Miami Foreclosure Lawyer Blog

Earlier this month, President Barack Obama announced in his State of the Union speech that the Residential Mortgage Backed Securities working group task force had finally been formed.

Our Miami foreclosure lawyers know that the foundation of this group was actually announced last year, though likely for political reasons, it never actually came to fruition until fairly recently.

This federal task force was put into place for the sole purpose of investigating and prosecuting criminal activity and fraud by Wall Street - namely, those individuals and institutions involved in the actions that led directly to the housing crisis in which we're still mired. The intended ultimate outcomes were two-fold: Justice for those who had wronged us as taxpayers and meaningful relief for homeowners who had suffered greatly. These firms, which literally dragged millions of Americans into foreclosure, must be made to answer for that.

So far, that hasn't happened - to the great frustration of countless homeowners, attorneys, journalists and advocates.

Last month, Frontline, produced by PBS, recently aired an hour-long chronicle called "the Untouchables" that investigated why Wall Street's top executives have yet to face any criminal prosecution for their clearly criminal actions. Reporter Martin Smith delves into why, finding that it had largely to do with impediments and road blocks thrown down by Obama's own Justice Department. The picture painted in countless interviews depicted the former leader of the departments' Criminal Enforcement Division as far more concerned with the rights and interest of the bankers, rather than the countless struggling homeowners.

Further, the oversight hearings that were organized by Congress, attempting to learn more about why the department had taken so little action in these cases, was something of a farce. Justice Department officials being "grilled" were given the questions prior to the hearing, giving them ample time to prepare canned responses.

And bank officials were routinely responding that they weren't aware of the inherent flaws in the internal practices that led to our economic mess. Even if that were true - which we don't believe for a moment - these were people who were raking in tens of millions of dollars annually. It was their responsibility to know.

That Justice Department executive is no longer at his post, but now questions have been raised about whether the Justice Department itself should be investigated for obstructing progress on these cases.

That isn't likely, but in the meantime, we've seen a slew of minor cases and settlements involving a patchwork of various government agencies, with no swift, definitive, meaningful action for those who have been harmed.

Even though many have up to this point criticized the RMBS task force as being a phony, it currently as we sit today has staff, investigators, pending investigations and funding. It's truly not too late for the group to take real action and fulfill its intended purpose.

Late last year, the working group did announce a civil lawsuit against Credit Suisse, alleging the firm deceived investors by misrepresenting its loan quality review process, costing losses in excess of $11 billion.

It's a start. We want to see more.

Continue reading "Miami Foreclosure Lawyer: RMBS Task Force Needs to Get to Work" »

Lorraine Brown, founder of the now-defunct mortgage document processor DocX, has pleaded guilty to racketeering in Michigan, where she faces a possible 20-year prison sentence.

Our Miami foreclosure lawyers however would not be surprised if she was given significantly less time, considering she faces a maximum of five years in prison for a guilty plea after pleading guilty to criminal conspiracy to commit mail and wire fraud in a federal court in Florida.

The 51-year-old's sentencing in the Michigan case is slated for the beginning of May.

You may recall that Brown's DocX firm was a subsidiary of Lender Processing Services, Inc. She has admitted to participating in a six-year scheme to produce fraudulently signed and notarized mortgage documents across the country - more than 1 million in all.

As the U.S. Attorney in that case noted, home ownership is a huge step for most people. The process is long and intimidating, and people rely and put their trust on the integrity of those who are facilitating the deal. What Brown and others like her did was more than simply gross negligence. It was a deep and egregious violation of trust, done intentionally with the sole purpose of increasing her own personal wealth - no matter who was hurt.

Although the federal case effectively settled the criminal question in a number of states, including Florida, Michigan launched its own investigation into practices that affected residents in that state. That investigation followed an April 2011 report in which it was revealed that thousands of mortgage and foreclosure documents were reportedly signed by the same woman - but with numerous variations in handwriting. County officials in Michigan discovered this same phenomenon repeated in most of their own districts. They reportedly found more than 1,000 instances in that state alone. An untold number of others may remain in the system.

It was later found that Brown and DocX were sanctioning this "robo-signing" effort, encouraging workers to forge the signature of a person who would actually be authorized to sign off on the paperwork. Because DocX was being paid by the number of documents its workers were able to churn out, it was in the company's best interest to simply fly through as many as it possibly could - regardless of whether those documents were in fact accurate. Internally, DocX had its own name for this: surrogate signing. That's a really nice way of saying "fraud."

Of course, the courts have for the most part given banks the benefit of the doubt, calling them victims in all of this - even though they were benefiting from this process. A federal judge even said LPS had no knowledge of the scheme - a claim which is either untrue or makes them incredibly inept. Both are likely.

In addition to accepting Brown's guilty plea, Michigan authorities also reached a $2.5 million settlement deal with LPS.

Continue reading "Mortgage Fraud Defendant Pleads Guilty to Racketeering in MI" »

Your credit report is often the make-it-or-break-it element of your financial future. In most cases, it is the foundation upon which creditors decide whether to sell you a car or a house or give you a job. It may even be the basis upon which you are given certain security clearances.

