Fallout from implosion of Stern law firm

The rule is the inverse of the factor applied to atomic weapons....for each time multiple of 7 since an explosion, the fallout is 1/10 as deadly....here, for each 7 weeks things seem to be 10 times as bad as they were before.


We have found that there are hundreds of cases being assigned out of that office and almost none of the law firms taking them on has any clue what's going on, so they are dragging things out even longer. result?


Move Move Move, we are always in a race to the Courthouse steps...

I told ya so...

Those "Green Shoots" will probably die in the chill of Round 3 of the Foreclosure debacle:

From November to February, the number of prime mortgages that were delinquent at least 90 days, were in foreclosure or had deteriorated to the point that the lender took possession of the home increased more than 473,000, exceeding 1.5 million, according to a New York Times analysis of data provided by First American CoreLogic, a real estate research group. Those loans totaled more than $224 billion.

During the same period, subprime mortgages in those three categories increased by fewer than 14,000, reaching 1.65 million. The number of similarly troubled Alt-A loans — those given to people with slightly tainted credit — rose 159,000, to 836,000.

Over all, more than four million loans worth $717 billion were in the three distressed categories in February, a jump of more than 60 percent in dollar terms compared with a year earlier.

The riskiest 25 markets in the US

This article is from Forbes, where I'm sure that the answer to the problem is the flat tax.  Florida has about as many cities as anybody, including Miami, at #2, with 33% non-prime loans...

Click through the article to see the list....

Proposed Texas constitutional amendment would prohibit HOA foreclosures

This has to be be the most stupid idea in the world; let people who pay for their assessments, and on time, suffer for the people who don't pay. The legislator has apparently never met anybody who operates a community association. If this was ever enacted in Florida, you might as well turn out the lights and throw away the keys....

"Free Fallin"

Like the Tom Petty song, real estate prices are in a free fall in Lee County. Again, this shows the need to be absolutely vigilant about staying on top of your receivables.

Lehigh Acres, Ground Zero

Nothing more to say...greed, recklessness, irresponsibility, bad government, a perfect storm, coming soon to all of the Sunshine State....Lehigh Acres

Foreclosures? Want to vomit? Read on!!

Want to know how sick the system is?  Below is just part of one day's analysis of the status of mortgage foreclosures we answered and are monitoring. As you know, we were recently forced to start charging a flat fee of $150 to answer and monitor these cases. I have 2 full time people doing this.  I think we just passed a BILLION Dollars in foreclosure defenses, over 3,200 at about $300k each...

Here is how to read them:

date-initials of my employee-action taken-followup

FC= foreclosure; MSJ= Motion for Summary Judgement' OC= Opposing Counsel.

This is absolutely sickening!  When we call the plaintiffs lawyers, they pull the file and move; if not they only move if their clients scream at them, and because Uncle Sam is bailing everybody out , what do the "lenders" care? They've already raped the investors, and sliced and sliced up the packages of these worthless mortgages.

The lawyers for the plaintiffs are totally under water, and their clients don't really want the properties anyway, what with having to pay back assessments, ongoing assessments, property taxes, maintenance &tc., &tc...... 

These matters are moving at about the speed of molasses, which is why I beat the drum about moving aggressively against delinquent owners, and having clients consider authorization of their own foreclosures even when the first mortgage holder starts foreclosure. This is done on a not to exceed fee of $1500, including costs. We can usually go start to finish in 5-7 months and the associations can then rent out the properties. Remember, no guarantees, but if your association sits on it's hands, you will get death by slicing

I believe it will get worse as the lenders all wait for Uncle sam to see how much they can sucker the taxpayers for in a bailout. Current valuation is about 22 cents on the dollar wait, it gets worse, I think we are half way through, maybe.  Just wait until all of the resets on loans come this year, and all of the foreclosed properties get on the market at 50% of their former "value."

