South Florida Condo Ownership is Different Than Owning a Single Family Home

For those looking into buying a Florida condo, as well as those who own a condominium either as their home or as an investment property, one of the key considerations in this type of real estate ownership is the reality of dealing with an association or board.  Buying, owning, or renting out a single family home often means you make certain decisions yourself: can or will there be a hot tub?; what color will your front door be?;  what kind of pets can your kids have in the house?

Owning a single family home (which is not part of a homeowner’s association) also means that you have the responsibility for all the upkeep and maintenance.  Yearly checks of the air conditioning system?  Your job.  Making sure that there’s not a leak in the wall behind the dishwasher?  Your job.  And if repair is needed, it’s up to you to get that done – and to file a claim with your homeowner’s insurance coverage as needed.

Condo ownership is different, and for many, the difference of sharing common areas and sharing responsibility for things that a single family home owner shoulders all alone is one of the big benefits of owning a Florida condo.  It can be especially nice if you own a condo as a second home or as an investment and not be nearby to check on things – knowing that there is a Board of Association watching over the property can be comforting.

Many see this as being smart, and so they buy a condominium in South Florida because they know they can leave a lot of these chores to the local “authorities.”

Condo Boards, Community Associations:  Powerful Entities Given Rights Under Florida Statutes

As we have posted about earlier, these kinds of properties have specific laws and regulations that govern them.  Boards and Associations can wield lots of power in their arena; when some go bad, owners can feel like they are living in a fiefdom where the Board acts as ruler, issuing edicts and forcing compliance at its whim.  Many, many controversies arise every day between individual owners and governing bodies over owner’s desires to do or not to do some act.

Rogue condo boards and community associations defend themselves against claims of individual owners everyday.  These kinds of cases are so commonplace that alternative dispute resolution has been implemented.  The Florida Legislature has passed special laws to deal with the situation, explaining:

(3) LEGISLATIVE FINDINGS.—

(a) The Legislature finds that unit owners are frequently at a disadvantage when litigating against an association. Specifically, a condominium association, with its statutory assessment authority, is often more able to bear the costs and expenses of litigation than the unit owner who must rely on his or her own financial resources to satisfy the costs of litigation against the association.

(b) The Legislature finds that alternative dispute resolution has been making progress in reducing court dockets and trials and in offering a more efficient, cost-effective option to court litigation. However, the Legislature also finds that alternative dispute resolution should not be used as a mechanism to encourage the filing of frivolous or nuisance suits.

(c) There exists a need to develop a flexible means of alternative dispute resolution that directs disputes to the most efficient means of resolution.

(d) The high cost and significant delay of circuit court litigation faced by unit owners in the state can be alleviated by requiring nonbinding arbitration and mediation in appropriate cases, thereby reducing delay and attorney’s fees while preserving the right of either party to have its case heard by a jury, if applicable, in a court of law.

What does that mean?  An individual owner is unable to immediately file a lawsuit in civil court over his or her challenge to the Board or Association, no matter how meritorious, because certain complaints must be heard before a Mediator or Third Party Arbitrator.

See Florida Statute §718.1255 which discusses alternative dispute resolution, voluntary mediation and mandatory nonbinding arbitration between a condo owner and the board of directors.

Not All Disputes Are Routed to the Conference Table in Mediation or Arbitration: Instances Where An Owner Can Sue

There are key exceptions to the Florida laws that push unhappy condo owners to mediation and arbitration, and one of them involves defining the type of dispute that is involved.  There are certain controversies that are considered so serious that they go directly to a civil lawsuit where a judge will preside over them.

Disputes are defined here by Florida Statute §718.1255(1), which provides that:

“Dispute” does not include any disagreement that primarily involves: title to any unit or common element; the interpretation or enforcement of any warranty; the levy of a fee or assessment, or the collection of an assessment levied against a party; the eviction or other removal of a tenant from a unit; alleged breaches of fiduciary duty by one or more directors; or claims for damages to a unit based upon the alleged failure of the association to maintain the common elements or condominium property.

