Foreclosure Fraud Case Settled at the Florida Supreme Court


In a matter of “great public importance” that has gone largely ignored this week, the high-profile foreclosure fraud case of Roman Pino versus The Bank of New York has been settled.  According to the Florida Supreme Court, the matter was dismissed upon Pino’s “Notice –Dismiss (Voluntary Stipulation)” on July 25th.

The opportunity for a precedent setting opinion for attorney Thomas Ice, of Ice Legal, whose boutique litigation firm specializes in uncovering forged and fraudulent foreclosure documents, must mean outright success for Pino. 

Although details of the settlement were not provided in the brief stipulation before the high court, one can only speculate whether Pino received a mortgage modification, principal reduction, right to short-sale, waiver of deficiency balance, or his home free and clear. 

One thing is clear, though.  Any settlement agreement between the parties would contain a confidentiality agreement.

Neither Ice, nor Enrique Nieves – Pino’s attorney of record – were available for comment despite several messages left at Ice Legal and on their cell phone voicemail.

An appeals court in February requested that the Florida Supreme Court consider the case of Greenacres homeowner Roman Pino as a matter of “great public importance.” The decision by the 4th District Court of Appeal in West Palm Beach was unusual as neither the bank nor the homeowner had requested such a review.

“We conclude that this is a question of great public importance, as many, many mortgage foreclosures appear tainted with suspect documents,” the appeals court wrote in certification to the Supreme Court.

Had the matter been adjudicated on its merits and a decision rendered in favor of Pino, thousands of foreclosure cases could have been impacted as allegations of document fraud and robo-signing run rampant throughout the nation.

According to land records, Pino purchased his Greenacres home in July, 2006 for $203,000 by securing a $162,400 mortgage with Silver State Financial Systems. After falling behind on the mortgage, the Bank of New York moved to foreclose in October, 2008.

In their foreclosure complaint, the Bank of New York alleged that it was the owner of Pino’s mortgage note through an assignment from another lender, but did not include said assignment as part of its original complaint.

Pino retained Ice, who in moving to dismiss the complaint, argued that the bank needed an assignment in order to have standing to foreclose.

Attorneys from the Law Offices of David J. Stern in Plantation filed an amended complaint and attached an unrecorded mortgage assignment “which happened to be dated just before the original pleading was filed,” the appeals court wrote.

Stern’s now defunct law firm is one of several foreclosure mills throughout Florida that are under investigation by Florida Attorney General Pam Bondi.

Just as Pino’s attorneys were set to take depositions of Stern employees to determine how the assignment was created, the Bank of New York dismissed its foreclosure action.  Ice had wanted an opportunity to prove that Pino was the victim of fraud but was unable to do so because of the voluntary dismissal. The bank refiled the foreclosure in August 2009, and that case is pending.

In its written opinion, the Fourth District Court of Appeal agreed with the lower court’s ruling about the dismissal but because of its importance on similar foreclosure matters, sent the case to the state’s highest court in Tallahassee. One appellate judge, Gary Farmer, dissented saying he thought the trial judge could have kept the case open to litigate Pino’s claim of fraud.

“I’m not surprised at a settlement of this matter considering the allegations of forged or fraudulent documents and the risk of substantial loss to the bank,” said Carlos J. Reyes, of the Reyes Law Group in Fort Lauderdale.  “As a foreclosure defense attorney, my preference would have been for a written opinion from the Florida Supreme Court, but the client is the ultimate decision maker in any settlement discussions.”

Foreclosure Mill Settles With Florida Attorney General


Florida Attorney General Pam Bondi announced today a first-of-its-kind settlement against attorney Marshall C. Watson and his law firm – the Law Offices of Marshall C. Watson – for alleged improprieties in the prosecution of foreclosure cases throughout Florida.  

This settlement calls for a $2 million payment and imposition of certain requirements to conduct business and is the first stemming from numerous investigations into Florida foreclosure law firms.

“We are aggressively investigating these law firms in order to protect the interests of everyone involved in foreclosure proceedings. Homeowners, lending institutions and the courts deserve to know that the law is being followed and all documentation is true and accurate,” stated Attorney General Pam Bondi. “Anything short of total assurance of complete accuracy during such serious situations is unacceptable.”

Florida led the nation in the investigation of law firms and foreclosure mills engaged in the improper production and filing of foreclosure documents. The Law Offices of Marshall C. Watson fully cooperated with the investigation since its inception.

Half of the $2 million payment from Marshall Watson’s law firm to the Attorney General’s Office will be contributed to the Florida Bar Foundation to continue the Florida Attorney General Mortgage Foreclosure Grant Program. This grant program provides for the funding of Legal Aid attorney positions throughout Florida specifically devoted to the representation of low-income individuals facing foreclosure actions.

