“Lost notes” and the Sudden Appearance of “Original Notes.”

Think of it this way: If someone wrote you a check for $100, which would you do? (1) make a digital copy of the check and then shred it or (2) take it to the bank? Starting with the era in which banks made what is abundantly clear as false claims of securitization the banks all chose option #1. And they collected incredible sums of money far exceeding the Madoff scam or anything like it.

Back in 2008 Katie Porter was a law professor and is now a member of the US House of  Representatives. For those of who don’t know her, you should follow her, even on C-Span. She nails it every time. She knows and other congressmen and women are following her lead. Back in 2008 she uncovered the fact that in her study of 1700 filings in US Bankruptcy court, 41% were missing even a copy of the note, much less the original note.

Around the same time, the Florida Bankers Association, dominated by the mega banks and who absorbed the Florida Community Bank Association, told the Florida Supreme Court that, after the purported “loan closing,” digital copies of the notes were made — and then the original notes were destroyed. FBA said it was “industry practice.” It wasn’t and it still isn’t — at least not for actual creditors who loan money. Out in the state of Washington on appeal, lawyers for the claimant in foreclosure admitted they had no clue as to the identity of the creditor. The state banned MERS foreclosures, along with Maine.

That admission, with full consent of the mega banks, raised the stakes from 41% to around 95% — a figure later confirmed in Senate Hearings by Elizabeth Warren. The other 5% are loans that were truly traditional — funded by the “lender” (no pretender lender) and still owned by the lender who had the original documents in their vault.

The law didn’t change. In order to enforce a note you needed the original. And in order to plead you “lost” the note, you had to allege and prove very specific things starting with the fact that it was lost and not destroyed. Then of course you had to prove that the original was delivered to you, which nobody could because the original was destroyed immediately after closing and a fax copy was the only thing used after that.

Typically destruction of the note means that the debt is discharged or forgiven — something that is actually a natural outgrowth of the same debt being sold dozens of times in varying pieces under various contracts, none of which give the buyer any direct right, title or interest in the “underlying” debt, note or mortgage. In short, neither the debt nor the note exist in most cases shortly after the alleged loan closing.

The representatives of the mega banks who started the illusion of securitization of mortgage debts could neither produce the original note (because it was destroyed) nor tell a credible story to explain its absence. So they did the next best thing. They recreated the note to make it appear like an original using advanced technology that could even mimic the use of a pen to sign it.

Some of us saw this early on when they failed to account for the color of the ink that was used at closing. Those were among the first cases involving a complete satisfaction of the alleged encumbrance, plus payment of damages and attorney fees, all papered over by a settlement agreement that was under seal of confidentiality.

While obviously presenting moral hazard, the process of recreation could have been legal if they had simply followed the protocols of the UCC and state law to reestablish a lost note. But they didn’t. The reason they didn’t is that they still had to prove that the note was a legal representation of a debt owed by the borrower to a creditor that they had to identify. But they couldn’t do that.

If they identified the creditor(s) they would admitting that they had no claim because a person or entity possessing a right, title or interest in the debt did not include the named claimant in the foreclosure. Naming a claimant does not create a claim. A real claim must be owned by a real claimant. That is the very essence of legal standing.

If they had no claim they would be admitting that the securitization certificates, swaps and other contracts were all bogus. That would tank the $1 quadrillion shadow banking market. That is where we see the evidence that for every $1 loaned more than $20 in revenue was produced and never allocated to either the debt of the borrower or the investment of the investors. The banks took it all. $45 trillion in loans and refi’s turned into $1 quadrillion in “nominal” value. Nice work if you can get it.

So then they did the next next best best thing thing. They simply presented the recreation of the note as the actual original and hoped that they could push it through and that has worked in many, probably most cases.

It works because most borrowers and their lawyers fail to heed my advice: admit nothing — make them prove everything. By giving testimony regarding the “original” note the borrower provides the foundation and the rest of the foreclosure is preordained.

For some reason, lawyers who are usually suspicious, refuse to acknowledge the basic fact that the entire process is a lie designed to take property, sell it and apply or allocate the sale proceeds to anyone except the owner(s) of the debt. They hear “free house” and get scared they will look foolish.

