Diligent Defense?

Homeowners in foreclosure seeking the help of a foreclosure defense attorney, do not always receive the diligent defense they so desperately need.  This is a letter from an attorney to his client. All names have been removed to protect the innocent and the guilty.

When a friend sent me the letter, my only response was an immediate OMG! Following is the text of the letter retyped verbatim:

"The purpose of this letter is to bring you up-to-date on the status of mortgage foreclosure cases in Escambia, Santa Rosa, Okaloosa, and Walton Counties under a program in which retired Circuit Court Judges are handling these cases on an expedited basis. This means that it is no longer possible to allow years to go by before a foreclosure will occur as the Judges are insisting that their dockets be handled efficiently and promptly. This means that in the cases of modifying mortgages, mediation must be held promptly and the financial documents produced ASAP for the bank's review to see if you qualify for modifying the mortgage based on income formulas. In general you have to have monthly income a gross income basis of at least three times the amount of the new monthly mortgage payments and the best rates that we have seen recently are 4%  for 40 years with the default tacked on to the end of the mortgage as a balloon. You can calculate your monthly mortgage payments less taxes and insurance by looking at amortization schedules on your computer and in an amortization book maintained by most realtors. If modification is not going to work, the other preferable solution is a short sale of the property with a release of liability on the note and mortgage. This means that the properties have to be promptly listed for sale with an expert broker that we recommend and hustled through the system to avoid the foreclosure. The result is far better for your credit score and also a good solution if the property is worth less than its mortgage balance.

The summary judgments of foreclosure resulting in a forced sale of the properties can be heard at anytime the Court feels the paperwork is sufficient in the  file to allow the bank to proceed. This means that even at routine hearings such as hearings on discovery dispute or Motions to Dismiss that we have filed, the Court can grant summary judgment for the Plaintiff. This is not the result that we want and we certainly want to avoid if at all possible.

If you have any doubts about what you wan to do with this property, find a qualified broker, who will tell you exactly what the property will sell for in the market based upon its condition and the comparables, and call me so we can make a joint decision on the best way to proceed."

What's wrong with this picture?

My analysis is below:

The letter states:
"The purpose of this letter is to bring you up-to-date on the status of mortgage foreclosure cases in Escambia, Santa Rosa, Okaloosa, and Walton Counties under a program in which retired Circuit Court Judges are handling these cases on an expedited basis. This means that it is no longer possible to allow years to go by before a foreclosure will occur as the Judges are insisting that their dockets be handled efficiently and promptly."

My take:

This expedited program to foreclose on homeowners is commonly known as the rocket docket. Retired judges/ senior judges have been assigned to hear these expedited cases. The problem with senior judges presiding over foreclosure cases is that senior judges do not have accountability. They have already retired, and do not need to care if their rulings are overturned on appeal. They have already retired, and are not subject to being voted out of office, as they are already out of office. Another issue regarding senior judges could be one of a conflict of interest. If the senior judges pensions are handled by the bank who is the Plaintiff in a foreclosure suit, this raises questions about the integrity of the proceedings. 

The letter states:

This means that in the cases of modifying mortgages, mediation must be held promptly and the financial documents produced ASAP for the bank's review to see if you qualify for modifying the mortgage based on income formulas. In general you have to have monthly income a gross income basis of at least three times the amount of the new monthly mortgage payments and the best rates that we have seen recently are 4%  for 40 years with the default tacked on to the end of the mortgage as a balloon. You can calculate your monthly mortgage payments less taxes and insurance by looking at amortization schedules on your computer and in an amortization book maintained by most realtors.

My take:

Really??? One of the biggest complaints about the mortgage modification process is the lenders dragging their feet, and not reacting to the documents which are repeatedly produced by the homeowner for the modification assessment. This situation persists despite Florida Attorney General, Pam Bondi's stern letter to Bank of America earlier this year. Calculating a mortgage amount is easy. Amortization calculators are all over the internet. However, actually obtaining a 4% mortgage is another matter entirely. Particularly when the homeowner is in foreclosure and has already taken a hit on the credit score.

