Archive for November, 2010
Posted on November 10th, 2010 by Mark Stopa
As a foreclosure defense attorney, I overwhelmingly prefer to attend hearings in person. There’s something to be said for getting to look the judge in the eye as I make my argument, and I like being able to hand the judge copies of documents and case law when necessary. Basically, all else equal, I prefer attending hearings in person rather than by phone.
That said, there are instances when phone appearances make sense. Some hearings, quite candidly, are less significant than others, and for such hearings, it often makes sense to appear by phone. For one, it’s certainly more convenient. More importantly, the unfortunate reality is that, as a foreclosure defense attorney, many of my clients don’t have a lot of money. When clients are operating with a limited budget, I try to make that budget stretch as far as possible, and sometimes that means attending less significant hearings by phone.
Fortunately, the Florida Supreme Court has envoked a Rule of Judicial Administration – Rule 2.530(c) – that facilitates phone appearances. The rule says, essentially, that for all hearings of 15 minutes or less, the judge “shall” allow phone attendance “absent good cause.” In my experience, requests to appear by phone are routinely granted in most Florida counties. Essentially, there is almost never “good cause” to preclude a phone appearance, particularly if a hearing is brief and does not require the presentation of evidence.
Unfortunately, a few counties in Florida, including Orange and Lee, have issued administrative orders that preclude phone appearances in all foreclosure cases. Respectfully, I find this procedure out of line. As I see it, the chief judges of Orange and Lee (and any other counties that have issued such an administrative order) cannot create a rule that contravenes Rule 2.530. The Florida Supreme Court has created Rule 2.530 pursuant to its exclusive authority to envoke rules of practice and procedure in all Florida courts, an authority expressly granted to it by Article V, Section II of the Florida Constitution. It’s not within the powers of a circuit court judge, even a chief judge, to apply a blanket rule that contravenes Rule 2.530.
In a recent case, I decided to push this argument. I filed a motion to attend a hearing by phone in Orange County, which, in light of the administrative order, the judge denied. However, I then filed a motion to stay the hearing pending appellate review, which the judge granted. I then filed this Petition for Writ of Certiorari or Mandamus, laying out the argument I just made, above, with some legal authority in support.
You may not think this is earth-shattering news, but check out footnote three of the Petition. Candidly, I’m concerned that some judges issue administrative orders precluding phone appearances with the specific intent of making it harder for foreclosure defense attorneys to represent clients, making it easier for them to “push through” foreclosure cases. That sounds harsh, but some of these judges actually set hearings on their own, without clearing the date, and order me to personally attend, even knowing I’m out of town. With all due respect, that’s wrong. And respectfully, I’m not going to be bullied into foregoing legal representation of clients who need my help. Hence, I consider this Petition for Writ of Certiorari or Mandamus my most recent attempt at curbing the perverse judicial procedures that permeate foreclosure cases in Florida. For me, it’s not just an issue of appearing by phone – it’s forcing judges to follow the law and ensuring my ability to represent homeowners in all foreclosure cases.
Mark Stopa
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Posted on November 9th, 2010 by Mark Stopa
The front page of today’s St. Pete Times tells the story of my client, Michael Carlson, who is seeking to vacate a foreclosure judgment entered against him in 2008. Here’s the rub – after foreclosing, Bank of America sold the home to a third party, who has been living in the home since 2009, yet, for the reasons set forth in this Motion to Vacate Foreclosure Judgment, I firmly believe my client’s claim for ownership/possession takes priority over the third party purchaser.
At the outset, I want to make it clear – there are limited circumstances in which a person who has lost his/her home via a Final Judgment of Foreclosure can file a motion to re-claim the home, particularly if someone else now owns it. The most straightforward way to do so, though, is the one outlined in the motion.
The argument is actually quite simple. Like any defendant in any lawsuit, a homeowner in a foreclosure lawsuit cannot be deprived of property without “due process of law,” a right bestowed upon all Americans via the Fifth Amendment to the United States Constitution. The way Florida courts ensure due process in foreclosure lawsuits is to require that homeowners be served with a Summons and Complaint by a process server or sheriff (commonly called “service of process”). This way, if a homeowner has valid defenses, he/she has a chance to assert them in a court of law.
