The Law Planet Blog

Florida Foreclosures and Mortgage Modification by the Numbers

Wed, 04 Aug 2010 03:05:55 -0800

According to the Government Accountability Office, nearly 400,000 households have avoided foreclosure with government programs, as of July 2010. Approximately $248 million of the $50 billion in TARP funds was used to help millions of homeowners with mortgage payment reductions.

In the month of June, the number of permanent modifications increased nearly 15%, bring the monthly total to over 50,000. The Making Home Affordable Program (HAMP) is assisting homeowners and providing hope. The trial modification programs are also beginning to work in the homeowner’s favor. Lenders offered nearly 45% of canceled trial modification participants an alternative modification. Less than 2% of the homeowners in trial modifications went to foreclosure sale.

When seeking loan modification assistance, homeowners need documentation such as pay stubs – last 30 days, Bank Statements – 6 months, Hardship Letter, 2 years of Tax Returns, and proof of residency. Lenders often make it difficult for homeowners in this process, therefore, the use of a loss mitigation professional can be helpful in finding an appropriate workout solution, such loan modification, deed in lieu, or extension of time. Homeowners should seek the assistance of qualified professionals to protect against being a victim of fraud.

The recent numbers from Realty Trac, a research firm based in Irvine, California, show that 75 percent of the top metro areas around the country increased foreclosure activity in the first half of 2010. Florida, California, Nevada, and Arizona accounted for all of the top 20 metro foreclosure areas with a population of 200,000 or more. The state of Florida ranked number one in the country with having the most top 20 metro areas on the list. South Florida accounted for nearly 6 percent of the foreclosures filed nationally with 94,466 foreclosures filed in the first half of the year. South Florida eclipsed larger markets such as Los Angeles, Chicago and New York, and outpaced foreclosure hotbeds Phoenix, Las Vegas and Detroit.

The Obama Administration approved state plans for use of $1.5 Billion in “Hardest Hit Fund” foreclosure prevention funding. Florida, California, Arizona, Nevada and Michigan were the first states to receive the first round funding under programs to support local initiatives to assist struggling homeowners in a mortgage crisis. The state of Florida will receive $418 million in funds to offer mortgage payment assistance to the unemployed and under-employed. The state will also offer principal reduction or second lien extinguishment, if necessary to achieve a mortgage modification for the homeowner.

Late last year, the Florida Supreme Court ordered courts to implement residential mortgage foreclosure mediation programs to help deal with the state’s foreclosure crisis and help homeowners stay in their homes while also keeping caseloads at bay. As of July 12, 2010, Palm Beach County homeowners facing new foreclosure actions on their homestead residences are referred to mediation. The Palm beach County Residential Foreclosure Mediation Program is a free optional program for borrowers; however, lenders are responsible for costs of mediation. A mediation is a great tool for borrowers to negotiate with the lender face to face. A Foreclosure Defense Attorney representing the homeowner is a wise investment, since lenders do not always play fair at the negotiations table.

Congressman Barney Frank gives a briefing to the New England Council

Mon, 07 Jun 2010 14:25:13 -0800

This morning I attended a Breakfast with Congressman Barney Frank sponsored by the New England Council in Massachusetts. I was excited to attend this breakfast to get a play by play as to how the financial reform was going. I have to say my initial fears of further regulation in yet another industry were put at bay, for the moment. I appreciated how Mr. Frank began his talk by giving some assurance that regulation was being initiated not with a socialist fervor but as recognizing that the financial industry is a private sector. The public sector is only being called on to create rules to deal with a present crisis.

Mr. Frank proceeded to discuss the historical regulatory creations as they have appeared in the past to deal with financial issues such as the Securities and Exchange Act of 1933 which dealt with the crash of 1929. He did not suggest that the repeal of the Glass-Steagall Act necessarily spawned this present financial crisis. However, he suggested that the present financial reform is meant to tackle non-financial, non-depository and non-regulated institutions. In light of the heavy regulation in the financial and insurance industry, Mr. Frank further suggested that the credit default swap, a form of an insurance product and a hedge, was not regulated and was based on a notional almost mystical value.