A free house to those persistent and enduring souls who finance the great fight is a small price to pay for the mountains of windfall profit of the banks and related parties. As for the banks, adding the proceeds of a house that should never have been sold is adding insult to injury not only to the homeowner but to the entire society.

If anyone wants to know why so many Americans are angry, look no further than the 40 million people were directly displaced by illegal foreclosure and the additional 70 million people who were affected by those dislocations. Voters know that if the many $trillions spent on bailouts had been used to level the playing field, 110 million Americans and millions more worldwide would have never faced the worst effects of the great recession.

And we will continue voting for disruptors until a level playing field re-emerges.

see Lost notes and Bad Servicing Practices and Incentives SSRN-id1027961

Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult or check us out on www.lendinglies.com. Order a PDR BASIC to have us review and comment on your notice of TILA Rescission or similar document.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
A few hundred dollars well spent is worth a lifetime of financial ruin.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK FOR YOU. THE INFORMATION ON THE FORMS ARE NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
========================

 

HOAs Retaliate Against Banks Skipping Out on Paying Maintenance Expenses

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Editor’s Comment: 

Having had the experience of representing Condominium Associations, Cooperatives and Homeowners Associations in Florida on a large scale, I am acutely aware of the pain they feel when “neighbors” don’t pay their monthly fees. The rest of the homeowners must pick up the slack and in many cases there were special assessments against the owners to pay for the shortfall.

The Banks, always playing the game, would get their Judgement of Foreclosure and then postpone the actual sale indefinitely because they could and because they didn’t want the liability of association dues, association compliance etc. So Florida actually had to pass a law that required the bank to start paying maintenance after they received a Final Judgment of foreclosure. Apparently, judging from the article below, that law has been rescinded or eviscerated by the intensive bank lobbying going on in all 50 state legislatures and in Congress.

With the foreclosure crisis desiccating entire neighborhoods, it sometimes comes down to a handful of homeowners who are paying the tab for the maintenance of the entire complex. So those homeowners, who were now on the Board of directors of the association jumped in and are now getting the benefits of self-help through renting abandoned homes and condos as though they owned it. In some cases they are turning a profit, attracting new buyers in and getting a pretty good bang for their buck — if they do it right.

You might remember the uproar that occurred when I reported that a number of people were making this situation  into a business model: by renting out at lower rates homes that were abandoned by both the homeowner and the “bank” or other pretender lender that put the home into default and foreclosure, these “entrepreneurs” are making money on assets that don’t belong to them.

That is a bad thing, right? Only if you are not a bank or pretender lender who are doing exactly the same thing. If a non-creditor took title to property by submitting a credit bid, then they don’t have real title. Whether they sell it or rent it out, they are making money off of an asset that was never owned by them and in which they never had any financial interest, risk or loss.

That of course is the problem with the corruption of our title system, and the failure of due process, especially in the non-judicial states where foreclosures are routinely processed on behalf of non-creditors who submit “credit bids” at auction. My answer as previously posted, is that the HOA and the homeowner should collude with each other the same way that the substituted trustees collude with the pretender lender. The  homeowner falls behind in payments causing the association to sue for those payments and to foreclose on the lien. The lawsuit names the homeowner and all other lenders on record reciting in the pleading that the existing mortgage on record has been satisfied or abandoned.

We all know that in many cases the lender of record is a sham corporation that was created to front as straw-man for the real lenders (investors). So the court enters a default against the lender of record, and then awards judgment to the association along with a sale date during which period the homeowner redeems the property with a settlement agreement in which the court quiets title to the homeowner.

At that point, if any party wishes to foreclose, whether they are in a judicial state or otherwise, they must proceed judicially by pleading and proving that they were a real party in interest and that they should have received notice of the foreclosure by the Association. In many cases, where it is institution versus association or another institution the same arguments advanced by homeowners are advanced by the association or institution.

