Tuesday, August 30, 2011

Florida HOAs Begin Scoring Big Wins Voiding Lender Mortgages; Banks Fail To Defend Suits, Claiming 'We're Only The Trustee, We're Not The Servicer'

Bloomberg reports:

  • Financially troubled condo associations are taking banks to court as foreclosure delays enable delinquent homeowners to stay in their buildings for years, often without paying dues that keep boards running. The groups start by pressuring lenders to speed up home seizures and take over payment of the monthly fees. In extreme situations, [...] , associations may force banks to give up rights to the property.

  • The lenders are stalling foreclosures,” Ben Solomon, the Miami Beach attorney for [one] association, said in a telephone interview. “Our complaints say the banks abandoned their interest and either need to accept responsibility for the title or walk away.”

    ‘Mortgage Terminator’

  • Solomon, whose Association Law Group represented homeowner boards in 16 Florida counties with 15,000 delinquent owners, also won what he calls “mortgage terminator” lawsuits in claims against Bank of America Corp., Citigroup Inc., Deutsche Bank AG and Wells Fargo & Co., according to court records.


  • To compel banks to act, Solomon’s lawsuits start by suing the homeowner for unpaid dues as a way of seeking title to the property. Then he files a claim against the bank, contending the non-performing loan restricts the association’s right to sell the property because the mortgage is worth more than the home.

  • The bank defendant is usually a trustee for the loan that was sold into a mortgage-backed security, a legal structure that can leave the party responsible for a mortgage unclear.

  • Citigroup and Deutsche Bank declined to challenge lawsuits brought by Solomon because both banks were trustees, not the servicers of the delinquent loans, bank representatives said.

  • In March 2010, Citigroup lost a lawsuit over a Miami Beach condo with a $136,000 mortgage, according to court filings. Danielle Romero-Apsilos, a spokeswoman for the New York-based bank, declined to comment, saying Citigroup wasn’t the servicer.

  • Deutsche Bank in September forfeited its right to a unit with a $149,300 mortgage to the Palm Aire Gardens Condominium Association Inc. in Pompano Beach, Florida.

  • Litton Loan Servicing, the loan servicer for the loan, and not Deutsche Bank as trustee, was responsible for all foreclosure activity relating to the loan,” John Gallagher, a Deutsche Bank spokesman in New York, said in an e-mail.

  • Donna Marie Jendritza, a spokeswoman for Litton in Houston, declined to comment on the lawsuit, citing privacy restrictions. Litton, which Goldman Sachs Group Inc. is selling to Ocwen Financial Corp., wasn’t named in the complaint or other court documents.

  • We sue whoever holds the mortgage,” Solomon said. “The bottom line is the bank had a loan and the mortgage got terminated.”

    No Defense

  • Palm Aire Gardens also won title to a unit with a $184,410 mortgage after Wells Fargo failed to mount a defense because it no longer owned the loan, a transfer that wasn’t reflected in property records, said Tom Goyda, a spokesman. The bank would have defended the mortgage if it hadn’t sold the loan, he said.(1)

For more, see Homeowner Associations in Need of Cash Sue Lenders to Force Foreclosures.

(1) The cavalier attitude that the banksters are exhibiting here will no doubt come back to haunt them in that the unwitting holders of the mortgage-backed securities (with the ever-diminishing value of their investment as each mortgage gets voided) are the ones getting hammered, and this gives them one more reason to sue the servicers and trustees to recover their losses.

Inasmuch as these suits are apparently going forward undefended by the trustees & servicers, it wouldn't surprise me if there is a mad rush by attorneys (or their 'runners & cappers') throughout Florida to solicit homeowner associations, offering to take on their collections work for unpaid maintenance dues with the view of ultimately voiding the existing delinquent mortgages on each home/condo held by foot-dragging banksters.

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