In 2008, Sarasota-Bradenton-Venice area ranked 11 in the country for lawsuit foreclosures. Due to the excess in the courts, 12th Judicial Circuit Chief Judge Lee Haworth put a new rule into place.  The lenders’ law firms must meet with the homeowners to discuss alternatives to foreclosing. The attorneys must appear, physically, in court. But even with this requirement, of the 79 foreclosure cases set for hearings last week, only 5 attorneys showed up in court representing the lenders. 


Foreclosures In Manatee County – BayNews9 Report 4/9/2009 from Your Virtual Wizard on Vimeo.

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So basically, this law was ignored. So now the Judge is clamping down and is fining lenders’ attorneys who do not show up in court.  Beginning in March, they must appear in person; and not just on the phone as was the usual practice.  

 

Interestingly, only a few law firms actually represent lenders in the state of Florida.  They are not located in Sarasota and Manatee counties, so they usually appear in local courts via telephone to save money.

I really do believe Judge Haworth might have something here.

Law firms will now have to hire local attorneys (stimulate the local economy) to attend the foreclosure hearings. But this also means that the lenders have to spend more time making sure the “checklist of requirements are met”; which, according to the Judge, includes abiding by “…the requirement to meet with homeowners within 45 days after the foreclosure is filed.”

Most homeowners who face foreclosure usually want lower payments or lower rates in order to save their homes. However, lenders are so backed-up with foreclosures that homeowners have to wait months to receive a call from the lenders to work out any negotiations.  And in some cases homeowners never receive a call from the lender until the case is actually in front of a judge. The Herald-Tribune reporter ads, “The lack of communication makes it impossible for a homeowner to question a debt, or to work out an arrangement other than a foreclosure until the case is in front of a judge.”  By then, the homeowner is out and has moved on.
 
Judge Haworth’s newest penalty requires the lenders’ attorneys to appear in court AND forces the lenders to communicate earlier in the foreclosure process with the homeowner.  Judge Haworth says, “I just think it’s important homeowners have an intelligent conversation with guys from the other side to see if there’s a way they can save their home.  It’s too important an issue to ignore.”

I learned that the law firms who represent the lenders contract the foreclosure cases in “bulk at a flat rate”.  There is an enticement to get these cases through the court system rather quickly so they can be paid.  However, as the article indicates the ‘line attorneys’ do not have the authority to make negotiations with homeowners to avoid foreclosures so it is inevitable that the foreclosure will occur any way.  This also means communication between lender and homeowner is further stalled.

Another interesting fact from this article is that two-thirds of all the mortgages in the past eight years have essentially turned into bonds.  This means that a mortgage might be split between four different trusts that oversee the bonds.  Apparently, these bonds then have different criteria for when to negotiate and when to foreclose.  Hillard, a former investment banker is quoted, “They would have to get authority from four different entities to settle these cases.”  

With more than a 600 percent increase in mortgage foreclosures since 2006, forecasts in this area seem rather bleak but I applaud Judge Haworth’s plan to financially force lenders’ attorneys to show up in court.  This is definitely a step in the right direction to at least open up negotiations between homeowners and lenders. If anything, it will get homeowners the opportunity to work with lenders’ earlier in the foreclosure process and possibly prevent cases from even getting in front of the Judge.

You can read the full article here .

 
Janine

 

 

 

 

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