Bottom line?  Condo owners with the following complaints can file their lawsuit without concern about a preliminary mediation or arbitration:

• real estate title issues to the unit
• real estate title issues to a common element
• issues over a warranty’s coverage (interpretation of the warranty’s language)
• issues over whether or not a warranty covers something
• conflicts over fees or assessments levied or collected against someone
• eviction or removal of a tenant
• breaches of fiduciary duties of the Board or Association Directors
• claims against the Association or Board for failing to do their duty regarding care and maintance of common areas.

Larry Tolchinsky’s Tip:  When you have a title issue, a damage claim because of common area mishaps like a shared air conditioning system causes damage, a pipe servicing several units bursts and causes water damage in your unit, or a sewage line breaks, and the ruling authorities don’t promptly address your needs, then that’s when you can simply file a lawsuit and ask the Court for help.

Own a Florida condo?  Follow our posts under the topic “Condos and Townhomes” here on AboutFloridaLaw.com.

Do you have questions or comments? Then please feel free to Chat with Larry in the comments below, at info@hallandalelaw.com, or (954) 458-8655. If you have a specific or personal situation, please call or email Larry because he can’t answer specific fact questions in general comments.

“I’m happy to take your call.”

In fact, our local area is well-known with foreign buyers: the National Association of Realtors’ Profile of International Home Buyers has confirmed that last year, over 31% of all international real estate sales in Florida happened here, in the Miami area and its surrounding communities.  Over half of these foreign buyers in our area (coming from Canada, Venezuela, Britian, and more) are buying South Florida condominiums.

Condos are home to lots of folks and they are hot properties today.  According to the Miami Association of Realtors, the median sales price for a Miami-Dade condo was up 24.6% from last year (comparing first quarters) and already in May 2013, the sales prices for these condo properties has rise 4.5% over the first quarter of 2013.

Which brings us to the issue of upkeep and maintenance of these properties, particularly water damage.  Whether an owner, a tenant, or a property manager is responsible for monitoring the condition of a Florida condo, one of the biggest concerns from a real estate ownership perspective is avoiding water damage and the expense of property repair due to water damage losses.  This is true not only for condos that are being considered for sale, rent or purchase, but for Florida condos that are permanent and long term homes for their owners.

Types of Water Damage Common in South Florida Condos

Condominiums are known to have particular kinds of water damage issues as a general rule, many of which can impact not just the single unit but neighboring condominiums and the common areas as well.  These include:

• washing machines that leak onto floors that do not have drains in the floor to protect against excess water coming from the washer;
• burst water pipes (those who don’t live in South Florida in the winter may not realize that we can reach freezing temperatures here that can impact plumbing);
• leaky toilets (like a busted fill valve);
• water heaters that leak (again, this is a real concern when floors do not have drains);
• dishwashers that leak (hoses fail, for example);
• refrigerators leaking (usually these aren’t discovered quickly since the kitchen design may hide the sides and back of the fridge); and
• bathtub and showers (old caulk that lets water through, shower pans that fail).

Fighting Insurance Companies Who Fail to Pay Water Damage Claims or Not Paying Enough on a Condo Water Damage Claim

Property insurance policies exist to help condo owners in situations where water damage has harmed their property.  Most people assume that they pay their insurance premiums and if they need to file a claim on their property insurance policy, things should be simple — as simple as it is for the insurance company to take that premium payment every month.

Unfortunately, this is not the case in many instances of South Florida condo owners filing claims for damage, particularly water damage, to their real estate.  It’s true that you can usually call in your claim, that’s easy enough.  However, the folk on the other end of the line aren’t your pals here:  they are representatives of a big company that answers to shareholders and is very interested in its bottom line.

Claims mean money paid out that lessens profit to the insurance company.  Insurance companies work not to help the individual policyholder but to keep the company profitable.  That’s the reality of things, which means that condo owners need to be well prepared to deal with the event of a insurance claim needing to be filed.

