Miami Real Estate Attorney Blog

Is Eminent Domain the Answer for Struggling Homeowners? NJ Town Considering Eminent Domain Plan

Is eminent domain the answer for struggling homeowners? We recently discussed how many local governments are considering using their eminent domain powers to assist struggling homeowners.

Eminent domain is gaining steam nationwide as municipalities are trying to help out homeowners. Using eminent domain, municipalities would have the power to acquire loans from bondholders, bypass mortgage contracts, write them down and give them back. Essentially the municipalities will be using eminent domain to obtain ownership of the homes and then relinquish them back to the homeowners.

The use of eminent domain in this context is believed to only be used on mortgages not backed by the United States government. The proposed idea would only help homeowners who are employed and can pay back the mortgages. Essentially those who are backing such a strategy are trying to put people back in their homes through government action without costing taxpayers any money.

In the financial industry, however, they believe that this process will backfire and cause more problems than benefits. They believe that using eminent domain would cause investors to pull their money out of mortgage backed securities. Another belief is that it will penalize those who save and invest. Lastly, this could cause a chain reaction and there is no telling where they would stop after foreclosures. Many believe this would cause people to use such practices for things such as credit card debt as well.

Richmond, California was the first city to announce such a plan. Now, Irvington, NJ, may also be moving towards implementing a plan to use its eminent domain powers to purchase mortgages that are in foreclosure.
—–

Was the Denial of your Loan Modification Part of a Plan by the Banks to Generate a Denial and Ensure a Foreclosure? Bank of America’s Wrongful Conduct in Denying Modifications Exposed

The Home Affordable Modification Program (“HAMP”) was President Obama’s plan for attempting to lower mortgage payments for distressed borrowers in order to prevent foreclosures. The HAMP program gives homeowners trial modifications to prove they can make the reduced payments before the change becomes permanent. In 2009 the Obama administration fell well short of the stated objective to avert three million foreclosures by implementing HAMP.

Why did the plan not work?

The leading cause for HAMP failure was Bank of America’s role in following through with HAMP modifications. Bank of America purchased Countrywide which led to them incurring 1.4 million delinquent borrowers and cost near $43 billion. To help in aiding Bank of America get through this process they hired a company called Urban Lending to service these troubled mortgages especially the complaints. Urban Lending and similar type companies were relied upon to handle this type of work and were given extremely strict quotas.

Yet now, Bank of America and Urban Lending are both accused of using very shady tactics in the processing of these HAMP modifications. It has been told by previous Urban Lending employees that Bank of America often used extreme stall tactics. They would constantly ask for the same documentation over and over, although they had already received it. What this would do is stall the HAMP modification long enough that they could close the file and deny the modification due to a lack of paperwork. They also used incorrect income calculations while filling out customer forms, which often times resulted in additionally fees because of the delays.

Urban Lending employees alleged many dirty tactics including spotting which signatures were computer generated and which were genuine so that the complaints with genuine signatures would be treated with more importance. They also alleged that borrowers’ modifications were delayed for over a year sometimes to collect fees and interest, along with disqualifying people for HAMP modifications because their debt-to-income ratio got worse over time. Urban Lending was also forging documents and falsifying conversations in order to meet extremely strict quotas. This deceit would often lead to the denial of HAMP modifications.

Bank of America is believed to have outsourced this type of work to other contractors as well who may be partaking in the same practices. Homeowners should be aware that these are major concerns when going through the HAMP modification process, which could eventually lead to foreclosure.

Foreclosures Dip to Levels Not Seen Since 2006

Foreclosure filings in 2013 were down 26% from 2012. These filings included notices of default, bank repossessions, and scheduled auctions. The foreclosure rate dropped to 1.04% in 2013, as one in every 96 homes reported at least one foreclosure filing. This rate is significantly lower than it was in 2010 when we saw a foreclosure rate of 2.23%.

Although this is the case there are still many homes in danger of foreclosure as borrowers owed at least 25% more than the homes actual value. Repossessions were also down 31% from 2012, as there were 463,000 homes repossessed in 2013. This is a great number considering there were more than a million repossessions in 2010.

