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houses.jpgThe Miami Herald just remarked that the passage of these Florida foreclosure bills (HB 87 and SB 1666) is an open invitation to more bank fraud. And more houses owned by banks in bulk to be sold to institutional investors.

This is an opinion piece published in the Tallahassee Democrat. Since not many in the Tampa Bay area likely read the Tallahassee Democrat, I thought I would include it here. Please help by contacting your legislative representatives and express your vote against HB 87 and SB 1666 if you have a similar story to that below.

I am in foreclosure. Although I am not proud of that, I know my foreclosure is not my fault.

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question.jpgAt the end of February 2013, the Middle District, Tampa Division of the U.S. Bankruptcy Court announced an amended Uniform Chapter 13 Plan would have a new choice for debtors. Debtors can now choose whether they want property of the estate to vest in the Debtor’s name upon confirmation of the plan, or they can choose to wait until discharge or dismissal.

Ok, so what does this really mean? I would easily bet that most debtors do not know what option is best for them in their particular situtation. I imagine that the volume bankruptcy mills don’t care even if they do know. After all I get several emails/calls a month from debtors who hired a mill who got things wrong or won’t return phone calls. They’ve been forced to google for the answer and came up with my blogs. Sorry, you get what you pay for, but that’s another story for another day.We refer to this quandry about vesting as a Section 1306 vs.1327 question. Under Section 1306, vesting occurs at the discharge. Under Section 1327, it occurs much earlier at confirmation of the plan. An Eleventh Circuit case from July 2000, Telfair v. First Union Mortgage Corp., 216 F.3d 1333 (11th Cir. 2000) pointed out a perfect example of why a bankrupt debtor may want to leave jurisdiction over property with the bankruptcy court until discharge. In that case, the mortgage company began to apply post-petition mortgage payments to its attorney’s fees and costs of curing a default after confirmation. First Union forceplaced insurance not with the prior insurance company used by the debtor, but rather with its own subsidiary at considerable additional expense and hefty fees to First Union. No approval of the bankruptcy court was needed since the plan had allowed the property to re-vest with the debtor. As the debtor owed less on the the property than what was owed, this was a pretty sneaky way to relieve the debtor of years of built up equity.

As a consumer advocate and Max Gardner bootcamper, we highly recommend that Debtors take advantage of the protections afforded by the bankruptcy court and choose to vest property to the debtor at the time of discharge or dismissal (the end of the case) and not the far earlier date of confirmation which occurs very early in the case.

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upside down man.jpgDon’t be fleeced by debt collectors. You have protections. In Florida, we have the Florida Consumer Collection Practices Act and the Fair Debt Collections Practices Act available to our clients.

I was reminded this week that not everyone knows their rights when the mother of a debtor called me. She was conned into paying $600 to avoid the threatened arrest of her daughter per a warrant that was allegedly on the judge’s desk to be signed in 20 minutes. My client needed that $600 but under presssure, she caved. There are certain things debt collectors cannot do (and if they do, they are liable for statutory damages even though you do not have any actual damages):

1. Pretend to be someone else.

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short sale tax.jpgThe late night fiscal cliff tenative workout included a proposed extension of the Mortgage Debt Relief Forgiveness Act for one more year to include 2013! Floridians seeking to short sale their home but weren’t able to get it done prior to the end of 2012 can breathe a sigh of relief. It’ll take a few days, but provided the House approves the Senate’s Bill, it will be full speed ahead for short sales for another year.

Popular blogger Calculated Risk posted the Senate version of the bill (H.R. 8) today.

Expiration of the favorable tax treatment of cancelled debt would create a major headache for homeowners who sell their home short (for less than what is owed). It would also apply to foreclosures and a deed in lieu of foreclosure.

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bp.bmpYou are going to hear a lot more about businesses filing BP oil spill claims in the next few months. On December 22, 2012, Bloomberg reported that the BP Gulf Oil Spill Settlement for 7.8 billion dollars was approved. This settlement was reached only two days before a trial was scheduled in March 2012. Preliminary approval was obtained over the summer and preliminary new claims filing rules went into effect.

However, litigation and judges can be fickle so no one knew for certain what was going to happen, but now we have a final order.

Some of the key factors of this settlement are:

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trickle down.jpgMost Floridians don’t believe me when I tell them that their business is likely eligible under the new rules under the BP Oil Spill Settlement. They think their business simply wasn’t affected by the oil spill.