The difference is that the argument coming from a creditor is taken far more seriously by the courts —- all the way up to the Supreme Court of the state (like the Landmark case in Kansas). In all such cases I have reviewed, the court found and was affirmed in its finding that the foreclosure by the first creditor to get to the mat won the case. This is one of several reasons why I have given my permission to start a national law firm rolling out into all 50 states. In a word, “if you want something done right, you have to do it yourself.”

Canceled foreclosure sales saddle neighbors, HOAs with expenses

By Mark Puente

Kathy Lane envisioned a picturesque neighborhood with tree-lined streets when she moved to FishHawk Ranch in 2004.

These days, she stares at an eyesore.

Two doors away, the back yard of an abandoned home overflows with trash; rain pours in open windows; weeds have overgrown the lawn. The pool, filled with black muck, draws swarms of bugs.

“I was expecting well-kept yards,” Lane said. “I live two doors from a dump. If it goes up in flames and catches our house on fire, who is responsible?”

The foreclosure crisis has littered the region with thousands of abandoned homes. The houses sit idle as banks have been slow to seize them in the final stage of the foreclosure process, the public auction.

Although recent headlines proclaim the worst of the housing crisis is over, the decrepit homes are a constant reminder that cleaning up the foreclosure mess remains a work in progress.

The house on Lane’s street in Lithia went into foreclosure in 2008 and has been vacant for more than a year. Aurora Loan Services had set an auction for February but canceled it.

It’s an oft-repeated pattern.

In the last 12 months, lenders have canceled auctions on 4,204 properties in Pinellas and Hillsborough counties. Sales have been canceled two, three, even nine times on some homes.

In many cases, banks delay seizures to avoid having to pay maintenance bills or homeowner association fees. Meanwhile, neighbors fend off vandals and thieves and worry about property values falling because of the deteriorating houses.

The repeated cancellations burden the court system.

“These never seem to go away,” said Thomas McGrady, chief judge of the Pinellas-Pasco County Circuit. “It’s a nuisance.”

Taxpayers also pay for the delays.

Hillsborough Circuit Judge Herbert Baumann Jr. said the Clerk of Courts’ workers spend hours filing paperwork when banks repeatedly cancel auctions.

“It does create more work,” he said. “Clerks do expend a lot of resources on this.”

• • •

No neighborhood is immune.

Even the tony streets in Tampa’s Avila and St. Petersburg’s Snell Isle have “lost houses.”

While the homes sit in limbo, homeowners associations lose money when lenders delay taking titles. The associations may mow lawns and make minor repairs, but that forces other residents to shoulder higher assessments.

Associations have few options to force lenders to sell the homes.

HOAs can seize properties through foreclosure when owners stop paying monthly assessments. Some go a step further by renting out the seized properties to recoup lost dues. Still, those actions cost the associations thousands in legal fees.

Lane, the FishHawk Ranch resident, is baffled by the banks’ inaction.

“Every day you expect a poltergeist,” she said. “We have to live here.”

She isn’t alone.

Tampa-based Rizzetta & Co. manages more than 100 community associations with 32,000 homes in Florida, including most associations in FishHawk Ranch. The firm has been deluged in recent years with calls about the abandoned homes and delinquent assessments.

Pete Williams, a Rizzetta manager, attributes the canceled auctions to money.

“The banks never want to take ownership,” he said. “They have to pay the fees going forward. The costs are considerable.”

Even McGrady, the Pinellas-Pasco judge, believes money is behind the canceled sales.

“After a while, you begin to question their motives,” the judge said.

• • •

On the flip side, some experts contend that the banks’ slowness helps stabilize the real estate market. Putting thousands of homes for sale at once could depress prices. Letting them trickle to the market brings higher prices.

And some cancellations occur because lenders and homeowners agree to loan modifications or because homeowners and defense attorneys find errors in bank documents.

The cancellations are currently down in Hillsborough and Pinellas. But that’s because lenders halted foreclosures in late 2010 amid allegations they used robo-signers and false documentation to speed up the foreclosure process.

Still, the delays have allowed some owners to live free for years and dodge assessments.

