Like Watching The Great Train Robbery in Slow Motion


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UnitedBank’s Cash for Keys offers to homeowners: Are the offers credible?

On Sunday January 15, 2012, frequent poster on Foreclosure Defense matters, and respected Florida foreclosure defense attorney, Mark Stopa, posted the following disclosures with respect to offers made to Florida homeowners-borrowers to give up deeds in lieu of foreclosure, possession of their homes, and releases of liability for predatory conduct—all in favor of “BankUnited” in exchange for BankUnited’s legal promises to forgive them of debt in future.

Thus UnitedBank’s financial stability and its credibility are of critical importance to homeowners’ decision-making.. If UnitedBank asserts a right or makes a promise of current right to seize, as well as future conduct, can a homeowner dare rely on those representations and promises? To answer these questions It is necessary to review UnitedBank’s recent history and associations with offshore hedge funds, and current government scrutiny focused on this particular group in recent days. What role does the Deed in Lieu play in enabling the claims they make for FDIC insurance for every house they can cause to become vacant? Is it effective public policy that effectively converts Florida and New York home value into offshore cash holding accounts?

At the end of the day, one might wonder if it is appropriate government policy to pay questionable offshore hedge funds to dispossess US homeowners—or should the FDIC money be placed in escrow until all the comparative rights are carefully verified. Even if the entity manages to push the current owner out through intimidation and abuse? Should FDIC take the incentive out of this rush?

Background: old Bank United Failed
The backdrop is significant in setting the tenor of this deal-making. The trademark “Bank United” has a tortured and unique past. Bank United suffocated from losses on its own predatory mortgage loan products. Like WAMU, AHM etc.
According to a Supplemental FDIC release dated January 26, 2011,
“•BankUnited failed because it was a badly deteriorated institution with significant problems, primarily due to heavy use of non-traditional mortgage products.
•Over 60% of the loans in BankUnited’s portfolio were pay-option arm mortgages. BankUnited (prior to failure) was the country’s second largest writer of these types of mortgages”
Other predatory lenders of this ilk either went bankrupt or were acquired by Big banks. However –unique to regulated banking—the purchase of control of this subprime bank’s assets was by a syndicate of unregulated offshore hedge funds including : ”Carlyle, Blackstone and Wilbur Ross”, per Reuters as published by New York Times.
Ross’ syndicate had already sounded out a smaller Florida Bank target.
According to an article in South Florida Business Journal by Brian Bandell , Date: Thursday, May 21, 2009, Ross is targeting elderly Floridians to increase his access to low cost cash deposits.
“Restructuring specialist Wilbur Ross runs New York-based W.L. Ross, which is buying a majority stake in First Bank & Trust of Indiantown. Ross said that bank wouldn’t be part of BankUnited. Instead, the new holding company will have W.L. Ross, Carlyle and Blackstone as the largest investors, and the other groups as minority partners, he said.
‘While the asset side of the bank has been very problematic, Florida, because it has so many prosperous retirees, has a good deposit base,’ Ross said. ‘The growth opportunities in Florida, with internal growth and further acquisition growth, are very considerable.’”
However, the South Florida Journal report was premature. The Ross syndicate had already focused on bigger game; BankUnited.
“Palm Beach billionaire Wilbur Ross last year announced a deal to pay $7.3 million for 68 percent of the bank’s shares, but the deal later fell apart as Ross focused on his stake in much larger BankUnited of Coral Gables.”

The syndicate took control in mid-2009 with help from FDIC
From FDIC “open site” in respect of the end of “old” Bank United:
“II. Press Release
The FDIC has issued a press release (PR-072-2009) about the institution’s closure. If you represent a media outlet and would like information about the closure, please contact David Barr at 202-898-6992.”
May 21, 2009
According to this FDIC “Release” May 21, 2009 ; the buyout group “ownership includes WL Ross & Co. LLC; Carlyle Investment Management L.L.C.; Blackstone Capital Partners V L.P.; Centerbridge Capital Partners, L.P. LeFrak Organization, Inc; The Wellcome Trust; Greenaap Investments Ltd.; and East Rock Endowment Fund.”
The deal was generally described in that release; “BankUnited, a newly chartered federal savings bank, acquired the banking operations, including all of the nonbrokered deposits, of BankUnited, FSB, Coral Gables, Florida, in a transaction facilitated by the Federal Deposit Insurance Corporation (FDIC).
Bank United, FSB had assets of $12.80 billion and deposits of $8.6 billion as of May 2, 2009. The new BankUnited will assume $12.7 billion in assets and $8.3 billion in nonbrokered deposits. The FDIC and BankUnited entered into a loss-share transaction and will share in the losses on approximately $10.7 billion in assets covered under the agreement. The loss-sharing arrangement is projected to maximize returns on the covered assets by keeping them in the private sector. The agreement also is expected to minimize disruptions for loan customers as they will maintain a banking relationship. BankUnited will recapitalize the institution with $900 million in new capital.”

