Strategic Defaults are Under Assault by Bank of America, and others, and May Lead to a Rise in Deficiency Judgments

bank owned.jpgMany financial institutions, including Bank of America, are planning on getting tougher with those who do not try in good faith to work out a deal with the bank but who have the capacity to pay.

Proposals that are currently floating around, and being pushed by Fannie Mae, and others, include trying to encourage distressed homeowners to find alternatives to foreclosure by banning those who walk away from their home from getting new loans to purchase a home for seven years. Put differently, if it is determined that you stopped making mortgage payments despite having the capacity to do so, you may be banned from getting a new loan for up to seven years.

A strategic default is a decision by a borrower to stop making payments on a debt despite having the financial ability to make the payment. A Wall Street Journal report recently estimated that 1 in 5 mortgage defaults are “strategic”. Indeed, many are anticipating that the next wave of foreclosures will consist of more and more individuals seeking to walk away from homes that are currently underwater.

Another weapon that many financial institutions have in their arsenal to combat strategic defaults is the pursuit of a deficiency judgment. A deficiency judgment occurs when the financial institution has not only taken the home back, but has also sold the home. However, the proceeds of the foreclosure sale were not enough to cover the full amount of the original mortgage. That difference between the foreclosure sale, and the original mortgage, is often referred to as the deficiency.

If a bank, such as Bank of America, suspects that the borrower simply walked away from the mortgage despite having the financial capacity to pay, the bank will likely have an increased incentive to pursue the borrower and seek recovery of the deficiency by way of a deficiency judgment. It should be emphasized that if a deficiency judgment is properly recorded, it could remain in effect for up to 20 years in the state of Florida. That means that the bank could have up to 20 years to recoup each and every penny, plus interest, of the deficiency judgment.

It becomes important to consult with an experienced foreclosure defense attorney to understand your rights. We have been successful in defending many foreclosure cases when given an opportunity to develop a plan to properly defend the foreclosure.
If you are on the brink of foreclosure, and need to assess your legal rights, please contact our office today.

Miami Foreclosure Defense Lawyers: How the Foreclosure Process Is Initiated & Developing a Plan to Defend the Foreclosure

foreclosure gavel.jpgIn Florida, unlike many other states, banks must utilize the court system in all foreclosures. In other words, if a bank wants to take your home, they must file a lawsuit against you. As a result, the foreclosure process may actually afford the homeowner with additional opportunities, and time, to remedy the situation.

It should be noted that many Florida banks hired several high-priced lobbyists recently in an effort to persuade our legislators to implement non-judicial foreclosures in Florida. Fortunately, the high-priced assault on homeowners, and their legal rights, in Florida failed. Therefore, foreclosures in Florida will continue to move through our judicial system.

It is therefore important to consult, and hire, an experienced foreclosure Defense attorney to defend your rights. An experienced foreclosure Defense attorney will be able to assess and evaluate what defenses you may have during the foreclosure process, and aggressively advocate your positions in the foreclosure.

For instance, the very first thing that a bank must do to formally initiate a foreclosure proceeding against you is to properly file a foreclosure complaint. Recent changes to our Florida Rules of Civil Procedure mandates that the banks must provide certain verification, under the penalty of perjury, that they actually own the note in question in order to properly file a foreclosure complaint. Failure to do so may result in the dismissal of the bank’s case against you.

Additionally, often times banks are required to send you written notification of the default at least 30 days prior to the filing of the foreclosure lawsuit against you. Failure to adhere to this condition precedent may result in the dismissal of the bank’s lawsuit against you.

When a foreclosure lawsuit has been filed, a process server will typically come to your home to serve you with the necessary legal papers. Often times, the process server may leave the papers on your doorstep when no one was home, or leave it with a housekeeper, or other person, that does not reside at your home. While the aforementioned circumstances certainly present the opportunity to raise a valid defense that you were not properly served with the foreclosure complaint, it is of critical and paramount importance that you respond within 20 days nonetheless. Even if you believe that the papers were not properly provided to you, if you fail to respond within 20 days you will be in a default situation where your defenses may be all waived and it will be difficult for you to assert any valid defense that you may have to defend the case.