However, as our Miami foreclosure lawyers have recently learned, an eight-year study by the Federal Trade Commission indicates that as many as 40 million Americans may be victims of errors. About half of those are considered significant.

You may think an honest mistake might be easy to rectify. You would be wrong. Not only that, these errors can cost you dearly.

Just like banking, credit reporting is a big business. The industry generates upwards of $4 billion annually, with three companies dominating: TransUnion, Equifax and Experian. These firms keep track of some 200 million Americans. These entities gather information on us and those with whom we do business, and then make money - a lot of it - selling that information. Buyers include not only banks but insurance companies, merchants and employers.

So these scores have a significant ripple effect on nearly every aspect of our lives. And yet, they have an error rate of 20 percent. An estimated one out of every 10 Americans is walking around with an error on their report that has served to damage their overall creditworthiness.

Of course, amid years of criticism, these firms have deflected the blame for any errors onto either merchants or banks, saying they had been given bad information.

But the attorney general's office in Ohio, which launched its own investigation into widespread reports of error, says the bulk of the blame lies with the credit agencies themselves, which often may be guilty of violations of the Credit Reporting Act.

Specifically, the federal law is clear in that if consumers believe there is a mistake, that claim should be promptly and thoroughly investigated by the agency. That isn't happening. Not only are these firms not conducting a "reasonable" investigation, per the federal law, they reportedly aren't conducting any investigation whatsoever, the state attorney general's office contends.

So the real problem is not even so much that there are errors, it's that they refuse to fix them.

It's estimated that some 8 million people file disputes with regard to their credit reports. However, most of those complaints are diverted to call centers in India, and even then, most are referred back to the reporting firm's website - which aren't specially equipped to handle complaints.

There is also an avenue to file complaints by mail, but the FTC learned most of those go absolutely nowhere.

Those that do get the problem fixed end up with cases that have dragged on for years - even in cases that involved a clear mistaken identity (something one would think would be a simple issue to solve).

There have even been multiple federal court cases in which individuals have won million-dollar judgments against these firms for clearly violating the law. However, it's easier for these firms to simply pay-out the settlements that actually make it that far than to go through and clean up their policies and procedures to make them compliant the law.

The fact is, bankruptcy and foreclosure often go hand in hand. Faulty credit reporting can be an incredibly difficult thing to shake. We can help.

Continue reading "Feds: Credit Reporting Errors Common, Costly" »

The case of Pino v. Bank of New York, reached a disappointing conclusion earlier this month, when the Florida Supreme Court ruled that a bank should not be punished or held liable when it files fraudulent or flawed documentation in a foreclosure case, and then hurries to voluntarily dismiss it without prejudice.

Our Miami foreclosure lawyers of course aren't surprised that yet again, banks have prevailed, but it paints a picture for potential clients of what you are up against in these cases.

It's almost as if banks have gotten away with it by virtue of the fact that it happened so often. The question posed was not whether the court has the ability to sanction parties in a civil proceeding for filing fraudulent documents, but whether in such cases the court should have the ability to re-open the case, reverse a voluntary dismissal without prejudice and subsequently issue a dismissal with prejudice - as a sanction to the original party for having committed the fraud.

The court ruled that such action is not within the authority of the court.

Here's what happened: Roman Pinto was a Florida resident who was sued for foreclosure back in 2010 for defaulting on his mortgage. However, when Pinto's foreclosure defense attorney sought to challenge the validity of ownership documents filed by the bank (that is, to allege they were in fact fraudulent, as so many documents are in these cases), the bank suddenly moved to voluntarily dismiss the case without prejudice.

The judge in the case agreed - which mean the bank could subsequently re-file the case, sans fraudulent documents, with no penalties or sanctions at all for having done so in the first place.

Subsequently, Pino appealed his case to the Fourth District Court of Appeal, asserting that the court should put the original voluntarily dismissal aside - as it was requested solely because the bank knew it had been caught submitting false and fraudulent documents - and enter a new dismissal that would render the bank unable to take further action.

However, the Fourth District Court of Appeal held that a trial court did not have this authority in a case where the plaintiff (in this case the bank) had not yet had the opportunity to obtain any affirmative relief from the defendant (in this case the homeowner) prior to the case being dismissed.

Still, the appellate court requested that the state Supreme Court answer the question directly, as it was applicable to numerous cases throughout the state as an issue "of great public importance."

The Florida Supreme Court certified the question in the negative. The justices reasoned that had the plaintiff actually obtained some form of affirmative relief from the defendant based on fraudulent conduct, then there would be an adverse impact on the defendant, who could then clearly be entitled to seek relief pursuant to Florida Rule of Civil Procedure 1.540(b)(3). But absent that, the court decided, a dismissal with prejudice would be improper.

Continue reading "Florida Supreme Court Sides With Banks That File Fraudulent Foreclosure Documents" »

For the second time in a month, the Florida Bar is pursuing discipline against a "foreclosure mill" attorney, known for intentionally mishandling cases for some of the country's biggest mortgage holders by submitting court documents that were both fraudulent and forged.

