Obama sings different tune on foreclosures

Posted on November 2nd, 2010 by Mark Stopa

As CNN adeptly reports, President Obama has done a complete 180 in his stance on foreclosures, now taking the position that foreclosures are “necessary” for the economy to recover.  As I read the article, below, two questions jump out at me:

1)  How does throwing homeowners on the streets “help” the economy? 

2)  Who is going to buy all of these foreclosed properties? 

I don’t have an answer to #1.  (Please spare me the lip service about how it’s ”necessary” to get these properties on the market – we all know most houses that become bank-owned remain vacant for months or years, and clearly that benefits nobody).   The answer to #2 is clear.  The only people who can afford to buy foreclosed properties are people who are already rich; the rest of the foreclosed properties will go back to the banks.  Hence, Obama is standing by, watching, as the country re-distributes wealth on a massive, widespread basis from middle class homeowners to big banks and wealthy investors.   Anyone else find this ironic, coming from a Democratic President? 

What’s unfortunate is that Obama’s original thoughts on this issue were right – the country needs to find a way to create meaningful loan modifications to keep homeowners in their homes. 

NEW YORK (CNNMoney) — The Obama administration is singing a different tune about foreclosures.

A year ago, officials focused on stemming the foreclosure tide. Now they are touting the need for foreclosures to rebuild the housing market.

Last week Phyllis Caldwell, head of the Treasury Department’s Homeownership Preservation Office, told a congressional panel that “an important part of ensuring longer-term stability in the market is to enable properties to be resold to families who can afford to purchase them.”

And White House Press Secretary Robert Gibbs last month told reporters that without sales of homes in distressed areas the “recovery in the housing market stops. It’s frozen.”

“That obviously can have — we believe and others believe — a very negative and detrimental impact to our economic recovery efforts and the housing markets in states that have been hardest hit,” Gibbs said.

But when Obama unveiled his signature foreclosure prevention program in February 2009, he said loan modifications were a key way to prevent the housing crisis from deepening. His initiative called for reducing distressed borrowers’ monthly payments to 31% of their pre-tax income.

“We’re not just helping homeowners at risk of falling over the edge; we’re preventing their neighbors from being pulled over that edge too — as defaults and foreclosures contribute to sinking home values, and failing local businesses, and lost jobs,” the president said.

The shift in rhetoric signals the Obama administration is recognizing that its loan modification program is foundering, experts said. Also, it is acknowledging that banks must address their swelling ranks of delinquent loans.

To be sure, the administration is still concerned with helping homeowners avoid foreclosure. Officials have rolled out a series of initiatives in 2010 aimed at assisting the unemployed and the underwater who owe more than their houses are worth.

And, they have called for reviews into the institutions’ foreclosure policies and procedures, stressing that servicers must comply with the law.

But they also now acknowledge more vocally that foreclosures must continue for a normal housing market to return. And that, in part, is why the administration is not supporting a nationwide foreclosure freeze despite the paperwork scandal that is roiling the mortgage industry.

The administration says there has been no change in either policy or rhetoric surrounding foreclosures and the housing market. The loan modification program was never meant to save every homeowner and officials always acknowledged the role of foreclosures in the market’s recovery, according to a Treasury spokeswoman.

“We have always thought some foreclosures needed to happen for there to be a full housing recovery,” said the spokeswoman, Andrea Risotto.

But, experts say, the new tone eminating from the White House also recognizes that the modification program is not living up to its initial goals of helping up to 4 million people avoid foreclosure. Some 496,000 distressed borrowers have received long-term modifications through September.

“What they have now realized is there are a lot of borrowers who can’t be saved and have to be moved through the foreclosure process,” said Laurie Goodman, senior managing director with Amherst Securities.

And they must break this news to Americans.

Officials are “trying to soften everybody up” to the fact that foreclosures are necessary, said Guy Cecela, publisher of Inside Mortgage Finance, an industry newsletter.