Condo owners need to do things like:

• make sure that the policy information that has been reported to the carrier is accurate (if it’s not all accurate, then it may form the basis of a denial);
• make sure that they have kept up with their property so the carrier cannot blame them for the loss;
• be aware of Florida laws, including the availability of public adjusters, who are third party professionals that can come in to evaluate the situation as an independent third eye (instead of relying on the company’s employee to be the adjuster on the claim); and
• be aware of the claims process — how long they have to file a claim, and when claims need to be filed as soon as possible after the damage has occurred.

If insurance claims aren’t properly respected, either because they pay too little or because they are denied outright, then filing a lawsuit against the insurance company may be the best alternative for the condo owner.  Litigation may be necessary in these South Florida situations, especially in instances where weather has resulted in a lot of claims being filed in a short time period.

Condo owners need to be aware of their rights and responsibilities regarding property damage and property insurance claims.  And those considering buying a South Florida condo, or those Miami area condo owners who live in other states or foreign countries, need to know their rights and prepare in advance to avoid a condo insurance claim fight.

Special Note For Our Frequent Readers:  Realty Trac’s latest Foreclosure Market Report has been released for May 2013, and according to their experts, there’s good news and bad news. Good news? Florida new (starting) foreclosures fell 27% from March 2013 to April 2013.

Not so good:  April 2013 and March 2013 both saw Florida with the 2nd highest foreclosure rate in the United States.  Also, foreclosure auctions in Florida (NFS) were up 55% from April 2012 and that means April 2013 is the 4th month in a row with an annual increase in foreclosure auctions scheduled to happen in Florida.

There’s more:  check out the report summary at RealtyTrac.

Do you have questions or comments? Then please feel free to Chat with Larry in the comments below, at info@hallandalelaw.com, or (954) 458-8655. If you have a specific or personal situation, please call or email Larry because he can’t answer specific fact questions in general comments.

“I’m happy to take your call.”

Related:
Florida Condominium Law and the Broken Water Heater

The proposed “foreclosure reform” legislation that failed last year, got revamped, and was proposed again this year to be made into new Florida law has been a big concern for foreclosure defense attorneys and advocates for Florida home owners.

We’ve been monitoring House Bill 87 as it has been making its way through the Florida Legislature (read our prior posts here) and now, sadly, the House of Representatives has approved HB 87 and it is now setting on Governor Rick Scott’s desk, awaiting his signature to become the law of this state.

| Read the final text of HB 87 here. |

This New Foreclosure Reform Law Creates Lots of Problems for Lots of People

As we have been pointing out — along with lots of other people including Florida Senator Darren Soto and the group Jurists Engaged in Title Integrity  – this new legislation doesn’t help as much as it hurts lots of people, in lots of ways.  If Governor Scott does not veto this bill, it will become the law of the State of Florida and it will then be up to Florida home owners courageous enough to take this fight to the appellate courts to try and return justice to the Florida Home Owner.

What injustice is here?  There are many bad things in HB87 from a Florida home owner’s viewpoint, here are some things to consider:

1.  Florida Land Titles Are In a Mess 

For instance, there’s the question of land titles.  With this new law, future buyers of Florida real estate are going to have a big problem on their hands because Florida real estate titles are simply a huge mess.

Insiders know this:  testimony given before the Florida House Subcommittee considering the passage of this very bill by none other than a representative of the Florida Title Insurance Industry explained to the lawmakers that there has been so much fraud in Florida foreclosures that title insurance companies cannot figure out what land title files have fraud tainting them and which are clean.  From his testimony:

“You should not buy a foreclosed property, knowing how much fraud was out there. … We cannot determine what files are infected with fraud, I wish we could, but we cannot, so you should not purchase foreclosed property.”

Banks know that real estate titles in the State of Florida are not trustworthy these days if the property has been touched in any way by a foreclosure.  And that’s a lot of property records, isn’t it, given the record breaking number of foreclosures this state has experienced over the past few years?

