Reboot Your Life: Tampa Student Loan and Bankruptcy Attorney BlogIt was reported in the Miami Herald recently that a former employee of a foreclosure mill law firm in Tampa Florida sued this week for overtime violations when she and others were forced to work “off the clock”. Florida Default Law Group allowed for five hours of overtime per week, but to keep up with the flood of foreclosure cases, Denise Vasquez alleges that she was routinely required to work even more hours without the federally mandated time and a half required by the (FLSA). The case was initially filed in Hillsborough County but was transferred to federal court under the FLSA. Florida Default Law Group remains under investigation by the state attorney general’s office for filing misleading documents in foreclosure cases. Another foreclosure mill law firm with over 1000 employees, Law Offices of David J. Stern, P.A., has practically shut down due in large part to the depositions of employees and other information gleaned in the pending attorney general investigation and the pulling of files by Fannie Mae and other major lenders or servicers.
Articles Posted in Foreclosure Defense
Planning on Purchasing a Foreclosed Home In the Tampabay Florida Area? Watch out for Freddie Mac’s Disclaimers!
Our neighbors are considering buying a condominium in Tampa that was foreclosed by Wells Fargo (owned by Freddie Mac) and noticed two strange things in the paperwork this weekend. First, Freddie Mac is only offering insurable title not marketable title and they wanted to use their own title agent.
Fortunately, our neighbors were smart enough to notice the distinction. First, the possibility of fraud in the foreclosure or anything else wrong with the foreclosure appear to have been excluded from the insurance coverage. So if the prior homeowner comes forth and says I didn’t have notice of the foreclosure because I wasn’t properly served (this happens all the time) or a faulty affidavit or assignment was submitted in the foreclosure litigation to support the plaintiff’s claim that it owned or held the note (also a common occurrence), the homeowner can have the foreclosure sale reversed. Where does this leave the new buyer? Well they would have a claim for the failure of Freddie to provide good and clear title — or would they? With an insurance exclusion, depending upon how it is written, this could be a major dilemma.
Second, Freddie specifically noted that the purchaser was responsible for any unpaid homeowners association expenses. In Florida, there is Florida Statute Section 718.116 that provides that upon foreclosure, the plaintiff is required to pay the past one year of unpaid condominium association dues or 1% of the original principal balance whichever is less. (This is not necessarily true for all homeowners associations). If the plaintiff lienholder fails to do so, are all the delinquent assessments plus attorney’s fees, costs and interest due and owing, perhaps going back years? I wonder, how often does the bank or mortgage servicer actually make this payment by the thirty day deadline? These are the same parties that cannot look at mortgage modification paperwork within the first 30-90 days of submission because they are so overwhelmed.
Massachusetts Supreme Court in Ibanez Voids Foreclosures: Impact in Florida
Two banks couldn’t prove they owned the mortgages in Massachusetts and they lost a pivotal case on January 7, 2011. This was a Supreme Court decision following an appeal by the banks when they lost at trial earlier this year. The banks probably regret their appeal of a limited land court’s decision which has now gone viral and has even hit the banks stock prices on Friday. The U.S. Bank v. Ibanez decision is the first state supreme court to weigh in on this issue involving securitized trusts.
What does this decision do for Florida homeowners facing foreclosure? Well Massachusetts is a title theory state while Florida is a lien theory state for one thing. One of the key points of the decision was that a mortgage could be bifurcated or separated from the note due to a 1800s decision in Massachusetts. Florida case law provides that a mortgage follows the note. Therefore no bifurcation would occur. However, if the note is lost as is often the case, and the banks cannot show that the mortgages were properly transferred into the securitized trust, that’s where Ibanez will count.
In Ibanez, U.S. Bank initiated the foreclosure proceeding before it possessed a legally effective mortgage assignment. This happens regularly in Florida. Often foreclosure defense attorneys in Florida are faced with trying to determine when notes and mortgages were actually transferred to the plaintiff bank. The banks present undated endorsements of notes which are merely stamps by an employee who often doesn’t review what they are signing or stamping. Assignments are dated retroactively to try and cure the problem. Numerous employees have testified in countless depositions that they do not review any records prior to executing assignments.
Florida Appellate Court Denies Foreclosure When Modification Attempted
In an effort to curb abuses by mortgage servicers, the First District Court of Appeal in Florida ruled on December 8, 2010 in Palacio to set aside a default judgment against Tampa, Florida homeowners who were “under the reasonable belief that the foreclosure action had been abated.”
According to the homeowners, the lender was willing to agree to a modification pursuant to certain terms, including an immediate payment of $8,500, a reduction of principal from $205,000 to $150,000 which would be re-amortized to result in a new monthly payment. After judgment was entered, the homeowners made five payments in accordance with what they understood was a modified mortgage agreement.
Despite the alleged modification agreement, a foreclosure sale was set and the homeowners’ final payment as returned. The homeowners hired a Tampa foreclosure defense attorney before the sale date and filed a motion to set aside the default judgment which was denied. Upon appeal, the appellate court ruled that the trial court’s failure to conduct an evidentiary hearing warrants reversal in favor of the homeowners. Despite the bank’s argument that the allegations of a modification were facially insufficient to warrant setting aside a default judgment, the appellate court disagreed.