Miami Real Estate Attorney Blog

As reported in the South Florida Business Journal, prominent Miami developer, Richard Meruelo, has filed suit against Ocean Bank seeking $9 million in damages after he and his family members were hit with foreclosure actions.

As our attorneys previously discussed, many banks have taken a very aggressive approach to this very prominent family and their many real estate projects. In the latest chapter of their ongoing legal saga, Mr. Meruelo filed suit against Ocean Bank alleging that Ocean Bank should not have loaned $12.4 million dollars to them to buy land in Golden Beach while then turning around and refusing to give him a construction loan. The Golden Beach property is now under foreclosure, with Mr. Meruelo listed as a guarantor.

This latest lawsuit alleges that Mr. Meruelo's family had more than $130 million in loans on multiple projects with Ocean Bank dating all the way back to 1984. However, Mr. Meruelo, and his family, including his brother, Homero F. Meruelo, have been hit with numerous foreclosure lawsuits over the last two years. That includes an ongoing fight with a different bank that pulled the financing on renovations that were underway with the Grand Bay Hotel in Coconut Grove, and a fight to enforce a settlement agreement regarding that case.

"As the relationship grew, Ocean Bank exerted increasing influence over the investment activites of the Meruelo family," the complaint alleges. "Over time, Ocean Bank exercised control over their investments because it could unilaterally restrict credit or refinance or extend terms of existing loans."

It turns out that back in 2006, Mr. Meruelo informed Ocean Bank of his plan to purchase two lots in Golden Beach, divide them into three lots and build beachfront homes on them. Ocean Bank executives visited the site, and approved the purchase of the lots. As a result, Mr. Meruelo purchased the Golden Beach lots for $17 million, including a $12.35 million loan from Ocean Bank.

Continue reading "Prominent Miami Developer Takes on the Banks Stemming from Foreclosure Fallout" »

How to get borrowers to pay?

With foreclosures filings on the rise in Miami, many Miami, Florida and national banks are taking a different approach to the on going foreclosure crisis here in South Florida in effort to get their borrowers to pay the monies that are owed to back to the banks.

It used to be the norm that debt collectors would call borrowers at all hours of the day and practically insult and scare them into paying. But with the growing financial crises in our community, such heavy handed tactics were increasingly yielding less and less results for the Miami and South Florida banks.

As a result, a trend is developing. As reported in the Miami Herald, many South Florida banks are taking a new and "nice" approach in an effort to hopefully secure payments from the borrowers that have fallen behind.

For instance, SunTrust, here in Miami, has courted struggling borrowers with care packages and $200, while West Palm Beach-based Ocwen Financial Corp. helps connect homeowners with food banks, employment services and even suicide hot lines through a nationwide social service referral company.

This new "nice" approach to dealing with borrowers that owe banks money is just another example of how the current economic down turn has led many South Florida banks to think of new ways to address an old problem - how to get its borrowers to pay. ``Banks spent billions of dollars in branding, establishing a name, and it all got blown to smithereens in minutes,'' said Sylvia Ayalon, an analyst at the Consumer Mortgage Audit Center in Fort Lauderdale. ``The traditional banking method was, `You owe me money; pay up or else.' Now they have to rethink; they can't be the big bully on the block.''

Today, banks are becoming more cognizant of the fact that in this economy there are many factors that have led to a foreclosure. Often times, it is the loss of a job. As a result, many Miami banks are now contracting with mortgage referral services, and job banks, in an effort to help their struggling borrowers land back on their feet.

Continue reading "Miami & National Banks Taking a Different Approach to an Old Problem " »

An interesting article recently ran in the Miami Daily Business Review regarding the dangers of knowing enough about your attorney before the attorney is hired.

Daniel and Alisa Cianciotto are a South Florida couple, who like many others in Miami, fell behind on their house payment and eventually defaulted on their loan with Aurora Loan Services. Aurora then filed a foreclosure which prompted the Cianciottos to retain a foreclosure defense attorney, John Watson. In February, the Cianciotto's became aware that Watson also represents a Littleton, Colorado based Aurora in foreclosure suits against homeowners like them.

