Archive for December 31st, 2011

A Principal Reduction for 2011 – More Proof Homeowners Must Save!

I can only hope that the last foreclosure case I worked on in 2011 was a sign of things to come for 2012. 

Out of the blue, I randomly received a letter from BB&T offering to accept $27,300 as payment in full of my client’s outstanding mortgage if it was paid before the end of the year.  This was a terrific offer, as my clients owed approximately $150,000 on their mortgage, and payment of this $27,300 would give them the house free and clear (and while the property appraiser’s values are hardly 100% accurate, its assessed value of the home is $54,000, showing this was truly a good deal).  Plus, this offer was given with no strings attached – no financial disclosures were required, and it didn’t matter where the money came from – the bank was walking away for less than 20 cents on the dollar.

Candidly, my clients would have loved to pay this $27,300 and keep their house, but, unfortunately, they lacked the money or the means to do so.  However, my clients were more than happy to get a deficiency waiver, which is what they’d be getting if they could sell the house for $27,300 (or something higher) to a third party, i.e. an investor.  After some work, we found someone willing to pay more than the bank’s asking price for a deed.  So just like that, viola!  The bank got its money, the investor got a house, and my clients had to move, but they got a complete deficiency waiver, so everyone was happy. 

I see a few morals to this story: 

1.  For the banks, deals like this should be more prevalent.  Cut your losses, add some cash to your balance sheet, and move on.  Or, you know, fight me in court.  Your choice. 

2.  For homeowners facing foreclosure, save your money!  Unsolicited offers like this are rare, but if you’re given one, you’ll be glad you have money set aside to take advantage (and you’ll be kicking yourself if you don’t). 

I’ve been saying this for a long time, to anyone who will listen – if you’re facing foreclosure, it’s almost always a good idea to save money.  Maybe you can use that money to pay off your mortgage.  Maybe you can use it as a down payment for a loan modification.  Maybe you’ll accumulate enough to buy an entirely different house.  The possibilities are endless if you can save money, and that certainly beats the alternative, i.e. not having money, especially if you’re facing the prospect of getting foreclosed and having to move elsewhere. 

3.  For homeowners facing foreclosure, you never know what good things may happen if you don’t give up.  If these homeowners didn’t fight, then would have never received this deal.  But they fought the bank, stayed the course, and got a result that satisfied them. 

4.  The bank’s offer was predicated on getting the money before the end of the year, and that’s no coincidence.  Banks want to improve their balance sheets before the end of each quarter, so keep that in mind when you’re negotiating.  Much like a car dealer, the best deals are often available at the end of March, June, September, and December. 

Let’s hope 2012 brings more stories like this!  Happy New Year to all. 


Mark Stopa

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Facing Foreclosure from a Homeowner’s Association

Did you know your home/condo can be sold at a foreclosure sale even if you’re current on your mortgage payments?  Or even if you own your home/condo free and clear?  I’m not talking about nefarious acts by a bank (this time).  Rather, foreclosures can happen in Florida, consistent with the law, if you live in an association and you fail to pay your association dues.  

Given the nature of my mortgage foreclosure defense practice, I’ve seen this dynamic many times.  Typically, the homeowner: (i) doesn’t realize he/she is behind on association payments, then gets sued for foreclosure; (ii) doesn’t think he/she can afford those payments and gets sued for foreclosure; or (iii) wrongly presumes an association foreclosure lawsuit can be defended like a mortgage foreclosure case.  No matter the situation, the homeowner is making a mistake that must be avoided.  Quite simply, you can’t fall behind on association payments. 

Let’s put it this way – even though I make my living charging attorneys’ fees, I do everything possible to prevent/turn away these cases, for a variety of reasons: 

First, unlike mortgage foreclosure cases, there often aren’t any defenses in a foreclosure case brought by an association.  Yes, sometimes the association attorneys charge ridiculous attorneys’ fees, but that’s not going to defeat a foreclosure, it’s just going to reduce the amount of the judgment.  Call me crazy, but I don’t like charging attorneys’ fees if I don’t think I’m going to help a client. 

Second, foreclosure lawsuits brought by an association tend to go much quicker than mortgage foreclosure cases.  If you think delay will be a by product of defending an association foreclosure, you’re probably wrong. 

Third, getting current on association payments isn’t nearly as daunting as getting current on a mortgage – often it’s just a matter of a couple thousand dollars, perhaps less.  Although that’s a lot of money for some people, it’s a small price to pay to avoid foreclosure and keep living in your home (especially if you have an attorney defending a mortgage foreclosure case).  Plus, unlike mortgage foreclosure cases, where a few thousand dollars in attorneys’ fees for the bank’s attorney are a drop in the bucket compared to the total amount owed on the mortgage, thousands of dollars in attorneys’ fees in association cases make a big difference in the total amount owed.  In association cases, it’s almost always best to stop the bleeding as soon as possible. 

Fourth, the amount you owe your association will go up astronomically if you don’t stay current.  By the time the association tacks on include late fees, penalties, interest, and attorneys’ fees, $1,500 in association dues can easily become $3,000, $4,500, or more.  Then, if you have to hire a lawyer to defend the case, you’re paying your own lawyer while you’re also incurring more fees to the association’s lawyer.  Again, I like getting paid, but collecting fees in a situation like this rarely behooves the client.  I’d rather see homeowners keep the money they’d pay me and use them to get current with their association. 

The combination of these factors cannot be overlooked.  Association foreclosures go quicker, there are fewer defenses, and they’re very expensive to defend, especially compared to the total amount owed.   Don’t lose your home to a foreclosure by your association.  And don’t let your unpaid balance get so out of hand that you get sued – you’ll win up paying far more than you otherwise would, and there’s probably not much a lawyer can do to change that.

Mark Stopa

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