Our Miami foreclosure lawyers reported last month on the earlier case, in which a Fort Lauderdale lawyer pleaded guilty to numerous offenses following a Bar investigation. That attorney was suspended for three months, forced to close his law firm and required to pay $6,000 to cover investigative costs and $30,000 for ongoing record analysis. He also must get the approval of the Florida Supreme Court before he can be reinstated to practice law.

At the time, that case was the first known instance of disciplinary action taken in Florida against an individual lawyer who worked to protect banks by acting unethically and possibly illegally. This is noteworthy especially because Florida is widely known to be Ground Zero of the national foreclosure crisis.

Back in 2011, the Florida Attorney General's Office was investigating at least eight law firms for similar practices. However, the Florida Supreme Court brought that investigation to a screeching halt by preventing the office from issuing subpoenas to those firms.

That's where the Florida Bar has stepped in.

This newest case draws striking similarities to the first - illustrating the kind of battle homeowners were in for when they tried to fight a wrongful foreclosure.

This attorney, based out of Plantation, was forced to close his firm as allegations swirled back in 2011. At the height of its operation, the firm employed more than 140,000 people across the state. Its clients included federal mortgage firms Freddie Mac and Fannie Mae, which backed out of the relationship in the midst of the robo-signing scandal.

The closure of his firm left more than 100,000 foreclosure cases in the state with an uncertain future.

Recently, numerous grievance committees (similar to a grand jury in civilian law) determined probable cause to punish the attorney in 17 different cases, following numerous formal complaints that had been made by foreclosure defense attorneys, banks, judges and even homeowners themselves.

The allegations run the gamut: backdating documents, notary fraud, failing to appear or have his attorneys appear in court, misleading the court and more. As one attorney complainant was quoted as saying, this law firm "made a mockery" of legal ethics.

An attorney representing the defendant claims that nearly 20 complaints were closed with no findings, and he maintains his clients' innocence.

It's important to note that the attorney hasn't been found guilty of anything yet. The grievance findings simply give the Bar the green light to proceed in filing a formal complaint with the state Supreme Court. From there, the case will be assigned to a circuit court chief judge. That judge will then assign it to a circuit court judge to mediate the proceedings.

The Bar said it is hoping to have the case closed within half a year, but with so many egregious violations alleged, it could take quite a bit longer. And if either side isn't happy with the outcome, they can seek a review, which could take another 12 months.

What is particularly interesting about this case is that it's clear that the defendant did not have his hands on every single case of which wrongdoing is alleged. What's more, the Bar is essentially set up to discipline individual lawyers - not entire law firms. The Bar is attempting to hold him accountable not only for his own personal actions actions, but also the subordinates who acted at his direction.

Continue reading "Florida Bar Takes On Another "Foreclosure Mill" Attorney" »

Officials at Bank of America have long lamented the burden they unexpectedly took on with the 2008 acquisition of Countrywide Financial, one of the largest subprime mortgage firms in the country. Countrywide's practices have reportedly cost Bank of America upwards of $40 billion so far following substantiation of widespread foreclosure abuse claims.

But our Miami foreclosure lawyers understand that new documents filed recently in the New York Supreme Court suggest that shady lending practices continued even after that acquisition, with the bank showing a continued interest in furthering its own bottom line, rather than rectifying the mess those troubled mortgages created for investors.

The New York Times reports that the court documents were filed by three Federal Home Loan Banks in different cities, as well as a mortgage securities investment firm. The plaintiffs hold that the $8.5 billion settlement the banking giant agreed to pay two years ago to free themselves of liability for Countrywide's actions is in fact egregiously low. The plaintiffs say the settlement does little to compensate the thousands of small investors who trusted the company to act prudently with their money.

The plaintiffs are requesting that the judge deny the settlement agreement and force the bank to make a bigger payout.

Among the biggest complaints is the allegation that Bank of America has yet to repurchase the high-risk mortgages it doled out after lowering the principal and payments on the loans. If true, this would be a clear violation of the agreement it made with investors who initially bought those bundled mortgage securities.

Nationwide real estate records reveal that the bank has worked to modify nearly 135,000 loans, reducing principal balances by more than $30 billion. Yet, the bank didn't take action to lower the principal on its second mortgages on those same homes, even though the owner of the home equity line of credit is historically the one that takes a loss - not the owner of the first mortgage. In fact, this practice reportedly allowed the bank to boost its potential of being repaid in full for its home equity line, as it carried more than $115 billion in home equity loans in the third quarter of last year.

These actions have cost investors dearly.

One example highlighted by the plaintiff involves a 2006 subprime loan extended for $575,000. Four years later, the bank agreed to lower the owed principal on the first mortgage down to about $280,000. Simultaneously, however, the bank's $110,000 home equity credit line remained unchanged. Meanwhile, investors took a $300,000 loss.

