Archives for January 2014

Foreclosures and the Rental Market on Homes

foreclosure defense attorneysThe large number of foreclosures due to the housing bubble in the United States has created an abundance of homes available for rental purposes. Approximately 20% of all single family homes are now rentals. The large number of single family homes being rented is related to the boom and bust of the recent real estate cycle. The significant number of homes sold in foreclosure proceedings have created an availability of homes for rental by families. In addition, millions of homeowners have lost their homes in foreclosure lawsuits. These families need a place to live. The availability of other homes that have been foreclosed on can be rented by them to meet their need for a place to live.

In addition to homes being foreclosed, homeowners who need cash flow are putting their homes on the market as rentals. They are even doing this during the foreclosure process. Since the foreclosure process in many states takes years, homeowners can literally move out of their home, charge rent to a tenant, and put the rental money in their pockets and not make their mortgage payments.

Rentals are Better than Vacant Homes

Officials in local areas have a preference for foreclosed homes to be rented instead of being left vacant. Vacant homes can be a blight on a neighborhood. They can invite trespassers and can be utilized by children for inappropriate purposes.

Although renting a home does provide a family with a place to live, it may not be their first choice. Their more likely first choice would be to stay in the home they had owned and not to have lost it in foreclosure.

assisting homeownersElliot S. Schlissel is a foreclosure defense lawyer representing homeowners, fighting financial institutions and banks to stay in their homes. Elliot and his associates have been protecting homeowners and keeping them in their homes for more than 45 years.

Under Water Homes on Long Island Rising!

mortgage modification attorneysThe number of homes that are under water on Long Island (where the owners owe more than the home’s value) are going down. Approximately 43,000 homes on Long Island are under water with regard to their mortgages. This amounts to about 8% of the homes on Long Island. This is down from 50,000 or 9 1/4% of the homes which were under water at the end of 2012.

Real Estate Values Increasing

Housing values have started to increase on Long Island. With the increase of housing values, more and more homes are developing equity greater than the value of the indebtedness on these homes. As a result of rising housing values, there have been fewer short sales on Long Island in 2013. A short sale is a transaction in which the home is sold for less than the amount owed on the mortgage. In addition to fewer short sales, there have been fewer sales in foreclosure proceedings in 2013 than there were in 2012 on Long Island. A smaller percentage of the homes on Long Island are under water when compared to homeowner rates on a national basis in the United States.

The increase in the value of homes on Long Island will have an affirmative economic effect which will create a rise in consumer confidence and result in economic growth in 2014. This is according to Anand Nallathambi, the President and CEO of Call Logic. Call Logic tracks information with regard to mortgages in the United States.

Conclusion

With fewer homes under water, financial institutions should be more reasonable in granting mortgage modifications. The rising value of homes gives banks greater equity incentive to grant mortgage modifications.

homeowner advocatesElliot Schlissel is a foreclosure attorney. He represents homeowners whose homes are going into foreclosure and seek to maintain their homes. He assists homeowners in obtaining mortgage modifications. He has kept scores of Long Islanders who are facing foreclosure in their homes. Elliot is the former president of the Commercial Lawyers Conference of New York.

New York’s New Mortgage Proposal

foreclosure defense attorneysNew York is considering a new proposal which would provide an incentive for banks to modify mortgages on homes which are under water. Under this new proposal, the financial institutions would reduce the amount of the mortgage on homes under water. The mortgage amount would then be brought into conformity with the value of the home. In exchange for the reduction in the mortgage, the bank would be entitled to share in the profits if the home eventually increases in value and is sold. This new proposal will require changes in various state regulations. Under the current law, banks cannot enter into these types of arrangements with homeowners.

Governor Cuomo Backs New Mortgage Proposal

Governor Andrew Cuomo stated this initiative will help keep families in their homes and out of foreclosure, while at the same time reducing potential loses for investors. He went on to further state with regard to this new proposal “that’s good for homeowners, good for local neighborhoods, and good for the long term strength of the housing market.”

Unfortunately, pursuant to existing federal rules and regulations, the large majority of home loans in New York cannot qualify under this program. This is because Fannie Mae and Freddie Mac, the two federal agencies which purchase mortgages for approximately two-thirds of all home loans in the State of New York, do not allow forgiving outstanding mortgage balances.