12-06-07-GT-Opened Mtg FC file. XXXXXX's office answered complaint 10-11-07.

docket pulled - nothing since answered filed. Check status 2mos.

02-20-08-GT-Per Gail, OC is awaiting hearing date for MSJ. Check status

2mos.

08-08-08-GW-Pulled docket nothing since April.  Status 2 mo

08-29-08-GW- MSJ filed.  check 1 mo for hearing date

02-02-09-GW- Nothing on docket since 8/08.  Check 2 mos

2-06-07-GT-Opened Mtg FC file. XXXXXXX's office answered complaint 10-11-07.

docket pulled - nothing since answered filed. Check status 2mos.

02-20-08-GT-Per Gail, OC is awaiting hearing date for MSJ. Check status

2mos.

08-08-08-GW-Pulled docket nothing since April.  Status 2 mo

08-29-08-GW- MSJ filed.  check 1 mo for hearing date

02-02-09-GW- Nothing on docket since 8/08.  Check 2 mos

04-09-08 LAP Answered Complaint.  Check status 3 mos.

08-08-08-GW- Pulled docket.  Nothing since April.  Check 2 mos

11-21-08-GW- MSJ filed.  Check 2 mos for hearing date

02-09-09-GW- Check 2 mos for hearing

12-03-07-GT-Answered Mtg FC complaint. Check status 3mos.

03-04-08-GT-MSJ was set for 02-28-08. Check status 2mos.

08-13-08-GW-  Sale date Septemebr 8, 2008.  Check 1 mo for CT

09-09-08-GW- OC filed Motion to cancel sale.  Check 1 mo for resch.

02-09-09-GW-Case reopened 9/08.  Nothing filed since 9/08.  Check 3 mos

03-16-08-GT-Gail answered Mtg FC complaint 03-07-08. Check status 3mos.

08-08-08-GW- Pulled docket.  Service being perfected.  Check 2 mo

02-09-09-GW- MSJ filed 11/08.  Check 1 mo for hearing

03-16-08-GT-Gail answered Mtg FC complaint 02-12-08. Check status 3mos.

05-22-08-GT-MSJ hearing set for 07-03-08. Check status 2mo.

08-08-08-GW-Pulled docket.  Nothing since April.  Check 2 mos

02-09-09-GW- Pulled docket.  MSJ filed 4/08 nothing since.  Emailed atty for

status

03-16-08-GT-Gail answered Mtg FC complaint 03-04-08. Check status 3mos.

04-20-08-GT-Owner filed BK 04-09-08.

08-20-08-GW-OC filed Amended Amts Due and Owing.  Check status 2 mos

08-22-08-GW-BKR discharged July 20, 2008.

02-09-09-GW- Defaults being filed 1/09.  Check 2 mos for MSJ

11-21-07-GT-Answered Mtg FC complaint. Check status 2mos.

01-28-08-GT-Stern's office is perfecting service and entering defaults.

Check status 2mos.

08-08-08-GW- Nothing on docket since December.  Check 2 mos

02-09-09-GW- Cas dismissed 8/14/08.  File closed

11-16-07-GT-File pulled for case status update. Docket shows no movement

since 04-03-07.

11-28-07-GT-Emailed status request to Echevarria.

11-29-07-GT-Per plaintiff's atty, this file is on BK hold. Check status

3mos.

03-04-08-GT-No movement on docket since 04-03-07. File to Gail to call OC.

03-07-08-GT-Per Gail's email from OC, file is still on BK hold. BK is

active. Check status 3mos.

10-24-08-Amending MSJ  Check 3 mos for hearing Check 2 mos

02-05-09-GW- BKR terminated.  Check 2 mos

02-09-09-GW- 10/08-Lenders atty amending MSJ and reschedule sale date.

03-09-08-GT-Gail answered Mtg FC complaint 02-12-08. Check status 3mos.

06-27-08-GW-Sale date 7/23/08.  Check 1 mo for CT. No fax sent per Kathy.

