Monday, December 21, 2009

Does my case need a foreclosure defense attorney

It is not necessary to hire an attorney in every Florida Foreclosure Case. Some homeowners in some circumstances do not need a lawyer, if they know how to deal with the lender and lenders attorney in a professional manner and commit to putting everything in writing in case things go wrong and they need to hire counsel later on.
Our new video blog entry discusses this further. Please click the link to see our new video on you tube.

Wednesday, December 2, 2009

Homeowner Gets Free House after IndyMac Bank Fails to Mediate in Good Faith

Daily Business Review, writer Vesselin Mitev reports that Suffolk County, N.Y. Judge Jeffrey A. Spinner, has judicially canceled the mortgage on homeowner Dana Yano-Horski’s home. The action was taken to sanction the lender’s “Unconscionable, vexations and opprobrious conduct” in its attempt to foreclose on the property.

Under applicable state law IndyMac was required to mediate with the homeowner before competing a foreclosure action. Judge Spinner was quoted as finding it “deeply troubling” that IndyMac spurned what would have been a “win-win” solution for all parties. Instead of negotiating the bank engaged in “harsh, repugnant, shocking and repulsive” treatment of the homeowner.

After the homeowners attempts to obtain mediation Judge Spinner ordered a bank representative to attend a mediation conference in September. At the mediation IndyMac loss mitigation manager Karen Dickinson “made it abundantly clear that that no form of mediation, resolution or settlement would be acceptable” to the bank.

The bank asserted that the borrower had previously defaulted on a forbearance agreement. The Court found that IndyMac never sent out the forbearance agreement. Judge Spinner noted “Defendant, through plaintiff’s duplicity found herself in the unique and uncomfortable position of being placed in default of the ‘agreement’ even before she had received it.”

Judge Spinner did more than just dismiss the lawsuit. If the lawsuit was dismissed without prejudice IndyMac could have re-filed the lawsuit and repeated in wrongful conduct. Judge Skinner concluded that the original principal of $292,500 “should be canceled, voided, and set aside.” The Judges order bars any attempt to collect on the note.

The Foreclosure Lawyers at Shuster & Saben applauds Justice Jeffrey Skinner’s courage. In Florida several counties including Dade County, Palm Beach County, Indian River County, and Brevard County have implemented mandatory mediation when the subject property is the homeowner’s primary residence. In a significant number of cases, particularly when homeowners are unrepresented some lenders attempt to avoid mediation or fail to mediate in good faith. In both Dade County and Indian River County our firm has moved for sanctions against lenders who fail to mediate in good faith.

Monday, November 16, 2009

Shuster & Saben Seek Sanctions against Bank of America on behalf of Sebastian, FL homeowner

For Immediate Release: On Tuesday, November 17, 2009, Shuster & Saben served a Motion For Sanctions against Bank of America, N.A. for failing to mediate in good faith with a Sebastian, Florida homeowner. The firm’s client, an elite estates and trusts paralegal (who spent over twenty years working with some of South Florida’s top law firms) attended mediation, in Vero Beach, pro-se, prior to hiring the foreclosure defense litigation department of Shuster & Saben, LLC.

Under the Administrative Order of 2009-01 of Indian River County Chief Judge Willaim Roby, lenders seeking to foreclose on the primary residence of Indian River County homeowners are required to conduct mediation prior to moving for summary judgment. Under the administrative order, the lender must have its counsel appear in person and a representative of the plaintiff/lender may appear by phone or in person. The administrative order requires that individual appearing for the lender must have “full authority to modify the existing loan and mortgage and to settle the foreclosure case.”

Prior to the mediation, the lender’s law firm, Kahane & Associates of Plantation, Florida filed a “Form A” identify Krystal Martin as the respresenative of the lender who would appear at the mediation. The subject homeowner, via federal express provided pertinent financial documents, a release of her tax returns, and a hardship letter to the loan servicer, Litton, so that Litton and Bank of America could evaluate modification of the loan prior to the mediation.

According to the firm’s client, when the mediation commenced for the first 30 minutes of the mediation Bank of America had no representative what so ever. The person listed on the “Form A”, Krystal Martin never appeared for the mediation and in her place, a representative of Litton, the servicer on the loan appeared by phone. Since the person appearing was not a Bank of America employee but only a employee of the loan servicer hired by Bank of America, it was apparent that the representative had no authority to do anything without talking to the lender. When the mediation began the Litton representative did not know the current balance on the loan. The lender’s attorney who signed the “Form A” did not bother to attend the mediation. In her place was a local Vero Beach attorney, Nina Ferraro, who is NOT an employee of Kahane & Associates (the law firm hired by Bank of America to bring the foreclosure). Ms. Ferraro had no prior involvement in the case and also did not have the borrower’s current balance.

Tuesday, November 3, 2009

Shuster & Saben obtains Dismissal of Foreclosure Action

For Immediate Release:
The law firm of Shuster & Saben has obtained the dismissal of a foreclosure lawsuit filed against the firm’s Brevard County client. The Plaintiff / Lender filed suit against our client in an attempt of take their Cocoa, Florida investment property. In the subject action, after the lender drastically raised our client’s interest rate (to well over 8% A.P.R.), our client was unable to continue to afford to make monthly mortgage payments. Our client had financed the property with an A.R.M. (Adjustable Rate Mortgage) that was linked to the LIBOR index, and faced an increase in their interest rate after their initial rate expired. Despite the fact that interest rates declined from 2007 to 2009, the lender still raised the client’s interest rate to a point that it was no longer affordable. Several months after the client stopped making mortgage payments the lender filed a Notice of Lis Pendens and a Complaint for Foreclosure in the Brevard County Circuit Court.

The client consulted with several other Space Coast attorneys before choosing Shuster & Saben to defend the foreclosure action. After Shuster & Saben filed its notice of appearance and voluminous discovery requests the lender decided to dismiss the case and cancel the lis pendens. Counsel for the lender advised that the lender has decided to write off the loan. To view the actual Notice of Dismissal click here.

Wednesday, October 7, 2009

Mortgage lenders try to trick homeowners out of 401k and IRA retirement accounts

There are few instances of bank behavior that anger me more than hearing of lenders and servicers who attempt to trick homeowners into making a withdrawal or loan against their 401k or IRA as a “prerequisite” of loan modification.

If a homeowner owes more than their house is worth and has insufficient income to afford both their monthly mortgage payment and basic living expenses then taking money out of the homeowner’s IRA or 401k is a mistake.

We have heard from several of our clients that the servicer would not approve loan modification because the homeowner had money in a 401k or IRA and that the owner would have to deplete their retirement savings before the loan modification could be approved. In most cases this is bold faced lie. For an upside down homeowner to raid their retirement saving is a always a huge financial blunder.

Florida Statute 222.21(2)(a) provides that any money or other assets payable to participant or beneficiary in a qualified retirement or profit sharing plan such as an IRA or 401k is exempt from all claims from creditors of the beneficiary or participant. Florida Statutes specifically include under the protection umbrella pension plans designated for teachers, county officers and employees, state officers and employees, police officers, and firefighters. In other words even if the lender filed for foreclosure, was able to win its case, took possession of the property, sold it for a loss, obtained a deficiency judgment and attempted to collect on the deficiency the lender STILL could not get its dirty hands on homeowner’s IRA or 401k. The only way the lender can get money out of the homeowners 401k is if the homeowner is DUMB ENOUGH to give it to the lender voluntarily. Further, with proper foreclosure asset protection planning, other assets can often be protected from the homeowner's creditors.