By passing HB87, the Florida Legislature has done nothing to help clear up the Florida Title Mess and in fact, has contributed to this problem.  Helping banks to foreclose means that banks and mortgage lenders wrongfully foreclosing on homes get to do so faster.   Then, the future homeowner who purchases that real estate gets an incomplete title to property and a big headache down the road.

2.   HB87 Blocks Victims From Getting Their Homes Back After Wrongful Foreclosures

Another big problem with the passage of HB87:  the home owner who has been wrongfully foreclosed upon — who has lost their family home to a bank who has improperly foreclosed upon that family — cannot get their home back.  The new law has included within it a “finality of foreclosure” provision.

HB 87′s language includes a section that protects banks by stating that if a lender forecloses on a Florida home, and later it’s shown by foreclosure defense arguments in court that the foreclosure was done illegally (fraud, mistake, etc.), then the bank is protected by the new “finality of foreclosure” law which means that the homeowner’s remedies do not include getting that home back.

Here is the provision as it appears in the final version of HB87, the language blocking a borrower the right to get his home back is in bold:

702.036 Finality of mortgage foreclosure judgment.—

162 (1)(a) In any action or proceeding in which a party seeks to set aside, invalidate, or challenge the validity of a final judgment of foreclosure of a mortgage or to establish or reestablish a lien or encumbrance on the property in abrogation of the final judgment of foreclosure of a mortgage, the court shall treat such request solely as a claim for monetary damages and may not grant relief that adversely affects the quality or character of the title to the property, if: [ conditions omitted] …. 

(b) This subsection does not limit the right to pursue any other relief to which a person may be entitled, including, but not limited to, compensatory damages, punitive damages, statutory damages, consequential damages, injunctive relief, or fees and costs, which does not adversely affect the ownership of the title to the property as vested in the unaffiliated purchaser for value.

Once the bank forecloses, wrongfully or not, that home owner cannot get the family home back even if the evidence shows that the bank has foreclosed wrongfully on that property.  Did the bank mix up which condo to foreclose upon?  Too bad, the wronged condo owner doesn’t get their condo back.  Did the bank never own the mortgage, and therefore had no legal right to file a foreclosure lawsuit?  Too bad: the home owner cannot get their home back.

Right now, it’s not clear if Governor Rick Scott will sign this bill into law.  If he does, then the Florida courts will be where justice is found — until then, this bad legislation will be the law of the land here in Florida and lots of Floridians are going to be hurt by this thing.

Do you have questions or comments? Then please feel free to Chat with Larry in the comments below, at info@hallandalelaw.com, or (954) 458-8655. If you have a specific or personal situation, please call or email Larry because he can’t answer specific fact questions in general comments.

“I’m happy to take your call.”

The Making Home Affordable Program (MHA) ® is a critical part of the Obama Administration’s broad strategy to help homeowners avoid foreclosure, stabilize the country’s housing market, and improve the nation’s economy.

What Has Happened to HAMP?

We’ve been monitoring the reality of banks failing to live up to their responsibilities under this federal program as more and more homeowners began filing lawsuits against lenders and suing banks for not accepting Home Loan Modifications under HAMP, specifically for lenders failing to accept a trial plan into a permanent home loan modification.

However, things seem to be getting more and more serious not just in Florida but in the entire United States.  This week, a new report was released by the Special Inspector General for TARP (Troubled Asset Relief Program) to Congress which found that HAMP is failing.  (Read the report here.)  For one thing, the Special Report shows that home loans that were modified under HAMP in the second half of 2009 are defaulting in shocking percentages:  46% of the HAMP modifications in the third quarter of 2009 are now in default.   This, of course, gives lenders an excuse to point the finger at HAMP for being a bad idea.

However, there’s more to this story. Much more.

And that story can be found in lawsuit after lawsuit, claim after claim, filed by individual homeowners all over this country against their banks for failing to do the right thing in a HAMP loan modification.  