In another case, the bank was shown to have held onto a $170,000 home equity line after it modified the first mortgage owned by investors. So investors ended up absorbing a nearly $400,000 loss, while the bank didn't suffer anything.

These are just a few of the highlights born of extensive research by investment firm Triaxx, which reportedly combed through hundreds of securities handed down by Countrywide in just a two-year time frame. The firm even created a database of these transactions over the last 10 years.

While we can't predict the judge's decision in this case, we do know that this same database was accepted in a separate mortgage lawsuit against a mortgage subsidiary of Ally Financial.

Of course, it's not just these two banks that are to blame -- the problem has been that loan servicers unsurprisingly have refused to turn over the kind of detailed loan data showing their misdeeds, absent a court order.

But these investment firms say they had no choice, as the $8.5 billion settlement would repay their clients about 2 cents for every $1 invested.

Continue reading "BofA Entangled in New Mortgage Mess Questions" »

HSBC bank has been allowed to pay a $1.9 billion fine in order avoid any criminal sanctions following the revelation it helped Mexican drug cartels and al-Qaeda-linked groups launder hundreds of millions of dollars in drug money.

Our Miami foreclosure lawyers understand that while the U.S. Justice Department will haul off medical marijuana providers in California to prison for decades, it refuses to prosecute those who are facilitating real and extensive harm.

HSBC leaders were quoted as saying they were "profoundly sorry," adding that it is not the same organization today as it was when those illegal transfers occurred.

Under the terms of the settlement, the bank has admitted that it broke several laws, including the Trading with the Enemy Act and the Bank Secrecy Act.

Sure, $1.9 billion sounds like a lot. Consider though that HSBC's most recent quarterly income statement shows it raked in more than $6.3 billion in gross profits in the last three months of 2012. It made more than $25 billion in all of 2012. So that $1.9 billion is roughly 7.5 percent of the company's profits for last year.

Let's turn this around and say you earn an annual salary of $40,000 and are arrested for a federal drug trafficking charge. If the federal government treated you the same way it treated HSBC, you'd be allowed to pay $3,000, say you're very sorry and that you've changed and walk away free and clear.

That would never happen. In fact, one of those middlemen convicted of participating in the money-laundering scheme has been found guilty of numerous federal charges and is awaiting a possible 15 to 18-year prison sentence.

We need to be asking why our federal leaders have no problem holding these large institutions to a lesser standard - especially given the large amount of taxpayer resources that went into the intensive five-year investigation of this scheme.

The bank can't claim ignorance. These were bulk-cash transactions funneled back-and-forth between the U.S. and Mexico. There were huge red flags at every step along the way. As U.S. Assistant Attorney General Lanny Breuer said, the long history of dysfunction at the bank in this regard was "astonishing."

And it's not that the bank was too large to fail or that the government had no power to enact further penalties. A criminal conviction for money laundering and the other crimes of which the bank was accused could have resulted in the institution being blocked from access to the U.S. banking system - a financial death sentence.

Instead, prosecutors decided to defer prosecution in favor of the monetary settlement.

Perhaps most disturbingly, HSBC isn't the only bank to have been caught doing this. Back in December, British banking firm Standard Chartered was ordered to pay about $330 million to the U.S. government after it was found to have aided Iran and other countries from avoiding sanctions in the U.S.

When banks are not held fully accountable for their gross negligence in blatantly breaking the law and aiding violent criminals, what kind of message does that send to law-abiding homeowners who are simply struggling to fight back against an impending foreclosure against these same firms?

Continue reading "Bank Evades Criminal Charges for Drug Cartel Money Laundering" »

The suspiciously close relationship between the large banks accused of widespread foreclosure abuses and the consulting firms hired to review them came to light within the last two months, as federal regulators put a stop to the costly and ineffective proceedings in favor of an $8.5 billion settlement.

Now, our Miami foreclosure lawyers have learned that members of Congress have announced their intention to open a federal investigation into the practices of these "independent" consulting firms, hoping to learn more about the depth of the harm inflicted.

We already know that the settlement agreement, while sounding sizable, is actually going to result in less compensation to wronged homeowners than they would have received had the consulting firms acted with integrity. However, the federal government couldn't escape the fact that those same homeowners would likely get little to no compensation had the reviews been allowed to continue as they were being conducted.

That's because these companies were being paid billions of dollars by the very banks they were supposed to be checking. This, combined with the fact that these firms had little formal oversight or direction meant that in some cases, they were actually found to have enabled the banks in continuing to inflict harm.

That harm goes beyond just the foreclosure review. Some firms have been accused of working to help banks avoid scrutiny with regard to large global transfers of money belonging to drug cartels - and then instructing the financial institutions on how to fly under the radar of federal authorities. These same firms have been accused of altering their own reports to the government - leaving out the banks' facilitation of numerous illegal transfers.

With regard to the foreclosure review, there is an understanding of the fact that the government didn't have the resources or expertise to conduct its own reviews and forcing taxpayers to cover the costs of those reviews wouldn't have been fair either. What's especially troubling is that foreclosure abuses continue on unabated, with government agencies still sorely lacking in any effective ability to institute recourse or oversight.