08-04-08-GW-Sale to third part for $99,700.  Check 1 mo for CT

4-18-08 LAP Answered Complaint.  Check status 3 mos.

02-09-09-GW- Nothng on docket since 7/08.  Check 2mos

12-27-07-GT-Answered Mtg FC complaint. Check status 2mos.

03-02-08-GT-OC is preparing defaults. Check status 2mos.

04-09-08-GT-BK filed 03-31-08.

05-22-08-GT-File was administratively closed but NOT dismissed. Check status

2mos.

09-18-08-GW-9/18/08 Hearing cancelled per phone call 9/17 from OC office.

Check status 2 mos

09-30-08-GW-Hearing cancelled.  check 2 mos for reschedule

02-09-09-GW-Nothing on docket since 9/08.  Court has the file as closed.  No

dismissal filed.  Check 2 mos

12-17-07-GT-Answered Mtg FC complaint. Check status 2mos.

03-02-08-GT-OC is preparing for defaults. Check status 2mos.

07-17-08-GW- Check status 2 mo

08-04-08-GW-MSJ hearing for 7/31/08 cancelled.  Check status 2 mos

02-09-09-GW- Hearing cancelled.  Notingo n docket since 7/08.  Check 2 mos

01-07-08-GT-Answered Mtg FC complaint. Check status 2mos.

02-04-08-GT-Owner is in BK.

03-09-08-GT-File is on BK hold. Check status 3mos.

06-15-08-GT-BK was discharged 03-24-08. OC is restarting the Mtg FC action.

Check status 2mos.

06-18-08-GW-MSJ hearing 7/17/08.  Check 1 month after.

09-15-08-GW- Hearing cancelled.  check 2 mos for reset.

11-01-08-GW-MSJ filed Check 2 mos for hearing date

02-09-09-GW-MSJ hearing 4/21/09.  Check 1 mo for sale date

01-21-08-GT-Answered Mtg FC complaint. Check status 3mos.

07-17-08-GW-Service being perfected.  Check 2 mo

02-09-09-GW- Noting on docket since 6/08.  called lender atty they are

preparing the MSJ in about a month  Check 1 mo

09-10-08-GT-Opened FC file. Ran clerk search - clear. Ready for TS.

10-03-08-GT-Have not rec'd TS back from Mike. Check status 2wks.

10-09-08-GT-Updated clerk search - Mtg FC found. File converted to Mtg FC.

Check status 3mos.

10/28/08-GW-Ans Complaint.  Check status 3 mos

03-18-08 LAP Answer Complaint - Check status 3 mos.

08-04-08-GW-MSJ hearing 9/22/08.  Check 1 mo for sale date

10-18-08-GW-MSJ hearing 11/4/08.  Check 2 mos for sale date

11-13-08-GW- Sale date 12/5/08.  Check 1 month for CT

11-18-08-GW- Bankruptcy filed 11/5/08.  Check 3 mos

12-01-08-GW- Foreclosure sale cancelled  Check 2 mos

02-09-09-GW- Nothing on docket since 12/08.  Check 2 mo

Race to the Courthouse Steps-2009 version

The situation is bad in Florida. We are now handling about a BILLION dollars of first mortgage foreclosures. When an owner is delinquent, the board needs to consider moving as fast as possible in the collection and foreclosure process, and try to take title and rent the property before the "lender" finishes the foreclosure. The lender foreclosures are taking anywhere from 9 months to TWO YEARS, as they don't want to pay taxes, assessments, insurance, etc., etc. Watch my video here for more details.

See my other videos and articles on the issues of the day at www.condocollections.com

More Pain to come

I read today that Credit Suisse expects about $350 BILLION in mortgage resets in 2009, the majority of which are option adjustable rate loans. What with depressed values and the end of the "teaser" rates, even with current low interest rates, I wonder how many people will be sending "jingling envelopes" to the loan servicers, knowing that their credit will not support a new loan, or that their LTV rate is negative 35%...batten down the hatches everyone.

