Home prices are slowly increasing throughout the United States. The price of homes sold in October of 2012 was 4.3% higher than homes sold in October of 2011. This is the largest year over year increase in more than 30 months. Although in most major American cities the price of homes increased during the 12 month period from October 2011 to October 2012, this did not apply to New York. Unfortunately, home prices have decreased in the past 12 months in the State of New York.

Housing Recovery

There is a housing recovery taking place in most of the country. Unfortunately this recovery is not taking place in New York. It is still too early to look at the data concerning the impact of Hurricanes Sandy on the housing market in New York. Although many New Yorkers lost their homes or their homes were badly damaged during Hurricane Sandy, it is too early to reach a conclusion on how this will impact on the New York housing market.

Fiscal Cliff and Home Prices

It is expected home prices will continue to increase slowly throughout the country if Congress and the President solve the issues regarding the fiscal cliff crisis. When home prices rise, potential purchasers have been sitting on the sidelines start to think to themselves, “well, should I get back into the real estate marketplace now?” Potential buyers are always looking for the lowest possible price.

Mortgage rates in the 3% range are very attractive to potential home purchasers. The construction of new homes continues to expand in the United States. The confidence of home builders rose in December 2012 for the 7th straight month. The confidence level of home builders is at the highest level it has been in 6 ½ years.

About the Author

Elliot S. Schlissel, Esq. and his team of dedicated attorneys represent individuals with regard to foreclosure problems, mortgage modifications and all types of real estate issues.

Newspapers and television news shows have made numerous presentations concerning many financial institutions in the United States being involved in fraudulent practices in originating loans. Lawsuits involving fraudulent practices can be brought against the original lender as well as subsequent lenders who received the notes and mortgage pursuant to assignments.

Fighting Foreclosure Lawsuits

A consumer who seeks to fight a foreclosure proceeding must present evidence he or she was taken advantage of due to predatory lending practices or the loan was issued after the Home Equity Theft Prevention Act (HETPA), as codified in Chapter 308 of the Laws of 2006 in the State of New York. HETPA creates presumptions of predatory lending in certain circumstances.

The case of Immigrant Mortgage vs. Fitzpatrick 95 A.D. 3D 1169, 945 NYS 2D 697 (2 Dept 2012) held a consumer is responsible for the contents of the information he or she provided in the loan application and at the time of the closing of the sale of the house. The court in this case held “[Immigrant Mortgage’s] evidence [presented against Fitzpatrick] established Fitzpatrick was presented with clearly written documents describing the terms of the subject loan and alerting her to the fact the plaintiff would not independently verify her income. Such evidence establishes prima facie entitlement to judgment as a matter of law dismissing an affirmative defense regarding fraudulent practices. In opposition, Fitzpatrick failed to proffer any evidence sufficient to raise triable issue of fact as to whether the plaintiff made any materially misleading statements or committed any misconduct with respect to the subject loan.”

Counterclaims in Foreclosure Proceedings

When a homeowner is sued in foreclosure, they may counter-sue the financial institution even if there is a waiver of defenses or counterclaims in the mortgage documents if the counterclaim is based on fraud.

Payback Time in Florida

The State of Florida has one of the highest foreclosure rates in the country. It is estimated, approximately half a million homes have been sold by banks and other financial institutions in foreclosure proceedings.

Today, many homeowner associations and condo associations are bringing foreclosure proceedings against banks. These proceedings relate to banks failure to pay homeowner associations’ dues, real estate taxes and other expenses related to properties which have been repossessed by the financial institutions. When a financial institution takes title to a home in a foreclosure proceeding, they become responsible for taxes, homeowners association fees and all unpaid expenses related to the house for past years. So what are banks doing concerning the payments of these fees? They are ignoring them!

Homeowners Liening on Bank Owned Properties

Homeowner Associations are fighting back against banks in Florida. They are putting liens on the properties taken by the banks in foreclosure proceedings. Ben Solomon, a Miami based attorney, has filed more than 8000 liens on behalf of homeowners against properties owned by financial institutions. He has also brought more than 100 foreclosure cases against financial institutions.

Shortfall in the Finances of Condo Associations

Due to the high foreclosure rates in Florida, many condo associations are having financial difficulties. When people stop paying their mortgages, they also stop paying their condo association fees. This has a negative impact on all the other homeowners in the condo association. The reduced cash flow by the condo association has forced them to cut back on maintenance of their properties, security, beautification programs and other essential services that are necessary to maintain the lifestyle of the members of the condo association.

