Posted: January 13th, 2012 | Author: admin | Filed under: News | No Comments »
New York State is investigating the practice of forced-place insurance. The question is whether banks like Wells Fargo and Citigroup, among others, fraudulently steered distressed homeowners into overpriced insurance policies.
Forced-placed insurance has boomed during the financial crisis as homeowners have struggled to pay their mortgages, and, at the same time, lapsed on their home insurance payments. Banks customarily require that their mortgage-backed homes be insured; a measure that enables a way to collect if their properties are damaged.
As The New York Times article linked above states:
In general, mortgage servicers are allowed to take out insurance policies on homes after a homeowner allows existing coverage to lapse. Though homeowners have little choice and sometimes little notice about the new plans, they often end up shouldering the costs of the insurance through their mortgage payments.
The increased cost is to be expected to some degree because homeowners who missed insurance payments on old policies are risky customers. However, [the financial services agency in New York investigating the matter] views some of the increases as exorbitant. For instance, in one case . . . a homeowner who paid $2,000 a year to State Farm ended up paying $6,000 a year to a new insurer.
Potential wrongdoing may occur when both mortgage servicing and insurance units are within the same company or affiliated in some way. That introduces a potential conflict because companies may have an incentive to place homeowners in policies offered by their affiliates rather than looking for the best rates on the open market.
Along with all the legal battles being fought nationwide over foreclosure abuses, this could be yet another hurdle for our largest banks to overcome. And the problem, once again, is that the financial industry has brought about circumstances that may be holding up economic recovery. In this instance, with home insurance, some homeowners have found it more difficult to refinance their loans after banks tied this compulsory insurance to their debts.
We’ll keep you up to date as this investigation unfolds.
Please be advised that this article does not constitute legal advice nor does it provide any basis to form an attorney-client relationship. Nothing in this article should be copied without the express permission of the author.
Posted: January 13th, 2012 | Author: admin | Filed under: News | No Comments »
The behemoth that is JP Morgan Chase’s collection machine has come to a screeching halt. It appears the bank has suddenly stopped filing lawsuits to collect consumer debts.
Without an explanation by Chase, we don’t know if this move is permanent or if the bank plans to pursue indebtedness some other way.
Some within the industry speculate that the halt in consumer suits is due to the greater scrutiny Chase’s collection strategies have come under lately. Recent troubles in state courts and a whistle-blower’s claim that Chase falsely overstated the balances of thousands of delinquent accounts threaten to expose less than above-board ways in which the bank allegedly went about collecting debt.
Given how much of the foreclosure crisis the several years was exacerbated by rampant documentation irregularities within the industry, would anyone be surprised if banks like Chase have resorted to similar shoddy practices when pursuing consumer debt?
You can read more about the JP Morgan Chase news over at American Banker.
Please be advised that this article does not constitute legal advice nor does it provide any basis to form an attorney-client relationship. Nothing in this article should be copied without the express permission of the author.
Posted: November 4th, 2011 | Author: CharlieHounchell | Filed under: News | Comments Off
http://www.housingwire.com/2011/10/18/buyer-of-invalid-foreclosure-loses-appeal-to-clear-property-title
A man who bought a house that turned out to be an invalid foreclosure cannot sue the previous homeowner over his clouded title because the bank foreclosed before receiving an actual mortgage assignment, the Massachusetts Supreme Judicial Court said Tuesday.
Vincent Valvo, group publisher and Editor-in-Chief for Massachusetts real estate data firm The Warren Group, says the case is a “massive holding” that will have a deep effect on the real estate market.
“Basically, the Supreme Judicial Court took all of these nice and neat housing sales that have happened under the umbrella of a foreclosure action and stuffed them in a blender and pureed them,” Valvo said. “There is no title or very few titles that have passed under a foreclosure action in Massachusetts that are not now under some draconian threat of being made insubstantial.”
The court’s conclusion involves the controversial Bevilacqua v. Rodriguez case. The case [1] pits the rights of Bevilacqua, a third-party who acquired the title in good faith, against the procedural and legal safeguards surrounding the foreclosure process that protects parties from wrongful foreclosures.
The main party to the case, Francis Bevilacqua III, acquired his home by quit-claim deed from U.S. Bank as trustee and holder of the note in October 2006. A quit claim deed allows a property owner to transfer his or her ownership in the property to another party.