In June 2009, a Pasco judge granted U.S. Bank a final judgment to seize a home in the Valencia Gardens subdivision in Land O’Lakes. U.S. Bank scheduled the auction for September 2009 but has canceled it eight times. The most recent cancellation occurred last month.

The homeowners have lived in the home but have not paid dues to the Valencia Gardens Homeowners Association. The association is objecting to the cancellations and has asked a judge to order the bank to sell the home. Thirty-eight delinquent homeowners owe the association $56,000.

The shortfall has forced the HOA to convert water fountains into flower beds and to scale back on other projects, said Gail Spector, the president.

The group began cracking down on delinquent residents last year by threatening foreclosure lawsuits against them. Spector knows residents have lost jobs but said other homeowners shouldn’t be burdened with the unpaid dues.

“You have to treat everybody the same,” Spector said. “We are fixing and paying for everything. That’s not fair.”

Leonard J. Mankin, a Clearwater-based law firm, represents hundreds of associations across Florida. Attorney Brandon Mullis has asked a judge to sanction U.S. Bank and to force the sale of the home in Valencia Gardens.

It is now common, he said, for banks to cancel auctions seven or eight times in many foreclosure cases.

Mullis questions why lenders file court documents saying they are “negotiating or reviewing for possible loss mitigation options” when the houses have been vacant a year or longer.

He is fighting another case in Palm Harbor. The Bank of New York Mellon has canceled seven auctions — even though the homeowner defaulted on the mortgage in 2008. The bank canceled the seventh auction in February because it wanted to exhaust options to prevent the foreclosure.

Mullis scoffed.

“This action leaves the burden to fall on those neighboring residents who are forced to pay higher assessments while the property next door further deteriorates,” he said.

The Florida Bankers Association disagrees.

Anthony DiMarco, executive vice president, said lenders are overwhelmed with thousands of foreclosures and aren’t cancelling sales to skirt maintenance and assessments.

“They are trying to move cases forward,” he said. “We’d rather keep people in homes.”

Rally in Tally: Homeowner Relief and Housing Recovery Act is a Sham and Shame

Editor’s Note: Due process requires that nobody be deprived of life, liberty or property without a judicial determination on the merits of claims against them. Non-judicial procedure runs a thin line that has not actually been tested constitutionally. Assuming it is valid by virtue of the “freedom of contract” doctrine, it still cannot be used to abuse and trick people into losing their homes when in fact the trickster has no interest in the loan, the property or the originating transaction. The attempt in Florida to increase the number of states using non-judicial procedure is abhorrent to anybody who conceives this country as a nation of laws. Non-judicial procedure is in my opinion, inapplicable to most, if not all, securitized loans.

The reason is simple: non-judicial foreclosure sales are meant to achieve judicial economy without prejudice to anyone. In securitized loans there are so many potential stakeholders that non-judicial sale prevents notice and due process and even encourages tricksters to use it against the interests of those who might have an interest. It not only increases moral hazard, it assures a growing cloud on the title of all properties that have been or will be the subject of foreclosure sales.

The pandemic effect on an already unstable marketplace is being amplified by these legislative attempts to legalize unjust enrichment of intermediaries who have no financial interest and who who are not subject to any financial loss for a loan, with it is performing or non-performing.

