Good News in Florida!

In a ruling Wednesday by the Florida 4th District Court of Appeal, banks trying to foreclose based on what they allege to be a promissory note, must first prove that the note is, in fact, a note, that it is for the property involved in the case, and that said lender actually owns it at the time of foreclosure. in the case, Robert McLean v JP Morgan Chase, the court ruled against the bank, reversing a lower court decision favoring Chase, saying that Chase had originally filed suit claiming the note was lost or stolen, and thus the bank could substitute another document for the original note. The court further said that the note not only had to be available, but it had to be endorsed and dated BEFORE the filing for foreclosure by the bank. The court then concluded that the borrower is entitled to a full hearing on the merits of the case BEFORE the foreclosure can proceed.
Should any of my readers wish to chat with an attorney on this, the plaintiff's attorney was Tom Ice, founder of Royal Palm Beach based Ice Legal.
Good luck!

Nevada News

Just a quick note if you owned real property in Nevada and were foreclosed in the past couple of years--the Nevada Attorney General has filed suit against Lender Processing Services (LPS), alleging fraudulent practices and procedures in the filing of documents related to foreclosures that subsequently occurred. If you had property in Nevada that was foreclosed, you should contact the Nevada AG to see if his action relates to your property and if any relief gained as a result by the suit will go to you.
Good luck.

Deficiency Judgments

One thing I haven't written about previously is deficiency judgments. These are the amounts that the foreclosing or short sale agreeing bank is short after the transaction on the home. For example, let's say your mortgage balance is $100,000 when the bank forecloses. Yet all they are able to get from sale of the home is $85,000. That leaves a deficiency of $15,000. So the bank sues you to get that amount, the deficiency, back. A similar situation occurs when a bank agrees to allow you to complete a short sale. Let's say you are able top conclude a sale of your home for $125,000. But the amount still owing on your mortgage is $137,500. That means the bank comes up short in an amount equal to the difference between what the home sold for and the amount that you still owed on the mortgage--$12,500. So, once again, the bank attempts top get that back as well by filing suit against you for the $12,500--the deficiency.
Until now, as far as I am aware, no state had ever made the filing of such an action by a lender illegal. The only existing limit on filing such a suit was the individual state's statute of limitations on how long after the transfer/foreclosure of the home the lender could file the action. Now, in the Congress, New York's Ed Towns has introduced a bill limiting the filing of such suits to 12 months after the foreclosure (shorts not included), except in cases where a given state's law is a shorter period of time. Presently, state limits vary from six months to six years.
Called the Fairness In Foreclosure Act, it would also restrict deficiency judgments filed against all low income families. It would also prohibit a lender reporting the deficiency to credit bureaus as a bad debt, a practice that is commonly done today by lenders.
While this is at this point just a bill in the House of Representatives, and, if passed there, will also have to pass the Senate and then be signed into law by President Obama, it is a definite starting point. For details of the proposed legislation, contact either Rep. Towns or your own representative. For reference, the bill is H.R. 3566.
Let's keep our collective fingers crossed.

SCRA Investigation

Recently I wrote of apparent violations of the Servicemembers Civil Relief Act (SCRA) in which case many major banks had illegally foreclosed on active military servicemembers' homes. Under the SCRA, a foreclosure is not permitted on the home of any active duty military personnel. Apparently, in a number of cases, this federal statute hasn't stopped some lenders from proceeding anyway. Now the Office of the Comptroller of the Currency (OCC) has commenced an investigation into the foreclosures of as many as 5,000 servicemembers' homes--all allegedly in violation of the SCRA--by ten of the country's largest banks.
The investigation is based on info provided by the lenders themselves. Additionally, the New York state attorney general, Eric Schneiderman, has undertaken an investigation as well. Members of Congress have publicly advocated for criminal prosecution of offending lenders and their involved staff. The law provides for both criminal and civil penalties, and, in fact, BofA agreed to a $20 million settlement for this earlier this year.
If you or someone you know is on active duty in the military and facing foreclosure or already been foreclosed upon during their military service, call your Congressional representatives or the OCC.
Good Luck.

Massachusetts Update

The Mass attorney general, Coakley, has filed suit against the 5 largest mortgage lenders. The suit alleges fraud via robo-signing, and seeks relief and compensation to harmed homeowners. The suit is good news to a degree, but, even if successful, likely will take several years until any judgment or settlement is reached. Lenders named are: Citi, JP Morgan Chase, GMAC, Wells Fargo and Bank of America.