The Denver Post - 08/18/2013
Monday, August 19, 2013
Another chapter of the unending scandal of foreclosures, the mortgage collapse at the expense of taxpayers and homeowners, with the emergence of banks too big to fail, with record earnings, and their usual court of financial analysts, wealth management specialists, and ...attorneys of course!
Here is the last thing I just read from the Denver Post.
Too incredible to be true ? Perhaps it is, but it happened and is still happening.
Read the article:
At the risk of losing their homes if they didn't, scores of Colorado homeowners struggling to avoid foreclosure in the past year were each forced to pay hundreds of dollars in lawyer charges for phantom court cases against them, a Denver Post investigation has found.
Those charges, which homeowners in the state's largest counties unnecessarily had to pay to bring their property out of the foreclosure process, totaled more than $40,000. The law firms billed the charges to be reimbursed for having filed the lawsuit and posted a legal notice about it, records show.
Although the fees were very real, the cases and the notices were not.
The Post found 126 foreclosures since January 2012 in which homeowners in 11 counties were told by county public trustees to pay the charges associated with the filings or the foreclosure would continue. But, in fact, no foreclosure lawsuit was filed.
The Post also found that the practice has been going on at least since 2006, according to random checks of prior years' District Court and county public-trustee records.
"I just wanted to keep my house and wanted to pay whatever to do that," said Melissa Cytron, a nurse who saved her Denver home from foreclosure last year by paying what she was told to pay: more than $8,150 in fees and costs that included $200 for a foreclosure lawsuit that was never filed against her and $125 for the legal posting of its notice, records show.
The charges — sometimes as much as $300 to file or "docket" a case and $150 to post the notice about it — appear on bills that lawyers submitted to public trustees after a homeowner formally requested the amount necessary to stop their foreclosure.
Those bills, called cure statements, detail the expenses lawyers hired by a foreclosing lender say they've paid or incurred, along with their legal fees to handle the case, the amount a homeowner has fallen behind on their mortgage, interest, late fees and the costs of the county public-trustee's office.
Homeowners are instructed to pay the whole amount by a certain date — no partial payments are allowed — if they want the foreclosure process to end. Otherwise, it continues, and they risk losing their home to public auction.
Bills can't be questioned
Public trustees, the overseers of the state's foreclosure process, are barred by state law from challenging a lawyer's cure statement.
"State law gives public trustees no authority to question cure figures presented by lenders' attorneys, nor to demand documentary justification or alteration," said Sindee Wagner, Denver chief deputy public trustee.
Lenders and their attorneys several times refused to comment for this story, citing privacy concerns and attorney-client privilege.
The lawsuits are a formality of the foreclosure process, which begins at a county's public-trustee office. A judge must ultimately sign off on a foreclosure before a property can be sold at public auction, so lawyers are required to file a lawsuit called a Rule 120 to obtain that signature.
Lawyers are not required to provide proof to public trustees that a Rule 120 case has been filed, only the judge's signature allowing for a property to be sold at the end of the process.
The lawsuit is not required when a homeowner chooses to cure the amount they owe, although sometimes cases are filed as the process moves forward. Homeowners can cure up to the time of the auction.
The Post found a number of instances where a homeowner cured a foreclosure before a Rule 120 was filed and were appropriately not charged.
The Office of the State Court Administrator said an attorney would not incur the docketing fee without any trace of the lawsuit.
Some cures, however, occur long before that happens.
Homeowners interviewed by The Post said they paid the full tab to cure their foreclosure — money that many said they scraped together from friends and family at the most vulnerable time in their lives — because they believed they had no other choice. Every homeowner interviewed said they were unaware of a Rule 120 case against them or that they had been billed for one.
"All I know is if I didn't pay, I'd lose my house," said Steve Hiatt, who paid $9,622 in May to cure the foreclosure on his Castle Rock home. "I wanted to be sure I didn't lose the house, so I paid what they told me to pay."
Hiatt's tab included $200 for a Rule 120 in Douglas County that doesn't exist and $125 for the associated posting of its notice, records show.
