foreclosure settlement – Fleysher Law

Florida Grabs a Chunk of Foreclosure Settlement Money for State Budget

Posted on July 3, 2012February 22, 2023 by Emil Fleysher

Out of $334 million in cash payments sent to Florida in a multibillion-dollar mortgage settlement with major banks, more than $33 million will help strengthen the state’s budget. In fact, Florida is one of several states taking a portion of the $2.5 billion in cash payments from banks. And, Florida is using it for programs not directly related to the foreclosure crisis. So, Florida’s total take in the $25 billion national settlement is worth about $8.4 billion.

About $334 million of that came in the form of a cash payment to the state. Furthermore, the attorney general’s office has maintained that most of the money will go to directly to help homeowners. Moreover, settlement documents indicate that Bondi negotiated the 10 percent civil penalty; resulting in a $33.4 million cash payment to the general fund. For now, Florida is only using 10 percent of the cash payment to strengthen its general budget. However, some other states are using all or a majority of their funds to plug large budget holes. A few states have clauses similar to Florida’s, directing 10 percent of the money to general revenue as a penalty.

$300 Million to Go

Still, some states have decided to use all of the funds for homeowners. In fact, they are citing that they were the main victims in the robo-signing scandal. The remaining $300 million in Florida’s settlement cash has not yet been allocated. Bondi asked members of the public for suggestions on how to spend the money this month. Moreover, he has stated that it would be used to provide direct relief help for homeowners. Housing groups have advocated for the money to be used for legal aid for homeowners and low-income housing programs.

If you have questions about foreclosure, loan modification, bankruptcy; or other alternatives, please feel free to call my office at 954-484-9987. Or, send an e-mail to emil@fleysherlaw.com, or complete the contact form below.

Lenders Prefer Short Sales to Foreclosures

Posted on July 3, 2012February 22, 2023 by Emil Fleysher

Short sales are exceeding the number of foreclosure sales in South Florida. Broward County had 1,831 short sales in the first three months of 2012, compared with 1,476 foreclosure deals. On a quarterly basis, this is the first time short sales have outnumbered foreclosures in Broward since early 2008. Short sales also exceeded foreclosures in Palm Beach County and across Florida from January through March.

Banks are more motivated to do short sales because of the messiness and the risk of foreclosures. After a homeowner defaults on a mortgage, the bank files a foreclosure lawsuit. But, the two sides often continue to negotiate a resolution. A short sale is when the lender allows the homeowner to sell for less than what’s owed on the mortgage and absolves the homeowner from paying a deficiency. Foreclosures can be lengthy. It takes an average of 861 days to complete a foreclosure in Florida. This is one of the longest timelines in the nation. There’s a backlog of cases in Florida courts because in 2010 some bank employees admitted they had signed off on thousands of cases without proper review. As a result, some major lenders temporarily suspended foreclosures.

Time Frame of Short Sales

A short sale in Florida takes an average of 603 days. Although, many now are happening much faster sometimes within a few months. They are helping the housing market recover. That is because they more quickly put distressed homes in the hands of cash buyers or owners who can afford the mortgages. The number of Broward short sales in the first quarter of 2012 increased 30 percent from the same period a year ago. Statewide, short sales rose 18 percent from a year ago. Some of the biggest lenders, including Bank of America and Chase, now offer thousands of dollars to homeowners to complete them.

If you have questions about foreclosure, loan modification, bankruptcy, or other alternatives, please feel free to call my office at 954-484-9987, send an e-mail to emil@fleysherlaw.com, or complete the contact form below.

Voluntary Dismissals and Foreclosure Paperwork Irregularities Examined

Posted on July 3, 2012February 22, 2023 by Emil Fleysher

The Florida Supreme Court got a request. It has to do with the prevention of lenders from escaping sanctions for using fraudulent documents by filing voluntary dismissals. The issue is whether courts have the authority to reject the voluntary dismissals of the cases. And, instead impose sanctions, including dismissing the foreclosures with prejudice. Attorneys asking for dismissal with prejudice argue. They state that the current system allows every party who comes before the courts to lie, cheat, or steal; knowing if they are caught they can simply voluntarily dismiss and clear themselves of that fraud.

The banks argue that when a party has not been harmed then that party cannot seek to undo a voluntary dismissal. Moreover, they agree that sanctions are justified if a submission to the court is improper. To deter improper conduct, courts have many punishments. Lawyers and parties already face a variety of sanctions if they use fraudulent documents.

This ruling could have a major effect on the state’s backlog of foreclosure cases as well as future lending practices. A change of this scale would impact general credit and lending practices. Also, the backlog of foreclosure cases in the court system. The threat of sanctions would force lenders to continue litigating unstable cases, rather than cure defects in a new proceeding.

