I lost my Florida home to foreclosure 2/5/10.  On 3/8/10, I received a letter from “Real Time Resolutions” indicating they now have servicing rights to our mortgage loan with a payoff amount of $153,443.21.  Do I have any recourse?

Milinda (more…)

HousingWire – A new rule adopted by the Florida Supreme Court would require lenders to explain “last minute” cancellations of foreclosure sales and request a rescheduling by the court.

Before the New Year, the Florida Supreme Court adopted a foreclosure mediation program to reach out to borrowers facing foreclosure and possibly clear up the backlog of foreclosure cases in the court system. The Task Force on Residential Mortgage Foreclosure Cases launched in March 2009 in response to the nation’s third highest delinquency rate and its worst foreclosure inventory at the time.

Florida has the fourth highest foreclosure rate in the country through January 2010, according to RealtyTrac. There, one in every 187 homes received a foreclosure notice.

The Task Force proposed the motion and recommended the adoption of the forms. In its proposal, the Task Force stated that many foreclosures set by the final judgment and handled by the clerks of court are “vague last minute” motions to reschedule sales without an explanation.

“It is important to know why sales are being reset so as to determine when they can properly be reset, or whether the sales process is being abused,” according to the Task Force proposal.

The new rule aims to clear up and accelerate a foreclosure process clogged with government incentive programs and civil cases. The Task Force wrote in an August report that the foreclosure pipeline resembled a traffic-jammed highway out of a town under hurricane evaluation.

“Again, this is designed at promoting effective case management and keeping properties out of extended limbo between final judgment and sale,” according to the Task Force proposal of the new rule.

Bloomberg – When John King stopped making payments on his home in Coral Gables, Florida, two years ago, he assumed the foreclosure ended his mortgage contract, he said. Last month, a Miami-Dade County court gave collectors permission to pursue him for $44,000 stemming from the default.

King is among a rising number of borrowers who are learning that they can be on the hook for years after losing their homes. Amid a crisis that stripped $6.4 trillion, or 28 percent, from the value of U.S. residential real estate since the 2006 peak, lenders are exercising their rights to pursue unpaid mortgage balances. To get their money, they can seize wages, tap bank accounts and put liens on other assets held by debtors.

“The big dogs get a bailout, and the little man gets no mercy,” said King, 39, referring to the U.S. government’s rescue of banks and other financial institutions.

While there are no statistics on the number of deficiency judgments approved by courts, the Federal Deposit Insurance Corp. tracks the amount banks collect after defaulted loans were written off.

These mortgage recoveries rose 48 percent to a record $1.01 billion in the first nine months of last year compared with the year-earlier period, according to the Washington-based regulator. Recoveries on defaulted home-equity loans almost doubled to $392 million, the FDIC data shows.

The figures don’t include money retrieved by trusts overseeing mortgage-backed securities, such as the one that holds the loan on King’s former home, or efforts by distressed- asset funds and companies that buy bad loans to profit from collection rights. Judgments such as the one levied against King usually tack on court fees, fines and interest.

‘Next Big Crisis’

Deficiency judgments were rare in the 15 years since the last real estate slump, said Ben Hillard, a former investment banker who now is a real estate and corporate attorney at Hillard & Rogers in Largo, Florida.

“The banks have been too underwater with foreclosures to spend much time on deficiency judgments, but that’s beginning to change,” Hillard said in an interview. “This is going to be the next big crisis.”

Almost 4.5 percent of mortgaged U.S. homes were in foreclosure during the third quarter, the highest rate in the 37 years of tracking the data, the Mortgage Bankers Association said Nov. 19. A record one in every 10 mortgages was at least one payment overdue in the same period, the Washington-based trade group reported.

The Obama administration is seeking to modify as many as 4 million loans by 2012 to prevent foreclosures through the Home Affordable Modification Program, which cuts monthly payments to about a third of borrowers’ income. By the end of December, the program was responsible for more than 850,000 modifications, the Treasury Department said in a Jan. 15 report.

20-Year Window

The federal government spent $230 billion in the year ended in September to support homeowners, according to the Congressional Budget Office in Washington. Those efforts didn’t help people who had already walked away from their houses.