The new proposed program would be available to homeowners who owe more on their homes than their homes are worth and have tried to obtain mortgage modifications and have been unsuccessful. Under this program, banks would provide disclosure to the homeowners concerning the terms of the new loan modifications and how much of the profits the bank would receive upon the sale of the home. The proposal would limit the bank to either 50% of the increase in value in the home or the total amount forgiven under the mortgage, whichever is less.

Homeowners Reluctant to Share in Appreciation

Interviews with a number of homeowners with regard to this new proposal, indicated they were reluctant to share in the appreciation of their homes with banks.

Conclusion

The program is an excellent idea. Homeowners whose homes are under water and are behind on their mortgage would be given a second chance to stay in their homes and have their mortgage modified to a realistic amount they could afford.foreclosure advocate for homeowners

Squatters Rights to Foreclosed, Vacant Homes

Squatters Rights to Foreclosed, Vacant HomesThere is a misunderstanding that squatters can walk into foreclosed homes which are vacant and end up the owner of the homes. What squatters refer to concerning extra-legal possession of homes actually refers to the legal concept of adverse possession. Adverse possession deals with openly and notoriously being in possession of property, in the State of New York, for a period of ten years. In the appropriate circumstances, should the squatter live openly and notoriously in the vacant home for ten years, they can claim ownership of the property.

Squatting Equals Trespassing

The theory of adverse possession actually deals with property boundary disputes. Under adverse possession theory, the boundary between neighboring properties can be changed if one owner has utilization of the other owner’s property around the boundary line for a period of ten years.

Squatters sneak into homes when no one is around. This is usually undertaken by vagrants or homeless people. Adverse possession of the home can only be claimed if the squatter lives openly and notoriously for a period of ten continuous years in the residence.
What most squatters are doing is trespass on someone else’s property. Sometimes during foreclosure cases, homes are vacant for a period of time. This period of time will usually not last ten years, the period of time necessary for a squatter to claim open and notorious adverse possession rights to a property.

Former Owners Remaining in the Home

In a foreclosure proceeding, the home in the State of New York can be sold on the courthouse steps. At the time of the sale, the homeowner whose home is being foreclosed upon will most likely still be living in the home. After the sale takes place, the new owner of the home can bring a landlord tenant case to evict the former homeowners from their home. The failure of the homeowners to move from the house after it is sold, in foreclosure, does not create an adverse possession situation. Eviction proceedings can be time consuming. During the course of the eviction proceeding, the former homeowners would be entitled to stay in their home until such time as the court grants an order forcibly removing them from the home.

Conclusion

Squatting in an abandoned, foreclosed home and creating ownership rights based on the legal theory of adverse possession is unlikely to happen!assistance for homeowners

Negotiations with Bank Does Not Stop Foreclosure Lawsuit

foreclosure defense attorneysA foreclosure lawsuit was brought by Citi Mortgage against Vatash. Vatash submitted an answer with affirmative defenses to the summons and complaint served by Citi Mortgage. Citi Mortgage moved for summary judgment. In their application they sought to dismiss the answer brought by Vatash. Vatash claimed, in his answer, Citibank lacked standing to bring this foreclosure action. He also claimed Citibank’s motion was inappropriate because he was involved in discussions with Citi Mortgage concerning a loan modification. He took the position since loan modification discussions were ongoing, Citibank had no right to move forward with the foreclosure case.

Standing Argument Dismissed

Justice Thomas Whelan sitting in a Supreme Court Part in Suffolk County, ruled Vatash’s argument that Citi Mortgage didn’t have standing was procedurally defective. The ruling was based on the allegation that Vatash failed to assert lack of standing in his answer or in a pre-answer motion to dismiss. In addition, the court took the position the argument even if it had been submitted appropriately in the answer, was substantively without merit. The court held Citi Mortgage was the owner and holder of the note and mortgage upon its merger with the original financial institution which made the loan.

The court ruled in favor of Citi Mortgage’s application for summary judgment (an application to grant a judgment without the need for a trial because there are no issues of fact). The court took the position the opposition papers submitted by Vatash did not create an issue of fact or an adequate defense.

