when we realized the tickets gave us access to the LL
cool j concert right after the game. I know I’ve told you a lot about Anthony
but I wanted you to understand how much the tickets were appreciate and how much
we all enjoyed both days at the Rays games. Thank you again.
This is what foreclosure defense is about … fighting to get cases dismissed … keeping homeowners in their homes … helping to support our community … making a difference in the lives of cancer-ridden children … fighting to help those who might not otherwise have a voice. Soon, I hope to live in a world where a judge won’t be so surprised to see lawyers carry out those objectives. After all, for me, that’s what foreclosure defense is all about.
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Anyone in the Jacksonville area probably knows the Duval County courthouse is a disaster-zone right now. The courthouse was going to change locations in mid-May, but apparently they couldn’t get a Certificate of Occupancy issued for the new building. As a result, the courthouse is basically shut down – all hearings have been cancelled, and the clerks have been largely unable to file any filings. In fact, from what I’m told, the clerks don’t even have computer access.
This is a nightmare in so many ways. For instance, I mailed a Notice of Appeal in a pending case a few weeks ago, and the timely filing of that document is imperative – it must be filed within 30 days or the right to appeal is eliminated. Yet the clerk’s office is in such a state of disarray (in light of the move) that the document didn’t get filed until one hard-working clerk helped me out after several phone calls. Can you imagine losing the right to appeal simply because the clerk’s office was moving and unable to file something you mailed?
Another big problem – the clerk’s office has stopped issuing Certificates of Sale and Certificates of Title after foreclosure sales. The sales are still going forward, yet the clerk isn’t issuing the paperwork necessary to transfer ownership to the parties who purchased the properties at the foreclosure sales. In my view, this raised a rather obvious question … if the courthouse is shut down, all hearings are cancelled, and the clerk can’t issue Certificates of Title or Certificates of Sale
Why the heck are foreclosure sales still schededuled?
Why aren’t all foreclosure sales cancelled (at least until the clerk’s office can operate like normal)?
I posed this question to a foreclosure clerk just now, and she agreed with my view so much that she decided, on her own, to talk to a foreclosure judge about getting all foreclosure sales scheduled in Duval next week cancelled. But that just begs the question … why did I have to be the one to think of this? Do we really live in a world where a courthouse is shut down, all hearings are cancelled, and the clerk can’t issue certificates of sale or certificates of title, yet foreclosure sales proceed anyway?
Take a look at the website that conducts these sales – www.duval.realforeclose.com. By my count, there are 144 foreclosure sales scheduled next week even though the clerk can’t issue the paperwork necessary to transfer ownership to the winning bidders. Am I the only one who thinks this is nuts?
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