What the reforms are attempting to tackle are the products that have grown out of an industry that is continuously growing in sophistication. Mr. Frank mentioned that the means became the end which was only to make money, instead of the means leading to the end. He also suggested that the new reforms would abolish the requirement that credit ratings be obtained as required in the past and that buyers will have the right to sue a credit rating agency.

I think the government may be on the right track. We may never be quite sure how we got into the current crisis but we can try to prevent them from being repeated and wait for the next.

Scammers target Seniors in fraud schemes - Seniors vs. Crimes Project - Helps seniors fight back

Mon, 24 May 2010 23:11:06 -0800

Did you know that 30% of all scam victims are over the age of 65? That frightening statistic is a call to action for 3,000 Florida senior citizens who volunteer in the Senior vs. Crimes Project. The Project is administered by the Florida Attorney General’s office. Their mission is to assist seniors who have been victimized by scams, identity theft, and unethical businesses and individuals.

The program began in 1989 as a task force on crime against the elderly. It has grown to include 30 offices statewide. Seniors vs. Crime has been responsible for recovering over $8 million for Florida seniors who were the victims of con artists. While they do not provide legal services or legal representation, their free service is offered to assist all consumers, regardless of age.

If you feel that you or a loved one has been the victim of a scam, you can contact one of the project’s 3,000 volunteers at an office near you.

Florida Attorney General
Fraud help line: (866) 966-7226

Seniors vs. Crime,
Statewide hot-line: (800) 203-3099

Local Seniors vs. Crime Offices

Foreclosure Filings decrease in Palm Beach County

Thu, 13 May 2010 14:11:47 -0800

A recent Palm Beach Post article on the drop in foreclosure filings in Palm Beach County indicates that 1,529 bank takeovers occurred in April, a 47 percent decrease from April 2009, according to numbers released by the Palm Beach County Clerk and Comptroller. Between January and April 2010, the number of Palm Beach County initial foreclosure notices totaled 7,764, a 30 percent tumble compared to the first four months of 2009.

Mr. Paul Baltrun, director of the firm’s Loss Mitigation division, gave Palm Beach Post Real Estate writer Kim Miller commentary on the drop in foreclosures. In the article, Mr. Baltrun stated that one of the possible reasons for the decline in the foreclosure rate is loan modifications. Mr. Baltrun and his team are seeing more people in Florida and across the nation being hands-on in trying to get a loan modification. In addition, the banks are becoming more willing to give homeowners modifications – especially in situations where a modification will enable a homeowner to avoid foreclosure.

"People are being more proactive and seeking workout solutions before their file goes into foreclosure," Baltrun said. Loan modifications made through the federal Making Home Affordable Program provide incentives to banks that reduce mortgage payments through interest rate cuts, principal amount reductions, and prolonging the loan’s life.

Click on the As filings fall, courts finally make dent in foreclosure cases link to read the Palm Beach Post article.

SEC settles Illegal Short Selling charges involving two Boca Raton men

Thu, 13 May 2010 10:06:39 -0800

In a May 11 announcement, the Securities and Exchange Commission (SEC) stated it had charged two South Florida men for engaging in the unlawful selling of securities. The SEC alleges that Boca Raton, Fla. residents Leonard J. Adams and Peter G. Grabler participated in numerous secondary offerings in order to profit illicitly. Although neither admitted nor denied the allegations, Adams and Grabler agreed to pay a combined total of over $1.5 million to settle the SEC’s charges.

The SEC indicated that the unlawful short selling occurred between 2006 and 2008 while Adams and Grabler were living in Massachusetts. The SEC further alleged that the two men operated separately yet used 84 brokerage accounts to engage in dozens of unlawful trades. According to the agency, their actions were in violation of Rule 105 of the agency’s Regulation M.

Designed to help prevent abusive tactics such as market scheming and short selling, Rule 105 of Regulation M ensures that offering prices are not determined by manipulative activity, but instead by the “natural forces” of supply and demand. According to the SEC, short selling before an offering has the potential to artificially depress the market price of shares.

The SEC stated that its enforcement action against Adams and Grabler was the first of its kind for non-securities industry individuals. David P. Bergers, Director of the SEC's Boston Regional Office, made this statement about the matter:

"Rule 105 applies just as much to individuals trading in their own accounts as it does to investment advisers and their related funds, which have been the subject of prior SEC enforcement actions. Grabler and Adams engaged in a trading strategy that by its very nature violates the SEC's rules."