In states such as Florida, courts give mortgage holders as long as five years to seek a deficiency judgment and, if granted, up to 20 years to collect. Usually, they have the option of renewing the judgment if it’s not paid off within 20 years.

About a third of U.S. states, including California and Arizona, prohibit collection efforts on primary residences after foreclosure. In some cases, homeowners waive that protection if they refinance. Most states allow collection on unpaid home equity loans.

Depression-Era Protections

The laws in states that protect some borrowers stem from the Great Depression in the 1930s, when a lack of bidders at foreclosure auctions caused deficiencies that, with added fees and interest, sometimes were bigger than the original loan amount, according to a 1934 Virginia Law Review article by Sol Phillips Perlman. Today, many courts measure the shortfall using a property’s market value at the time of foreclosure rather than auction results.

The likeliest candidates for deficiency judgments are so- called rational defaults, said Larry Tolchinsky, a real estate attorney in Hallandale Beach, Florida. In those cases, people who are current on their mortgages decide to walk away from a property because its value has sunk so far below their loan balance they have no hope of recouping the loss.

About 21 percent of American homeowners owe more on their mortgages than their properties are worth, according to Zillow.com, a Seattle-based real estate data firm.

“Walking away from a property comes with a cost, especially for people who otherwise have good credit,” Tolchinsky said in an interview. “The bank is going to pull your credit report, and if you’re current on your other bills they are going to come after you and potentially ruin you.”

Fine Print

It’s not just foreclosures that can trigger debt collections. Short sales also may lead to deficiency judgments years after former homeowners have moved on, according to Hillard, the attorney in Largo. In a short sale, lenders agree to let borrowers sell a home for less than the mortgage balance.

“Banks are being very careful to preserve their rights, either outright in the short sale agreement or by using vague language that leaves that door open,” Hillard said. About 90 percent of people who do a short sale think they are “off the hook.”

That was the case when two of his clients, Brigitte and John Howard, sold their home in New Port Richey, Florida, almost two years ago without using a lawyer to check the bank’s short- sale agreement.

$20,000 Shock

“We got a call out of the blue saying we owed $20,000,” said Brigitte Howard, 45. “It was a shock. There was no mention in the short-sale contract that the bank might come after us for the difference.”

The money King owes to the Soundview Home Loan asset-backed security that holds the mortgage on his former Coral Gables condominium consists of $38,000 for unpaid principal and almost $6,000 in legal fees and interest accrued prior to the ruling. According to the judgment, the security can charge 8 percent interest until he pays off the debt.

King, who said his default was caused by a reduction in his income, now rents near Fort Lauderdale, Florida, where he teaches ballroom dancing.

“I thought the foreclosure was the worst of a bad situation, but it’s not,” said King. “The people who got sucked into the real estate bubble are still paying for it, even after they’ve taken our homes.”

HousingWire – Fraudulent reductions in Home Equity Lines of Credit (HELOCs), revolving credit collateralized by one’s home, may become the focus of a forthcoming series of state-led hearings in Tallahassee, and the man behind the plan is setting big banks in his sights.

Florida State Senator Mike Haridopolos is calling for a round of investigations to explore claims that banks fraudulently or arbitrarily reduced HELOCs to improve their bottom lines, according to a press statement this weekend.

“I have heard the stories of this happening across our state and our country, and the courts are filled with lawsuits,” Haridopolos said. “This needs to be investigated because, if true, it’s outrageous.”

The Republican State Senator is also calling on Congress to conduct national hearings. Specifically, Haridopolos is urging the examination of this alleged practice within banks that received government funds through the Troubled Asset Relief Program (TARP).

“When Congress gave away the taxpayers’ money to the banks, they guaranteed the public that if the banks did not use it to lend money, they would immediately call for hearings and hold the banks accountable,” Haridopolos said.

He added: “Since then, we have seen the President sit down with the leaders of the big banks and refuse to meet with the average Americans who are being hurt by their practices… I can tell you, the banks may control [Washington] DC, but the people control Florida and we’re going to keep it that way.”

Haridopolos is calling for hearings to feature testimony not only from homeowners, but consumer groups and banks, “so that everyone has a chance…to weigh in,” according to the press statement.

