New Blog Post: WWW.FLORIDAREALESTATELAWYERSBLOG.COM

I'm sad to say that this blog will no longer be operational, but I'm happy to announce that we have a new blog on the very same topics at: www.Floridarealestatelawyersblog.com

Please check us out as we will be posting often! The new link is below.  Thank you, Dan Pascale

Floridarealestatelawyersblog.com

Florida’s Foreclosure Process & Deficiency Judgments

In an effort to alleviate the foreclosure crisis, Florida’s Legislature recently passed a new foreclosure bill (House Bill 87).  Unfortunately, the new foreclosure law is 95% pro-bank and only 5% pro-homeowner.  From a homeowner's perspective, the biggest problem with the new foreclosure law is that it speeds up the foreclosure process by requiring the homeowner to prove to the Court in an “order to show cause hearing" that the foreclosure should be stopped.  Some additional provisions that all homeowners fighting foreclosure should know about are as follows:

The Positives

Deficiency Judgments: The time frame for the Bank to pursue a deficiency judgment against the homeowner has been drastically shortened from five (5) years to one (1) year.  That means that the Bank only has one year to pursue a collection action against the homeowner for the amount that the homeowner actually owed on the loan and what the house ultimately sold for in the foreclosure sale.  If the Bank does not initiate a collection action against the borrower within one year, the Bank loses the right to collect the deficiency judgment.

Tightened Paperwork Requirements: Banks are now required to initially identify in their foreclosure complaint whether they are in possession of the mortgage note and/or their factual basis for bringing a foreclosure action without being in possession of the mortgage note.  If the Bank is in possession of the mortgage note, the Bank must file with the initial complaint copies of the note in the Bank’s possession.  If the Bank fails to file the appropriate paperwork then there may be grounds for the borrower to file a motion to dismiss the foreclosure lawsuit.

The Negatives

Speedy Foreclosure Process/Show Cause Hearing: The Bank is entitled to a “show cause hearing” within 20 days of serving the foreclosure lawsuit.  At the show cause hearing the homeowner must prove to the Court that the foreclosure should be stopped.  If the homeowner fails to appear the show cause hearing the court may grant a final judgment of foreclosure at that time.

Final Judgments: Borrowers who have been victims of fraud and have had their homes foreclosed on will not be able to regain possession of their home once it is sold at a foreclosure sale on the grounds that they were defrauded.  The only remedy available to these particular homeowners is money damages (i.e. dollars).

In light of the congested courthouses and foreclosure epidemic, it is no surprise that Florida is getting tougher on foreclosure and foreclosure defense.  The new law requires that homeowners facing foreclosure, even those homeowners who are pursuing a short-sale or a loan modification, react quickly by filing the appropriate defenses to avoid a foreclosure sale. Under the new foreclosure law, homeowners who do not actively defend the foreclosure lawsuit will lose their homes faster than in the past. Therefore, homeowners should not rely on anecdotal stories from their neighbors about how long it takes a bank to foreclose on a home.

In order to stop foreclosure, homeowners will need to quickly develop a clear cut strategy. Whether that strategy involves a short sale, loan modification, or bankruptcy will be dependent upon the unique circumstances of the homeowner.  Under the new foreclosure law, it is even more important for homeowners to hire a reputable and experienced foreclosure defense lawyer who understands the complexities of  Florida's foreclosure process.   For a free consultation to discuss your legal matter with me please email me at dpascale@rascoklock.com or call my office to schedule an appointment: 305-476-7100.  

U.S. mortgage rates jump to 2-year high

As many folks know, mortgage rates are on the rise.  Will the increase put a damper on the housing and economic recovery or will it stoke new home sales by encouraging prospective home buyers to move quicker? The article below does a great job of explaining why we are facing higher mortgage rates in light of Ben Bernanke and the FED's actions.

