Castle Law Group

September 27th, 2009

Cutting Deals with the Bank

Undercapitalized or Upside Down Lenders Provide Greater Opportunities

for Borrowers Facing Foreclosure to Cut Deals

According to an article in the South Florida Business Journal, Florida is tied with Georgia and Illinois for having the most banks in the nation with major capital shortfalls according to a study by The Street.com ratings and SNL Financial.

Where lenders and banks are under capitalized, borrowers have greater opportunities to cut deals with lenders on upside down properties.  There are many reasons why undercapitalized banks and lenders present better opportunities for borrowers to cut deals.

First, undercapitalized lenders often do not have sufficient staff or resources to participate in highly structured loan workout programs.  In other words, undercapitalized lenders often have more flexibility to consider a wider range of loan workout proposals.

Second, because there is often less formal internal structure, undercapitalized lenders may be more likely to take the borrowers individual circumstances into account when making loan resolution decisions.

Third, Florida foreclosure defense attorneys have an easier time defending foreclosure suits by lenders or banks that have been taken over by the Federal Deposit Insurance Corporation (“FDIC”), the Office of Thrift Supervision (“OTS”), or by another bank in lieu of government takeover.  Initially, after a loan is transferred to a new owner/entity, it often takes several months for the new owner/entity to get up to speed on the loan or foreclosure status.  Secondarily, after such an acquisition, the risk profile of the assets [loans] should shift in the direction of market value.  In other words, if a new entity owns the loan, it should have acquired the loan at a significant discount, giving the new/current owner of the loan more flexibility to cut a deal with the borrower to resolve a contested foreclosure.  Finally, Florida foreclosure defense attorneys have an easier time defending foreclosure suits where the loan has changed hands one or more times.  Where a loan has changed hands several times, discovery becomes more complex, assignments may be missing, original documents could be lost, authority to foreclose may become unclear.

Therefore, the banks pain becomes the borrower’s gain.

July 29th, 2009

$4 Million Grant for Florida Foreclosure Defense

Today Florida’s Attorney General, Bill McCollum, announced that the State of Florida will have funds to help Floridians facing foreclosure.

Thanks  to a settlement with Bank of America, resulting from their takeover of Countrywide Financial, the State of Florida will be releasing $4 million dollars to provide Foreclosure Defense services.  The funds will be distributed to non-profit agencies beginning October 1, 2009 through September 30, 2011.

Read more about it here in a story posted by the Tampa Bay Business Journal.

July 7th, 2009

634,000 Americans 50+ years old facing foreclosure

According to AARP Magazine (March/April 2009), there are 634,000 Americans aged 50+ who are 30-180 days past due on their first mortgages.

A study done in September, 2008 by AARP indicates that, at that time, Americans 50+ years old represented 28% of those who were delinquent, in foreclosure or who had been foreclosed.  The study titled “A First Look at Older Americans and the Mortgage Crisis” is available by clicking HERE.

The assumption that they are in good shape during this crisis,  based on equity and low fixed interest rates,  has not proven true.  Unlike younger homeowners, who may eventually be able to recover from such a loss, homeowners in this age group may never recover, and may suffer significant financial reprecussions into older age.