Infographic: Troubled Asset Relief Program (TARP) As of March 2012 Per Congressional Budget Office
Posted By Larry Tolchinsky on May 2, 2013
HAMP Trial Period Plan Lawsuits: Borrowers Sue Banks for Failing to Do the Right Thing in TPP Loan Modification as Lenders Fail To Follow HAMP Requirements
Posted By Larry Tolchinsky on April 30, 2013
Florida homeowners, and borrowers across the country, are no longer considering HAMP (Home Affordable Modification Program) to be the big success that it was touted to be by the Treasury Department when it debuted back in 2009. HAMP, as you may recall, was a part of the MakingHomeAffordable program which describes itself as:
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.”
What is Happening With Foreclosures in South Florida Real Estate Right Now? We’re Still in a Big Mess – Consider These Reports
Posted By Larry Tolchinsky on April 23, 2013
How is the Florida foreclosure market doing right now? Some are reporting optimistic viewpoints – we’re out of the woods, they claim: everything is getting better every day.
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.”
Out of State Homeowners Who Owned Florida Real Estate are Facing Bank Collection Efforts in Their Home State (or Country) Because of a Florida Foreclosure Judgment: Domesticating Judgments
Posted By Larry Tolchinsky on April 16, 2013
For those who live outside of the State of Florida but who own or owned Florida real estate subject to foreclosure, the possibility of that foreclosure’s deficiency judgment being collected in your resident state is real.
Florida Deficiency Judgments Have Five Year Statute of Limitations Deadline
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.”
FHFA Refinance Report Released Today: Over Half of Florida Refinances Done Through HARP in Janaury 2013
Posted By Larry Tolchinsky on April 9, 2013
Today, the Federal Housing Finance Agency (FHFA) released its January 2013 Refinance Report which provides information on loan modifications and refinancing during the first month of this year, not just through the federal HARP option for homeowners (Home Affordable Refinance Program), but through other re-financing alternatives available through Fannie Mae and Freddie Mac, too. The refinancing of underwater mortgages across the country via HARP is discussed in detail, too.
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.”