SEC settles stock-shorting charges for $1.5 million – Reuters

SEC, two Boca men settle case that alleged illegal trading of stocks – Sun-Sentinel

SEC Charges Two Florida Residents for Unlawful Short Selling – SEC News Release

Foreclosure: What it means for Homeowners and the Community

Wed, 12 May 2010 13:41:09 -0800

As the United States slowly recovers from the mortgage crisis and ensuing economic downturn, the fact remains that thousands of homeowners all across America are still facing the threat of foreclosure. Given the current state of the economy, the possibility of missing just one mortgage payment can sometimes be the tipping point that pushes a homeowner closer to the brink of foreclosure. Despite a seemingly dismal outlook, mortgage modification and foreclosure defense are just two of the tools available to help struggling homeowners protect themselves against foreclosure.

A foreclosure occurs when a lender sues a borrower for not making payments toward the property. The lender’s goal in filing this lawsuit is to recover, through the sale of the property, the money it lent to the borrower. Once a lender files a foreclosure lawsuit, an official will deliver a summons to the homeowner’s residence notifying them of the suit. However, a foreclosure not only has the potential to wreak havoc on a homeowner, it can also lead to community degradation and other negative societal impacts.

According to the Joint Center for Housing Studies, each foreclosed home can reduce nearby property values by 1 percent or more. Additionally, foreclosures can also lead to:

•    The foreclosed home and property falling into disrepair
•    A decrease in buyer perception of the area
•    Unpaid HOA fees, normally leading to an increase in the existing members’ payments
•    A refusal by prospective homeowners to live in a neighborhood that includes foreclosed and neglected properties

While these examples are ominous, it is important to note that a successful mortgage modification can help prevent such negative impacts in addition to possibly allowing a homeowner to keep his or her home. Click on the links below for more information.

Lenders’ Cost of Foreclosure Policy Paper – Mortgage Bankers Association

Foreclosure Sales Affect Home Values - Nearby Homes Feel Effect – About.com

Link to Joint Center for Housing Studies – Harvard University

FINRA Permanently Bars Florida Broker for stealing more than $1.9 million from Clients

Wed, 12 May 2010 08:59:56 -0800

The Financial Industry Regulatory Authority (FINRA) has permanently barred Michael J. DiMare, of Ponte Vedra Beach, Fla., from the securities industry for “misappropriating over $1.9 million in client funds.” In its news release on the settlement, FINRA stated that Dimare, formerly a registered representative, hid his financial scheme by making false statements and submitting falsified account statements to his customers.

DiMare worked for John Hancock Mutual Life Insurance Company (John Hancock) as a sales manager between 2001 and 2006, and as a registered representative/insurance agent with ING Financial Partners, Inc. (ING) from late 2006 to mid 2008. According to FINRA, DiMare persuaded his clients from at least 2001 to 2008 to invest in fictitious CDs and bonds, including what he described to be “tax free” corporate bonds.

FINRA’s investigation revealed that between 2001 and 2008, DiMare instructed some 14 of his clients to write checks payable to John Hancock – even after he no longer worked there – which he deposited directly into his bank account for eventual personal use. DiMare concealed his scheme by submitting false account statements to his clients who thought they were making legitimate financial investments.

In response to the situation, James S. Shorris, Executive Vice President and Executive Director of Enforcement for FINRA, made this statement:

"FINRA will continue to bar individuals who engage in deceit and theft with no regard for the high standards of ethical conduct that govern the industry. By deceiving customers into believing they were making legitimate investments when, in reality, he was simply enriching himself, DiMare epitomized the darkest side of the securities industry."

DiMare never admitted guilt nor denied FINRA’s charges, but the now barred schemer did consent to the entry of the agency’s findings in the settlement. John Hancock and ING reimbursed the customers defrauded by DiMare’s scheme.

