Staggering volumes of foreclosure work bring opportunities for many
By Donna Balancia, Editor
ORLANDO - As the volumes of foreclosure work continue to grow, so
do opportunities for attorneys and others who can help clients keep their homes.
Keeping a
positive attitude, using appropriate billing procedures and seeking outsourced help are ways attorneys can manage the caseloads,
those who focus on the real estate and financial fields say.
"The best analogy I can use about
this field right now is the plate-spinner at the circus," said Mark Chmielarski, a shareholder with Zimmerman, Kiser
& Sutcliffe PA in Orlando, whose practice areas are real estate, corporate and bankruptcy and creditors' rights. "You're
trying to keep it all going and you've got to go over to one plate and spin that, then you have to move to another plate and
spin that, keep them all spinning and hope they don't crash to the floor."
Chmielarski
said up to a year and a half ago, he was spending 80 to 90 percent of his time on loan closings. Now it's mostly foreclosures.
He has switched gears, but is hopeful that soon his business will go back to being centered on closings in the not too distant
future.
Lender Forensics principals Gary Lacefield and Steve Dalia are seeing a
vast increase in their business. Their company works with attorneys to help minimize volumes of work. Lacefield, who says
he has been unchallenged in court on his forensic audits, trains HUD field investigators and is considered an expert witness
in lawsuits involving fair housing issues. Dalia had been a branch manager for a mortgage company before starting Lender Forensics.
"Ultimately the point is to get the borrower the payment they can afford and to
help the attorney possess the ammunition to fight for that payment," Dalia said.
There
are several flaws in the system that got the foreclosure market to the state it's in, Lacefield said.
"I know it's blasphemy but the fair housing act has caused a lot of the problems," Lacefield said. "There's
a big difference in the terms 'Qualified to pay' and 'Able to pay.' The lender can't see the expenses the buyer has.
The lender can't say 'I see you're spending $500 at the opera,' or 'I see you have a TV service with 500 channels,'
so when you're qualifying, none of the living factors come into play. If you're told you qualify for $300,000 home,
do you look for a $150,000 home? No you look for a home that's $299.000. The fair housing act has kept lenders from
discriminating."
For attorneys who may be looking to make a change or for those who are
freshly minted, the increase in foreclosure work gives them a new opportunity.
"There
is enough of this type of work to go around," said attorney Debi Rumph, founder of Residential Real Estate in Orlando.
"But it can be a long term process and attorneys should structure the fee in such a way that they can keep going."
Keeping buyers in their homes is a labor-intensive effort.
"There is a lot of client-attorney
interaction," Rumph said. "You have to reassure clients, you have to keep them calm because they get nervous. So
you can't feel stuck in the case. Set the fee structure so you can accommodate the process."
The promise of rising home values had also been a continual temptation in a hot market, Lacefield said.
"The story is always the same," Lacefield said. "It was, 'Oh don't worry, you can make the payments, real estate
values always go up.' Or 'The teaser rate is only here six months, but you can refinance and you'll even probably be able
to pull some money out.' In years past, it's sort of always worked."
But falling
values affect more than solely the buyer who may be stuck in an adjustable loan.
"Even
the good citizens who were placed in good loans and the homes around them are empty or foreclosed on, they're in trouble because
they're just as much victimized by what the straw buyers have done," Lacefield said. "I'm seeing whole neighborhoods
destroyed."
Rumph said that when working with clients who are significantly late in making
mortgage payments, she aims for recission of the contracts the buyers may have signed.
"With rescission, of course you have to make the lender whole," she said. "And many of the clients can't
get the cash to do that, so we play the waiting game as best we can and work with both sides. What I do, is I ask to see the
closing documents. That gives me an opportunity to have a face to face with the client and we can proceed from there."
There are certain factors Lacefield looks for in his forensic audits.
"When we do a review with an attorney and his or her clients, we're looking for certain things," Lacefield said.
"We want to know if these people had the ability to qualify for the loan and did they qualify to make the payments on
that loan. In the first three years, did they have the ability to make the payments? I would say 95 percent of the people
who come to us, whether individuals or through counsel, did not."
"There are
all kinds of reasons why these things happened," Lacefield said. "There is plenty of blame to go around.
"It doesn't matter who was selling the product," he said. "The entity that ultimately has the responsibility
to make sure the buyer is qualified is the entity making the loan. I can go into Dillards and try on the jeans with the 28-inch
waist and the salesman can say 'You look great' when you actually can only get one leg in. The lender is ultimately
responsible that I don't get a loan I can't repay."
Chmielarski said working with
both sides is crucial in keeping people in their homes and helping to propel the future of the housing market.
"In any situation if the borrower can show they have a sustainable income to support a mortgage debt and it's a situation
where the value of the home has been reduced, I would bring that to the attention of the lender and the client," Chmielarski
said. "It is in the best interest for both parties to keep the client in the home making payments. The key is 'sustainable'
income, and it involves working with the borrower to maintain that.
That is always a better situation. Banks
don't want to pay property taxes and cut the lawn and risk an empty home that someone can break in and steal from."
Chmielarski said: "I don't know one lender who held a gun to the head of anyone to buy a home. The situations vary as
to why the market is the way it is, people have lost jobs or the property values have gone
down.
"The financial infrastructure is the same as it was two years ago, let's face it," he said. Florida has the
same great sunshine it's always had. There is no state income tax here and there are numerous great things about living in
Central Florida in general. It's going to take time for the market to come back, but not as long as what is being predicted."
