Saturday, May 5, 2012

Three Year Old Foreclosure Case Settled with Short Sale

When the recession of 2008-2010 hit, a young Florida mom’s employer closed and in a short span of time she faced financial hardships of both unemployment and divorce.  In her divorce she kept the family home in Palm Bay, Florida.  Unfortunately, the value of the property fell more than 60% when the local real estate market collapsed.  She now owed nearly $150,000 on a property worth less than $50,000 and her limited income from unemployment was insufficient to pay her mortgage.  When Space Coast Credit Union filed a foreclosure action against her in 2009, the homeowner traveled to a legal aid office in Daytona Beach where a legal aid lawyer helped her draft a do it yourself ( Pro Se ) Answer. 

The homeowner originally obtained the loan on her home from Space Coast Credit Union ( SCCU) who in turn sold the loan to the Federal National Mortgage Association, also known as Fannie Mae or FNMA.  In 2009, SCCU filed a foreclosure action against the homeowner which she defended herself through 2009 and part of 2010.  In 2010, the homeowner found a job as a legal assistant and attempted unsuccessfully to modify her mortgage.  In 2010 after mediation was unsuccessful and Space Coast’s lawyers filed a motion for summary judgment the homeowner hired Melbourne Florida foreclosure defense attorney, Richard Shuster, to defend the foreclosure action.

Shuster & Saben defended the foreclosure action for two additional years during which time the homeowner made no mortgage payments.  During the three years that the client made no mortgage payments she was able to use the savings to provide for her family, and later after finding employment, to replenish her savings that were wiped out by unemployment and divorce. 

Shuster went on the offensive in the foreclosure action and deposed Space Coast’s corporate representative.  The firm hoped to win the case under a theory that the proper plaintiff was Fannie Mae the loan owner and not the loan Space Cost the loan servicer.  The firm used testimony from the deposition to defeat Space Coast’s motion for summary judgment. Unfortunately, the Court denied the motion for summary judgment the firm filed on behalf of the homeowner.  Since the Court denied both sides’ motions for summary judgment the case would ultimately have to be resolved by trial.

 Space Coast’s counsel advised that they were amenable to settlement by loan modification, short sale, or deed-in-lieu of foreclosure.  For this client an interest only loan modification would be a band-aid that would do nothing to solve a very serious negative equity problem.  Further, her home was in need of significant repair.  For this client, short sale was a better solution than loan modification. Our client retained Kerry Ramage a local real estate superstar with Re/Max Elite of Melbourne, Florida.  Ms. Ramage successfully marketed the property.  Initially, the firm was worried that the lender would not approve what seemed to be a very low offer would net the lender less than $32,000.00.  After the lender’s motion for summary judgment was defeated and the bank failed to take the property after three years of litigation settlement was the bank’s only option.  The settlement was approved with the homeowner receiving a wavier of deficiency on her FNMA owned mortgage.  A successful foreclosure defense gave the realtor enough time to find a buyer and the client enough time to get back on her feet, replenish savings and find a better place to live.  Our client had a “triple win” by (1) saving over $30.000.00 she would have spent on mortgage payments or rent had she not defended her case, (2) avoiding liability for approximately $100,000 of negative equity, and (3) avoiding bankruptcy and the expense of a bankruptcy lawyer which would have been necessary if the bank foreclosed on her home and came after her for the difference between the value of the property and the amount of the loan.

To Review the complete short sale approval letter from Space Coast Credit Union please click the link below.

About Shuster & Saben:  Shuster & Saben provides savvy consumers with sophisticated foreclosure defense.  At Shuster & Saben foreclosure defense is not stalling or foot dragging but a focused effort to find and exploit weaknesses in the bank’s case with a goal of winning the case or settling the case under favorable terms.  Our job is to solve problems, protect client’s assets, and give solid practical legal and financial advice.

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