Thursday, May 9, 2013

HARP Update

Refinances through the government's Home Affordable Refinance Program (HARP) remained strong as mortgage rates stayed near record-low levels, according to the Federal Housing Finance Agency's (FHFA) most recent refinance report. In February, 97,738 Fannie Mae and Freddie Mac loans were refinanced under the program, bringing the total to 2.3 million since HARP's April 2009 inception. Underwater borrowers also continued to represent a large share total HARP refinance volume.  http://www.fhfa.gov/

In Nevada, Arizona, and Florida, the share was even greater with underwater borrowers representing 65 percent or more of HARP volume over the first two months of the year. In California and Georgia, the share of HARP refis for underwater borrowers was 58 percent and 50 percent, respectively.

Among the underwater borrowers, 18 percent opted for shorter-term 15-and 20-year mortgages, which build equity faster than traditional 30-year mortgages.  http://www.dsnews.com/articles/harps-expiration-date-extended-for-another-two-years-2013-04-11




HARP, which was set to expire at the end of this year, will live on for two more years after receiving an extension into December 31, 2015.



Tuesday, May 7, 2013

Acceleration Notice



Florida law required only the bank “substantially comply” with the conditions precedent in paragraph 22,(sometimes paragraph 9) of the mortgage and the letter of acceleration which was sent comported with that standard.  

Verification of Complaint


Florida’s Fifth District Court of Appeal just issued an opinion in U.S. Bank, N.A. v. Wanio-Moore which seems to indicate that anyone can verify a foreclosure complaint consistent with the requirements of Fla.R.Civ.P. 1.110(b).  In fact, that person need not specify his/her position or title with that verification, as a mere signature is sufficient.  In the words of the Fifth District, “the trial court erred in concluding that a foreclosure verification must state must state the signer’s position” and “the rule does not require any information about the signer’s positional authority.” http://www.5dca.org/Opinions/Opin2013/040113/5D12-1746.op.pdf

Florida’s Second District Court of Appeal in Deutsche Bank Nat’l Trust Co. v. Prevratil, where the Second District ruled that Deutsche Bank could satisfy its obligation to verify the foreclosure complaint under Fla.R.Civ.P. 1.110(b) by having its servicer and attorney-in-fact, Select Portfolio Services, sign the verification. http://www.2dca.org/opinions/Opinion_Pages/Opinion_Pages_2013/March/March%2008,%202013/2D12-2030.pdf

Florida courts have long required some type of evidence – certainly something more than the filing of a complaint – to support a conclusion that one is “likely” to prevail.  See City of Jacksonville v. Naegele Outdoor Advertising Co., 634 So. 2d 750 (Fla. 1st DCA 1994).

What about when the Bank wrongly forecloses?


So you got a Summary Judgment in favor of the Homeowner that the Bank should not have foreclosed- now what?

In the bank’s view, the homeowner can’t resume making normal, monthly mortgage payments – not without paying all of the late charges, attorneys’ fees, and default interest since the alleged default, not to mention the monthly payments that accrued since the last payment was made.

The homeowner’s view, doing that would be ridiculous.  Why should a homeowner who was wrongly declared in default have to pay default interest, late charges, and attorneys’ fees where those charges would have been unnecessary if the bank hadn’t wrongly declared the default

Judge William Levens of Hillsborough County 's  Final Judgment not only denied a foreclosure, but it required the bank to reinstate the mortgage as of the date that payments stopped being accepted.  All default interest, late charges, attorneys’ fees – POOF, GONE.  The homeowner could resume making monthly, mortgage payments today as if the mortgage were never in default. http://pubrec3.hillsclerk.com/oncore/showdetails.aspx?id=16972127&rn=1&pi=0&ref=search


The Second District makes this ruling, it is binding law for every circuit judge in Florida and affirmed Judge Levens position of putting the parties back in the financial positions they would have been in had the foreclosure not occurred. The appellate court affirmed the judge’s ruling that the mortgage should be reinstated retroactive to the date that the bank wrongly stopped accepting monthly mortgage payments.


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Motion to Dismiss


As long as a motion to dismiss is pending, the homeowner need not file an Answer, and without an Answer in place, the case isn’t “at issue” under Fla.R.Civ.P. 1.440 and can’t be set for trial.  Hence, a motion to dismiss prevents a trial from being set.