The letter states:

If modification is not going to work, the other preferable solution is a short sale of the property with a release of liability on the note and mortgage. This means that the properties have to be promptly listed for sale with an expert broker that we recommend and hustled through the system to avoid the foreclosure. The result is far better for your credit score and also a good solution if the property is worth less than its mortgage balance.

My take:

Again, really??? When was the last time you tried to arm wrestle a realtor into including a a release of liability on a short sale. Realtors will tell short sale sellers, no problem they won't come after you. But to actually get that promise in the documents -- good luck! And even better, "an expert broker that we recommend". I smell kick back.

The letter states:
The summary judgments of foreclosure resulting in a forced sale of the properties can be heard at anytime the Court feels the paperwork is sufficient in the  file to allow the bank to proceed. This means that even at routine hearings such as hearings on a discovery dispute or Motions to Dismiss that we have filed, the Court can grant summary judgment for the Plaintiff.

My take:

Hold on, hold up! A summary judgment is not proper if there are material issues in dispute. The last time I checked, Florida is still a judicial foreclosure state. That means that there are specific rules that the Court and the Plaintiff must follow to bring a foreclosure to auction. It is not when the Court "feels" the paperwork is sufficient to proceed. The Court is not supposed to feel. The Court is supposed to be an unbiased trier of fact. The letter was written by a foreclosure defense attorney, and somehow I don't think he is doing his job if "even at routine hearings such as hearings on a discovery dispute or Motion to Dismiss the Court can grant summary judgment. For starters the Plaintiff would have had to file a Motion for Summary Judgment. And there are defenses to that, such as an Affidavit in Opposition to Motion for Summary Judgment; and Affidavit of Denial of Debt.

Foreclosure Reform - Is the Fox Watching the Henhouse Again?

The Foreclosure Reform Bill awaiting Governor Scott's signature is designed to work through Florida's backlog of foreclosure cases. It could be one of those double edged swords. Below is a summary of the pending Foreclosure Reform Bill and staff analysis. Is it yet another example of the fox watching the henhouse? You decide.

CS/CS/HB 87: Mortgage Foreclosures

GENERAL BILL by Appropriations Committee ; Judiciary Committee ; Passidomo ; (CO-INTRODUCERS) Caldwell ; Cummings ; Moraitis ; Rodrigues 

Mortgage Foreclosures; Revises limitations period for commencing action to enforce claim of deficiency judgment after foreclosure action; provides for applicability to actions commenced on or after specified date; provides time limitation for commencing certain actions; provides legislative intent; specifies required contents of complaint seeking to foreclose on certain types of residential properties with respect to authority of plaintiff to foreclose on note & location of note; authorizes sanctions against plaintiffs who fail to comply with complaint requirements; provides for nonapplicability to proceedings involving timeshare interests; requires court to treat collateral attack on final judgment of foreclosure on mortgage as claim for monetary damages; prohibits such court from granting certain relief affecting title to foreclosed property; provides for construction relating to rights of certain persons to seek specified types of relief or pursue claims against foreclosed property; limits amount of deficiency judgment; revises class of persons authorized to move for expedited foreclosure to include lienholders; defines "lienholder"; provides requirements & procedures with respect to order directed to defendants to show cause why final judgment of foreclosure should not be entered.

Last Action: 05/03/2013 Ordered enrolled -HJ 1470
Effective Date: upon becoming a law

CS/CS/HB 87 — Mortgage Foreclosures

by Appropriations Committee; Judiciary Committee; and Rep. Passidomo and others (CS/CS/SB 1666 by Judiciary Committee; Banking and Insurance Committee; and Senator Latvala)

This summary is provided for information only and does not represent the opinion of any Senator, Senate Officer, or Senate Office.
Prepared by Banking and Insurance Committee (BI)
Statute of Limitations on Certain Actions

The bill reduces the statute of limitations period for a lender to enforce a deficiency judgment following the foreclosure of a one-family to four-family dwelling unit from 5 years to 1 year, for any such deficiency action that commences on or after July 1, 2013, regardless of when the cause of action accrued.