"I was completely devastated," Daniel Cianciotto said. " I felt like I was tricked and scammed. I never would have signed up with him if I knew he had anything to do with representing Aurora. These people are trying to throw me out of my house." Watson claims that Aurora was not his client, but his brother's law firm's, who he shared office space with.

This case has enticed a debate as to whether a conflict of interest exists when a lawyer hired to fight foreclosure is also represented by the homeowners' lender. Warren Trazenfeld, a Miami lawyer who specializes in attorney malpractice law, says that for the same law firm and its of-counsel lawyers to represent borrowers defending against foreclosures when the same law firm represents lenders foreclosing on the borrowers is "an absolute conflict".

In fact, a Florida Bar article states that "before forming an 'of counsel' relationship, a firm should consider the fact that the 'of counsel' lawyer is treated as a firm member for conflict of interest analysis."

Continue reading "Florida Homeowners on the Brink of Foreclosure Should Educate Themselves on their Defense Attorneys" »

As reported by Bloomberg News, foreclosures are proving to be more profitable to mortgage servicers than Obama's mortgage modification program.

The Treasury Department will begin this month to pay companies, including those here in South Florida, that collect mortgage payments and examine pleas for assistance a stipend of $1,500 for approving the sale of homes for less than the loan balance. This practice is known as a "short sale."

The servicers will also get $1,000 for each completed modification under the government's year-old mortgage modification program, and additional stipends over three years if borrowers stay current on their payments. These stipends can add up as there are currently 4.6 million homes that have payments more than 90 days overdue.

However, Diane Swonk, chief economist of Chicago-based Mesirow Financial, doesn't think these stipends will be enough of an incentive for the mortgage servicers, who earn more money by foreclosing on a defaulted loan.

The current number of permanent loan changes through the government's Home Affordable Modification Program (HAMP) seems to agree with Swonk's rationale. There have only been 227,922 permanent loan changes and 780,951 trials as of March. HAMP "has made very little progress," according to a report by Neil Barofsky, special inspector general for the Troubled Asset Relief Program.

HAMP's lack of success may be due to servicers earning approximately $10,000 or more on a foreclosure of a $200,000 mortgage. "Servicers can easily make 10 times any of the government stipends being offered by simply foreclosing on the house," Glen Russell, a real estate attorney in Fall River, Mass. said.

Continue reading "Florida Mortgage Servicers Profit with Foreclosures" »

As reported by the Associated Press, the Obama administration is implementing significant changes to the $75 billion Mortgage Aid Program that will potentially provide some much needed homeowner relief here in South Florida. These same changes, however, may also cause vulnerable homeowners to become innocent victims of fraudulent and criminal schemes. Therefore, it becomes important to retain the services of a reputable professional.

In response to the current real estate collapse here in South Florida, and other parts of the nation, the administration has added an incentive program for mortgage lenders which will encourage them to reduce the amount borrowers owe, providing "underwater" homeowners with some relief. The administration aims to prevent three to four million foreclosures by encouraging mortgage lenders to lower the monthly payments for many here in South Florida. In addition, through this new program, unemployed homeowners may have their mortgage payments cut by thirty-one percent of their income for three to six months.

Clearly, through these changes, the administration is attempting to aid struggling homeowners on the brink of foreclosure, especially those here in South Florida. But some critics are skeptical that the administration has not done enough to prevent fraud.

Continue reading "New Mortgage Aid Program May Lead to Fraud in South Florida" »

The USA Today reported that the Obama administration's initiative to help homeowners obtain modifications of second mortgages is getting off the ground. The program is aimed at overcoming the impediment to permanent modifications of first mortgages.

The government's second mortgage program, called 2MP, offers incentives to borrowers, mortgage services and investors to modify second mortgages. Here is how it works:

- If the first loan is modified under HAMP, and the servicer of the second loan is the same as the first, then the servicer must offer to modify the second loan.

- Servicers can stretch the term of the second loan to 40 years.

- Second lien lenders must defer the payment by the same proportion as that of the 1st.

- The second loan also must have been originated on or before Jan 1, 2009, to be eligible for a modification.

