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Archive for February, 2012
We’ve been following this bill for a while and it looks like it is going to pass. Have no fear, once it does, Governor Valdemort will be signing it into law. What does this mean for Florida Homeowners? For one thing, don’t blink or you may lose your house! If you are facing foreclosure, make sure that you talk to an attorney sooner rather than later. You can no longer rely on the Plaintiff’s a…ttorneys sitting on their hands. If a process server comes to your door with a Summons and Complaint, don’t procrastinate- call us right away. If you do nothing, you may be left with nothing!! The only ray of hope from this terrible bill is that the banks will only have on year to seek a deficiency judgment against you– small consolation.
Call me crazy, but shouldn’t an entity whose entire business is built on insuring and limiting risk had enough foresight to take out D&O insurance policies to cover the legal costs of defending lawsuits against the officers and directors of the companies? Secondly, and arguably more importantly, if they decided to self insure against risks like these, shouldn’t they have written in an escape clause stating that if a fraud was perpetrated by one of these officers that directly harmed the company, that the company has no duty to defend them? Instead insult is being added to injury and we, the taxpayers, are being “forced” to pay for the defense of the very individuals whose fraudulent activities directly led to the Great Recession. Unbelievable!! Adding Insult to Injury
There has been a lot of talk about this new bil, “The Fair Foreclosure Act” that is making its way through the Florida Legislature. Critics decry it as an assault on Florida Homewoner’s due process rights, supporters point out that it also places more stringent requirements on Foreclosing Lenders. The truth is that there is some good, some bad, and some things that don’t matter. I like the fact that Lenders need to have all of their paperwork in order before they file. The provisions allwoing for expedited foreclosures of abandoned non-residential properties may be useful in freeing up judicial resources, with, and this is a big caveat, PROPER JUDICIAL OVERSIGHT! The provision reducing the amount of time a lender has to seek a deficiency judgment from 5 years to one year will no doubt benefit Florida Homeowners who have been foreclosed on. The provisions affecting Condo and Homeowners Association are redundant as they are already law. Finally, alot of people are making a big deal about the provision that limits a homeowners’ ability to vacate a judgment after a sale of the property to a third party. What a lot of critics don’t realize is that this actually restates current Florida Case law which already protects a “Bona Fide Purchaser for Value”- a legal principle which actually dates back several centuries. What will happen in the end, who knows? What will the effects be if this passes or fails?- That’s anybody’s guess.
So Keith Horowitz downgraded good ol’ BOA’s stock because he felt that “other analysts were too optimistic in predicting profit growth over the next two years.” No huge surprise, but what is amazing is just how myopic the rest of these analysts can be. Let me explain– One of the main reasons for the great recession is the crash of the Real Estate Market, that much is a given. What often goes unrecognized is that 2 of the major contributing factors were in fact caused by over-optimism in the prediction of profits. (1) All of the banks and insurance companies behind CDOs based their analyses on the prediction that Real Estate values would continue to rise at the same meteoric rates they had in 2003-2006. (2) Based on these unrealistic predictions, lenders encouraged mortgage brokers to put borrowers into negatively amortizatizing loans so they could stake a claim in the growing equity in the houses they were using as collateral (they also used their accounting wizardry to add those negatively amortizing balances to their balance sheets and artificially inflate their stock prices- making the executives’ options that much more valuable— but that is a matter for another post). Long story short- Santayana said it best- “Those who fail to learn form history are doomed to repeat it”
Here is some more on the impact of the big foreclosure settlement on Florida. I am sticking with my initial reaction of “Too Little Too Late.” The estimated $1800 (the number seems to keep going down!) to homeowners who lost their homes due to illegal and criminal foreclosure practices is a joke (and not a funny one, at that!) And now they are estimating that underwater homeowners will get a $20,…000 principal write-down. Considering how many of my clients have properties that are underwater by $100,000 or more, this really is a band-aid being applied to a bullet wound. And of course, this deal doesn’t apply to Fannie Mae or Freddie MAc loans–which only account for about 50% of outstanding loans!!! This “Landmark Deal” is really more of a “Landfill Deal”! That being said– we are still going to fight to get our clients get every penny they can. While the settlements are paltry, I know I’d rather the money be in my clients’ pockets then the Bank’s.
Here are some more details about the settlement. From what I have read, Florida will be receiving an estimated $8.5B as part of the settlement. To put that in perspective that is $8,500,000,000.00. Here is what i don’t get, according to the government website, an adminstrator will be contacting homeowners who were wrongly foreclosed on in order to get them their woefully small settlements (see my previous post for more on that). Ummm… how exactly is this administrator going to know where they are?!??! They lost their houses, right? What’s next, free eyeglasses for the blind. Great Job, Pam Bondi- thanks!
Still waiting for a lot of the details to be released, but here is my take so far. (1) a $2,000 payment to a wrongly foreclosed homeowner- essentially they are saying, “Hey, sorry we perjured ourselves so we could take your house a few months earlier, here is a check that should cover one month’s rent in your new place.” (2) States are giving up the ability to pursue Civil Charges againt Lenders-… considering the sheer number of State and Federal violations involved, the settlement to the states is merely a pittance. Individuals will now have to go after banks seperately for each violation, which can be cost prohibitive and time consuming– way to look out for your constituents AG’s! (3) I am lookng to forward to getting more details about the roughly $20B that will be going towards reducing principal, state assistance programs, and refinancing efforts. We will keep on top of the latest developments so we can assist our clients is getting what they are entitled to!
Ladies and Gentlemen, it is time for a history lesson! Take a good look at the history of Roman Senate and you will see that at the time of fall of the Empire, that August Body (pun intended) knew of the massive debt problems it was facing, knew that it’s colonial economic system could no longer sustain itself- and yet they did nothing! It was easier to do nothing as long as the gold was rolling …in from the outer fringes of the Empire, but once that dried up, there was nothing but Chaos left. Fannie and Freddie, as Government Sponsored Entities, acted just like our government does now– identify the problem, acknowledge that there is a problem that calls for tough solutions and do nothng about it!
Knowledge is only power if you use it