One family that consulted with us had household income of over $150,000 when they bought an $800,000 home in 2006. While the couple put over $80,000 down today their Broward home is worth only $560,000. After the husband was laid off in 2008 the family’s income fell to less than from $150,000 to $50,000 a year. Following the husband’s layoff the couple used their 401k to pay their mortgage of over $5,000.00 per month. They thought the husband’s unemployment would be short lived. Today, nearly one year later, their retirement savings are gone. They have negative equity in their home and have nothing to show for the payments they made since the layoff. If spending $5,000 a month on rent after losing your job is foolish, spending $5,000.00 in mortgage payments when you are not building equity and will not have equity anytime soon is also a poor financial decision. Unfortunately, many homeowners make poor business decisions about their homes due to emotional attachment to the home, ego, and pride. This family paid a huge price because they attempted to handle the problem themselves.

A better solution for this homeowner would have been a short sale that would likely eliminated the negative equity that continues to burden family. In the alternative the homeowner should have sought loan modification and forbearance to delay and reduce payments while the husband sought new employment. If the bank was unwilling to agree to forbearance and/or modification then suspending mortgage payments due to the hardship would financially be a better move than depleting their retirement savings.

The only time a homeowner should use retirement savings to make mortgage payments is when the homeowner has substantial equity in the property. If your house is nearly paid off and is worth far more than you owe then taking money from retirement accounts to protect your hard earned equity makes good financial sense. An upside down homeowner lives in a house that belongs to the bank and essentially owns “less house” than a homeless person. Squandering retirement savings, that the bank could not otherwise touch, is not a worthwhile exchange for minor or temporary interest rate concessions that do nothing to address the homeowner’s negative equity problem.

When borrowers are upside down and the lender is looking at loosing 25% to 50% of the loan balance in a costly protracted litigated foreclosure the homeowner has FAR MORE leverage than they realize. We have seen loan modifications made for homeowners who had no hardship and six figure incomes but simply stopped paying their mortgage because they were upside down and wanted reasonable interest rate concessions from the bank.

If the bank asks you to deplete your 401k in order to get a loan modification it is time to fight back and get professional help. When the representative of the lender or servicer says they cannot approve you because you have assets in your 401k obtain the name and E-mail address of the person you are dealing with and confirm the conversation in writing by e-mail.

There are some homes that could be saved but an essential step in the analysis is whether it is in the homeowners best interest to save their home and at what price is the home worth saving. Detached, objective professional advice is essential part of what we at Shuster & Saben do. Florida homeowners from Dade, Broward, Palm Beach, Collier, Lee, Martin, St. Lucie, Indian River, and Brevard counties can e-mail our firm at
In the meantime hold on to your IRA, 401k, 529, and Florida Prepaid College accounts. You will need these in the future.

Thursday, September 17, 2009

Shuster & Saben Wins Emergency Motion to Stay Foreclosure Sale

For Immediate Release:
Shuster & Saben wins Emergency Motion to Stay Foreclosure, and obtains Court order cancelling judical sale.

September 17, 2009, could have been a very bad day for Shuster & Saben client M.L.* When M.L came to our firm on August 11, 2009, she had already lost her case because a default was entered against her after she failed to file an answer to a complaint for foreclosure filed by MidFirst Bank. Our client had received numerous calls from the loan servicer who had told her that she did not need to attend a Court hearing because she had been approved for loan modification. Relying of what she was told by the servicer M.L. did not answer the compliant or attend a motion for summary judgment. M.L. realized she had a serious problem that required immediate legal action when she received an Court order scheduling her home to be judicially auctioned on September 17, 2009.

After Shuster & Saben was hired on August 11, 2009, the firm filed a Verified Emergency Motion to Stay Foreclosure Sale and Request for Mediation. In support of the motion M.L.’s affidavit was filed that set forth that she was employed and was attempting in good faith to reach a loan modification with MidFirst bank. The affidavit also set forth that M.L. did not file an Answer based upon representations of the servicer that the foreclosure could be worked out by loan modification.

On September 15, 2009, just two days before the scheduled sale the Court held a hearing on the Emergency Motion to Stay Foreclosure. Thomas Willis, from the law firm of Shuster & Saben presented the firm’s argument on behalf of the homeowner and George Zamora of the law firm Kass, Shuler, Solomon, Spector, Foyle & Singer, P.A. presented the bank's argument. Circuit Court Judge Marc Schumacher granted the Emergency Motion and entered an order cancelling the foreclosure sale and deferring the parties to mediation.

To Review the Court's Order Click Here

* M.L. is a real client. To protect her identify and privacy one of her initials has been changed our client's name has been redacted from the linked order.

Shuster & Saben, LLC, Foreclosure Defense
Miami: (305) 576-8688
Fort Lauderdale: (954) 423-0052
Palm Beach (877) 511-STAY
Stuart: (877) 511-STAY
Melbourne: (321) 549-STAY

To See Thomas Willis' Spanish Foreclose Blog Click Here

Sunday, September 13, 2009

We are now available for consultation in Boca Raton

For Immediate Release:
Shuster & Saben, LLC, in an effort to better serve its rapidly growing list of clients in South Palm Beach, is now availbale for consultation in Boca Raton, Florida. Palm Beach County homeowners facings foreclosure can meet with an attorney of the law firm of Shuster & Saben, LLC at 595 South Federal Hwy Suite 600, Boca Raton, Florida. We are available for consultation at this location by appointment only.

Shuster & Saben, LLC is law firm of five attorneys with offices in Miami and in Plantation / Fort Lauderdale. This Fall Shuster & Saben will open a third office in Satellite Beach, Florida (Brevard County). Shuster & Saben, LLC defends homeowners in foreclosure. Lawyers in our firm have been featured in or quoted by Time Magazine, Univision, and the Daily Business Review. Shuster & Saben offers free consultation with an attorney and defends homeowners in foreclosure for $495.00 per month on loans under $500,000. Treasure Coast residents can reach us toll free at 877-511-STAY.

For More Information about Shuster & Saben, LLC, please see our website

Friday, August 28, 2009

Shuster & Saben, LLC announces Short Re-Fi representation with NO ADVANCE FEES

Shuster & Saben, LLC announces Short Re-Fi homeowner representation with no upfront fees.
For Immediate Release: The law firm of Shuster & Saben, LLC announces its availability to represent homeowners with negative equity in Short Re-Fi transactions with no upfront fees. Homeowners pay nothing to get started and incur no fees or costs unless their loan balance is reduced by at least $20,000.00. Frequently Asked Questions about this program follow:

Q: What is a short re-fi?
A: A short re-fi or short payoff refinance is when current lender accepts less than the amount of the loan balance in full and final settlement of the mortgage debt and a new mortgage is issued in the name of the entity providing the source of the funds used to payoff the original mortgage.

Q: What is an example of a short re-fi?
A: The homeowner, Bob Upsidedown bought his home in 2006 for $200,000 and put nothing down at the time of purchase. Mr. Upsidedown had a $200,000 loan with Countrywide that was acquired by Bank of America (BOA). The current value of Bob’s home is $100,000. Due to the recession Bob’s income went from $4,000 a month to $3,000 per month and he was unable to continue to pay his mortgage for the past four months. After reviewing Bob’s employment history and finances Short-Re-Fi investor determines that Bob is a good credit risk. Short Re-Fi investor then contacts Bank of America and offers $75,000 to purchase the mortgage and note on Bob’s property. Bank of America, then evaluates whether it is in their financial interest to accept the offer. If Bank of America’s alternative is a lengthy, protracted foreclosure case against a homeowner represented by an attorney, it might prefer to sell the note rather then spending 12 to 30 months fighting a foreclosure case. Bank of America will also realize that if they were able to win their case and obtain the home, they would have to pay property taxes, mow the lawn, keep the lights on, maintain the property and pay real estate commissions in order to sell the property for an unknown price after unknown delays. In this context the lender may prefer to close their file quickly, receive immediate cash from the investor and take a toxic asset or non-performing loan off their books.

