The housing bust has put thousands of South Florida residents on the sidewalk, but when a mortgage is foreclosed there is hope — sometimes even after a lender has repossessed the home.
In some cases, foreclosures are set aside, and the homeowners regain their properties because of errors by courts or lenders.
In at least one instance, a bank reversed its foreclosure and sold the home back to the former owner at a deep discount, apparently for no other reason than the deal made financial sense for the lender.
How can homeowners score these victories? Be persistent and get lawyers or consumer advocacy groups to work on your behalf, observers say.
“Most folks don’t fight it or don’t know there was a problem,” said Arden Shank, president of the non-profit Neighborhood Housing Services of South Florida.
When foreclosure sales are overturned, the delinquent borrowers don’t get to live in the homes for free. Banks can move to refile the foreclosures, but they may agree to mortgage modifications that allow the homeowners to stay put.
Dan Francis found that out after losing his three-bedroom Margate home this summer.
Francis, 69, said he was laid off from his construction job and fell behind on the mortgage payments. Bank of New York Mellon, as a trustee for the owner of the mortgage, filed for foreclosure in March 2010 but dismissed the case the following month in what may have been a simple mistake, said his Fort Lauderdale lawyer, Manny Singh.
Mellon’s motion to have the case reinstated was never heard by a judge, but the case continued anyway, and the foreclosure sale occurred in February, Singh said.
Ownership of the home was transferred to Bank of New York Mellon in June, though Francis continued living there because the bank had not yet tried to evict him.
A real estate broker recommended that Francis contact Singh, who discovered that the foreclosure sale happened despite the procedural error. A judge ultimately vacated the foreclosure in July.
“Maybe prayers do get answered,” Francis said.
A spokesman for Mellon referred calls to the loan servicer, GMAC Mortgage, and a spokeswoman there could not provide details on the case.
United Financial Counselors, a non-profit consumer advocacy group based in North Miami Beach, says it is negotiating a loan modification on behalf of Francis that would turn his adjustable-rate loan with an 8.5 percent interest rate into a fixed-rate loan at 3.275 percent.
More than 2,500 Broward County homeowners were in some stage of foreclosure in September, according to RealtyTrac Inc., a foreclosure listing firm. Palm Beach County had nearly 1,900. Last year alone, lenders repossessed 20,400 homes in Broward, and roughly 11,000 in Palm Beach County, according to CondoVultures, a consulting firm.
But in the rush to complete foreclosures across the country, some bank employees, called “robo-signers,” admitted in depositions that they signed off on thousands of cases without knowing the details.
United Financial Counselors has helped get more than a dozen South Florida foreclosure sales overturned in the past five months, President Jason Walowitz said.
United Financial helped overturn the foreclosure sale of Annette and Ellison Hixson’s three-bedroom home in Miami Gardens. The couple faced financial difficulty after Ellison, a truck driver, suffered two heart attacks and a stroke.
The mortgage servicer, Ocwen Loan Servicing, rejected a loan modification and completed the foreclosure in August 2010, Annette Hixson said.
Fearing that she and her husband would be evicted at any moment, Hixson made a series of phone calls and eventually found United Financial.
The agency convinced Ocwen that, even though the foreclosure had occurred, it was in the servicer’s best interest to sell the home back to the Hixsons for the $59,000 market value, Walowitz said.
But there are limits to what consumer groups can do.
They likely can’t help people who are unemployed with no income or those who have defaulted on a loan modification. Despite the Hixsons’ experience, homeowners shouldn’t expect relief if there were no errors in the foreclosure process, Walowitz said.
Still, he said, clients are stunned to learn that there is assistance available.
“It’s beyond satisfying,” Walowitz said. “We gain friends for life after this.”