On April 22, 2013, Florida’s First District Court of Appeal issued a written opinion in Wells Fargo Bank, N.A. v. Bokatka, Case No. 1D11-3356 (Fla. 1st DCA 2013).  The lower court dismissed the foreclosure suit with prejudice and the First District reversed that ruling.  

The Court stated: In this case, we do not fault the trial judge for dismissing the bank’s initial complaint, which facially created a contradiction between who the bank alleged was the owner of the note (the bank) and whom the attached note and mortgage identified as the owner (Option One). The parties’ attempts to interject or examine materials outside the pleadings, dismissal without prejudice was appropriate simply to allow the bank an opportunity to amend its initial complaint to address this discrepancy and to fortify its allegations and attachments.

Even given this I do not favor Motion to Dismiss unless the plaintiff's error is egregious as they tend to angery the Court.

Motion to Dismiss



As long as the motion to dismiss is pending, the homeowner need not file an Answer, and without an Answer in place, the case isn’t “at issue” under Fla.R.Civ.P. 1.440 and can’t be set for trial.  Hence, a motion to dismiss prevents a trial from being set.

On April 22, 2013, Florida’s First District Court of Appeal issued a written opinion in Wells Fargo Bank, N.A. v. Bokatka, Case No. 1D11-3356 (Fla. 1st DCA 2013).  The lower court dismissed the foreclosure suit with prejudice and the First District reversed that ruling.  

The Court stated: In this case, we do not fault the trial judge for dismissing the bank’s initial complaint, which facially created a contradiction between who the bank alleged was the owner of the note (the bank) and whom the attached note and mortgage identified as the owner (Option One). The parties’ attempts to interject or examine materials outside the pleadings, dismissal without prejudice was appropriate simply to allow the bank an opportunity to amend its initial complaint to address this discrepancy and to fortify its allegations and attachments.

Bank Induced Default-Defense


Any homeowner who was duped to stop making payments under the auspices of a loan modification (only to ultimately realize the modification never came). See La Boutique of Beauty Academy, Inc. v. Meloy, 436 So. 2d 396 (Fla. 2d DCA 1983) (“because the mortgagee, by its own conduct, led appellees to believe acceleration would not occur following a late payment … we affirm the order granting summary judgment for the mortgagors”); Dale v. Jennings, 107 So. 175 (Fla. 1926); Kerber v. Chadan, Inc., 364 So. 2d 1264 (Fla. 4th DCA 1978). When a bank leads a homeowner to believe acceleration/foreclosure won’t occur after a default in payments – as it does when it tells a homeowner to default in order to get a loan modification – then it should not be able to foreclose.  In Meloy, the Fourth District affirmed a summary judgment for the homeowners where the bank led the homeowners to believe a foreclosure would not occur after the default. 

Florida HB 87


This legislation changes the landscape of foreclosure defense in some significant ways.

1.  Finality of Judgment:  Once a final judgment is entered in a mortgage foreclosure case, the property is sold to a third-party, and the appeal time has run, the mortgagor is precluded from getting title to the property back, even if the foreclosure was wrongful.  Instead of being able to ask for the judgment to be vacated under Fla.R.Civ.P. 1.540 up to a year after the judgment was entered – or, in some circumstances, many years post-judgment - the homeowner’s remedy is now limited to claims for money damages.
For obvious reasons, the title insurance industry was the driving force behind this aspect of the bill.

2.  Order to Show Cause:  Expedited Foreclosure:  Any lienholder (to include condo associations and homeowners’ associations) can ask the Court to issue an Order to show cause, forcing the homeowner to come to court and convince the Court not to enter an expedited foreclosure judgment.  If the homeowner doesn’t file the appropriate paperwork/defenses, a foreclosure judgment is entered at that hearing.  This sounds bad, but it’s similar to the existing version of Fla. Stat. 702.10, except it now enables any lienholder (as opposed to just the bank) to request the show cause hearing.

The condo and homeowners’ associations were the driving force behind this aspect of the bill.  They believe this will give them leverage to accelerate the mortgage foreclosure lawsuit when the bank is slow to prosecute the case. If you’re current on your association dues, the association probably won’t feel a reason to make this request.  If you’re behind on those payments, however, you run the risk that the association will cause that hearing to be set.  If you’re paying your dues and taking care of the house, they probably don’t care if the house is in foreclosure.  If you’re not paying your dues, however, then the association likely prefers that you get foreclosed so a new owner – who pays his dues – will get put in the house.
Don’t let a rather nominal association payment cause you problems on your mortgage foreclosure case.  Pay those dues!