Forced Placed Homeowners Insurance Policies

Posted on July 3, 2012February 22, 2023 by Emil Fleysher

If you think your homeowners insurance is too expensive, then you would be interested to hear Mark Kunzelmann’s story. Mr. Kunzelmann is a 49-year-old network specialist. Just over a year ago, he let the policy on his four-bedroom, North Palm Beach home expire.

But you would not believe what the oversight, which was later remedied, cost him, approximately $10,000 for a few months’ worths of coverage. If your home is financed then you must have homeowners insurance that protects the lender’s interest in the property. If for some reason you let the policy lapse, then your bank can obtain a force-placed insurance policy. And, they can pass on the charges to you. In Mr. Kunzelmann’s case, his lender, Wells Fargo got a policy that was way above his budget.

The policy that was acquired cost him nearly $18000.00 dollars a year. And, Wells Fargo got an 11 percent commission from Assurant. Turns out many lenders have relationships with insurance companies. So, when homeowners allow their policy to lapse they will turn to that entity for a policy. Needless to say but “It left a very bad taste in my mouth,” Kunzelmann said. “I told them, ‘If you do this to me, I’m going to sue you and take my business elsewhere.’ ” Kunzelmann has followed through on his threats. He recently refinanced his mortgage with another lender. And, he has filed a federal lawsuit in order to recoup not just his loss, but the loss of the thousands of fellow Wells Fargo customers who suffered a similar fate.

National Mortgage Settlement

Posted on July 3, 2012February 22, 2023 by Emil Fleysher

National Mortgage Settlement seems to take some time.

As part of the national mortgage settlement signed in March of 2012, Chase, Bank of America, Citigroup, Wells Fargo, and Ally Financial have agreed to offer at least $10 billion in loan forgiveness or principal reduction. In fact, they are offering it to an estimated 11.1 million homeowners who are in default or underwater. After three months the banks’ distribution of this relief is slow. According to housing counselors that The Huffington Post surveyed, only a few individuals got an offer of a principal reduction. That is out of dozens who applied for modifications. These institutions are not indicating how much principal they have written off. Even though a report to the government on their efforts is due in September of 2012.

Baloon Payment

It seems that principal reductions are very rarely seen. And, banks are more likely to offer the homeowner a principal forbearance. It moves the payment of most of the debt to the end of the loan’s term. In fact, this is identified as a balloon payment. During the first few years of the housing crisis, banks and other institutions that service loans made life difficult for hundreds of thousands of homeowners. All of those who tried to obtain a loan modification and failed. Moreover, the institutions lost paperwork, failed to follow up with borrowers. And, they even pushed homeowners who were current on their payments into foreclosure.

However, there seems to be a reasonable explanation as to why there still has not been much change these last few months. Fannie Mae and Freddie Mac, which are the government-backed mortgage giants that control 60 percent of the mortgage market refused to participate in principal reduction; except for limited circumstances. These two entities hold 29.2 million mortgages, 3.3 million of these loans are underwater. According to Edward Demarco, director for the Federal Housing Finance Agency; loan write-downs are a “moral hazard” since the practice might encourage borrowers now current on their mortgages to stop making payments.

Only time can tell whether or not this new settlement will actually help the millions of homeowners across the country desperately reaching out for help.

Fannie Mae & Freddie Mac Considering Principal Reduction Policy

Posted on April 20, 2012February 22, 2023 by Emil Fleysher

Fannie Mae and Freddie Mac could save $1.7 billion if they forgave principal on some troubled mortgages. Furthermore, The Federal Housing Finance Agency may make a decision in the next few weeks; whether to change its policy barring the two taxpayer-owned companies from performing such loan modifications. In fact, The FHFA has come under pressure from the Obama administration and consumer advocates to cut principal for underwater borrowers. Moreover, the companies are barred from reducing principal on the seriously delinquent loans they own or guarantee on the grounds that it would hurt their bottom line.

Furthermore, the FHFA will announce additional measures to help troubled homeowners in the next few weeks. Other measures may include a program that would allow delinquent Fannie Mae and Freddie Mac borrowers to continue to live in their houses as renters. That is after turning over the deeds.

Additionally, the FHFA said it would cost Fannie Mae and Freddie Mac an additional $100 billion. Just to write down all 3 million underwater loans to the value of the homes securing them. However, far fewer loans would actually be candidates for principal forgiveness, even if FHFA changes its policy. It is estimated that at best the tactic would help an additional 200,000 to 300,000 families keep their homes. From the perspective of the FHFA, the main goal is to protect taxpayers. They want to be sure the principal reduction strategy is appropriate. And, they believe it is for some types of loans.

