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Foreclosure Defense Florida

Writing The Real Story on the Foreclosure Wars

financial-foreclosure-collapseAt some point in time, I’m going to sit down and write the full story on the tragedy that is the Foreclosure Wars.   The press is doing an excellent job of pulling the pieces together, but there are so many details and important facts that are being missed.   When I write the book, it’s going to start like this:

The collapse of the American economy didn’t begin in the First Great Financial Collapse in 2008, or in the Second Great Collapse that’s coming in 2011, it began in 2004 when New Century Mortgage extended a loan on a home in a rough section of town in St. Petersburg, Florida to a couple who had no chance of ever repaying it…and no real incentive to repay it.

I had a front row seat to this collapse when I was hired to foreclose on the second mortgage my client had placed on the home.   My client was the typical American entrepreneur.   He worked eight hours a day at his full time job, then he’d spend another 8 hours building by hand, often by himself, a series of homes in this troubled part of town.   As he neared completion of his one off, solidly built American dreams, he would stick a sign in the yard and in a few days the home would be under contract to a family ready to claim their piece of the American dream with no money down, no real ability to pay for the home and no chance of ever climbing out from under the massive mortgage debt they would sign up for.

In this particular case, New Century Mortgage gave the borrowers a $150,000 mortgage and my client gave a $25,000 second mortgage, a figure that represented the entire profit my builder client hoped to make after breaking his back for six months. This was just a few years before the subprimes would loan any amount of money to anyone.   At this point in time, no lender was willing to pony up the full $175,000 that would have allowed my client to immediately take his profit off the top.   My client’s only hope to take his profit was the hope was some other lender would come along in a few months to offer the hopeless homeowners a bigger loan and pay him off in full.   The new homeowners moved in to their brand new, shining example of The American Dream and all was well….for a few short months.   It didn’t take long before payments were late and the homeowners were in default. (Remember they had no hope of ever making the income they would need to support this home in even the short run.)   First came the foreclosure lawsuit filed by something that claimed it actually owned the $150,000 first mortgage, Deutshe Bank Trust, filed by one of Florida’s now infamous Foreclosure Mills.   Next came the foreclosure lawsuit I filed on behalf of my client, seeking to recover the $25,000 he claimed he was due on the second mortgage.

A most interesting thing happened when the foreclosure mill called into the judge’s chambers to try and foreclose the First Mortgage.   I was at the hearing on behalf of my client the second mortgage holder and I raised some objection to the Affidavit that was submitted by the foreclosure mill. The judge agreed that my objection was valid and then a most curious exchange occurred.   The Foreclosure Mill replied over the speaker phone, “that’s no problem judge, I can just correct the Affidavit and have it faxed right over to you.”   The judge and I both questioned how this were possible when the lender was a corporation based in California. “Well”, the Foreclosure Mill Replied, “That’s because we actually produce and sign the affidavits right here in the law office”

BOMBSHELL–The hearing and exchange described above occurred in 2006, long before Jeffrey Stephan and the robo signer controversy of 2010.   So here we were in a hearing and the attorneys on one side of the case admitted that they were producing and entering the evidence they needed to win their case.   This would seem to be a clear cut and blatant violation of all rule of evidence and ethics, but it was apparently a widespread practice….when the judge raised objections to the fact that attorneys were entering evidence, the Foreclosure Mill helpfully replied, “It’s not a problem for us to file these affidavits, we do it all over the state.”   Hmmmmm…. “We do it all over the state.”

If we looked back at all the foreclosure cases that have been “won” by the banks since 2006, my mind struggles to comprehend how many of these cases should not have been “won” by the banks at all if a) we all realized the long tern consequences of allowing such flawed and faulty procedures to occur and; b) we had all been paying closer attention to the manipulations of the foreclosure mills, the subprime lenders and the Wall Street Fat Cats that caused all this mess.

Subprime Loans Were Never Intended To Be Repaid

A key fact, and one that people (understandably) have a hard time wrapping their heads around, is the fact that this family never had any hope of repaying this loan.   The vast majority of subprime loans were never going to be repaid, even if the US economy kept chugging right along.   So what company in their right mind would ever write a $150.000 check when they knew there was no hope of repaying that loan and what other incentives were at play in the orgy to write billions in dollars in loans that were not going to be repaid….that’s where the real (phantom) money comes in.

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