Florida Real Estate Lawyers

New Short Sale Guidelines

2012-08-24T15:43:00.000-04:00

On August 21, 2012, the Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac are issuing guidelines to their mortgage servicers that will consolidate existing short sales programs into one standard short sale program in an effort to streamline program rules that will enable lenders and servicers to quickly and easily qualify eligible borrowers for a short sale.

The new guidelines, will go into effect November 1, 2012 and will permit a homeowner with a Fannie Mae or Freddie Mac mortgage to sell their home in a short sale even if they are current on their mortgage if they can demonstrate an eligible hardship. Servicers will be able to expedite processing a short sale for borrowers with hardships such as death of a borrower or co-borrower, divorce, disability, or relocation for a job without any additional approval from Fannie Mae or Freddie Mac.

“These new guidelines demonstrate FHFA’s and Fannie Mae’s and Freddie Mac’s commitment to enhancing and streamlining processes to avoid foreclosure and stabilize communities,” said FHFA Acting Director Edward J. DeMarco. “The new standard short sale program will also provide relief to those underwater borrowers who need to relocate more than 50 miles for a job.”

The new guidelines:

• Offer a streamlined short sale approach for borrowers most in need: To move short sales forward expeditiously for those borrowers who have missed several mortgage payments, have low credit scores, and serious financial hardships the documentation required to demonstrate need has been reduced or eliminated.

• Enable servicers to quickly and easily qualify certain borrowers who are current on their mortgages for short sales: Common reasons for borrower hardship are death, divorce, disability, and distant employment transfer or relocation. With the program changes, servicers will be permitted to process short sales for borrowers with these hardships without any additional approval from Fannie Mae or Freddie Mac, even if the borrowers are current on their mortgage payments. Borrowers will now qualify for a short sale if they need to relocate more than 50 miles from their home for a job transfer or new employment opportunity.

• Fannie Mae and Freddie Mac will waive the right to pursue deficiency judgments in exchange for a financial contribution when a borrower has sufficient income or assets to make cash contributions or sign promissory notes: Servicers will evaluate borrowers for additional capacity to cover the shortfall between the outstanding loan balance and the property sales price as part of approving the short sale.

• Offer special treatment for military personnel with Permanent Change of Station (PCS) orders: Service members who are being relocated will be automatically eligible for short sales, even if they are current on their existing mortgages, and will be under no obligation to contribute funds to cover the shortfall between the outstanding loan balance and the sales price on their homes.

• Consolidate existing short sales programs into a single uniform program: Servicers will have more clear and consistent guidelines making it easier to process and execute short sales.

• Provide servicers and borrowers clarity on processing a short sale when a foreclosure sale is pending: The new guidance will clarify when a borrower must submit their application and a sales offer to be considered for a short sale, so that last- minute communications and negotiations are handled in a uniform and fair manner.

• Fannie Mae and Freddie Mac will offer up to $6,000 to second lien holders to expedite a short sale. Previously, second lien holders could slow down the short sale process by negotiating for higher amounts.

Deficiency Judgments in the Mortgage Foreclosure Arena by: Robert S. Saraga, Esq.

2011-10-03T16:11:00.001-04:00

Recently on October 1, 201 the Wall Street Journal published an article written by Jessica Silver-Greenberg addressing the recent increase in deficiency judgments in the mortgage foreclosure arena. In the State of Florida, along with forty (40) other states and the District of Columbia, lenders are permitted to seek deficiency judgments after real property has been sold in a foreclosure sale. In its simplest terms, a deficiency judgment is a final judgment for money damages in favor of the lender for the difference between the amount of money the lender realized from the foreclosure sale (with certain exceptions if the fair market value at the time of the sale is not realized) and the amount of money still owed to the lender after the sale.
Clearly there is a new cottage industry on the rise. There are firms and funds that are now in the business of buying deficiency judgments. Specifically, the article in the Wall Street Journal correctly states that lenders are now inclined to seek deficiency judgments from “Strategic Defaulters”. A Strategic Defaulter is a borrower that has the financial wherewithal to meet its financial obligations, but elects to default on his or her mortgage due to the fact that the property securing the obligation is worth less than the loan balance. “Some close observers of the housing scene are convinced this is just the beginning of a surge in deficiency judgments. Sharon Bock, clerk and comptroller of Palm Beach County, Fla., expects a massive wave of these cases as banks start selling the judgments to debt collectors. The increase in deficiency judgments has sparked a growing secondary market. Sophisticated investors are ravenous for this debt and ramping up their purchases, says Jeffrey Shachat, a managing director at Arca Capital Partners LLC, a Palo Alto, Calif., firm that finances distressed-debt deals.”

