Posted on September 8th, 2011 by Mark Stopa
I receive questions like this from Florida homeowners on a regular basis, so I thought this question and my response were worth posting:
Q: We are currently more than 1/2 upside down on our mortgage. Would a short sale be better for our credit than a foreclosure? We don’t want to rent forever. How long do you think we would be able to buy another home after a short sale or a foreclosure?
My Answer: The difference in your credit between a short sale and foreclosure is negligible in my view and not what should be driving this decision. If you’re that far underwater, your objective, in my view, should be to not have to pay a deficiency.
It’s one thing to be foreclosed; it’s another to be foreclosed and still owe hundreds of thousands of dollars to the bank. For example, if you owe the bank $300,000 and your house is worth $120,000, then you’ll still owe the bank $180,000 even after being foreclosed (unless the bank agrees not to pursue such payments from you). Want to talk about something that will ruin you financially – that is it!
It sounds to me like your goal should be to defend the foreclosure case, save money while the case is pending, try to avoid a deficiency, and use the money you’ve saved to try to buy a new house. For example, if the bank agrees to waive the $180,000 deficiency, and you save $30,000 while the foreclosure case is pending, then you can take $30,000, pay it towards a $120,000 house that is identical to the one you own now, and have $30,000 in equity.
If you’re still adamant about a short sale, remember this – when you agree to a short sale, you have to leave the home you’re living in (and pay to live elsewhere). Obviously, if you’re paying to live elsewhere, that will make it harder to save money to buy a new home. It may be worth doing if you’re avoiding a big deficiency, but if you’re not, then a short sale makes no sense whatsoever.
How long it takes you is a product of how much you’re able to save and what type of house you want to buy.
The good news is that it’s a tremendous buyer’s market (and probably will be for years to come) – especially if you have cash.
Good luck, and let me know if you need more information.
Mark Stopa
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Posted on September 8th, 2011 by Mark Stopa
One of my biggest frustrations as a foreclosure defense attorney is watching judges take it upon themselves to prosecute foreclosure cases that banks seem perfectly content to let languish.
In Hillsborough County, for instance, a new Administrative Order authorizes judges to adjudicate motions in foreclosure cases without a hearing. Unfortunately, many judges see this as a “free pass” to deny homeowners’ motions, and grant motions for the banks, without notice, without hearing, and without explanation. It’s ironic, actually – many consumer advocates complained about the senior judge system, but, candidly, I greatly preferred the senior judge system, at least in Hillsborough, to what we have now. When the senior judges were in place, at least homeowners got hearings. At least homeowners felt like they were being heard. Now, it’s rare, at least in Hillsborough, that anyone even pretends that homeowners’ arguments are being considered. It’s pushing a boulder up a mountain just to be heard.
Meanwhile, in Manatee County, a new Administrative Order requires that homeowners set hearings on their motions as the motions are filed, and some judges have threatened sanctions for failure to comply. As a litigator (and not just a foreclosure defense attorney), I find this procedure terribly misguided, particularly since it only applies in foreclosure cases. To illustrate, when I sue an insurance company and it responds with a motion to dismiss, do you think there is any procedure requiring the insurance company to set its motion for hearing right away? Heck no. I represent the plaintiff, so if I want to advance the case to judgment, I have to set the motion to dismiss for hearing. That’s standard fare in the court system. Yet, in foreclosure cases in Manatee County, when a homeowner files a motion to dismiss, he/she is required to set the motion for hearing. Why? Because the courts are concerned that foreclosure cases aren’t being adjudicated quickly enough? I’m sorry, but that’s not a good enough answer, for two glaring reasons.
First, why is the court system bending over backwards to push through foreclosure cases but not any other types of cases? Are banks somehow deserving of special attention? The entire concept (that a special procedure would be employed only in foreclosure lawsuits, to the systematic betterment of one side) is, respectfully, offensive. Judges are supposed to call balls and strikes, like an umpire in baseball, not employ widespread, systematic procedures for the benefit of banks.
Second, when are the courts/judges going to realize that the only ones trying to move these cases quickly are the courts/judges themselves? Generally speaking, banks aren’t killing themselves to obtain foreclosure judgments and acquire title to properties, especially when competent defense lawyers are throwing up bona-fide roadblocks making it difficult for the banks to prevail. In fact, this article in the St. Pete Times appropriately describes how banks often refuse to take title to properties even after they’ve obtained a foreclosure judgment.
Think about that for a minute. The bank has won the case, all it has to do is set the foreclosure sale and become the high bidder (and take title) or let someone else be the high bidder. But the banks are systematically refusing to go through with these sales.
Respectfully, shouldn’t this be a wake-up call to all of our courts? Why are the courts implementing all of these procedures to accelerate foreclosure cases when the banks aren’t even taking properties? Why are Hillsborough judges refusing hearings to accelerate cases when banks don’t want title? Why are Manatee judges requiring motions be set for hearing right away when banks don’t want title? What, exactly, is being accomplished here? Who is this helping?
I wish I had answers to these questions, but, clearly, there are no answers. Instead, I’m left to lament how I have to prosecute cases when I represent plaintiffs, without any assistance from the courts, yet when I represent homeowners, the courts often take it upon themselves to help the banks prosecute the cases to judgment (even when the banks don’t want title to these properties).
Mark Stopa
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