South Florida homeowners facing default or foreclosure should contact an experienced Miami foreclosure defense attorney to discuss their options. Government and private mortgage assistance programs, short sales, strategic default, foreclosure and bankruptcy are all options best discussed with a qualified South Florida real estate lawyer.

The re-default rate for modified loans in the first quarter of 2009 was 51.5 percent by the end of the year. Payments at least 30 days late climbed to 57.9 percent when measured during the previous 12 months.

One in four homeowners are struggling with underwater mortgages -- meaning they owe more on their home than it's worth. Florida has been among the hardest hit areas in the nation as property values have plummeted and unemployment continues to linger in the double digits.

The median price of a U.S. home was $165,100 in February, down 28 percent from the height of the market in July 2006, according to the National Association of Realtors. In Florida, values have fallen 45.7 percent, the third-worst in the nation behind Nevada and Arizona.

The number of homeowners more than 60 days late on their mortgage payments climbed 49.6 percent year-over-year -- leading to an estimate of 4.5 million foreclosure filings this year, according to RealyTrac.

As of the end of February, the government home-loan modification program, had assisted 168,708 homeowners with permanent modifications.

While help will not be available for everyone, an experienced Miami foreclosure attorney should be called to assist struggling South Florida homeowners determine the best course of action, including loan modification, short sales, foreclosures, principal reductions and bankruptcy.

The government reported this week that 16 of the top locations in the nation for troubled FHA mortgages are in Florida -- including Miami where 18 percent, or nearly 1 in 5 federally-insured mortgages, were in trouble.

CNN reported Friday that the new effort would require mortgage companies to reduce monthly payments to no more than 31 percent of a borrower's income and mandate suspension of payments for 3 to 6 months for some borrowers, including the unemployed. Additionally, those in the government's loan-modification program, known as the Home Affordable Modification Program, would be able to get a reduction in principal if their outstanding loan balance is greater than 115 percent of their home's value.

The Washington Post provides a good Q & A for struggling homeowners, which answers questions for unemployed borrowers, those struggling with underwater mortgages, program restrictions, second mortgages, FHA loan options, impact on credit scores, delinquent payments, reductions for owners already in a loan-modification program, and taxpayer implications.

QA Will foreclosure-prevention measures affect me.pdf

The announcement is the latest in a string of government and state programs designed to assist residents facing foreclosure. An experienced Miami foreclosure attorney can help you determine the program that is right for you and fight to keep you in your home.

This latest program, which will provide underwater homeowners with cash in an effort to induce them to sell for less, is the latest attempt to deal with the estimated 5 million households who are behind in their mortgage and in danger of foreclosure. South Florida is among the hardest hit areas in the nation.

The government's $75 million mortgage modification plan is another program available to Miami homeowners, though it has helped just a small percentage of eligible homeowners.

An estimated 1 in 6 U.S. borrowers owe more on their home than it is worth after the nation's real estate bust erased more than $3.3 trillion in home equity during 2008, according to the real estate site Zillow.

The new program takes effect April 5 and will encourage hundreds of thousands of borrowers to sell their homes through short sales, a process where the bank permits a house to be sold for less than the amount owed.

Homeowners associations are often much more aggressive than banks in seeking eviction or foreclosure actions against delinquent homeowners. Miami homeowners facing foreclosure can often remain in their homes throughout the foreclosure process as long as they don't run afoul of their homeowner's association. A Miami foreclosure attorney should be consulted in cases where a homeowners association is involved in the foreclosure process.

Homeowners associations in South Florida are resorting to "reverse foreclosures" in an attempt to collect association and maintenance fees. Associations have come under increasing financial strain during the real estate bust as multiple foreclosures leave them with fewer fees and more empty units and properties to maintain.

This latest move by homeowners associations is a result of an increasing number of banks that are delaying the process of taking back a property. By delaying the sale, banks are hoping for a market rebound. In the meantime, a property sits in limbo and the homeowners association doesn't get paid.

Under a reverse foreclosure, the association files its own foreclosure action. It then renounces its claim to the property (an association can't sell anyway because of the bank's lien) and asks a judge to give title to the bank.

Staying current on your homeowners fees is important if you and your family want to remain in your home throughout the foreclosure process, which can take several years.

Struggling South Florida homeowners are faced with many options in dealing with an underwater mortgage, resetting option ARM mortgages or unaffordable mortgage payments, including government and private modification programs, short sales, foreclosure and bankruptcy. An experienced Miami foreclosure lawyer can assist in determining the option that is right for you.