The new talking points, however, won’t likely result in a change in policy, said Anthony Sanders, a real estate finance professor at George Mason University. Administration officials will continue to support foreclosure alternatives because they are more palatable.

“As long as politics are involved, they’ll keep doing it,” said Sanders

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Florida courts “clearing” foreclosure cases

Posted on November 2nd, 2010 by Mark Stopa

This article by Kimberly Miller of the Palm Beach Post explains, in layman’s terms, how the judiciary views foreclosure.  For most judges, it’s all a numbers game – how quickly the judges can “clear” foreclosure cases.  As the article reflects, there is still a huge backlog of foreclosure cases in Florida courts, but senior judges and “rocket dockets” are chipping away at the backlog.  

This is a disturbing trend, one that should make all homeowners facing foreclosure realize the need for a competent foreclosure defense attorney.  Quite simply, without an attorney, your case might be lumped in with all the other cases that judges are all too quick to try to “clear” from their dockets. 

Here’s the entire article: 

Florida’s courts cleared 65,830 foreclosure cases in a three-month period beginning July 1, with 71 percent being decided in quickie hearings before the judge sometimes called “rocket dockets.”  According to a report released today by the Office of State Courts Administration, only 23 foreclosure cases went to trial statewide during the same time period.

The report, the first of its kind, was conducted between July 1 and Sept. 30 to measure how Florida’s 20 circuit courts are using a $6 million state allotment awarded over the summer to hire additional judges and staff to handle foreclosures.  Despite clearing 65,830 cases, 25 percent of which were dismissed for reasons that could include a completed short sale or deed-in-lieu of foreclosure agreement, the report found a backlog of 396,509 cases are still clogging Florida courts.

Lawmakers awarded the $6 million, in part, hoping that getting homes back onto the market will hasten an economic recovery.  “We needed a way to see how we are doing and identify reasons for delays or slowdowns,” said Kris Slayden, who oversees foreclosures for the Office of State Courts Administration. “This shows we are doing what we said we would do, reducing the backlog.”

Palm Beach County’s foreclosure court cleared the most cases in the state during the three-month period, wiping 9,846 suits from its system. About 70 percent of those cases were decided via summary judgment, with just one trial being held, according to the report. 

The concern among foreclosure defense attorneys has been that some senior judges hired with the state money would rush through foreclosures using summary judgments. A summary judgment is held in lieu of a traditional trial when the facts of the case are considered irrefutable. They are often allowed when the borrower is not contesting the foreclosure or represented by an attorney, having possibly walked away from the home.  “Summary judgment is a shortcut that should rarely be used,” said foreclosure defense attorney Tom Ice, of the Royal Palm Beach-based Ice Legal. “In foreclosure cases they are routinely filed and routinely granted. That’s a disturbing trend that there are so few trials.”

Ice said it’s even more of a concern in light of recent revelations that some foreclosure affidavits, which are used in summary judgments, are flawed or fraudulent. Beginning in late September, major lenders including Bank of America, Ally Financial, Inc., and JP Morgan Chase, acknowledged that some of their foreclosure paperwork would need to be re-filed.  “All you need is one issue of fact, such as dispute over note ownership, to get a trial,” Ice said.

Palm Beach County Judge John J. Hoy, who took over foreclosure court today, refused to comment for this story. Hoy replaces Judge Meenu Sasser, who is now hearing civil cases.

Palm Beach County, which is the 15th Circuit Court, received $646,540 of the $6 million, using it to hire two senior judges and six case managers to tackle foreclosures. The Palm Beach County Clerk and Comptroller’s Office received $403,000 out of a $3.6 million statewide allowance given to clerks’ offices to handle foreclosure paperwork.

Today’s report showed Palm Beach County had 46,438 foreclosures backlogged as of June 30. That fell to 36,592 as of Sept. 30.

The 19th Circuit Court, which includes Martin and St. Lucie counties, received $212,729 to hire senior judges, case managers and administrative assistants. As of Sept. 30, it had cleared 951 cases, but still had a backlog of 18,110.

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