Articles Posted in Short Sales

The number of underwater mortgages in Florida has reached a crisis level. One report indicates 45 percent are in that category, which has led to strategic defaults, short sales and foreclosures in Miami.

Homeowners simply cannot be asked to continue making payments on houses that aren’t worth the price. An underwater loan is one where what the homeowner owes is more than the value of the house. Florida has been hit hard because of plummeting housing prices, based largely on the glut of foreclosures throughout South Florida.
1155202_wavelets.jpg
In many cases, a person may consider a strategic default, which means simply walking away from the house — mailing in the keys, in an effort to save face. This is a decision that must be made with great thought and planning and advice from an experienced Miami foreclosure defense lawyer.

The reason for this is that banks can attempt to come after the homeowner for the difference, called a deficiency judgment. While banks won’t say which homeowners they attempt this on and which they don’t, some experts believe people who have walked away from investment homes or whom they believe could actually afford the house are targets.

If a judgment is levied against the homeowner, they would be on the hook for the difference between the loan amount owed and what the house sold for at auction after foreclosure.

Another option is a short sale. However, a short sale requires help from the banks, which may not be willing to work with a homeowner. In a short sale, the homeowner finds a buyer for the house and then brings the amount that person would be willing to pay to the bank for negotiation. The goal is to get the bank to agree to that purchase price and sale — and in the process relieve the homeowner of the remaining debt.

In either case, there is a risk involved and in both cases, it’s almost guaranteed that the motivation for the move is an underwater mortgage. If successful, however, these moves can pay off greatly, as getting out from an albatross of a home can be important.

According to creditsesame.com, 45.1 percent of homes in Florida are underwater in their mortgage and another 4.2 percent are near underwater, meaning they are in negative equity or within 5 percent of being in a negative equity position.

That means that 1,970,756 homes are underwater and another 182,389 are classified as near underwater. That puts Florida as one of only three states where more than 45 percent of homes are underwater.

In Nevada, 60.4 percent of homes are underwater and in Arizona, 48.7 percent hit the mark, according to creditsesame. But Florida has far more homes underwater than either of those states. In fact, Florida’s underwater homes equal twice that of both states combined.

Only California, with 2.06 million homes underwater, has more than Florida nationwide. Florida is clearly in a different position that any other state because there are so many vacation and speculative homes here. This has put our state in a perilous position.

And this has not only affected the homeowners whose houses have gone into foreclosure, but also those that haven’t. Foreclosures affect everyone, even those making monthly mortgage payments.
Continue reading

CBS 4 is reporting that home values continue to plummet in South Florida, with struggling Miami homeowners being among the hardest hit.

Nearly half of all home sales in Miami were short sales. The banks are evolving and getting smarter as the real estate slump grinds on. The best way to stop foreclosure in Miami is to move aggressively to protect your rights with the help of a Miami real estate attorney. Mortgage relief and principal reduction programs are not the same for everyone. By negotiating from a position of strength, you can best protect the financial well-being of you and your family.
1237498_untitled.jpg
Zillow.com reports South Florida is one of the 20 worst areas in the country for falling property values and struggling underwater homeowners. Zillow reports that the average home price in Miami-Dade is $144,700 — down more than 20 percent from last year. In Broward County, the average value is $134,800, a decline of nearly 14 percent from a year ago.

In Miami Dade, prices have dropped 55 percent from the peak of the housing bubble in 2006 — meaning your house is likely worth less than half of what it was four years ago. In Broward County, prices have dropped 54 percent.

When it comes to negative equity, 44 percent of South Florida homeowners owe more on their home than it is worth in the current market. And nearly half of all homes sold in June in South Florida were sold for a loss.

Zillow found that Tampa and Orlando is in even worse shape than South Florida.
Continue reading

The Miami Herald reports about a thriving private industry that is buying debt from banks and chasing homeowners for mortgage balances owed in the wake of a short sale or foreclosure.

This is another example of why it is critical to consult an experienced Miami foreclosure attorney for those seeking mortgage foreclosure help or for homeowners trying to stop a foreclosure sale in South Florida. Companies are waiting to go after homeowners who close short sales without a waiver of deficiency.
1037536_Miami_foreclosure_help.jpg
The New York-based Deficiency Judgment Recovery Network is one such company. Formed in late 2009, the company reports it is attempting to collect from “hundreds, maybe thousands” of Florida homeowners who though completing a short sale would put their housing nightmare behind them. The company is either hired by lenders to collect deficiencies or buys the debt for pennies on the dollar. A deficiency is the difference between a homeowner’s mortgage balance and what a home brought through short sale or foreclosure.

“People are under the assumption that the banks are so busy modifying home loans that they don’t have the bandwidth or stomach to go after those who are walking away. That’s a bad assumption,” said Joshua Rand, whose company motto is “We turn shortfalls into windfalls.”