Still, some attempts have been made. The Office of the Comptroller of the Currency penalized JPMorgan Chase in January amid problems with its implementation of controls to avoid money-laundering, it also handed down a strict list of requirements with regard to consultants. To limit the potential conflict of interest, the bank was ordered to only hire a company that can provide certain specialized experience.

Moving forward, the OCC is expected to continue requiring consultant reviews of certain problems, but officials told The New York Times that there is widespread concern with regard to quality and independence.

There are no shortage of firms clamoring for such opportunities. Those involved in the now-scrapped 14-month review process raked in more than $2 billion in fees. Meanwhile, homeowners are getting about $3.3 billion out of the whole deal.

OCC officials say the entire process was quite complex, and the agency did work to spot check the results. But it wasn't enough to curb some of the inherent problems. With banks still employing consultants in roughly 15 percent of enforcement actions, we can expect to see a continuation of these issues.

Continue reading "Federal Inquiry Launched on Integrity of "Independent" Foreclosure Reviews" »

One of the nations largest mortgage processing firms has agreed to a settlement in which they will pay more than $120 million to states where homeowners were wrongfully foreclosed upon and forced to move.

Our Miami foreclosure attorneys understand the agreement was inked between Florida-based Lender Processing Services Inc. and 46 states, as well as the District of Columbia.

The terms of this settlement will not only provide payment to those wronged, but will also require that the firm overhaul its business practices and conduct a review/correction of all existing foreclosure documents generated between January of 2008 and December of 2010. This will no doubt prove to be a huge task, and the U.S. Attorney General has said the company must regularly report its progress in each participating state to federal authorities. The agreement bars the firm from allowing unauthorized individuals or those lacking first-hand knowledge of the case at hand to sign foreclosure documents associated with those cases.

A previous $6 million settlement reached by the company and Missouri, Delaware and Colorado means that Nevada is the only state whose cases remain unresolved. That brings the total to $127 million in payouts.

This may seem like a significant number, but consider that this firm alone had a legal reserve of nearly $225 million at the close of last year. The company's annual revenue is somewhere in the neighborhood of $2 billion.

Individual pending civil lawsuits against the firm will continue to be ongoing.

The company was revealed to have cut significant legal corners in order to maximize their own profits - to the detriment of thousands of homeowners, who were left out in the cold - literally.

All of this stems from the practices of Lender Processing's now-defunct subsidiary, DocX, which was shuttered three years ago amid allegations of foreclosure fraud through a practice called robo-signing. It is a practice we have come to know was widespread within the mortgage industry, with DocX being one of the biggest and most egregious violators. Robo-signing involves a bank employee or subcontractor signing thousands of affidavits and documents without first verifying the information to which they are swearing or attesting. In some cases, the firm had so-called "surrogate signers," who forged the signatures of authorized parties, at the direction of the company. Those signatures were also notarized as if they had been given by the actual authorized person.

DocX's founder Lorraine Brown was convicted in federal court for her role in the scam. Despite the harm she caused countless homeowners, she is expected to serve just two years in a minimum-security prison and pay a $250,000 fine. Yet her criminal conduct earned her and her company a total of $60 million between 2003 and 2009.

LPS, which represents most of the country's 50 largest banks, continues to maintain it was a victim in all of this, with executives having no idea whatsoever of the massive fraud being perpetuated right under their noses - the fraud that reaped them a direct benefit.

While a settlement agreement will provide some relief to wronged homeowners, it falls woefully short of rectifying the actual damage inflicted.

Continue reading "Lender Processing to Pay $121M to Resolve Robo-Signing Claims" »

When the $9 billion foreclosure settlement deal was announced earlier this month, along with the elimination of the oft-criticized independent foreclosure reviews, the banks and federal regulators involved weren't particularly forthcoming with details.

Our Miami foreclosure lawyers however are beginning to learn more about how it will work.

Politico is quoting insiders to report that banks have been given one month by the Office of the Comptroller of the Currency and the Federal Reserve to affix borrowers into one of 11 categories that will define how much compensation each person or family will receive. After that, each bank has to issue a check to those individuals within 45 days of making that determination.

Federal regulators have publicly said they are looking for a final resolution to all of this by March, but they still won't offer any further specifics.

(The deal had previously been set at $8.5 billion, but was raised to $9 billion when Morgan Stanely and Goldman Sachs hopped aboard too.)

Banks have crowed about how they pushed for a resolution on all of this in order speed up compensation to customers wronged by their abusive and fraudulent practices. But as it turns out, it may have been driven far more by their own bottom line. First of all, as we previously reported in our Miami foreclosure lawyer blog, the expedited deal allows these firms to tack the losses onto last year's earnings, which means they can come up smelling like roses in the current fiscal year. And secondly, the deal put an end to the independent foreclosure reviews, which were reportedly costing banks hundreds of millions of dollars each quarter and would likely have stretched through the next two years. In fact, review costs for this year were expected to be even higher than last year. Now, they can stop the hemorrhage of that cash flow immediately.

