Association Hits Hurdle in Foreclosure

The trial court has a deficiency subject of matter jurisdiction to hear the Homeowners Association foreclosure action where a bank or superior lien has already recorded a notice of lis pendens.

In this Broward County case, a bank recorded a lis pendens and filed a foreclosure action against a borrower. Furthermore, they claimed the homeowners association as having a possible interest in the property.  While the bank’s lawsuit was pending, the association filed its own foreclosure lawsuit against the borrower in a different court. And, they received a final judgment of foreclosure. The borrower then attempted to have the association’s final judgment vacated. However, the trial court shut down that motion, and the borrower appealed that ruling.

The Fourth District Court of Appeals sided with the association’s final judgment; which was obtained after the bank’s foreclosure action was filed and lis pendens recorded, was void because the trial court that granted the final judgment to the homeowners association lacked jurisdiction to hear the association’s case.  The association’s only avenue to attain their past due assessments would be through the bank’s still pending foreclosure action.

This ruling is potentially very significant in affecting the rights of associations and junior lienholders. As well as investors whose business strategy is to purchase homes at the association or junior lienholder foreclosure sales.

If you have questions about Foreclosure, Loan Modification, Bankruptcy, Short Sale, or other alternatives, please feel free to call my office at 888-886-0020. Or, send an e-mail to emil@fleysherlaw.com, or complete the contact form below.

Condominium Reprimanded in Foreclosure

A North Miami condominium association got sharp scorn from the Third District Court of Appeal. They may penalize it for a lawsuit the panel called a “waste of time.”
Furthermore, Biscayne Point Condominium Association must show why it shouldn’t receive sanctions in its litigation with HSBC Bank USA N.A. over a condo unit the bank state the group illegally controls.

In fact, their quarrel centers on whether Biscayne Point gave suitable notice to the correct lienholder. That is if they did this prior to foreclosing on homeowner Michael Leavitt for unpaid condo assessments. For its part, the appeals court wants to distinguish if attorneys for both sides attempted to resolve the problem; before extending their fight. Moreover, in a mandate issued Feb. 24, it provided the bank with 30 days to file a memorandum; demonstrating whether it communicated with the association to reach a concession of error before filing the appeal.

Biscayne Point won a default judgment silencing title in January 2012 after HSBC didn’t secure the foreclosure suit. It secured a certificate of title nearly a month later after coming as the winning bidder in a foreclosure sale. Public records show the association paid $10,400 for the one-bedroom unit at 12105 NE 11th Place. Biscayne Point’s suit named HSBC Bank USA N.A., but the bank stated a related company, HSBC Trustee, held the mortgage. Years of litigation trailed.

Naming the Wrong Defendant?

At trial, the bank insisted the suit named the wrong defendant. And they argued the association improperly served court papers on a bank branch employee. The bank insisted HSBC Trustee, not HSBC Bank, held the purchase-money mortgage on Leavitt’s $107,920 promissory note, which was sold twice. And, it was eventually transferred to the company in 2009. Nearly a year after Biscayne Point got the title, the bank filed for foreclosure in 2013; naming Leavitt and the condo association as defendants. HSBC sought to vacate orders in the association’s favor. They wanted to do this by challenging Biscayne Point’s service and claiming the group misidentified the debtor.

Biscayne Point responded with a motion to dismiss, arguing the judgment quieting title extinguished the bank’s interest in the debt. The association acknowledged in its pleadings that its lien for unpaid assessments was junior to HSBC’s. However, they argued the certificate of title obtained through foreclosure was superior to the bank’s unsatisfied mortgage. Its lawyers also condemned the bank’s misidentification argument.

“HSBC Bank is HSBC Bank,” attorney Maria Garcia Larrabure, who teamed with Gustavo Gutierrez of Torres & Vadillo in Miami, contended at a 2014 hearing before Miami-Dade Circuit Judge Jorge Cueto. He denied the bank’s motion to vacate the judgment quieting title, finding the association appropriately served HSBC. HSBC Bank contoured with representation from Elliot Kula and Aaron Daniel of Kula & Associates in Miami.