Companies servicing loans through the Home Affordable Modification Program (HAMP) have until Jan. 31 to review trial modification that have been underway for several months. Meanwhile, the Treasury Department said it will issue new guidelines next week but would not give details.

Reviewers must determine whether borrowers have made all the payments during the trial period and completed the necessary paperwork. During trial modification, a homeowner's monthly payments are no more than 31 percent of pre-tax income. Some homeowners have waited seven or eight months to see if they qualify for permanent adjustment to their mortgages.

About 450,000 struggling homeowners are currently enrolled in the program.

Stephen Colbert explains the difference between your mortgage and your word.

The Colbert Report	Mon - Thurs 11:30pm / 10:30c
The Word - Honor Bound
www.colbertnation.com
Colbert Report Full Episodes Political Humor Health Care reform

Brent T. White, a University of Arizona law school professor, wrote new academic paper entitled "Underwater and Not Walking Away: Shame, Fear and the Social Management of the Housing Crisis."

 His conclusion was that the 15 million U.S. homeowners underwater on their mortgages should stiff their lenders and take a hike.

 Many would save hundreds of thousands of dollars that they "have no reasonable prospect of recouping" in the years ahead. Plus the penalties are nowhere near as painful or long-lasting as they might assume.

Professor White explains that while "credit scores get whacked when you walk away, "one can have a good credit rating again -- meaning above 660 -- within two years after a foreclosure" as long as you stay current with other creditors. 

Better yet, homeowners can "strategically" default and make preparations for a few years of limited credit.
In Florida, many lenders may decide that it is not worth the legal expense to pursue walkaways, or our firm may be able to find flaws in the mortgage documents, disclosures or underwriting to challenge the original contract.



Professor White's main point is that people let their emotions get in the way of clear financial thinking about mortgages. Most owners are too worried about feelings of shame and embarrassment after a foreclosure, and ignore the powerful financial reasons for doing so. They often fall prey to "the social control of the housing crisis" -- pressures and messages continually sent to consumers by the "social control agents," namely banks, government and the media. The mantra that these agents -- all the way up to President Obama -- pound into owners' heads, White said, is that "voluntarily defaulting on a mortgage is immoral."

The other side of the coin for homeowners is that Banks set the rules during the housing boom, handing out home loans with no down payments, no income checks and inflated appraisals. Now that property values have dropped 20% to 50% in many areas, banks have been slow to modify troubled mortgages and reluctant to reduce principal debts.

 Only when homeowners cut through the emotional fog and default strategically in large numbers, White argues, will this inequitable situation be seriously addressed. 

 The best chance many will have is to hire aggressive, competent counsel to fight for their financial freedom.

Professor advises underwater homeowners to walk away from mortgages - latimes.com.pdf

Underwater and Not Walking Away- Shame, Fear and the Social Management of the Housing Crisis.

A "strategic default'' occurs when a borrower abruptly and intentionally stops paying mortgage. Using a massive sample of 24 million individual credit files, researchers found homeowners with high credit scores are 50 percent more likely to walk away than lower-scoring mortgage borrowers. Many who chose a strategic default understand the consequences of what they're doing. They are clearly sophisticated. They usually are selective about payments they make. For instance, they often pay home equity lines until they bail on their first mortgage and many draw down more cash on the equity line.

Recently, the national credit bureau, Experian, identified the characteristics and debt management behavior of homeowners who bail out of their mortgages. They found 588,000 strategic defaults nationwide in 2008, more twice the number from 2007. Eighteen percent of all serious delinquencies lasting over 60 days are strategic defaults.

Strategic defaulters go from perfect payment histories to no payments at all. Most distressed borrowers try to keep paying their mortgage after they've fallen behind. They want to save their homes, not dump them.

If you are considering a strategic default, know your credit scores will be severely hit. Many see it as the only practical solution to deal with their negative equity. Strategic defaults are found everywhere that home values boomed and cratered since 2006. In Florida last year, the number of strategic defaults was 46 times higher than in 2005. In other parts of America, defaults were about 9 times higher in 2008 than in 2005.

There are dangers in trying a strategic default without strong foreclosure defense counsel. You will lose points on your credit score and may ultimately get hit with a deficiency judgment. The best advice is to fight back against the bank to make sure they have reason to waive the deficiency and let you walk away.

Strategic default - 09_20_2009 - MiamiHerald.com.pdf

When a home is underwater or upside-down, a foreclosure sale price is far less than the loan balance. In Florida, lenders can apply to the Court for a deficiency judgment after a foreclosure up to five years later. The judgment amount is the difference between the loan and the market value of the home on the day it sold at a foreclosure auction.