Although the numbers as a whole look great, Florida is still the leader in foreclosures. Last year Florida saw 270,000 properties or over 3% of all housing units, that obtained at least one foreclosure filing. That’s a significant number considering it’s over twice as much as second place California.

Like Florida, Miami is the number one city in foreclosure proceedings, as one in every twenty-five homes or 96,710 properties has a foreclosure filing. This is up 44% higher than in 2011, which means that Miami is behind in bringing down its foreclosure filings. On the other hand, 2013 foreclosures filings for new matters were actually down. In 2013 there were 16,704 foreclosure filings in Miami-Dade County compared with 26,202 in 2012.

As such, in Miami, there is still a hefty backlog of foreclosures being pushed through the judicial system.

The good news, however, is that as the home market rebounds less homes are underwater. Additionally, home prices continue to increase as interest rates continue to remain at historic lows.

Former Miami Dolphins Battle Over Property

Two former Miami Dolphins players are now battling in court. Patrick Surtain brought suit against former wide receiver Brandon Marshall regarding a property Marshall bought for $4.15 million. Surtain alleges that he spent hundred of thousands of dollars making modifications and improvements to the home and while he was in the process of negotiating to close on the house, Marshall purchased the home. Surtain had a contract to buy the home for $5.2 million, but was unable to obtain financing on the home, due to the appraisal coming back below the contract price. Surtain then filed this action to retrieve his deposit and the value for improvements from both the developer and Marshall.

Marshall tried to remove himself from the matter, but it was denied, because Surtain alleged Marshall was told about the improvements and knew about the pending litigation with the developer and closed on the house anyways. In essence Marshall bought the lawsuit along with the property. Surtain on the other hand could have avoided the issue by closing on the home pursuant to the terms of the original contract, instead of trying to renegotiate the purchase price.

The question now is whether Marshall or the developer or both are liable for Surtain’s alleged damages if any. The developer alleges Surtain is to blame for breaching the contract in not closing, which would allow all improvements to stay with the home. Surtain is alleging that the contract is void because it said that no improvements were to be made during construction, but the developers allowed for improvements to be made.

Although, it is hard to determine what the outcome of these legal proceedings may be, a valuable lesson can be learned here to avoid such an issue. Whenever you are purchasing a home do not close on a home without inquiring as to whether the home is subject to any type of litigation, because this can cause serious issues in the future, such as those that now face Marshall. You should always consult with an attorney before purchasing a home.

Florida’s Homestead Protections Extended to Non-U.S. Citizens

Florida’s Homestead protections have been extended to non-U.S. citizens. Indeed, the Florida Supreme Court has extended the benefits of Florida’s homestead provisions to people who are not United States citizens or permanent residents. Florida’s homestead provisions give homeowners in Florida crucial benefits such as a reduction in the value of homestead real property for the purposes of property tax. These provisions also allow homeowners some protection against creditors. Specifically, creditors cannot force sale or acquire the homeowner’s property as part of the debt collection process. Tax debts are still exempt from the benefits of the homestead provisions.

In the past the benefits stemming from Florida’s homestead provisions were solely for permanent residents and United States Citizens who own their principal residence in Florida.

However, non U.S. citizens and non permanent residents who own real estate in Florida that serves as the principal residence of their dependents who are United States citizens or permanent residents may secure the benefits of Florida’s homestead provisions.

For instance, Florida’s Supreme Court in Garcia v. Andonie, 101 So. 2d 339 (Fla. 2012), ruled in favor of a Honduran couple attempting to claim a homestead exemption despite the fact that they were not lawful residents of the U.S. Florida’s high court concluded that the couple could take advantage of Florida’s homestead exemptions because the couple resided in the home with their three minor children. Since the three minor children were U.S. citizens, as well as the legal dependents of the property owners, i.e. the non-resident Honduran couple, and the home was being used as a principal residence since the Honduran couple could lawfully reside in the U.S., the court concluded that they could receive the benefits of qualifying for the homestead exemption.

