Posted on 04/15/2012 11:52:43 AM PDT by Lorianne
Nearly 7,000 stagnating foreclosure cases lie dormant in Palm Beach County's courts, creating a payment-free limbo for some homeowners but a stain of vacant and abandoned homes in deteriorating neighborhoods.
These sleeper files, which have remained inactive for a year or longer, date as far back as 1997, according to documents provided to The Palm Beach Post by the clerk of courts.
But most are from the early years of the housing crash when lenders feverishly sought to repossess homes, unaware that the frenetic pace would cause a second crisis based on faulty documents and unlawful corner-cutting.
While an unknown number of dormant files are mistakes, such as one party forgetting to request a dismissal after an agreement is reached, others remain open but unmoving because of homeowner bankruptcy, loan modification negotiations or bank neglect.
"I have no idea what's going on and I'm not pushing it," said Robert Feinson, a Jupiter resident whose case has sat idle since November 2010, more than two years after his lender initially filed for foreclosure against him. "Right now, we're just waiting to see who is going to make the next move."
The 6,927 zombie files make up about 17 percent of Palm Beach County's 39,252 foreclosure cases.
The banks with the largest number of dormant cases include Bank of America (670), JPMorgan Chase (602) and Deutsche Bank (546).
After 10 months of inaction, a homeowner, or the court itself, can seek a dismissal of the foreclosure based on non-prosecution . If the bank fails to react within 60 days, the case can be thrown out and the bank forced to start over.
It's a move Palm Beach County Chief Judge Peter Blanc said might begin in earnest this summer after a one-time bump in state funding allows him to hire additional judges to tackle foreclosures and get rid of "deadwood."
The last court-initiated weeding-out occurred two years ago when Blanc received $640,000 to add judges, he said.
"There's a whole variety of reasons why cases were dismissed, which is sort of consistent with how the practice was all over the place in the early years," Blanc said.
The frustration over stalled and prolonged cases can be heard in Palm Beach County Judge John Hoy's foreclosure court.
This month, Hoy waved a calendar at bank attorneys who had missed deadlines or sought to cancel foreclosure sales for reasons such as a failure to publish the auction announcement or belief that a loan modification was in the works.
Often the claim that a short sale or loan modification is pending comes after a final foreclosure judgment is made as banks backpedal on rulings.
"This is a 2009 case," Hoy said to one lender attorney who was seeking an extension of time. "If you can't take care of your old cases, don't file new ones. "
On another foreclosure, which was filed in January 2008, Hoy was equally nonplussed.
"There are 111 docket entries in this case and we're still screwing around on a motion to dismiss?" he asked the attorneys. "What's going on around here?"
When the lender's attorney couldn't produce an endorsed note proving ownership, Hoy dismissed the case.
"I kicked them back just now to January 2008," said foreclosure defense attorney Malcolm Harrison after Hoy's decision. "You'll find a lot more errors on these older cases because they didn't know what they were doing."
Harrison hopes the "fatal flaw" in the bank's case will force it to modify his client's mortgage instead of refiling the foreclosure. The homeowners have been living in their Olympia home in Wellington without making a payment for about four years.
The reasons cases may be delayed are myriad, said Guy Cecala, publisher of the trade publication Inside Mortgage Finance. They include:
•Fear of flooding the market with distressed properties that will crash prices. •Concern over getting a clear chain of title. •Unwillingness to take on maintenance and liability for a property. •Negotiating a loan modification or short sale. •A homeowner files for bankruptcy, putting the case on hold. •Problems with paperwork or how a previous law firm handled a file. After the collapse of the Plantation-based Law Offices of David J. Stern in March 2011, about 100,000 foreclosure cases statewide needed to be transferred to new attorneys.
Tampa-area defense attorney Mark Stopa said he didn't have a hearing or trial set by a bank on any of his foreclosure cases in a year.
Stopa said he was able to get between 30 and 40 cases dismissed in the past six months because of lack of prosecution.
"That's something I love to take advantage of, and in years past, the courts would do it on their own," he said. "It's a good way to clear dockets that is favorable to homeowners."
Feinson, the Jupiter homeowner, said he tried to get a loan modification after losing his business, but found himself dealing with a revolving door of lenders and servicers. His loan traveled from LIME Financial Services to La Salle Bank to Wilshire and finally to Bank of America, he said.
The last action on his case was an unsuccessful mediation in late 2010, just when the problems with robo-signing were revealed.
"We don't know who has the mortgage and no one seems to have any answers," Feinson said.
Forgotten foreclosures may see a reanimation of activity following the $25 billion settlement between the nation's largest banks and the states' attorneys general, Stopa said.
The agreement, announced in February, requires banks to modify more home loans and outlines a standardized way to process foreclosures.