Therefore, and upon receipt of the foreclosure complaint, irrespective of the manner in which you received it, it is critical to consult with an experience foreclosure Defense attorney to begin the process and developing a plan to defend the case and save your home. We have been successful in defending many foreclosure cases when given an opportunity to develop a plan to properly defend the foreclosure.
If you are on the brink of foreclosure, and need to assess your legal rights, please contact our office today.

Miami Foreclosure Defense Attorneys Win Case Against the Bank and Get Attorney Fees Awarded to them too

victory.jpgOur firm recently prevailed in a contested foreclosure dispute after having litigated the case with the bank, and their lawyers, for three years. Not only did we win the case, but we were also awarded several thousands of dollars in attorney fees in doing so that the bank now has to pay our law firm.

The Judge assigned to the case awarded our firm 100% of the attorney fees we requested, and found our attorney fees to be reasonable given the complexities and issues raised in this case. This is just another example why it is important to hire an experienced foreclosure defense law firm to represent your interests.

This victory is also the latest in a growing trend for many homeowners that are actually winning their cases against the banks. Many judges are frustrated by the deliberately slow, and often times sloppy, pace of many banks that are attempting to foreclose. Indeed, the Florida Attorney General Office’s is currently investigating many law firms that actively file foreclosures on behalf of many Florida banks. The investigation centers on allegations of purported fraud.

Moreover, the bank’s efforts to move foreclosures out of the court system, and into a bank friendly, and bank created, foreclosure process, was rejected by our legislators. Additionally, recent changes to the Florida Rules of Civil Procedure that require banks to verify, under penalty of perjury, that the bank filing the lawsuit actually owns the mortgage, coupled with higher filing fees, and mandatory early mediation, all means that the banks have to be much more careful and precise when trying to foreclose on a property.

If you are on the brink of foreclosure, and need to assess your legal rights, please contact our office today.

Saving Your Home: Alternatives to Avoid Foreclosure

foreclosure help.jpgHugo V. Alvarez will be a speaking at a Foreclosure Clinic sponsored by the Florida Bar’s Consumer Protection Law Committee, in conjunction with the Legal Aid of Palm Beach County. The clinic is scheduled to take place on June 24th from 6pm to 8pm at the Boca Raton Community Center.

Mr. Alvarez will be speaking on alternatives to foreclosure, and specifically discussing (a) options to retain one’s home, while avoiding foreclosure, and (b) options to dispose of one’s home, and avoid foreclosure.

Options to Retain Your Home

1. Payment or Repayment Plan – the quickest method of avoiding foreclosure is to come up with the necessary money to bring the delinquent loan current. In some instances, banks are willing to provide the delinquent borrower with a repayment plan in an effort to bring the mortgage current. This will typically involve an agreed upon time frame in which to make the regular payments, plus a little extra, to repay in the delinquent amount in full over time.

2. Refinance – in the event that you actually have equity in your home today, you may be in a position to refinance your mortgage. Refinancing your mortgage may actually provide you with a lower interest rate, and a lower monthly payment. If you do not qualify for a government-sponsored loan modification, you may also be eligible for a government-sponsored re-financing plan (HARP – Home Affordable Refinance Program).

3. Forbearance – some banks may offer you a forbearance plan. This option typically provides for a temporary reduction or a suspension of monthly payments for a specified length of time, and with an agreement that the amount that was forgiven will be paid back at a later date.

4. Loan Modification – a loan modification is a permanent change in one or more of the terms of the mortgage. It also allows the mortgage to be reinstated, and results in a payment that the borrower can afford. This can include anything from a reduction in interest, adding years to the mortgage (from say a 30 year mortgage to a 40 year mortgage), reduction in the principal amount owed, or any combination of the aforementioned. It should be noted that many financial institutions are provided with financial incentives from the government to modify loans. Additionally, the current loan modification program is not designed to save every home, but only geared toward saving the homes of individuals that can still afford to be in that home.

Options to Dispose of Your Home

1. Sell the Home – if there is sufficient equity in your home, you may be able to sell your home in today’s market for more than the amount you currently owe on your mortgage. If you can do this, you will actually reap a profit.