All too often, the homeowner has worked with their lender to establish a trial period plan (TPP) – a modification of the original mortgage that the bank agrees is acceptable.  The borrower then makes payments pursuant to that trial plan.  Everything looks hunky dory.

Then, the borrower gets sideswiped by the bank as the lender rejects the mortgage modification as a final deal.  Often, the bank does this without following HAMP’s official guidelines — and sometimes, without the lender apparently even being aware of them.

HAMP TPP Actions Proceed In Federal Court Against Many Mortgage Lenders

Right now, so many borrowers have sued banks for this sort of thing that many of these lawsuits have been collected from all around the country and pulled together in big lawsuits (class actions) pending before a single federal district judge.  Among the banks who are defendants in these HAMP TPP cases are Wells Fargo Bank, Litton Loan Servicing, Citimortgage, and J.P. Morgan Chase Bank. 

However, many of these lawsuits have been filed against Bank of America based on bad HAMP actions by the lender.  Again, each lender is different and the claims against Bank of America do not include claims based upon not respecting HAMP loan modifications by other banks, such as Wells Fargo or OneWest Bank (see our earlier post).    These cases have their own nickname now: they’re known in legal circles as “HAMP TPP Cases.”  Different banks have different  HAMP TPP claims against them.

The Big HAMP TPP Case Against Bank of America

Right now, cases against Bank of America for evildoing in HAMP TPP Plan finalization of loan modifications have been consolidated before Massachusetts Judge Rya Zobel and the borrowers had an early victory against Bank of America as it moved to dismiss everything – some cases were dismissed, but many remained (see Schedule A to the  2011 Amended Complaint for a list of the cases remaining).

Right now, the parties are doing discovery (gathering facts, interviewing witnesses, taking depositions, etc.) and there is nothing set before the court until August 2013.

For details regarding the bad things that borrowers are alleging in federal court has happened to them in HAMP TPP deals with Bank of America, you can read the entire Complaint that has been filed on their behalf in the public record.  There, you will find true horror stories that include American citizens paying monthly mortgage payments under the Trial Period Plan, as well as paying additional monies to the bank, only to find that foreclosure proceedings were still moving forward against them by the Bank’s lawyers.

In other words, in case after case, the Bank winked and took the TPP payments and never halted their foreclosure proceedings.

Fighting For Right in HAMP TPP Situations

Once again, we have to reiterate that this is the Wild Wild West in Florida Real Estate and Florida homeowners and borrowers need to think twice before negotiating with banks or mortgage lenders without having an experienced Florida foreclosure defense lawyer at their side.

Real estate attorneys who deal with HAMP Trial Period Plans, HAMP TPP Claims, and mortgage loan modifications generally usually have lots of knowledge that is very helpful to the individual borrower: not just about Florida law, but also about the individual bank and even about the bank representatives doing the actual deals.  This kind of savvy is great to have on your side at a negotiation table.

There’s lots of shady stuff that has been going on for years now — and will likely continue for the next few years.  HAMP modifications were a good idea, and lenders need to respect borrowers and the intent of this federal program.

Do you have questions or comments? Then please feel free to Chat with Larry in the comments below, at info@hallandalelaw.com, or (954) 458-8655. If you have a specific or personal situation, please call or email Larry because he can’t answer specific fact questions in general comments.

“I’m happy to take your call.”

Meanwhile, for those working with Florida home owners and Florida borrowers in the current South Florida real estate market, it’s not that rosy.  Here’s why:

Proposed Legislation to Help Banks Not Borrowers with Home Foreclosures Moving Forward in Tallahassee

Things are cooking on the Florida Legislature Stovetop and those proposed bills to change current Florida Foreclosure law to let foreclosures happen faster are still bubbling away in their pots.  This isn’t good news for Florida homeowners defending themselves against foreclosure by Florida banks; however, it’s nice to hear for lenders and those concerned about backlogs in the court system.  Consider this:

1.  House Bill (HB87) is moving forward “favorably” through the Committee process. As of yesterday afternoon, it had been added to the Second Reading Calendar and has made its way through the Civil Justice Committee, the Justice Appropriations Committee, and the Judiciary Committee to its current spot before the Appropriations Committee.