After purchasing the mortgage from BOA, the investor would then record a satisfaction of mortgage, on the original mortgage in exchange for the execution of a new mortgage for an amount agreed to with the homeowner before the note was purchased. Bob Upsidedown’s new mortgage would likely have a loan balance of $90,000 to $95,000 and an interest rate around 7.5%. The investor benefits because they spent $75,000 but are earning interest on $90k to $95k and will receive the full loan balance when the loan is repaid or later refinanced at a lower interest rate. The homeowner benefits because they now have equity in their house and are paying interest on a much small loan balance. Many homeowners see a 30% to 50% reduction in their monthly mortgage expense.

Q: Does Shuster & Saben, LLC provide funding for Short Re-Fi.
A: NO. Shuster & Saben, LLC is a law firm that represents the homeowner in the Short Re-Fi transaction. Our role is to collect information from the homeowner, submit pre-qualification forms to one or more short re-fi companies, and to negotiate with the short re-fi company to obtain the lowest possible loan balance and interest rate for the homeowner.

Q: My credit rating has been damaged by late payments on my mortgage can I still qualify.
A: The Short Re-Fi companies we work with are most concerned about stability of employment and income then credit rating. The short re-fi companies must be confident that the homeowner will be able to make their mortgage payment if the loan balance is reduced to an amount that is less than or equal to the current value of the home. Excellent credit is not required. Candidates with excellent employment history ( 3 years in their current job ) and below average credit will often qualify.

Q: Will the Short Re-Fi company change me an upfront fee?
A: NO. We believe that homeowners contemplating a Short Re-Fi should only incur costs if they actually receive a short re-fi that substantially lowers their loan balance. The Short Re-Fi companies we work with either do not charge upfront fees or have agreed to waive such fees for our clients.

Q: Will ownership of my home change?
A: No. The homeowner never loses ownership of their home. There will be a real estate closing similar to that in a conventional refinance transaction but the homeowner will not transfer ownership of their home.

Q: How does Shuster & Saben get paid?
A: Our firm gets paid only if the Short Re-Fi transaction is completed. Our fee is the greater of $3,000.00 and 10% of the homeowners savings. For instance if the homeowner had a $150,000 loan balance before the Short Re-Fi and a $100,000 balance after Short Re-Fi, our fee would be $5,000.00.

Q: What if I do not have sufficient cash to pay a fee of 10% of the savings?
A: If many cases a substantial portion of the legal fees can be rolled into the new mortgage. Our firm also accepts credit cards.

Q: How complex is the pre-qualification process?
A: The pre-qualification from used by one of the companies we work with is only 1 page long. After receiving the form the re-fi company will have a 15 to 30 minute phone conference with the homeowner to obtain additional information.

Q: How long does the qualification process take?
A: We expect that the re-fi company will make a determination of whether the homeowner is a good risk within two (2) to three (3) weeks.

Q: If I qualify does this mean I will get a short re-fi.
A: Perhaps. In order for a short re-fi to take place three things must happen. First the short re-fi company must approve the homeowner. Second the lender must be willing to sell the mortgage and note for less than the current value of the home, and Third, the Short Re-Fi company and the homeowner must agree to reasonable terms for the new mortgage.

Thursday, August 27, 2009

New Stuart, Florida Consultation Location

For Immediate Release:
Shuster & Saben, LLC announces a new available for consultation location in Stuart, Florida. Treasure Coast homeowners facings foreclosure can meet with an attorney of the law firm of Shuster & Saben, LLC at 850 North Federal Highway, Stuart, FL 34994. We are available for consultation at this location by appointment only.

Shuster & Saben, LLC is law firm of five attorneys with offices in Miami and in Plantation / Fort Lauderdale. This Fall Shuster & Saben will open a third office in Satellite Beach, Florida (Brevard County). Shuster & Saben, LLC defends homeowners in foreclosure. Lawyers in our firm have been featured in or quoted by Time Magazine, Univision, and the Daily Business Review. Shuster & Saben offers free consultation with an attorney and defends homeowners in foreclosure for $495.00 per month on loans under $500,000. Treasure Coast residents can reach us toll free at 877-511-STAY.

For More Information about Shuster & Saben, LLC, please see our website

Friday, August 21, 2009

New Melbourne, Florida Consultation Location

For Immediate Release:
Shuster & Saben, LLC announces a new available for consultation location in Melbourne, Florida. Space Coast homeowners facings foreclosure can meet with an attorney of the law firm of Shuster & Saben, LLC at 100 Rialto Place, Suite 700, Melbourne, FL 32901. We are available for consultation at this location by appointment only.

View Larger Map

Shuster & Saben, LLC is law firm of five attorneys with offices in Miami and in Plantation / Fort Lauderdale. This Fall Shuster & Saben will open a third office in Satellite Beach, Florida and will continue to be available by appointment only at 100 Rialto Place, Suite 700 in Melbourne. Shuster & Saben, LLC defends homeowners in foreclosure. Lawyers in our firm have been featured in or quoted by Time Magazine, Univision, and the Daily Business Review. Shuster & Saben offers free consultation with an attorney and defends homeowners in foreclosure for $495.00 per month on loans under $500,000. When the firm defends a homeowners primary residence
Melbourne Phone: (321) 549-STAY or Toll Free: 877-511-STAY.

For More Information about Shuster & Saben, LLC, please see our website

Sunday, July 26, 2009

Shuster & Saben, LLC, announces Written Limited Money Back Guarantee on Foreclosure Defense Cases

For Immediate Release:

Shuster & Saben announces its new written limited money back guarantee for foreclosure defense cases.

Shuster & Saben is a law firm of five attorneys with offices in Miami and Plantation / Ft. Lauderdale, Florida. The firm defends homeowners in foreclosure cases for a flat monthly fee of $495.00 per month on loans under $500,000.00.

A complete copy of the written limited guarantee is available online at:

Frequently Asked Questions About the Guarantee:

Q: Does the program guarantee legal results?
A: No. The results of litigation are not within the complete control of legal counsel and therefore no attorney can guarantee legal results.

Q: What is guaranteed?
A: Clients in the program are guaranteed a 100% refund if their home is lost to writ of possession (following court ordered judicial sale) of their home with six (6) months of the filing of suit, a 75% rebate if the home is lost to foreclosure within nine (9) months and a 66% refund if the home is lost to foreclosure between 9 month to one year from the filing of suit.

Q: What are the eligibility requirements for the guarantee?
A: To be eligible the client must (a) retain the firm within twenty (20) days of being served with the foreclosure complaint, (b) sign up for billing be credit or debit card, (c) maintain their credit or debit card account such that their monthly bills are paid in a timely fashion, (d) assist their counsel by providing assistance with discovery and attending any depositions or medication set in their case.

Q: What is the purpose of the guarantee?
A: The purpose of this limited money back guarantee is to enhance the client’s financial security by eliminating or substantially decreasing the cost of the firm’s services in the infrequent cases where the legal work performed by the firm does not produce the intended outcome set forth below. A further purpose of this guarantee is to limit or partially alleviate client financial hardship.

Q: If it has been more than twenty (20) days since a homeowner was served but a default has not been issued can an exception be made with respect to eligibility requirements?
A: If a client retains the firm more than 20 days after being served, but before a motion for default is filed and before a motion for summary judgment is filed, the firm will evaluate the case for inclusion in the program on a case by case basis.

For more information about Shuster & Saben, LLC
please see our website.

Monday, July 20, 2009

Do Not Be A Loan Modification Victim

Last week I saved an Aventura homeowner from foreclosure less than week before a scheduled summary judgment hearing. Our client was almost the victim of a bad loan modification. The Court had already entered a default against the Aventura client for failing to file an answer. We were hired a week before the summary judgment, a point in time that is usually to late for us to implement our attack strategy. The Aventura client had asked the bank's lawyer for an extension of time because his loan modification company was working on a loan modification. The bank's lawyer agreed to a 20 day extension and on the 20th day our client wrote the bank's lawyer and faxed her a letter from the loan servicer confirming that his application was complete and in the hands of the lenders “negotiations team.” Our client requested an additional extension because while he completed his application the servicer's "negotiation team" had not made up their mind. The bank's lawyer never said yes or no to his request for additional extension, rather they just obtained an exparte (without hearing) clerk's default. Thankfully all of our client’s communications with the bank's lawyer were in writing or confirmed by fax or e-mail. Armed with proper documentation we were able to get the default set aside. (Lesson One... if you do not have a lawyer confirm all of your conversations with the loan servicer or bank's lawyer in writing. When I practiced law in Jacksonville in the late nineties my old boss would always say: “If it’s not in writing it did not happen.”).

