Foreclosure | Sun Valley Idaho’s Best, Most Experienced Real Estate Marketing Expert – George Martin, Jr.

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Having trouble paying your mortgage? What if you got an ad in the mail asking you to join in a lawsuit against your lender? The ad looks like a government form and claims you can get large principal reductions or other monetary relief by joining the suit.

Bad news: Idaho State Attorney General Lawrence Wasden is warning consumers that .

“The scam is a pretext to collect an unlawful $5,000 upfront fee from homeowners,” Wasden says. “The representations in the solicitations are false and are designed to prey on vulnerable homeowners. My office is currently investigating this company.”

The company named in the AG’s press release is Corvus Law Group.

Here’s a copy of the letter.

The ads, which appear to be “notices,” may be mailed to homeowners or posted on their doors. Typically, the business asks for a “retainer fee” and may ask homeowners for their credit card numbers or offer to set up a weekly payment plan.

State and federal laws prohibit companies from charging upfront fees for foreclosure rescue or mortgage modification services.

Beginning September 1, .

“I encourage homeowners who have lost money to this business or other mortgage rescue companies to file complaints with my Consumer Protection Division,” Wasden said. Complaint forms are available at

or by calling (208) 334-2424.

The Attorney General’s Office recently updated its consumer education manuals regarding home buying and foreclosure prevention. The manuals are available at.

Homeowners who are having difficulties paying their mortgage loans may qualify for a mortgage modification and can visit the federal government’s website at www.makinghomeaffordable.gov for an application packet. Idaho homeowners who are having difficulties communicating with their mortgage loan servicers about their loans can call the Idaho Attorney General’s housing specialist at (208) 334-4536 for assistance.

The US Department of Housing and Urban Development (HUD) also offers help to people having trouble paying their mortgage. For an office nearest you, go to www.hud.gov. Menu options at this time are placed on the left side of the page and include Avoid Foreclosure, Learn about Reverse Mortgages for Seniors, and Talk to a Housing Counselor.

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October 19, 2011

Home Sale After Bad Foreclosure Isn’t Valid, Court Rules

A Massachusetts man who bought property in a faulty foreclosure sale didn’t have the right to bring a court case over the property because he isn’t the owner, the state’s high court ruled.

The Supreme Judicial Court, which in January found that banks can’t foreclose on a house if they don’t own the mortgage, went one step further in a closely watched case and said a sale after that foreclosure doesn’t transfer the property. Therefore, the buyer couldn’t bring his court action against a previous owner, the court ruled.

The high court upheld a lower-court decision that said Francis J. Bevilacqua III, the buyer of residential property in Haverhill, Massachusetts, never owned it because U.S. Bancorp foreclosed before it got the mortgage. Yesterday’s ruling could have implications in the foreclosure crisis in which banks are accused of clouding home titles through sloppy transferring of mortgages.

“By alleging that U.S. Bank was not the assignee of the mortgage at the time of the purported foreclosure, Bevilacqua is necessarily asserting that the power of sale was not complied with, that the purported sale was invalid, and that his grantor’s title was defective,” the court wrote. “In light of its defective title, the intention of U.S. Bank to transfer the property to Bevilacqua is irrelevant and he cannot have become the owner of the property pursuant to the quitclaim deed.”

Jeffrey B. Loeb, a lawyer for Bevilacqua, said that while he’s “disappointed” in the ruling, it does pave the way to a solution for third-party buyers: re-foreclosure.

“It reaffirms the concept that a defective foreclosure deed operates as an assignment of the mortgage and if you can trace the ownership of the mortgage, that person would have the right to re-foreclose,” said Loeb of Rich May PC in Boston.

The state high court’s January ruling in the earlier case, U.S. Bank v. Ibanez, didn’t address the status of so-called third-party buyers who purchase property from someone who conducted an invalid foreclosure.

Bevilacqua bought the property in 2006 from U.S. Bancorp, which oversees the mortgage-backed trust containing the loan. The bank isn’t a party to the case.

The case is Bevilacqua v. Rodriguez, 10880, Supreme Judicial Court of Massachusetts (Boston).

SOURCE: Bloomberg Businessweek

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LEHIGH ACRES, Fla.—Joseph Reilly lost his vacation home here last year when he was out of work and stopped paying his mortgage. The bank took the house and sold it. Mr. Reilly thought that was the end of it.

In June, he learned otherwise. A phone call informed him of a court judgment against him for $192,576.71.