But in this case, U.S. Bank didn’t actually have title to the property when it transferred it to Bevilacqua.
U.S. Bank initiated a foreclosure on the home’s previous owner without receiving an official mortgage assignment from the Mortgage Electronic Registration Systems. Without MERS delivering the assignment to U.S. Bank before the foreclosure actions, the defendants claim the bank never had authority to deed the property to Bevilacqua, making him unqualified to try title.
The Massachusetts Supreme Court was asked to determine “whether a person who holds title to property by virtue of a recorded deed, but whose title is clouded by a possible adverse claim due to deficiencies from a prior foreclosure in his chain of title, has standing to try title,” according to briefs filed in the case.
In its final opinion, the Massachusetts Supreme Judicial Court cited precedent from another major case [2], U.S. Bank National Association v. Ibanez. The court wrote: “One of the terms of the power of sale that must be strictly adhered to is the restriction on who is entitled to foreclose.” The court added, “In light of its defective title, the intention of U.S. Bank to transfer the property to Bevilacqua is irrelevant and he cannot have become the owner of the property pursuant to the quitclaim deed.”
The Warren Group’s Valvo said the ruling is significant when looking at the number of foreclosures that have already passed in the state.
“The court just said you might be able to go back and re-foreclose (on the property) and prove title, but you do not have clear title now,” he explained when describing the new homeowner’s dilemma. “The issue for a homeowner is having to prove that a foreclosing entity had the right to foreclosure. But if I am someone who has bought a foreclosure, I now cannot sell my home until I can prove that the foreclosing entity had that right of foreclosure, which might be difficult for me to prove.”
Posted: November 4th, 2011 | Author: CharlieHounchell | Filed under: News | Comments Off
Thousands of rulings on motions to dismiss have been issued by Florida’s trial courts without any clear stance by the appellate courts as to what it takes for a bank to state a cause of action and survive a motion to dismiss.
This may have changed with the recent decision handed down by the Second District Court of Appeal in Feltus v. U.S. Bank National.
The crucial passages of Feltus follows:
On November 18, 2009, U.S. Bank filed another copy of the Note as a supplemental exhibit to its complaint. In contrast to the copy attached to the complaint that contained no endorsements, this copy contained two endorsements …
We view U.S. Bank’s filing of a copy of the note that it later asserted was an original note as a supplemental exhibit to its complaint to reestablish a lost note as an attempt to amend its complaint in violation of Florida Rule of Civil Procedure 1.190(a). U.S. Bank did not seek leave of court or the consent of Feltus to amend its complaint. A pleading filed in violation of Rule 1.190(a) is a nullity, and the controversy should be determined based on the properly filed pleadings. See Warner-Lambert Co. v. Patrick, 428 So. 2d 718 (Fla. 4th DCA 1983).
This language is crucial. An unendorsed note is often attached to the complaint in foreclosure cases. The bank later files a note that contains an endorsement, then attempts to defeat a motion to dismiss by asking the court to consider the subsequently-filed endorsement. What I typically argue at this stage of things is that the court must limit its consideration to the “four corners” of the complaint, viz., the note attached to the original complaint, not the endorsed one filed later. The lender usually counters that its status as holder is predicated on having filed the original note, endorsed in blank.
This position, in my estimation, raises questions about whether the bank had standing in the first place. That is to say, if the bank lacked an endorsement when it filed the suit, it cannot then try to correct this deficiency with the requisite endorsement after the fact. See Progressive Express Ins. Co. v. McGrath Community Chiro., 913 So.2d 1281, 1285 (Fla. 2d DCA 2005) (“the plaintiff’s lack of standing at the inception of the case is not a defect that may be cured by the acquisition of standing after the case is filed.”)
It seems that Feltus builds on the Progressive case. The Second District ruled that this isn’t so much an issue of the bank lacking standing at the case’s inception. The court, according to Feltus, cannot consider the subsequently-filed note without the bank first amending its complaint. For pleading purposes, references to the note later filed with an endorsement are “a nullity.”
You can bet foreclosure defense attorneys will now cite Feltus v. U.S. Bank when arguing motions to dismiss. Without leave of court and without the consent of all defendants, pursuant to Fla.R.Civ.P. 1.190, banks shouldn’t be able to get away with amending their pleadings by subsequently filing a note that contradicts the note attached to their complaints. A bank has failed to state of cause of action when it opposes a motion to dismiss by referencing a note that’s not attached to the complaint. It either has to amend the complaint properly or suffer a dismissal without leave to amend.