One might say that FDIC “bailed out the defunct predatory bank by guaranteeing much of its assets—home-loans? Put backs? FDIC then Media Contact: David Barr (202) 898-6992, Cell: (703) 622-4790. E-mail:
The syndicate began “cashing in” on the banks assets and FDIC bailout by year-end 2010
By late 2010, barely 18 months after the FDIC bailout, press accountsrevealed BankUnited’s plans to make an Initial public offering [IPO] of common stock by the hedge fund group owners:
“… it is not going to look pretty for the F.D.I.C. when BankUnited goes public, which it can do from late next month under the deal it brokered 18 months ago. Investors including Carlyle, Blackstone and Wilbur Ross plugged $900 million of new capital into the bank. That equity is almost certain to be worth a multiple of what they paid. “
FDIC’s 2009 Release is today supplemented by information relating to new ”BankUnited IPO Supplemental Fact Sheet, January 26, 2011” That further discloses the sale by the control group of shares to the public. The control group retained majority control.
Per FDIC, “the initial set of investors will retain at least 67% of their initial investment in the company after the IPO.” [ibid]
However they appeared to walk away with nearly all their investment back, according to WSJ,
“…about 86% of the shares slated to be sold were from its investors. The BankUnited investors include big names such as financier Wilbur Ross and private-equity giants Blackstone Group, Carlyle and Centerbridge. Their combined take from the IPO: roughly $2.2 billion.
A caveat: The figures here are based on the shareholders’ stock holdings disclosed in BankUnited’s most recent regulatory filing. The company last night sold more shares than expected as part of the IPO – 29 million compared to the expected 26.25 million. It’s unclear for now how much of the extra stock sold came from Ross, Blackstone et al. We’ll update this post when we know more. In any case, these guys did great.

Hereinbelow is Attorney Stopa’s post;
“Bank United Offering Deficiency Waivers, Cash for Keys
by Mark Stopa Esq.

BOA Reversing: Cash for Keys up to $20,000


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Bank of America Offering Cash for Keys
Posted on October 11, 2011 by Mark Stopa’s St. Pete

Times had an interesting article about how Bank of America is offering cash to homeowners who are delinquent on their mortgage payments.
Instead of pushing for foreclosure, BOA is offering cash in exchange for the homeowners consenting to the home being sold to a third party for less than the amount owed, i.e. a short sale.

In an industry littered with horror stories and negativity, this is good news. If you’re skeptical, don’t be – this is a natural consequence of foreclosure defense attorneys like Stopa Law Firm making it difficult for banks to foreclose through the court process. In other words, take a second look at my website, written in early 2008, including this sentence:

If your bank cannot win its foreclosure lawsuit against you quickly (because you are fighting for yourself and defending your rights), it may be willing to negotiate with you in ways that it otherwise wouldn’t…

I foresaw resolutions like this years ago. It only makes sense. If foreclosure defense attorneys are continuing to make it difficult for banks to win in court, and the court systems are so clogged that cases are moving slowly, it makes perfect sense for banks to try to find a way to avoid the court process and resolve these disputes in other ways. Giving homeowners facing foreclosure cash payments in exchange for them consenting to a short sale is an obvious solution for the banks. It’s a “win” for both sides – the bank gets the property sold and the homeowner gets money to move elsewhere.

As the article suggests, I’m sure this solution won’t work for all homeowners. For instance, the article notes that BOA isn’t intending to waive a deficiency judgment in all cases. That’s ridiculous – it doesn’t help to put a few grand in your pocket if the bank can get a judgment against you far in excess of that amount. This why we all need to keep fighting. The more difficult we make it for the banks to foreclose, the more inclined they’ll be to give homeowners a fair resolution. And make no mistake, that’s what’s happening here – the banks don’t care about being fair to homeowners; they care only about avoiding the time and expense associated with foreclosure lawsuits.