In essence this means that people who are not U.S. citizens or permanent residents, but who have dependents such as young children that are U.S. citizens, or permanent residents, and that live in that residence as a primary residence, can take full advantage of Florida’s homestead provisions. Ways in which they can prove that this is a primary residence is where the children are registered for school, bank statements, and even utility bills.

Foreclosure Filings Decrease in Miami

August proved to be a good month for Florida’s foreclosure rate, which is continuing to drop. In August, there were 23,372 properties in Florida that received foreclosure filings. That number is down a whopping 15% from last year in August, and 14% from July alone. This is the lowest level in Florida since 2005 and reflects and overall decrease of 65% for new filings.

In Miami-Dade County, every 264 residences have at least one home to receive one type of foreclosure filing in August. This is almost a 20% decrease from last year, and nearly 15% from July. Broward County fares better that Miami in that one in every 372 residences got a filing for foreclosure.

Even with all that good news, however, Miami still holds the highest foreclosure rate of the top 20 metropolitan cities.

As for actual filings, in August there were 797 foreclosure filings in Miami-Dade County. In September there were 914 foreclosure filings in Miami-Dade County. These numbers are down from 2012. In August of 2012, there were 2,627 foreclosure filings, and in September of 2012 there were 1,995 filings.

Through September of last year there were 19,933 foreclosure filings in Miami-Dade County, but so far this year there have only been 13,634.

On the other hand, many foreclosures are already in the later stages and we have seen scheduled auctions increase by 39% since last year. Bank repossessions have also risen from last year by 48%.

If you are facing a foreclosure, you have options available to you. One of them is a defense to your case. If you are in doubt regarding your rights, don’t hesitate to contact us today to discuss further.

Homeowner Wins Appeal in Foreclosure Because the Bank Failed to Address all of the Defenses

The Fourth District Court of Appeal recently reversed the entry of final summary judgment in the bank’s favor because of procedural deficiencies.

Regions Bank had filed a foreclosure lawsuit against homeowners Michael and Elaine Seale. The homeowners had filed several defenses to the foreclosure lawsuit. The defenses included the allegation that the Bank lacked standing, that the Bank was not authorized to bring the action on behalf of the owner of the note, and that the bank failed to provide required default, acceleration, and opportunity to cure.

Nonetheless, the trial court granted summary judgment in favor of the bank, and the homeowner appealed.

By entering summary judgment in favor of the Bank the Fourth District Court of Appeal found that the trial court erred, because the Homeowners affirmative defenses were not factually refuted nor were they found to be legally insufficient.

In so ruling, the appellate court noted that a wealth of case law makes it clear that in the mortgage foreclosure cases, summary judgment is precluded if affirmative defenses are not factually refuted or shown to be legally insufficient.

In this particular case, legally sufficient defenses were erroneously struck, because nothing in the record refuted the claims made by the Homeowners.

The case has been reversed and remanded because the Bank did not provide the required notice of default and acceleration.

This is another illustration of how the banks are often in a rush to get to judgment. If you are facing a foreclosure, you have options available to you. One of them is a defense to your case. If you are in doubt regarding your rights, don’t hesitate to contact us today to discuss further.

Can Eminent Domain Solve The Foreclosure Crises in Miami?

The foreclosure crisis has not only impacted many Americans, but it has also impacted many communities. Homes that fall into foreclosure often fall into a state of disrepair. That leads to increased blight, a continued negative downward spiral of decreased real estate prices, and depressed neighborhoods. Even in today’s improving real estate market, the continued blight of foreclosed homes continues to be a problem for many of our hardest hit communities.

One local community is attempting to take a novel approach to solving this problem. The mayor of Richmond, California believes that the banks put all these people into loans that they simply could not afford. Then the banks refused to work with any of the homeowners in an effort to renegotiate the loans to make them affordable.