Where does money go? Cures are rare; rarer still are cures at the very beginning of the foreclosure process. Of the 28,400 foreclosures filed in 2012, trustees processed 1,565 cures, according to the Colorado Public Trustees Association. It's unclear how many were at the outset of the foreclosure process.
Where the money ends up is also unclear. Homeowners told The Post they have not gotten a refund or a credit on their mortgage account for the Rule 120 expenses. All said they had other, more-important uses for the funds had they not paid them, such as medical expenses or utility bills.
Critics say even if the amount were credited to a borrower's loan principal, it should first be the homeowner's choice how the misbilled funds are applied or even refunded.
"When a borrower is in foreclosure, cash flow is limited and every penny counts," said Zachary Urban, former director of housing counseling at the Adams County Housing Authority.
"Phantom fees are just insidious and reckless," he said. "It's not up to an attorney or the bank to decide where the money goes. It's up to the borrower. It's their money. They shouldn't have had to pay it in the first place."
The Post took a list of more than 1,000 homeowner names from 11 counties who paid to cure their foreclosures since January 2012 and cross-checked them against a state-authorized database of district court cases that specifically list Rule 120 lawsuits.
The Post also did spot-checks of the same type of information from prior years in the same 11 counties — Adams, Denver, Arapahoe, Boulder, Douglas, Pueblo, El Paso, Jefferson, Weld, Larimer and Mesa — and found that the practice of charging for nonexistent lawsuits has occurred since at least 2006.
Nearly every major law firm that handles foreclosures is represented in the records located by The Post, but the bulk were filed by Aronowitz & Mecklenburg and by Castle Stawiarski, now known as the Castle Law Group, both in Denver.
Attorneys at Castle and Aronowitz, through their own lawyers, would not comment for this story despite numerous requests.
By law, foreclosure attorneys can recoup their expenses, such as the fees they incur or pay to file the Rule 120 lawsuit. The cost of filing a lawsuit in the state's district courts varies by the type of case.
Currently, it is $224 to file a Rule 120 case. That amount changed on July 1 from $185, which it had been for about a year. There are additional fees for filing the cases electronically, which most are, but that amount is generally only a few extra dollars.
The legislature establishes those fees, and the chief justice of the Colorado Supreme Court administers them through the state court administrator.
The Post found instances where attorneys charged as much as $300 — though not by Aronowitz or Castle — for docketing a Rule 120 case that doesn't exist, at a time when the charge by the court should have been $185.
"You're not in a bargaining position when they say this is what you owe," Urban said.
Some foreclosure attorneys have argued that the charges they list on a cure statement are only estimates. Many cure statements indicate that estimated charges are specifically identified with an asterisk, although none that The Post inspected is marked that way.
A Denver District Court judge recently described the cure document differently from the way lawyers describe it.
Statements, not estimates
The "assertion in the ... letter to the Public Trustee that 'these figures are valid through (a certain date)' unequivocally renders that assertion a statement of fact — not an attorney opinion ... or anything else," Denver District Court Judge Edward Bronfin wrote last month when denying an argument by the Vaden Law Firm that cure statements were not sworn statements of fact but merely estimates filed on behalf of their client.
"It is an assertion of what expenses were incurred and must be paid," Bronfin wrote.
He added: "The Public Trustee simply accepts the costs submitted by the filing law firm at face value. There is no judicial oversight and no opportunity to contest the fees, nor any opportunity to object. Either the full amount of costs which are included is paid or the foreclosure goes forward."
The cost of posting a legal notice in a foreclosure has been the subject of an investigation by Colorado Attorney General John Suthers into the practice of padding expenses but is unrelated to The Post's findings.
Suthers' office would not comment for this story.
The state investigation focuses on how much the law firms charge homeowners for the posting of a pair of legal notices required by the foreclosure process. Investigators allege in court records that law firms charge up to six times the market rate for the service and control those expenses by either owning the companies that do the service work or having a significant financial interest in them.
The law firms have denied investigators' claims in lawsuit documents and in court.
Homeowners said it never occurred to them to challenge the cure bill because the charges came via their county public trustee, the official charged with administering the foreclosure process impartially.