Before the downturn in the real estate market, such deficiencies were rare. Now, as many as half of homeowners owe more on their property than it’s worth in the current market — particularly in hard-hit states like California, Florida and Arizona.

As one industry watcher put it: “It’s going to be a blood bath.”

Florida courts handled 398,825 foreclosures last year — not including short-sales, which account for more than one-third of all real estate transactions in some areas of South Florida. By the end of this year, Realty Trac predicts a total of 3.5 million more foreclosures nationwide.

In Florida, lenders have up to five years to file a deficiency judgment and up to 20 years to collect.
Continue reading

Lenders dealing with foreclosures and short sales in South Florida and across the nation are expected to file a barrage of lawsuits seeking to recoup losses from homeowners, the Miami Herald reported.

An experienced Miami foreclosure defense attorney should assist buyers dealing with a short sale or foreclosure. Without a written agreement from your lender, you are exposing yourself to the possibility of being slapped with a huge judgment for outstanding mortgage debt — the difference between what your house is worth now, and what you owe on the mortgage. Get an experienced Miami real estate attorney and make sure you protect your financial well-being by seeking a waiver of such deficiency judgments. Otherwise, a short sale may help the bank, but won’t help you.
772351_Miami_deficiency_judgment_1.jpg
“It will be a dramatic problem because the borrowers will not know it’s coming,” Frank Alexander, a law professor at Emory University in Atlanta, told the Sun-Sentinel. Florida law gives banks five years from the date of a sale to file a deficiency judgment and up to 20 years to collect. Lenders can garnish wages, make claims against a borrower’s assets and use other means of collection.

While such deficiency judgments were rare before the housing meltdown, so were foreclosures and short sales and borrowers frequently had few assets worth chasing in an attempt to collect. But, with the advent of strategic default, banks are finding borrowers often walked away with significant assets and the bill collectors are suiting up for action.

A recent survey found more than 4 in 10 homeowners said they would consider walking away from a property with an underwater mortgage — meaning more is owed on the home than it is worth in the current real estate market.

Other homeowners at high risk of collection action include those who ransacked or damages properties in foreclosure, either out of spite or for a profit.

Mortgage companies typically won’t pursue homeowners who negotiate in good faith, or those who default because of job loss, health problems or other unforeseen circumstances, according to the Herald’s report. But don’t take the lender’s word for it; work with a qualified and experienced attorney to get it in writing.

Even if the mortgage companies don’t pursue collection action, they can sell the debt to a collection agency at a steep discount, and the debt collectors will come calling with all of the aggressive and disruptive tactics that they employ.
Continue reading

Make sure you have an experienced foreclosure defense attorney read your short sale approval letter before you agree to close. An alarming new trend is confronting underwater homeowners facing foreclosure in Miami and South Florida. Even if you do everything right to short sell your property, Bank of America may still want its deficiency judgment.

This week, Bank of America was foreclosing its a $1.2 million mortgage on a South Beach condo. The borrower got an approval letter for a shortsale at $750,000.00. However, there was a catch. The approval letter reserved the right for Bank of America to pursue a deficiency judgment. This result helps the bank a whole lot more than the borrower.

didyourbanklie.jpgDon’t be mistaken, the worst thing in a foreclosure is not losing your property. It is getting hit with a deficiency judgment after losing your property. A deficiency judgment is given when the amount you owed was more than the appraised value of your property at the foreclosure sale. In my situation, the borrower still faced a $450,000 deficiency judgment if the short sale closed under that approval letter.

Banks are picking up the pace when it comes to approving short sales in the Miami area and across the country, a trend expected to continue in the coming months as the government pays lenders to close the deals, CNN Money reported.

However, loan modifications are still voluntary and many banks still refuse to offer any assistance to struggling home owners. A Miami foreclosure defense attorney can best assist you in exploring your options for dealing with an underwater mortgage, short sale or foreclosure in the Miami area.
Sinking-home
As we reported last month on our Miami Foreclose Lawyer blog, the government’s latest plan would seek to get mortgage companies to reduce payments to no more than 31 percent of a homeowner’s income, suspend payments for the unemployed and reduce the total balance to no more than 115 percent of a home’s value. The effort is aimed at assisting underwater homeowners and those struggling to pay their mortgages amid the economy downturn and real estate collapse in South Florida and elsewhere in the country.

Homeowners who are underwater on their mortgage owe more than their home is worth, largely due to plummeting resale values. A short sale is an agreement between a bank and a borrower to permit a home to be sold for less than it’s worth, allowing the borrower to walk away.

However, a qualified Miami real estate attorney should always be consulted when considering a short sale, which can have tax consequences and other disadvantages best explained by a legal professional hired to protect your interests.

CNN reports that short sales accounted for 17 percent of all residential real estate sales in February, up from 13 percent in November. The new government program will pay borrowers up to $3,000 in relocation expenses and pay mortgage companies $1,500 for completing a short sale.
Continue reading