As one official with JP Morgan Chase put it: The savings for the firm as a result of this deal will be "significant." No doubt the motivations for the other banks were along those same lines.

The settlement is intended to not only compensate those who suffered wrongful foreclosures at the height of the robo-signing crisis, but also to allow for foreclosure prevention assistance to borrowers who are still on the brink.

The reviews were initially required by federal regulators, but they were scrapped after serious questions were raised about the validity and fairness of the reviewers' results, as there was no uniformity to the program and it was mostly being overseen directly by bank managers, as opposed to the government.

According to reports, no borrowers had received any compensation yet from the review program, though some were set to receive it by December. Those individuals will now likely have to wait until at least March.

The banks are now going to have to tear through millions of loan files to categorize borrowers. What's especially troubling to us is that it's the banks that have been left in charge of it all. Once again, they are given the opportunity to decide how much they will pay for their own failures and misdeeds.

Some lawmakers are already raising this point. One Democratic Senator from Ohio sent a formal letter to both top regulators recently, expressing concern that the methods we have learned of so far may lead to many borrowers getting back far less than they should.

The regulators have yet to respond.

Continue reading "Foreclosure Settlement Deal Details Trickle Out" »

Before anyone starts to get all warm-and-fuzzy about the ounce of altruism 10 major banks had in reaching an $8.5 billion foreclosure abuse settlement deal, consider this: The timing of that settlement was in all probability carefully calculated to benefit the banks.

As our Miami foreclosure lawyers understand it, those familiar with the situation have leaked to reporters that the idea was to shove the losses in their fourth-quarter results so that they could present a cleaner picture to investors in the coming calendar year. This is on top of the fact that the amount they paid is likely far less than what they would have owed had the "independent" foreclosure reviews actually been done with a smidgen of integrity.

The deal was announced January 7, 2013, which allowed the major banks involved - JP Morgan Chase, Wells Fargo, Bank of America, Citigroup and others - to take advantage of something called subsequent-events accounting. Worth noting is that this same advantage applies to the $10 billion deal Bank of America separately reached with Fannie Mae over the risky mortgage loans it sold to taxpayers.

Subsequent-events accounting under U.S. law is essentially this: If a certain event, be it a profit or loss, occurs after the close of the previous fiscal year but prior to the time when the next quarter's results are released, the firm is required to mark that impact in the previous quarter's results.

So what this means is that the portfolio of these financial giants will be looking much cleaner for the current fiscal year - something that will ultimately lure more potential investors.

Bank of America, for example, will be reporting a $2.5 billion loss for the foreclosure settlement deal and another $2.7 billion loss for the Fannie Mae deal in its fourth-quarter earnings. Citigroup, meanwhile, will report a $305 million loss. Wells Fargo will report about a $645 million loss, and JP Morgan will report about $700 million in losses.

But none of them will have those blemishes on their reports for this year. The firms will essentially minimize their losses.

A former official with the Securities and Exchange Commission was quoted by The Wall Street Journal as saying it's understandable that banks would want to move past all this. Sure - so would the millions of homeowners left out in the cold by the egregiously unethical and at times illegal practices of these too-big-to-fail firms. But instead, after much heartache and strife, some will be getting mere pennies on the dollar for their losses.

One bank official from Wells Fargo admitted pushing for a faster resolution, but said it was to expedite help to customers, not for any residual benefit it may have incurred as a result. Right.

Had these banks had their customers - and the taxpayers - in mind all along, we wouldn't be in this mess in the first place.

If you believe you may be eligible for a foreclosure settlement or are seeking a loan modification, call us today to learn more about how we can help get you the most you deserve.

Continue reading "Foreclosure Settlement Deal Timing Strategically Benefits Banks" »

In the wake of ballooning criticism regarding the so-called "independent foreclosure reviews," two multi-billion settlements have been formally reached by federal regulators and banks accused of major foreclosure abuses.

Our Miami foreclosure lawyers understand that at least one of those deals, the $8.5 billion agreement between the Office of the Comptroller of the Currency and 10 major banks that were initially on board with the foreclosure review process, has been characterized by insiders as "vague. Further, it likely actually amounts to far less than these entities may have had to pay if the review process had been conducted with any modicum of integrity.

It's unclear how the $8.5 billion number was reached, but we do know that 10 banks will pay out a total of $3.3 billion directly in cash to nearly 4 million homeowners who were eligible for a review. In all, that works out to about $870 for each borrower.

However, it's expected that the awards will be fluctuating a great deal. The remaining $5.2 billion will be credits that the bank will receive for things like loan modifications and other efforts to help current underwater borrowers avoid foreclosure.

Similar to the $25 billion settlement reached by five major banks last year with attorneys general from 49 states, some have said this is money banks will earn for doing things they were either already doing or should have been doing.

Still, it is worth noting that the deal is intended to mean accelerated payments for those who are owed money. In other words: You'll get it faster, but it might not be nearly what you're owed.