2.  Senate Bill (SB 1666) likely is getting favorable consideration as it just got approved in a vote count of 6 yeas to 2 nays before the Florida Senate’s Judiciary Committee.  It’s now before the Appropriations Committee.

Neither of these proposed new laws recognize the time that is needed by foreclosure defenses to mount a proper defense against lender-plaintiffs who all too often have screwy paperwork if not outright fraudulent documentation.  Furthermore, where are the tools to punish wrongdoing in these matters?  Not in these bills.  Not even a hand-slap on banks who have done bad things.

For details on these two pieces of legislation, read our earlier post “Florida Legislature Annual Session Begins Today: Proposed Laws That Impact South Florida Home Owners In a Big Way Are on the Table.”

South Florida Continues to Lead the Nation in Foreclosures – a Growing Inventory of Homes on Bank Books

Out of the entire United States, not only does Florida lead the nation in foreclosure rates in 2013, according to studies performed by those in the know like the economists at RealtyTrac, but South Florida – and in particular, Miami – leads the Sunshine State in the number of homes foreclosed upon by lenders.  We’re Number One, and not in a good way.

• Around ten days ago, the Miami Herald reported on this current economic reality in a story that not only highlighted the RealtyTrac numbers but discounted the impact of the elephant in the room, that big Shadow Inventory of homes setting on bank books right now.
• Meanwhile, there cannot be a foreclosure without the title to that property going somewhere: and as foreclosure numbers make records, that means that Shadow Inventory numbers are breaking records, too.  These lenders are holding lots of property — and that property comes with duties like insurance and taxes and upkeep.
• In fact, the Palm Beach Post reports that there has been an 86% jump in the Miami Shadow Inventory from the first quarter of 2012 to the first quarter of 2013, with the State of Florida overall having an increase almost as big (82%).  That’s a lot of homes.

How will that Shadow Inventory impact the Florida economy?  As we’ve reported earlier, there are experts opining that it’s going to hold Florida’s economic recovery down until 2015 if not later. 

Employment Rates Impact Housing Recovery Says Fannie Mae Ecomonist

The economy is a mishmash of lots of different things working together and the housing market in Florida doesn’t operate independently of other economic conditions.  No news to those of us here, monitoring our personal budgets and planning for our kids’ college and our own retirement, right?

So it’s not news but it’s a good point to remember when Richard Koss, the director of mortgage market analysis at Fannie Mae is quoted from a speech he gave in Texas this week to a conference of bankers (mortgage servicers), that the number of people employed or underemployed directly influences the housing economy of South Florida.

• There needs to be people ready and willing and able to buy homes and to get mortgages.  People need good and steady jobs to do this.  Lenders need proof of the buyer’s ability to repay the mortgage before they can offer the home loan.  Buyers need to have money each month to pay the mortgage and the insurance and the taxes.
• Right now, unemployment numbers are bad for the country.  Reuters is reporting that March 2013 was the worst hiring month out of the past nine months.
• According to the Department of Labor, the national unemployment rate fell to 7.6% in March 2013.  This, reports USA Today, is because almost half a million Americans (496,000) gave up trying to find a job.   Bottom line, in March 2013, the number of working Americans was the lowest percentage in over 30 years (since 1979).

Larry Tolchinsky’s Tip:  South Florida is hurting and will be hurting for the foreseeable future, that’s the reality.  For Florida borrowers considering a short sale, or Florida home owners facing foreclosure, it’s important to understand the battlefield before entering into negotiations with their mortgage lender, or pricing their home for a quick sale to avoid foreclosure by the bank.  It’s tough times and home owners need to be savvy more than ever before when making financial decisions about their real estate.