Read more here: http://www.miamiherald.com/2013/06/27/v-print/3474352/us-mortgage-rates-jump-to-2-year.html#storylink=cpy

U.S. mortgage rates jump to 2-year high By MARCY GORDON and ALEX VEIGA Associated Press U.S. mortgage rates have suddenly jumped from near-record lows and are adding thousands of dollars to the cost of buying a home. The average rate on the 30-year fixed loan soared this week to 4.46 percent, according to a report Thursday from mortgage buyer Freddie Mac. That’s the highest average in two years and a full point more than a month ago. The surge in mortgage rates follows the Federal Reserve’s signal that it could slow its bond purchases later this year. A pullback by the Fed would likely send long-term interest rates even higher. In the short run, the spike in mortgage rates might be causing more people to consider buying a home soon. Rates are still low by historical standards, and would-be buyers would want to lock them in before they rise further. But eventually, more expensive home loans could price some people out and slow the housing market’s momentum, which has helped drive the U.S. economy over the past year. “People are getting off the fence a little bit more or choosing to buy now instead of choosing to buy three months from now,” said Anthony Geraci, a Cleveland real estate broker-owner who says he’s seeing more sales activity lately in his market. Mortgage rates are rising because they tend to track the yield on the 10-year Treasury note, a benchmark for most long-term interest rates. The 10-year yield began rising from near-record lows in May after speculation grew that the Fed might be closer to reducing its bond purchases. In early May, the average rate on a 30-year mortgage was 3.35 percent, just above the record low of 3.31 percent. But rates began to surge – and stocks plunged – after Fed Chairman Ben Bernanke made more explicit comments last week about the Fed’s plans. He said the Fed would likely begin to scale back its bond buying later this year if the economy continued to strengthen. The rate on 30-year loan soared from 3.93 percent last week to 4.46 percent this week – the biggest one-week jump in 26 years. The effect on buyers’ wallets in just the past two months is striking. A buyer who locked in a 3.35 percent rate in early May on a $200,000 mortgage would pay $881 a month, according to Bankrate.com. The same mortgage at a 4.46 percent rate would run $1,008 a month. The difference: $127 more a month, or $45,720 over the lifetime of the loan. Those figures don’t include taxes, insurance or initial down payments. Jed Kolko, chief economist at Trulia, a real estate data analysis firm, thinks many would-be buyers will start to take note. “Some buyers will reconsider jumping into the market; others will speed up their (home) purchases before rates go higher,” Kolko said. The rate hike comes at a critical time. Low mortgage rates have helped fuel a housing recovery that has kept the economy growing modestly despite higher taxes and steep federal spending cuts. In May, completed sales of previously occupied homes surpassed the 5 million mark for the first time in 3 1 / 2 years. And those sales could rise further in June because the number of people who signed contracts to buy homes rose to the highest level since December 2006. There’s generally a one- to two-month lag between a signed contract and a completed sale. Greater demand, along with a tight supply of homes for sale, has driven up home prices. It’s also led to more home construction, which has created more jobs and contributed to economic growth. Lower rates have also inspired a refinancing boom over the past two years. Many homeowners have locked in rates below 4 percent. That has lowered their monthly payments, leaving them with more cash to spend elsewhere and fuel more economic growth. The average rate on a 15-year fixed mortgage, a popular refinancing instrument, soared this week to 3.50 percent – its highest point since August 2011 – from 3.04 percent last week. A report this week suggested that the economy might not be as strong as some had thought. The government cut its growth estimate for the January-March quarter to an annual rate of just 1.8 percent – much lower than the 2.4 percent rate it estimated a month ago. A key reason for the downgrade was that consumers spent less than previously thought. Less spending has led some economists to predict that growth will stay weak through the summer and fall short of the Fed’s more optimistic forecast of 2.3 to 2.6 percent growth for all of 2013. The downgrade for economic growth has cast some doubt on the likelihood that the Fed will reduce its stimulus later this year. Several Fed voting members have stressed in recent days that Bernanke’s comments made clear that any pullback in bond purchases would hinge on the economy’s performance, not a calendar date. Those reassurances and solid, if not spectacular, economic data have helped boost stocks in recent days and reverse a jump in long-term interest rates. The yield on the 10-year Treasury note fell Thursday to 2.47 percent, down from its two-year high of 2.66 percent on Monday. Geraci says he doesn’t think higher mortgage rates will hurt a housing market in which there aren’t nearly enough available homes in many areas. “So buyers that find a nice home, no matter what the rates are, are going to move on it,” Geraci said. “If there’s enough supply, people might sit and wait a little bit and see if the rates come down.” Rising rates motivated Alex Backus to act two weeks ago and sign a contract on a $365,000 three-bedroom house in the Seattle suburb of Edmonds, Wash. Backus, 30, had searched listings for two months before signing the contract. He locked in a 30-year loan at a fixed rate of 4.125 percent. “Seeing that interest rates were starting to come back up, it seemed like now was the time to really start to get serious about buying a home,” said Backus, an aerospace engineer.