2. Short Sale – if your home is “underwater”, i.e. you owe more than the home is worth, then you will have to pursue a short sale if you are interested in selling the home. A short sale is when a bank allows you to sell the home for a contract price that is less than the amount owed on the mortgage. In many instances, however, banks may reserve the right to pursue the difference between the short sale contract price, and the amount owed on the mortgage, from the borrower directly. This is commonly known as a “deficiency”, or “deficiency judgment”. So when trying to sell a home via short sale, it is important to understand whether the bank will continue to pursue the borrower, for monies owed, even after the transaction is completed, especially if the home was “underwater” at the time of the short sale. Don’t assume that just because the bank approved the short sale that they won’t pursue you for the difference after the deal is done.

3. Deed in Lieu of Foreclosure – this is accomplished when the property owner voluntarily gives the property back to the bank in exchange for the bank canceling the mortgage. In other words, the deed is transferred from the borrower to the bank in an effort to shorten the length and costly process of foreclosing on the property. As with a short sale, the bank may reserve the right to pursue any deficiency against the borrower directly even after the deal is done.

4. Tax Issues – all tax issues should be consulted in great detail with a certified public accountant. However, 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:

A. You did a cash-out refinance and splurged.
B. You have a home-equity line of credit.
C. You lost your vacation home or investment property.
D. You owned a multi-million-dollar home.

But again, these are issues to be covered in greater detail with an accountant.

If you are on the brink of foreclosure, and need to assess your legal rights, please contact our office today.

Real Estate Market Losing Steam as Hurricane Season Approaches

blowing palms.jpgReal Estate experts are anticipating that home sales will slow for the second half of the year. This is due in large part to the expiration of the $8,000 tax credit, for first time home buyers, that expired on April 30. However, those that signed purchase contracts prior to April 30th can still take advantage of that tax credit if they complete their transaction by June 30th.

Additionally, other factors will likely continue to contribute to the ongoing sluggish recovery in the housing market. For instance, the economic recovery that is currently taking place is largely a jobless one. In fact, since 2007, when the recession began, South Florida’s workforce has only recovered to about 90% of where it was before the recession began. Since South Florida’s economy was so dependent on the housing market, it will likely take some time for South Florida’s economy to recover given the ongoing real estate crisis that is impacting all of us on a daily basis here in South Florida.

Additionally, another potential problem for our local economy, an economy that is still very dependent on real estate development, is that many lenders are increasingly reluctant to make new construction loans to developers. Now that certain tax credits have expired, coupled with the increasingly sluggish real estate market, builders see stormy days ahead. Indeed, increasingly high unemployment rates, coupled with stringent mortgage lending guidelines, are keeping many prospective purchasers on the sidelines.

All of these factors contribute to the general consensus that our real estate market will continue to struggle to stand on its own without the assistance of government backed programs, like the tax credit for first time home buyers, or a sharp turnaround in the economy as a whole.

In South Florida, with the storm season under way, a natural catastrophe could tip the ongoing real estate crisis into further disarray. If high unemployment rates, and rapidly declining real estate values were not enough, then a strong hurricane directly hitting South Florida and causing extensive damage will only serve to worsen the ongoing real estate crisis here in South Florida.

If you are on the brink of foreclosure, and need to assess your legal rights, especially in light of the recent BP oil spill, please contact our office today.

Fraud at Countrywide Found Leading to the Foreclosure Crises in Miami and Beyond

foreclosure-thumb-280x216.jpgMore evidence has come to light of Countrywide’s fraud and misconduct during the height of the real estate boom. Federal charges were brought against Bank of America, who acquired Countrywide nearly two years ago, alleging fraud, insider trading, and a host of other unethical activities.

In an effort to address the federal charges, Bank of America agreed to pay $108 million to settle the various federal charges brought against Countrywide. The settlement was announced by the Federal Trade Commission, and the settlement is intended to refund money to approximately 200,000 borrowers. This is the largest mortgage industry settlement for the Federal Trade Commission and its history.

The Federal Trade Commission’s chairman, Jon Leibowitz, accused Countrywide of “callous conduct, which took advantage of consumers already at the end of their financial rope.” Countrywide’s unethical practices included requiring borrowers who were already late on their mortgage payments to pay additional fees of several thousand dollars at a time. In other words, Countrywide collected several thousands of dollars from many borrowers on the brink of foreclosure, and economic collapse.