In Mr. Carlson’s case, he was never served with a Summons and Complaint, as the bank served a tenant at a property where he never lived, so he never knew about the suit (until after it was over) and never had a chance to defend it. On these facts, I firmly believe the law requires that Mr. Carlson regain ownership of his home (even though it’s been more than two years since the foreclosure and even though the home was sold to someone else). In other words, the Final Judgment of Foreclosure entered against him is void, as if it never existed, because he never had a chance to defend the suit.
If that sounds like an extraordinary result, bear in mind – that’s how strong the Fifth Amendment is.
Homeowners cannot be deprived of property without due process of law.
If you’re a prospective client reading this, and you are interested in bringing a similar motion, please bear this in mind. When I evaluate prospective cases like this, I’m looking for two facts:
1. The homeowner never defended the foreclosure lawsuit in any way; and
2. The homeowner was never served with a Summons and Complaint, or was served by publication.
This is not to say that all foreclosed homeowners who meet these two criteria can file a motion to vacate a Final Judgment of Foreclosure, nor does it mean these are the only circumstances when such a motion can be brought. That said, if you’re a Florida homeowner who fits these two criteria, I’d be interested in giving you a free consultation. Even if the foreclosure was months or even years ago, if you were never served, and never defended the case, you may be able to re-claim ownership of your home.
I understand some people reading this may sympathize with the third-party purchasers, the Winters. However, they are not without remedy. Their recourse is against Bank of America, the bank that warranted title to the home when they sold it to them, and/or the title insurance company, which issued a title insurance policy when they purchased it. In fact, if my client prevails on his motion, the Winters should, in my view, have a slam-dunk claim against the title insurance company. Of course, this is precisely what I’ve been talking about in all of the prior blogs and media stories about title insurance problems. Here, a title insurance company is looking at a significant claim, on what seems to be a very nice home in Dunedin, even though, arguably, all it did was issue a title policy on a home that Bank of America had foreclosed.
This story is also a glaring illustration why Florida judges must ensure that foreclosure cases are done the right way, from the outset. Here, for instance, there could have been some requirement that the process server’s affidavit of service require the process server to indicate some provide personal knowledge that Mr. Carlson lived at the home where the tenant was served. That safeguard was lacking, however, Mr. Carlson did not live at the home, and now a big mess has unfolded. Respectfully, the entire court system should slow down and ensure foreclosures are done properly from the outset, failing which more and more of these problems are going to boomerang back to them.
Mark Stopa
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Posted on November 8th, 2010 by Mark Stopa
The New York Times did a story over the weekend about how Florida foreclosure attorneys are charging homeowners facing foreclosure. I’ve read the article and, with respect to my colleagues, I’m disturbed. According to the article, Roy Oppenheim charges $500/month to his clients (every month the case is pending, no matter how little activity takes place in the case each month). Ice Legal charges a retainer, monthly fees, and a contingent fee. Peter Ticktin charges monthly fees plus a 40% contingent fee. As I see it, instead of trying to make their services as affordable as possible, these lawyers are trying to figure out how much they can get away with billing. I’m also troubled at the ethical quagmires created by these fee arrangements.
To illustrate my concerns, let’s take one of the examples in the article. If a client of the Ticktin lawyers gets the principal on his/her mortgage reduced from $500,000 to $200,000 (be it by modification, settlement, court order, or the like), then that homeowner owes the Ticktins $120,000 ($300,000 x 40% = $120,000). Perhaps worse yet, that $120,000 is secured by a mortgage on the client’s home. Hence, the $500,000 mortgage is reduced to $200,000, but there is now a second mortgage, payable to Ticktin, in the amount of $120,000, so the homeowner still owes $320,000.
Respectfully, isn’t it our job as foreclosure defense and bankruptcy attorneys to help homeowners avoid foreclosure? To try to reduce their debt? I realize this is a business, but I can’t help but feel that these fees are excessive. As I see it, why should Ticktin, Ice Legal, Stopa Law Firm, or any foreclosure defense attorney get a windfall if we’ve helped a client and obtained a principal reduction? Striving for favorable results is our job – it’s why we get paid. Sometimes favorable outcomes happen, sometimes they don’t, but either way, we shouldn’t get a windfall, particularly at the expense of our clients.