To read the entire article in the Wall Street Journal go to: http://online.wsj.com/article/SB10001424053111904060604576572532029526792.html

At Saraga & Lipshy, P.A., we counsel our clients to take a more proactive approach to avoid the deficiency judgment dilemma when at all possible. We have spent countless hours negotiating with lenders and have concluded that lenders would prefer not to resolve mortgage defaults through foreclosure and potentially having to take back the property. To the contrary, even when dealing with strategic defaulters, most lenders prefer to work with a borrower who has taken the initiate to put together a short sale. Likewise, borrowers are in a much better position to control their own destiny by working with a broker/realtor seasoned in short sales and an experienced law firm, such as Saraga & Lipshy, P. A. to negotiate the best possible solution; (even if it means having to bring some money to the closing table or signing a new deficiency promissory note for a portion of the short sale balance on the original note). The bottom line is that the lender and borrower decide how much the lender is willing to forgive and how much is still owed to the lender, as opposed to a judge making a final determination after the conclusion of the foreclosure sale. This is one of the many reasons why at Saraga & Lipshy, P.A. we work with some of the best real estate agents in Florida and handle their short sale closings, so that their clients can avoid the taint of having a foreclosure sale on their record and the aggravation of a twenty (20) year deficiency judgment encumbering their future.

Ian's Friend's Foundation

2011-06-29T16:57:00.002-04:00

Normally, SLPA keeps the blog to legal matters only, but upon returning from a recent baseball tournament with my son Boomer in Atlanta, I shared the email below with my law partner Brian Lipshy and Brian requested that I post it on Blog as a reminder as to things outside the law that are important to us. A sincere thank you to Camilo G. Rodriguez, the Commissioner of Palm Beach Baseball for making it happen for Ian as well. The email below was written by Camilo G. Rodriguez on Monday June 27, 20111:

To All PBB Families, Players, Coaches and Advisory Board Members:

In the midst of winning and/or losing, deciding which tournament to go to and/or not, getting playing time and/or not, and the intensity of summer travel baseball, we all forget about the small but meaningful things in life. We all forget that what is considered minor for some is actually huge for others. What some consider inconsequential is life-changing for others. As you can see in the attached pictures, Ian is the batboy for PBB 15U while in East Cobb. He is the cousin of PBB 15U player Boomer Saraga. He was diagnosed with an inoperable brain tumor at a very young age. One of his greatest desires was to be the Bat Boy for his cousin’s baseball team. Today, Ian got his wish granted (with PBB Bat Boy Jersey and Helmet included). The good news is that PBB 15U won its first game. I think Ian brought them luck. WAY TO GO IAN!!!! If you want to, we’ll make you the Bat Boy for the 18U’s and 17U’s next week at East Cobb. We are proud of having you as our official Bat Boy. I am asking the PBB families to access the webpage below for the Ian’s Friend’s Foundation and see how you can help. With your assistance, Palm Beach Baseball will join Nike and the PGA tour as one of Ian’s supporters and sponsors. http://www.iansfriendsfoundation.com Best and Kindest Regards.

Camilo

Camilo G. Rodriguez

commissioner@palmbeachbaseball.org

palmbeachbaseball.org

Debt Consolidators Can Compound Problems

2011-01-11T15:48:00.002-05:00

A client of the firm asked us about our opinion regarding the effectiveness and credibility of debt consolidation firms. With the exception of pointing out to him that we have always been troubled by the fact that there is always the possibility that the monthly payment does not find its way to the actual creditors; historically we did not recommend or discourage the utilization of advertised debt consolidation firms. With this said, I recently read a very well written commentary written by Elliot Raphaelson, a Certified County Court Mediator in the State of Florida. Mr. Raphaelson provides great insight into this largely unknown industry. The article appeared in the Sun Sentinel on Tuesday, January 11, 2011 and Mr. Raphaelson stated in pertinent part as follows:

"In my 10 years as a certified county court mediator in Florida, I've participated in all sorts of cases, from evictions and personal injury suits to contract disputes. Due to the poor economy, the majority of cases I deal with these days are credit-related, and most involve credit cards. Here's a common scenario:

A man loses his job, or his family is facing unmanageable health care bills. He decides to pay for food and the mortgage first. As a result, he can no longer make his usual monthly credit card payments. He sees ads from debt consolidators and debt "repairers" claiming to have easy solutions to his debt problems. All he has to do is stop paying his creditors and start sending monthly payments to a consolidator.

Is this a good choice? I don't think so. Debtors who use them generally pay high fees and may shoulder higher interest rates than they're currently paying. More important, there's no assurance that the consolidator will pay the creditors, and state and federal laws that police such programs are insufficient to protect debtors.

Consider the following case.

A Florida small-business owner was sued by a law firm specializing in debt acquisition. The firm had purchased the man's debt for pennies on the dollar from a credit card company that had written off the debt. The initial amount was $1,000 before the man stopped making payments several years earlier. The principal amount had now climbed to $2,500 due to interest charges (as high as 30 percent, plus various monthly fees). Moreover, additional expenses such as court costs, which can be $200 or more, and legal fees, which can reach $500, were tacked on.

