Matt Weidner – Fighting For The American People

Posts Tagged ‘florida foreclosure mediation’

I spent a great deal of time reading the attached report from the Florida Senate.  Remember, the Florida Senate is supposed to represent the People of The State of Florida.

Now perhaps I’m not giving this document a fair read, but I want each and every one of you to read this report and please share with me your comments and observations.  Does this document fairly and evenly describe all the issues surrounding foreclosure in a way that suggests the Florida Senate is looking for an equitable and just way to deal with the foreclosure crisis or does this document reflect a desire on the part of the Florida Senate to bail out the banking industry in Florida?

Read the document carefully. Read the document with critical analysis. Then provide feedback to me regarding your observations.

senateforeclosure

Everyone knows the drill, right?  The banks don’t like mediation in Florida because it “would have” forced them to come to the table and negotiate in good faith with the taxpayers that bailed them out three years ago.

So what do the banks to?  The assassinate the entire program….statewide.  Now think about that power.  Just a few short months ago, state policy makers, legislators and court officials….THE SUPREME COURT OF FLORIDA no less spend millions of dollars to implement a statewide system that gives homeowners the right to participate in mediation. Pay attention to that key phrase, THAT GIVES HOMEOWNERS A RIGHT.

But what our “leaders” give, the banksters taketh away.  The banks didn’t like the program, so they kill it.  But they’re not just killing a program, they’re exercising their power to assassinate your liberties, to take out a hit squad on your rights.

It’s ugly, but that’s the world we live in today.  Read the article, but importantly, read the comments from your fellow comrades:

A Florida Supreme Court mediation program should end because it hasn’t kept people in their homes or reduced a logjam of foreclosure cases, a judicial committee determined.

Successful mediations occurred in less than 4 percent of statewide cases. A report presented to the high court said three main factors led to the program’s demise: borrowers not trusting the program; lenders not willing to settle cases in mediation; and officials not publicizing the program.

Florida has a backlog of about 350,000 foreclosures and many more to come, experts say.

ST PETERSBURG TIMES

The foreclosure crisis continues unabated and will only get worse as economic conditions continue to decline in the United States.  The foreclosure mediation programs starting across the state risk being dismal failures because the lender representative, who is supposed to have “full settlement authority”, really has only a very narrow range of options to offer the borrower.  Often these narrow few options are totally out of synch with the economic or practical realities such as when Indymac will refuses to allow an 84 year old sick and disabled woman to stay in her home under a reduced payment when they will lose at least half the balance of the loan if they take it back or when a servicer fails to accept a reasonable modification that is just a few dollars shy of their pre-programmed guidelines or when a servicer fails to accept a short sale because they’re holding out for an absurd sales price that they will never, ever receive.

INVESTOR/SERVICER LAWSUITS PILE UP

Later today I’m going to post an excellent lawsuit where a group of investors is suing a group of mortgage trusts alleging fraud in the sale of the deal to the investors.  Previously I’ve posted a lawsuit where other investors were suing the servicer for failing to act prudently in managing the mortgage payments and other obligations.  The point of all of this is that whole system is broken down very badly.  Individual attorneys like myself and others are reporting the absurd conduct of the attorneys and clients (how can attorneys pursue cases in circuit courts when they have no contact with their clients?), but increasingly these issues are going to have to be addressed at the much bigger levels of the investors and servicers…..the bottom line is the investors who bought these “shitty” mortgage deals are the ones holding the bag and their servicers and their attorneys are not acting in the investor’s best interests to proceed with these cases.

There are two avenues where these wrongs will start to be addressed:

1. Continued Institutional Litigation

(From the website subprime shakeout)

Heard on this Street this week: the super-secret Syndicate of MBS Investors discussed previously is gaining momentum.  A confidential source has informed me that some of the largest institutional investors in mortgage-backed securities have now joined the group, bringing the amount under management to ”hundreds of billions of dollars in MBS investments.”  The source further informed me that this number is expected to swell to a “jaw-dropping dollar figure.”

As discussed before, the Syndicate hopes to amass enough representation in enough securitizations throughout the country to take over those trusts pursuant to the terms of the respective Pooling and Servicing Agreements (PSAs).  These contracts often require 25% class ownership to petition the Trustee to take action and 50% ownership to fire the Trustee or Master Servicer.

The headline from today’s front page of the Saint Petersburg Times reads,

“Effort To Save Homes Lags”

The headline should read:

“Mediation Will Not Solve The Foreclosure Crisis And it May Make Things Worse For Homeowners”

The full text of the article, in which I am quoted, can be found below, and I encourage everyone involved in foreclosure to read the article in full

Saint Petersburg Times Article Here

I have several concerns related to the mediation process in foreclosure.  First, although the Supreme Court rules mandate that the lender’s representative appear at the mediation and have full settlement authority, many of these lenders are in fact going to be constrained by the current modification requirements that prevent any significant number of modifications from being approved.  The Supreme Court can order mediation, but only federal intervention can force a change in the modification parameters that will allow them to be successful in any meaningful numbers.  Accordingly, I expect the response from lenders to the Supreme Court’s new rules will be, “You can force us to the mediation table, but you cannot force any meaningful mediation to occur.”

A second issue that any party considering a modification must consider whether the modification is issued in mediation or outside mediation is the modifications I have seen thus far do not offer any significant reduction for the homeowner.  While any bit of relief is helpful, buried in the small print of most modifications is language that forces the homeowner to give up many of the rights and defenses that homeowner may have in a typical foreclosure defense.  As a result, lawyers and their clients need to think long and hard before agreeing to any modification, either in mediation or not.

Bottom line is while mediation may relieve some of the pressure on courts….at least for the short term…mediation will do precious little to solve the fundamental problems that exist within the system.