I’d be less disturbed about foreclosure lawyers charging a contingent fee if it was the lawyers’ only way of billing. For instance, if a lawyer somehow eliminates a mortgage from a client’s home, and hasn’t collected any fees, a contingent fee seems reasonable to me. In that scenario, the client now has a free and clear house and the lawyer helped obtain that result without getting paid, so a contingent fee seems fair. Unfortunately, there are two fatal problems with this line of thinking. First, it’s clear that these lawyers are charging more than just a contingent fee – they’re charging retainers and monthly fees, too. When the foreclosure defense attorneys are already getting a monthly fee, the contingent fee strikes me as excessive. My concerns are heightened in that regard because I find the $500 monthly fee excessive on its own. Bear in mind, in foreclosure cases, there are often many months of inactivity, where the lawyer does little or no work. As I see it, why should a lawyer keep collecting $500/month when he/she isn’t doing any work? I strongly believe the fees a foreclosure lawyer collects should bear some reasonable relationship to the work being performed.
Second, I agree with Margery Gallant, who opines in the article that the elimination of a mortgage and client owning a home free and clear is generally not “realistic.” There are undoubtedly exceptions, but the typical homeowner cannot expect that he/she can march into court and convince a judge to eliminate a mortgage and give the homeowner a free home. Don’t get me wrong – I’m always on the lookout for fact patterns that could lend themselves to this result. For the typical Floridian, though, this is not a realistic goal (especially with the climate in the judiciary being what it is). As such, I’m left wondering just what these foreclosure defense attorneys have to do to earn their contingent fee.
For example, suppose the foreclosure lawsuit is dismissed without prejudice, meaning the bank can re-file a separate suit and seek foreclosure. Should a foreclosure defense attorney be able to collect a contingent fee in that scenario? I’d argue “no,” unless the fee was very low. After all, the fees obtained should be commensurate with the results obtained, and a dismissal without prejudice does not lend itself to a $50,000 or $100,000 contingency. Unfortunately, I’ve seen contingent fee agreements that require such a payment even upon a dismissal without prejudice. As I see it, that’s grossly excessive.
Also, I strongly believe these fee arrangements are rife with conflicts. To illustrate, Tom Ice says he “doesn’t ever want to have a client say ‘I’m not taking the deal because I can’t afford to pay you.” Yet isn’t this the very dynamic that these contingent fees create? Using the example above, if the homeowner is offered a $300,000 reduction, doesn’t he/she have to think about whether he/she can pay the $120,000 mortgage to Ticktin before accepting the offer? If so, who is going to counsel the homeowner about that? Ticktin? How does that conversation go? “I’m glad you’ve been offered the $300,000 reduction – just be sure you can pay the $120,000 fee to me.”
Mr. Ticktin says he “would never enforce the mortgage and foreclose.” If that’s true, though, then why have this fee agreement in the first place? Clearly, these lawyers want to leave open the possibility of foreclosing on their clients’ homes, as otherwise they wouldn’t be including such language in their fee agreements.
Also, many homeowners facing foreclosure are candidates for bankruptcy. Using the same example, above, are the Ticktin lawyers going to give conflict-free advice to a client about bankruptcy if Ticktin has a second mortgage on the client’s home? How can they? Ticktin and the homeowner are directly adverse – the homeowner wants to eliminate the mortgage, which could happen via bankruptcy, whereas Ticktin wants to enforce it, which a bankruptcy would preclude. Undoubtedly, Ticktin’s representation to that client about the benefits of bankruptcy are impacted by its own interests in keeping the mortgage intact.
The more I study these fee agreements with other foreclosure defense attorneys, the more comfortable I feel with the fees being charged by Stopa Law Firm.
Mark Stopa
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Posted on November 8th, 2010 by Mark Stopa
It’s bad enough that the loan modification process is not helping homeowners as intended, a failure I’ve reported in this blog many times. Unfortunately, it’s even worse than that. As numerous media outlets are now reporting, and as I’ve seen in my daily practice as a foreclosure defense attorney in Florida, temporary loan modifications often *cause* a homeowner who was otherwise not behind on mortgage payments to go into foreclosure.