Here’s the article. …

Bank of America is offering up to $20,000 to select Florida homeowners willing to agree to a short sale instead of entering foreclosure.

To sweeten the deal further, the nation’s largest lender will consider waiving the deficiency on the loan, which allows homeowners to sell the house for less then they owe without having to make up the difference to the bank. It can save homeowners thousands of dollars.

Not every Bank of America customer in Florida will be eligible for the program, which pays a minimum cash incentive of $5,000. It’s targeted toward home­owners who cannot afford their mortgages.

To quality, the short sales must be submitted for bank approval by Nov. 30 and must close by Aug. 31. Sales already under contract are not eligible; neither are properties outside of Florida.

This is a “test-and-learn” program being rolled out only in Florida because of the higher foreclosure rates than other parts of the country, said Christina Beyer Toth, a Tampa-based spokeswoman.

Florida is seen as a viable market to gauge short-sale response when presenting home­owners with relocation assistance, she said. If successful, the plan could expand to other states.

The bank notified select Florida real estate agents this week about the offer.

“It will get a lot of people off the fence about wanting to sell their home,” said Steve Capen of Keller Williams Realty in St. Petersburg. “This makes sense.”

What’s in it for Bank of America? It saves attorney fees, court costs and property taxes by avoiding foreclosure. It also speeds the process of getting bad loans off its books and gets the properties back on the market faster.

Capen, who specializes in short sales, plans to heavily market the offer to clients. But he cautioned that homeowners shouldn’t get overly excited because many of these plans have restrictions.

“It will only help a fraction of the people,” he said.

Homeowners get the cash after the short-sale deal closes. A caveat: Homeowners might have to pay income taxes related to the deficiency waiver and the cash payout.

The cash payouts give home­owners a reason not to trash their homes or strip them bare before moving out. When houses enter foreclosure, home­owners can essentially live for free until banks take possession at the end of the court process, which takes an average of nearly two years in Florida.

Attorney Chris Boss of Yesner & Boss said the deficiency waiver will enable homeowners to buy a house without filing bankruptcy or waiting three years from when foreclosures become final.

“It’s a chance to get away from the house with some money in your pocket,” Boss said. “This is good for the economy.”

Other national lenders started similar programs.

Late last year, JPMorgan Chase began giving homeowners $10,000 to $20,000 and waived losses on the mortgage. The bank still suffers a loss in the process, but generally speaking, sale prices on short-sale homes are higher than foreclosed homes.

Real estate experts and economists have said the housing market cannot fully recover until the millions of distressed mortgages are removed from the system.

Mark Stopa

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Obama Considering Expansion of Cash for Keys With Taxpayer Money

Editor’s Note: It seems to me that this concedes the battle to Wall Street. It encourages homeowners to take the loss that at the very least should be shared with ALL the players in the securitization scheme and creates more problems in housing and social services.

Excerpt from NYT – do not buy into this –

Program Will Pay Homeowners to Sell at a Loss
Published: March 7, 2010

“In an effort to end the foreclosure crisis, the Obama administration has been trying to keep defaulting owners in their homes. Now it will take a new approach: paying some of them to leave.

This latest program, which will allow owners to sell for less than they owe and will give them a little cash to speed them on their way, is one of the administration’s most aggressive attempts to grapple with a problem that has defied solutions.

More than five million households are behind on their mortgages and risk foreclosure. The government’s $75 billion mortgage modification plan has helped only a small slice of them. Consumer advocates, economists and even some banking industry representatives say much more needs to be done.

For the administration, there is also the concern that millions of foreclosures could delay or even reverse the economy’s tentative recovery — the last thing it wants in an election year.

Taking effect on April 5, the program could encourage hundreds of thousands of delinquent borrowers who have not been rescued by the loan modification program to shed their houses through a process known as a short sale, in which property is sold for less than the balance of the mortgage. Lenders will be compelled to accept that arrangement, forgiving the difference between the market price of the property and what they are owed.