New Florida Foreclosure Bill Expedites Foreclosure Process

Florida homeowners facing foreclosure can no longer rely on court inefficiencies to protect them from foreclosure.  The article from the Florida Bar below provides a summary of Florida's newest foreclosure law. 
Plan in place to work foreclosure backlog By Gary Blankenship
Senior Editor

Florida courts will soon have more money and a new law to attack the state’s backlog of mortgage foreclosure cases, assuming Gov. Rick Scott signs the two measures passed by the Legislature.

In the closing days of the session, lawmakers approved a bill designed to speed the handling of foreclosures, overriding the concerns of critics that it might shortchange homeowners with legitimate defenses and not address the real cause of languishing foreclosure cases.

They also okayed spending more than $40 million for senior judges, court staff, clerks of courts, and legal aid assistance for low- and moderate-income homeowners facing foreclosure. All those expenditures were made toward cutting the state’s backlog of more than 350,000 foreclosure cases.

As both chambers considered the legislation, it nearly died in the Senate. Although it passed the House on April 29 by an 87-26 vote, the fate of its counterpart in the Senate appeared questionable when it had not been taken up in the Appropriations Committee, the bill’s final committee of reference.

In an unusual procedure, it was withdrawn from the committee and taken up on the Senate floor on April 30, amended to match the House bill, and then finally passed on May 2 by a 26-13 tally.

Both chambers saw unsuccessful amendments to change a provision of the bill that limited recoveries by homesteaded homeowners if fraud by the lender had been involved in their foreclosure. If those homes had been purchased by “innocent” third parties, then the original homeowners were limited to recovering only monetary damages from the lender; they could not get the home back.

The amendment would have allowed the original homeowner in those cases to get the house back. Rep. Mike Fasano, R-New Port Richey, pushed that amendment in the House and Sen. Darren Soto, D-Kissimmee, championed it in the Senate.

“Imagine that you made all your payments on your mortgage and there was a mistake made or fraud and you actually lost your house,” Soto said. “If this law passes without this amendment, you won’t be able to get it back.”

Rep. Kathleen Passidomo, R-Naples, sponsor of the House bill, said in addressing Fasano’s amendment that many of the foreclosed homeowners don’t want the homes back even in cases involving fraud, because the homes would come with the previous mortgage and liens that the homeowners had been unable to pay.

“We discussed this issue extensively in a couple of the committee stops,” Sen. Jack Latvala, R-Clearwater, and the Senate sponsor, said on Soto’s amendment. “One of the provisions we are trying to have in this bill is finality. The innocent purchaser would be protected. . . . You can’t have your home taken away from you. The bill provides that instead that person who was foreclosed on wrongly has a right to monetary damages only and they can still go after whoever perpetrated the fraud.”

Sen. Nancy Detert, R-Venice, argued Soto’s amendment would create more victims and that those who had been foreclosed, even if the procedure was in error, had defaulted on their mortgages.