Do you have questions or comments? Then please feel free to Chat with Larry in the comments below, at info@hallandalelaw.com, or (954) 458-8655. If you have a specific or personal situation, please call or email Larry because he can’t answer specific fact questions in general comments.

“I’m happy to take your call.”

Deficiency judgments?  We’ve written a lot about deficiency judgments in Florida foreclosure lawsuits: to recap, when the foreclosure sale proceeds don’t cover the balance on the home loan, then the amount left due and owing to the bank is called the “deficiency.”  Unless there are specific laws in place, or negotiated agreements between the parties, the bank has a certain number of years to collect that remaining balance on its home loan.

The pursuit of a mortgage deficiency can be a big surprise to Florida and out of state homeowners  who have assumed that once the bank took their home, the horrible event of foreclosure was behind them.  In Florida, the statute of limitations (deadline) for banks to sue for deficiencies is five years.  Which means that borrowers may be waiting 5 years for the other shoe to drop: the bank collection of the deficiency amount left on the mortgage.

And banks are feeling the pressure to go after these balances: last fall, for example, the Federal Housing Finance Agency (FHFA) formally notified Fannie Mae and Freddie Mac that a more aggressive stance on collecting deficiencies on home foreclosures was being required on their home loans.

For more, read the October 2012 FHFA Report:  FHFA’s Oversight of the Enterprises’ Efforts to Recover Losses from Foreclosure Sales.

Once the lender has a judgment from a court confirming that the deficiency amount is due and owing, the bank can pursue all sorts of collection avenues to get paid.  Just like other kinds of judgments, deficiency judgments can give the bank power to grab other assets from its borrower in order to clear the judgment debt.

It’s trouble enough when the borrower and the bank both hail from Florida. However, banks are now becoming more and more interested in collecting deficiency judgments on foreclosures where the real estate owner isn’t someone who lives in the Sunshine State.  More and more, lenders are taking the time and expense to pursue deficiencies against owners of Florida property who live in another state or even another country.

When The Florida Property Owner Doesn’t Live In Florida – But Resides in Another Part of the United States: Out of State Domesticating Judgments

When a Florida bank forecloses on a Florida property under Florida state law, but the borrower resides in another state, the bank has a decision to make: is it worth the time and expense to try and pursue that deficiency in the other state?  More and more, that decision has been “yes.”

It’s allowed under the Full Faith and Credit Clause of the United States Constitution, and the other state will recognize and respect the Florida deficiency judgment as a “sister state judgment.”

Once the lender goes through the necessary steps to get that other state’s respect, called “domesticating the judgment“, then the bank is free to institute collection efforts in that state against its borrower who resides there.

What if the state (say California, for example) has an “anti-deficiency” statute?  That may not protect the borrower who has been foreclosed upon in Florida on a Florida property: it’s a situation with lots of loopholes and the bank may be able to get around “anti-deficiency” laws when domesticated deficiency judgments are involved.

Many courts are ruling on deficiency judgments based upon where the property is located, not where the borrower lives, for what state law applies.  So Florida deficiency judgments that are “domesticated”  can have banks willing and able to cross state lines or national borders to get that deficiency amount collected.

Larry Tolchinsky’s Tip:

We saw the outbreak in deficiency lawsuits a couple of years ago, and along with it there was the legislative response: bills have been offered, for example, to change the limitations deadline to one year – among other things.  If similar legislation passes in Tallahassee this year, then that will be good news for borrowers who are dealing with a deficiency on their home loan and a lender amenable to going after that money.

For those facing a deficiency in Florida. the banks with a deficiency judgment can mess with someone’s life for a long time:  there is the possibility of wages being garnished, etc.  However, these Florida laws only apply to Florida residents.

Whether or not the bank can do the same type of collection efforts in another state or country, even after they have gone to the trouble of domesticating the judgment there, is a complicated matter.  Some states (and countries) may be more bank-friendly than others, and that’s something that foreign borrowers and borrowers from out of state who have purchased Florida real estate need to consider when facing foreclosure on their Florida real estate.