Most states allow up to 20 years to try to collect the debts

It turned out that at a foreclosure sale, his former house fetched less than a quarter of what Mr. Reilly owed on it. His bank sued him for the rest.

The result was a foreclosure hangover that homeowners rarely anticipate but increasingly face: a “deficiency judgment.”

[pullquote_right]Forty-one states and the District of Columbia permit lenders to sue borrowers for mortgage debt still left after a foreclosure sale.[/pullquote_right]Forty-one states and the District of Columbia permit lenders to sue borrowers for mortgage debt still left after a foreclosure sale. The economics of today’s battered housing market mean that lenders are doing so more and more.

Foreclosed homes seldom fetch enough to cover the outstanding loan amount, both because buyers financed so much of the purchase price—up to 100% of it during the housing boom—and because today’s foreclosures take place following a four-year decline in values.

“Now there are foreclosures that leave banks holding the bag on more than $100,000 in debt,” says Michael Cramer, president and chief executive of Dyck O’Neal Inc., an Arlington, Texas, firm that invests in debt. “Before, it didn’t make sense [for banks] to expend the resources to go after borrowers; now it doesn’t make sense not to.”

Indeed, $100,000 was roughly the average amount by which foreclosure sales fell short of loan balances in hundreds of foreclosures in seven states reviewed by The Wall Street Journal. And 64% of the 4.5 million foreclosures since the start of 2007 have taken place in states that allow deficiency judgments.

Lenders still sue for loan shortfalls in only a small minority of cases where they legally could. Public relations is a limiting factor, some debt-buyers believe. Banks are reluctant to discuss their strategies, but some lenders say they are more likely to seek a deficiency judgment if they perceive the borrower to be a “strategic defaulter” who chose to stop paying because the property lost so much value.

In Lee County, Fla., where Mr. Reilly’s vacation home was, court records show that 172 deficiency judgments were entered in the first seven months of 2011. That was up 34% from a year earlier. The increase was especially striking because total foreclosures were down sharply in the county, as banks continued to wrestle with paperwork problems that slowed the process.

One Florida lawyer who defends troubled homeowners, Matt Englett of Orlando, says his clients have faced 20 deficiency-judgment suits this year, up from seven during all of last year.

Until recently, “there was a false sense of calm” among borrowers who went through foreclosure, Mr. Englett says. “That’s changing,” he adds, as borrowers learn they may be financially on the hook even after the house is gone.

In Mr. Reilly’s case, “there’s not a snowball’s chance in hell that we can pay” the deficiency judgment, says the 39-year-old man, who remains unemployed. He says he is going to speak to a lawyer about declaring bankruptcy next week, in an effort to escape the debt. The lender that obtained the judgment against him, Great Western Bank Corp. of Sioux Falls, S.D., declined to comment.

Some close observers of the housing scene are convinced this is just the beginning of a surge in deficiency judgments. Sharon Bock, clerk and comptroller of Palm Beach County, Fla., expects “a massive wave of these cases as banks start selling the judgments to debt collectors.”

In a paradox of the battered housing industry, trying to squeeze more money out of distressed borrowers contrasts with other initiatives that aim instead to help struggling homeowners, including by reducing what they owe.

The increase in deficiency judgments has sparked a growing secondary market. Sophisticated investors are “ravenous for this debt and ramping up their purchases,” says Jeffrey Shachat, a managing director at Arca Capital Partners LLC, a Palo Alto, Calif., firm that finances distressed-debt deals. He says deficiency judgments will eventually be bundled into packages that resemble mortgage-backed securities.

Because most targets have scant savings, the judgments sell for only about two cents on the dollar, versus seven cents for credit-card debt, according to debt-industry brokers.

Silverleaf Advisors LLC, a Miami private-equity firm, is one investor in battered mortgage debt. Instead of buying ready-made deficiency judgments, it buys banks’ soured mortgages and goes to court itself to get judgments for debt that remains after foreclosure sales.

Silverleaf says its collection efforts are limited. “We are waiting for the economy to somewhat heal so that it’s a better time to go after people,” says Douglas Hannah, managing director of Silverleaf.

Investors know that , ample time for the borrowers to get back on their feet. Meanwhile, the debts grow at about an 8% interest rate, depending on the state.

Some close observers of the housing scene are convinced this is just the beginning of a surge in deficiency judgments. Sharon Bock, clerk and comptroller of Palm Beach County, Fla., expects “a massive wave of these cases as banks start selling the judgments to debt collectors.”