The Foreclosure Complaint

The bill requires that in order to bring a complaint to foreclose a mortgage on residential real property designed principally for occupation by 1 to 4 families, including condominiums and cooperatives ... under part III of ch. 721, F.S., the complaint must establish that the plaintiff holds the original note or is a person entitled to enforce a promissory note. If a plaintiff has been delegated the authority to institute a foreclosure action on behalf of the person entitled to enforce the note, the complaint must describe with specificity the authority of the plaintiff and the document that grants such authority to the plaintiff.

A plaintiff in possession of the original promissory note must certify, under penalty of perjury, that the plaintiff possesses the original note. An “original note” or “original promissory note” is defined as the signed or executed promissory note, including a renewal, replacement, consolidation, or amended and restated note or instrument that substitutes for the previous promissory note. The term includes a transferrable record, but not a copy of any of the foregoing. The required certification must be submitted contemporaneously with the foreclosure complaint, and set forth the location of the note and other specified information. The original note and allonges must be filed with the court before the entry of any judgment of foreclosure or judgment on the note.

A plaintiff seeking to enforce a lost, destroyed, or stolen instrument must attach to the complaint an affidavit executed under penalty of perjury, detailing the chain of all endorsements, transfers, or assignments of the promissory note, and setting forth the facts and documents showing that the plaintiff is entitled to enforce the instrument. Adequate protection as required under s. 673.3091(2), F.S., must be provided before final judgment.

Finality of Mortgage Foreclosure Judgment

The bill provides that an action to challenge the validity of a final judgment of mortgage foreclosure, or to establish or re-establish a lien or encumbrance of property is limited to monetary damages if all of the following apply:

• The party seeking relief from the final judgment of mortgage foreclosure was properly served in the foreclosure lawsuit;
• The final judgment of mortgage foreclosure was entered as to the property;
• All applicable appeals periods have run as to the final judgment with no appeals having been taken or having been finally resolved; and
• The property has been acquired for value by a person not affiliated with the foreclosing lender or the foreclosed owner, at a time in which no lis pendens regarding the suit is in the official county records.
  

The bill defines affiliates of the foreclosing lender to include any loan servicer for the loan being foreclosed, and any past or present owner or holder of the loan being foreclosed, and:

• a parent entity, subsidiary, or other person who directly or indirectly controls, is controlled by, or under common control of any such entities; or
• a maintenance company, holding company, foreclosure services company or law firm under contract with such entities.
  

The bill provides that the former owner can continue to pursue money damages against the lender. The claims of the former owner, however, cannot impact the marketability of the property of the new owner.

The bill provides that when a foreclosure of a mortgage occurs based upon enforcement of a lost, destroyed, or stolen note, a person who was not a party to the foreclosure action but claims entitlement to enforce the promissory note secured by the mortgage has no claim against the foreclosed property once it is conveyed to a person not affiliated with the foreclosing lender or the foreclosed owner. That person may still pursue recovery from any adequate protection given pursuant to s. 673.3091, F.S., or from the party who wrongfully claimed entitlement to enforce the promissory note, from the maker of the note, or any other person against whom a claim may be made.

Deficiency Judgments

The bill limits the amount of a deficiency judgment on owner-occupied residential property to the difference between the judgment amount and the “fair market value” on the date of the foreclosure sale. Similarly, the deficiency for a short sale may not exceed the difference between the outstanding debt and the fair market value of the property on the date of the sale.