3.  Order to Show Cause:  Monthly Mortgage Payments:  If a residential property is not owner-occupied, the plaintiff can ask the court to require the mortgagor to make normal monthly mortgage payments to the plaintiff during the foreclosure case.  If those payments are not made, then the mortgagor is removed from possession of the property even before the case is over.  If this happens, the homeowner can still defend the lawsuit, but will be removed from possession before the case is over. Similar to requesting rents be deposited into the Court with a  twist.

4.  Statute of Limitations:  On claims for deficiency, reduced to one year from five.

5.  Pleading requirements:  The new bill imposed a few new pleading requirements for plaintiffs.
(a)  The foreclosure plaintiff must plead it is the “holder” or its specific factual basis to foreclose in its Complaint.  This codifies what defense attorneys have been arguing in motions to dismiss for many months – it’s not enough to say you’re entitled to foreclose, you have to plead ultimate facts.
(b) If the plaintiff is suing on behalf of another entity, it must identify the document which sets forth that authority.
(c)  The plaintiff must file a certification under oath, upon filing suit, that it possesses the original Note.  If the note is lost, it must file an affidavit detailing the chain of assignments/transfers and must attach documents showing how ownership was acquired.





S

Monday, May 6, 2013

Stone V BankUnited

2013 Fla. App. Lexis 7207
May 3, 2013
2nd DCA
Case 2D12-980

Standing

1. Date of allonge
2. evidence of transfer of equitable interest
3. assignment from payee
4 receivership agreement

Hann v. Educational Credit Management Corp.


 Creditors cannot ignore claim objections, even when the debt is a nondischargeable student loan.  Debtors objecting to a claim on the merits should be prepared to put on a prima facia case in support of the objection - even if the creditor does not respond. The prevailing party preparing an order, especially ones involving the treatment of a claim, should draft the order with such specificity that its effect cannot be challenged even after completion of the bankruptcy case.  Final orders of the bankruptcy court cannot be ignored with impunity

Loan Modification Update


New Modification Program

The Federal Housing Finance Agency will require mortgage servicers to offer a streamlined modification program to borrowers with loans owned or guaranteed by Fannie Mae and Freddie Mac, starting in July. The offers will be sent to homeowners who are at least 90 days behind on their loans but no more than two years behind. To qualify, borrowers must owe at least 80 percent of the home's value.
The modification reduces the loan's interest rate and extends the loan term to 40 years.
Minimal paperwork:  Borrowers won't be required to submit any financial documentation to the lender to get approval. The loan modification becomes permanent after three payments are made during the three-month trial period.


Ginnie Mae Loans

Your just screwed- no mod for you!



Borrowers seeking low-payment mortgages will be charged for mortgage insurance for the life of their loans if they don't get their Federal Housing Administration mortgages by June 2.

The FHA currently requires borrowers to pay for mortgage insurance on FHA loans until the balance reaches 78 percent of the original value of the home.
Pay forever:  Once the change goes into effect, all new FHA loans with less than a 10 percent down payment will carry mortgage insurance until the loan is refinanced or paid off. Loans with a 10 percent down payment or greater will have to pay for mortgage insurance for at least 11 years.
For borrowers who plan to stay in their homes for less than 10 years, the new rules won't make that much of a difference, says Cameron Findlay, chief economist at Discover Home Loans. That's because normally, it takes borrowers about 10 years to reach the required loan level for the insurance to cancel anyway.

Mortgage Rates

The Mortgage Bankers Association estimates the 30-year fixed rate will reach 3.9 percent by the end of the first quarter this year. That's not as good as the superlow rates that borrowers got in December 2012, when the 30-year fixed hit a record low of 3.5 percent in Bankrate's weekly survey




Florida Faster Foreclosures

http://www.miamiherald.com/2013/05/03/3378402/mortgage-foreclosures-bill-headed.html?utm_source=May+6+Email&utm_campaign=5%2F6%2F13&utm_medium=email


Florida lawmakers sent Gov. Rick Scott a bill Friday that is aimed at speeding up the residential mortgage foreclosure process in a state where the real estate market went into a tailspin during the national housing crisis. (HB 87)


The bill cleared the Senate on a 26-13 vote on the final day of the Legislature's 60-day session. It passed the House recently 87-26.