Mr. Hannah expects the market to expand as banks “aggressively unload” their distressed mortgages in the next year, driving up the number of deficiency judgments being sought.

They are pretty easy to get. “If the house sold for less than you owe, the lender wins, plain and simple,” says Roy Foxall, a real-estate lawyer in Fort Myers on Florida’s west coast.

Mr. Foxall says five deficiency suits were filed against his clients this year, and he couldn’t poke any holes in any of them. Lenders typically have five years following a foreclosure sale to sue for remaining mortgage debt.

Mr. Englett, the Orlando lawyer who has handled 27 such suits for homeowners in the past 21 months, says he didn’t get the bank to waive the deficiency in any of the cases, but did reach six settlements in which the plaintiff accepted less.

[pullquote_left]One Florida lawyer who defends troubled homeowners, Matt Englett of Orlando, says his clients have faced 20 deficiency-judgment suits this year, up from seven during all of last year. [/pullquote_left]Florida is among the biggest deficiency-judgment states. Since the start of 2007, it has had more foreclosures than any other state that allows deficiency judgments—more than 9% of the U.S. total, according to re firm Lender Processing Services Inc.

A loan-deficiency suit can yank borrowers back to a nightmare they thought was over.

Ray Falero, a truck driver whose Orlando home was foreclosed on and sold in August 2010, says he thought he was hallucinating when, months later, he opened the door and saw a sheriff’s deputy. The visitor handed him a notice saying he was being sued for $78,500 by the lender on the home purchase, EverBank Financial Corp., of Jacksonville, Fla.

“I thought I was done with this whole mess,” he says.

Mr. Falero, 37, says he was about nine months behind on his loan when the bank foreclosed. Before it did, he bought another home in Minneola, Fla., where he now lives and where he says he is up to date on mortgage payments. Like Mr. Reilly, Mr. Falero says he didn’t swell the foreclosed-on loan through refinancing or home-equity borrowing.

EverBank won a deficiency judgment on Mr. Falero’s Orlando loan. Mr. Falero and his lawyer are fighting to reduce the amount owed. EverBank declined to comment on his case.

Credit unions and smaller banks are the most aggressive pursuers of deficiency judgments, a review of court records in several states shows.

At Suncoast Schools Federal Credit Union in Tampa, Jim Simon, manager of loss and risk mitigation, says the institution has a responsibility to its members, and that means trying to recoup losses by going after loan deficiencies. He calls such legal action the credit union’s “last arrow in the quiver.”

The biggest banks appear to have stayed largely on the sidelines as they deal with the foreclosure-paperwork mess. One big bank, J.P. Morgan Chase & Co., “may obtain a deficiency” judgment in foreclosure cases but will “often waive” the leftover debt when a homeowner agrees to a so-called short sale of a house for less than is owed on it, a bank spokesman says.

Among the hardest-hit spots in Florida is Lehigh Acres, a 95-square-mile unincorporated sprawl of narrow, cracked-pavement streets about 15 miles inland from Fort Myers.

Lehigh Acres was carved out of scrub land and cattle farms in the 1950s by a Chicago businessman, Lee Ratner, who had made a fortune on d-CON rat poison, says Gary Mormino, a history professor at the University of South Florida in St. Petersburg. Before he died, Mr. Ratner sold prefabricated houses to families hungry for a slice of paradise.

Decades later, Lehigh Acres (population 68,265) attracted people eager to cash in on the housing boom, even though it is distant from the sugary white beaches on the Gulf of Mexico. Speculative investors bought more than half of homes sold in Lehigh Acres in 2005 and 2006, Bob Peterson, a real-estate agent, estimates.

Many of those stucco homes now stand empty, priced at about a third of the value they had at the peak of the housing boom, which was often around $300,000.

In the first seven months of this year, courts entered 42 deficiency judgments in Lehigh Acres, for a total of $7 million, up from 26 judgments for $4.6 million in the same period of 2010, according to a Wall Street Journal analysis of state-court records.

Fifth Third Bancorp, of Cincinnati, filed for the largest share of deficiency judgments in Lehigh Acres last year. The bank declined to comment.

“It’s eerily quiet around here,” says Jon Divencenzo, who bought a house in Lehigh Acres at a May foreclosure sale for $50,000. Some nights, he says, the only sounds are rustling pine trees and the idling car engines of former homeowners circling the block to glimpse what they lost.