We had a prospective client who was not so fortunate. She did not get her communications with the lender in writing. She relied on a loan modification company in California who told her not to worry about the papers the process server dropped off. They told her they would take care of it. The loan modification company did not take care of her case and never obtained a loan modification. It appears all the company in California did was take her money. She waited even longer to call a lawyer than the Aventura homeowner. In her case she was defaulted, summary judgment was granted and a sale date was less than 3 weeks away. Given how badly her case was messed up we thought it was very unlikely that our efforts could help her and sadly had to pass on the case.

We want to do our part to prevent other victims of bad loan modification. For this reason we are offering a FREE second opinion / Foreclosure Check Up. If you hired a loan modification company and have been served with foreclosure papers we will look-up your case online and send you via E-mail a copy of the Courts on-line docket. This will let you know if anything has been filed on your behalf. This offer is available only to homeowners who live in Dade, Collier, Lee, Palm Beach, St. Lucie, Indian River or Brevard County. Disclaimer: What information is posted on-line by the county clerks office varies from county to county and some clerks offices have a 3 to 5 day delay updating their online docket. Shuster & Saben’s check-up will not include a in person review of the actual court file and Shuster & Saben does not vouch for the accuracy of the Court Clerks records. We hope that this will be of assistance to homeowners and hope that it will prevent homeowners from being victims of bad home loan modifications. Remember only a lawyer who is a member of the Florida Bar can defend you in Court and present evidence to the Court on your behalf.

This information is a public service of Shuster & Saben, LLC for more information about our firm please see our website,

Monday, June 29, 2009

Shuster & Saben files suit against Florida Default Law Group

Shuster & Saben, LLC has filed a lawsuit on behalf of a Miami-Dade county homeowner against the Florida Default Law Group. The lawsuit alleges that the Florida Default Law Group violated the homeowners rights under the Fair Debt Collection Practices Act (FDCPA). The lawsuit was filed in county court for Miami-Dade County. This case is believed to be the first lawsuit filed against Florida Default Law Group filed in a Miami-Dade county court. The basis of the lawsuit is the practice of Florida Default Group of sending letters to homeowner, prior to foreclosure litigation, in envelopes bearing the words “Florida Default Law Group, P.L.” The lawsuit alleges this practice violates the Fair Debt Collection Practices Act because the firm name “Florida Default Law Group” identifies that the firm is a debt collector. One of the purposes of the FDCPA is to protect the privacy interests of debtors by making collection companies send bill collection letters in envelopes that do not identify the company as a bill collector.

Shuster & Saben anticipates filing additional lawsuits on behalf of injured consumers in Dade, Broward, Collier, Palm Beach, St. Lucie and Brevard counties. Shuster & Saben's handling of this case is on a pure contingency (no recovery - no fee) basis. For more information about Shuster & Saben, please see our website:

Wednesday, June 24, 2009

Court Discovers 15,000 unserved foreclosures

On the cover of today’s Daily Business Review is an article which reports that Miami-Dade chief administrative judge, Jennifer D. Bailey has discovered that there are 15,000 foreclosure cases filed in 2009 in which the lender has not served the defendant homeowner. Service of Process is the act of having a process server or sheriff physically hand deliver a copy of the lawsuit to the Defendant (in foreclosure cases the primary defendant is the homeowner). A plaintiff (in foreclosure cases the lender) has 120 days to serve the Defendant. If the Plaintiff serves the Defendant after 120 days without getting an extension of time, in advance, from the Court, the service of process is invalid and the case is subject to dismissal.

We recommend that if a homeowner is served with a foreclosure complaint the homeowner check the Court docket to determine when the case was filed and check to see if service was completed within 120 days.

Shuster and Saben is a five attorney litigation law firm that defends homeowners in foreclose and seek monetary damages for victims of predatory lending and other mortgage law violations. We are available for free consultation at our offices in Miami and Plantation and have freelance paralegals to meet with homeowners in Lee, Collier, and Brevard county. Homeowners with questions can reach our foreclosure defense department at

Tuesday, June 16, 2009

Florida Default Law Group Sued for violation of Fair Debt Collection Practices Act

A Class Action lawsuit for alleged violation of the Fair Debt Collection Practices Act has been filed against the Florida Default Law Group, P.L. in the United States District Court for the Middle District of Florida.

The class action was filed by attorney James E Kallaher, of the Law Office of Bohdan Neswiacheny of Orange Park, Florida. At issue in the lawsuit is the practice of the Florida Default Law Group to send letters to consumers who were behind on their mortgages in envelopes upon which a return address bearing the words “Florida Default Law Group, P.L." was printed.

The purpose of the The Fair Debt Collection Practices Act (FDCPA) is to insure that debt collectors refrain from using abusive debt collection practices. The specific statute alleged to be violated is 15 USC 1692(f)(8) which prohibits:

“Using any language or symbol, other than the debt collector’s address, on any envelope when communicating with a consumer by use of the mails or by telegram, except that a debt collector may use his business name if such name does not indicate that he is in the debt collection business.”

The lawsuit, in our opinion correctly asserts that the business name “Florida Default Law Group” is a business name that indicates the company is in the debt collection business.

Under the Fair Debt Collection Practices Act, any individual who has been a victim of a violation of the act is entitled to both their actual damages and such additional damages as awarded by the Court not to exceed $1,000.00.

Our law firm is in the process of filing individual law suits for clients the firm is defending in foreclosure actions in Dade and Broward County. These actions will be filed on as individual cases in county court. We anticipate that our first law suits will be filed later this week. A copy of the class action complaint is available on-line at

Any consumer who has questions about whether their rights have been violated may contact our firm at

Consumers who believe that the Florida Default Law Group has were sent an envelope with the words “Florida Default Law Group” on the envelope should be aware that any lawsuit brought to recover damages under the Fair Debt Collection Practices Act must be filed within ONE YEAR of the alleged violation.

For more information about Shuster & Saben, LLC
please see our website.

Tuesday, April 21, 2009

What the bank's lawyer does not want you to know.

What the bank's lawyer does not want you to know:

As insurance and foreclosure litigators who are in Court just about every day to keep the roof over our clients heads and prevent our clients homes from being sold out from under them, I wanted to share the view from the front lines from our battles with the banks in courtrooms in Miami, Ft. Lauderdale, Naples, Orlando, and across the great state of Florida. The banks and lawyers they hire would like the homeowners to believe that bank’s case is easy. Many of our clients have asked:

Q: If I borrowed money and I have not made all of the payments … what is there for you to do?

A: We make the bank prove its case. We search for legal violations by the mortgage broker, original lender, appraiser, loan servicer, and law firm representing the bank. We make the party bringing the lawsuit (which is often a trustee for various institutions who purchased securities representing claims on a pool of securitized mortgages) prove that they actually own the mortgage and note, have legal standing to file lawsuit, and have the evidence to prove the loan was properly transferred between each of the entities that owned the mortgage at various times. We assert all affirmative defenses and counterclaims that we know of and conduct discovery to support any claims our client may have against the bank or any other entity involved in the lending process.

In short there is plenty of things for a lawyer to do when defending a homeowner in foreclosure. Some homeowners decide to file a simple answer denying the allegations in the lenders complaint. Filing a simple answer will avoid a default but foreclosure defense litigation is much, much more then filing an answer. Sadly some “foreclosure defense” lawyers do little more filing a simple answer with lawyers bar number on it.