The debtor, who contracted with a debt consolidator, was under the false impression that part of his $250 monthly payment was going to his creditors. When he went to court, he discovered that none of his monthly payment had gone to creditors. He had never received statements itemizing how the payments had been allocated, so he had no defense. It was my job to present him with the following" unpleasant options:

Enter into a monthly payment plan (that he couldn't afford) with the law firm that owned his debt.
Enter into a default judgment. (This would limit his ability to borrow and jeopardize assets he owned. His salary could also be garnished.)
Take the case to a judge, which would have made sense only if he could have demonstrated that he didn't owe the money or if the law firm couldn't have proved that the money was owed. (This option could result in additional legal costs.)
File for bankruptcy. (This option should be considered only after discussions with an experienced bankruptcy attorney).

If he had used a competent financial counselor from the start or negotiated with his creditors directly, he would have avoided a trip to court and gotten to a better outcome.

In my experience, the vast majority of people who contract with debt consolidators or repairers don't succeed in paying off their debts. Not only do these contractors charge high fees, they also operate without any apparent obligation to report to clients how their payments are allocated.

I always ask the debtor being sued if he had received a monthly statement from his contractor summarizing which debtors received payments and for how much. I've never had a defendant tell me he received such statements.

If you're having trouble paying your bills, you're better off either dealing with creditors directly or consulting a reliable credit counselor.

Struggling with debt can be frightening and humiliating. Your first priority should be to avoid making your problems worse by using desperate options or falling for "easy" solutions. Educate yourself about your options and persevere; you'll find a way to resolve your problems and get on with your life."

In conclusion, there are no easy solutions and a qualified credit counselor or bankruptcy attorney is always the best starting point. Anyone promising a deal that sounds too good to be true, is exactly that "not being true". The last thing anyone struggling with credit card debt wants to do is dig a deeper hole. Robert S. Saraga, Esq 1/11/11

SLPA completes sublease deal for Italian Ice Cream Shop in Deerfield Beach:

2010-10-08T16:42:00.001-04:00

On September 9, 2010, SARAGA & LIPSHY, P.A. represented Yo Berri in its successful negotiation of a sublease and equipment purchase for an Italian Ice Cream Shop on the beach in Deerfield Beach, Florida. The prior tenant was Ben & Jerry's. (by Tripp Vitto 10-08-10)

SLPA represents Bloom Center Condominium Association

2010-10-08T16:41:00.001-04:00

In July 2010, SARAGA & LIPSHY, PA represented Bloom Center Condominium Association in its transition from developer control. Bloom Center is comprised of medical offices on Atlantic Avenue with approximately 18,000 square feet. (by Tripp Vitto 10-08-10)

SLPA Completes 30,000 S.F. Leasing Transaction

2010-10-06T17:37:00.001-04:00

On August 3, 2010, Robert Saraga of SARAGA & LIPSHY successfully represented Relli Technology, Inc. of Boca Raton, Florida in a leasing transaction with Boca Industrial Park, Ltd. for 30,000 s.f. of industrial space located in the Boca Industrial Park, Boca Raton, Florida.

SLPA Closes $10,000,000 Real Estate Loan with Wells Fargo Bank

2010-10-06T16:25:00.001-04:00

Despite the tight credit markets, Robert S. Saraga of SARAGA & LIPSHY on October 4, 2010, successfully closed a $10,000,000.00 refinancing of a Boca Raton shopping center. Wells Fargo Bank Middle Market Real Estate ("WFB") was the lender. The shopping center is commonly known as the North Dixie Center located on Spanish River Boulevard and Dixie Highway, Boca Raton, Florida. The Shopping Center is owned by North Dixie Center, LLC and is principally anchored by Bennet Auto Supply, Sherwin-Williams, Carvel Ice Cream and North Dixie Fitness. (by Robert Saraga 10-5-10)

SLPA Closes $25,425,000.00 REFINANCING WITH WELLS FARGO BANK

2010-10-06T14:13:00.001-04:00

SARAGA & LIPSHY is pleased to announce on May 10, 2010 it represented 19^th Street Investors, Inc. in its loan refinancing of Bal Harbour Square Shopping Center in Fort Lauderdale, Florida with Wells Fargo Bank, N.A. The loan closing amount was $25,425,000.00. The loan proceeds of approximately $17,000,000.00 were used to pay off an existing mortgage and the remaining loan balance will be used to redevelop the Shopping Center for new national tenants. 19^th Street Investors is a subsidiary of Retail Property Group, Inc ("RPG"). RPG and its principal owner, Joe Carosella were recently featured in an article in the Sun-Sentinel. RPG is a regional shopping center developer with over 1 million square feet of retail shopping center space.

SARAGA & LIPSHY P.A.

2008-02-25T17:58:00.003-05:00

Saraga & Lipshy, P.A. is a specialty law firm located in historical downtown Delray Beach near the South Palm Beach County Courthouse. Our sophisticated transactional, real estate and corporate practice is handled by partners Robert S. Saraga and Brian Louis Lipshy. In addition to acting as counsel in real estate transactions, the firm is authorized agents of Fidelity National Title Insurance Company of New York and Attorneys Title Insurance Fund, Inc.