Under the review process, homeowners could have been awarded up to $125,000 for foreclosure wrongs.

The $8.5 billion deal effectively ends the foreclosure review process.

That deal involved Bank of America, as did the $25 billion deal. Still, that bank has reached a separate, $10.3 billion settlement agreement with Fannie Mae, the government-backed mortgage firm that purchased questionable home loans from the bank before the housing bubble burst.

The bank has agreed to fork over $3.55 billion in cash, and it will also repurchase an estimated 30,000 of those mortgages that are expected to yield significant losses, paying approximately $6.75 billion for those loans. These were loans that had been packed into mortgage-backed securities and then sold to Fannie Mae, ultimately giving taxpayers a raw deal.

In fact, Fannie Mae reported major losses as a result of these purchases, forcing a complete government takeover and a bailout of $116 billion just to keep it afloat.

These loans were originated by Countrywide Financial, which was a top subprime home lender that was bought by Bank of America in 2009 for $4 billion.

The bank already repurchased some $3 billion worth of bad loans in 2010 from Freddie Mac - a deal many said let BofA off far too lightly. It was also slapped with a $330 million fine two years ago for discriminatory lending practices.

This all sounds like a lot of money, but its unclear how all of this will translate for homeowners who were either victims forced from their homes or who are still struggling as a result.

While federal regulators have issued generalities about how borrowers will be compensated under the $8.5 billion deal, we don't yet know all the details. We do know that the review process had identified 13 varying categories of potential harm, each with a corresponding price tag for compensation. It's expected that this payout may mirror that, with lump sums anywhere from a few hundred dollars all the way up to $125,000, but we haven't been given specifics.

If you have been a victim of wrongful foreclosure or are struggling to avoid it now, call us today to see how we can help.

Continue reading "Multi-Billion Dollar Settlements Vague, Replace Foreclosure Reviews" »

The process was supposed to make whole homeowners who had been wronged by the foreclosure fraud that was rampant in the midst of the housing crisis.

Instead, our Miami foreclosure lawyers realize that it made us all even more wary of the integrity of large financial institutions.

The Independent Foreclosure Review process has come under intense scrutiny by numerous media organizations, having spoken to some of those who were contracted by the banks to spot problems in reviewing hundreds of thousand of foreclosures, as requested by individual homeowners and overseen by the Office of the Comptroller of the Currency. The most recent investigative report comes from The Huffington Post, whose reporters spoke to five former reviewers.

These were individuals who were tapped to comb through the mortgages of those who were in foreclosure at the height of the scandal, in 2009 and 2010. In the midst of this process, these firms were supposed to be looking for some of the telltale signs of mismanagement and fraud - overcharges, lost paperwork and refusal to offer loan modifications.

Many of the reviewers, who may have at first believed they were working for the greater good, soon came to the conclusion that it was all set up.

For starters, those contracting with Bank of America had to answer literally thousands of questions per case. These questions seemed intentionally confusing and open to interpretation. But the banks offered default answers, which of course favored the financial institution, which the reviewers then had to change if they disagreed.

Additionally, the training offered to reviewers was spotty, at best. Mistakes were commonplace. And when the reviewers themselves pointed out obvious mistakes, managers at Bank of America urged them to turn a blind eye.

The five former reviewers interviewed by the Huffington Post said the cover-up went so far as bank managers telling them they would lose their jobs if their results tended to favor homeowners.

Although a recent $8.5 billion settlement that effectively ended the review process was characterized by the banks as a more effective way to serve homeowners' interests, those on the inside say the deal was only reached because the banks realized they could no longer realistically justify the systematic errors that would have inevitably come to light sooner or later.

One reviewer, who had previously signed on with JP Morgan Chase, likened the reviews to a badly-designed ship that was fully intended to sink from the start. The reviews were being directly overseen by bank managers.

Perhaps the greatest fault lies with the Office of the Comptroller of the Currency, which failed to implement a mandated, consistent and truly independent process. These regulators also didn't appear to even see that there was a problem until it had gone on so long that saving it was a lost cause.

When it all ended, the consultant firms had raked in more than $1.5 billion by billing anywhere from $230 to $630 an hour.

And for what?

We have to wonder how much good that money could have done in the hands of homeowners who were wronged in the first place.

Continue reading "More Evidence of Foreclosure Review Fraud" »

NBC News recently reported on the situation of an Ohio man who may literally die as a result of a mortgage foreclosure that remains undead.

Our Miami foreclosure lawyers understand this situation started about five years ago, after he fell 10 months behind on his mortgage payment. He was told the house would go up for auction, and he and his wife moved out. But then he was sued by the county for code violations. Then the tax collector sued him for thousands in back taxes for sewer fees and waste removal. Then he was contacted by the bank's debt collector, claiming he owed up to $85,000 for his mortgage. And then just recently, the Social Security Administration denied him disability benefits on the basis that the "asset" made him ineligible. With advanced liver disease, among other ailments, that decision means he can't get a liver transplant he so desperately needs.

