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Obama official says banks can restart foreclosures

WASHINGTON – Oct. 21, 2010 – President Barack Obama’s top housing official said Wednesday that lenders are within their rights to resume foreclosures this month despite allegations that they erred in processing documents. But he said the banks could face fines if found to have broken the law.

“They’ve made a business decision,” Shaun Donovan, the secretary of housing and urban development, said in an interview at the White House.

Two big lenders – Bank of America Corp. and Ally Financial Inc.’s GMAC Mortgage unit – are restarting foreclosures after halting them temporarily. They had frozen those cases amid allegations that employees signed but didn’t read foreclosure documents that may have contained errors. The companies say they’re fixing the problems in the documents.

Donovan noted that several federal agencies, including his department and the Federal Trade Commission, have authority to penalize mortgage companies if they’re found to have violated the law.

“We are going to hold them accountable,” he said.

The housing secretary discussed the foreclosure document mess earlier in the day with officials from 11 federal agencies that are reviewing the issue. He said the government is also in contact with 50 state attorneys general who have launched their own inquiry.

Donovan said the government has found no evidence that the system used to handle foreclosures is flawed, even though some banks may not have followed proper procedures.

A federal law enforcement official told the Associated Press on Tuesday that the FBI is trying to determine whether the financial industry broke criminal laws in the mortgage foreclosure crisis.

The law enforcement official said the question is whether some in the industry were acting with criminal intent or were merely overwhelmed after the housing market’s collapse. The official spoke on condition of anonymity because the investigation is just getting under way.

In a related inquiry, Donovan said the Federal Housing Administration has found disparities in how five major lenders have responded to distressed homeowners. He said the FHA reached that conclusion after a four-month review. He declined to name the lenders.

The government has authority to fine lenders that fail to comply with guidelines of the FHA, which guarantees some home loans.

Some lawmakers have called for a national halt to foreclosures. The Obama administration opposes such a move. It says doing so could hurt the housing market by making it harder for buyers of foreclosed homes to complete their transactions.

In an interview earlier this week, Rep. Barney Frank, D-Mass., the chairman of the House Financial Services Committee, said he also didn’t support a nationwide foreclosure freeze.

“It never seemed to me that the great majority of these foreclosures were going to be invalid,” he said.

Frank said, though, that lawmakers should work next year to enact tighter regulations over the industry.

Copyright © 2010 The Associated Press

U.S. issues new rules for appraisers

The Federal Reserve Board introduced new regulations yesterday to protect real estate appraisers from outside pressure and ban them from having a financial interest in properties they assess.

The new rules, required by the Dodd-Frank financial overhaul law, apply to appraisers as well as creditors, mortgage brokers, Realtors, title insurers and other firms that provide settlement services. The document contains 132 pages.

Intended to curtail abuses, such as writing loans based on faulty valuations, the rules take effect on April 1, 2011. Once published in the Federal Register, the public has 60 days to comment on the changes.

To download the complete regulation click here

Foreclosure Process

The foreclosure process will vary in each State depending on whether you are in a Mortgage State or Deed of Trust State. Most mortgage states use the judicial process, while most deed of trust states use the power of sale process. For this purpose we are focusing on Florida, which is a judicial state.

Judicial Foreclosure

The first step of the foreclosure process begins with the non-payment of the mortgage/lien by the property owner. Banks/lien holders vary on the amount of time they will allow to pass before they begin the foreclosure process. As a general rule this period is usually 90 days in default. Once they do, it proceeds as follows:

1. A “Lis Pendens” is filed on behalf of the Plaintiff. A Lis Pendens is a notice of pending litigation. Anyone who acquires an interest in the property is subject to the result of litigation. The Plaintiff is the party filing the Lawsuit. If other parties have a claim against the property, they can join the lawsuit. (See example A).

2. Service of process is initiated on behalf of the Plaintiff. The Plaintiff(s) can either hire an Attorney to represent them or can file pro se.