Posted by Malcolm Doney

The following letter was sent to all 14 members of the House Criminal & Civil Justice Council the day before the Bill was killed. We have reason to believe that it was instrumental in causing the death of that Bill and of the Senate Bill. It was authored by me assisted by three other founding members of Mortgage Justice an activist and educational not for profit. It is now widely circulated to many of the people going to the Rally in Tally. Any of your readers is free to use it as a tool to fight the fraudsters.
1. The Florida Bankers Association is attempting to use the power of the Florida State Legislature as an instrument to commit fraud upon its citizens and House Bill 1523 is inappropriately named The Homeowner Relief and Housing Recovery Act.
2. This Bill and its sister Bill in the Senate SB 2270 will not relieve any Homeowners and neither will it aid any Housing Recovery. On the contrary these Bills, if enacted, will add to the personal burdens of this States’ citizens, deepen the recession, add to the destabilization of communities, the breakup of families, an increase in blue collar crime and hundreds of millions of Dollars in lost Court revenue to the State.
3. HB 1523 adds to the deception in its introduction by adding to the ‘deadbeat borrowers myths’ [whereas it was deliberately planned and executed by Wall Street Investment Banks, Main Street Banks, mortgage lenders and their cohorts], falsely suggests that the cure is to expedite foreclosures to bottom out the market and that somehow this unsupportable economic theory will revitalize the economy, allow citizens to pay their taxes and Housing Associations to maintain communities.
4. If enacted, the passage of these Bills would shift the burden of proof to foreclose from the foreclosing parties to the homeowner, thus denying those homeowners their existing rights of due process and simultaneously, circumvent the recently imposed Supreme Court of Florida’s requirement placed upon foreclosing parties to substantiate under penalty of perjury that they have the legal authority to foreclose on real property given as security in a Mortgage to the true Owner of a Promissory Note and to engage in mandatory mediation. These requirements are the real reason for these proposed laws, because they can no longer hide their crimes from our Courts.
5. Because all members of the legislature are unaware of the fraudulent intent behind the Florida Bankers lobbyists who proposed this draft legislation we have concentrated most of our detailed efforts upon exposing the frauds rather than pointing out the serious deficiencies of the Bills as we know that other groups and individuals are adequately bringing such reviews to the attention of the legislature.
6. However, of paramount importance is the fact that lines 216 to 225 of the original draft clearly backdates the effect of these proposed laws to time immemorial. By the clever use of the words “agreed in substance in the security instrument” the drafters are seeking to remove the requirement contained in Florida Mortgages in clause 22 that all foreclosures must be conducted through the Judicial system by obliquely [but not specifically] referring to clause 16 in which the signor has acknowledged that the whole document is subject to Federal and State Law. The intent of the signing parties of all such Mortgages was that clause 22 of that unilateral contract would apply for the life of that instrument and that imprecise words such as “agreed in substance” would not be used in future laws to imply that they had agreed to a major change in the terms of those Mortgages and if enacted it will negatively impact basic human, property and contractual rights guaranteed under the Federal and State constitutions.
7. Mortgage Justice wishes to reveal that the truth behind the mortgage meltdown is:-
(a) The Housing Bubble was deliberately planned and implemented by Wall Street entities and the Main Street Banks.
(b) Mortgage and other loans were deliberately set up to fail.
(c) The lenders shown on Promissory Notes and Mortgages were not the Lenders, but were misappropriating the use of their licenses to transact mortgage business in the various states and were funded by Wall Street Brokers from the proceeds of the sale of Derivatives in wrongly described AAA rated Mortgage Backed Securities, for which they were paid excessive ‘yield spread premiums’ as a commission.
(d) Notes and Mortgages were not sold in the secondary market, neither were they transferred into securitized mortgage pools. It was impossible for pretend lenders to sell what they did not own.
(e) Contrived sales in the secondary market were documented in the Securities and Exchange Commission’s public records to entitle these pretend lenders to avoid paying federal taxes upon their profits by appearing to comply with IRC 860 and ‘selling’ loans into Real Estate Mortgage Investment Conduits (REMIC). Documents filed in the SEC provide proof that all these mortgages failed to comply with IRC 860.