The investigation of the Florida Attorney General into the practices of several other Florida law firms is continuing.

To access the Assurance of Voluntary Compliance, please click here: http://myfloridalegal.com/webfiles.nsf/WF/SKNS-8FAHED/$file/WatsonAVC.pdf

Florida Attorney General cracking down on foreclosure mills


Homeowners, attorneys, and Florida’s judiciary have long sounded the alarm over insufficient or fraudulent documents being used to take thousands of properties from unsuspecting homeowners in the foreclosure process. Not only has the Florida Supreme Court amended the rules of civil procedure in relation to home foreclosures, judges throughout the state have reversed foreclosure sales, dismissed cases for insufficiency, and created additional steps to ensure the proper filing and disposition of cases.

 

Coming on the heels of an investigation into the Florida Default Law Group, Florida Attorney General Bill McCollum announced Tuesday that his office has launched a new investigation into allegations of unfair and deceptive actions by three law firms handling residential foreclosure cases in the Sunshine State.

Handling over 35 percent of all foreclosure cases in the state of Florida, the investigation names the Law Offices of Marshall C. Watson, P.A.; the Law Offices of David J. Stern, P.A.; and Shapiro & Fishman, LLP. The Florida based law firms were hired by loan servicers to begin foreclosure proceedings when consumers were in default on their mortgages.

The Attorney General’s Economic Crimes Division is investigating whether documentation may have been fictitiously created and filed with Florida courts to speed up foreclosure processes, potentially without the knowledge or consent of the homeowners involved. Thousands of final judgments of foreclosure against Florida homeowners may have been the result of the alleged improper actions of the law firms under investigation.

Because many mortgages have been bought and sold by different institutions multiple times, key paperwork involved in the process to obtain foreclosure judgments is often missing. On numerous occasions, fabricated documents have allegedly been presented to courts in support of a final judgment against homeowners. The investigation will focus on whether these law firms created and filed improper documentation with Florida courts in an effort to deceptively strip Floridian’s of their homes.

The attorney general’s investigation will also look at whether the law firms created affiliated companies outside the United States where the alleged false documents are being prepared and then submitted to the law firms for use within the Florida court system.

“On numerous occasions, allegedly fabricated documents have been presented to the courts in foreclosure actions to obtain final judgments against homeowners,” stated Attorney General Bill McCollum. “As Attorney General, my job is to protect the rights of all Floridian’s by investigating unlawful activities and putting a stop to deceptive practices. To this end, my office will continue to investigate.”

News of the Florida Default Law Group investigation led to a number of complaints from homeowners and attorneys about the Law Offices of Marshall C. Watson, P.A.; the Law Offices of David J. Stern, P.A.; and Shapiro & Fishman, LLP. Subpoenas were served on each of the law firms demanding documents dating back to Jan. 1, 2008. The subpoenas also seek information on 18 specific foreclosure cases, in addition to general information about the law firms’ operations.

Defense attorneys who have long reported widespread fraud in home foreclosure cases called Tuesday’s announcement from the state’s chief law enforcement officer a “bombshell” for Florida’s foreclosure system.  “The fact that Bill McCollum is expanding his investigation into potentially unfair and deceptive practices should be commended” said Fort Lauderdale foreclosure defense attorney Scott Kleiman of Kalis & Kleiman. “The attorney general doesn’t spend limited state resources investigating these types of cases without reason.”

According to McCollum, 245 complaints have been filed against the Florida Default Law Group while 48 complaints have been filed against The Law Offices of David Stern. The Law Offices of Marshall C. Watson and Shapiro & Fishman each have 12 complaints pending. A number of other complaints are under review and additional subpoenas may be issued.

If you are the victim of a mortgage foreclosure fraud, file a complaint with the Attorney General’s Office by calling (866) 9-NO-SCAM (866-966-7226) or by visiting their website at http://www.myfloridalegal.com.

William E. Lewis Jr., is a credit repair expert with Credit Restoration Consultants and host of “The Credit Report with Bill Lewis” on AM 1470 WWNN, a daily forum for business and financial news, politics, economic trends, and cutting edge issues.

Foreclosure defense: Court rules bank must prove ownership


Following foreclosure moratoriums by PNC Bank, Bank of America, J.P. Morgan Chase, and Ally Financial, the settlement of deceptive marketing charges by Wells Fargo Bank, and the Attorney General’s investigation into faulty foreclosure practices at the Florida Default Law Group, the Law Offices of Marshall C. Watson, P.A.; the Law Offices of David J. Stern, P.A.; and Shapiro & Fishman, LLP., a Florida court ruled that banks must provide evidence of ownership when attempting to foreclose on a property.