Federal regulations allow HELOC suspensions under adverse financial circumstances and in situations where the underlying property experiences a significant decline in value. According to the statement from Haridopolos’ office, homeowners claim banks allegedly use false pretenses in order to freeze their family capital.

Florida is not immune to the substantial peak-to-trough house price declines. And a spokesperson for Haridopolos told HousingWire some borrowers claim banks order no appraisals and make no assessment of actual property value decline before freezing their HELOCs.

Similar claims by an Illinois homeowner recently resulted in a suit against JP Morgan Chase (JPM: 39.21 +0.13%). The suit alleged Chase froze a HELOC without disclosing its valuation methods or explaining to the borrower to what degree the house value fell.

Despite the allegedly fraudulent HELOC freezes and the scarcity of new HELOC lending, consumers in hard-hit areas like Florida are still buying in ways that aren’t measured against the backdrop of local foreclosures and price declines.

Time to get those Banksters.

F.S. 718.116(1)(b)  The liability of a first mortgagee or its successor or assignees who acquire title to a unit by foreclosure or by deed in lieu of foreclosure for the unpaid assessments that became due prior to the mortgagee’s acquisition of title is limited to the lesser of:

1.  The unit’s unpaid common expenses and regular periodic assessments which accrued or came due during the 6 months immediately preceding the acquisition of title and for which payment in full has not been received by the association; or

2.  One percent of the original mortgage debt. The provisions of this paragraph apply only if the first mortgagee joined the association as a defendant in the foreclosure action. Joinder of the association is not required if, on the date the complaint is filed, the association was dissolved or did not maintain an office or agent for service of process at a location which was known to or reasonably discoverable by the mortgagee.

In the state of Florida is it legal for a debt collection agency to sue me for a second mortgage on a second home I had bought in Florida?

The home could not be sold as a short sale and was foreclosed on. Before it foreclosed the bank which held both mortgages sold off the second mortgage to a debt collection agency.

I was unable to pay them and now they have served papers on me and are suing me for the sum of the second mortgage.

I have heard in other states that they cannot do this but am unsure about in Florida.

Any help would be greatly appreciated. Thanks!

Bonnie (more…)

Hi Paul,

Can I give the house back and not lender come after me for judgements issue. House is Florida and no longer live there.

Kim (more…)

Florida Foreclosure Defense Blog – The law firm of Shuster & Saben has obtained the dismissal of a foreclosure lawsuit filed against the firm’s Brevard County client. The Plaintiff / Lender filed suit against our client in an attempt of take their Cocoa, Florida investment property. In the subject action, after the lender drastically raised our client’s interest rate (to well over 8% A.P.R.), our client was unable to continue to afford to make monthly mortgage payments. Our client had financed the property with an A.R.M. (Adjustable Rate Mortgage) that was linked to the LIBOR index, and faced an increase in their interest rate after their initial rate expired. Despite the fact that interest rates declined from 2007 to 2009, the lender still raised the client’s interest rate to a point that it was no longer affordable. Several months after the client stopped making mortgage payments the lender filed a Notice of Lis Pendens and a Complaint for Foreclosure in the Brevard County Circuit Court.

The client consulted with several other Space Coast attorneys before choosing Shuster & Saben to defend the foreclosure action. After Shuster & Saben filed its notice of appearance and voluminous discovery requests the lender decided to dismiss the case and cancel the lis pendens. Counsel for the lender advised that the lender has decided to write off the loan.

To view the actual Florida Foreclosure Dismissed.

You can have any kind of a home you want. You can even get stucco.

Oh, how you can get stucco.

The Cocoanuts (1929)

For any real estate investors in Pinellas County Florida and specifically south Saint Petersburg (also known as St Pete), here’s a wholesale home available immediately for $25,900 cash.  It’s a 2/2 with 1376 square feet and needs zero work.

If you are a cash buyer in Pinellas County Florida, then email me to buy homes at 20 cents on the dollar.  Paul at brokencredit.com

I also wouldn’t mind if this post showed up in Google for St Petersburg Florida short sales, Pinellas County Foreclosures, preforeclosures, wholesale bargain homes in St Pete, hey you get the idea.