Twenty years ago it was very easy for the banks lawyers. Twenty years ago all the banks lawyer had to do was fill out forms. In days of old a homeowner had to put 20% down to purchase a home. If a home owner put 20% on a $200,000 house they would have to put $40,000.00 of their own money down at the time of the sale. Over the next few years the house might appreciate to $215,000 and the homeowner might pay off $5,000 to $10,000 of the debt. As such three to four years after buying the home the homeowner would have $60,000 to $65,000.00 in equity. Let us consider what would happen if this homeowner lost their job or was hospitalized and missed four mortgage payments. If the bank brought a foreclosure action, the homeowner with substantial equity would do one of the following:

(1) Borrow money from a family member, credit cards, or a loan shark to pay the four missed payments, interest, late fees, attorney’s fees & costs, and obtain a dismissal by bringing the account current.

(2) Sell the house at a significant profit (around $215,000) and use the sales proceeds to payoff the full loan balance.

(3) Refinance the house, and payoff the original mortgage with the loan proceeds.

Whether the homeowner brought the account current, sold the house, or refinanced the bank got paid in full. After the bank and the bank’s lawyer received their principal, interest, late fees, attorney’s fees and costs, the case was dismissed. The bank’s lawyer only needed to fill out the forms and every homeowner with equity would capitulate and pay whatever the bank says was due.

Since the law firms representing the banks mostly just filled out forms at many of these firms paralegals were hired to fill out most of the forms. The lawyers at many of these firms did not have to litigate very often and thus while they were very good at filling out forms many of them rarely got a chance to develop litigation skills in evidence and civil procedure.

Today most homeowners facing foreclosure never hire a lawyer. CNN did a story about what happens to Ft. Myers homeowners who go to court without a lawyer. Here is a link to a video segment about this on CNN.

In Ft Myers (Lee County) there is a judge who will hear 300 unrepresented foreclosure cases in an afternoon. The hearings last as little as 45 seconds. In these cases, since the homeowner has not filed the proper written legal defenses, the judge would merely ask:

Q: Are you current on the mortgage?
A: NO …and
Q: Are you living in the house
A: Yes

The judge would then grant summary judgment for the bank and ordering a sale in sixty days. For a homeowner going to Court without a lawyer is like bringing a knife to a gunfight. Most unrepresented homeowners get slaughtered.

When the bank’s lawyers have to battle real litigators the battle is very, very different. Many times the bank has lost the original note that is usually a prerequisite to foreclose. In other cases the mortgage has been transferred from a mortgage broker to a large bank who sold the mortgage to Fannie Mae or Freddie Mac, which in turn bundled and sold the loans on Wall Street (often to Bear Sterns) where they loans were securitized. The trustee for the pool of securitized mortgages often lacks documentation that each of the prior holders of the note and mortgage complied with all necessary formalities when transferring the note. If the bank bringing the foreclosure action needs evidence or documents from the prior owners of the note many of these companies have closed, been taken over by the government, or have merged with other banks. It is often very difficult or in some cases impossible for the banks to prove their case.

The bank’s lawyers are often overwhelmed. In Collier, Lee and Dade counties there have been times when over three thousand cases were filed in a single month. When bank lawyers have more work than they can handle they are often inclined to work on the easier cases first. For the banks’ lawyers the easiest cases are against homeowners who just give up. Unrepresented homeowners almost always loose, usually lose quickly, and may lose more then once. For many homeowners the first time they lost was when the failed to shop for the best loan. Many homeowners with good credit who could have qualified for a prime mortgage were put in higher rate interest loans with variable rates that just kept adjusting upwards after the teaser rate was over. The second time these homeowners lose is when they lose their home in foreclosure. If the bank gets a judgment for the full amount of the loan and later sells the home for less the homeowner may end up losing a third time. The bank may seek a deficiency judgment for the difference between the amount of the note and the amount the bank received for the home. Years later the bank may sell this judgment to a bill collector, who will attempt to collect from the former homeowner by garnishing their bank accounts or garnishing their wages. This third and final loss will add insult to injury and cause further damage to the homeowner’s credit.

If the bank is faced with an aggressive defense from an experienced litigator they often face a real risk of losing the case entirely or spending years in an expensive fight where they could win some of the issues and lose others. Banks are corporations that exist to make profits for their shareholders. Banks operate out of self-interest. Banks modify mortgages when making interest rate concessions with increase the likelihood that a borrow continues to pay, or in order to convince the borrower to restart making payments. When a mortgage file gets transferred from the loss mitigation department to the legal department the concessions banks will make when they are at risk of losing are much, much greater. We have had clients that begged for loan modifications and have had clients that sent the bank full mortgage payments that were post due only to see the bank return the payments and pursue foreclosure. After the bank loses a summary judgment the calls from the banks lawyers often sound something like this: “What will it take to make this go away?” These homeowners in exchange for a written agreement to “Re-establish the note” may see the amount of their loan cut by 40% and their rates lowered below 5%.

In the trenches we have found that banks are overwhelmed, unprepared, and often unable to prove their case. In their rush to close loans many banks cut corners and did not comply with all applicable rules. Many homeowners have legitimate claims against the banks that they will never discover on their own. In the trenches we are finding that with proper representation homeowners stay in their homes longer (in some cases indefinitely) and can work out settlements that are rarely if ever offered to unrepresented homeowners.

This information is a public service of Shuster & Saben, LLC. For more information about hiring Shuster & Saben to defend your foreclosure case our website

Thursday, April 2, 2009

Upfront Loan Modification Fees in Florida are Illegal

Last week over lunch I was having a spirited debate with undefeated foreclosure defense lawyer Thomas Willis, about whether Florida’s Foreclosure Rescue statute the prohibits up front fees to “foreclosure rescue consultants” would apply to the booming loan modification industry.  It seems these days every out of work mortgage broker wants to be a loan modification consultant.  This is ironic in that if some of these mortgage brokers would not have sold crappy loans with huge transaction costs, hidden yield spread premiums, and adjusting rates the homeowner might not have a need for modification in the first place.  Leave it to a mortgage broker to make money screwing a homeowner and then ask for more money to unscrew the homeowner.  Of course in South Florida, what is sold as an unscrewing is often a repeat screwing where the loan modification company takes an upfront fee but never delivers on the promised loan modification.


During my lunch with Thomas Willis I pondered, if the homeowner is current on their loan then they are not in danger of foreclosure so why should the foreclosure rescue statue apply to a loan modification if there is no foreclosure issue.  Mr. Willis thought that the statute would apply to loan modification.  His thought was that loan modification is essentially a loss mitigation program to prevent bank losses.  If an wealthy investor with continuing high current income made a bad decision by over paying for a home or not obtaining a competitive mortgage the lender will not modify a profitable loan out of sympathy.  Loans are modified when banks believe that modification will prevent a default by the homeowner or when the government creates programs that financially reward lenders to modify loans for certain types of homeowners. Willis saw all loan modification as foreclosure related and argued that all loan modification companies would be prohibited from charging upfront for loan modification services.


The Florida Attorney General sees things the same was as Thomas Willis and by weeks end had filed suit against one loan modification company and had obtained an injunction against the other.  Before the week was up the Attorney General posted the following press release about Lincoln Lending, a loan modification company that  extensively marketed in South Florida on Spanish language television:


Temporary Injunction Obtained in Foreclosure Rescue Fraud Lawsuit

TALLAHASSEE, FL – Attorney General Bill McCollum today obtained a temporary injunction against LINCOLN LENDING Services, LLC and owner Rita Gomez, prohibiting the company from engaging in any type of consumer-debt related service or mortgage modification service and from taking payment from consumers for such services until further order of the court. The company will also be required to preserve and allow inspection of its records and refrain from liquidating its assets.