The New York Times has a real-life story, but here’s the simplified version:
The homeowner is making monthly mortgage payments as required, but finances are tight. The homeowner asks the bank for a loan modification. The bank says it needs to review the homeowner’s financial information to make a decision, but agrees to a temporary modification while the application is being reviewed. The homeowner’s payments are temporarily reduced from $1,500/month to $1,000, pending the review process, which the bank says should take a couple of months. The homeowner diligently makes the $1,000 payments each month and anxiously awaits approval on the permanent modification. The process seems simple enough, so the homeowner is optimistic.
Two months turn into six, then eight, then ten. The homeowner keep making the required $1,000/month payments, never imagining it would drag on this long. The homeowner keeps calling, and the bank keeps saying the permanent modification is being reviewed. Then, bam. The bank rejects the permanent modification, without explanation (or a flimsy explanation that shouldn’t have taken 10 months to disclose). But instead of telling the homeowner to resume the $1,500/month payments, the bank requires the homeowner pay all of the arrearages. In other words, the $500/month that the homeowner didn’t have to pay while the modification was being reviewed – those monies need to be paid, all at once, in one lump-sum, plus interest, late fees, attorneys’ fees, etc. When the homeowner can’t/doesn’t pay that $7,500 lump sum (10 months x $500/month = $5,000, plus $2,500 estimated interest, late fees, etc.), the bank pursues foreclosure.
This sounds impossible to believe, but this phenemonon is happening to homeowners all across the country. Please, don’t fall prey to such “gotcha” tactics.” Retain a foreclosure defense attorney to assist you through this process.
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Posted on November 5th, 2010 by Mark Stopa
I was one of a handful of attorneys who had the opportunity to participate in a conference with Chief Judge Thomas McGrady and several other judges in Florida’s Sixth Judicial Circuit (Pasco and Pinellas Counties) to discuss foreclosure-related issues. The conference was a unique opportunity for everyone to share their concerns about the foreclosure process in an open forum. Having reflected on the conference, here are my thoughts – both the good and the bad.
First off, I applaud Judge McGrady and the other judges who were willing to attend the conference and discuss these issues, with bank attorneys and foreclosure defense attorneys, in an open forum. I’m often critical of procedures being utilized in Florida courtrooms in foreclosure cases, so let’s give credit where credit is due. These judges deserve kudos for their willingness to discuss these issues openly, with both sides, as part of their attempts to promote fairness and efficiency in the process. I still disagree with some of the procedures, but the effort is there, at least in the Sixth Judicial Circuit. Anyway, here’s what I took out of the conference:
1. Judges Rule Based on Evidence in Each Case. Many homeowners have wondered (as did the media, who was invited into the latter part of the conference) what judges are doing differently in the wake of numerous media stories about fraudulent affidavits, foreclosure fraud, robo-signers, and the like. All of the judges made one thing clear – they rule based on the evidence before them in each particular case. Media reports, news stories, and internet articles are not part of a court file and judges do not take them into account when ruling on a particular case. In fact, the judges deem it part of their responsibility to ignore such factors when adjudicating a case. Quite simply, judges’ rulings are based on the evidence before them in that particular file and not anything external.
2. If you’re a homeowner, and want to defend a foreclosure, you must present evidence! Many people believe judges should be ruling in favor of homeowners in foreclosure cases in light of the many recent stories about foreclosure fraud. The judges have made it clear, though, that they aren’t going to make rulings based on newspaper articles or internet stories. To me, that means one thing:
If you want to fight your foreclosure, you must present evidence!
The judge on your case isn’t going to rule in your favor based on anything being said in the media. If you think there’s fraud or other misconduct being committed by the bank in your foreclosure case, you have to prove it to the judge. In my view, the best way to do that is to retain a competent foreclosure defense attorney to represent you, as asserting such defenses is what we do. You may suspect there’s fraud, and the media may be reporting fraud, but you have to prove fraud in your case or it won’t matter.
