Send in Your Complaints to the Office of Mortgage Settlement Oversight

As reported earlier this month, the Independent Foreclosure Review Program was scrapped due to “lack of response  from the majority of homeowners.

Please submit your complaints about your lender, servicer or loan itself to the Office of Mortgage Settlement Oversight and have your voice heard.  There, in the left column  you can read more about the settlement and submit a complaint under “Consumer”

Please note that the Office will NOT address issues with your mortgage or foreclosure case.  Please contact our office and we can help you with these types of issues.

Foreclosure Mill Marshall Watson to Shut Down and Mr. Watson to Face Florida Bar Discipline

The owner of the Fort Lauderdale-based “foreclosure mill” Law Offices of Marshall C. Watson has agreed to plead guilty to offenses found during a Florida Bar investigation.

The consent judgment, not yet approved by the Florida Supreme Court, would suspend attorney Marshall C. Watson for 91 days, force him to close his law firm, and require him to pay $30,000 for a record-keeping analysis, plus $5,931 for the Bar investigation.

The consent judgment entered into in December, accuses Watson of failing to develop “foreclosure policies for firm employees” and includes charges that the firm routinely filed Complaints alleging a lost mortgage note without confirming with the lender that it was truly lost.  This was done as a time-saving tactic, and the note was typically found prior to judgment or trial.

Watson’s firm was the only one of those investigated by Florida Attorney General Bondi’s office that settled its case. In March 2011, the firm signed a $2 million consent agreement while admitting no wrongdoing.

Charges against Watson in the Florida Bar’s 12-page consent judgment include that an attorney contracted by the firm was paid $1 each for signing approximately 150,000 attorney’s fee affidavits. Of those, an unknown number of which were fraudulently notarized.  On numerous occasions only the last page of this fee affidavit was given to the attorney to sign despite the fact that the attorney was swearing to the truth and accuracy of the entire document.

The Florida Department of State website shows the firm officially changed its name to Choice Legal Group late last month.

It was noted in the consent judgment that the firm had taken numerous measures to improve foreclosure policies. In May 2011, the firm hired former Broward County Chief Judge Victor Tobin to supervise and ensure appropriate practices were being followed.

Prominent Royal Palm Beach-based foreclosure defense attorney Tom Ice was quoted saying that this was groundbreaking as it holds Watson personally accountable for failing to supervise and train his associates and control firm policies.

Watson’s firm grew dramatically during the height of the foreclosure crisis, the judgment notes. By the end of 2009, his firm was handing more than 66,000 cases with 71 lawyers and 597 support staff.

If you have an ACTIVE case with Marshall Watson, contact my office IMMEDIATELY!! 

(305) 501-0442

Mortgage Debt Forgiveness Survives Fiscal Cliff

As reported back in December, the Mortgage Forgiveness Debt Relief Act of 2007 was set to expire on the eve of December 31, 2012.  As a result of this Act, any deficiency owed by a homeowner to their lender beyond the short sale value (and not agreed by the lender to be waived) would not be taxed as income to the homeowner.

In a last minute deal struck by Congress, a key provision protecting borrowers losing their homes was extended for one more year.  The Mortgage Forgiveness Debt Relief Act of 2007, which technically expired on December 31, 2012 was extended to December 31, 2013.

In the case of a foreclosure, there can be circumstances under which a mortgage debt is forgiven (the debt not fully paid by the recovery of the home in foreclosure), and a homeowner then “charged” with additional, taxable income.  As a result of the flood of foreclosures in 2007, a law was passed which provided that under certain limited circumstances, that forgiveness certain related debt would not be considered taxable as income to the homeowner.

**As with any tax issue, this article is not intended to substitute for specific, professional tax advice. This article is general in nature and may not be relied upon by the reader for specific legal advice. You should consult with your own tax professional as to your own specific circumstances.

Independent Foreclosure Review Program Scrapped by Lawmakers

The New York Times reported Sunday night in a surprising decision by regulators that the “independent foreclosure review program” has been scrapped in favor of a $10 billion settlement with 14 banks.

Since the housing market crashed, foreclosed homeowners have complained that their mortgage company made a mistake in the management of their home loan, such as the common practice of foreclosing on someone making payments on a loan modification trial and/or payment plan. The Independent Foreclosure Review emerged from an agreement in April 2011 between 14 mortgage companies and bank regulators over these abusive “servicing” practices. The Independent Foreclosure Review was supposed to give homeowners a chance to have an unbiased third party review their foreclosure and loan and determine whether they might qualify for a cash payout of up to $125,000.

The program was slow to catch on as homeowners, and their representatives, complained that the application forms were confusing and lacking what compensation would be provided.

While the reason for scrapping the program is not clear, it may have been a pending report by the Government Accountability Office, a nonpartisan investigative arm of Congress, which was investigating the review program.

One problem the GAO was likely to highlight in its report was an “unacceptably high” error rate of 11 percent in a sampling of bank loan files.  The sample files were chosen at random by the banks from their pool of foreclosed homeowners, who had not necessarily applied for relief.  The data suggests that of the 4 million families who lost their homes to foreclosure, more than 400,000 had some bank-caused problem in their loan file.  It also suggests that many thousands of those who could have applied for relief didn’t; because they weren’t aware of the review program or weren’t aware that their bank had made a mistake.  Some of these mistakes pushed homeowners into foreclosure who otherwise could have afforded to keep their homes.

It is unclear what will happen to the approximately 250,000 homeowners who have already applied to the Independent Foreclosure Review for monetary relief.  It is further unclear how the settlement money would be distributed or how many current and former homeowners who lost their homes to foreclosure might qualify.

In recent months ProPublica, an investigative nonprofit organization found that supposedly independent third-party reviewers looking over Bank of America loan files were given the “correct” answers in advance by the bank. These reviewers could override the answers, but they weren’t starting from a blank slate.

If they did not find a “compensable error,” the banks figured they should not have to pay anything, and thus giving the banks motivation to not find any flaws it their own files.  The program was said to be flawed from the start as there were no true “neutral” parties reviewing the loan files in order to ensure that homeowners were properly compensated; many who were not.