As the managing partner of the largest foreclosure defense firm in Northeast Florida and the only practicing attorney on Jacksonville’s Foreclosure Task Force, members of the media often contact me for my opinion foreclosure issues.  Last week, I appeared on local National Public Radio (NPR) affiliate, WJCT, to discuss “homeowner walk-away” with the host of First Coast Connect, Melissa Ross.  Joining me were two Jacksonville Area Legal Aid Lawyers, Allison Albert and James Millard.

Recently, There has been much talk about homeowners making the strategic decision to walk away from houses that are now way “underwater,” meaning that the home value is far lower than the principal balance owed.  This is especially relevant in the hardest hit foreclosure states – Florida, California, Arizona and Nevada.

I have consistently advised my clients that the best way to deal with their foreclosure is as a purely dispassionate business decision, realizing how difficult it is to look at a home with cold eyes and think of it only as an investment.  Many homes represent more than just a place to park the car – homes symbolize marriage, childbirth, coming of age, retirement and death. Read the rest

I am not the only blogger who bemoans the Administration’s feeble foreclosure prevention program.

The Huffington Post has an excellent story on the failure of HAMP, due to not getting the mortgage companies to voluntarily reduce the principal balances.

That is, to agree to lower the total amount owed on a house.

What happened is, the mortgage companies took their foot off the gas last year when judicial mortgage modification was before Congress.  Once they defeated that in the Senate, it was back to business as usual.

Sure, they told the politicians, hey, no need to force us, that would mess up the mortgage market, and, besides, we are fixing the problem ourselves. Read the rest

CNN Money recently posted an article, which can be viewed here, on the problem of mortgage deficiencies for people facing foreclosure or attempting work outs or short sales with mortgage creditors. The article rightly points out that a lender’s right to pursue an unpaid mortgage balance after foreclosure varies in accordance with state law, and the article focuses primarily on Florida. Here in Massachusetts, there are two key points to remember about a foreclosing mortgagee’s right to hold a borrower liable for a deficiency:

1. The mortgage lender must send a notice, usually called “Notice of Intention to Foreclose and of Deficiency After Foreclosure of Mortgage,” to the borrower at his last known address not less than twenty one days before the date of the sale, and;

2. A mortgage lender must sue within two years of the foreclosure sale to hold the borrower liable for any deficiency.

But this is Massachusetts foreclosure deficiency procedure, if you are in another state, you should consult an attorney there if you’re curious about your exposure and options. Moreover, the scenarios described in the CNN article, in which borrowers have been surprised by demands for deficiencies after short sales, are cautionary tales: You should always know what you are agreeing to and, if possible, have an experienced attorney review your documents before you sign them.

Borrowing for a home has been tough ever since the subprime securitized loan market collapsed a couple years ago.  Without government help through the FHA, many such loans would not be made right now.

But although the government is backing FHA, Fannie Mae and Freddie Mac and shoring up the mortgage market by backing many of these loans — and the Federal Reserve helped further by buying a lot of mortgage paper — it is also trying to avoid taking excessive risks and losses.  So recently the the government-backed entities are forcing originators — mostly banks — to take back bad or risky new loans.  And mortgage securitized trusts are following suit. Read the rest

If you are lucky enough to get your mortgage company to offer a meaningful modification of your mortgage while you are in a Chapter 13, you probably can get the Trustee and the Court to agree to allow it. There are a number of issues, however, that need to be addressed.

Before modifying your mortgage you will need to inform your attorney that your mortgage company is willing to entertain a modification. You will also need to present your attorney with the details of the proposed modification. Your attorney will then get the needed permission from the Trustee and/or the Court.

One of the concerns the Trustee and Court may have is how the modification will affect the amount of disposable income you have each month. Read the rest

In some states, once bank forecloses and gets your house back, you do not owe them any money.

But not everywhere.

Check with an attorney in your state.

In Michigan, we have foreclosure by publication, an auction process, or through a court.

If the mortgage company bids the amount you owe at the foreclosure auction, you owe them nothing.