However, you don’t have to prove that oil sludge washed up on your doorstep or that you swallowed a toxic fish. Because it is so difficult to prove the exact cause of economic damages, the “causation” requirement was completely eliminated in June 2012. Now businesses are qualifying when previously they were being denied.

Think of it this way, how many tourism dollars does your county bring in? Those tourism dollars filter through society and affect all types of businesses. From restaurants, hotels, t-shirt shops and amusement parks, to their employees or other supportive businesses. This trickle down effect includes even dentists, doctors, attorneys, chiropractors and virtually all tradespeople. Realtors, builders, architects, the list is never ending.

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house life preserver.jpgWe are still seeing significant principal reductions for some of our very lucky clients, mostly from Bank of America and Ocwen.

An article by Drew Harwell in the Tampa Bay Times and the Orlando Sentinel and the Tampa Bay Times indicates that since March, more than 1,000 Florida homeowners have learned their principal balances were dropping by an average of $114,000. This is due to the National Mortgage Settlement of $25 billion. Five of the nation’s largest banks – Ally Financial, Bank of America, Citigroup, J.P. Morgan Chase and Wells Fargo.

I know to many this seems unfair. Those behind in their payments get huge windfalls, while those who have kept paying do not. Or someone with a different lender doesn’t qualify and no one has control over who buys their mortgages. Fannie and Freddie do not presently allow for any principal reductions.

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student loan bubble.jpgEarlier this year, total student loan debt surpassed credit card debt for the first time ever. Student loan debt and the resulting high tuition are without a doubt in a huge bubble after having raised 800 percent in the past few years. After graduation, students are presented with the bill and most have no idea how it got that high.

Why is this? The cause of this student loan bubble is not unlike the mortgage crisis. The initial theory was to expand homeownership to the masses. Thereafter, lax lending standards allowed more and more people to buy homes. More buyers led to higher prices. The mortgage loans were securitized on Wall Street to unidentified investors. As the demand for these investments grew, the need for more questionable loans grew. People began to fear being left behind, if they didn’t buy now, they would be priced out of a home forever. It was actually cheaper to buy a home than it was to rent one with first month, last month and security deposit required in cash. Who cared if the loan couldn’t later be repaid when it was determined that the homeowner didn’t actually have a job that paid $200,000, but instead worked as a gardener for $20,000. Turns out that kind of thing really matters now that our housing market tanked 50% or more across the board as a direct result of this chain of events. Poorly run mortgage servicers or those with their own agenda has multiplied the number of foreclosures. The resulting crash hurt everyone, even people who could normally afford their home payments but god forbid lost their job or had to move.

Feeding the securitization beast was a common problem among mortgage brokers and investment banks. They had to create product to sell to the securitization machine. Kinda like making meth in large quantities in the popular show Breaking Bad that I am now hooked on and spent half of this past Labor Day weekend watching.

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courthouse.jpgUnder Florida law, a creditor has up to twenty years to try and collect a judgment. That’s an intimidating number, two whole decades. Something not to take lightly. To become a lien on real estate, a certified copy of a final judgment must be recorded in the public records in the county in which the real property is located.

Once recorded, Florida law provides that the judgment acts as a lien on non-homestead real property for an initial period of ten years. See Florida Statute Section 55.10. The judgment can be re-recorded and act as a lien for an additional ten years. Prior to 2004, a recorded judgment acted as a lien for only seven years, but could be re-recorded up to two additional times for a total of twenty years.

In comparison, a bankruptcy remains on someone’s credit report for 10 years. However, the last 18 months is the most important time period in anyone’s credit history and often the bankruptcy after it gets old enough is considered irrelevant.

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mortgage puzzle.jpgThere are several exciting things happening in mortgage modifications lately. The modification puzzle pieces seem to be falling into place, albeit four years after the foreclosure crisis began. We hope to take full advantage of this and get as many of our clients through a mediation this fall as possible.

First, the Attorney-General settlement is in full swing. We are seeing a number of substantial principal reductions. This money will eventually run out.

Second, Ocwen is buying lots of mortgages, or I should say the mortgage servicing rights. Homeowners who have previously been denied should try again if they learn that Ocwen has taken over their loan. We have written several blogs about Ocwen principal reductions.

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