Judgments are good for 20 years. Judgment holders can force people into court every year to disclose their finances. They can seize bank accounts, assets, garnish wages, even the family dog (its considered property under Florida law). ,

Quietly, many investors are buying up these deficiency judgments at pennies on the dollar. These investors tend to be very aggressive and look to recover a higher rate of return than the larger institution. They are willing to put the effort in," said Jeff Baum, formerly with SunTrust Bank's unit handling residential mortgage-backed securities.

Once a deficiency judgment is awarded, it is often sold to debt collectors. A bank will walk away rather than spend money to collect a debt that will force the borrower into bankruptcy. Many lenders are saying "So, why not sell it for 25 cents on the dollar?"

The best way a homeowner or borrower can protect themselves is hire strong foreclosure defense counsel to negotiate a waiver of the deficiency judgment.

http___www.dailybusinessreview.com_news.pdf

According to a transcript of the Sept. 29 hearing in the White Plains case, The Bank's counsel said: "In the secondary market, there are many cases where assignment of mortgages, assignment of notes, don't happen at the time they should. It was standard operating procedure for many years." Judge Drain rejected that argument, and ruled he had "more than 50 percent doubt that if the debtor paid this claim, it would be paying the wrong person."
Fair Game - If the Lender Can't Find the Mortgage - NYTimes.com.pdf

Councilman Williams is demanding lenders do more to help South Florida homeowners avoid foreclosure. If a lender has a branch in Miami Gardens, the new legislation punishes banks that start foreclosure proceedings without offering a loan modification.

There is no jurisdiction for local government to run oversight on banks. Councilman Williams' ordinance would test whether a lender filed more foreclosure actions in Miami Gardens that loan modifications offers over a period of time. If so, Miami Gardens would pull its accounts or other business from that bank.

To date, Banks have modified only 9% of over 3 million mortgagees at risk of foreclosure. The relief can come in the form of interest rate or principal balance reductions. President Obama's Making Home Affordable Program made $75 billion available to 38 major home lenders in the US for that purpose.

Councilman Williams is running for U.S. Congress. The Miami Herald editorial said that Banks should help distressed homeowners or Congress should consider changing bankruptcy laws to permit judges to reduce the principal balance of home mortgages. So, if Councilman Williams can't get his law passed in Miami Gardens, perhaps he can wins a seat in Congress and make it happen.

How Miami Gardens May Punish Banks for Foreclosures -- Printout -- TIME.pdf

It all started after Ms. Ramirez defaulted on her $2,159 mortgage payments. She had purchased the suburban Miami home three years ago for $260,000. Her loan was owned by J.P. Morgan Chase, (formerly WAMU) who started the foreclosure process. The house was sold at auction in June for $87,000. However, Ms. Ramirez convinced Judge Reyes to cancel the sale and allow them to work out a loan modification. They ultimately agreed to reduce the monthly payment by $600.

The problem arose after the clerk of court failed to tell the foreclosure sale buyer. That buyer brought out the police in August to finish the eviction. The Ramirez family had only three hours to empty their 3 bedroom, 2 bath house. They even showed the police a copy of Judge Reyes' order cancelling the sale but the police didn't believe them.

The problem was corrected the following day when Judge Reyes ordered the Ramirez Family could move back into their home. Judge Reyes also ordered the Clerk's office to update the docket to reflect the changes. Even the Bank's spokesperson admitted this was a miscommunication and clerical error in the court system.

Foreclosure stopped but family forced out of home HeraldTribune.pdf

This legislation was struck down earlier this year. However, the Senate Subcommittee on Administrative Oversight and the Courts agree that current foreclosure relief efforts are disappointing so far. Both Senators and Experts agree that voluntary loan modification and short sale programs by loan servicers are not helping enough. The door remains open to new leverage that can force Lenders to the table.

The newly revived legislation calls for a bankruptcy judge to modify primary mortgages by a "cramdown" in a Chapter 13 case. In Miami and South Florida, where almost half of the homes are underwater or upside-down, cram down means the bankruptcy judge reduces the principal loan balance to the current value of the home. The legislation also permits Judges to reduce interest rates and extend repayment terms up to 40 years. Chapter 13 currently permits cram downs of almost any loan except the first mortgage on primary residence.