The End Result

But Biscayne Point seemed to give up on the litigation, failing to appear through counsel or file an answer. The condominium association also failed to answer to appellate court orders to file a brief and a memorandum of points and authorities to back its position. “The end result of the frivolous legal proceedings below and here is a waste of time and judicial resources,” Third DCA Judge Vance Salter wrote in a unanimous conclusion with Judges Ivan Fernandez and Thomas Logue agreeing. On the court’s own motion, the panel ordered Biscayne Point to show why the association shouldn’t pay for the bank’s attorney fees.

If you have questions about Foreclosure, Loan Modification, Bankruptcy, Short Sale, or other alternatives, please feel free to call my office at 888-886-0020. Or, send an e-mail to emil@fleysherlaw.com, or complete the contact form below.

Civil Procedure – Orders of Dismissal contrasted with Final Judgments and Decrees

Terminology caused the bank to lose its case.

In this Third District Court of Appeals case, the bank’s foreclosure lawsuit against the borrower was set for trial. The bank never received notice of the trial. So, order of the court dismissed the bank’s foreclosure action. This happened when the bank did not appear for the trial. More than two years later, the bank filed a motion to set aside the court’s dismissal of its foreclosure lawsuit. And, it was granted. And, the bank then obtained a final judgment of foreclosure against the borrower.

The borrower then filed a motion to vacate the court’s order setting aside the dismissal of the plaintiff’s foreclosure lawsuit and all orders entered thereafter. The trial court denied that motion, encouraging this appeal.

Borrower’s Dispute

The appellate court agreed with the borrower’s dispute because of several reasons. Firstly, upon the dismissal of the action, which is a final order, the trial court was without authority to vacate the initial dismissal order more than two years later. Secondly, an order of dismissal is not a final judgment or decree under Rule 1.540(b)(4) of the Florida Rules of Civil Procedure. Lastly, because the order of dismissal was not a final judgment; the bank must have moved to set aside the order of dismissal within a year of its entry, not more than two years later.

So in conclusion, because of the terminology of the Florida Rules of Civil Procedure, an “order”, no matter if it is a final appealable order, is not a “judgment.” Thus, it cannot be argued more than a year after entry of the order. Because of this, the plaintiff’s foreclosure lawsuit must be dismissed as initially ordered.

De La Osa v. Wells Fargo Bank, N.A.

Third District Court of Appeals

Opinion issued February 10, 2016 (3D14-1455)

41 Fla. L. Weekly D382b

2016 WL 517466

If you have questions about Foreclosure, Loan Modification, Bankruptcy, Short Sale, or other alternatives, please feel free to call my office at 888-886-0020. Or, send an e-mail to emil@fleysherlaw.com, or complete the contact form below.

Is a Short Sale right for you?

Many South Florida borrowers face a tough decision after defaulting on their mortgage loan… Is a Short Sale the right thing for us to do right now? The answer is actually not as complicated as you may think.

How to Know if it is the Right Decision?

Simply put, if you are ready to leave the property within 3-6 months and you require a little financial help in making the transition to your new home, then the Short Sale is the way to go. The typical successful Short Sale transaction takes about 3-6 months from listing to closing. And, most banks offer anywhere from $3,000 – $10,000 in relocation assistance at the closing. In addition, a waiver of deficiency (the difference between what you owe on the loan and what the property is worth) can typically be negotiated with banks in most Short Sale transactions.

Further, it is a way for many borrowers to salvage their credit. Also, it is a way to speed up the waiting period for a new mortgage after filing a foreclosure. A Short Sale typically results in a report of the mortgage on your credit as “settled for less than the full amount owed”; as opposed to a flat-out “foreclosed” branding. Most lenders provide for a waiting period of 4 years after a foreclosure before a potential borrower will be considered for a new mortgage; while that waiting period is typically reduced to 18-24 months following a Short Sale.