Please be advised that this article does not constitute legal advice nor does it provide any basis to form an attorney-client relationship. Nothing in this article should be copied without the express permission of the author.
Posted: September 30th, 2011 | Author: CharlieHounchell | Filed under: News | Comments Off
The St. Petersburg Times weighed in this past week on the issue of non-judicial foreclosures now under debate in Tallahassee. The editorial wonders what effect this tack would have on borrowers’ rights, state coffers, and the integrity of the foreclosure process. We’ve shared some of these very same concerns here on our blog.
If those in support of systemic change are to be believed, at least some foreclosures should be moved out of the courts for the sake of efficiency and economic interest. In order to breathe life into the housing market, they claim, we have to clear up the glut of foreclosures paralyzing the judiciary and Florida real estate. The faster we can process these foreclosures, the quicker we can get these properties off of lenders’ books and back out there for potential buyers.
It’s all about speed, we’re told, and an effort to get the economy going again.
But, as we’ve asked before, at what cost? To borrowers’ rights? To the integrity and operation of our judiciary?
And why aren’t more legislators addressing why the foreclosure process is taking so long in the first place? Perhaps if banks and mortgage servicers hadn’t been so haphazard (the most benign way of putting it) in handling foreclosures, our system would never have been overwhelmed with the scandals of “robo-signing” and the filing of dubious paperwork. And now these same forces want to remove the very judicial oversight that has safeguarded the public against rampant abuse? Is the goal to erode borrowers’ rights further and to encourage the banks to cut even more corners?
The St. Pete Times also addresses how the courts would take a big fiscal hit if more cases were moved out of the system. Though foreclosures currently make up only 8% of the judicial workload, statewide court operations are primarily funded from the filing fees necessary to process these cases. If this money’s eliminated, the state revenue to maintain the judiciary has to come from someplace else. Higher taxes? Even harsher budget cuts? And what effect will those measures have on the economy?
These are some of the tough questions we should be asking to address the reality behind some of the rhetoric in Tallahassee.
The editorial’s a worthwhile read. Click the link above and check it out.
Please be advised that this article does not constitute legal advice nor does it provide any basis to form an attorney-client relationship. Nothing in this article should be copied without the express permission of the author.
Posted: September 27th, 2011 | Author: CharlieHounchell | Filed under: News | Comments Off
The Reform Game
As the debate over courts and the foreclosure process heats up, the argument about jettisoning or limiting the judiciary is already being framed as one of “reform” of “frivolous” use of the legal system. These are loaded terms, though, and without a careful teasing out of the motives of the political players involved, we may just find ourselves having forsaken fundamental rights all in the name of economic and political expediency.
The St. Petersburg Times reported last week that state legislators are now considering a hybrid system to replace the judicial oversight of foreclosures. This model is already used by half the country and entails that some cases are presided over by a judge and others are not.
This proposal, proponents argue, is necessary to address an overwhelmed court system, and, according to economists, help ignite an economic recovery by removing distressed properties off lenders’ books and back into an anemic housing market. Some proponents even go so far as to suggest that a portion of these foreclosures clog dockets due to unnecessary procedural challenges invoked by defense attorneys.
These positions, however, fail to consider how our legal system is the best safeguard against abuse. Absent judicial involvement, foreclosure cases are vulnerable to mishandling, damaging basic property rights and sometimes resulting in forcing folks out of their homes unjustly. Where would we be, for example, if the legal system hadn’t exposed the fraud of “robo-signing” or how certain lenders initiated foreclosure proceedings where they didn’t actually have a right to the property in question?
Think about these things as Tallahassee defers to economists and throws words like “reform” and “recovery” around while your due process rights—and the consequences of ignoring them—are lost to lip service and supposed concerns for “getting the economy going.”
Please be advised that this article does not constitute legal advice nor does it provide any basis to form an attorney-client relationship. Nothing in this article should be copied without the express permission of the author.
Posted: September 22nd, 2011 | Author: CharlieHounchell | Filed under: News | Comments Off
The banner headline of a front-page, above-the-fold article in today’s St. Petersburg Times poses the possibility of removing the courts from the foreclosure process in the state of Florida.