In addition to freezing the company’s assets, the order requires that the company refund any up-front payments made by consumers for foreclosure-related rescue services subsequent to October 1, 2008, the effective date of the law prohibiting up-front charges. These refunds should be completed within 90 days and will be made without the necessity of consumers filing a claim.

The Attorney General's Economic Crimes Division sued Lincoln Lending and Gomez earlier this week for allegedly charging up-front fees for loan modification services in violation of the Foreclosure Rescue Fraud Prevention Act. The Attorney General’s office has received hundreds of complaints regarding this case since the lawsuit was filed. Both parties agreed to this order.


Our firm has a client that went to Lincoln Lending for loan modification prior to retaining our firm to defend a foreclosure action filed against her by the lender.  According to the client, when she went to Lincoln Lending she was current on her mortgage but Lincoln told her to stop making payments on her mortgage in order for Lincoln to obtain a loan modification.  Lincoln never obtained a loan modification and as a result of our client’s failure to make her mortgage payments she ended up in foreclosure.  To Lincoln’s credit and the client made multiple complaints to Lincoln she was issued a refund.


My advice to homeowners is to choose carefully when it comes to loan modification.  Review the qualifications of the loan modification company and find out if your loan modification will be handled by an attorney or experienced professional of passed off to staffer with no experience or qualification.  Ask for references.  If you home is already in foreclosure speak to an attorney who is a member of the Florida Bar who is willing to go to Court to protect your home.

Thursday, March 19, 2009

Foreclosure Rescue Scams:  How to tell a Helping Hand from a Hand Grenade.

The filing of a foreclosure action or notice of lis pendis is a matter of public record.  As such if the bank files a lawsuit against you to take back your home a large number of people are going to know about it.  Many of these people are con artists who prey upon unsophisticated consumers in a time when the homeowner is stressed out and vulnerable.  In times of old the most common scam was an attempt to steal the homeowner’s equity.  The foreclosure rescue consultant / con artist usually would trick the homeowner into quit claiming the deed to the consultant, a third-party straw buyer, or a shell corporation which would pay off the mortgage and pay little if anything to the seller at the closing.  This rescue consultant would justify this action by telling the homeowner ‘we need to get the house out of your name.’  The new owner of the home would then lease it back to the former homeowner.  Many times the homeowner would not even realize that all of the legal papers he or she was signing were transferring ownership of the home.  The new owner would then refinance the property or take a second mortgage to pocket the difference between the amount paid by the “rescuer” and the value of the home.  At this point the “rescuer / con artist” would stop making payments on the new mortgage(s) while continuing to collect rent from the prior owner.  The former owner realizes he has been duped when he is served with a foreclosure action as a tenant in his own home.  By this time the amount of the mortgages that encumber the property may be double the amount the original owner owned on the property. 


Florida has passed a NEW foreclosure rescue scam prevention law which I have reproduced at the end of this post. This statute PROHIBITS foreclosure consultants from charging any fee prior to the completion of foreclosure consulting services.  Attorneys are exempt from this statute.  This means that if a homeowner engages the services of a loan modification company or other foreclosure consultant the homeowner should not pay any fee until the service is completed. 


We have had clients come to us who hurt badly when they failed to show around for a home mortgage and were put in high interest subprime loans when their credit rating would have qualified them for a 30 year fixed prime loan at a much lower interest rate.  These same clients upon being served with foreclosure paid $1,500 to $2,500 to non-lawyers to assist them with their foreclosure case.  The non-lawyer often did absolutely nothing or wrote only a single letter to the lender or lender’s attorney.  In one case the consultant hand wrote a “pro se” (self-represented) answer for the client to sign.  One of the companies offering these foreclosure services was run by a disbarred lawyer.  Hiring a non-lawyer to represent you in a Court proceeding, when the non-lawyer cannot appear in Court, is about as smart as hiring a car mechanic to perform heart surgery.  What is truly said is that for the price some of our clients paid non-lawyers they could have obtained competent representation from one of several law firms.  The non-lawyers “services” was no help but rather a hand grenade.  Thankfully we were retained early enough to repair the damage.  This far the disbarred lawyer has refused to return our client’s money.  When we sue this guy and his company we will post the suit on this blog. 


OK – for those that are interested here is the statute:

501.1377  Violations involving homeowners during the course of residential foreclosure proceedings.--

(1)  LEGISLATIVE FINDINGS AND INTENT.--The Legislature finds that homeowners who are in default on their mortgages, in foreclosure, or at risk of losing their homes due to nonpayment of taxes may be vulnerable to fraud, deception, and unfair dealings with foreclosure-rescue consultants or equity purchasers. The intent of this section is to provide a homeowner with information necessary to make an informed decision regarding the sale or transfer of his or her home to an equity purchaser. It is the further intent of this section to require that foreclosure-related rescue services agreements be expressed in writing in order to safeguard homeowners against deceit and financial hardship; to ensure, foster, and encourage fair dealing in the sale and purchase of homes in foreclosure or default; to prohibit representations that tend to mislead; to prohibit or restrict unfair contract terms; to provide a cooling-off period for homeowners who enter into contracts for services related to saving their homes from foreclosure or preserving their rights to possession of their homes; to afford homeowners a reasonable and meaningful opportunity to rescind sales to equity purchasers; and to preserve and protect home equity for the homeowners of this state.

(2)  DEFINITIONS.--As used in this section, the term:

(a)  "Equity purchaser" means any person who acquires a legal, equitable, or beneficial ownership interest in any residential real property as a result of a foreclosure-rescue transaction. The term does not apply to a person who acquires the legal, equitable, or beneficial interest in such property:

1.  By a certificate of title from a foreclosure sale conducted under chapter 45;

2.  At a sale of property authorized by statute;

3.  By order or judgment of any court;

4.  From a spouse, parent, grandparent, child, grandchild, or sibling of the person or the person's spouse; or

5.  As a deed in lieu of foreclosure, a workout agreement, a bankruptcy plan, or any other agreement between a foreclosing lender and a homeowner.

(b)  "Foreclosure-rescue consultant" means a person who directly or indirectly makes a solicitation, representation, or offer to a homeowner to provide or perform, in return for payment of money or other valuable consideration, foreclosure-related rescue services. The term does not apply to:

1.  A person excluded under s. 501.212.

2.  A person acting under the express authority or written approval of the United States Department of Housing and Urban Development or other department or agency of the United States or this state to provide foreclosure-related rescue services.

3.  A charitable, not-for-profit agency or organization, as determined by the United States Internal Revenue Service under s. 501(c)(3) of the Internal Revenue Code, which offers counseling or advice to an owner of residential real property in foreclosure or loan default if the agency or organization does not contract for foreclosure-related rescue services with a for-profit lender or person facilitating or engaging in foreclosure-rescue transactions.

4.  A person who holds or is owed an obligation secured by a lien on any residential real property in foreclosure if the person performs foreclosure-related rescue services in connection with this obligation or lien and the obligation or lien was not the result of or part of a proposed foreclosure reconveyance or foreclosure-rescue transaction.

5.  A financial institution as defined in s. 655.005 and any parent or subsidiary of the financial institution or of the parent or subsidiary.

6.  A licensed mortgage broker, mortgage lender, or correspondent mortgage lender that provides mortgage counseling or advice regarding residential real property in foreclosure, which counseling or advice is within the scope of services set forth in chapter 494 and is provided without payment of money or other consideration other than a mortgage brokerage fee as defined in s. 494.001.

(c)  "Foreclosure-related rescue services" means any good or service related to, or promising assistance in connection with:

1.  Stopping, avoiding, or delaying foreclosure proceedings concerning residential real property; or

2.  Curing or otherwise addressing a default or failure to timely pay with respect to a residential mortgage loan obligation.