Renting/foreclosed properties

It goes without saying that we are in a depression in the multifamily commonly owned property industry in Florida. The price and value of Condo, HOA and other types of property is in the process of reverting to the mean.

Now I am not a fortune teller, as that is contrary to my religion; additionally I have been right for the wrong reasons before and vice versa. All I know is that I saw a half -billion dollars worth of condo projects in Sunny Isles when I was in South Florida for the BCS that has not even been finished yet; they will be finished and sit empty until foreclosed on, and the lender, and then we the people will take the haircut now that all financial losses have been socialized and all profits were, of course, privatized. Prices will continue to tumble for a looooong time, IMHO. Assessments need to be collected more urgently than ever in the midst of this disaster.

What are ongoing associations to do?

Well for one thing, when you amended your documents 3, 4 and 5 years ago to prohibit rentals in the first "x" years of ownership or capped rentals at "x" percent of units, I hope you included a sentence that says "This shall not apply to the association."

I just took over representation of a community in Gibsonton where their lawyer helped them amend LAST JULY and did not place that language in the amendment. Now, I understand as well as anybody why my communities wanted that language; there were so many speculators buying property hat they were in danger of becoming filled with tenants who have little interest in the long term success of the community. However by doing so, the flip side is that in this extremely dangerous market, if the association forecloses and takes title to the property, it will face a political and perhaps a legal problem if it takes title due to a foreclosure and tries to rent pending foreclosure of the first mortgage.

What's the bottom line? No matter what your documents say, the association should aggressively foreclose and take title to units that do not pay. People need to know that they will not hold on to their property for long, and that the association will do everything it can to divest them from title, and rent the unit to recoup some of the lost payments.

That's all I have to say about that....

Feds stop loophole debt strapped consumers use

here we go, homeowners underwater in debt have discovered a way out; find and buy a home in their community that is selling for half the price they paid 3 years ago, move out of their hopelessly overpriced residence and let the lender foreclose on the former abode.  This is part ofthe 'cretive destruction" of capitalism, and one of the only way a "little guy" could game the system to save himself without help from Uncle Sam....Not so fast say the regulators....

Little guys, bend over, big guys, get your hands out....billions for you!!!

September 19, 2008

MORTGAGEE LETTER 2008-25

TO: ALL APPROVED MORTGAGEES

SUBJECT: Converting Existing Homes to Rentals—Underwriting Instructions

Through this Mortgagee Letter, the Federal Housing Administration (FHA) takes steps to immediately respond to an unscrupulous practice arising in the housing mortgage market that poses a risk to FHA, FHA-approved lenders, and consequently to FHA’s ability to help new homeowners.

Recently, FHA and others in the mortgage industry have observed an increasing number of homeowners who have chosen to vacate their existing principal residence and purchase a new residence. This has been occurring as some homeowners, given the rising price of fuel, are relocating to homes nearer their employment, or are taking advantage of other home buying opportunities arising in the marketplace.

Due to FHA’s concern that some homebuyers in these transactions may attempt to provide misleading information regarding the rental income of the property being vacated to qualify for the new mortgage, FHA is instituting underwriting guidance designed to assure that the homebuyer can make payments on the full debt service of both mortgages. Consequently, beginning with case number assignments on or after the date of this Mortgagee Letter and until further notice, the underwriting analysis may not consider any rental income from the property being vacated except under circumstances described in this Mortgagee Letter. The exclusion of rental income from property being vacated is being instituted on a temporary basis while FHA further analyzes this situation to determine whether permanent measures may need to be taken. This will assure that a homeowner either has sufficient income to make both mortgage payments without any rental income or has an equity position not likely to result in defaulting on the mortgage on the property being vacated. In either case, this guidance is directed to preventing the practice known as “buy and bail” where the homebuyer purchases, for example, a more affordable dwelling with the intention to cease making payments on the previous mortgage. Although the property being vacated will not have a mortgage insured by FHA, surrounding properties may and, thus, FHA may be indirectly negatively affected should that property result in a foreclosure.