Generally, modifying a mortgage with a second lien can be more difficult because of the additional parties involved. While this program is expected to reach up 1.5 million homeowners who are struggling to afford their mortgage payments, there are an estimated 19 million residential junior liens, with an average balance of $57,000 as of January, according to First American Core Logic. Moreover, up to 50% of at risk mortgages have second liens, according to the Treasury Department. "First lien holders holders become more reluctant to do principal reduction because of the second lien", says Jack Schakett, loss mitigation strategies executive at Bank of America.

Continue reading "More Relief from the Federal Government for South Florida Homeowners" »

According to the South Florida Business Journal, sales are up. Sales are up in the entire State of Florida, and in South Florida. However, and while the news regarding the increased sales pace is positive, prices have yet to follow as foreclosures and short sales continue to dominate the housing market both statewide and locally.

West Palm Beach was the exception in the try-county area. Not only did it see a jump in home sales by 23 percent - 843 homes from 685 the previous year - but the median price rose 8 percent, to $246,100 from $228,100.

In Miami, the median price slid 4 percent, to $197,500 from $205,600 from the previous year. However, homes sales rose 17 percent, to 649 from 556.

It should be noted that this trend was experienced not in South Florida, but statewide and nationwide. The National Association of Realtors latest outlook anticipates a rise in home sales in late spring, which should help to absorb inventory. Increased pending sales is a positive sign for home prices, which are continuing to stabilize.

The newly extended homebuyer's tax credit program coupled with the high inventory of real estate, thanks in large part to the ongoing foreclosure crises, are the catalysts that are driving the current upswing in real estate sales.

Continue reading "South Florida Home and Condo Sales Rise" »

A Judge in Pasco County, Florida, admonished U.S. Bank, N.A. for committing a "fraud" in a foreclosure lawsuit. Another Judge in St. Petersburg, Florida was highly skeptical about the validity of documents submitted by the bank's "foreclosure mill". These cases highlight many of the problems that banks are encountering when trying to foreclose on homes using a "foreclosure mill".

As reported in the Wall Street Journal, U.S. Bank N.A. sued a homeowner after the homeowner defaulted on a $190,000 loan he had received from U.S. Bank N.A. in Pasco County, Florida The Law Offices of David J. Stern, which represented the bank, prepared a document called "assignment of mortgage" showing that the bank received ownership of the mortgage in December of 2007. The document was also dated December 2007.

But after investigating the matter, the Circuit Court Judge assigned to the case concluded that the document could not have been prepared until 2008, and not 2007 as the bank claimed. Therefore, the Judge ruled that the bank could not prove it owned the mortgage at the time the foreclosure was filed. Specifically, the Judge wrote that the"assignment of mortgage" that was purportedly prepared in 2007 "did not exist at the time of the filing of this action ... was subsequently created and ... fraudulently backdated, in a purposeful, intentional effort to mislead." The Judge ultimately dismissed U.S. Banks N.A.'s foreclosure case against the homeowner.

This is just another example of an unfortunate trend developing in Florida. Banks are inundated with foreclosures due to the collapse of the housing market, and often times they do not have the appropriate paperwork to support their claims. Our law firm could help assist in defending these types of cases, and we can assist with your needs.

And with the increased number of foreclosures comes the higher propensity for banks to make mistakes. Which is yet another reason to ensure that banks be required to go through the judicial process. Fortunately, and as we reported in our earlier blog posting the Florida legislature rejected the bank's efforts to bypass the judiciary.

"The pure volume of foreclosures has a tendency perhaps to encourage sloppiness, boilerplate paperwork or a lack of thoroughness" by attorneys for banks, wrote the Judge in the Pasco County assigned to this particular foreclosure claim. The deluge of foreclosures makes the process "fraught with potential for fraud", she said.

Continue reading "Florida Judges Bash Bank "Foreclosure Mills" " »

A recent report in the Miami Herald reveals that 19,918 homes slipped into some stage of foreclosure during the first three months of 2010. That is a 60% increase in foreclosure related matters as compared with the three months of the year last year.

In Broward county, the number of homes falling into some stage of foreclosure is even higher - 21,308. And that means the increase is a staggering 67% increase compared with the first three months from last year.

Additionally, banks also repossessed over 9,000 properties in South Florida during the first three months of 2010. Indeed, over 3,500 properties were repossessed in March alone in the tri-county area.