Negotiations Do Not Stop Foreclosure Cases from Moving Forward

The Court specifically held the fact that Vatash was engaged in negotiations and/or discussions with Citi Mortgage is not a defense to the foreclosure lawsuit. Citi Mortgage’s motion for summary judgment was granted.

Conclusion

There are a number of important issues which were dealt with in this case. To start with, a lack of standing argument must be plead in the answer to the Summons and Complaint. Secondly, discussions with a bank concerning mortgage modifications or other ways of resolving the case have no impact on the foreclosure lawsuit moving forward.

helping homeowners stay in their homesElliot Schlissel is a foreclosure defense lawyer. His office has represented homeowners for more than 45 years on mortgage foreclosure lawsuits throughout the Metropolitan New York area.

Mortgage Lender Penalized for Failure to Comply with Notice Requirements

foreclosure defense lawyersJudge Dolinger sitting in the Supreme Court in Rochester recently ruled a mortgage lender who did not comply with the “consumer friendly notice requirements under New York State law should be given a second chance to comply with the statute.” However, the lender was permanently enjoined from imposing any interest, fees, costs or legal expenses on the borrower from 90 days before the filing of the complaint until the bank complies with the New York notice requirements.

Foreclosure Prevention Tenant Protection and Property Management Act

The Foreclosure Prevention Tenant Protection and Property Management Act of 2009, requires a lender give the homeowner notice prior to the house being foreclosed on. In the case before Judge Dolinger, Citi Mortgage failed to comply with this statute. Judge Dolinger was concerned if the case was dismissed, Citibank would get a second chance to comply with the statute’s notice requirements. However, the judge noted in his decision the bank’s failure to comply with the notice requirements in their first attempt. If they were successful in the second attempt the borrower would be worse off because they would be responsible for the entire amount of the unpaid debt including the portion of the interest penalties and attorneys fees which accrued on the debt during the period of time between Citi Mortgage’s first chance at complying with the statute and their second chance. Judge Dolinger wrote in his decision, “the borrower is worse off because the amount of the debt has been increased during the two year period in which the foreclosure action has been pending making a recasting of the mortgage more costly, if not prohibitively so.” To deal with this, Judge Dolinger entered an order permanently enjoining the bank from imposing any interest, fees or legal expenses on the borrower from 90 before the filing of the complaint until such time as they complied with the statute.

Notice Regarding Foreclosure Lawsuit

New York Real Property Actions Proceedings Law (RPAPL) § 1304 requires a creditor to notify a borrower by registered or certified mail as well as by first class mail, offering assistance on how to avoid foreclosure. Citi Mortgage had failed to comply with this section of the Real Property Actions Proceedings Law. In the case before Judge Dolinger, he stated “there was no sworn statement from any bank official regarding the mailing.” Judge Dolinger, based on the bank’s failure to provide the sworn statement regarding the mailing, could have dismissed the foreclosure lawsuit. He refused to do so because he stated he “will not allow the bank to escape the consequences of its failure to follow” the law. Judge Dolinger went on to state “when and if the bank complies” with this statute it can collect “any principal payments due at any time under the note and mortgage.” Judge Dolinger’s ruling, however, denied the bank the ability to collect interest, fees, costs and attorneys fees during the period of time the bank was in non-compliance with the statute.

Conclusion

This was a victory for the mortgagors, albeit a small victory.assisting homeowners

Foreclosure Court Conference Denied

foreclosure defense lawyerIn a case of first impression, Justice Cohen sitting in the Appellate Division, Second Department (an appeals court) recently wrote a decision that stated a residential foreclosure lawsuit which was caused by a default on a commercial loan is not entitled to participate in the mandatory settlement court conference program. Justice Cohen stated in his decision “while it is unfortunate that here a primary residence may be lost in foreclosure not everyone under every circumstance is entitled to reap the protections afforded to victims of the mortgage crisis by the New York State Legislature.”

History of the Case

Roz Valt Corp. took out a loan from Independence Bank in December 2006. It borrowed $230,000. The purpose of the loan was to provide funds to enable the corporation to acquire various types of equipment, to pay construction costs and to be utilized as funds to set up a “Quiznos” submarine shop in Brooklyn.