One key provision would reduce from five years to one year the amount of time for banks to go after foreclosed homeowners on deficiency judgments. Deficiencies are the difference between the money obtained from selling a foreclosed home and what the original homeowner still owes on it.


Homeowners could have limited time to show "a genuine issue of material fact or law" to avoid foreclosures.







Foreclosure Settlement Checks


The compensation payment checks, which range from $300 up to $125,000, are part of the Independent Foreclosure Review Payment Agreement announced in January between federal regulators and 13 mortgage servicing companies, which were subject to enforcement actions for “deficient practices in mortgage loan servicing and foreclosure processing.”  Deficient practices have included errors and misrepresentations and the “robo-signing” of documents.

The regulators are the U.S. Treasury’s Office of the Comptroller of the Currency (OCC) and the Board of Governors of the Federal Reserve System.

The recipients of the checks are mortgage loan borrowers whose homes were in any stage of a foreclosure process during 2009 or 2010, and whose mortgage servicers were among the 13 companies, or their subsidiaries or affiliates.  Compensation payment checks, which began going out April 12, have so far been sent to 3.7 million homeowners. In all, 4.2 million eligible mortgage loan borrowers will receive them.
The 13 servicers are: Aurora, Bank of America, Citibank, Goldman Sachs, HSBC, JPMorgan Chase, MetLife Bank, Morgan Stanley, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo.

According to the OCC’s online FAQ about the agreement, the servicers agreed “to provide more than $9.3 billion in cash payments and other assistance to help borrowers. The sum includes $3.6 billion in direct cash payments to eligible borrowers and $5.7 billion in other foreclosure prevention assistance, such as loan modifications and forgiveness of deficiency judgments.”

By comparison, the five largest banks alone – Wells Fargo, Citigroup, Goldman Sachs, JPMorganChase, Bank of America – earned $60 billion in total profits last year.

The largest payouts – $125,000 – are going to 1,082 members of the military wrongly foreclosed upon, and to just 53 homeowners across the country foreclosed upon even though they never missed a mortgage payment.  But most of the recipients – almost 2 million homeowners – will get the smallest payments of $300 to $600.
http://www.occ.gov/topics/consumer-protection/foreclosure-prevention/financial-remediation-framework.pdf


“In determining the payment amounts,” reads a recent OCC press release, “borrowers were categorized according to the stage of their foreclosure process and the type of possible servicer error.  Regulators then determined amounts for each category, using the financial remediation matrix published in June 2012 as a guide, incorporating input from various consumer groups.”)


So far federal regulators have refused to release information – about what the consultants’ reviews had found about mortgage servicers’ “deficient” practices in mortgage loan servicing and foreclosure processing – to the public, or even to Congress -- claiming the servicers’ documents are "trade secrets."




Wells Fargo Slammed $3,1712,154 for Misapplying Payments in Chapter 13


Judge Elizabeth W. Magner’s  imposition of punitive damages  of $3,1712,154 against Wells Fargo Bank was recently affirmed by the district court in Jones v. Wells Fargo Home Mortgage Inc. 2013 WL 1155248 (E.D. La. 1/19/13).

The district court held that the bankruptcy court’s ruling was substantially supported by the record.  Wells Fargo had initially agreed to a systematic audit of its accounting of home loan payments after misapplying Chapter 13 payments against undisclosed post-petition fees and costs.

In awarding punitive damages, the bankruptcy court said: “After considering the compensatory damages of $24,441.65 awarded in this case, along with the litigation costs of $292,673.84; awards against Wells Fargo in other cases for the same behavior which did not deter its conduct; and the previous judgments in this case none of which deterred its actions; the Court finds that a punitive damage award of $3,171,154.00 is warranted to deter Wells Fargo from similar conduct in the future. This Court hopes that the relief granted will finally motivate Wells Fargo to rectify its practices and comply with the terms of court order, plans and the automatic stay.”

The district court agreed and stated, “Wells Fargo was on notice that its actions were impermissible and could incur significant legal penalties and assessing punitive damages at ten times the amount of compensatory damages is within the constitutional limits.”


michaela whiteProfessor of Law, Michaela White is the source of information.