As it turns out, the bank claims that it filed to dismiss the foreclosure case back in 2008, several weeks after the homeowner and his wife had already moved out. But the homeowner said he never received any such notice. Yet, his name stayed on the title - making him responsible for all of it.

It's not clear how many so-called "zombie titles" there are in America right now. However, given the fact that some 10 million homes have gone into foreclosure since 2006, and the paper trail mess that so many banks and mortgage companies were in, it wouldn't be surprising to find thousands of homeowners across the country grappling with this issue.

We know that approximately 2 million of those foreclosures were never finalized. Some of those homes may be still occupied by homeowners living for free. Some have been swept up in the robo-signing scandal, in which banks tried to churn out as many foreclosures as it could as fast as it could.

But then there are the cases like this Ohio man. Cases in limbo. Never truly resolved one way or the other.

Just as many homeowners made the choice to simply walk away from their mortgage, it appears that for the last few years, banks have been doing the same thing. Except unlike homeowners, who must for years live with the ill effects of that foreclosure on their credit score, banks have done so with no apparent repercussion.

Essentially, people left what they thought was an imminent foreclosure - which banks had warned in multiple official letters and other correspondence. Except it's not until later the homeowner learns he or she is still responsible for the property. A situation like this means their wages have been garnished, their credit is ruined and their tax refunds are seized. Bailiffs show up at their front door, ordering them to come to court. Some are forced to file for bankruptcy. In some places, they are even threatened with jail.

Some have likened the situation to those of indentured servants: They have all the responsibilities of property ownership, yet none of the rights.

The reason so many homeowners were caught off guard by this scenario is that it rarely if ever happened before the housing bust. It used to be, banks would, without fail, follow through with a foreclosure action in one of two ways: either putting up for sale at a sheriff's auction or repossessing it outright. A letter would be sent to the homeowner informing them of the intention, and that was it.

But after the housing market tanked, the banks began to understand that if they followed through on repossession of these homes, they were going to be responsible for the homes' upkeep, taxes, etc. And even if the home could be sold at auction, the banks knew they wouldn't get anything near what they owed.

So, they simply walked away, unbeknownst to the homeowner, who would often only find out after these actions were taken against them.

If this is a situation you have found yourself struggling with, call us today. We can help you find the way out of this legal nightmare.

Continue reading "Foreclosed Homeowners Plagued By "Zombie" Titles" »

The fiscal cliff deal hammered out by national leaders at literally the final hour of 2012 will have a number of benefits for homeowners - who all in all have been handed a raw deal the last few years.

Miami foreclosure lawyers had been watching closely to see what they could expect for the coming months. The truth is, it's still a mixed bag, but it seems, for a change, there may be more good than bad.

Kenneth R. Harney, executive director of the National Real Estate Development Center, recently penned a comprehensive, point-by-point analysis of how the complex agreement translates for homeowners, buyers and sellers.

For starters, if you are among the millions whose mortgage is backed by Fannie Mae, Freddie Mac, a Rural Housing Loan, an FHA or the VA, the fiscal cliff compromise, titled the American Taxpayer Relief Act, will give you the opportunity to write off any insurance premiums you paid last year, as well as your mortgage interest, so long as your collective household income doesn't go over $110,000. This deduction had actually expired at the end of 2011, but the bill is going to give you the opportunity to retroactively write-off those things for both 2012 and 2013.

Secondly, if you had some renovations done to your home last year that made it more energy efficient, you could be eligible for a maximum $500 tax deduction. Eligible renovations would be things like insulation or energy-saving doors, windows, roofing material or non-solar water heaters. This measure too had expired in 2011, but thanks to the bill, has been revived.

Thirdly, if you are underwater on your home, there is doubly good news for you with the renewal of the Mortgage Forgiveness Debt Relief Act. This measure provides relief for those who were either planning to work out a short sale or to request a principal loan reduction. It had been scheduled to expire Dec. 31, 2012, but it's now been extended at least another year. Absent this provision, homeowners who owe more on their home than it's worth could be held responsible for paying taxes on the difference between what they owe and the amount their home sold for in the short sale - as if that amount were actual money-in-their-pocket income. Same deal for those who requested a principal loan reduction; they would have had to pay taxes on that amount as well.

The expiration of that last measure in particular would have likely devastated cash-strapped homeowners. Many would have most probably had to seek relief in the form of a bankruptcy, as they could have scarcely afforded to pay taxes on tens or even hundreds of thousands of dollars in "income."

Still, it's not all good. There will be some increased capital gains taxes for sellers who make more than $250,000 individually or more than $500,000 as a married couple.

In addition to that, the deal will limit deductions you can take for taxpayers who earn more than $250,000 filing single or more than $300,000 filing jointly. It's a fairly complex formula, but generally, it's probably going to mean another $1,000 for a couple earning about $400,000 altogether.

So overall, it's reason for most homeowners to breathe easier - at least until this spring. That's when a number of other big tax reform measures will be on the table, including several real estate write-offs.

Continue reading "Fiscal Cliff Deal Has Benefits For Struggling Homeowners " »