Forget everything you knew about FHA short sales.  There’s a new Mortgagee Letter describing the FHA pre-foreclosure sale (a/k/a short sale) guidelines which states:

“This ML supersedes in its entirety ML 1994-45, “HUD’s Nationwide Pre-Foreclosure Sale (PFS) Procedure”.  It also supersedes the section (pages 29-35) of ML 2000-05, “Loss Mitigation Program-Comprehensive Clarification of Policy and Notice of Procedural Changes” that describes Pre-Foreclosure Sale requirements.”

FHA Pre-Foreclosure Sale Procedures

My husband and I filed a bankruptcy that finalized June 4, 08. My car was repossed in August 08.  We were given no warning.  They said that we hadn’t paid in three months.  They worked with us before with late payments.  In May we were up half a payment that month and made the other half payment that month.  With my husband out of a job it was hard to make a full payment.  So the next two months we only made a half payment.  Which put us behind 1 full payment by July. 

We told them that we would be able to make July’s and August’s payment all at once, by the end of August, from the economic stimulus payment we would recieve.  Our payments were $365. So we would owe them $730. Well right before the end of August two men came to repossess our car. 

We called them and they said it hadn’t been paid in three months.  We called Truepay, which removes money from our bank account and places it with the car loan bank account.  They had went out of business!  We had no idea where our payments went.  They sent our account to Speedpay, another middle man.  But they had no idea about the payments either. We told our bank that we would not make payments until it was settled. 

They then told us that our car was repossessed because my husband had told them we weren’t going to make July and August’s payment, when we said we were going to pay in full.  They even said we were late every month because we made our payments on the 5th and 20th and they didn’t accept half payments and even though they said payments were do by the 27th, they told us that the date varied every month!

The guys took our car and it was sold about a month and a half later.  It was sold for half of what we had left on the loan!  Now we can’t get ahold of the bank to make payment arrangements.  Though we can’t afford them since we had to get another vehicle and pay a high interest.  Its not even as good as vehicle as what we had.  We went from 2006 Hundyaii Sonata to a 2003 Chevy Cavalier.

Even though we agreed that payments would stop until the car was sold, the bank still made the new middle man take out the next two payments.  They said we verbally agreed on them taking them out.  We did get those two payments returned and had a stop placed on the bank and on Speedpay.

Can we do anything about the middle man taking out money?  And what about those half payments that were never posted to their bank?  Was the bank with the loan in the wrong? 

I have two children and one on the way.  My husband is getting deployed soon and we need the money. I am afriad that they will garnish his wages.  Or even take our tax return which i need to pay my student loan that has to be paid.  It feels like we were trapped!

Kimberly (more…)

I have a condo right now and i want to short sale it. While the condo is for sale can i apply for an FHA loan even if i have the other loan. THe loan on my condo is not an FHA loan.

Vicente (more…)

I was talking to an attorney recently about newly enacted FS 501.1377 and its application to lawyers in Florida.  The initial version/s of the statute contained a specific attorney exemption which was subsequently altogether removed in the version of the Act that has since become Florida law.

The Broken Credit Blog covered this problem six months ago on June 11, 2008 where we wondered if homeowners would be left in the lurch when desiring attorney legal assistance in filing bankruptcy, or in defending a foreclosure action.  Thankfully, on July 11, 2008 we reported that Attorney General Bill McCollum provided a limited attorney exemption which states (in part) that the FL AG “approves for exclusion from the definition in this provision of a foreclosure rescue consultant, a person licensed to practice law in this state, when such person provides legal representation to a client with respect to a foreclosure” (emphasis added).

To put the Florida AG letter in perspective, he was responding to an inquiry made on behalf of bankruptcy attorneys (who no doubt were in upheaval with 501.1377 because they became the unenviable subject to provisions of BAPCPA in ’05).  And in answering their concern he most assuredly also wanted to aver foreclosure defense attorneys that they were not hindered in any way “when such person provides legal representation to a client with respect to a foreclosure”.

Contrast all of this with the California version of the Foreclosure Consultant Act which exempts attorneys in CA Civil Code 2945.1(b)(1) with the following text: “A person licensed to practice law in this state when the person renders service in the course of his or her practice as an attorney at law.”

The California version of the statute was enacted in 1979 (and amended in 1980 and 2004), whereas the Florida statute is brand new, literally only a few months old. In California, lawyers essentially run loss mitigation companies collecting legal fees for loan modifications, short sales, etc. and I have no problem with that.  The problem and liability arise, in my opinion, when an attorney in Florida offers to assist a homeowner with a loan modification, short sale, or other workout, exclusive of the client engaging him or her in response to the filing of a foreclosure of which the pendency of such “foreclosure proceedings (is) recorded pursuant to s. 48.23” [501.1377(2)(g)].

