Wednesday, January 27, 2010

Ten Months and Two Weeks Later ... Still Perfect in Naples

In early March 2009 an upside down Naples homeowner contacted our law firm in search of litigator willing to take on lenders like Fifth Third Bank and Deuthsche Bank in Collier County. The homeowner was close friends with a prominent Naples real estate investor who had hired one or two local lawyers to defend foreclosures with mixed results. It was the perception of the homeowner and his investor friend that some lawyers who dabble in foreclosure do not fight the cases but merely move for an extension of time. The investor perception was that in the past he paid for “foreclosure defense” but what he received was merely “foreclosure delay.”

When I heard the homeowners plight, I advised him that for one case it might not be practical for our firm to take cases in Naples but if there were others we would consider it. I always enjoyed going to Naples to visit my wife’s relatives and taking foreclosure cases in Naples would be another excuse to visit Michelbob’s Ribs. On March 11, 2009, I met with the upside down homeowner, his friend the real estate investor, a local realtor, and local mortgage broker and another distressed homeowner. By the end of the day, we had committed to defend five cases, with total mortgages of 2.7 Million dollars (two of the properties had loan balances in excess of $700,000). Since this trip we been blessed with additional referrals from the original Naples clients.

In my first interview with a prospective Naples client the client had many frank questions. “Why should I hire a law firm with offices in Miami and West Broward to litigate a case in Collier County?” she asked. I explained that for our firm to litigate in Naples is not an impediment as the lenders' lawyers usually have to travel from Tampa or Fort Lauderdale. While I could not comment as to the quality of the representation she would receive from local counsel, I let her know that the representation we would provide would be through and effective and that we would keep her in the loop by scanning and E-mailing her the copies of the pleadings we filed on her behalf. Further, she would not see knee-jerk motions for extension of time. Our way of doing things would be to sit down, assess her situation, and develop a strategy with her to achieve her objectives based on her financial position and the strengths and weaknesses of her case.

After ten and half months none of our Naples clients have lost their home to foreclosure. One of the clients (the one who asked all the questions) had a successful no-recourse short sale. The rest of the clients are still living in their homes. Our firm has since grown from two offices (Miami and Plantation / West Broward) to three offices when the firm opened its third office in Melbourne. Hopefully the firm will be able to add a full time office in Southwest Florida later this year. For More Information about Shuster & Saben please visit our website

Sunday, January 24, 2010

Is HAMP one big Scam?

Yesterday, CNN published an article about Home Affordable Modification Program otherwise know as HAMP and the Obama Plan Modification. The article is titled “450,000 At Risk In Foreclosure-Prevention Program.” If you have not read the article here is a link to the story. I was suspicious of the banks participating in HAMP before the article was published. Too many times I our law firm has heard from homeowners who had stopped making mortgage payments and were contacted by their lenders about a HAMP modification. The homeowners were promised that is they made three (3) trial payments they would be approved for a HAMP loan modification that would reduce their mortgage payments. The homeowner would be told that if they made the three trial payments and submitted the requested paperwork (usually pay stubs and tax returns) they would receive a loan modification, the amount of which would be determined during the 90 day trial period. Many of the homeowners contacting our firm for help made the three trial payments only to be told that they did not qualify for a modification or that their documentation was incomplete.

After reading CNN’s article, I am beginning to feel that HAMP is just a scam perpetrated by lenders against homeowners. The statistics reported by CNN show that less than 10% of the homeowners who have participated in HAMP received a permanent modification. Specifically, CNN reports that while 787,200 homeowners are in trial modifications but only 66,500 people have received permanent adjustments.

A bank-loving lobbyist might speculate that the reason for so few modifications is a failure by the homeowners to make their three trial payments on time. Such speculation would be WRONG as the Treasury Department confirmed to CNN that three-quarters of the homeowners in trial modifications are making their three trial payments on time.

My suggestion for Florida homeowners that are not in foreclosure and are considering a HAMP modification is get everything in writing. If a homeowner who has not paid their mortgage in several months is called about HAMP, the homeowner should request written confirmation that if they make three timely trial payments they will receive a permanent modification. The amount of the permanent modification should also be provided before the first payment is made. After the first payment is made and the documents are submitted, the homeowner should call to confirm receipt of the documents and confirm that no additional documents are needed. If a bank representative orally confirms that no additional documents are needed such confirmation should be reduced to writing in the form of an E-mail or letter to bank confirming the conversation. By confirming that the lender or servicer does not need any additional documents the homeowner takes away the lender’s ability to call after receiving 3 payments and only to tell the homeowner that they must start over because one form was incomplete or missing a signature or comma.

For homeowners who already in foreclosure any loan modification should occur as part of a written settlement agreement reviewed by the homeowner’s legal counsel. Before the homeowner pays one thin dime, the homeowner must know what performance on their part will result in the dismissal of the bank’s case and the amount of interest rate and loan balance reduction they will receive in return for their resumption of monthly mortgage payments.

Homeowners who made three HAMP payments and did not receive a permanent modification should consult a licensed attorney to evaluate if the homeowner has a claim for either fraudulent inducement or breach of contract. Our firm is litigating against Litton and Bank of America for breaching a loan modification agreement. Homeowners with further questions about this issue my inquire by e-mail to