Archive for August 8th, 2012

Are Tampa/St. Pete Judges a Different Breed?

Throughout the two-plus years I’ve been writing this blog, I’ve encountered many homeowners who have expressed rampant frustration with the legal system in Florida.  “The judge won’t listen to my arguments.”  “The judge is a robo-judge and is only interested in clearing his/her docket.”  Even when I’ve articulated some bona-fide defenses to foreclosure, and illustrated how such defenses have worked in some of my cases, some such homeowners have responded with words to the effect of:

Yeah, but that’s in Tampa/St. Pete. 

Judges where I live, in my part of Florida, don’t rule that way.

For example, in response to my post explaining how it’s possible for homeowners to obtain a summary judgment in their favor, one homeowner wrote, and I quote:

I am fighting my foreclosure in the 18th Circuit, Seminole County, and my judge like most judges in Seminole County is not the least bit interested in the semantics of an intelligent legal defense.  This is a robo foreclosure county.  Judges here are interested in clearing their docket, spending approximately three minutes in a hearing and nothing else.  Due process is right out the window.

I understand these sorts of frustrations, I do.  However, I can’t help but wonder … is there something inherently different about the judges in the Tampa/St. Pete area than the judges in other parts of Florida, as this homeowner seems to believe?  Are the judges in the Tampa/St. Pete area somehow more inclined to rule in favor of homeowners than other judges in other parts of the state?  Or have foreclosure defense attorneys such as myself worked so tirelessly on behalf of homeowners that we’ve convinced these judges that the law often requires them to rule in favor of homeowners?

I’m sorry, but I refuse to believe that judges in the Orlando area, South Florida, or anywhere else in Florida are just inherently anti-homeowner.  I refuse to believe there’s anything inherently different about the judges in Orlando, Ft. Lauderdale, or Ft. Myers than the judges in St. Petersburg, Dade City, or Tampa.  They’re all judges.  They’re all equally qualified to hold the position.  Does it seem like the judges in the Tampa/St. Pete area tend to rule more favorably for homeowners?  Sometimes, perhaps.  But why is that?  Is it really because these judges are somehow a different breed?

I’m sorry, but I just don’t buy it.  I firmly believe the judges in my area have issued some favorable rulings for homeowners because the Tampa/St. Pete area is filled with foreclosure defense lawyers, such as myself, who have steadfastly and consistently advocated for homeowners.  I believe that by repeatedly presenting well-taken arguments, with case law, we have created these favorable rulings.  I also believe that if this happened more often, in other parts of the state, that other judges in Florida would do the same thing.

For example, I had a hearing today in Seminole County (the very county that the homeowner, above, was complaining about) before Judge Marlene Alva.  The bank was asking that a receiver be appointed so as to enable the bank to collect rents during the pendency of the lawsuit.  Frankly, this was the sort of thing that a “robo-judge” (to use that homeowner’s term) could have easily granted, almost as a formality, with a simple explanation.  (“Mortgage is in default, bank should collect rents while the case is pending.”).   That wouldn’t have been correct, but I could have seen it happen.  However, when the bank’s lawyer tried to make the argument for a receiver without evidence (i.e. without a live witness to testify), Judge Alva sustained my objections and denied the motion.  It didn’t matter that the mortgage was in default and my client was collecting rents – the bank didn’t prove its entitlement to a receiver, so the judge denied the motion.

What’s my point?  Obviously, I have more hearings in the Tampa/St. Pete area than I do in Seminole County.  However, I don’t think there is anything inherently different about the judges in this area.  I think all judges will listen to bona-fide, well-taken arguments supported by case law, especially if lawyers develop a reputation for always making such arguments.

For instance, is it a coincidence that Matt Weidner (to name just one other) and I work in St. Pete and many plaintiffs’ lawyers consider St. Pete the most defense-friendly place in Florida?  Or is it that we’ve consistently shown these judges why the law requires rulings in favor of homeowners, and they’ve responded accordingly?  Call me biased, but I don’t think it’s a coincidence.

Another example … I recently had a hearing in Miami, which is probably as “bank-friendly” as it gets in Florida.  I cited Feltus and the judge had never heard of the Feltus case previously, so he stopped the hearing to read it.  Now … if the judge hadn’t been following the principle of law set forth in Feltus (prior to my hearing), then whose fault is that, exactly?  Yes, the judges in the Tampa/St. Pete area are typically aware of Feltus and typically follow it, but that’s because lawyers such as myself routinely cite it in hearings.  If none of the lawyers before that Miami judge had ever cited Feltus in a hearing, then how can anyone expect that judge to follow that principle of law?  In my view, it’s up to us to present the arguments, with case law, so as to make the judges understand the bona-fide defenses to foreclosure.

So for anyone who laments that they don’t reside in the Tampa/St Pete area … don’t give up.  Personally, I refuse to accept that judges in other parts of Florida are somehow different, or less inclined to rule for homeowners.  In my view, if these judges aren’t ruling in homeowners’ favor more often, then that’s because homeowners and their attorneys aren’t doing a good enough job presenting viable defenses, with case law.  So don’t give up, folks.  Keep hammering away.  Keep presenting your arguments.  Keep bringing case law.  And, I hate to say it, but keep hiring competent counsel, as good attorneys know what arguments to present and when to present them, maximizing the chances that the judge will do what you want him/her to do.