Read the rest

Author’s note – Although not publicized, I am absolutely convinced there is a race in the State of Florida to prove which Floridian can do the dumbest thing.  Given recent actions by some bankers, lawyers and public servants, my guess is that the prize for first place must be pretty awesome.  This series will expose these recent acts of stupidity, and then I’ll open the floor for voting. If you feel that a particular Floridian deserves consideration, please send your suggestion to parker@jaxlawcenter.com.

Let’s take a look at today’s nominee:

Florida Bankers Association President Alex Sanchez is proposing legislation to Florida lawmakers that would make it much easier for banks to take homes away from Floridians by doing away with that pesky due process in foreclosure cases.  The association wants Florida’s legislators to make this state a non-judicial foreclosure state, which allows banks to take homes without filing a foreclosure complaint and without allowing the homeowner an opportunity to contest the banks’ right to foreclose.

In its effort to obfuscate the truth, the FBA has named the bill . . . and I am not making this up . . . The Florida Consumer Protection and Homeowner Credit Rehabilitation Act.

From the banks perspective, this bill makes perfectly good sense.  Mortgage servicers have virtually no way of proving they own 98% of the residential home mortgages being foreclosed upon in Florida and the rest of the country because these greedy bankers bundled their mortgage portfolios and sold them, often before the closing of the loan, into securitized trusts (REMICS) on Wall Street with no regard for the investor or borrower.

As a Florida foreclosure defense attorney with over 500 actively defended foreclosure cases, I believe the banks have “thrown in the towel” in the cases I’m defending.  I cannot recall the last time the plaintiff in a foreclosure case came to a court hearing with an intelligent argument that resulted in a ruling against the homeowner.

Since the plaintiffs rely on fraud in almost every foreclosure case, good defense lawyers are always frequency-tuned to find the lies, and now that Circuit Court judges have been exposed to the stench of foreclosure mill pleadings, more judges are looking at each foreclosure with more skepticism.

So, what is the only way the FBA can defeat contested foreclosures?  Legislatively delete the homeowner’s ability to fight for their home.  Make no mistake, a non-judicial foreclosure state is this close to a police state.  Just ask California, with its tent cities filled with displaced homeowners who were never given an opportunity to fight the banks.

Mortgage companies often fail to discharge a mortgage, even in the face of a Court order directing them to do so.
When you file a Chapter 13 bankruptcy, you often can get rid of your second mortgage if the balance of the first mortgage is greater than your home’s value. If this is the case, the Chapter 13 treats the second mortgage as if it were an unsecured debt, and when you successfully complete your Chapter 13 plan, the second mortgage is discharged.

Assuming that your bankruptcy attorney properly prepared your Chapter 13 plan, the confirmation order should also direct the mortgage company to prepare a discharge of the lien on your property, and either deliver it to the Chapter 13 Trustee to hold until you get your discharge, or send it to you directly after the discharge. In some Courts, your attorney may have to make a separate motion, or even commence an adversary proceeding to achieve this lien release.

Unfortunately, it is often the case that the second mortgage company is not responsive to the court order and your attorney’s efforts to get the lien release. When this happens, your attorney will have to go back to court to force them to produce the lien release. The mortgage company should then have to pay for any damages and legal fees for this effort.

If you are presently in a Chapter 13 your plan is to avoiding your second mortgage, be sure to discuss this matter with your bankruptcy attorney before it becomes a problem in the future.

Take a breath.  Slow down.  You know better.  Don’t act from panic, act from common sense.

You select an attorney the same way you make any other important decisions.  Ask questions, lots and lots of questions.  How many cases have you worked on?  What were the outcomes?  How long have you been working in the specific area of foreclosure defense?  Do you have references?  What are your rights?  What are your chances of success?  What will success even look like?  What do you want from the process?  Did the attorney even ask what you wanted?

Talk with the attorney, and talk some more.  In a slow economy, it’s easy for an attorney to jump into a new field without thoroughly studying the field and having the necessary experience.