(f) SEC documents establish that none of the mortgage loans that they say were put into REMIC Trusts, ever reached those Trusts and that the majority of the ‘so-called’ Trusts were not Trusts but a form of perpetual LLC with zero reporting requirements filed in the State of Delaware for the benefit of those major Banks and/or GSEs, as the true beneficiaries of all the frauds. These ‘Trusts’ are named Delaware Statutory Trusts, they are neither Statutory, nor are they Trusts.
(g) The true beneficiaries of the frauds also sold undisclosed and unregulated multiple default insurances and credit default swaps sold through the International Swaps and Derivatives Association on every new mortgage created to guarantee receipt of multiples of sums they had pretended to lend as and when the planned defaults occurred.
(h) It is therefore a fact that in almost every mortgage foreclosure action the foreclosing entity is not the owner of the Note or the Mortgage, never lent any money, is an integral part of a criminally motivated group has already reaped criminal profits, will share in multiple proceeds from insurances, all the Notes have been deliberately eliminated as admitted to the Supreme Court of Florida by the Florida Bankers Association and all Notes are already paid in full.
8. Mortgage Justice understands that the above text contains major allegations of fraud levied against some of the biggest and most powerful institutions in the land and does not make these accusations lightly. We are fully prepared upon request given adequate notice to furnish irrefutable documentary evidence supporting those accusations and if required to justify them with documentary evidence are willing so to do in order to demonstrate why this proposed legislation must be unanimously rejected by the Florida Legislature for the benefit of its present and future citizens.
9. We also request Public Hearings be scheduled prior to any passage of these proposals and we suggest inviting all interested parties, including representatives of finance and banking who are apparently promoting these Bills, consumers and their advocates.
10. Finally, we refer you to informative videos that can be accessed via the Internet. In our opinion the most reliably informative and professional presentations of the truth behind the housing bubble are those involving the eminent Academic, Criminologist, Economist, Lawyer, Accountant, author of the book entitled ‘The Best Way to Rob a Bank is to Own One’ and a former lead regulator during the savings and loans crisis. Professor William [Bill] Black. To authenticate what we have revealed, please watch Bill Moyers’ PBS interview of Bill. WE BELIEVE this interview OFFERS AN EXCEPTIONAL OVERVIEW OF THE CAUSE OF THE ECONOMIC MELTDOWN AND FRAUD PERPETRATED BY THE BANKING INDUSTRY ON THE AMERICAN CITIZEN AND WE BELIEVE IT IS IMPERATIVE THAT YOU WATCH AND HEAR THIS VIDEO.
11. Bill Black submitted himself to further questioning in a recent five-part interview on an Internet news channel, Real News. Please watch and listen to these questions and answers also. Political rhetoric, spin and sound bites are no answer to the serious crimes exposed in these interviews. He speaks openly, with a sincere honesty and integrity, almost extinct in our country today. His interview makes us starkly aware that the Banks are striking at the heart of our Republic and government, in all of its branches, but especially the judicial branch. Now that Courts are more closely examining foreclosure cases filed against homeowners in Florida and other jurisdictions the truth is beginning to emerge. Courts in Florida and in many states are finding that the banks lack standing, are filing frivolous lawsuits and are unable to prevail when a homeowner enters a properly pled defense. Mortgage justice strongly believes that the preservation of citizen rights to defend these actions is as vital to the Citizens of Florida as it is to the banks to destroy it. Preserving those rights will establish the truth, disclose extensive violations of state and federal laws by the banking industry, put an end to the power of the banking industry in our state legislature and the resultant backlash of public opinion will reverberate throughout our nation and the world. After nearly destroying the Global Economy, after lowering by twenty percent the net worth of our citizens, and after borrowing billions from them and reaping record profits without any legislative reform or inquiry they now attempt to make it even easier to take the homes of the citizens and deprive them of their legal rights. We urge you to carefully consider, investigate and reject this proposed legislation on behalf of the homeowners and citizens of Florida.
Sincerely,