The president of Roz Valt Corporation was Roslyn Valentine. She was personally liable for the payment of the loan. In addition, she executed a collateral mortgage to Independence Bank for $230,000. This was a second mortgage on her home in Queens County. Unfortunately, Roz didn’t make the payments under the loan. Independence Bank brought a foreclosure action on the second mortgage on her home. In her pleadings, Ms. Valentine argued she was entitled to the mandatory settlement court conference pursuant to New York Civil Practice and Law Rule Section 3408.

Court of Appeals Ruling

The New York Court of Appeals ruled New York Civil Practice Law and Rule Section 3408 applies to settlement conferences for “any residential foreclosure action involving a home loan.” Judge Cohen agreed with Ms. Valentine’s argument that the settlement court conferences were designed to help homeowners avoid their homes being taken from them in foreclosure. However, he also found, in this case, she was not entitled to a foreclosure settlement court conference. He took this position because this case involved a commercial loan. The loan was made to Roz Valt Corporation which was not a natural person. The money loaned was not utilized for housing purposes. He also found Ms. Valentine was a guarantor of the loan not the borrower.

Conclusion

Unfortunately, Judge Cohen’s decision may cause Ms. Valentine to lose her home.homeowner advocates

Home Buyers Misconceptions

foreclosure defense lawyerBuying a home is a complicated undertaking. First home buyers usually rely on discussions with friends and relatives as to what action they should take, what they should do, what they should be aware of, and how real estate transactions are conducted. The lay of the land on home purchases has changed. The mortgage bubble that resulted in the real estate crisis in America has changed some of the ground rules.

Real Estate Brokers Are Not Always Necessary

Real estate brokers provide a valued service to both buyers and sellers. They are very well paid for their services. However, homeowners can sell their homes without a real estate broker. This is especially true if someone is available to show the home during evenings and weekends. A homeowner can advertise the home for sale in local newspapers and/or on the internet, meet and greet the prospective purchasers, and hire an attorney to represent them on the real estate transaction. If the homeowner does not have the time, the patience, or the availability, hiring a real estate broker to represent them may be a necessity. Websites such as www.zillow.com and www.redfin.com can be utilized by a homeowner who seeks to avoid paying the commissions related to listing a home with a real estate broker. Many home buyers today utilize the internet to look at the material on these websites to find the home of their dreams.

Hidden Costs of Owning a Home

The average homeowner, when looking to purchase a home, takes into consideration the mortgage and sometime the taxes on the property. In addition to the mortgage and taxes, homes require heat in the winter and they may require air conditioning in the summer. The fuel oil to heat the home and the electricity to air condition the home can be expensive. Depending on the climate of the area where the home is located, these expenses can amount to between $5,000 and $10,000 per year. Even if the home does not need air conditioning, the electricity to run the appliances, computers, and keep the lights on can be very expensive. The grounds of the home need to be maintained. The homeowner has to maintain his lawn and shrubs and the rest of his property or hire a gardener to do so. The exterior of the home needs to be kept in good condition. Painting needs to be done on a periodic basis and/or the home needs to be sided. Roofs can leak, boilers can break, pipes can leak, electrical issues can develop. These are all potential expenses a homeowner may face.

Down Payment Policies

A 20% down payment is not always needed to obtain a mortgage. If the prospective homeowner is looking to obtain a conventional mortgage from a financial institution, a 20% down payment may be necessary. However, under Federal Housing Authority (FHA) programs, much less is required as a down payment. In some situations, as little as 5% or 10% of the cost of the home is sufficient as a down payment. Programs are available from the Veterans Administration for veterans who can finance a home with a very low down payment.

foreclosure advocate for homeownersElliot S. Schlissel, Esq. has been representing clients in real estate transactions for more than 45 years. His office represents homeowners in buying and selling of homes, defending them against foreclosures, and helping them obtain mortgage modifications when they fall behind on their mortgages.

Foreclosure Dismissed – Citibank Has No Standing

foreclosure defense lawyersIn a case before Justice Lizbeth Gonzalez, in the Supreme Court of Bronx County, the judge dismissed a foreclosure lawsuit brought by Citibank.

Citibank had filed a foreclosure proceeding against a homeowner named McCray. They had taken this action on behalf of a Bears Stearns Alt-A Trust. McCray brought a motion requesting the foreclosure lawsuit be dismissed. He argued Citibank had lacked standing to bring the lawsuit. Citibank claimed it had standing to bring the lawsuit because it was the holder of the original note.