Citi to Try New Version of Cash for Keys

Editor’s Note: The decision about flight or fight is deeply personal and there is no right answer. The decision you make ought not be criticized by anyone. For those with the fight knocked out of them the prospect of taking on the giant banks in court is both daunting and dispiriting. So if that is where you are, and this Citi program comes your way, it might be acceptable to you. AT THE MOMENT, CITI IS SAYING YOU NEED TO BE 90 DAYS BEHIND IN YOUR PAYMENTS AND NOT HAVE A SECOND MORTGAGE. (A quick call to the holder of a second mortgage or the party claiming to be that holder could result in a double settlement since they are going to get wiped out anyway in a foreclosure. You can offer them pennies on the dollar or simply the chance to avoid litigation.)
Citi, faced with the prospects of increasing legal fees even if they were to “win” the foreclosure battle in court, along with the rising prospects of losing, is piloting a program where they will give you $1,000 and six months in your current residence — and then they take over your house by way of a deed in lieu of foreclosure, which you sign as part of a settlement. Make sure all terms of the settlement are actually in writing and signed by someone who is authorized to sign for Citi.
The deed is simply a grant of your ownership interest to Citi and frankly does little to “cure” the title defect caused by securitization. HOPEFULLY THAT WILL NEVER BE A PROBLEM TO YOU, EVEN THOUGH IT PROBABLY WILL BE CAUSE FOR LITIGATION OR OTHER CONFRONTATIONS BETWEEN PARTIES OTHER THAN YOU WHEN ALL OF THIS UNRAVELS.
The possibility remains that you will have deeded your house to Citi when in fact the mortgage loan was owed to another party or group (investors/creditors).
The possibility remains that you could still be pursued for the full amount of the loan by the REAL holder of the loan.
Yet in this topsy turvy world where up is down and left is right, the Citi program might just take you out of the madness and give you the new start. They apparently intend to offer to waive any claim they have for deficiency which in states where deficiency judgments are allowed at least gives you the arguable point that you gave the house to some party with “apparent” authority. And the hit on your FICO score is less than foreclosure or bankruptcy, under the proposed Citi plan.
In the six months, which can probably be extended through negotiation or other legal means, you can accumulate some cash from what otherwise would have been a rental or mortgage payment. Taken as a whole, even though I would say that you are probably dealing with a party who neither owns the loan nor has any REAL authority to offer you this plan, it probably fits the needs of many homeowners who are just one step away from walking away from their home anyway.
As always, at least consult a licensed real estate attorney or an attorney otherwise knowledgeable about securitized loans before you make your final decision or sign any documents. BEWARE OF HUCKSTERS WHO MIGHT SEIZE THIS ANNOUNCEMENT AS A MEANS TO GET YOU TO PART WITH YOUR MONEY. THERE IS NO NEED FOR A MIDDLEMAN IN THIS TYPE OF TRANSACTION.
February 24, 2010

Another Foreclosure Alternative


HOMEOWNERS on the verge of foreclosure will often seek a short sale as a graceful exit from an otherwise calamitous financial situation. Their homes are sold for less than the mortgage amount, and the remaining loan balance is usually forgiven by the lender.

But with short sales beyond the reach of some homeowners — they typically won’t qualify if they have a second mortgage on the home — another foreclosure alternative is emerging: “deeds in lieu of foreclosure.”

In this transaction, a homeowner simply relinquishes the property, turning over the deed to the bank, in exchange for the lender’s promise not to foreclose. In a straight foreclosure, a lender takes legal control of the property and evicts the occupants; in deeds-in-lieu transactions, the homeowner is typically allowed to remain in the home for a short period of time after the agreement.

More borrowers will at least have the chance to consider this strategy in the coming months, as CitiMortgage, one of the nation’s biggest mortgage lenders, tests a new program in New Jersey, Texas, Florida, Illinois, Michigan and Ohio.

Citi recently agreed to give qualified borrowers six months in their homes before it takes them over. It will offer these homeowners $1,000 or more in relocation assistance, provided the property is in good condition. Previously, the bank had no formal process for serving borrowers who failed to qualify for Citi’s other foreclosure-avoidance programs like loan modification.

Citi’s new policy is similar to one announced last fall by Fannie Mae, the government-controlled mortgage company. Fannie is allowing homeowners to return the deed to their properties, then rent them back at market rates.

To qualify for the new program, Citi’s borrowers must be at least 90 days late on their mortgages and must not have a second lien on the home.

That policy may be a significant obstacle for borrowers, since many of the people facing foreclosure originally financed their homes with second mortgages — called “piggyback loans” — or borrowed against the homes’ equity after buying them.