Not only did Countrywide profit from making extremely risky loans during the height of the real estate boom, but they also attempted to cash in during the down time by taking advantage of the same individuals that they had lured into taking risky mortgages just a few years before they fell behind. So Countrywide profited by making risky loans, and then again by securing additional payment from borrowers who were overburdened by those loans.

Indeed, Countrywide was doing very little to prevent many foreclosures in large part because of the fees that they were securing from individuals on the brink of foreclosure. In short, it became more profitable for Countrywide to allow certain individuals to actually fall into foreclosure rather than help the struggling borrowers save their home. Often times, these default fees of several thousand dollars were significant barriers to loan modifications.

This is just another example of the ongoing mortgage crisis which has taken hold in South Florida. If you are on the brink of foreclosure, and need to assess your legal rights, please contact our office today.

Mortgage Crises Continues For Those With Adjustable Rate Mortgages in Miami and Beyond

scream.jpgThe worst of the real estate meltdown is far from over. While the economy is showing tenuous signs of recovery, unemployment rates remain at staggering highs. With this backdrop, millions of homes will likely go to foreclosure this year, and more so this year, than in years past, as many risky adjustable rate mortgages written in 2005 are about to be reset, and yet others explore “strategic defaults.” If you are currently facing foreclosure, or need additional information regarding your home mortgage, please contact our office today.

As we previously reported, there are multiple factors that typically drive foreclosures. Those factors include the overall economy, unemployment, and a host of other reasons. However, two new factors will likely fuel additional foreclosure filings for the rest of the year, and beyond.

First, many adjustable-rate mortgages will be reset during the course of the next few months. Many prospective home purchasers agreed to exotic mortgages in an effort to purchase homes that they likely would not have been to afford otherwise. In an effort to purchase that dream home, many home purchasers agreed to financing deals that provided for low monthly payments for a few years. But after that, the mortgage would readjust with a higher interest rate. And now, we are starting to see the next wave of adjustable mortgages reset which is about to further complicate the ongoing foreclosure crises we are experiencing here in South Florida.

Second, not only will unemployment and adjustable mortgage resets drive-up foreclosure filings here in South Florida, but many more people may opt to push forward with a foreclosure by way of a “strategic default.” As we previously explained, a strategic default is when a homeowner voluntarily decides to stop paying their mortgage because their home is worth less than their mortgage. In other words, the home is “under water” and the borrower believes that a strategic default may yield a better deal for them by requiring the bank to address the borrower’s concerns by way of a foreclosure.

The next chapter in the foreclosure crisis here in Miami, and beyond, will not only impact lower income borrowers who typically purchased mortgages they could not afford, often at the advice of pushy, and sometimes fraudulent, banks and brokers. But what we will soon start seeing, and what our firm has already begun to handle with much success in Miami, and beyond, is foreclosures starting to mount for borrowers who have prime mortgages that are solidly middle-class, upper middle-class and even the rich and famous.
The foreclosure crisis is an ongoing problem that impacts all segments of our society, and individuals of all walks of life. If you, or a loved one, are facing foreclosure, or are in need of a consultation with a real estate attorney regarding your rights, please contact our office today.

Foreclosures Fuel Decrease of Property Values for the 3rd Straight Year in Miami-Dade County

photo.jpgMiami-Dade County’s official estimate of taxable values released to local taxing authorities show a general decline in both residential and commercial real property values in Miami-Dade County for the third straight year.

The decline for the third straight year stems from multiple factors fueling the collapse of real estate values throughout South Florida. Additionally, South Florida continues to struggle with an economic downturn that has cost many their jobs and sent real estate prices spiraling downward.

According to Miami-Dade County’s Property Appraiser, the 2010 estimate of Miami-Dade County’s taxable value is $192,484,000,000. That figure represents a sharp 13.4% decline as compared with the 2009 figure of $222,141,817,140. Moreover, the new construction taxable value in Miami-Dade County is estimated at $2,626,000,000. And that figure is also a significant decline from the $8,379,000,000 of the previous year.