3. Defendants are the homeowners and anyone else who holds an interest in the property. A Process Server hired by the Plaintiff’s attorney will serve the homeowner at the property. If the Defendants are unable to be served personally, then the Plaintiff must place an ad in a newspaper circulating in the County in which the property is located. This is called constructive notice. They will receive the Complaint, Lis Pendens and a copy of the mortgage instrument.

4. Defendants have 20 days to answer the Complaint. An answer is a response to the Complaint filed by the Defendants, which admits or denies the allegations contained in the Complaint. If the Defendants file an answer, the judge will set a hearing date, at which time the Defendants must defend the foreclosure.

5. Defendants must either send their response by certified mail with return receipt requested to the County Courthouse and the Plaintiff’s attorney or take the response personally to the Courthouse with an extra copy which the Clerk will stamp with a date and time of receipt. The Clerk will keep the original and place it in the Defendants file. The other copy should be faxed to the Plaintiff’s attorney’s office. Defendants should keep any receipts as evidence that the reply was mailed.

6. If no answer is filed within the required time, the Plaintiff may move for a default. This may accelerate the foreclosure process in that the Plaintiff can move for a Summary Final Judgment.

7. At the hearing on a motion for summary final judgment, if the court grants the motion, a summary final judgment is entered and a sale date is set. The summary final judgment indicates the sale date and the judgment amount.

8. Defendants should be encouraged to respond to the Complaint and also attend the Summary Final Judgment hearing. If the Defendants attend the hearing they will be allowed to plead their case to the judge and ask for more time to resolve the foreclosure. They should tell the judge and the Plaintiff’s attorney what they are doing to get the house sold and ask for a minimum of 90 days. In most cases the judge gives 60 days with the Plaintiff’s attorney in agreement. If a homeowner does not show up at the hearing the sale date will be set approximately 30 days from the hearing date.

9. The property is sold for cash to the highest bidder on the sale date at the courthouse auction. If no one bids on the property it goes back to the Plaintiff and now becomes an R.E.O. property or Real Estate Owned by the Plaintiff.

10. The clerk of the court will issue a Certificate of Title to the new owner of the property approximately 10 days following the sale.

After the foreclosure sale the homeowner must vacate the property. Timeframes vary from lender to lender but usually the homeowner should vacate within 10 days of the foreclosure sale.

Judges revisiting foreclosure cases may help owners but clog market

TAMPA, Fla. – Oct. 5, 2010 – On Florida’s west coast, where the housing bust has flooded courts with foreclosure filings, the chief judge of the 6th Judicial Circuit has little sympathy for lenders who have routinely submitted flawed and possibly fraudulent foreclosure cases.

J. Thomas McGrady, whose jurisdiction includes two hard-hit counties with more than 1 million people in the Tampa area, said Monday that foreclosures based on improper paperwork should be tossed out.

Judges “are going to have to vacate that judgment and start over again,” he said.

Across the country, judges facing pressure from homeowners and their attorneys are beginning to reexamine old cases and dismiss pending ones. The trend could lead to overturned evictions, and it could stall foreclosure cases for years and scare away buyers of millions of seized properties clogging the real estate market.

“We’ve never been inundated to this extent with this number of cases alleging fraudulent paperwork,” said Peter D. Blanc, chief judge of the 15th Judicial Circuit Court, in West Palm Beach. “We’re in new territory, and we’re struggling to determine what the proper solution is.”

Judges nationwide have broad latitude in deciding whether to accept new paperwork and whether to charge the lenders with fraud for submitting problematic documents in the first place.

Even before three of the nation’s largest lenders – Bank of America, J.P. Morgan Chase and Ally Financial – announced moratoriums on foreclosures in the 23 states that require a court order to evict a borrower from a home, some judges were beginning to push back against banks with sloppy or fraudulent filings.

The lenders have acknowledged that a handful of employees signing off on hundreds of thousands of files may not have read them, but they have insisted that the problem amounts to a technical issue that can be fixed easily by replacing old documents with new ones. They say that the facts proving that borrowers missed their payments are sound and that the procedural errors might delay foreclosures but won’t change the outcome.