Florida Broker Barred for Selling Phony Financial Products, Taking More Than $1.9 Million From Clients – FINRA’s News Release

Florida Broker Took More Than $1.9Mln From Clients –Finra – Wall Street Journal

Tips from FINRA to help Investors Avoid Financial Fraud

Report finds that almost Half of all South Florida Home are Underwater

Tue, 11 May 2010 15:09:50 -0800

A recent report released by real estate research firm Zillow states that 44.3 percent of South Florida homes were underwater during the first part of 2010. Zillow’s first quarter analysis report also determined that home values in Palm Beach, Broward and Miami-Dade counties continued to decrease from 2009.

In a recent article on the Real Time Blog, Palm Beach Post Real Estate writer, Kim Miller, reports that it could take up to five years for home values to begin climbing,according to Zillow. In addition, the real estate research firm expects national home values to hit bottom not in the second quarter of 2010, but the third, presumably extending the housing crisis nearly all the way through 2010. Zillow is also predicting that negative equity and foreclosures will compound to keep home value appreciation in the U.S. near zero possibly until 2015.

According to foreclosure data, services and online marketplace RealtyTrac, Florida homeowners continue to face some of the highest foreclosure rates in the country. The following is a current breakdown of the foreclosure situation in South Florida:

Palm Beach County: 18,755 Foreclosures
8,401 Homes for Sale

Broward County: 42,467 Foreclosures
3,960 Homes for Sale

Miami-Dade County: 40,184 Foreclosures
8,094 Homes for Sale

Homes still sinking, 44.3 percent in South Florida underwater – Palm Beach Post

Link to RealtyTrac’s map of Florida Foreclosures & Home Sales

Link to Zillow’s Web site

How the Home Affordable Modification Program can Help Struggling Homeowners

Mon, 10 May 2010 13:44:36 -0800

In response to the housing crisis gripping the nation, the Obama administration implemented the Home Affordable Modification Program (HAMP) to stem the growing number of foreclosures in the United States. HAMP is a part of the government’s comprehensive Making Home Affordable initiative to help homeowners who are struggling to make their mortgage payments, or homeowners who are facing foreclosure.

In a recent article on the topic, Reuters indicated that over 230,000 of the approximately 1.4 million HAMP mortgage modifications had been made permanent by the end of March. According to U.S. Treasury spokesperson Meg Reilly, "More than 1.1 million borrowers were receiving a median savings of $500 each month.” The Obama administration hopes to help between 3 to 4 million homeowners receive permanent modifications through HAMP by 2012.

The primary objective of HAMP is to help borrowers avoid foreclosure by modifying troubled loans in order to achieve a more affordable payment. Under the terms of HAMP, however, homeowners must meet certain conditions in order to be eligible for a modification.

To be eligible for a HAMP modification, the following conditions must apply:

•    Your are the owner-occupant of a one- to four-unit home;
•    You have an unpaid principle balance equal to or less than:
      •   1 Unit: $729,750             •   3 Units: $1,129,250
      •   2 Units: $934,200           •   4 Units: $1,403,400;
•    You are having difficulty making your mortgage payments;
•    You got your current mortgage before January 1, 2009; and
•    You have a mortgage payment (including taxes, insurance, fees, etc.) that is more than 31% of your current gross (pre-tax) monthly income.

It is important to note, however, that a homeowner does NOT need to be behind on his or her mortgage payments to participate in the Home Affordable Modification Program. If you are a responsible borrower who is struggling to remain current on your payments, or if you are at risk of default due to a financial hardship or recent payment hike, you may be eligible for a HAMP modification. Please use the resources below to learn more about HAMP and the mortgage modification process.

Home Affordable Modification Program – U.S. Government

US mortgage modification program helps 230,000 permanently – Reuters

Home Affordable Modification Program Guidelines – U.S. Department of the Treasury

Tips on how Homeowners can lower Mortgage Payments

Mon, 10 May 2010 13:37:44 -0800

As the nation slowly recovers from one of the worst recessions in recent history, millions of homeowners throughout the United States continue to struggle with their monthly mortgage payments. Many hardworking and responsible homeowners who have fallen victim to the unhealthy economy in addition to the mortgage crisis are facing the threat of foreclosure as well. Although the situation may seem dire, a successful mortgage modification can yield a bevy of positive results, including the possibility of avoiding foreclosure in addition to helping a homeowner keep his or her home equity.