A Drawback of Short Sale

However, keep in mind that closing on a Short Sale will require you to leave the house right away. And, if you’re not ready to take that step, a different strategy may be a better fit for you. Perhaps the Short Sale initiation process can be delayed for some period of time; while circumstances change so that you can later be in a better position to start on the Short Sale.

I am an attorney helping borrowers in these and similar situations navigate the process and make the best of a difficult situation. Please call or email me to schedule a Free Consultation to discuss your situation and options. I look forward to helping in any way I can.

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It Takes Two for the Foreclosure to be Through

Abusing the voluntary dismissal one too many times cost the foreclosure case for the lender who acquired the loan that had been previously sold at least twice.

The Fourth District Court of Appeal took into consideration the number of times there was a connection between the loan and a voluntary dismissal rather than the number of dismissals per plaintiff to overturn the foreclosure, leaving the homeowner attorneys to celebrate. The appellate invoked the two-dismissal rule under Florida Rule of Civil Procedure 1.420(a)(1). They allow one voluntarily dismissal but not two.

The initial foreclosure came from Flagstar. They dismissed the suit and sold it to DKR Mortgage who began filing for foreclosure but later dismissed it. Finally, MIA Real Holdings bought the loan and started its own foreclosure but then voluntarily dismissed the suit. The defendant’s attorney argued that the same note got dismissal twice in prior cases. However, Palm Beach Circuit Judge Catherine Brunson ruled in favor of the plaintiff. The defendant’s attorney challenged that decision and won. Fourth DCA Judge Robert Gross wrote in a unanimous decision with Judges Martha Warner and Spencer Levine concurring.

If you have questions about Foreclosure, Loan Modification, Bankruptcy, Short Sale, or other alternatives, please feel free to call my office at 888-886-0020. Or, send an e-mail to emil@fleysherlaw.com, or complete the contact form below.

Foreclosed homes to be rehabilitated for new buyers in South Florida

The housing organization in South Florida gets the opportunity to purchase over 2,000 homes in foreclosure. It could ultimately end up with individual homebuyers. The Federal Housing Finance Agency stated it is broadening its Neighborhood Stabilization Initiation Program to South Florida. And, 17 other metro areas across the nation.

How does Neighborhood Stabilization Initiation Program work?

Since the beginning of December, housing groups got the opportunity to purchase properties valued at $175,000 or less. This is before making them available to the general public. Such groups can then renovate, rent and or resell them to such individuals who meet the income qualifications. Some properties will be torn down alltogether and rebuilt.

Mortgage companies Freddie Mac or Fannie Mae. own the properties under foreclosure. The FHFA oversees them all. The program started last year in Detroit and later in the Chicago area. Rob Grossinger, the president of the National Community Stabilization Trust, nonprofit partners with Freddie, Fannie, and community housing groups nationwide, stated that the homes will play a big role for first-time buyers. That is, for those who have been struggling to get in the housing market. The program’s design, however, is not for buyers in higher price rangers; where there continues to be a shortage of listings.

If you have questions about Foreclosure, Loan Modification, Bankruptcy, Short Sale, or other alternatives, please feel free to call my office at 888-886-0020. Or, send an e-mail to emil@fleysherlaw.com, or complete the contact form below.

Foreclosures in South Florida are Gradually Improving

New foreclosures dropped dramatically across South Florida last month. Though the number of repossessed homes by banks has increased as the courts are clearing up the dockets. According to RealtyTrac, there has been a 53 percent decline since November of 2014 in foreclosures in South Florida. In November there were just 831 foreclosure lawsuits in Palm Beach, Broward, and Miami-Dade Counties. Since RealtyTrac began counting in January 2006, this has been the fewest number of new foreclosure filings for the tri-county region.

The collapse of the housing bubble began in 2006. Many buyers who paid too much for the properties lost their jobs and weren’t able to refinance those taxing mortgages. However, in 2012 prices eventually bottomed out and the housing climate has steadily improved since then. A vast amount of the homes that went into foreclosure during a burst of the housing bubble have clogged the system for years. However, the courts are handling the situation better by getting rid of the backlogs. The tri-county region had an increase of 45 percent from last year in repossessions last month, by repossessing 1,845 properties.