These drops in real estate value are the steepest since the once roaring real estate market collapsed a few years ago. This figures will also form the basis of Miami-Dade County’s budget, and the budgets of all local municipal budgets in Miami-Dade County. Therefore, there can be no doubt that this will be yet another difficult year for government budgets throughout South Florida, and we will likely see more critical cuts to services as well as major fee increases.

Although there is evidence to suggest that the real estate market has “bottomed out”, it still won’t help the many local governments in need of tax revenue to run their cities. Worse yet, the sharp declines in real estate values here in Miami-Dade County will only continue to worsen until the foreclosure crises has fully run its course.

Hialeah Mayor Julio Robaina said the county’s projection — a 19 percent decline in his city’s taxable property value — was more than he expected, but not a shock. “It should be no surprise to any of us,” he said.
If you, or someone you know, is facing foreclosure, please contact our office today to assess your rights.

Judge Blasts Bank’s Lawyer and Wipes Out Mortgage in Disputed Foreclosure

punch.jpgForeclosure mills are coming under increasing assault and scrutiny by crafty defense attorneys, and a judiciary that is being pushed beyond their means by the increasingly steady rise of foreclosure filings in Miami, and Florida as a whole.

Recently, Miami-Dade County Circuit Court Judge Jennifer Bailey canceled the homeowner’s debt and mortgage owed to a bank as a direct result of the bank’s willful failure to follow Judge’s Bailey Order. Judge Bailey called the actions of the bank’s lawyer were “contemptuous”. You can read the full court hearing transcript here Judge-Wipes-Out-Homeowner’s-207-000-Mortgage[1].pdf.

The issue in this case began in December of 2009 when Judge Bailey granted the bank’s motion for foreclosure sale of the homeowner’s property. However, the bank had lost the note on the homeowner’s property. As a result, Judge Bailey ordered the bank to post a $414,000 bond to indemnity the homeowner in the event another bank filed a claim against the property in question.

The bank failed to do so, and moved forward with the foreclosure sale. The homeowner’s lawyer then asked Judge Bailey to set the sale aside in light of the fact that the bank had failed to post the bond, and otherwise failed to follow the Judge’s clear court order.

Not only did Judge Bailey agree to the homeowner’s request, but Judge Bailey wiped out the entire debt. In so doing, Judge Bailey complained about the general “chaos and disorganization of lenders and their lawyers.”

This is without a doubt a significant victory for homeowners struggling to keep up with their monthly mortgage payments. It is also the latest in a string of recent rulings from Florida Judges who are beyond frustrated with the bank’s lack of candor with the judicial system. Indeed, Florida’s Attorney General is currently investigating a prominent foreclosure Tampa foreclosure firm due to purported fabrications and allegedly presenting false and misleading documents in many foreclosure cases throughout the State of Florida. These actions by many foreclosure firms have also resulted in the change of certain Rules of Civil Procedure that govern foreclosure cases.

Please contact our office today if you are facing foreclosure. Our team of dedicated attorneys can help you. But don’t delay and call us today.

South Florida Real Estates Sales Are Up As Foreclosures Steady

foreclosure 001.jpgAccording to the National Association of Realtors, sales of existing homes and condos in Miami-Dade, Broward and Palm Beach county rose 27% in April.

Additionally, and another positive trend, last month’s statewide existing home median price of $140,100 was 1% higher than the statewide median price in April of 2009. While the median price for single family homes also rose, the same can’t be said for condos. Statewide, condo prices fell 1%, to $79,300 from $79,000.

In the tri-county area, Miami saw the smallest increase in home sales in April. There were 594 sales, up 7% from 555 in April of 2009. The median price was up 8%, to $192,000 from $177,000.

There several factors behind these positive numbers. We previously anticipated this news, and discussed many of the many positive factors that are behind the recent news regarding the trends in the Miami, and South Florida, real estate market.

As for some of the reasons behind this trend, they include the following:

• The recent expiration of certain tax credits forced many to buy before the tax credit expired.
• We’re starting to see a stabilization of home prices.
• Home prices are starting to stabilize because inventory levels are starting to fall.
• Inventory levels are starting to fall because foreclosures are being absorbed in the market at manageable levels.

If you wish to discuss this article, or your real estate needs in general, please contact our office today to discuss further. Our phone number is 305-263-7700.