The Reform Game

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.

May It Flee The Court . . .

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

“Rick Scott: The Banks’ Good Governor”

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

In the Muck and the Mire

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

CHASE Away Foreclosure?

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

Learning to Rent Again . . .

The foreclosure crisis has predictably led to a spike in rentals. Thousands of individuals and families around the country, forced out of homes they can no longer afford, have turned to rental properties for housing.

If you’re facing this prospect, you should know how your foreclosure might affect your standing with landlords and apartment companies.

An article from WalletPop.com outlines several tips to finding and securing the apartment or rental home you may want after foreclosure. Should you offer a higher-than-requested deposit? How can a creditworthy co-signer improve your chances of getting a rental? Where can you find important information about the costs and living arrangements of housing that better suit your financial situation? Is submitting your rental application actually time-sensitive?

The answer to these questions and much more can be found in the piece above. Check it out. All is not lost after foreclosure. And the better informed you are about the realities of your situation, the more likely you’ll be able to maximize the opportunities available to you.

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

The Downtown Revival

When the housing boom spread through the local area, newly constructed high-rises, lofts, and urban apartments began to dot the Tampa skyline. Places like Grand Central at Kennedy, the Towers of Channelside, and SkyPoint and Element all offered freshly built structures, modern monuments to luxury and comfort, shiny beacons luring those looking for an upscale urban lifestyle.

Then the housing market collapsed. And hundreds of those brand-new units were left empty and developers struggled to unload them at even the most modest prices. Downtown Tampa, once a potentially vibrant and kinetic area, stood largely vacant.

Until now, that is.

According to a recent article in the St. Petersburg Times, downtown Tampa is currently bustling with new residents. Triggered by an increase in renters and bargain hunters, not to mention a thriving waterfront arts and entertainment scene, those once-empty towers are now almost completely full. In fact, Tampa Downtown Partnership reported in April that 85% of downtown homes were occupied, a rate higher than the state average.

Click on the St. Petersburg Times link above to read more about the rebirth and emergence of Tampa’s downtown area. Amidst all the discouraging economic news, it’s good to see hopeful signs of life and a possible glimpse of things to come.

Some Relief for the Hardest Hit

A new mortgage-assistance program administered last month promises to help numerous Floridians stave off foreclosure. Florida’s Hardest Hit Fund (FHHF)—a product of federal funding to states hardest hit by the real estate market collapse—is expected to assist 40,000 Floridians. Since Florida is one of the states most adversely affected by the foreclosure epidemic, its total allocation for the program now stands at more than $1 billion. With unemployment in Florida remaining at double-digits, and thousands of mortgages in delinquency, the FHHF may be welcome relief for many state residents.

FHHF is designed to aid unemployed homeowners by paying their mortgages for up to 6 months, or helping them get caught up on as much as $6,000 in past due payments. The homeowner must be unemployed or underemployed, and must be no more than 6 months behind on mortgage payments. The program only applies to primary residences (“owner-occupied”). There are several other eligibility requirements, and, if you think you may qualify for the program, you should research and know as much as possible about the applicable restrictions before applying.

For more information, or to apply, visit www.flhardesthithelp.org. The application process is free of charge. The official website not only contains information about how to apply, but also provides a program fact sheet, a detailed explanation of the relevant qualification restrictions, a section devoted to frequently asked questions, and links to resources that are helpful to those experiencing financial hardship.

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

The Debt of Forgiveness

The IRS has traditionally treated personal forgiven debt as if it is income and taxed it accordingly. That is to say, if you lost your house to foreclosure or short sale, and the lender forgave some of your mortgage debt because the house sold for less than what you owed, the IRS would treat the mortgage debt as income and subject it to taxes. This liability ended for many homeowners with the enactment of the Mortgage Debt Relief Act in 2007.

Though that act is likely to be renewed in 2012, and thus some tax relief for distressed homeowners will continue, it’s important to know what exceptions apply and what situations may bring your mortgage debt within the tax purview of the IRS.

A recent article from CNNMoney.com lays out these scenarios. For example, if you took out cash when you refinanced your home, or were given a home-equity line of credit, then legitimately spent the money on home improvements, and subsequently lost the house to foreclosure or short sale, the IRS won’t tax you on the remaining debt waived by your lender. The IRS’ reasoning, according to the article, “is that only money spent on home improvement actually added to your home’s value. And that, presumably, diminished the difference between what you owed on your mortgage and the value of your home when it was foreclosed.”

Now, if you splurged some of that cash on new cars, vacations, or the like, prepare to hear The Tax Man tap his scythe at your door.

The CNNMoney.com piece also discusses the tax implications of losing a vacation home or investment property, as well as other possible ways out from underneath certain tax liability.

If you have questions about the tax ramifications of your short sale or foreclosure, please contact me at 813.251.2701 or e-mail me at 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

Celebrating the Year of Michael Connelly

Photo Courtesy of Jay L. Clendenin, L.A. Times

We thought it’d be refreshing to set aside mortgage and housing matters today to highlight the massive success of bestselling writer and Tampa resident, Michael Connelly.

Connelly is the author of several detective and crime novels, most notably featuring LAPD detective Harry Bosch. With over 42 million copies of his books sold worldwide, Connelly is widely hailed as the modern heir apparent to such giants of the genre as Dashiell Hammett and Raymond Chandler. And in setting his work in Los Angeles, like James Ellroy before him (“Black Dahlia,” “The Big Nowhere,” “L.A. Confidential”), Connelly evokes an unrelentingly gritty and gripping portrait of the city.

The film adaptation of one of Connelly’s most successful books, “The Lincoln Lawyer,” recently hit theaters to wild critical and commercial acclaim ($50 million at the box office thus far).

“The Lincoln Lawyer” was Connelly’s first foray into legal thrillers. Now part of a series of books (“The Brass Verdict” (2008), “The Reversal” (2010) and “The Fifth Witness” (2011)), its central character is criminal defense attorney Mickey Haller, a staunch and oft times morally conflicted defender of the accused who operates out of the backseat of his Lincoln. In what Salon.com called “a bravura, career-reshaping lead performance,” Matthew McConaughey plays Haller and somehow manages to walk the fine line between “charm and sleaze” as the maverick lawyer. McConaughey’s Haller is a spiritual descendant of Paul Newman’s Frank Galvin from “The Verdict” and George Clooney’s character from “Michael Clayton,” world-weary attorneys still animated by a flicker to do the right thing, ever hopeful that redemption is not beyond their grasp.

Rolling Stone film critic Peter Travers gushes in his review that “The Lincoln Lawyer” is a “slam-bang twister of a legal thriller, full of whiplash energy, tasty acting and . . . a decadent, skuzzy sense of Los Angeles as a perfect hell for the beautiful and the damned.”

And perhaps most relevant to our blog readers, Connelly takes on the mortgage foreclosure crisis with Mickey Haller in his newly released and soon-to-be #1 New York Times bestseller “The Fifth Witness”. (Impressively enough, this is Connelly’s sixth novel to debut atop the hardcover New York Times bestseller list.) In the book’s acknowledgements, Connelly graciously thanks our very own Charlie Hounchell for all the information and help he personally provided during the author’s research of the subject matter. In a rave review in last weekend’s New York Times Book Review, the notoriously stingy Marilyn Stasio applauded Connelly for exploring the economic realities of the real estate disaster in a way that makes for a thought-provoking and entertaining read.

So head out to your local movie theater or bookstore, and whether on the page or the screen, sit back and enjoy the work of Michael Connelly. You’ll be glad you did.