Borrowers facing a deficiency collection effort, either in another state or another country, might be wise to consider hiring a local Florida foreclosure lawyer to help them defend themselves against these often intrusive and stressful collection matters.  Florida foreclosure attorneys may be able to help with defending the deficiency proceeding itself (for example, arguing against domestication or arguing against the validity of the deficiency, etc.) or help by negotiating a deal with the bank, as well as working to stop harassing efforts by debt collectors who are known for their disruptive and sometimes abusive contacts and communications with borrowers at their homes, places of employment, etc.

Do you have questions or comments? Then please feel free to Chat with Larry in the comments below, at info@hallandalelaw.com, or (954) 458-8655. If you have a specific or personal situation, please call or email Larry because he can’t answer specific fact questions in general comments.

“I’m happy to take your call.”

The FHFA January 2013 Refinance Report can be read online or downloaded as a .pdf document.

What Does the FHFA Refinance Report Tell Us?  

First, the Refinance Report gives the numbers for refinanced mortgages in America during one month via FHFA: January 2013.  During that 31-day time period,  almost one-half million home loans were refinanced (470,000) by entities overseen by FHFA.  Out of that number, almost 25% (97,600) were HARP refinances.

Second, the Report gives numbers that apply only to FHFA refinances.  However, since FHFA’s Fannie Mae and Freddie Mac are responsible for the majority of home mortgages in the United States today (FHFA sets their involvement at 65%) , it gives a pretty good indication of how loan modifications and mortgage refinancing is doing right now.

Other information released today in the FHFA Refinance Report: 

• In January 2013, 56% of refinances done in Florida were done through HARP: “… more than double the 21 percent of total refinances nationwide,” according to today’s Report.
• Seriously underwater mortgages were refinanced by HARP: a quarter of the HARP refinances involved mortgages were the homes had a 125% loan-to-value ratio.
• Underwater mortgages as a whole, i.e., any mortgage that exceeded the value of the home by 5% or more, made up almost half of the January 2013 HARP refinances.

Larry Tolchinsky’s Tip:

HARP was introduced by FHFA back in 2009 as a new offering in via the Treasury Department in President Obama’s “Making Home Affordable” program.   It was a creation designed for people who were not finding lenders willing to modify or refinance home loans because the mortgages were underwater or because of problems in getting insurance coverage for these homes with risky loan-to-value ratios.  HARP was designed to charge into situations like the cavalry and save home owners from foreclosure.

Over time, HARP has regrouped and extended its program wider than its first approach.  In October 2011, for example, HARP tossed out its limitations on what underwater mortgages would be considered for refinancing through HARP: before that change, only mortgages that were 125% underwater were eligible.

HARP does help people stay in their homes and that’s a good thing.  Today’s report shows that Florida home owners have been helped quite a bit by this program.

However, there’s more than one way to skin a cat.  The federal government has a number of programs designed to help underwater mortgages get refinancing (a few of them are discussed here).

There’s also the tried and true way of sitting down at a table with a banker and trying to hammer out a new deal.  In the past, loan modifications were unwelcome in many Florida foreclosure negotiations – or the banker paid lip service to the idea and nothing came of it.  Today, borrowers working with foreclosure defense lawyers are finding banks and mortgage lenders much more receptive to the idea of restructuring an underwater mortgage and refinancing is a real alternative for many Florida borrowers.

The numbers today provided in the FHFA Refinance Report bring good news for Florida — and they serve as a reminder to those that aren’t eligible for HARP: you may have a much better chance at getting your Florida home loan refinanced in 2013 than you have had in the past several years.

Do you have questions or comments? Then please feel free to Chat with Larry in the comments below, at info@hallandalelaw.com, or (954) 458-8655. If you have a specific or personal situation, please call or email Larry because he can’t answer specific fact questions in general comments.

“I’m happy to take your call.”