Whether the settlement is good news for homeowner Kathryn Siddons, also of Jupiter, remains to be seen. Her home has been in foreclosure since 2008 with the last action on her file taken in the fall of 2010.
But she's also been working on a loan modification, she said.
"We got a letter two years ago saying they couldn't find our original note and we could work on other options," Siddons said. "I just keep reapplying (for a loan modification). I'm afraid not to because then you're just giving up."
“”We don’t know who has the mortgage and no one seems to have any answers,” Feinson said. “
The cruxt of the problem, the banks can’t prove they have ownership of the property they are seeking to foreclose on.
Banks foreclose - they’re bastards.
Bank’s don’t foreclose - they’re still bastards.
Obviously I have a surfeit of apostrophe's.
When the courts can provide the manpower to get ‘clearing the deadwood’ I imagine that where only ‘mistakes’ occurred and not ‘errors’ and where also the banks still want to pusue a foreclosure, they will refile a foreclosure notice in most of those cases.
And when the responisble homeowners actually do pay off their mortagages, they will be in for an unpleasant surprise, when they find the bank that bought their bundled mortgage can't produce the note.
Of course this information is supposed to be filed at the county clerks office. But that costs money. This is one case where I would have to consider giving full legal ownership over to the homeowner.
The bankers are sitting on these for the reasons stated in the article. It is impossible for the homeowner to get out from under this obligation or to even find out what there obligations are when this is going on. Meanwhile the expenses continue to mount(Taxes and such)
“This is one case where I would have to consider giving full legal ownership over to the homeowner.”
The homeowner already has legal ownership. At question is the lien against the property for the original loan.
I am talking about clear title. Even the ability to sell it and move on if they choose to do so.
In most cases I do not feel this way. I am dead set against the taxpayers paying one thin dime in forgiving mortgages or paying for them and such. But this is different because the banks are not meeting there moral and legal obligations to conduct business. They need to legally foreclose(If they can) or get out of the way. The system needs to be cleared. Once they got that message then they would get on the ball.
On 2nd thought. There is a better way then just giving clear title to the home owner. In short, Transfer the legal ownership of the note to the county. Transfer the right to foreclose to the county. Transfer the right to clear the mortgage to the county. The banker gets Zero.
“In most cases I do not feel this way. I am dead set against the taxpayers paying one thin dime in forgiving mortgages or paying for them and such. “
Trouble is the taxpayer has already paid and will continue to pay regardless. In many cases the foreclosed home is only selling for 60-75% of the market price. Which keeps prices down. Here in Florida the market price is probably 60% of the original value of these loans.
So an original loan of $350,000 equals a current value of $230,000. If the home is in foreclosure they’ll probably only get $175,000 from a new buyer, if they can find one. In the mean time taxes and maintenance have to be paid. Add in legal costs and they might not net anything on the home except interest on the new loan.
“There is a better way then just giving clear title to the home owner. In short, Transfer the legal ownership of the note to the county. Transfer the right to foreclose to the county”
The county has no right to the property. All they would do is give it to some economically disadvantaged group.
The county didn’t enforce their laws in the first place. They are equally at fault in this whole fiasco.
It is true that there is no perfect solutions to such a screwed up and complex problem. That problem was created by the bankers and by the government. But something has to be done besides more of the same. And those who committed fraud need to go to prison.
“But something has to be done besides more of the same. And those who committed fraud need to go to prison.”
That would be the bankers and the govt people. They knew these were risky loans and couldn’t give them out fast enough.
When you apply for a loan they can view your bank balances. The whole idea of a liar loan is a farce.
The government-linked socialists are keeping property taxes high by refusing to foreclose and sell, but the debt regime will crash anyway. It’s going to be hilarious, if listings are still so hysterically high after more the collapse.
10 years worth of shadow inventory. Round II of the crash is being purposefully delayed until after the election.
The ‘market price’ is what the house will sell for today, not inflated bubble prices way back when.
Here in Tampa about 15% of the homes are sitting empty. Not far away a new development is starting which will have 6700 new homes.
Its easier to sell a brand new home but I can’t imagine that will help the market.
Yet the banks made thousands of loans at the end of the bubble, when they knew it was going to crash.
but hey, what did they care, they knew they were going to sell the loan.
Won't matter...recent college graduates won't be in the market for a house for a good ten years after they graduate, if then. The combination of high income taxes, servicing student debt, and saving for a 20% downpayment on the house will keep Johnny and Susie with Mom & Dad until they're in their mid-30s.
When Mom & Dad wake up and realize they'll never be able to sell their home (at a price they expected to sell), they'll give Fonzie or Fred Thompson a call for a reverse mortgage. Johnny & Susie will really be PO'ed at Mom and Dad for wiping out their expected inheritance.
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