As the situation in Florida shows, it’s unlikely to wind up so simple.

Armies of consumer attorneys and homeowners are seizing on the paperwork issues to try to protect individual homes from foreclosure and bring into question the legitimacy of the millions of foreclosures undertaken since the housing crisis began in 2007.

The recent moratoriums have made life easier for people such as Michael Gaier, a Philadelphia lawyer who has taken on 130 clients hoping to fight their foreclosures.

Before, he said, judges churning through foreclosure cases tended “to roll their eyes, because they’ve heard every story in the book,” he said. But now, “I don’t have to convince them on my own. I don’t have to start from scratch,” he said, because the moratoriums show that the banks “know that something is wrong.”

Gaier and other lawyers say they have been flooded with calls from new clients who had lost hope of keeping their homes but now see an opportunity to stay. In addition, homeowners who had been complaining of flawed or forged paperwork for years feel they are finally getting traction.

“My reaction is, it’s about time. In the past, people thought we were crazy; the judges laughed at us. Now everyone knows there is a serious problem,” said Denise McMillan, 51, who was evicted from her four-bedroom home in Pikesville, Md., in July and has been coordinating online with others fighting foreclosure.

The collective decisions of judges across the country could turn a foreclosure slowdown into a far larger mess if they determine that homes were wrongly seized and resold by lenders. Foreclosed homes accounted for nearly one-fourth of all residential sales in the second quarter, according to a report by RealtyTrac released last week.

That possibility already is driving away potential buyers of bank-owned properties who don’t want to get caught in legal battles between banks and borrowers. At least one company that provides title insurance, Old Republic Title, has refused to work on homes foreclosed by Ally’s GMAC mortgage unit.

Travis John, a broker in central Florida who specializes in distressed sales, said buyers in recent weeks have seen the headlines about problems in the foreclosure process and have shied away.

“If buyers continue to have this fear – if we have even 30 percent less sales – that would be traumatic,” he said. “We’re already in a traumatic market.”

Across Florida, which has the most foreclosure filings of any state, mortgage companies are already submitting formal requests to judges for the withdrawal of documents that they say were “not properly verified.”

Such actions show that the flawed paperwork is “a serious problem,” said veteran circuit court judge Lynn Tepper, who has presided over foreclosure cases in Pasco County, north of Tampa.

“They’ve conceded that the affidavit is flawed,” Tepper said. That means the judgment based on the affidavit must have been problematic as well – and that the decisions should be reversed.

Tepper sent a chill through law firms working for lenders this spring when she threw out a request for a foreclosure and ruled that U.S. Bank perpetrated fraud by submitting backdated documents that purported to show the lender owning the loan at the time of the foreclosure.

The homeowner, Ernest E. Harpster, got his home back despite the fact that he owed $190,000 on the loan. Tepper also ruled that U.S. Bank could not refile the case.

These days, Tepper is plodding slowly through the pending cases, looking closely at signatures and notarizations, making sure the names and numbers look accurate and legitimate.

“You have to be careful,” she said. “It used to be such a pro forma thing; it was a no-brainer. That’s surely not the case now.”

Copyright © 2010 washingtonpost.com

IRS: tax break for homeowners with Chinese drywall

NEW ORLEANS (AP) – Oct. 1, 2010 – Homeowners with homes damaged by tainted Chinese drywall are getting a bit of help from the Internal Revenue Service.

The IRS said Thursday that it will give tax breaks to homeowners who suffered property losses due to bad Chinese drywall installed in their homes between 2001 and 2009. The IRS says repairs to homes and household appliances can be treated as casualty losses. People can file amended tax returns to claim the deduction.

Chinese drywall was installed in thousands of homes across the nation, including many in Louisiana. It has caused problems ranging from a foul odor to corrosion of pipes and wiring.