Consequently, the mayor is threatening to use, and invoke, the government’s eminent domain power in an effort to buy back the property. Eminent domain is a process that involves seizing private property for public use. Government use of eminent domain is most commonly used in the construction of roads and other government infrastructure.

If Richmond proceeds with its plan, however, it would be the first city in the nation to use its municipal power of eminent domain for mortgages.

Richmond’s plan would involve acquiring underwater mortgages at steep discounts, and then restructuring them to make them affordable for homeowners. While Richmond’s elected leaders emphasized that they would prefer to acquire the mortgages through negotiations with banks and investment firms, eminent domain would be an option to force the sales.

Then, once the city owns the property, they will in turn sell it back to the homeowner at a nice profit. Probably most importantly, the homeowner will be afforded an opportunity to buy the home back at a price, and with interest rates, that they could afford.

The idea behind the plan is to try to use the government’s powers to strong arm the banks into negotiating with homeowners. Many banks are crying foul. They claim that if the government were to move forward with this eminent domain plan that it will chill many investors in the future from providing prospective homeowners loans in the community in question.

In fact, several banks have taken the unprecedented step of filing suit against the City of Richmond in order to secure an injunction and enjoin the City of Richmond from moving forward with its plan.

Too often in today’s partisan political gridlock politicians are simply afraid to think out-of-the-box. This is no doubt a new novel approach in an effort to solve an age-old problem. But the approach proposed by the Richmond city officials begs the question – is this truly a workable plan to help solve the on going foreclosure crises still gripping our nation and local communities?

Time to Act – Short Sale Changes Coming Oct. 1st

Effective October 1, 2013 U.S. Department of Housing and Urban Development (HUD) has announced the following changes to their Federal Housing Administration (FHA) Short Sale requirements:

• New or different documentation requirements for verifying assets, income, and expenses
• Deficit Income Test (DIT) will be used to determine a homeowner’s financial hardship
• Possible elimination of the financial hardship/deficit income preforeclosure sale requirement for:
– service members who have received Permanent Change of Station (PCS) Orders, or
– homeowners who are deemed eligible for a streamlined preforeclosure sale option
• New validation requirements for appraisals
• Different dual agency/brokerage requirement: to meet the new short sale purchase contract addendum requirements, brokers and their agents may represent either the buyer or the seller, but not both parties

Not only are short sale changes coming as of Oct 1st, but please be reminded that the Federal Debt Relief Act of 2007 will expire at the end of 2013. While it initially expired in 2012, it was extended for another year. It is unknown if Congress will extend it again. The Federal Debt Relief Act generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief.

As a result of these looming changes, time is now to pursue a short sale. If you have not already started the process, you may lose out on some of the biggest benefits of a short sale if you continue to delay.

Miami’s Foreclosure Process is a Major Hurdle in a Improving Housing Market

Florida’s foreclosure process is a major hurdle in a slowly improving housing market. Today Florida has the highest rate of mortgages that are behind by more than 90 days. The national average for mortgages which are behind more than 90 days is currently at 5.6 percent. However, Florida is at a whopping 13.3 percent, over twice the country’s average. Florida had 103,000 residences that were auctioned or taken back by lenders over the past year. That total means that the state accounts for 8.8 percent of the foreclosure inventory, while the next highest state is at 6 percent. Many believe that the reason for this extremely high average is the states lengthy foreclosure process.

Due to the astonishing number of foreclosures and Florida’s current foreclosure process, homes are not making it back onto the market in a timely manner. Many of the banks or lenders who foreclose on these properties are unable to put them back on the market, because these residences continue to be occupied. The current process, which must go through the courts often times gets delayed to allow residents to try and hold onto their homes.

The homeowners/renters of these properties are causing an increase in price for the properties that do make it on the market. It is believed that if more properties from foreclosure are out on the market, it will balance out the high prices that are currently taking over the market.

There is a direct correlation between Florida’s foreclosure process and the continuing struggles with foreclosure that cripple the housing market. Since the state has the slowest process in the country, Florida is continually crowned with the highest percentage of foreclosures.