Bubble Loans

“Bubble loans” or loans taken out between 2004 and 2008 are the majority of the loans that are in the foreclosure backlog right now. In the past couple of years, the Sunshine State has been at the top of the list of the nation’s highest foreclosure rates. But, Florida has seen a 36 percent decline in new foreclosure lawsuits in the last month. Florida still has the third-highest foreclosure rate in November with one in every 662 units in foreclosure. Palm Beach, Broward, and Miami-Dade counties were ranked 12th nationwide; at one in every 645 homes at some stage of foreclosure.

If you have questions about Foreclosure, Loan Modification, Bankruptcy, Short Sale, or other alternatives, please feel free to call my office at 888-886-0020. Or, send an e-mail to emil@fleysherlaw.com, or complete the contact form below.

Broward’s Foreclosure Division Needs Senior Judges

Broward County’s foreclosure division is going to need all the help it can get in the next few months to keep its head above water. After several layoffs, harsh budget cuts, and the county taking a huge hit during the collapse of the housing market; it is going to take nothing short of a miracle for the thousands of foreclosure cases to work through the already clogged dockets. The foreclosure division has taken yet another hit. This was after state legislators were unsuccessful in renewing the funds to pay senior judges. However, in spring Broward Circuit Chief Judge Peter Weinstein will present a plan to circuits less affected. He will do this by the housing crisis to borrow from their allocation of senior-judge days.

Thousands Cases Pending in Broward County

Although the majority of the cases last hours, some take up entire mornings or afternoons. Thus, continuing to hinder the already overloaded division and its judges. The worst might be over, but the fallout from the market crash continues to plague the Broward court system. The court’s 11th Division handles foreclosure cases from 2011 to the present date had 6,023 pending cases during September. That same month, it had 363 new filings, reopened 955, but only disposed of 774. “We’re doing what we can, but it’s a big caseload,” Weinstein said.

Broward Circuit Court still receives hundreds of new filings each month since the housing bubble imploded eight years ago. The 363 new filings during September were the second-lowest number of foreclosure filings in the last yet; with January’s 350 new suits being the first. This is a much lighter caseload in comparison to the first three months of 2013. Then, the enormous caseload was in the upward of 40,000 pending foreclosure. After resolving tens of thousands of pending lawsuits, October 2014 saw a significantly smaller backlog; with 543 new filings, 1,100 reopened cases, disposed of 1,584 and left about 13,100 still making their way through the clog. But clearing up the backlog, in combination with lower new filings had its pros and cons.

Budget Cut

In September, the Clerks of Court Operations Corp., which certifies the proposed budget for the state’s 67 clerks, estimated a $24 million statewide cut. The group relies on a state trust fund that during a time was flushed with court fees and costs at the height of the foreclosure crisis that legislators diverted a portion of that revenue to cover other expenses. But as foreclosures faded, clerks said not enough money entered or remained in the till. It meant a reduced budget of $444 million for Florida’s clerks and a 5 percent statewide budget cut. Broward County had a $2 million reduction from a $40 million budget. This meant a hiring freeze, on unpaid furlough day every month through October. And, cutting operation hours to the public from 4 pm to 3:30 pm. The office also had to lay off 17 employees and lost another 14 more to resignations.

The budget cuts affected all of South Florida. Miami lost $3.45 million of its $69 million budget and 130 employees. And, Palm Beach County struggled with the $2.6 million shortfalls. As we all know, South Florida was one of the regions hit the hardest by the housing collapse. What normally would be 13 case managers and two employees doing case management work to assist in speed litigation, Broward was left with just four staffers. The court took yet another blow as it had hired General Magistrate Lisa Dolin Eiss in 2013 as a full-time foreclosure magistrate. But, was forced to eradicate her position due to budget cuts. Then in October, as part of the fallout from her arrest for driving under the influence, Broward Circuit Judge Lynn Rosenthal stepped down from the bench, leaving a courthouse vacancy unlikely to be filled before January.