Reminder: FAR/BAR contract goes offline today

FAR/BAR contract goes offline Friday
ORLANDO, Fla. – Sept. 28, 2010 – A reminder that three of Florida’s widely-used forms — the FAR/BAR Contract for Sale and Purchase (FAR/BAR-8), FAR/BAR As Is Contract for Sale and Purchase (ASIS-2x) and FAR/BAR Comprehensive Rider (FBCR-10) – will be removed from floridarealtors.org and from Florida Realtors’ forms vendors on Friday.

They have been replaced with updated versions developed by Florida Realtors and the Florida Bar. Enhancements to the Florida Realtors/Florida Bar Residential Contract for Sale and Purchase, “As Is” Residential Contract for Sale and Purchase, and Comprehensive Riders to the Residential Contract for Sale and Purchase include: larger print; the addition of blanks for buyers and sellers initials at the bottom of each page, and a limited hold harmless and indemnity clause for brokers and agents. Additionally, there are several new riders sought by Realtors: an appraisal contingency, an agreement to arbitrate disputes and a short sale rider.

Florida Realtors attorneys discourage members from using the old forms after Sept. 30, as the forms will not be updated to reflect changes in the law or practice. However, if a transaction is initiated before Sept. 30 with the old forms, continue using the old forms for counteroffers and addendums unless the buyer and seller agree to use the new forms.

As always, if you have questions, please contact the Florida Realtors Legal Hotline at 407-438-1409.

Now is the BEST time ever to buy homes

Now is the BEST time ever to buy homes

Kitchen Remodeling: Six Steps to a Green Kitchen

While the “green” movement may have slowed down slightly, similar to the economy, it is still alive and well.

More homeowners are opting to stay in their current homes, and many of them are turning to eco-friendly products and contractors for a variety of reasons: some are environmentally conscious while others have allergies or are chemically sensitive.

Whatever the reason for remodeling, almost everyone agrees that lowering their energy consumption and their electricity and water bills is important.

KitchenRemodeling.net offers six ways people can make their homes greener when kitchen remodeling.

1. Choose energy-efficient appliances. When purchasing a new refrigerator, dishwasher or other appliances, choose ones that are certified energy efficient. Use the water and energy-saving settings as often as possible. Plus, some states offer rebates for homeowners who use energy-efficient models.

2. Install energy-efficient lighting. When working on the kitchen remodel design in their new space, homeowners can increase their natural light to cut down on the need for electricity. But some bulbs will be needed. Choose fixtures that are compatible with compact fluorescents (CFLs), which save 75% of the electricity that incandescent bulbs use. These are slightly higher in initial price but last eight times as long and will significantly cut down on energy bills.

3. Purchase green kitchen cupboards and cabinets. There are more eco-friendly kitchen cupboards and cabinets available today than ever before. These are constructed of rapidly renewable resources or recycled materials. People remodeling their kitchen should ask their contractor about wheatboard, bamboo and other green cabinet products. Additionally, they should inquire about water-based adhesives and finishes.

4. Choose green products when kitchen remodeling. For flooring, cork is highly durable, comfortable and an excellent insulator of sound and heat. Cork is also hypoallergenic and environmentally friendly. Concrete is excellent for flooring, countertops and other areas because it does not have harmful fumes, glues or laminates. For countertops and backsplashes, homeowners can choose from a variety of durable and attractive eco-friendly options, such as vertrazzo and recycled glass tiles.

5. Remodel with hypoallergenic materials. These materials are not toxic, like some building materials, and will not lead to harmful indoor air quality. Homeowners should look for low-toxicity finishes and surfaces, and water-based adhesives and finishes without synthetic formaldehyde resins. Paints should have low-VOC or no-VOC (volatile organic compounds).

6. Choose green kitchen remodeling contractors. When a homeowner is getting quotes from contractors, they should inquire about their products and building methods to ensure they are eco-friendly. Increasingly, contractors are becoming more conscious of their materials and methods and will be able to meet a homeowner’s needs.