More Lenders Offering Plans with Debt Forgiveness

Posted on April 8, 2012February 22, 2023 by Emil Fleysher

Non-government holders of delinquent mortgages are offering more payment plans with debt forgiveness. This is even as government-controlled Fannie Mae and Freddie Mac resist. Of the 116,153 mortgages modified in the fourth quarter of 2011, debt forgiveness takes 16 percent of loans. All of them held by private investors; 25 percent of loans held in bank portfolios, and in none owned by government-run companies. Fannie Mae and Freddie Mac haven’t granted principal reductions because it would cost the taxpayer-funded companies almost $100 billion.

Bank of America in Side Deal with Government on Mortgage Foreclosures

Posted on March 21, 2012February 22, 2023 by Emil Fleysher

Bank of America, one of the five banks in the $25 billion settlement with the government over foreclosure practices, has struck a side deal. It will allow it to reduce penalties in return for bigger cuts to borrowers’ mortgage balances. Bank of America will make deeper and broader cuts than other banks; it will allow it to avoid as much as $850 million in penalties. And, it will give more than 200,000 financially strapped households the opportunity to sharply reduce their mortgage balances.

This deal is unique to Bank of America and many of the write-downs will be made on loans originated by Countrywide Financial Corp. Borrowers who qualify will receive principal reductions averaging more than $100,000. The side deal offers qualifying borrowers a chance to cut their mortgage balances to their home’s current market value. Whereas other banks must under the national settlement cut principal to no more than 120 percent of the home’s value.

High-End Mortgages Not Immune from Foreclosure

Posted on March 4, 2012February 22, 2023 by Emil Fleysher

It has been five years since the housing market first began to crash and with many middle and working-class Americans still facing foreclosure; it may come as a surprise to know they’re not alone. Over 36,000 homes valued at $1,000,000 or more have been foreclosed on in 2011 alone. While this accounts for less than 2% of the foreclosures nationwide, it represents a historically huge increase in “upper class” foreclosures. Until recently, many high-end homeowners were able to postpone or avoid the foreclosure process. This is because they had the means to either pay up or come up with other alternatives. Unfortunately, many Floridians that used to earn high incomes no longer have the financial means to hold out against default.

˝Strategic Default˝ Approach for High-End Homeowners

With the recovery of the housing market still years away, many high-end homeowners have taken a different approach to their foreclosure woes. This approach has been identified as a “strategic default” or “foreclosure defense.”
Paying on a loan that exceeds the value of the home securing it makes little sense from the pragmatic perspective of an investor. Most of these homeowners view their current mortgage as just that; an investment gone bad. Using the strategic default approach affords many borrowers the opportunity to withhold their mortgage payments. That is for as long as it takes for the bank to prove their case and complete the foreclosure action. This provides the borrowers the chance to save money and prepare for the eventual move that will take place.

A foreclosure defense attorney can provide the necessary planning and support to provide as much time as possible in the home. Loan Modification, Deed in Lieu of Foreclosure, Short Sale, and Bankruptcy; these are options that should be considered; in light of the individual borrower’s goals and circumstances.

If you have questions about foreclosure, loan modification, bankruptcy, or other alternatives; please feel free to call my office at 954-484-9987. Or, send an e-mail to emil@fleysherlaw.com, or complete the contact form below.

2nd Mortgage Holders and HELOC Investors will Benefit from the AG Foreclosure Settlement

Posted on March 4, 2012February 22, 2023 by Emil Fleysher

The banks that settled a nationwide probe of foreclosure practices last month will get a bonus from the deal. The bonus is protection for $308 billion of home-equity loans they hold. The banks that service about half the nation’s mortgages on behalf of investors will be able to share losses on their junior loans with bondholders. And, they will get credit toward the cash they pledged to spend in the settlement. Loss-sharing will clear the jam that occurs when banks drag their feet processing modifications on mortgages that outrank their junior liens.

Government Foreclosure-prevention Programs

Government foreclosure-prevention programs have resulted in less than 1 million modifications; a quarter of the goal the administrators set three years ago. Home-equity mortgages have been a reason for that because the servicers want to protect their second liens. The credits banks will get for writing down home equity loans won’t be as much. In comparison to what will get for reducing the balance on primary mortgages.

In fact, about 92 percent of home equity loans are held on the balance sheets of US banks. The five banks in the mortgage settlement own 42 percent of the second liens. This makes it very likely a servicer of the primary mortgage will hold a property’s junior loan. A conflict arises. This is because the servicer has a financial incentive to service the first lien to the benefit of the second-lien holder; which may oppose the financial interest of the investor.

If you have questions about foreclosure, loan modification, bankruptcy, or other alternatives, please feel free to call my office at 954-484-9987. Or, send an e-mail to emil@fleysherlaw.com, or complete the contact form below.