(d)  "Foreclosure-rescue transaction" means a transaction:

1.  By which residential real property in foreclosure is conveyed to an equity purchaser and the homeowner maintains a legal or equitable interest in the residential real property conveyed, including, without limitation, a lease option interest, an option to acquire the property, an interest as beneficiary or trustee to a land trust, or other interest in the property conveyed; and

2.  That is designed or intended by the parties to stop, avoid, or delay foreclosure proceedings against a homeowner's residential real property.

(e)  "Homeowner" means any record title owner of residential real property that is the subject of foreclosure proceedings.

(f)  "Residential real property" means real property consisting of one-family to four-family dwelling units, one of which is occupied by the owner as his or her principal place of residence.

(g)  "Residential real property in foreclosure" means residential real property against which there is an outstanding notice of the pendency of foreclosure proceedings recorded pursuant to s. 48.23.

(3)  PROHIBITED ACTS.--In the course of offering or providing foreclosure-related rescue services, a foreclosure-rescue consultant may not:

(a)  Engage in or initiate foreclosure-related rescue services without first executing a written agreement with the homeowner for foreclosure-related rescue services; or

(b)  Solicit, charge, receive, or attempt to collect or secure payment, directly or indirectly, for foreclosure-related rescue services before completing or performing all services contained in the agreement for foreclosure-related rescue services.


(a)  The written agreement for foreclosure-related rescue services must be printed in at least 12-point uppercase type and signed by both parties. The agreement must include the name and address of the person providing foreclosure-related rescue services, the exact nature and specific detail of each service to be provided, the total amount and terms of charges to be paid by the homeowner for the services, and the date of the agreement. The date of the agreement may not be earlier than the date the homeowner signed the agreement. The foreclosure-rescue consultant must give the homeowner a copy of the agreement to review not less than 1 business day before the homeowner is to sign the agreement.

(b)  The homeowner has the right to cancel the written agreement without any penalty or obligation if the homeowner cancels the agreement within 3 business days after signing the written agreement. The right to cancel may not be waived by the homeowner or limited in any manner by the foreclosure-rescue consultant. If the homeowner cancels the agreement, any payments that have been given to the foreclosure-rescue consultant must be returned to the homeowner within 10 business days after receipt of the notice of cancellation.

(c)  An agreement for foreclosure-related rescue services must contain, immediately above the signature line, a statement in at least 12-point uppercase type that substantially complies with the following:







(d)  The inclusion of the statement does not prohibit the foreclosure-rescue consultant from giving the homeowner more time in which to cancel the agreement than is set forth in the statement, provided all other requirements of this subsection are met.

(e)  The foreclosure-rescue consultant must give the homeowner a copy of the signed agreement within 3 hours after the homeowner signs the agreement.


(a)1.  A foreclosure-rescue transaction must include a written agreement prepared in at least 12-point uppercase type that is completed, signed, and dated by the homeowner and the equity purchaser before executing any instrument from the homeowner to the equity purchaser quitclaiming, assigning, transferring, conveying, or encumbering an interest in the residential real property in foreclosure. The equity purchaser must give the homeowner a copy of the completed agreement within 3 hours after the homeowner signs the agreement. The agreement must contain the entire understanding of the parties and must include:

a.  The name, business address, and telephone number of the equity purchaser.

b.  The street address and full legal description of the property.

c.  Clear and conspicuous disclosure of any financial or legal obligations of the homeowner that will be assumed by the equity purchaser.

d.  The total consideration to be paid by the equity purchaser in connection with or incident to the acquisition of the property by the equity purchaser.

e.  The terms of payment or other consideration, including, but not limited to, any services that the equity purchaser represents will be performed for the homeowner before or after the sale.

f.  The date and time when possession of the property is to be transferred to the equity purchaser.

2.  A foreclosure-rescue transaction agreement must contain, above the signature line, a statement in at least 12-point uppercase type that substantially complies with the following:


3.  A foreclosure-rescue transaction agreement must state the specifications of any option or right to repurchase the residential real property in foreclosure, including the specific amounts of any escrow payments or deposit, down payment, purchase price, closing costs, commissions, or other fees or costs.

4.  A foreclosure-rescue transaction agreement must comply with all applicable provisions of 15 U.S.C. ss. 1600 et seq. and related regulations.

(b)  The homeowner may cancel the foreclosure-rescue transaction agreement without penalty if the homeowner notifies the equity purchaser of such cancellation no later than 5 p.m. on the 3rd business day after signing the written agreement. Any moneys paid by the equity purchaser to the homeowner or by the homeowner to the equity purchaser must be returned at cancellation. The right to cancel does not limit or otherwise affect the homeowner's right to cancel the transaction under any other law. The right to cancel may not be waived by the homeowner or limited in any way by the equity purchaser. The equity purchaser must give the homeowner, at the time the written agreement is signed, a notice of the homeowner's right to cancel the foreclosure-rescue transaction as set forth in this subsection. The notice, which must be set forth on a separate cover sheet to the written agreement that contains no other written or pictorial material, must be in at least 12-point uppercase type, double-spaced, and read as follows:








I (we) hereby cancel this transaction.

 Seller's Signature 


 Printed Name of Seller 


 Seller's Signature 


 Printed Name of Seller 




(c)  In any foreclosure-rescue transaction in which the homeowner is provided the right to repurchase the residential real property, the homeowner has a 30-day right to cure any default of the terms of the contract with the equity purchaser, and this right to cure may be exercised on up to three separate occasions. The homeowner's right to cure must be included in any written agreement required by this subsection.

(d)  In any foreclosure-rescue transaction, before or at the time of conveyance, the equity purchaser must fully assume or discharge any lien in foreclosure as well as any prior liens that will not be extinguished by the foreclosure.

(e)  If the homeowner has the right to repurchase the residential real property, the equity purchaser must verify and be able to demonstrate that the homeowner has or will have a reasonable ability to make the required payments to exercise the option to repurchase under the written agreement. For purposes of this subsection, there is a rebuttable presumption that the homeowner has a reasonable ability to make the payments required to repurchase the property if the homeowner's monthly payments for primary housing expenses and regular monthly principal and interest payments on other personal debt do not exceed 60 percent of the homeowner's monthly gross income.

(f)  If the homeowner has the right to repurchase the residential real property, the price the homeowner pays may not be unconscionable, unfair, or commercially unreasonable. A rebuttable presumption, solely between the equity purchaser and the homeowner, arises that the foreclosure-rescue transaction was unconscionable if the homeowner's repurchase price is greater than 17 percent per annum more than the total amount paid by the equity purchaser to acquire, improve, maintain, and hold the property. Unless the repurchase agreement or a memorandum of the repurchase agreement is recorded in accordance with s. 695.01, the presumption arising under this subsection shall not apply against creditors or subsequent purchasers for a valuable consideration and without notice.

(6)  REBUTTABLE PRESUMPTION.--Any foreclosure-rescue transaction involving a lease option or other repurchase agreement creates a rebuttable presumption, solely between the equity purchaser and the homeowner, that the transaction is a loan transaction and the conveyance from the homeowner to the equity purchaser is a mortgage under s. 697.01. Unless the lease option or other repurchase agreement, or a memorandum of the lease option or other repurchase agreement, is recorded in accordance with s. 695.01, the presumption created under this subsection shall not apply against creditors or subsequent purchasers for a valuable consideration and without notice.

(7)  VIOLATIONS.--A person who violates any provision of this section commits an unfair and deceptive trade practice as defined in part II of this chapter. Violators are subject to the penalties and remedies provided in part II of this chapter, including a monetary penalty not to exceed $15,000 per violation. 

Wednesday, March 18, 2009

If the bank lost the note, will I get my house for free?