With the nation’s second highest foreclosure rate, and with the seeming intention of addressing the glut of homes awaiting foreclosure, Governor Rick Scott and GOP leaders in Tallahassee are considering legislation that would involve a non-judicial system. Instead of judges presiding over the proceedings, the default process would involve no court intervention whatsoever, subjecting the full handling of these matters to whatever requirements are established by state law.
A homesteader’s right to access the courts? To have one’s dispute regarding property rights fully heard in a court of law? Those principles would be replaced with the more streamlined and inexpensive approach already taken up by such states as Michigan, Arizona, and Nevada.
While adjudication in court costs more in terms of time and money, one can only wonder what the cost would be to our rights should we abandon the due process currently afforded by our legal system.
We’ll keep you informed as this issue winds its way through the halls of politics.
Please be advised that this article does not constitute legal advice nor does it provide any basis to form an attorney-client relationship. Nothing in this article should be copied without the express permission of the author.
Mr. Hounchell has a law degree from The University of Florida College of Law and he is a partner in The Law Offices of Charles A. Hounchell, P.A. � Attorneys & Counselors at Law, in Tampa, Florida. Mr. Hounchell obtained his undergraduate degree from The George Washington University in Washington D.C. and he obtained his MBA in International Management from the American Graduate School of International Management (“Thunderbird”) in Glendale, Arizona..
Mr. Hounchell is a licensed real estate agent with Smith and Associates, Inc. www.smithandassociates.com; www.livecasanova.com. He has lived in many different countries, including Spain, Brazil, Argentina, Mexico and Germany and he speaks Spanish and Portuguese. A significant portion of Mr. Hounchell’s law practice is concentrated on Real Estate Law. He can be reached at 813-251-2701 or charlie@floridapropertylaw.com
Posted: September 21st, 2011 | Author: CharlieHounchell | Filed under: News | Comments Off
http://www.tampabay.com/news/business/realestate/rick-scott-gop-look-at-taking-courts-out-of-florida-foreclosure-process/1192603
Please be advised that this article does not constitute legal advice nor does it provide any basis to form an attorney-client relationship. Nothing in this article should be copied without the express permission of the author.
Mr. Hounchell has a law degree from The University of Florida College of Law and he is a partner in The Law Offices of Charles A. Hounchell, P.A. � Attorneys & Counselors at Law, in Tampa, Florida. Mr. Hounchell obtained his undergraduate degree from The George Washington University in Washington D.C. and he obtained his MBA in International Management from the American Graduate School of International Management (“Thunderbird”) in Glendale, Arizona..
Mr. Hounchell is a licensed real estate agent with Smith and Associates, Inc. www.smithandassociates.com; www.livecasanova.com. He has lived in many different countries, including Spain, Brazil, Argentina, Mexico and Germany and he speaks Spanish and Portuguese. A significant portion of Mr. Hounchell’s law practice is concentrated on Real Estate Law. He can be reached at 813-230-3376 or charlie@floridapropertylaw.com
Posted: September 20th, 2011 | Author: CharlieHounchell | Filed under: News | Comments Off
In the Muck and the Mire
The Wall Street Journal today reports on the entangled state of the foreclose process.
We’ve previously explored how such issues as robo-signing and the dubious status of MERS have adversely affected the system, throwing into question proper ownership of and interest in distressed properties.
Now, with legal, regulatory, and PR fallout brought about by this crisis, it seems banks around the country are handling foreclosures much more cautiously. In states like New York, for instance, there’s greater scrutiny of paperwork submitted by loan servicers when homes are seized. Though enhanced scrutiny is welcome given past abuses, it’s effectively ensnarled the system, leaving New York with the lowest foreclosure-completion rate in the country.
According to the WSJ, with the number of properties entering foreclosure outpacing the total sold or taken back by the banks, the foreclosure machinery is nearly paralyzed. With banks taking back fewer homes, there are fewer homes to sell. While this may bear well economically in the short-term, not flooding the market with distressed properties, it’s taking longer to clear and sell to new buyers the foreclosed homes that are in the market.
Much, if not all, of this is a systemic reaction to the corruption and problems that created the crisis in the first place. How long it will take to clean up and stabilize the market remains uncertain.
Please be advised that this article does not constitute legal advice nor does it provide any basis to form an attorney-client relationship. Nothing in this article should be copied without the express permission of the author.
