The firm’s Oscar R. Rivera was quoted extensively in an article that appeared in today’s edition of the Daily Business Review, South Florida’s only business daily and official court newspaper. The article, which was titled “Judge Urges Fairness in Foreclosure Actions,” focused on the concurring opinion written by Judge Chris Altenbernd of the Second District Court of Appeal in the court’s ruling filed on Jan. 13 in the case of Bonafide Properties v. Wells Fargo. The article reads:
In Bonafide Properties v. Wells Fargo, the Second District affirmed a trial court decision to bar the investor/buyer of a foreclosed property from a bank foreclosure action. The court’s reasoning was that since Wells Fargo initiated its foreclosure first, the bank wins.
Altenbernd took the opportunity to philosophize about the process, which involves parallel foreclosure proceedings, that dates to the 2008 real estate meltdown. He encouraged trial judges to monitor the impacts on foreclosed homeowners and renters caused by this common form of investor purchasing.
He also called upon the Florida Bar, the Florida Supreme Court and the Legislature to do some fine-tuning.
“It seems likely that there is a measure of good within this innovative procedure that should be preserved,” the judge wrote. “It also seems likely that there is a measure of bad that ought to be regulated or prohibited by substantive law or rules of procedure.”
Knowledgeable observer Oscar Rivera said Altenbernd’s concurrence “shows the concern of courts about being fair to people who are being foreclosed and aggrieved by this situation.”
“He wants to make sure that in the context of the benefits, the homeowners and tenants are not being unduly harmed,” said Fort Lauderdale-based Rivera, who heads the real estate/corporate practice group of Siegfried Rivera. “That’s commendable.”
Certainly there are benefits enough to entice the big stakeholders — home owner associations, lenders and the investor/buyers such as limited liability companies and HOAs.
The procedure goes like this: Florida is notoriously slow about completing bank foreclosures. In the meantime, HOAs looking for their unpaid fees file second foreclosure proceedings in county courts. Then either the homeowner defaults or the case quickly moves to trial.
The HOA gets a judgment. At the county court foreclosure sale the bidding is low because everybody knows the property typically is worth less than the mortgage that will eventually have to be paid off.
Often the buyer is an LLC that specializes in such purchases. The buyer pays the back HOA fees, the property taxes and insurance and rents to a new tenant at fair market value. Month by month profits accumulate because rents are relatively high and the property was obtained for peanuts.
“It is a benefit to the community as a whole if there are people who take over the units and pay their share while these long-winded foreclosures go through the system,” Rivera said. The property is stabilized and the bank can sit back and put off its foreclosure end game until the market rebounds.
The article concludes:
Rivera said in his experience trial judges already take pains to help homeowners. “Judges try and give the benefit of the doubt to the debtor, and the trial courts are reasonably compassionate with borrowers who truly have a desire to keep the property,” Rivera said.
He said he doesn’t expect the Florida Supreme Court to jump on Altenbernd’s suggestion that the justices tweak the procedure. “It’s a public interest issue and it would be more appropriate for the legislative side than the judicial side.”
Nor does he expect the Legislature to act, especially since many local governments have proactively addressed Altenbernd’s concerns. “Some say government already regulates way too many things, and we don’t need any more government regulation,” Rivera said.
Whether there’s more regulation or deregulation, the state’s foreclosure jackpot is nowhere near over. Sixty cases like Bonafide v. Wells Fargo are pending in the Second District alone, according to Altenbernd’s concurrence.
A year ago 300,000 open foreclosure cases were clogging Florida state courts, Coral Gables foreclosure defense lawyer Dillon Graham told HousingWire Magazine. Queueing up: about 550,000 homeowners who were behind in their mortgage payments by 90 days or more.
And with investors nudging housing prices skyward, chances are that more average buyers will get in over their heads, perpetuating the bubble-and-bust syndrome.
Still Rivera is optimistic about real estate after what he calls “the tail end of the foreclosure crisis.”
“We’re reaching the end of the cycle,” he said, “and hopefully there won’t be another one anytime soon.”
Our firm congratulates Oscar for sharing his insights on this opinion with the readers of the Daily Business Review. Click here to read the complete article in the newspaper’s website (registration required).