The serious question remains and undoubtedly case law will develop accordingly to determine what was the legislative intent behind removing the attorney exemption in FS 501.1377?

This author is not an attorney and this information should not be considered legal advice.  Please consult an attorney for legal advice.

It seems to be standard operating procedure for lenders to force borrowers to sign away their rights in the form of a (sneaky) waiver when entering into a workout to retain the home (i.e. forbearance agreement, loan modification, etc).  Well, it appears these waivers are not enforceable – or at least with regards to federal laws that affect the “public interest” such as the TILA.  In Vermurlen v. Ameriquest Mortgage Company, No. 1:06-cv-828, 2007 the borrower entered into a forbearance agreement and Ameriquest included the following waiver:

“Effective upon the execution hereof, and notwithstanding any failure of Borrowers to satisfy any of the conditions precedent set forth above, Borrowers hereby agree that, without any further act, Lender is fully and forever released and discharged from any and all claims for damages or losses to Borrower’s property or person (whether these damages or losses are known or unknown, foreseen or unforeseen, or patent or latent) including, without limitation, tort claims, demands, actions and causes of action of any nature, whatsoever arising under or relating to the Loan Documents or any of the transactions related thereto, prior to the date hereof, …”

The court noted that “[i]n Brooklyn Savings Bank v. O’Neil, 324 U.S. 697 (1945), the Supreme Court addressed the question of waiver under the Fair Labor Standards Act. The Court held that “a statutory right conferred on a private party, but affecting the public interest, may not be waived or released if such waiver or release contravenes the statutory policy”…“The public benefits from enforcement of TILA because it creates a system of disclosure that improves the bargaining posture of all borrowers.”  Therefore, such a waiver is unenforceable with regards to the TILA.

While the TILA rescission claim was dismissed for other reasons in Vermurlen; nevertheless, this is helpful case law for others who no doubt will find themselves once again battling against their lender after a completed loan modification down the road when a similar waiver was included.

This author is not an attorney and this information should not be considered legal advice.  Please consult an attorney for legal advice.

I have 8 homes needing to be short sold. How do you have time to help? You must be over loaded. I need real help. I need lots of advice. H E L P!!!

Judy (more…)

Appellant’s car was repossessed and sold, and she filed this class action against the lender, alleging that it failed to comply with the notice requirements of the UCC. The trial court granted the lender’s motion for summary judgment, but we reverse because of the insufficiency of the notice. We also find a settlement offer for the full amount plaintiff sought did not make the class action moot.

The notice provided by the lender failed to include a number of requirements found in section 679.614(1)(a) and section 679.613(1), such as whether the sale was public or private, or where or when the sale would be held. The lender argues that if the notice was not in compliance with the UCC, plaintiff had received actual notice of the sale through conversations between her and the director of collections for the lender. The case relied on by the lender to support its argument that the oral notice would remedy any deficiencies in the written notice, Bondurant v. Beard Equipment Co., 345 So. 2d 806 (Fla. 1977), was decided before the legislature enacted the current statutes requiring written notice, and is no longer good law. The court accordingly erred in entering a summary judgment in favor of the lender.

Nor do we agree with the lender’s argument that its unaccepted settlement offer for the full amount of plaintiff’s claim, a practice which is known as “picking off” a class representative, made this case moot. Neither Florida nor the federal courts sanction that practice. Allstate Indem. Co. v. De La Rosa, 800 So. 2d 245 (Fla. 3d DCA 2001); Weiss v. Regal Collections, 385 F.3d 337 (3d Cir. 2004). Reversed.

Jackson v. Southern Auto Finance Company [4D07-3284, Fla 4th DCA, August 20,2008]

For unto us a child is born, unto us a son is given: and the government shall be upon his shoulder: and his name shall be called Wonderful, Counsellor, The mighty God, The everlasting Father, The Prince of Peace.

Paul,
 
My sister just received a loan modification from Litton.  To make a long story short…she quit paying on her mortgage about a year ago when Litton quit responding to her attempts at a loan mod.  Then she just received an off from Litton where they are willing to eat approx $150,000 in principal, interest and fee’s. 

My question, can the lender send the difference to the IRS as an income for my sister? 

I told her not to sign until we received clarification.  She called Litton and they told her to talk to an attorney.
 
Dorene

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