Mr. Hounchell has a law degree from The University of Florida College of Law and he is a partner in The Law Offices of Charles A. Hounchell, P.A. � Attorneys & Counselors at Law, in Tampa, Florida. Mr. Hounchell obtained his undergraduate degree from The George Washington University in Washington D.C. and he obtained his MBA in International Management from the American Graduate School of International Management (“Thunderbird”) in Glendale, Arizona..
Mr. Hounchell is a licensed real estate agent with Smith and Associates, Inc. www.smithandassociates.com; www.livecasanova.com. He has lived in many different countries, including Spain, Brazil, Argentina, Mexico and Germany and he speaks Spanish and Portuguese. A significant portion of Mr. Hounchell’s law practice is concentrated on Real Estate Law. He can be reached at 813-230-3376 or charlie@floridapropertylaw.com
Posted: June 29th, 2011 | Author: CharlieHounchell | Filed under: News | Comments Off
Troubled homeowners behind on mortgages owned by JP Morgan Chase may qualify for some valuable benefits if they agree to a short sale rather than let the home go to foreclosure. Under this Short Sale Outreach Program, some folks have reportedly received up to $30,000 and been forgiven any deficiency in order to accept a quick sale of their home, a scenario in which the property sells for less than the amount owed. Homeowners are also entitled to $3,000 of government money if they complete short sales through the Home Affordable Foreclosure Alternative (HAFA) program.
A short sale agreement, forgiven debt, plus cash? Sounds too good to be true, right?
Well, according to the St. Petersburg Times, the program is in fact real.
Chase has extended cash offers to distressed homeowners in exchange for an agreement to short sell their home and avoid foreclosure. Lest anyone mistake the bank for Mother Teresa, you can be assured the institution is not acting out of altruism. The math – not to mention the inevitable details of the program – makes it more advantageous for Chase to remove these bad loans off the financial books in this fashion. (As the Sun Sentinel recently reports, Wells Fargo has also offered delinquent homeowners a similar deal.)
Florida was one of the states hardest hit by the housing market collapse with over 300,000 foreclosures in the Sunshine State, alone, the last several years. And with the foreclosure process in this state taking, on average, nearly two years to unfold, Chase has devised a way to incentivize an alternative and, in the mean time, save itself money.
A mortgagee like Chase loses a lot of money if its properties go into foreclosure. If the proceeding in Florida takes almost two years from beginning to end, that’s two years worth of interest lost, association dues owed, and real estate taxes and legal fees that have to be paid, not to mention the deterioration of the property and the overall loss in value. It’s cheaper to pay a delinquent homeowner cash to get out and agree to a short sale than go through the entire foreclosure process.
What’s the catch in all of this? There are several. The program only applies to mortgages owned by Chase, and not merely serviced by it. If the home is sold, the settlement is reported to credit bureaus. And sellers must also pay taxes on the forgiven debt since it’s considered income. Some experts surmise that Chase has only offered in areas where home prices are still less than $300,000 . And it’s too early to tell whether some homeowners agreed to a deal with Chase and were never paid, or if the amount promised upfront was eventually reduced after the home was sold.
Chase has not publically disclosed the qualification process. The bank’s analytical team supposedly specifies which loans qualify, and then Chase initiates the process with homeowners by way of a letter. In other words, it’s not an open application process, and, though the details are scant, it appears as if Chase has offered the program to homeowners with only certain particular kinds of loans.
If you’ve received correspondence from Chase or Wells Fargo about any short sale outreach program, please contact me at 813.251.2701 or charlie@flapropertylaw.com.
Please be advised that this article does not constitute legal advice nor does it provide any basis to form an attorney-client relationship. Nothing in this article should be copied without the express permission of the author.
Mr. Hounchell has a law degree from The University of Florida College of Law and he is a partner in The Law Offices of Charles A. Hounchell, P.A. Attorneys & Counselors at Law, in Tampa, Florida. Mr. Hounchell obtained his undergraduate degree from The George Washington University in Washington D.C. and he obtained his MBA in International Management from the American Graduate School of International Management (“Thunderbird”) in Glendale, Arizona..
Mr. Hounchell is a licensed real estate agent with Smith and Associates, Inc. www.smithandassociates.com; www.livecasanova.com. He has lived in many different countries, including Spain, Brazil, Argentina, Mexico and Germany and he speaks Spanish and Portuguese. A significant portion of Mr. Hounchell’s law practice is concentrated on Real Estate Law. He can be reached at 813-230-3376 or charlie@floridapropertylaw.com