Holder or Assignee of the Note and Mortgage

Judge Gonzalez in her decision stated a foreclosing party in a foreclosure lawsuit has standing when they are both the holder or assignee of the mortgage and underlying note at the time the action is commenced.

Citibank’s attorneys had argued they were the holder of the note. However, their legal submissions did not state they also were the holder of the mortgage.

Motion to Dismiss Case Granted

Judge Gonzalez found that there was no proof submitted by Citibank they were the holder of both the mortgage and the note at the time of the initiation of the lawsuit. The court therefore granted McCray’s motion to dismiss. Judge Gonzalez found that Citibank did not submit adequate proof it had the right to the debt in the absence of documentation of chain of custody and proof the mortgage and notes were lawfully assigned and held by it prior to commencing the lawsuit. Since Citibank did not establish and meet the requirements they had standing to bring the foreclosure lawsuit, Judge Gonzalez held that they did not have standing to foreclose and their foreclosure lawsuit was dismissed.

Conclusion

Before a financial institution can bring a foreclosure lawsuit they must be able to prove that they are the holder of both the note and mortgage. In addition, they must show that the mortgage has been rightfully assigned to them and the assignment was properly filed. The documentation of the assignment, the possession of both the note and the mortgage, should be attached to the summons and complaint in the foreclosure legal action. If the financial institution does not do this, the court should dismiss the case for lack of standing.

assistance for homeownersElliot S. Schlissel is a foreclosure defense attorney. His office has helped homeowners in scores of cases fight foreclosures and remain in their homes.

New Mortgage Rules: Too Little, Too Late!

foreclosure defense attorneysA new agency called the Consumer Financial Protection Bureau has been established. The purpose of this agency is to see to it we do not end up in another real estate bubble related to improper, unfair and illegal mortgage practices by financial institutions.

Owning one’s home is the American dream. The process of purchasing a home involves applying for a mortgage. Mortgage brokers and loan officers at banks seek to simplify this process. However, applying for a mortgage loan is generally the largest financial transaction a family enters into. The Consumer Financial Protection Bureau is set up pursuant to the Dodd-Frank financial reform law. New applications and forms are created by this statute. They are supposed to be in simplified, easy to read, and involve complete disclosure.

Financial institutions are supposed to clearly provide individuals applying for the mortgage with information concerning the actual cost of the loan. The principal amount. The amount of interest they are being charged and what they will spend in closing costs. The forms must also contain information concerning other aspects of the financial transaction including but not limited to whether there will be prepayment penalties and other costs related to the financing. The new law goes a long way to simplifying and clarifying this process for prospective home buyers. However, it does not go far enough.

Failure of the New Mortgage Rules

What the new forms do not do is provide the prospective homeowner with a logical basis to compare loan products from different financial institutions. The new loan forms do not include various costs related to the purchase of a home. Some of the costs these forms do not deal with are title insurance, closing expenses related to taxes, fuel oil costs to heat the house, and attorneys fees for hiring an attorney for legal representation.

No Three Day Right to Review

The Consumer Financial Protection Bureau had initially requested that all financial institutions be required to give the mortgagors a three day right to review the information whenever loan terms concerning the transaction are changed or modified. Unfortunately, this rule was not established. Lenders still have the ability to present the mortgagors, at the time of the closing, with changes in the cost structure of the financing. This is both unfair and unreasonable. You have homeowners sitting at the table at their closing expecting to pay one amount for the financing of their home and being told at the last minute, it is going to cost you more. They are too deep into the transaction to walk away. They are stuck with a higher cost of their mortgage. This is true even if the higher costs are beyond their ability to pay. Lenders should be forced to live up to the terms of their proposals when they offer prospective homeowners mortgages. They should not be allowed to change the terms at the last minute to the prospective homeowners detriment.

The establishment of the Consumer Financial Protection Bureau under the Dodd-Frank financial reform law was a great idea. Unfortunately, this great idea has not worked out completely to consumer’s benefit.

helping homeowners stay in their homesElliot S. Schlissel is a foreclosure defense lawyer with more than 45 years of legal experience. He litigates foreclosure lawsuits throughout the Metropolitan New York area. He keeps families in their homes and helps them obtain mortgage modifications.

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