Foreclosures and Loan Modifications Up

On January 5, 2012, in Foreclosure, by Robbie L. Vaughn, Esq.

Foreclosures are Increasing

Foreclosures are increasing.

According to several recent news articles and reports,  it appears that foreclosure actions are once again on the rise. Fortunately, we have noticed much of an increase in foreclosure actions being brought.  At any rate, this is still troubling news.

Loan Modifications are up.

At least in our office, we have seen an increase in Loan Modifications. Many of our clients have recently received loan modification offers. Many of the offers are for a HAMP trial modification. However, we have received some permanent in-house modification offers.

Each case varies:

  • Some cases involved lengthy litigation (years).
  • Some cases were resolved in a matter of months.
  • Several of our clients had already filed for chapter 7 bankruptcy
  • Most, if not all, of our clients were previously turned down for a loan modification.

Note: Prior results do not guarantee a similar outcome.

The Law Firm of Vaughn, Weber & Prakope, PLLC routinely represents homeowners facing foreclosure. We examine each homeowner’s specific situation to determine their best course of action. We proudly assist residents of Long Island (Nassau county, Suffolk county) and New York City (Queens, Brooklyn, Bronx, Staten Island, and Manhattan) with their foreclosure matters.

Call (516) 858-2620 to arrange a FREE  consultation with a foreclosure attorney!

 

News: Man Gets Free house

On April 10, 2011, in Foreclosure, Message/News Board, by Robbie L. Vaughn, Esq.

We figured this would start happening sooner or later.

So far this year we have been made aware of three (3) cases where the lenders actually “walked away.” The homeowners appear to have been left with a home without a mortgage on it (a free house).

The following is from Jacksonville.com:

Bank gives man foreclosed house for free

By Roger Bull

Perry Laspina was in the middle of foreclosure with the possibility of losing the house he owned in Jacksonville. Then the mail came one day in late January telling him that the house was his.

Despite the $72,000 mortgage that he barely paid anything on, despite the foreclosure … the house was his.

In the middle of foreclosures gone wild, of a system overloaded by sheer volume, judicial investigations and allegations of corners cut, Laspina ended up with the house.

Despite the fact that he didn’t have an attorney in the foreclosure proceedings, the mortgage holder simply gave up and walked away.

“I’ve never seen anything like this in my life,” he said.

It’s a tale populated with many of the major players in the national foreclosure drama: The law firm of David Stern, the Mortgage Electronic Registration Systems (better known as MERS) and a mortgage packaged with others and sold into a securitized trust.

Here’s how it happened.

Back in 2006, Laspina, a used-car dealer based in South Florida, had some extra money and decided to buy some real estate that he could resell quickly at a profit. It was, after all, the height of the housing boom with prices skyrocketing and mortgage money easily available.

“Since everyone else was making money flipping houses, I figured I would, too,” he said.

He wasn’t familiar with Jacksonville, but his brother owned a house in Fernandina Beach and found the house on Oakwood Street in the Panama Gardens neighborhood of Jacksonville off North Main Street.

It’s an old neighborhood where most of the houses are still well-maintained.

Laspina bought the house for $80,000, putting $8,000 down and taking out an adjustable rate mortgage with EquiFirst for the remaining $72,000 with an interest rate of 9.5 percent.

EquiFirst, based in Charlotte, N.C., was one of the nation’s leading sub-prime lenders in 2006. But it soon fell victim to the housing and mortgage industry collapse and it closed in 2009.

EquiFirst kept few of the mortgages it wrote; most were packaged and sold to securitized trusts which were owned by investors.

Laspina wasn’t worried about the interest rate.

“It didn’t matter,” he said. “I figured I’m going to flip this house within six months, maybe three months.”

He also figured he’d get about $120,000 for it after he did a bit of work on it, mostly tearing up the carpet and stripping the paint that covered the hardwood floors.

“But right after I put it on the market, the crash came,” he said. “I couldn’t sell it, I couldn’t rent it.”

By 2008, the increases on his payments kicked in, going from an initial payment of $605 to $894 and then $1,058 in less than a year. He quit making payments, and in September of that year, a foreclosure notice was filed against him. The plaintiff was the U.S. Bank National Association, which was simply acting as the trustee for an unnamed trust that now owned the mortgage.

The court file says that Laspina lost his foreclosure case in February 2009. A sale date was set, then postponed and then cancelled, all at the plaintiff’s request, later that year.