“Under your amendment we would have more victims because your people would win a case and throw out people who are timely payers, who in good faith bought a [foreclosed] house,” she said.

Latvala, who praised Passidomo for pushing the legislation for the past three years, explained during the Senate debate what the bill would accomplish:

* It cuts the statute of limitations for banks to seek a deficiency judgment against a foreclosed homeowner from five years to one year. The amount of the deficiency would be limited to the difference between the amount received in the foreclosure sale and the fair market value of the house at the time of the sale, not the amount of the original mortgage.

* Lenders filing foreclosures face heightened standards for filing papers that show they have the right to foreclose. That portion of the bill came in response to the “robosigning” scandal where lenders were found to be fabricating documents and signatures in a rush to process foreclosures. “It eliminates the fraud . . . that has resulted from robosigning practices of the past,” Latvala said.

* Show cause hearings in foreclosure cases will use the summary judgment standards to speed the resolution of foreclosure cases, and at those hearings defendants will have to claim a specific, allowable defense to forestall the foreclosure. Critics of the bill said defendants would have inadequate time to conduct discovery, noting in other civil cases summary judgment comes well into the case and after discovery. They also said that under current law, foreclosure defendants only have to claim that they have a defense without specifying what it is to delay the foreclosure. Passidomo and other supporters said that has led to abuses where defaulting homeowners fabricate defenses to stay in their homes while not paying the mortgage.

* Homeowner and condominium associations with liens on unpaid property assessments will be able to seek a show cause hearing if the lender does not.

* “Innocent” third parties who buy foreclosed homes cannot be divested of those homes if that foreclosure was later found to be fraudulent. Instead, the original owner will be limited to collecting monetary damages from the lender or party responsible for the fraud.

The legislation produced sharp debate both in committee and on the floors of the two chambers. Proponents contended that the bill was needed to attack the backlog of cases and help quickly move those cases while protecting homeowners.

Critics said it rewarded banks which had flooded the courts with faulty paperwork and limited the ability of homeowners to defend a foreclosure. They argued that there would be no untimely delays if banks filed the proper paperwork and pursued cases instead of letting them languish.

The issue split Bar members, with the Real Property, Probate, and Trust Law Section supporting the legislation and a coalition of attorneys who defend foreclosures opposing it. Some citizen and consumer groups also opposed the bill, claiming it was too easy on banks that had abused the foreclosure process.

The bill becomes effective when signed by the governor or 15 days after it crosses his desk if he decides to let it become law without his signature.

Whatever the effect of the new law, lawmakers signaled their desire to reduce the number of foreclosure cases in the court system when they dealt with more than $200 million the state received through Attorney General Pam Bondi’s participation in the National Mortgage Settlement. Lawmakers, outside of the regular budget, appropriated about $40 million for addressing foreclosures.

The Office of the State Courts Administrator broke down the authorized spending:

* It includes $16 million for the courts to pay for increased use of senior judges, general magistrates, and case managers to help dispose of foreclosures. Another $5.3 million was allocated to the state courts system to pay for technology to help handle foreclosures. Those monies can be spent over two years.

* A total of $9.3 million is designated for county clerks of courts to help courts with foreclosure paperwork.

* Another $10 million is set aside for legal aid agencies to help low- and moderate-income homeowners threatened with foreclosure.

Recent Win in Legal Malpractice Case Involving $5.3 Million Loan Closing

I am pleased to share the press release below for a legal malpractice case that Alfonso Perez and I tried in Federal Court which produced a million + jury verdict in favor of our client, the FDIC. 

MIAMI--(BUSINESS WIRE)--

Yesterday, the Law Firm of Rasco Klock Perez & Nieto, P.L., based in Coral Gables, FL, had a major victory in U.S. District Court for the Middle District of Florida in a legal malpractice and breach of fiduciary duty case.