Show Cause Procedure 

 

The bill makes several revisions to the show cause process. The bill provides that after filing a complaint, the plaintiff may request an order to show cause for the entry of final judgment, and the court must immediately review the request and the court file in chambers without a hearing. If the complaint is verified, complies with the requirements in s. 702.015, F.S., and alleges a cause of action to foreclose on real property, the court must issue an order to show cause why a final judgment of foreclosure should not be entered to the other parties named in the action. The bill adds a number of elements that must be included in the court’s order to show cause that is sent to the other parties named in the action. The court must set a hearing no sooner than the later of 20 days after service of the order to show cause or 45 days after service of the initial complaint. The hearing is no longer required to be held within 60 days of the date of service, as required by current law. The bill specifies that the Legislature intends that the alternative show cause procedure may run simultaneously with other court proceedings.

The bill adds the requirement that the plaintiff must file the original note, establish a lost note, or show the court the obligation to be foreclosed is not evidenced by a promissory note, before the court can enter a final judgment of foreclosure after the court has found that all defendants have waived the right to be heard. If the hearing time is insufficient, the court may announce a continued hearing on the order to show cause.

The bill exempts foreclosures of owner-occupied residences from provisions authorizing the plaintiff to request the court to enter an order to show cause why it should not enter an order to make payments during the pendency of the foreclosure proceedings, or an order to vacate the premises.

Adequate protections for lost, destroyed, or stolen notes

The bill provides that the following may constitute reasonable means of providing adequate protection, if so found by the court:

• A written indemnification agreement by a person reasonably believed sufficiently solvent;
• A surety bond;
• A letter of credit issued by a financial institution;
• A deposit of cash collateral with the clerk of the court; or
• Such other security as the court deems appropriate under the circumstances.
  

The bill provides that a person who wrongly claims to be the holder of a note or to be entitled to enforce a lost, stolen, or destroyed note is liable to the actual holder of the note for damages and attorney fees and costs. The bill specifies that the actual holder of the note can pursue any other claims or remedies it may have against the person who wrongly claimed to be the holder, or any person who facilitated or participated in the claim.

Application and Implementation of Bill

The Legislature finds that the act is remedial and not substantive in nature. The act applies to all mortgages encumbering real property and all promissory notes secured by a mortgage, regardless of when executed. The following sections are exempted from this general rule of application:

• Section 702.015, F.S., only applies to cases filed on or after July 1, 2013.
• The amendments to s. 702.10, F.S., and the entirety of s. 702.11, F.S., apply to causes of action pending on the act’s effective date.
  

The Legislature also requests the Supreme Court to amend the Rules of Civil Procedure to implement the expedited foreclosure process.

If approved by the Governor, these provisions take effect upon becoming law.

Vote: Senate 26-13; House 87-26

Child Support

Child support is one of the most critical and divisive issues among divorced parents. Particularly during these difficult economic times, child support can be a huge financial burden even for parents who love and cherish their children. It is well settled law throughout the United States that both parents are obligated to provide for their children. Every state has a slightly different method for calculating child support. In some states child support is calculated on a case by case basis decided by the judge. In other states there are guidelines, worksheets, and formulas that must be strictly applied.

The federal law that is used to enforce child support is called the Uniform Interstate Family Support Act (UIFSA). This is often referred to as a long arm statute, where one state can enforce a court order in another jurisdiction. For example, if a child support order is entered in Florida, it can be enforced in Georgia or any other state through UIFSA. Under the federal law, each state is required to recognize another state's child support order. It isn't necessary to formally transfer jurisdiction of the family law case to the other state for the other state to enforce it. However, in order to modify child support a state must accept Continuing Exclusive Jurisdiction (CEJ). The CEJ usually follows the child's residency. The state that will accept jurisdiction is usually the state where the child has resided for at least six months immediately prior to filing the petition to modify child support.

Methods of Enforcement

Different states have different methods of enforcement. Among others, sanctions and enforcement methods may include: income tax refund capture; bank account levy; driver's license suspension; and passport denial or revocation. In many parts of the United States, loss of liberty is a very real possibility for anyone who refuses to pay child support. A finding of civil contempt can land a non-payor in jail until he or she comes up with at least a portion of child support arrears. This portion is often called a “purge” and is often 25% of the total amount owed, but can be any amount a judge decides is required.