What all those numbers mean is that at least 1 in 45 homes in South Florida are at some stage of the foreclosure process, and the numbers are growing.

Indeed, the foreclosure crises is striking all areas of South Florida. A recent report in the Miami Daily Business Review reveals that while Fisher Island has one of the highest per-capita incomes in the Unite States, the banks are pursuing many Fisher Island homeowners in foreclosure. The same holds true for many other high end South Florida communities such as Gold Beach, Golden Estates and Coral Gables, just to name a few.

Continue reading "Foreclosures in Miami are on the Rise " »

In a victory for all Floridians, a piece of legislation that was backed by the Florida Banker's Association died today in the Florida House of Representatives.

The controversial piece of legislation would have weakened the voices of the many distressed homeowners in Florida by depriving them of their basic due process rights to a hearing, and notice. If this bill had passed, the balance of power on foreclosures would have swung almost entirely in the bank's favor, leaving the homeowner with little to no recourse to fight to save his home.

As reported in the Miami Herald, the Florida House of Representatives Criminal and Civil Justice Policy Council ended its session without hearing the controversy foreclosure bill.

The proposed bill would have allowed banks to skip legal proceedings all together unless the homeowner requested that the foreclosure go through the legal system. Such a bill would only further the struggles many homeowners are experiencing by significantly shortening the foreclosure process thereby making it more difficult to save the home.

Of significance, the proposed bill would have allowed homeowners to go to court, and avoid the non-judicial foreclosure process, only if they made a request within the first 20 days of the foreclosure process. That particular provision is indicative of the importance of immediately contacting our office upon receipt of any foreclosure related papers so as to best assess what options you may have to defend the foreclosure.

This fight, however, is not over. The banks will again attempt to pass this bill through the current legislative session. Please check our blog frequently for updates regarding this important piece of legislation.

If you, or a loved one, are facing foreclosure, please contact us today to discuss your situation in greater detail.

The Florida Realtors recently released a report revealing that those that fell into foreclosure typically had one more reason other than a job loss or bad loan.

``Contrary to what some researchers have argued, many Florida homeowners were not driven into foreclosure by simply being trapped in bad loans, or losing their jobs or taking pay cuts,'' said Joel Searby of Strategic Guidance Systems. ``What we found in talking with people who've gone through foreclosure is that there's a `plus one' factor,' '' meaning job loss coupled with other circumstances such as divorce or health problems usually led to homeowner distress.

Not surprisingly, the study also revealed the far reach of the foreclosure epidemic in that foreclosures have impacted homeowners across a broad range of incomes and demographic backgrounds. After researching many of the markets with the highest rates of foreclosures, including Miami, from March 2006 through February 2009, the report made the following findings:

• More than 20 percent of homeowners who were foreclosed upon had household incomes ranging from $50,000 to $75,000. Another 20 percent had incomes in excess of $100,000.

• One in four Floridians facing foreclosure were college grads. Another 30 percent had at least some college education.

• Ninety-two percent of foreclosed-upon Floridians were married homeowners, and 8 percent were single. Nearly two-thirds of Florida foreclosure cases involved families with children.

• Thirty-five percent of those in foreclosure had lived in their homes for 10 years or more. More than 40 percent had lived in the homes fewer than 5 years.

Continue reading "Miami Foreclosures Stem from Multiple Factors " »

With tax season upon us, many homeowners are confronted with the reality that they may have to pay taxes for some of the mortgage debt that was forgiven during a foreclosure. A recent CNNMoney.com report discusses this unfortunate trend.

As reported by CNNMoney.com, it is IRS policy to tax forgiven debt you are personally responsible for as if it is income. Say, for example, your credit card company settled a $10,000 debt for 50 cents on the dollar. You'd have a debt forgiveness of $5,000, which the IRS would count as income, just like your wages.

The same policy held true for most mortgage debt until 2007, when Congress passed the Mortgage Forgiveness Debt Act. That ended the liability for many homeowners -- but not all.

In general, if you lose your home to foreclosure or short sale, where you sell your home for less than you owe, the IRS won't add insult to injury by counting the difference as income. At least until 2012.

However, there are four major exceptions to the rule:

Continue reading "Foreclosure Has Consequences with Uncle Sam" »