Welcome to the first installment of the Florida Foreclosure Defense Blog.   This Blog is brought to you by the law firm of Shuster & Saben, LLC, a firm with offices in Miami, Florida and Plantation, Florida that defends or is available to defend Florida homeowners in Dade, Broward, Palm Beach, Collier, Lee, St. Lucie, Indian River, Brevard, and Orange counties.  In the weeks ahead we will discuss the foreclosure crisis, what is happening in defended foreclosure cases, common questions about the foreclosure process, the origins of this crisis and potential solutions to the problem.  The opinions expressed herein are purely those of the blog authors and are not meant as legal advice. Homeowners who have been served with a foreclosure should consult and attorney and if they are indigent, unemployed, or qualify for legal aid, are likely to be able to obtain legal assistance for free or at nominal cost.

For our first topic I address the question often presented by potential clients:  If the Bank Lost the Note will I get my house for free?

Homeowners who have received their homes for free have reached the status of Urban Myth on the Internet.  Does it happen in the real world?  It does, but it does not occur that often.  In Florida Statute 71.011 provides for the Reestablishment of papers, records, and files in limited circumstances.  The statue in pertinent part provides as follows:

71.011 Reestablishment of papers, records, and files.--All papers, written or printed, of any kind whatsoever, and the records and files of any official, court or public office, may be reestablished in the manner hereinafter provided.

(1)  WHO MAY REESTABLISH.--Any person interested in the paper, file or record to be reestablished may reestablish it.

(2)  VENUE.--If reestablishment is sought of a record or file, venue is in the county where the record or file existed before its loss or destruction. If it is a private paper, venue is in the county where any person affected thereby lives or if such persons are nonresidents of the state, then in any county in which the person seeking the reestablishment desires.

(3)  REMEDY CONCURRENT.--Nothing herein shall prevent the reestablishment of lost papers, records and files at common law or in equity in the usual manner.

(4)  EFFECT.--

(a)  Any paper, record or file reestablished has the effect of the original. A private paper has such effect immediately on recording the judgment reestablishing it, but a reestablished record does not have that effect until recorded and a reestablished paper or file of any official, court or public officer does not have that effect until a certified copy is filed with the official or in the court or public office where the original belonged. A certified copy of any reestablished paper, the original of which is required or authorized by law to be recorded, may be recorded.

(b)  When any deed forming a link in a chain of title to land in this state has been placed on the proper record without having been acknowledged or proven for record and has thereafter been lost or destroyed, certified copies of the record of the deed as so recorded may be received as evidence to reestablish the deed if the deed has been so recorded for 20 years.

(5)  COMPLAINT.--A person desiring to establish any paper, record or file, except when otherwise provided, shall file a complaint in chancery setting forth that the paper, record or file has been lost or destroyed and is not in the custody or control of the petitioner, the time and manner of loss or destruction, that a copy attached is a substantial copy of that lost or destroyed, that the persons named in the complaint are the only persons known to plaintiff who are interested for or against such reestablishment. 

Our law firm has found that in over 50% of the foreclosure cases we are defending the lender has included a count to "reestablish" a "lost" note.  I think this statute was designed to protect the bank that 50 promissory notes in their vault on Monday, gets hit by a category 4 Hurricane on Tuesday, and takes diligent action to reestablish the notes as soon as the hurricane has past.  From time to time banks make mistakes and this statute could prevent a forfeiture from a clerical error.  In the foreclosure cases we are seeing it is a stretch to say the banks lost the note.  It appears readily apparent that the mortgage brokers who were selling their loans before the ink was dry on the closing real estate closing documents, and the banks forgot the meaning of the word "underwriting" were in such a hurry to write loans, bundle the loans  and sell the loans, that nobody was bothering to take physical possession of the note.  When the loan changes hands three of four times and the fourth holder of the loan says they lost the note, how can they lose something that they never had.  Many times the lender who brought the foreclosure action has no idea which bank lost the note.  

In the real world if the foreclosure complaint has a count to reestablish the note, the bank will have a much more difficult time in the foreclosure cases.  When a bank realizes that it does not have the evidence it needs to prevail and that obtaining such evidence may take years the bank is often amenable to settlement under terms very favorable to the homeowner.  While every case is different when faced with the possibility of losing banks offered homeowners settlements that cut the loan balance in half and reduce the interest rate to 4%.  

While some judges rulings, like the one below (Not our firms case) have set the bar to reestablish a note quite low others have held the banks feet to the fire.  An example of a case where the bank was allowed to reestablish the note follows:

 GLENDALE FEDERAL BANK, FEDERAL SAVINGS BANK, Plaintiff, v. PHILIP L. FRYBERGH; LAKEVIEW VILLAGE II, INC., a dissolved Florida corporation; SUMNER E. ROBINSON, Trustee of the Duncan Florida National Trust Dated 11 July, 1989, SEARS, ROEBUCK AND CO., a New York corporation; WASTE MANAGEMENT INC. OF FLORIDA, Successor by Merger to Southern Sanitation Service; and CAUSEWAY LUMBER COMPANY, INC., Defendants. 17th Judicial Circuit for Broward County, Civil Division. Case No. 93-25033-06. March 2, 1994. Geoffrey D. Cohen, Judge. Robert W. Lee, Smith & Hiatt, P.A., Ft. Lauderdale, for Glendale Federal Bank. Robert A. Arabian, Tamarac, for Frybergh and Lakeview.





THIS ACTION came before the Court on motion of the Plaintiff for the entry of a Partial Summary Final Judgment As to Count I (Lost Note) and Second Affirmative Defense, and after consideration thereof and the Court being duly advised in the premises and otherwise,


1. Plaintiff has established that it owns and holds a promissory note and mortgage, copies of which were attached to Plaintiff's Complaint in this action. The original note has been lost and is not in the custody or control of Glendale. The note has not been paid or otherwise satisfied, assigned or transferred. In Florida, the right to reestablish lost instruments is recognized both by common law and by statute. The destruction or unintentional loss of an instrument does not change the rights or obligations of the parties to the instrument. Florida Real Property Practice III §8.3 (2d ed. 1976). Upon establishing that the instrument has been destroyed, lost or stolen, an interested party is entitled to a judgment reestablishing the instrument. Fla. Stat. §71.011. Accordingly, the note is hereby re-established and the copy of the lost note attached hereto shall stand in place and in stead of the original promissory note. If the original note is ever located, Plaintiff shall immediately deliver it to the Court for cancellation.

2. In Defendant's Second Affirmative Defense, Defendant alleges that Glendale neglected to give Defendants written notice of default and an opportunity to cure before accelerating the note and mortgage. Glendale has, however, established that proper notice was given to Defendants as set forth in the affidavits previously filed with this Court. Evidence of a routine practice of an organization is admissible to prove the conduct of the organization on a particular occasion was in conformity with the routine practice. Florida East Coast Properties v. Coastal Construction Products, Inc., 553 So. 2d 705, 706 (Fla. 3d DCA 1989). The rule is that, when something is mailed by a business, it is presumed that the ordinary course of business was followed in mailing it, and that the mail was received by the addressee. Allstate Insurance Co. v. Eckert, 472 So. 2d 807, 809 (Fla. 4th DCA 1985); Brown v. Giffen Industries, Inc., 281 So. 2d 897, 900 (Fla. 1973). Glendale's affidavits establish that the ordinary course of business was followed in sending its notice of default and acceleration. Accordingly, judgment is hereby entered in favor of Plaintiff as to Defendants' Second Affirmative Defense.

Returning to the initial client question of If the bank lost the note will I get the house for free?  When this question is asked in a first meeting the best answer we can give is MAYBE.  Our firm is a firm of litigators and we fight foreclosures with the goal of getting the case dismissed.   On day one we will not know what cards are in the banks hand.  During the period the case is pending the lost note could be found.  What we do know is that the homeowners position will be stronger if the bank has the added burden of reestablishing the note.  If the bank or the banks lawyers make a mistake, which happens quite frequently we will attempt of capitalize on the mistake.  Many foreclosure cases settle and thus even if the homeowner does not get their house for free a resolution that keeps the homeowner in their home and drastically reduces their loan balance and interest rate is outcome worth working for.