Archive for August 4th, 2011

Judge Laments “Idiocracy” of Banks; U.S. Government to Blame

I hope you haven’t eaten yet today, because when you read this, you’re going to be sick. 

Today’s St. Pete Times details the story of Saji Mathew, who owns a Mobil gas station in Pinellas County.  On October 13, 2010, Mr. Mathew went to pay his monthly mortgage payment to BB&T, which was due on October 12.  BB&T refused to accept it.  Mr. Mathew has been trying to pay, in full, ever since, only to have his payments rebuffed. 

Yesterday, he tried again, in court before St. Pete Judge Amy Williams.  Despite his willingness to pay more than $50,000, the bank once again refused.  This prompted Judge Williams to express some well-founded frustration:

All the people that understand anything about mortgage foreclosures need to know this stuff,” Circuit Judge Amy Williams said in court. “This is the idiocrasy of this stuff. This is why we’re in a worldwide financial crisis because there’s no business sense any more in the foreclosure industry, none. And it blows my mind. Totally blows my mind.

The article goes on to explain that there must be “some financial incentive” for BB&T not to accept these payments, but is unsure what it is. 

Well, I’ve awwn this fact pattern before, and I know what it is. 

As the article reflects, this loan originated with Colonial Bank, which was taken over by the FDIC, which then gave the loan to BB&T. 

Want to know why BB&T won’t accept Mr. Mathew’s payments?  It’s simple.  BB&T wants to have the entire loan balance paid in full.  And it knows it will, one way or the other.  You see, one of two things will happen here.  Either Mr. Mathews is collectible, and will be forced to pay a deficiency judgment to BB&T in full (once the foreclosure is finalized) … or Mr. Mathews is not collectible, and the FDIC will pay the judgment to BB&T in full.  Either way, BB&T will collect, in full. 

So that’s the dynamic at play here (and in countless other cases) – BB&T would rather refuse the monthly mortgage payments because it knows it can collect, in full, courtesy of the U.S. Government. 

If you think I’m speculating here, you’re wrong.  I’ve had cases recently where this exact dynamic was discussed openly and repeatedly.  When BB&T obtains a judgment on a Colonial Bank loan, it gets paid by the FDIC so long as it proves to the FDIC that (1) the judgment debtor is uncollectible; or (2) the judgment debtor is in bankruptcy.  That’s it.  What precipitated the default and the judgment is irrelevant … even if the default was minor and the owner can make the monthly payments, that’s irrelevant – BB&T gets paid in full by the FDIC. 

So, if you’re like many other Floridians wondering why BB&T refuses to accept Mr. Mathew’s payments, wonder no more.  Quite simply, BB&T would rather foreclose, and collect from the FDIC, than continue accepting his monthly payments. 

If you agree with me that this dynamic is perverse and disgusting, do something about it.  Complain to your Congressman.  Talk to the media.  It’s up to you and me to stop this insanity. 

Here’s the article.  …

ST. PETERSBURG — Saji Mathew missed the Oct. 12 mortgage payment on the Mobil gas station he co-owns.

On Oct. 13, he took the money to the bank, thinking that would make things right.

He tried to make his November and December payments as well. But each time, BB&T kicked back his money.

Ten months later, Mathew is still trying to pay. In circuit court on Tuesday, he offered BB&T $50,000, the total amount due since October.

BB&T didn’t want the money.  It wants the gas station.

“They won’t take my money,” said Mathew. “I want them to take it. I was one day behind paying the mortgage.”

BB&T’s stance flabbergasted the judge in the case.

“All the people that understand anything about mortgage foreclosures need to know this stuff,” Circuit Judge Amy Williams said in court. “This is the idiocrasy of this stuff. This is why we’re in a worldwide financial crisis because there’s no business sense any more in the foreclosure industry, none. And it blows my mind. Totally blows my mind.”

• • •

Because the case is pending, the judge could not elaborate on her frustration.

But as thousands of property owners across Florida and the nation battle foreclosure, defense attorneys accuse lenders of bogging down courts with an unwillingness to negotiate with people on their mortgages, often by simply refusing to make decisions.

St. Petersburg lawyer Matt Weidner said attorneys across the country fight these types of cases everyday.

“It’s an example of the mess that has been handed to our judges and courts,” he said. “It’s an impossible mess to clean up.”

Mathews bought the station in 2001. He bought the property in 2003. Court filings detail his side of the story.

In 2009, he signed a $504,000 mortgage with Colonial Bank. The deal allowed the bank to withdraw the $4,964.93 mortgage payment on the 12th day of each month. Months later, Colonial failed. BB&T acquired the mortgage.

Late last summer, Mathew spent $75,000 for new underground storage tanks at the station. That led to a cash flow problem in October.

On Oct. 12, BB&T tried to withdraw the mortgage payment from the gas station’s account, which lacked sufficient funds.

Mathew deposited money the next day. Because the bank had sometimes not taken the payment until the 14th of the month, Mathew said he assumed everything would be okay.

Instead, on Oct. 25, he received a late notice. Mathew said he visited the bank, where a representative told him the payment would be reprocessed. Eleven days later, Mathew received a notice demanding $5,243 for the October payment, which included a penalty.

Mathew said he did nothing because the bank employee had already told him the October payment would be reprocessed. On Nov. 20, a BB&T attorney sent Mathew a letter demanding the total amount remaining on the loan, $473,000.

Mathew said he contacted the bank but was told it wouldn’t deal with him because he was involved with another company in an unrelated BB&T foreclosure in Charlotte County. He contacted the bank’s attorney, who directed him back to BB&T.

Mathew made mortgage payments in November and December. The bank refunded them and filed foreclosure on Dec. 20.

• • •

In court this week, Ronald Bruckmann, a Miami lawyer representing BB&T, insisted that the bank had the right to demand repayment of the entire loan amount once Mathew missed a payment.

Mathew’s attorney, Brian Gray of Fort Lauderdale, disagreed. He told the judge that Mathew has had the ability to pay each month.

“They accepted subsequent payments and then subsequently refunded those payments to him,” he said. “Gave him the runaround, and that’s why we’re here today.”

Judge Williams ordered BB&T to place the $50,000 in a trust account or into the Clerk of Courts’ registry account until the case is settled.

In a telephone interview, Gray said he doesn’t understand BB&T’s motives for not accepting the money. He stressed that Mathew doesn’t want the loan modified. He simply wants to pay what he always paid.

“The bank would rather drive (Mathew) into foreclosure,” he said. “There’s got to be some financial incentive for them to not work with my client. This is disturbing, especially in this economy. It is really wrong.”

Bruckmann declined to comment.

Mathew vows to fight the foreclosure at a trial set for December.

“This is devastating,” he said. “This is all I have. This is how I make my living.”

Mark Stopa

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