In addition to state remedies for refusal to pay child support there is also a federal remedy. According to this federal law, failure to pay child support, if willful, is a crime when the parent owing support lives in a different state than the parent who is supposed to receive the support. The purpose of the Federal Child Support Recovery Act was to prevent a parent from moving to a different state or a foreign jurisdiction to avoid paying child support.

The penalties available for child support enforcement under the Child Support Recovery Act include prison sentences, fines and restitution. A first offense under the Federal Child Support Recovery Act can result in a prison sentence of up to six months plus fines. A second conviction can result in more jail time and greater fines. Probation can be imposed and can include conditions such as the payment of child support and mandatory employment. A violation of those probation conditions can result in additional prison time.

Controversies

It is easy to accept that as a matter of public policy, parents should support their children. But what if a parent is ordered to pay child support, but is not able to pay? And, even though child visitation and child support is supposed to be separate, what if the parent obligated to pay support is prevented from seeing the child? Do the penalties for nonpayment do anything to help the children in the long run? How does putting daddy or mommy in jail help? What about the unwed father who never wanted to have the child to begin with? Or worse, what about the unwed father who never knew he even was a father until he was served with a complaint for child support?

As always your comments are welcome. Thank you for reading.

And How are the Children?

Masai warriors are widely known for fearsome rites of passage. Tradition demands that to become a warrior you must kill a lion with nothing more than a spear. These fierce fighters embrace their roles as protectors of the tribe.

The traditional greeting between Masai warriors is: And How Are the Children?
The traditional response is: The Children are Well.

If the children are well, then all is well. Can we say that in America? And how are the children? Are the children being looked after, protected, revered? Are they? I have my doubts.

Adriana spent over two years searching for her baby boy. In June of 2009 Adriana's boyfriend, her baby's daddy, was taking care of the baby while Adriana worked. Before she got home the boyfriend fled taking the baby who knows where. Adriana panicked and called the police, reporting it as a kidnapping. Under the laws of that state, as in Florida, when a child is born of unwed parents, it is the mother who has parental rights, not the father. The father can assert paternal rights only after a court orders that he is the legal father. The police, however, told her – sorry ma'am custody is a civil matter, you have to go to court. It was not and is not a civil matter, it is a crime for a parent to abduct a child.

I spoke with Tod on the phone yesterday. His former wife took their daughter out of the country without his knowledge or consent. They have court ordered shared parental responsibility and they have a Parenting Plan incorporated into their Final Judgment of Dissolution of Marriage. But, the mother took their eleven year old daughter out of the country anyway – all the way to Guam. Tod doesn't think they're coming back. So far law enforcement has refused to enforce the Child Pick Up Order, although it was signed by a Hillsborough County judge.

And another one – Marcus from Texas called me. His son is probably in Jacksonville, Florida; but may be with relatives in Boston. He's not sure. With the help of a private investigator he found a current address for his son's mother. Marcus, an unwed father, needs an Order of Paternity before he can hope to get child custody or visitation. He pays his child support though, every week it comes straight out of his check. Marcus will go to jail if he doesn't pay his support. For the past five years, not a single thing has happened to his ex for keeping Marcus' son from him.

And yet another. Joe pays child support for a son he has never seen. Joe discovered he was a dad months after his girlfriend left him. He dutifully sent in the DNA test which he paid for himself. An Order for Child Support went into effect. Joe learned the hard way that child support and visitation are separate. At the court hearing when Joe was ordered to pay child support, the Magistrate refused to listen to anything pertaining to custody or visitation. And so it goes.

And how are the children? You tell me. In a state, in a country, where as a matter of public policy we claim that it is in a child's best interest to have access to both parents – why is it so hard? Neither Adriana, Tod, Marcus, or Joe has been found by a court, or anyone else to be unfit parents. There are not even any allegations of unfitness against any of these parents. So why is it so hard? Why is it so hard for a supposedly civilized society to take care of the children? Are the children well? Nobody knows.