Exceptions:

Rental income on the property being vacated, reduced by the appropriate vacancy factor as determined by the jurisdictional FHA Homeownership Center (see http://www.hud.gov/offices/hsg/sfh/ref/sfh2-21u.cfm) may be considered in the underwriting analysis under the following circumstances:

• Relocations: The homebuyer is relocating with a new employer, or being transferred by the current employer to an area not within reasonable and locally recognized commuting distance. A properly executed lease agreement (i.e., a lease signed by the homebuyer and the lessee) of at least one year’s duration after the loan is closed is required. FHA recommends that underwriters also obtain evidence of the security deposit and/or evidence the first month’s rent was paid to the homeowner.

• Sufficient Equity in Vacated Property: The homebuyer has a loan-to-value ratio of 75 percent or less, as determined by either a current (no more than six months old) residential appraisal or by comparing the unpaid principal balance to the original sales price of the property. The appraisal, in addition to using forms Fannie Mae1004/Freddie Mac 70, may be an exterior-only appraisal using form Fannie Mae/Freddie Mac 2055, and for condominium units, form Fannie Mae1075/Freddie Mac 466.

The guidance in this Mortgagee Letter applies solely to a principal residence being vacated in favor of another principal residence. This Mortgagee Letter is not applicable to existing rental properties disclosed on the loan application and confirmed by tax returns (Schedule E of form IRS 1040).

It is important to note that if the property being vacated had a mortgage insured by FHA, eligibility for a second FHA insured mortgage can only occur under the exemptions described in handbook HUD-4155.1 REV-5, paragraph 1-2.

If you have any questions regarding this Mortgagee Letter, call 1-800-CALLFHA.

Sincerely,

Brian D. Montgomery

Assistant Secretary for Housing-

Federal Housing Commissioner

Community Association Collections for Dummies

Here is a shortened version of what I prepared for a client, FYI---

When we are asked to file a lien we send it to the debtor Certified mail and regular mail. We send the original to be filed with the clerk of the court the same day. Law requires that we provide 30 days notice to debtor before filing suit.

Usually we get the return receipt back; sometimes there are issues with the debtors address; there is no one answer fits all. We move as fast as we can. We NEVER give less than the 30 day notice.

After we clear up the issue of notice we ask for approval to foreclose. I recommend that he board authorize management to do so as these are critical times in the industry and delay is bad.
After we get authority to foreclose, we filed the complaint with the court, lis pendens and serve the suit on the debtor. We wait until 30 days after service of the suit on the debtor (time for service varies, maybe out of state, avoiding the process server, whatever) before seeking a default from the clerk of the court if they do not answer.

Usually 3/4 of people who have not paid arrange to make payment at this point including all fees and costs, interest, etc.

If they continue to ignore us, we seek summary judgment; that usually takes 10 more days to get filed and a hearing date is set about 30 days later.

Usually 3/4 of the remaining people pay by this time or make arrangements to do so.
At the summary judgment hearing, we ask for sale of the unit on the courthouse steps to satisfy the amounts due. Usually the court sets it 30 days later.

If we go to sale, we bid up to the amount of the judgment; if someone goes higher, the association is paid in full as well as all interest, costs, etc...if not (about 1 in 200) the association takes title to the unit.

If there is a first mortgage it is subject to that mortgage, what most people do not understand is that no payments are required...no taxes, no insurance, only make sure liability insurance in place.

Usually at this point we try to rent it month to month just to recover lost assessments. I hardly ever ask for fees, and rarely ask for costs to be repaid, as by the time of sale I have about $800 in hard money paid out for the benefit of the association. Given the current environment, I am considering to ask to be reimbursed for my out of pocket costs if nothing is realized at the sale...that is done on a case by case basis.