The hard-hit area reveals a sharp contrast in homeowners’ attitudes toward deficiency judgments.

Julia Ingham invested in four Lehigh Acres properties in June 2005, hoping to “drum up some real money for retirement.”

All have since been foreclosed on by lenders, says the 62-year-old retired programmer for International Business Machines Corp.

A credit union, after selling one of the foreclosed houses for less than the debt on it, obtained a deficiency judgment against Ms. Ingham for $181,059.54. She worries she could face such judgments on the other properties, too.

Ms. Ingham says when she bought them, she misunderstood how much her investments put her on the hook for. Her builder, she says, promised she could invest $10,000 in four properties and then flip them for a profit. Ms. Ingham says deficiency judgments punish borrowers who were taken advantage of by lenders and builders.

Catherine Ortega, who owns a Lehigh Acres home around the corner from one of Ms. Ingham’s foreclosed homes, says banks should leave people like her former neighbor alone. “Those people have suffered enough,” she says.

In July 2005, Mr. Reilly took out a $223,000 mortgage to build a vacation home here, about 160 miles from his primary home in Odessa, Fla. He was laid off just as construction was being completed.

Mr. Reilly says he is current on the loan on his primary residence but couldn’t afford the vacation home’s $1,200-a-month loan payment. Great Western Bank, which is owned by National Australia Bank Ltd., foreclosed on his house in Lehigh Acres in July 2010.

Mr. Reilly, who was a mortgage broker before his layoff, says he knew that deficiency judgments were possible after a foreclosure but didn’t expect to face one because he doesn’t have any financial assets, and you can’t get “blood from a stone.”

Alfredo Callado, who lives next door to Mr. Reilly’s former house, is unsympathetic. Like Ms. Ortega, Mr. Callado is troubled by the crime that a neighborhood full of empty houses attracts. He started watching over Mr. Reilly’s former house to ward off thieves who steal air conditioners from vacant properties.

Mr. Callado, sitting on a lawn chair in his driveway, says lenders should use deficiency suits to punish defaulting homeowners for the damage they do to neighborhoods, including driving down property values.

“You have to make them pay for what they do to those of us left behind,” he says.

SOURCE: Wall Street Journal

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The federal government is increasing efforts to help distressed homeowners avoid foreclosure with new public service announcements about programs that could lower their monthly mortgage payments.

[pullquote_right]“Struggling homeowners do not need to work through their concerns alone,”[/pullquote_right]The departments of Treasury, and Housing and Urban Development, have joined with the nonprofit Ad Council in a series of new television, radio, print, and online spots to inform homeowners of options to guide them through the foreclosure process and — in many cases — save their homes.

More than a million Americans have already taken advantage of the federal Making Homes Affordable Program, according to HUD Secretary Shaun Donovan. He said the new “Foreclosure Prevention Assistance” campaign is designed to help more people find “specific solutions for their mortgage problems.”

“Struggling homeowners do not need to work through their concerns alone,” Donovan said in a joint statement with Treasury Secretary Timothy Geithner. “The key is encouraging homeowners to pick up the phone now to explore their options.”

“We are continuing to do everything we can to help stabilize the market and to ease the burden on struggling homeowners,” Geithner said. “And that includes working to make sure families and individuals know about the resources available to them.”

One in 11 homeowners nationwide has missed two or more mortgage payments. Many struggling homeowners delay conversations about their mortgage concerns and enter foreclosure without ever reaching out for assistance. The new PSAs notify homeowners facing mortgage trouble that options other than foreclosure are available, and the sooner they act, the more options they have for the best possible outcome.

The Foreclosure Prevention Assistance campaign encourages homeowners to call 888-995-HOPE (4673) to speak one-on-one with a HUD-approved housing expert to discuss the solutions that are available based on their individual circumstances. In addition, the program website, MakingHomeAffordable.gov, serves as an online resource for struggling homeowners to learn about options other than foreclosure.

In the second quarter of this year, for example, 31 percent of the homes sold nationwide were foreclosures.

Third quarter figures are due out this month, but foreclosures nationwide could hit 1.6 million homeowners this year, according to private and government forecasts.

SOURCE: Market Watch

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Aly Chiman

Aly Chiman is a Blogger & Reporter at AlyChiTech.com which covers a wide variety of topics from local news from digital world fashion and beauty . AlyChiTech covers the top notch content from the around the world covering a wide variety of topics. Aly is currently studying BS Mass Communication at University.

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