Partly for that reason, Elizabeth Fogarty, a spokeswoman for Citi, said that the bank had only modest expectations for the test. Roughly 20,000 Citi mortgage customers in the pilot states will be eligible for a deed-in-lieu agreement, she said, and of those, about 1,000 will most likely complete the process.

As is often the case with deed-in-lieu settlements, Citi will release the borrower from all legal obligations to repay the loan.

In some states, like New York, New Jersey and Connecticut, banks can legally retain the right to pursue borrowers for the balance of the loan after a foreclosure, a short sale or a deed-in-lieu of foreclosure. That is one reason why housing advocates say borrowers should carefully weigh these transactions with the help of a lawyer or nonprofit housing counselor before proceeding.

Ms. Fogarty said Citi had no specific timetable for rolling out the program nationally.

Among the other major lenders, there is no formalized program for deeds-in-lieu. Bank of America, JPMorgan Chase and Wells Fargo, for instance, generally require borrowers to try a short sale before considering a deed-in-lieu transaction.

A deed-in-lieu is better for banks than a foreclosure because it reduces the company’s legal costs, and it is better for the homeowners because it is less damaging to their credit score.

Banks may also end up with homes in better condition.

J. K. Huey, a senior vice president at Wells Fargo, says her bank usually offers relocation assistance — often $1,000 to $2,500 — as long as the borrower leaves the property in move-in condition after a deed-in-lieu transaction.

“The idea is to help them transition in a way where they can keep their family intact while looking for another place to live,” Ms. Huey said. “This way, they only have to move once, as opposed to getting evicted.”

Foreclosure Defense, Predatory Lending and Attorney Malpractice: Language Issues

New comment on your post #168 “Foreclosure Defense: Cash for Keys Offer and TILA Defenses”


Can a mortgage be voided or canceled if the contracts, promissory note, deed of trust, TILA and RESPA disclosures and remedies were not produced in the native language of the purchaser or owner, e.g. Spanish?


Part of the pernicious scheme hatched on Wall Street was to target people who were least likely to understand what was going on, least likely to ask questions about the sagacity of the loan program they were being sold and least likely to have the resources to do anything about it. 

It is probably true that nearly every lawyer in the nation is committing malpractice by not recognizing TILA, RESPA, RICO and other non-disclosure, fraud and misleading practices by lenders and all the participants who were “feeding” on the closing.

Whether interviewing or representing a client on the lender or investor side, or the borrower side, or even someone on an unrelated matter who mentions a mortgage that was given or signed during the 2001-2007 period, there is good chance that something was mentioned that the lawyer didn’t pick up on when he heard about it. 

The absence of a certified language interpreter and extra efforts to make certain that the borrower understood the dynamics of the loan documents, the appraisal of the property and the way the payments would work in the future, is probably good grounds for asserting a complete violation of TILA disclosure — especially if you can honestly make the allegation that the borrower spoke little or no English.

Thus part of the TILA audit normally would include the fact that disclosure was absent because no effort was made to assure that the borrower understood the loan and the lender, by and through its affiliates, agents, servants or employees knew that the borrower didn’t understand the transaction.

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Foreclosure Offense and Defense: Cash for Keys Offers, Pitfalls and Opportunities

In response to email from one of our readers who was presented with a “get out” notice and an offer to pay him $1,000 to do so peaceably, which was then later stated to be “negotiable (meaning they would pay more if asked), I wrote:

Sounds like you are on the right track. I am glad to hear you are still there.

If you are inclined to accept the offer, ask for more money. It can’t hurt.

Otherwise, you might want to ask for a copy of any document he has that names him as having authority to make the offer. He could be a scammer that will take the keys from you, make everything look all fine and dandy and then strip the house down right through the walls to the wiring and plumbing.

Then the lender comes in and files suit against you or worse files a criminal complaint against you for trashing the place.

While you are at it, you might want to ask for copies of the assignment or sale documents with which GMAC allegedly bought the mortgage and note. If you really press the point hard, you might get them or even better, you might not get them in which case they might back off completely, or they might negotiate something much more favorable to you.

In many cases, these purchases are not well-documented or they can’t find the documents. It is worth pushing this point.

If they don’t produce the documents you can make the allegation in your petition for BK that the liability is contingent and that your “asset” — the house is a contingent asset as well because it looks like GMAC took title under false pretenses. If things break your way you could end up with the house back and possibly without the mortgage if you announce your rescission due to failure to properly make disclosures in the TILA estimates and loan closing documents.

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