"It came from the county, so you naturally believe it's accurate and fair, that it's legitimate," said Harold Mildenstein, who paid $6,148 in December to the Jefferson County public trustee to cure the foreclosure against his deceased son's home in Littleton.
In addition to other charges, the cure statement filed by Aronowitz with the public trustee, who sent it to Mildenstein and his deceased son, shows a "Rule 120 Docket Fee" of $200.54 and a "Service/Posting HB 1240" for $125. House Bill 1240 is the law requiring the posting on a homeowner's property of a legal notice about a Rule 120 lawsuit.
Jefferson County District Court records show no such lawsuit was ever filed.
Mildenstein, a 78-year-old former satellite-TV salesman, said last month that $325 might not seem like a lot of money to some, "but I just lost my job this morning, and it's pretty important to me now."
The Denver Post - 08/18/2013
Henry B. Nathan
is a Florida Real Estate Professional.
Please visit my website:
to search for
Tuesday, August 13, 2013
At some point I wrote that, in the last few years, I couldn't remember a single instance when I sold a property to a local buyer.
Most of my sales have been to foreign buyers. A few to out-of-state people, in search of vacation homes at the bargain prices seen since 2008 were the exception, but most of my buyers spoke French, Spanish, Portuguese, even Russian.
It's not only a question of "affordability". Mortgage Lenders are immensely more demanding nowadays that at the good times of the freewheeling loans, subprime programs, no-income-verification, negative amortization, you name it.
But that is just one point.
Confronted with the strict requirement of verifying a high income in order to be granted a loan, a typical middle class person, or family just does not meet these requirements.
People income has shrunk, or is stagnant at the best. Talking of salary increase is anathema in the new corporate culture, and would almost automatically blacklist the unfortunate employee who voices such an incongruous subject.
Sub-employment is also much more frequent. Or, to put it in other words, people do not get to work full time. They have flexible schedules, at the whim of their employers, which depend on the day-by-day needs of the corporation, not on the employee's need to pay a rent, a car bill, or a mortgage.
Then there is job security that is a thing of the past for the great majority. Taking a thirty or even a fifteen year term loan to buy a house is an audacity that needs a great amount of mad hope. You grow older and your chances of being retained due to an increased experience or skill are not very high.
To make it short, it's easier, simpler, and safer to just rent.
I read this article today. It confirms all the above.
It is not based on speculations, but on statistics.
After all, I wasn't so wrong.
From the South Florida Business Journal - Aug 13, 2013,
Housing affordability drops to lowest level in more than four years
Only 69.3 percent of houses sold in the second quarter were affordable to families with the U.S. median income of $64,400.
There's a down side to the housing market's recovery: More people now can't afford to buy a house.
Only 69.3 percent of new and existing homes sold in the second quarter of 2013 were affordable to households with the U.S. median income of $64,400, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index.
That's down from 73.7 percent in the first quarter, and it's the first time this housing affordability measure has fallen below 70 percent since late 2008.
The median price of homes sold in the second quarter was $202,000, compared with $185,000 for the same period a year ago, according to NAHB.
"Home values are strengthening at the same time that the cost of building homes is rising due to tightened supplies of building materials, developable lots and labor," said NAHB Chairman Rick Judson, a home builder from Charlotte, N.C.
"Together with rising mortgage rates, this contributed to affordability slipping to the lowest level in more than four years," said NAHB Chief Economist David Crowe.
This problem could get worse, Crowe hinted, if Congress limits the mortgage interest deduction as part of tax reform and ends federal support for the secondary mortgage market, "both of which play enormous roles in keeping home ownership affordable."
The most affordable major housing market in the U.S. was Ogden-Clearfield, Utah, where 92.8 percent of homes sold in the second quarter were affordable to families earning the area's median income of $70,800. The least affordable major market? You probably guessed it -- San Francisco-San Mateo-Redwood City, Calif., where only 19.3 percent of homes sold were affordable, even though families there have a median income of $101,200.
Henry B. Nathan
is a Florida Real Estate Professional.
Please visit my website:
to search for