The U.S. Department of Housing and Urban Development (HUD) defines a loan modification as a permanent change in one or more of the terms of a mortgagor’s (homeowner’s) loan, which allows the loan to be reinstated. This process normally results in a payment the mortgagor can afford. A lower monthly payment (sometimes half of the original amount) is just one potential advantage of a successful mortgage modification. Some of the other benefits include:

•    An Interest Rate Reduction – Possibly as low as 2%
•    Brining a Delinquent Loan Current
•    Credit Rating Protection
•    A shift to a Fixed-Term Mortgage from an Adjustable-Rate Mortgage

A successful mortgage modification not only has the potential to benefit a homeowner, it can also benefit their lender as well, making it a win/win situation for both parties. A lender generally loses money – sometimes a large amount of money – on a foreclosure, meaning that the lender will generally work to avoid such a situation when possible. A lender stands to benefit more from a homeowner who is making payments, even at a modified or lower level, than from a foreclosure. Therefore, a successful mortgage modification can lead to a homeowner keeping his or her home in addition to the lender continuing to receive payment.

Follow the links below for more information about mortgage modification.

Answers to Questions About New Mortgage Modification Program – NY Times

U.S. Department of Housing and Urban Development (HUD)

Home Affordable Modification Program – Part of the U.S. Government’s Making Home Affordable Program

Miscommunication between Banks can lead to "Mistaken" Foreclosures

Mon, 10 May 2010 13:33:36 -0800

As millions of American homeowners continue to deal with a struggling economy and a poor housing market, more and more of these individuals and families now have to contend with another problem: a breakdown in communication between banks that service mortgages. Not only does this miscommunication bring frustration, it can also lead to mistaken or even premature foreclosure in spite of a pending mortgage modification application.

This communication breakdown can occur between banks or servicers that are participating in the Obama Administration’s Making Home Affordable Program, despite provisions that prohibit servicers from auctioning a person’s or family’s home while a mortgage modification is pending. The article indicates that the lapses in communication that can lead to premature or mistaken foreclosure continue to occur because they go unpunished for the most part. USA Today indicates that the U.S. Treasury Department is reportedly aware of such problems and is “moving to fix them.”

In a ProPublica news report on the topic, the breakdown in communication between servicers generally occurs due to their organizational structure. The ProPublica article points out that one division normally deals with modifications while a separate unit contends with foreclosures, presumably leading to both internal and external communication problems.

"Basically, you have the right hand at the mortgage company not knowing what the left hand is doing," said Mark Pearce, North Carolina's deputy commissioner of banks. Communication glitches and mistakes are "systemic, more than anecdotal" among mortgage servicers, he said.

Although miscommunication between mortgage servicers does occur, having the assistance of an experienced team of mortgage modification professionals that will aggressively ensure that the servicers communicate properly can help prevent such tragedies from coming to light.

If you are a homeowner in need of assistance with a foreclosure, contact an experienced foreclosure attorney to discuss your situation.

Homes can be lost by mistake when banks miscommunicate – USA Today

Disorganization at Banks Causing Mistaken Foreclosures – ProPublica

Link to the Obama Administration’s Making Home Affordable Program

Charles Schwab proposes $200M settlement for investor class action suit

Mon, 26 Apr 2010 02:29:49 -0800

Despite individual investors losing a reportedly $800 million, the Charles Schwab Corp. agreed last week to pay $200 million to settle a class-action lawsuit stemming from brutal mortgage-related losses in its once-popular YieldPlus bond fund.

This case has not been as high profile in the news as the Goldman Sachs case in the news, where victims were primarily banks. The class action suit against Charles Schwab Corp., involved 250,000 individual investors.

If the judge approves this class-action settlement, Schwab would be able to move on from this legal fight. Investors are expected to receive approximately 20 to 25 cents for each dollar they lost.

Schwab has paid out $48 million in settlements and awards in other arbitration cases. However, there are approximately 180 arbitration cases still pending and a class-action suit in California state court on the horizon.

Click on the following link to read more from the LA Times on the proposed Schwab $200M settlement.

