My Beef With Some Foreclosure Defense Lawyers in Florida

Regularly reading some blogs from lawyers around the state in the area of foreclosure defense, a few topics really “grind my gears” that I think the public should be aware of.

First, it truly bothers me when a lawyer has numerous and continuous blog posts about foreclosure trials and trial transcripts.  Why is a lawyer taking foreclosure cases to trial that regularly?  Is is not in the client’s best interest to get them a long extended sale date and try to get them into a loan modification or sort sale?

Once it gets to trial it is win the case (dismissed with leave for the bank to re-file the case) or lose and get a 30-60 day sale date assigned by the judge.  It truly irks me when I see so many defense lawyers taking their clients to trial on such a regular basis, especially when a slim few of those posted were wins for the homeowner.

If you ask my opinion, I think it is borderline unethical to continue to take your clients to trial versus getting them into a good settlement just to seemingly pad your reputation or track record; or even worse to be a martyr for the “foreclosure cause.”  I get that some defense lawyers are a little outspoken, or out there, but don’t drag your clients through the legal system ringer just to make a point or to “show the bank.”  Honestly, the bank doesn’t care if you win the case; it is one out of 200,000 or more they have in Florida alone.  And they will certainly re-file against your client anyways; this time with the proper standing/paperwork/fixed issues.

My view is this: get the client into something that works for them, not what pads your wallet or reputation.  I advocate loan modifications, and our firm is very successful getting them for clients.  And clients are extremely happy.  They are out of active foreclosure, into an affordable monthly mortgage payment with a 30 year fixed low interest rate, and some even had the principal (amount they owe) reduced.   In my eyes, this is a win win for everyone.  I don’t have to charge the client some ridiculous fee for trial preparation and to attend a trial, and the client keeps their home as long as they continue paying their modified payments.  I do not need the reputation of being “that guy” who is always in the courthouse challenging the banks, being the cowboy.  I am content getting good results for my clients which speak for themselves.

If your defense lawyer wants to take you to trial without settling, ask them to show you the arguments.  Do your own research on the arguments.  Get a second opinion even! Most lawyers do not charge for a consultation just to review the case.  Double check the arguments your lawyer wants to make at trial if they are even feasible to win on with someone reputable in the field in your area.  Your lawyer may not in fact have your best interest at heart, but rather pad their fee to bill you more, or pad their reputation in the foreclosure world.  They don’t care if you lose because there will be another case and trial, and that 1 notable win is worth the 50 losses it takes to get to the win to them.  Is your house worth it to you though?

Sit in your local courthouse one morning and watch foreclosure trials.  Courts are open to the public.  See how the judges rule and what is argued.  See the state of foreclosure currently and how some judges are extremely pro-bank and some more pro homeowner.  See how some counties overall are receptive to defense arguments, and some rarely ever rule for the homeowner on the same issues.

But in the end, please keep in mind that illusive ‘free house” really does not exist.  You are not going to beat the bank and take your house free and clear; absent a VERY slim and specific set of facts which rarely happens.

So if you are not going to ever truly beat the bank, closely examine why your lawyer is not helping you reach some resolution to keep your house at an affordable price but instead dragging you and your case into court/trial to risk it all.

Flood Insurance Rate Hike Threatens More Foreclosures

In July 2012, the U.S. Congress passed the Biggert-Waters Flood Insurance Reform Act of 2012 (BW-12) which calls on the Federal Emergency Management Agency (FEMA), and other agencies, to make a number of changes to the way the National Flood Insurance Program (NFIP) is run.

Biggert-Waters was intended to help keep the National Flood Insurance Program alive after suffering huge losses from Hurricane Katrina.  The “key” to the bailout was getting rid of subsidized rates; in some cases gradually and in other cases, such as the sale of a home, in one fell swoop.

Most flood policyholders nationwide will see only single-digit increases in rates next year. In fact, just 20 percent of all flood policies in the United States are subsidized. But in Florida, the impact will be much greater.  With 40 percent of all flood policies nationwide, Florida has by far the most subsidized homes.

House reps said that the flood insurance program needed to be retooled to bring stability to a flood insurance program that had lapsed 18 times in previous years; causing several interruptions in the program that prevented new policies from being issued.  Several times, house closings had to be postponed when home buyers couldn’t purchase a required flood insurance policy due to these lapses.

This new bill allows for rate hikes in flood insurance as high as 20% per year.  Backed by the House and several interest groups such as the National Association of Realtors, no one seemed to recognize the disastrous risks that passing this Act would bring until it was too late.

For someone staying in a subsidized home in a high-risk flood zone, rates will typically rise 16 or 17 percent October 1, 2013.  That doesn’t include a 5 percent charge toward the new flood reserve fund.

The impact is more immediate, and devastating, for recent buyers of subsidized properties, or those who let their subsidized policies lapse such as those in foreclosure.  After Oct. 1, their premiums will reflect the full “risk-based” rate, typically adding many thousands to their premiums yearly.

For instance a buyer who planned to purchase a 900-square-foot home in Sanibel cancelled the purchase asfter he he found out the flood premium would jump from $2,440 to $16,092 when he renewed next year; a nearly 8-food rate hike!

There are several measures being discussed in both the U.S. Senate and House of Representatives to stave off “unintended consequences” of Biggert-Waters.  But so far the sole measure that has passed the House would delay only a small part of the law, and wouldn’t stop the premium hikes from hitting new buyers of subsidized properties.

On Monday, the Independent Community Bankers of America echoed calls for a freeze on any increases until FEMA can complete a study on the impact on home affordability.  Moving forward Oct. 1 threatens to price people out of their homes, destroy home values and disrupt the housing market’s recovery, the bankers group maintained.

Garret Graves, chair of Gov. Bobby Jindal’s Coastal Protection and Restoration Authority, tweeted that the flood insurance program hasn’t been the drain on taxpayers claimed by proponents of Biggert-Waters. He said the program collected $65.3 billion in premiums since 1978, but only paid out $56.4 billion to policyholders.

This Act further will have a devastating effect on the already fragile Florida housing market.  Thousands of homeowners will be unable to afford these massive rate hikes and fall into breach of their mortgage with their lenders, putting them into foreclosure in the already clogged court system.