BEWARE of Headlines that State Fla. Homeowners Receive More Than $1.7B from National Mortgage Settlement

The National Mortgage Settlement which gave Ally/GMAC, Bank of America, Wells Fargo, Chase, and Citi a very easy out for massive financial and real estate crimes is getting a lot of mainstream media coverage in the wake of the release of the first report card.

The full report card is here.  Florida’s stats are on page 42.

Florida’s portion of the “relief” which was originally intended to allow families to stay in their homes with a modified, sustainable mortgage has been doled out thus far (notice the heavy concentration of short sale “relief”).  Without the short sales, the total relief is $244,221,629 for 10,086 homeowners.

Yes, granted, if the deficiency is truly being waived, then 13,024 Florida families got to sell their homes for less than they owed on their existing mortgages and do not have to worry about debt collection that can legally be done on the remaining owed balance.   But, I would argue that the families may not see the short sale as a “relief”.  They have been displaced from their homes during difficult financial times, with lowered credit profile, and are sent into a tough rental market.

As David Dayen wrote on here and here.

The more I look at this foreclosure fraud settlement report, and the reliance on short sales for the allegedly positive results, the angrier I get.

This acts a lot like a waiver of a deficiency judgment. In the circumstance of a deficiency judgment, the bank can get a court ruling to go after a foreclosure victim post-foreclosure to get them to cough up the balance between what they ended up getting on a foreclosure sale and the amount owed on the mortgage. Banks rarely do this, for the simple reason that foreclosure victims typically don’t have a big pot of money to give them. It’s like drawing blood from a stone. So banks often waive deficiency judgments.

Florida mortgage relief: March 1 – June 30

• $115.3 million in primary mortgage debt forgiveness
• $37.3 million in previous mortgage forbearance that is now forgiven
• $31.7 million in second mortgage debt forgiveness
• $1.5 BILLION in completed short sales
• $42.4 million in other activity, including moving assistance and deficiency waivers
• $14.7 million in consumer savings from refinancing to a lower interest rate
• 23,110 total homeowners affected, with an average savings of $74,240 per borrower
• 10,086 non-short sale homeowners affected, with an average savings of $23,974 per non-short sale

It comes as no surprise that banks are gathering credit under this settlement for acts they were doing anyway.  To make matters worse, many states prohibit deficiency debt collection from short sales and the five banks are earning credits for short sale “relief” from a debt that doesn’t even exist in those states.

If you are considering the option of a short sale, please do not make the same mistake of trusting the banks to guide your family through this process without legal representation to protect your rights.  A short sale requires you to sign documents that contain legal, contractual language.  Our firm offers affordable fees to help protect your family and discuss your options fully for those struggling with underwater mortgages; short sales, foreclosure defense, debt defense or bankruptcy.

If you are looking for help with debtforeclosurereal estate or want more information about bankruptcy law, call us at (754)400-5150 or fill out our online form for a FREE CONSULTATION.  Let the lawyers and staff at the Law Offices of Evan M. Rosen serve you!

We are a debt relief agency.  In addition to other legal services, we help clients file for bankruptcy relief under the Bankruptcy Code.

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