3. Judges’ opinions on the law vary widely. It was fascinating to see a panel of judges, all of whom are obviously intelligent jurists, have such different opinions on legal issues in foreclosure cases. At various points in the conference, different judges were openly (but respectfully) disagreeing with one another. To me, this is a huge indication that our appellate courts need to issue more written opinions in foreclosure cases (so as to clarify the law on these issues), but in the meantime, it shows that arguments that work in one courtroom may not work in another, and vice versa.
For instance, on the issue of affidavits supporting summary judgment (a hot topic in the media in recent weeks), the judges seem to fall into one of three categories: (1) some judges believe documents must be attached to an affidavit to satisfy the mandates of Rule 1.510(e) (a topic I discussed at length in my blog titled “Willful Blindness by Judges”), even in cases where the homeowner is not defending the foreclosure suit, failing which summary judgment will be denied; (2) some judges believe the absence of such documents is not a reason to deny summary judgment when the homeowner is not defending the case, but if the homeowner opposes summary judgment and objects based on the absence of supporting documents, then summary judgment will be denied; and (3) some judges believe the absence of such documents is not an impediment to summary judgment, even in the face of an objection (or, unfortunately, don’t care). I agree with the judges in the first category, and it’s hard for me to see an argument otherwise. The fact that there are differences of opinion, though, and that reasonable judges can disagree, reflects the need for homeowners to retain a competent attorney to raise these arguments in foreclosure cases. Where there are no black and white answers, persuasive argument from counsel can carry the day.
One concern I raised was how Pinellas County grants summary judgments of foreclosure even when the plaintiff or its counsel does not attend the hearing (if the defendant does not attend, either). When I voiced my disagreement with this approach to Chief Judge McGrady, who defended the procedure and clearly did not want to argue with me about it, the Pasco County judges indicated, essentially, that they agree with me. In their courts, if a plaintiff’s counsel does not attend a summary judgment hearing, they presume the plaintiff doesn’t care (or the case settled) and the motion is denied.
4. Ex Parte Orders. During the conference, I voiced my concern about how judges enter Orders from Plaintiff’s attorneys ex parte, i.e. without notice to defense counsel and without a hearing. The general consensus from the judges is that this shouldn’t happen but, given the volume of paperwork they’re dealing with, it’s going to happen from time to time, so it’s up to defense attorneys to challenge such Orders after they’re entered. Candidly, I’m disappointed there isn’t a procedure in place to prevent such Orders, but at least the judges realize the problem.
I monopolized a fair amount of the discussion during the conference, but I’m aggravated with myself that I didn’t initiate one more discussion – about judges taking it upon themselves to prosecute a foreclosure case by sua sponte setting a hearing. I’ll make that issue number 1 at the next such conference. In the meantime, bear in mind:
If you want to defend your foreclosure, you must present evidence!
Judges will not consider media stories if there is no evidence of it in your case.
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Posted on November 4th, 2010 by Mark Stopa
Below is a horribly sad, tragic story. Putting aside the emotional aspects of it (to the extent that’s possible), two questions jump out at me. Please think about these questions after you read the story:
1. Without foreclosures, would the home have been abandoned and the pool left in the shape that it was? Before you answer, ask yourself this – do people living in homes leave their homes looking like that? Or do homes wind up in that condition because banks foreclose and the homes wind up vacant?
2. What does it say about the foreclosure system that the parents of this deceased child have to join 20 defendants because it’s so unclear who owns the home?
When a toddler wandered into a foreclosed home and drowned in the pool, a host of legal complexities surfaced.
Woulby Dieudonne holds a photo of his son Dieudonne who drowned in this pool that was boarded up two years ago in Miramar. October 20, 2010. Only the attorney and the father were there.
BY TONY PUGH
In a nation with millions of foreclosed homes, the one next door proved the most dangerous for 2-year-old Isaac Dieudonne.
On Oct. 11, 2009, Margarrette and Woulby Dieudonne were moving into their new home in the 6700 block of Southwest 26th Street in Miramar when their son Isaac strolled unnoticed out the family’s open front door. Minutes later, the toddler was found floating facedown in the algae-ridden backyard pool of a neighboring foreclosed home.
