RESCUE MY HOME: Foreclosure Defense and Debt Solutions Blog

First off– wow! What an amazing in depth report from the Center for Public Integrity. It is definitely worth the time to sit down and read this article. I will warn you, though, that unless you are a lender, this article may be very depressing. There is a silver lining to the black cloud that this article paints, however. Yes, there is no doubt that the Courts in South Florida are pushing foreclosure cases to “resolution” as fast as they can. But (and this is an important “but”) resolution can also work in favor of a homeowner- especially if your case has been languishing in the Court system. Why do is say that? In my experience, the older a case is, the better chances a homeowner has at trial! I get really excited when I have a trial scheduled for a case from 2010 or earlier. Foreclosure law in Florida has evolved and changed a lot in the last few years, making it much harder for lenders to prove their cases- especially when it comes to Standing at the Time of Inception– in layman’s terms, the operative question is “Did this Plaintiff (bank/lender) own the note and have the right to enforce it when they filed this lawsuit? Once this is raised as an Affirmative Defense in your lawsuit, this becomes a fact that the bank needs to prove at trial- and it isn’t easy to do that when the servicers and/or owners of loan have changed multiple times- often after the lawsuit has been initiated.

With that being said, the bank’s attorneys know much more than the average non-lawyer homeowner does about the system, and will take advantage of that with pro se (or unrepresented) defendants. There are usually 100-160 trials set in Broward County every day and the vast majority of them are either uncontested (the homeowner doesn’t hire an attorney and doesn’t show up for the trial) or settled (usually with the bank getting a judgment, agreeing to waive its deficiency claim and sometimes giving the homeowner some money to help with moving expenses). That usually leaves about 5-10 contested trials per day. Well, i have news for you, a lot of those contested trials end up as victories for the homeowners. I have had a good streak as of late with my cases that are 2010 and older– When i show up for trial, the bank dismisses the case rather than take it to trial. Why, because they know that there is an element of their case that they can’t prove. Further, they know that a good foreclosure defense attorney will know how to turn that into a win! I know that if my clients in those cases had decided not to hire me (or another competent attorney) the bank’s attorney would have probably convinced them to agree to a judgment.

I am always honest and up-front with my clients- if I don’t think that we have a good case for trial, I encourage them to settle the case. But when we have a good case, there is nothing better than the sweet smell of victory!
Center for Public Integrity takes on Florida Foreclsoures

What a load of self-serving tripe! It is the lenders who are the real vampires in this situation (no disrespect intended to the undead!) There are 2 reasons why the banks are so reluctant to take physical possession of these foreclosed properties. The one obvious reason that the banks are not taking over these properties is that they are artificially holding back supply to increase demand. With the amount of foreclosed homes in Florida, there is no natural market reason that there should be bidding wars on bank-owned properties. But there are, because of the the sheer amount of inventory that these lenders are holding back. Add to that the cost of winterizing homes (in those areas that have winters) and you have your second reason for these lenders to delay taking possession of these properties until they are ready to release them into the market.

The upshot of all this is that the banks’ strategy will ultimately backfire. Because of the way that they are manipulating the market, and their preference for accept offers from cash buyers (i.e, investors) they are setting up the market for another bubble that will lead to reductions in property values, again!

Banks Suck… Literally!

As someone who deals with servicers on a daily basis, none of this is surprising. I cannot count the amount of times that we have email confirmation from a servicer that they received the requested documents, only to be told later that our loan modification/short sale is denied because they did not receive the document in question. You would think that once we are able to show the servicer that the mistake was on their part, not ours, it would be a relatively simple fix– unfortunately that is not the case. Once we are able to confirm the receipt we then have to pierce through several layers of Khafka-esque bureaucracy to get a manager who can review the file and then re-open it. Sometimes they can’t even do that, and we have to start the file all over again and request that a different manages expedite the file.

None of this will change until there is a change in the way loan servicing is billed. The way mortgage servicing works is that the servicer keeps about .5% of what they collect on a performing loan. When a loan is in default, not only does the servicer get to keep its percentage, it also gets to keep any late fees, which are the first thing payments are applied to, regardless of whether they come from the Homeowner, a short sale, or a foreclosure sale. This can push the servicers profit on a loan up to 2000% in some cases (no that not a typo– two thousand percent). Because of the way the system is set up, servicers have a very real financial incentive to not process loss mitigation effectively and to accidentally (on purpose) misplace or misfile documents and otherwise find a way to submarine a loss mitigation attempt. It is a crying shame that investors and lenders are not filing Breach of Fiduciary Duty suits against these servicers, as they are sometimes getting screwed harder than the Homeowners.

The Truth Behind the Servicer

Mortgage Defaults are down, but foreclosure rates are steady. What does that mean? That means that that the banks still have a huge backlog that they are dealing with. Basically they are finding, or possibly fabricatiing, the documentation they need to initiate foreclosure proceedings for the properties that they haven’t started the process on yet. Additionally, there is they are also dealing with the issue that I posted about last week, Homeowners that are defaulting on their mortgages after they are modified.
We Will Be Doing This For A While

I just got off the phone with a potential client who walked away from her house a year ago after she was served with Foreclosure Papers. She moved out of state, and after reading an article like this one, got worried and started calling attorneys in South Florida. I was floored when she told me that 2 other attorneys she had spoken to told her not to worry about it- that banks almost never pursue deficiency judgments. That is horrible legal advice, and in my opinion borders on malpractice. The fact is that up until last week the banks had 5 years after foreclosing on a home to pursue a deficiency judgment. Now that Gov. Scott has signed the new Foreclosure Bill into law, the banks only have one year to do so. That is bad news for homeowners, as now banks who may have been biding there time to see if the government would offer incentives to them in the future not to pursue Deficiency Judgments, will now be pursuing them as a matter of course. Even if your lender decides not to pursue the deficiency judgment, it does not mean that the deficiency goes away. They can still sell your debt to a debt collector who will harass you to get paid. Even if they don’t, the balance will continue to be posted to your credit report adn drag down your score for up to 7 years. You have a lot of options prior to a sale in which you can deal with your deficiency ,like a Short Sale, Consent Judgment, Deed-in-Lieu of Foreclosure. After the sale you only have one option– Bankruptcy (which we can help you with too) !

So Good, they came back for more!!