No Special Foreclosure Funding for Broward County’s foreclosure division

Court spokeswoman Meredith Bush states that without the special foreclosure funding, the circuit will need to draw from the general annual allotment of senior judge days to handle foreclosures. The changes leave one full-time senior judge assigned to the foreclosure division, and three senior judges working on rotation to cover two part-time shifts. “We’re doing everything we can to keep the foreclosure division functioning. …. We’re doing the best we can, and I think doing a pretty good job of keeping everything going,” Weinstein said. “It’s quite a job.”

If you have questions about Foreclosure, Loan Modification, Bankruptcy, Short Sale, or other alternatives, please feel free to call my office at 888-886-0020. Or, send an e-mail to emil@fleysherlaw.com, or complete the contact form below.

South Florida’s Zombie Foreclosures Have Plunged

Zombie foreclosures, or abandoned properties that are going through the foreclosure process, have had a dramatic decline in South Florida in the past year. According to RealtyTrac’s Zombie Foreclosure Alert, there has been a 46 percent decline in Zombie Foreclosure during the second quarter of litigation; which translates to about 7,021 properties. An attorney from Royal Palm Beach attributes this to higher knowledge of the law. Residents are aware that they are not required to leave the property until it is sold. This is a great benefit to both parties.

Ghost Neighborhoods because of Zombie Foreclosures

The average value of a property that remains occupied during the foreclosure process is $251,236. Once a property turns into a Zombie Foreclosure it loses about 22 percent of its value; knocking it down to $195,856. It is in the bank’s best interest for a property to remain occupied during the foreclosure process. This is because zombie properties tend to have overgrown yards and incur fees for municipal code violations. Abandoned homes also tend to have mold issues which could become costly for the bank to amend. Empty homes tend to bring down the value of all homes around them. This eventually turns them into ghost neighborhoods, where every other property is deserted.

However, lenders are more inclined to offer loan modifications to keep borrowers in their homes. And, to rehabilitate former nonperforming loans as the economy improves. An attorney from Miami who represents lenders stated that they are getting increasingly more wary and tired of the litigation process. They prefer to extend the option of loan modifications to borrowers. Furthermore, they do this to avoid the year to two years wait for the foreclosure process to be complete.

If you have questions about Foreclosure, Loan Modification, Bankruptcy, Short Sale, or other alternatives, please feel free to call my office at 888-886-0020. Or, send an e-mail to emil@fleysherlaw.com, or complete the contact form below.

Supreme Court Declares 2nd Liens Can’t be Stripped in Chapter 7 Bankruptcy

Banks win out after the Supreme Court ruled on Monday. They state that homeowners cannot rid themselves of a second mortgage by filing for bankruptcy protection. All nine Supreme Court justices unanimously agreed that filing for Chapter 7 bankruptcy will not void a junior mortgage lien. This is when the amount owed by the senior lien surpasses the current amount of the collateral; if the Chapter 7 bankruptcy code allows the homeowner’s claim and a lien secures it. Moreover, this ruling allows the junior lienholders to collect on loans in the event a debtor files bankruptcy. And, when they treat the subordinate loan as secured in bankruptcy proceedings.

Moreover, the ruling, which will mainly benefit commercial lenders, states that the bankruptcy courts don’t have permission to “strip off” junior liens on a property; if the value on said property is in usage as collateral and is below the amount the homeowner owes to the principal lienholder. Bank of America v. Caulkett, where the Supreme Court ruled in favor of Bank of America and the new bankruptcy ruling originated, asserted that junior liens should not be considered as unsecured loans. This is because the bankruptcy code only “strips off” claims from property that are disallowed. And, because the Supreme Court’s ruling in Dewsnup v. Timm, disallowing “stripping down” of primary liens to the value of the underlying property, should extend to this case.

If you have questions about Foreclosure, Loan Modification, Bankruptcy, Short Sale, or other alternatives, please feel free to call my office at 888-886-0020. Or, send an e-mail to emil@fleysherlaw.com, or complete the contact form below.