The FDIC, represented by attorneys Alfonso Perez and Daniel T. Pascale of RKPN, filed the legal malpractice case against Bob Messick and his law firm, Icard Merrill, for failing to close a $5.3 million real estate development loan in accordance with the Bank’s written instructions. The FDIC asserted that the Bank’s written instructions expressly required Bob Messick to secure an option contract on a critical piece of loan collateral, a 25-acre riverfront property. After seven days of testimony the jury rendered a verdict for the FDIC, finding that Mr. Messick had an irreconcilable conflict of interest in the transaction because he was simultaneously serving as legal counsel for the Bank, the borrower, a third-party lender being paid off with the Bank’s loan, and the principal of the borrower. As a result of that irreconcilable conflict of interest, Mr. Messick failed to advise the Bank that the borrower did not actually have an option contract in the 25-acre riverfront property and closed the Loan without it. Despite soliciting favorable testimony from 3 former Bank executives, all of whom had previously paid the FDIC almost $2 million to settle claims that they mismanaged at the Bank, the Defense failed to convince the jury that the Bank’s official records had been verbally altered, as claimed by the defense.

This is the first case in the country since the last wave of bank failures in the 1980s where the FDIC, acting as a receiver of a failed bank, successfully prosecuted an attorney and his law firm for legal malpractice and breach of fiduciary duty.

"We are excited that our law firm had the opportunity to represent the FDIC on this important case," stated Alfonso J. Perez, Esq.

Abandoned Property & Florida Landlord Tenant Law

A commercial landlord client recently questioned what her rights as a landlord were with respect to property that her former tenant had left behind in their rental unit.  Florida Statute, Sections 715.104 - 715.112 (link below) governs this issue:

http://leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&URL=0700-0799/0715/0715ContentsIndex.html&StatuteYear=2012&Title=-%3E2012-%3EChapter%20715

According to Section 715.104, F.S., before taking any action a landlord must provide written notice to the former tenant and any other parties that the landlord suspects may own the property that was left behind.

The written notice needs to identify the property with specificity and advise the former tenant that they must pick up the property within 10 days (if the notice is personally delivered) or within 15 days (if the notice is sent by mail) or the property will be sold or thrown-out.

Although the statute only requires the notice to go out via first class mail, and although it will cost slightly more, I always send any statutorily required notice out by certified mail in order to lessen the chance of any confusion about whether the notice was ever provided because the issue of proper and effective notice arises quite frequently in landlord/tenant matters.

How Much is the Florida Tenant's Abandoned Property Worth?

The landlord will also need to determine whether the property is worth $500 or more.If the property is worth less than $500, at the end of the applicable time period (10 or 15 days depending on how the notice was sent) then the landlord has three options: 1) she can claim title to the property and take possession of it; (2) she can dispose of the property, or 3) she can sell the property and keep the proceeds from the sale for herself.

However, if the property is worth $500 or more, the landlord must advertise that the property is for sale for at least two consecutive weeks in newspaper of general circulation.After deducting the costs of storage, advertising, and the sale costs, any balance of the proceeds from the sale which are not claimed by the former tenant (or an owner other than such tenant) shall be paid to the treasury of the county in which the sale took place.

Can the Florida Landlord Recover Their Costs?

It is important to keep in mind that in either case, i.e. whether the property is worth less or more than $500, the landlord always has the right to recover the money spent storing the property, advertising its sale, and selling the property. When the property is stored at the premises, the costs of storage is calculated by determining the fair rental value of the space which is needed to store the property.

A brief word of caution, the Florida Landlord/Tenant Statute is strictly construed and landlords can (and do sometimes) come under fire for violating the statute, even when they are owed back rent! As a result, it is always advisable to retain an experienced real estate attorney to assist with landlord/tenant matters.

For a free consultation on a landlord tenant or about any other real estate issue that you are experiencing, please contact me at 305-476-7096 or at dpascale@rascoklock.com.