Ponzi Scheme Orchestration lands Minnesota Tycoon in Prison for 50 Years

Fri, 09 Apr 2010 14:08:10 -0800

U.S. District Judge Richard Kyle sentenced Minnesota businessman Tom Petters to 50 years in prison for orchestrating a Ponzi scheme estimated at $3.7 billion. Counted among the victims of his scheme were missionaries, pastors and retirees. The sentence comes after a jury found Petters guilty on 20 counts of money laundering, wire fraud, conspiracy and mail fraud in December.

The Ponzi scheme involved the fake purchase of electronics by Petters Company Inc., which would then “resell” the supposed merchandise to discount retailers for a profit. Petters and his associates used bogus bank records and fake purchase orders to swindle investors out of $3.7 billion.

Judge Kyle stated to a packed courtroom that included Petters' relatives as well as some victims, "Mr. Petters was captain of the ship." The Judge did not believe that Petters, a former owner of Polaroid and Sun Country Airlines, was unaware of the fraud at Petters Group Worldwide.

At his sentencing hearing, Petters said, “Every day, I’m filled with pain and anguish for all the lives that have been destroyed and touched by this episode.” Petters, a successful entrepreneur and former owner of Sun County Airlines and Polaroid, apologized to his family, friends and others hurt by his actions, but never admitted guilt.

At 52 years old, Petters will likely spend the remainder of his life behind bars.

50-Year Term for Minnesota Man in $3.7 Billion Ponzi Fraud – NY Times Article

Minn.'s Petters Gets 50 Years in $3.7B Fraud Case – ABC News/Money Article

Anti-Fraud Law debated before the Supreme Court

Wed, 31 Mar 2010 03:54:02 -0800

Lawyers argued before the Supreme Court on whether a key provision of the Securities and Exchange Act should protect foreign fraud victims when the alleged scammer has a U.S. subsidiary. "This case has 'Australia' written all over it," Justice Ruth Bader Ginsburg said. The law's scope is pivotal, as courts increasingly face lawsuits over transnational fraud.

Three Australians who bought stock in National Australia Bank, the country's largest bank, filed a class action when the bank was forced to write down more than $1.75 billion on HomeSide Lending, a U.S. mortgage service provider the bank bought in 1998.

The bank had to sell the Florida-based subsidiary after HomeSide miscalculated how much revenue it would receive from mortgage-backed securities in 2001. Investors said the bank, HomeSide and four officers made false and misleading statements in SEC filings. When those statements were revealed in Australia, they allegedly caused the bank's stock price to plummet.

A final ruling is expected by late spring or early summer.

Click on the following link to read more on the Justices Hear Debate on Scope of Anti-Fraud Law - Courthouse News Service

Hacker, Albert Gonzalez, sentenced to 20 years for $200 Million Theft

Tue, 30 Mar 2010 04:41:45 -0800

The DOJ takes cyber crimes seriously, as Albert Gonzalez has found out. U.S. District Court Judge Douglas P. Woodlock sentenced Gonzalez to 20 years and one day in prison for two conspiracy counts in connection with his efforts to help gain access to the payment card networks of numerous nationwide retailers. The judge also ordered Gonzalez to pay a fine of $25,000 as well as serve a three year supervised release upon completion of his prison term.

This sentencing comes in addition to an earlier sentence issued against Gonzalez by U.S. District Judge Patti B. Saris for aggravated identity theft, computer fraud, conspiracy, and access device fraud among others. In this sentence, the judge also ordered Gonzalez to serve 20 years in prison in addition to a three year long supervised release after completing his prison term, and a $25,000 fine.

Court documents indicate that Gonzalez and his co-conspirators used sophisticated methods such as “wardriving” (attempting to locate unsecure wireless computer networks with a laptop while driving) and “sniffer programs” designed to capture card information during transfers. According to court documents, Gonzalez and his cronies stole more than 40 million credit and debit card numbers from retailers using these or similar techniques, and then sold the numbers to others for fraudulent use.

According to Federal prosecutors, the actions of Gonzalez and his co-conspirators cost a number of companies, banks, and insurers some $200 million in addition to victimizing millions of people. U.S. Attorney for the Eastern District of New York, Benton J. Campbell, made the following statement about the matter:

"Computer hackers and identity thieves pose serious risks to our commercial, personal and financial security. Today’s sentence should serve as a warning to would-be hackers everywhere, including those who commit their crimes from abroad – you will be found, prosecuted and convicted."