A neighbor administered CPR as the foul water spewed from Isaac’s mouth. Thirteen minutes after arriving at the hospital, he was pronounced dead.
The Dieudonnes’ tragedy led to a wrongful death lawsuit that shows how complications from the nation’s housing downturn can slow the wheels of justice.
The Dieudonnes never moved into their new home after the accident and Margarrette hasn’t been back since that fateful evening. Between bouts of depression, insomnia and emotional emptiness, she has found it difficult to visit her son’s grave, even on the anniversary of his death. But with a heavy heart and four helium-filled balloons in hand, she made the solemn cemetery trek last month out of respect for Isaac.
“I feel an obligation for me to at least show up on his birthday and on his birthday in heaven because I feel like he’s watching over me and he may feel like I abandoned him. But I haven’t,” she said, fighting back tears. “So I went there to place two balloons [at his grave]. And I released two to the sky to let him know I love him and, even though he’s in heaven, I truly do miss him.”
SAFTEY HAZARDS
Untold thousands of foreclosed homes across the United States pose an added public safety hazard because of their green, murky backyard pools, which can breed mosquitoes, nourish problem animals and rodents, or, in the case of Isaac Dieudonne, attract young children.
The Dieudonnes’ lawsuit hinges on a simple, but painful, question: Who is most liable for the boy’s accident? Was it the parents who were watching him or the property owners, servicing companies and maintenance firms that were responsible for making sure the vacant house met public safety requirements?
Like millions of foreclosed properties across the country, the home where Isaac drowned has been awash in legal action over the years, making it difficult to determine who owned the property at the time of the accident.
It took months for the family’s attorney, Janet Spence of Pembroke Pines, to sort through the property’s muddied chain of title possessions and transfers. At one point, Spence said, the home had two separate foreclosure actions pending simultaneously.
Spence also has faced some of the same paperwork irregularities that have put the nation’s foreclosure cases on indeterminate hold. Several documents transferring the mortgage appear to be flawed or possibly fraudulent, with conflicting dates. Two documents show that the mortgage was transferred from one mortgage company to an affiliated company in November 2007 and again in February 2008.
One of the questionable documents was generated by the Florida Default Law Group in Tampa, one of four law firms that are under state investigation for allegedly “fabricating and/or presenting false and misleading documents in foreclosure cases,” according to the Florida Attorney General’s Office
COMPLEX TRAIL
Because of the confusing paper trail, Spence has named 20 defendants in the case. They include banks that once owned the mortgage, companies that serviced the loan, property maintenance companies and even a company that was holding the mortgage for the banks.
Some defendants, such as American Home Mortgage Servicing, and the property management firm, Field Asset Services, are claiming parental negligence in the case. Others, including JPMorgan Chase, say they had no ownership stake in the property when the accident occurred.
“What you’ve described is a really tragic example of what happens when properties are abandoned and no one individual or institution will accept responsibility for the property,” said Dan Kildee, president of the Center for Community Progress, which pushes for redeveloping vacant and abandoned properties. “It’s particularly troubling when mortgage-foreclosed properties are managed by a servicer who claims they don’t own the property and therefore they don’t have any obligation to protect the public.”
On a recent visit to the Florida home where Isaac died, Spence and Woulby Dieudonne said the side gate where Isaac probably entered the property was still open. The screen door to the enclosed pool area was locked, but Spence said holes and tears in the enclosure still allowed easy entrance to the pool, which remains full of dirty water, but is now covered by wood scaffolding.
The Miramar city code requires that gates on pool safety barriers have spring locks that self-close after opening. The requirement applies to the screened pool enclosure and the fence around the backyard, Spence said. Safety barrier gates also must be locked when the pool isn’t being used. Spence said that neither the pool enclosure nor the backyard fence met either requirement at the time that Isaac drowned.
The Dieudonne case was filed originally in state court, but was moved to U.S. District Court after a defendant claimed that the case lacked a valid Florida-based defendant. That claim was later proved false and ultimately was withdrawn. Because of that, Spence is asking that the case go back to state court and that the federal judge impose punitive sanctions against the defendants for allegedly providing false information about the disputed Florida defendant. A hearing on those issues is set for this month.
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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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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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