But the next year, the plaintiff requested that it all be vacated – the suit, the judgment, all of it. In October, Circuit Judge Waddell Wallace signed the order.

In December, officials for MERS, which acted as the mortgage holder, signed and filed the documents saying it “has received full payment and satisfaction … and does hereby cancel and discharge said mortgage.”

Laspina had paid less than $1,000 toward the principal on his $72,000 loan.

That’s what happened. But there are questions about why.

“This is crazy,” attorney David Goldman said as he looked over the files at the Times-Union’s request.

“They won,” he said referring to the mortgage holder. “They’re standing at the goal line, and they just need to sell the house.”
….
“The investor on the loan, the bondholder on the trust, decided to write off the loan balance,” said a Wells Fargo spokesman, “because of the significant decreased value of the property.”

He declined to give more details or further explanation.
….
Roger Bull: (904) 359-4296

Read more at Jacksonville.com

NEWS: Change in Foreclosure Process?

On April 6, 2011, in Foreclosure, by Robbie L. Vaughn, Esq.

The following is from a recent New York Times article:

The nation’s top mortgage servicers are expected to sign legal agreements by the end of this week compelling them to change their foreclosure procedures, regulatory officials said Tuesday.

The servicers, which violated state and local laws and regulations governing foreclosures, are agreeing to improve their methods in numerous ways. They will be required to have more layers of oversight and proper training of their foreclosure staff. The oversight will extend to third party groups, including the law firms that do much of the actual work of eviction.

Under the new rules, every homeowner in default will have a single point of contact with the servicer. The servicers will end their practice of foreclosing while borrowers are pursuing loan modifications that might allow them to stay in their homes.

One of the most significant measures in the consent agreement will require servicers to hire an independent consultant to review foreclosures done over the last two years. If owners were improperly foreclosed on or paid excessive fees, they will be compensated.

Foreclosures Plunge

On December 16, 2010, in Foreclosure, by John A. Weber IV, ESQ.

Robbie L. Vaughn, Esq. is quoted in the following New York Law Journal article written by Andrew Keshner.  Mr. Keshner details how the new Attorney Affirmation requirement has impacted recent foreclosure filings.

As stated in the article, we have seen a substantial decline in calls from homeowners seeking foreclosure defense representation. However, we have had an increase in calls from homeowners wishing to evict tenants.  The evictions seem to be driven by the homeowner’s desire to Short sale their property.  We’re not yet sure if lenders have become more willing to approve short sales, but we do find it interesting that foreclosure actions have declined and short sales seem to be on the rise.
The following article is from Law.com:

Foreclosures Plunge as Lawyers Adjust to New Affirmation Rule

Andrew Keshner

New York Law Journal

December 16, 2010

Statewide filings of new foreclosures plummeted after Chief Judge Jonathan Lippman on Oct. 20 required attorneys for lenders to submit affirmations attesting to the accuracy of their court submissions, state figures show.

There were 797 residential foreclosure filings during Oct. 18-24, the week of the chief judge’s announcement of the requirement, according to the Office of Court Administration. There has been a precipitous decline since then; only 100 filings were recorded during the week of Dec. 6-12.

The drop-off has been particularly stark in counties where lenders have been especially active in seeking foreclosures. For example, filings fell to six from 274 in Suffolk County and to two from 53 in Brooklyn between the week Judge Lippman made his announcement and last week. Only in Queens have filings remained at a relatively high level, falling to 48 from 88 during the same period.

Attorneys and court officials anticipate the decline will be temporary and that foreclosures will start rising again as lenders and their attorneys become familiar with the new requirements and adjust their procedures.

“I assume it’s a blip in the process,” said Paul Lewis, chief of staff to Chief Administrative Judge Ann Pfau. “It’s a breather, it’s not an end to foreclosure in the court system.”

For the moment though, lenders and their attorneys are still struggling to come to grips with a system that requires attorneys to communicate with named representatives of their clients and to assure the courts that the papers they file contain “no false statements of fact or law” (NYLJ, Oct. 21). Violation of the requirement could lead to disciplinary action.

Mr. Lewis said he had expected a slowdown as attorneys studied the affirmation. However, he called the actual statistics “surprising.”

“I knew there’d be a drop off, but not of this magnitude,” he said.