Mark Stopa

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Want a Loan Modification? Better Save Your Money

Whenever a homeowner facing foreclosure tells me that he/she wants to obtain a loan modification, what’s the first thing I discuss?  No, it’s not that loan modifications are hard to come by, especially those with principal reductions (even though that’s true).  And no, it’s not that banks have all sorts of perverse financial incentives to foreclose rather than work out a mortgage modification (even though, sadly, that’s true as well).

The first thing I ask my clients is how much money they’ve been able to save while the foreclosure lawsuit has been pending.

Look … I’m not judgmental.  I get that the economy sucks and that a lot of good people are unemployed or underemployed.  I understand that, for many people, saving money just isn’t possible.  And I understand that nobody wants to lose their home.  That said, if you haven’t made a mortgage payment in two years, have been unemployed for 18 months, and have no savings, how do you think you’re ever going to get a loan modification?  I think I’m pretty adept at defending foreclosure lawsuits, but if this is your financial situation, there’s nothing I can do to make a bank give you a loan modification.  Can I fight the foreclosure lawsuit?  Absolutely?  But can I somehow force a bank to give you a modification (when you basically have no money)?  Sorry, no.

Here’s the cold, hard reality, as I see it (not intended to be harsh but to help homeowners realize the situation they face) … why would a bank modify your loan if you can’t afford to pay, even at a reduced rate?  Even if we can get past the other hurdles to obtaining a modification (the perverse financial incentives to foreclose, the infrequency with which modifications are offered, and the perception that offering principal reductions would induce everyone to default), if you can’t afford to pay, then what’s the point?  Ultimately, the best way you can prove your ability to pay is to save money.  Saying you can pay is one thing – pulling out cash is another.

This is why my first discussion with clients who say they want a loan modification is to inquire about the amount of money they’ve saved.  In my view, if you haven’t been able to save any money while the foreclosure case has been pending, then you probably can’t afford to pay, even if a loan modification were offered.  After all, if you were able to pay on a monthly basis, then you’d have some money saved.

Sometimes, this advice creates some understandable anger.  “You don’t know what you’re talking about, Stopa.  I just chose to spend my money in other ways.  I paid other debts.  I have a job now.  I can afford a modification.”

OK.  But here’s the problem.  On the rare instances where I’ve seen modifications offered, they often look like this.

At first glance, this loan modification offer looks appealing, and in some ways, it is.  The monthly payments are reduced, and it even has a principal reduction!  For some homeowners, this sort of offer is a godsend, creating the ability to keep ones home and avoid foreclosure.

However, look closer.

Do you see how the agreement requires that monthly payments begin immediately?  There’s no “wait 60 days until I get a job” – the monthly payments start now.

Do you see how the agreement is predicated on proof of insurance?  For the homeowner to get this modification, he/she will have to immediately obtain homeowners’ insurance – and pay for it.  For anyone whose insurance lapsed, getting insurance right away will not be easy, or cheap.

Do you see how “any payments for taxes and insurance will be [the homeowner’s] responsibility in addition to the payments of principal and interest”?  Hence, the homeowner not only has to pay the monthly payment, he/she has to pay property taxes, too.  Does that include delinquent taxes?  The agreement is not entirely clear, but I’d say so.  Of course, these taxes could be many thousands of dollars.

Do you see how “fees and charges that were not included in [the new] principal balance will be [the homeowner’s] responsibility”?  What does this mean, exactly?  Frankly, your guess is as good as mine – this agreement, as written, is clear as mud.  Does it mean that the fees and costs the bank incurred in the foreclosure case have to be paid by the homeowner?  If so, when?  And how much are these fees and costs?  We really don’t know, but that’s the problem – arguably, the bank could simply hand you a bill and say “pay this.”  Sure, you could fight that.  But if you signed, and those are the terms on which the bank is giving the modification, you may have no choice but to pay.

Do you see how “any expenses incurred in connection with the servicing of [the] loan, but not yet charged to [the] account as of the date of this Agreement, may be charged to [the] account after the date of this Agreement.”  What does this mean, exactly?  How much are these charges?  When are they due to be paid?  Again, you may get stuck paying this bill in order to get your modification.

There are other problems with this modification as well, including (1) there is no representation from the lender that it is the owner/holder of the Note and Mortgage; (2) the foreclosure case proceeds unless/until the homeowner has done everything the agreement requires, including obtain Ocwen’s signature; and (3) nothing in the agreement requires the foreclosure case to be dismissed even if all of the terms are complied with.

The point here, though, is that even if the homeowner wanted to do this modification, it requires immediate, out-of-pocket payments – monthly payments, starting immediately, but also payments for insurance, property taxes (including back due taxes), and, arguably, some unspecified amounts for fees, costs, and service charges.

This is a good illustration why I encourage homeowners who want a loan modification to save their money.  As you can see, if you don’t have cash on hand to pay these expenses, then even if a loan modification does come your way, you won’t be able to take advantage.  So when you hear me asking about whether you’ve saved your money, please realize – I’m not being judgmental.  I’m trying to assess whether you can comply with the terms of a loan modification even if you’re one of the lucky homeowners to whom such a modification is offered.

Mark Stopa

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