Back in April of 2009, the Senate voted against an amendment to the housing bill that would allow the mortgage cramdown to become law. The vote was only 45-51. Opposition to the bill argues that a bankruptcy cram-down would mean fewer lenders making loans and higher mortgage rates. There is also a strong belief that Lenders should not shoulder the burden of bad investments.

Those in favor of the bill argue these past two years of voluntary loan modifications have not stemmed the crisis. They believe the threat of bankruptcy judges forcing lenders to make realistic modifications is enough to bring them to the table. This would have an immediate effect at no additional taxpayers' expense. The new bankruptcy law would guarantee lenders recover as much as they would by foreclosure.

So far, no lawmaker has reintroduced cramdown legislation since the April 30 defeat. However, Senator Dick Durbin has promised to do so at the first available opportunity.

The issue is bigger than Miami-Dade county and bigger than Florida. Homeowners facing foreclosure around the country are suing their loan servicers for harrassment, forced placed insurance manipulations and illegal fees. Some loan servicers are accused of delaying the process of loan modifications, short sales and payoffs, and graceful exit (walkaway) agreements to charge more fees and earn more profits.

President Obama has given billions of dollars to major loan servicers like Wells Fargo, Bank of America, Citigroup and JPMorgan Chase to help homeowners in foreclosure. Yet, these companies are being sued for abuses by the very homeowners they are being paid to help. The smaller players in the loan servicing industry, the ones that service subprime loans and loans in default, are some of the worst offenders.

Mortgage loan servicers are middlemen who collect homeowner's payments and send the money to loan owners. They are the link between lenders and borrowers and are charged with negotiating loan modifications under President Obama's $50 billion mortgage-modification program. The Government pays the servicers if the borrower stays current on payments for at least three months after a loan modification.

Borrowers have sued loan servicers for various illegal practices. Charging illegal fees and engaging in illegal collection practices are common complaints. Some loan servicers are accused of foreclosing on homes prematurely and proceeding with foreclosure after agreeing to a loan modification. Others are accused of misleading customers about whether they qualify for a loan modification or the amount of their new payment. In many cases, servicers allegedly told borrowers to stop making payment during the application process and then moved to foreclose.

The government needs the loan servicers because they are the primary link between the investors who indirectly own their mortgages through securities and borrowers. The government program pays loan servicers over $5,500 per loan modification. However, they only get paid after the homeowners make three monthly payments on time.

Under President Obama's program, dozens of loan servicers are now paid to negotiate loan modifications that reduce mortgage payments to less than 38 percent of the borrower's gross monthly income. There are several ways to modify a loan. The servicer may reduce the principal or the interest rate. It can extend the term for repayment. The problem is that any of these options means the loan servicer makes less money.

Loan servicers earn less than half a percent of the value of the loans in their servicing portfolio. The larger the mortgage, the more fees the servicer earns. Loan servicers also make money through late fees and charge hundreds of dollars to foreclosure a mortgage.

Associated Press_ AP IMPACT_ Gov't mortgage partners sued for abuses.pdf

The Florida Supreme Court's special task force on residential foreclosures recommends mandatory mediation to ease the crisis overwhelming Miami and South Florida courts. The plan is to force mediation on primary homes so homeowners can negotiate loan modifications and expedite foreclosures of vacant and abandoned properties

Miami-Dade Circuit Court Judge Jennifer Bailey chairs the 15-member residential foreclosure task force which suggests dividing foreclosure cases into three categories: primary homes, also known as homesteads; vacant and abandoned properties; and all others.

Almost half of all South Florida homeowners are underwater on their home. This means they owe more to their mortgage lender than their house is worth. With unemployment rising and foreclosure filings skyrocketing over the past three years, help is sorely needed. Miami-Dade County has seen 29,618 foreclosure cases filed since May, 2009, and Broward has seen 22,306.

While mandatory mediation will be a godsend to homeowners, Lenders are not as happy. The program is considered to costly and will delay foreclosure cases. Especially for those borrowers who may have already been considered and denied help. The plan calls for the lender to bear most of the cost of this mandatory mediation program.

Mandatory mortgage mediation will force the lender to meet with the homeowner, and their counsel, to discuss various settlement proposals. This will avoid one of the biggest problems with loan modifications - Banks and lenders cannot keep up with the demand. Endless waiting on hold and confusing, contradictory procedures make the process frustrating and inefficient. Sitting down with a mediator and your attorney can mean all the difference in avoiding the worst-case scenarios in a foreclosure.

Mediation urged before foreclosures - 08_18_2009 - MiamiHerald.com.pdf