“The pace of foreclosures has slowed considerably as both law firms and their clients work on procedures to comply with the new affirmation requirements,” said Steven J. Baum in an e-mail. Mr. Baum’s Amherst-based law firm represented lenders in more than 20,000 actions statewide last year.

A Long Island attorney who represents lenders but declined to be named for fear of antagonizing court officials, said that she has signed a few affirmations in cases involving smaller banks. But her firm has canceled all sales and is waiting for direction from its larger bank clients on how to proceed.

“They really put a finger in the dam so that nothing’s moving,” she said of the courts action.

The dynamic was highlighted in a decision Monday by Brooklyn Supreme Court Justice Arthur Schack (See Profile) in Citimortgage v. Nunez, 2558-2009. Noting that Citimortgage’s counsel did not have an affirmation because the bank did not have procedures in place to comply with Judge Lippman’s order, Justice Schack dismissed the foreclosure action without prejudice.

“The Court does not work for CITI and cannot wait for CITI, a multi-billion dollar financial behemoth, to get its ‘act’ together,” the judge wrote. He later added, “Continuing the instant action without moving for a judgment of foreclosure and sale is the judicial equivalent of a ‘timeout,’ and granting a ‘timeout’ to plaintiff CITI is a waster of judicial resources.”

‘It Just Stopped’

Paul Riordan is a court referee who oversees the settlement conferences in Monroe County. Before the Oct. 20 announcement, the county was averaging between 100 and 150 residential foreclosure filings a month.

“It just stopped,” he said.

Mr. Riordan said that the few affirmations filed have come from locally owned banks and private deals, not from any national banks. He noted that the lenders’ attorneys he speaks with are resigned to submitting the affirmation but just need to figure out how to do so.

Christopher Palmer of Brooklyn-based Cullen and Dykman said he has signed about 10 affirmations, with other colleagues signing even more.

“It’s a little bit scary, but certainly is serving its purpose” of insuring that court papers are accurate, he said.

But the Long Island attorney said she considered the requirement “preposterous,” observing that in no other area are lawyers required to submit written pledges that clients are being truthful.

“If every criminal lawyer had to swear that their clients were telling the truth, no one would practice criminal law,” she said.

In a November interview, Judge Lippman said the affirmations, which came against a backdrop of publicity about “robosigning” and other negligence in foreclosures, underscored the importance of full and accurate paperwork in proceedings where the stakes for homeowners are so high.

“And, I might say, if the lawyers feel in some way by asking them to do what they should be doing anyway in some way makes them adversarial with their clients or slows down the proceeding, then so be it,” he said.

In Erie County—where Buffalo is located and where there have been only two foreclosure filings since Nov. 8—Supreme Court Justice Timothy J. Walker (See Profile) said he wrote to attorneys in some 220 pending cases on Dec. 9 to caution them that their matters would be dismissed if the required affirmations were not filed within 45 days. Given the financial stakes for the banks and with the attorneys’ reputation on the line, Judge Walker said he anticipates that most will comply.

“Eventually they are going to get things right. They have to,” he said.

Meanwhile, Suffolk Supreme Court Justice Peter H. Mayer (See Profile) issued a number of orders in pending foreclosure actions, such as Citimortgage v. McGee, 25292-2009, saying affirmations must come with “any and all stages of new and pending foreclosure proceedings.”

Mr. Lewis, Judge Pfau’s chief of staff, said he has fielded between 40 and 50 calls from attorneys about the affirmation’s language, application and when it could be submitted.

He said the attorneys’ difficulties have been increased by the fact that many are working with hard-to-reach out-of-state clients.

“I don’t think they have the infrastructure for conferences and affirmations,” he said of the banks.

Mr. Lewis contrasted that situation to that prevailing in personal injury and medical malpractice cases where an insurance adjuster is on standby to authorize any settlement.

“You don’t have that with the banks. Banks have to come up with a system,” he said.

The filings have affected some foreclosure defense attorneys too. Robbie L. Vaughn of Vaughn & Weber in Mineola has noticed at least a 50 percent drop in new foreclosure defense business since late October. Of the approximately 40 to 50 active foreclosure cases the firm is now handling, about five have been started after October.

“It’s good if they’re taking their time to make sure the paperwork is in proper order,” he said, later adding that the slowdown is just temporary. “I think they are going to come back full force,” he said.

@|Andrew Keshner can be contacted at akeshner@alm.com.

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