MORTGAGE JUSTICE,
for our members and the Citizens of the United States, April 12, 2010.

P.S. Internet links – Please copy and paste the following links into your browser:- http://www.pbs.org/moyers/journal/04032009/watch.html

Then listen to – To rob a country, own a bank Pt5 – put this into Google and follow the links to 5 part video of Black on Real News.

Also essential viewing and listening to the latest on MSNBC,
http://www.rumormillnews.com/cgi-bin/forum.cgi?read=170712

FLORIDA BEWARE!! FBA non-judicial foreclosure initiative

Florida Bankers Association, controlled by national and supersize regional banks are trying to convert Florida to a “non-judicial state.”

DON’T LET IT HAPPEN!!!!

Start writing letters and get others to write letters to the Republican controlled Florida legislature. This effort will not only deny homeowners essential rights it will vastly increase the pace of foreclosure sales, thus crashing the market values of homes across the state even further. Taxes will go up, services will go down.

THE ENTIRE REASON IS THAT THE WALLS ARE BEGINNING TO CLOSE IN ON THE PRETENDER LENDERS AND THEY WANT THE LAX RULES OF NON-JUDICIAL PROCEDURE TO LET THEM STEAL MORE HOMES AND WEALTH FROM BOTH HOMEOWNERS AND INVESTORS WHO FUNDED LOANS.

Banks say cut out the courts

By James Thorner, Times Staff Writer

Published Thursday, January 28, 2010


If bankers get their way, Floridians facing foreclosure could be kicked out of their homes in as little as three months.

The Florida Bankers Association, the 400-member-strong lenders’ lobby, has presented state legislators with a bill to upend decades of Florida law and establish “non-judicial” foreclosures in Florida by July 1.

What’s a non-judicial foreclosure? Banks would accelerate foreclosures against defaulting homeowners by bypassing the courts. Judges would no longer rule on foreclosure cases.

Some states — 37 in fact — already grant that fast-track foreclosure authority, including California, Georgia, Alabama and Texas. But Florida, with its plethora of vacation and retiree homes, has always been big on homeowner rights.

If you’re a financially strapped Florida homeowner — 62,719 Tampa Bay properties got foreclosure notices last year — the 53-page bill contains worrisome signs:

• Non-judicial foreclosures must conclude in no less than three months and no more than a year. Most Florida foreclosures take a year to 18 months to work through the courts these days, longer if a lawyer fights a successful rear guard action. So in 90 days banks can theoretically auction the home out from under you.

The Florida Supreme Court’s newly endorsed mandatory mediation for lenders and homeowners would effectively go bye-bye. The bill provides only for informal meetings between creditors and debtors.[Editor’s Note: This triggered the FBA action. By ordering mediation, the creditor/lender would be required to be disclosed and the whole scheme would fall apart]

• Even after homeowners are evicted, banks can still pursue them for unpaid mortgage debt. But banks will waive that right if homeowners avoid trashing or stripping the house before the new owner takes over.

The bankers association has titled the bill The Florida Consumer Protection and Homeowner Credit Rehabilitation Act. Association president Alex Sanchez views the bill as a way to break a foreclosure crisis partly caused by mortgage fraud. [Editor’s Note: Old trick — name it something that conveys the exact opposite meaning of the bill].

He offered a list of innocents the bankers aim to help: neighbors annoyed by abandoned houses next door; condo associations pursuing dues from properties in legal limbo; cities grappling with urban blight; and judges overloaded with thousands of foreclosure cases.

“We don’t want the property. We’re not into the property management business,” Sanchez said of bankers. “We want to get a property out of the courts and sold to a productive Florida family.”

Finalizing a foreclosure is time-consuming and expensive. The longer a property lingers in the courts, the longer banks get no mortgage income from the property. One Tampa mortgage banker revealed this month that each foreclosure can cost lenders an additional $30,000 in legal fees.

The law would apply to foreclosures after July 1, not old cases already in the courts. Kristopher Fernandez, a Tampa foreclosure attorney, blames the banks themselves for much of the judicial foot dragging.

“These cases are stuck in legal limbo because banks don’t want to push foreclosures,” Fernandez said. “I’ve seen cases where nothing is done. The lenders don’t want these homes back. They know they have to pay assessments once they take them back.”

Pinellas-Pasco Chief Judge Thomas McGrady backs up that point. McGrady has talked about a “dam” in the courts from banks reluctant to schedule sales of foreclosure homes.

What’s the chance of this legal revolution getting consideration? The Florida Legislature convenes on March 2. As of yet, the bill has neither an official number nor formal sponsors.

With populism resurgent and anti-banker attitudes rife, passage could be a stretch. Gov. Charlie Crist would have to sign a pro-banker bill as he’s contesting a U.S. Senate seat with state Rep. Marco Rubio.

“We’ve had conversations in both chambers to have it filed,” said Anthony DiMarco, the bankers association’s executive vice president of government affairs.

“Sure, it’s a change in Florida law. But it will help us get to the bottom of the foreclosure crisis faster.”

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