By Paul Krasker
I read the editorial “Cattle prod, not a rocket” about the acceleration of more than 1,500 foreclosure cases in Palm Beach County. Your view oversimplifies a much more complicated situation.
My office defends foreclosure actions throughout South Florida. We acknowledge that there are borrowers and owners who are abusing the process, but many more homeowners are trying to retain their homes and seek only to receive mortgage modifications mandated by the Department of Justice settlement or the Home Affordable Modification Program (HAMP.) Other homeowners have applied for short sale approval to allow their bank to receive fair market value of the property without the damage of a foreclosure to their credit rating and the negative effects to the economy.
Our firm will not accept clients who are simply “delaying” a foreclosure. We require that a client pursue a loan modification or short sale. Many other attorneys are pursuing similar “solution-based” remedies, but the mortgage modification applications or short sale packages are being unnecessarily delayed by the “Big Five” banks.
In fairness to the Big Five, they are speeding up their modification reviews, and we are seeing better and more timely results. It used to be that the first submittal was automatically rejected by the bank, and we would get approvals only on the second, third or fourth submittal.
But many homeowners need the foreclosure process to be “stayed” while the bank reviews the modification requests. The attorneys general insisted on that provision within their national settlement, and the HAMP already required the stay while a modification is being reviewed. But like the “robo-signing” scandal, the big banks are intentionally breaching their obligations and proceeding with “dual-tracking” the foreclosures.
When defense counsels raise the dual-tracking violations, the judges rule that only the federal government and/or the attorney general’s office have the right to intervene. I am unaware of any case in which either has intervened in an individual case. Until the Florida Supreme Court rules on the matter, our hands are tied.
My office represents 143 South Florida homeowners who have applied for mortgage modifications with the Big Five and are simultaneously fighting foreclosure. While reading The Post’s Kimberly Miller’s excellent reporting of this improper dual tracking, I was pleased to read that Florida Attorney General Pam Bondi has hired a staff member to police the Big Five and stop these abuses. My office has provided Ms. Bondi with the numbers of each of the 143 cases in which the Big Five are violating the settlement by dual tracking. I assume other foreclosure defense counsel have similar numbers.
Several thousand South Florida cases should be stayed just to make the Big Five comply with their obligations. This action alone would clear the backlog that frustrates Palm Beach County Chief Judge Peter Blanc, and would allow him to accelerate those cases in which the property sits abandoned or the owners are abusing the system.
Dual tracking and judicial acceleration are causing some homeowners to lose their primary residences when they could save them. Other homeowners who tried to short sell their property are falling into further credit problems, potentially bankruptcy, when the foreclosure happens before the short sale approval. Everyone loses, because the banks would receive the same or more net proceeds in approving a short sale than they will at the courthouse steps.
We need to understand the complexities of foreclosure cases and address the underlying causes of the delays before sending thousands of homeowners toward bankruptcy. There is no simple solution, and judicial acceleration — whether named a “cattle prod” or a “rocket docket” — is hurting far more homeowners while it helps the banks and the court system.
Paul Krasker is a lawyer in West Palm Beach.