Most Banks Settle

Attorneys who have brought foreclosure proceedings against properties owned by financial institutions report when pressed, the financial institutions pay the back taxes, condo association fees and other expenses on the real estate.

Conclusion

When banks don’t pay their bills, go after them! Their pockets are deep and they usually come up with the cash!

600,000 Foreclosures a Year

Approximately 600,000 homes are foreclosed upon in the United States each year. In addition, there are tens of thousands of short sales taking place each and every year. It is also estimated, under the terms of the $25 billion foreclosure abuse settlement, approximately one million homeowners will have the principal amount of their mortgages reduced within the next few years. This means that there are virtually millions of Americans who will suffer increased income taxes related to losing their homes if the Mortgage Forgiveness Debt Relief Act of 2007 isn’t extended by Congress as part of some settlement concerning the fiscal cliff issues.

The Fiscal Cliff and the Real Estate Market

Most pundits point to a slow recovery in the residential housing market in the United States. However, fiscal cliff issues will have a negative impact on the housing market. The fiscal cliff and the housing crisis in the United States are major issues that must be considered by Congress and the President when resolving financial and tax issues.

Filing Bankruptcy

Let’s assume that the Mortgage Debt Forgiveness Act expires. Is there a way of avoiding income tax in the event of a short sale or foreclosure? The answer to this question is yes. If the individual files a Chapter 7 bankruptcy. If the debt is discharged in bankruptcy there will be no taxes due on the debt. Who can file for this type of bankruptcy? Individuals with debts that are greater than their assets or have negative cash flow.

Foreclosure filings rose by almost 20% in Nassau County in July of 2012. This took place even though foreclosure rates fell in this same month by 43% as compared with July of 2011.

Financial institutions were busy in Nassau County in July. They filed to 469 foreclosure cases. Many of the new foreclosure cases filed in Nassau County involved homes that are recent defaults in mortgage payments. During this same time, there were only 216 filings for foreclosure proceedings in Suffolk County.

Barry Smolowitz, the founder of the Suffolk County Pro Bono Foreclosure Settlement Project, recently stated Suffolk County has “a more decentralized” way of processing foreclosure court cases than Nassau. There are a larger number of judges hearing cases in Suffolk County then there are in Nassau. This has had an impact on the administrative process involving foreclosure cases in Suffolk County.”

David Schwartzberg, the foreclosure counsel to the Huntington based Advantage Title, recently stated the foreclosure process is “much more onerous” for banks than it used to be because there are much stricter Federal and State oversight and then there has been in the past.

Early in 2012, the nation’s five largest mortgage lenders reached a $25 billion dollar settlement with both Federal and State agencies dealing with alleged foreclosure improprieties.

Fewer Foreclosed Homes Being Listed For Sale

Real Estate brokers who handle the sales of foreclosed homes have indicated there are fewer foreclosed homes being listed for sale on the market in Long Island. John Fitzgerald, the President of Realty Connect USA, located in Suffolk County stated “we’ve seen a lot less foreclosed homes enter the marketplace then they have in the past.”

On March 27, 2007, HSBC Bank brought a foreclosure proceeding on a mortgage on property located in Brooklyn. The mortgage on the property was given to “MORTGAGEIT.” The mortgage was an adjustable rate mortgage in the amount of $624,000. A note was also given to “MORTGAGEIT,” as lender.

The borrower on the note and the defendant on the case was named McKenna.  The note showed an undated endorsement on behalf of ” MORTGAGEIT” to HSBC. There was also an assignment of the mortgage on March 2, 2009. The assignment was from the Mortgage Electronic Registration System Incorporated designated the mortgagee as “the nominee for the lender and mortgagee of record” to HSBC.

HSBC had refused to agree to a short sale on the property which had been requested by McKenna. HSBC claimed that McKenna had never been a resident of the property subject to the foreclosure. Therefore, HSBC had no obligation to negotiate with him in good faith.

The court found that HSBC failed to negotiate in good faith. The court ruled that they could not recover the interest on the note and the mortgage from the date of the McKenna’s alleged default.

Conclusion

This court penalized the lender for refusing to act in good faith.  The courts in New York are becoming more aggressive in taking action against lenders who fail to act in good faith.