On Wednesday, a three-judge panel of the 4th District Court of Appeal in West Palm Beach overturned an earlier summary judgment by Palm Beach Circuit Court Judge Thomas Barkdull, allowing repossession of a Boca Raton couple’s home by US Bank National Association. The foreclosure went through even though the lender did not provide an original note or other acceptable proof of ownership.

In the case of Guiseppe Servedio, the court ruled that banks must provide evidence they actually own and hold the mortgage when seeking to foreclose on a property. “Some judges have been lax about the rules of evidence,” stated Peter Snyder, his attorney. “I think that what this case says is you better have the original note.”

The decision comes following an earlier ruling against Deutsche Bank where the court stated that “[a] summary judgment should not be granted where there are issues of fact raised by [the] affirmative defense[s] which have not been effectively factually challenged and refuted.” In this matter, a homeowner asserted several defenses that were ignored by Deutsche Bank and the lower court.

The recent decisions come amid critical reports of judicial foreclosures receiving “rocket docket” processing despite missing and/or poorly prepared documents. Last week, Wells Fargo admitted making mistakes in 55,000 foreclosure cases but promised to expeditiously address them.

The San Francisco-based bank said it plans to resubmit documents in Florida and 22 other states by mid-November. This move comes two weeks after Wells Fargo officials issued a statement saying its affidavit procedures and daily auditing “demonstrate our foreclosure affidavits are accurate.”

Officials at Wells Fargo claim the mistakes were technical and that it had no plans to halt the foreclosure process as PNC Bank, Bank of America, J.P. Morgan Chase, and Ally Financial did. “We don’t believe that there are instances in which the foreclosures would not have occurred otherwise,” says Teri Schrettenbrunner, a bank spokeswoman.

Through the Mortgage Foreclosure Multi State Group, attorneys general in all 50 states are investigating whether legal procedures and documents were handled properly in judicial foreclosures. As the probe widens, a number of attorneys general have opened separate investigations on “robo-signers” as well as law firms and banks.

Shapiro & Fishman, LLP, one of the four Florida foreclosure firms being investigated by the Florida attorney general for allegedly providing inaccurate or false documents, represented US Bank against the Servedio’s. Lawyers at the firm could not be reached for comment, but in the past have denied any wrongdoing.

In the appellate opinion, the judges said that even though US Bank later provided the court with a copy of the original note, it was insufficient because it was submitted after Barkdull finalized the foreclosure. “Without evidence demonstrating [the bank’s] status as holder and owner of the note, genuine issues of material fact remain,” the judges wrote.

“Unfortunately, for the sake of expediency and reduction of overloaded dockets, judges are granting summary judgments without full consideration of a homeowners affirmative defenses and the evidence presented,” says Carlos J. Reyes, a foreclosure defense attorney with the Reyes Law Group in Fort Lauderdale. “In some cases, the appellate courts have now found that banks did not provide a note or prove ownership of the property being foreclosed upon.”

Source:  The Credit Report with Bill Lewis – Highlands Today, an edition of the Tampa Tribune (Media General Group) – http://www2.highlandstoday.com/content/2010/oct/31/foreclosure-defense-court-rules-bank-must-prove-ow/news-newbusiness/ To review Bill Lewis’ entire consumer protection series at the Highlands Today, visit www.williamlewis.us.

William E. Lewis Jr., is a credit repair expert with Credit Restoration Consultants and host of “The Credit Report with Bill Lewis” on AM 1470 WWNN, a daily forum for business and financial news, politics, economic trends, and cutting edge issues.

Mortgage and Foreclosure – Florida AG joins Mortgage Foreclosure Multi State Group


Attorney General Bill McCollum announced last week an ongoing effort to rein in mortgage servicers and protect Floridians from purported deceptive and unfair practices. Along with 49 other attorneys general who are part of the Mortgage Foreclosure Multi State Group, McCollum is leading an effort to stop mortgage loan servicers from submitting alleged false affidavits in support of mortgage foreclosure actions.

Homeowners, attorneys and investigators have long alleged that many of the affidavits contained within mortgage foreclosure complaints have been signed without personal knowledge of the facts asserted within them. Having recently come to light is the fact that many of affidavits were signed outside of the presence of a notary public. This process of signing documents without confirming their accuracy has come to be known as “robo-signing” and is in direct violation of Florida law.

In an effort to effectively address and investigate the robo-signing crisis, the Mortgage Foreclosure Multi State Group is now comprised of all 50 state Attorneys General, mortgage regulators and state banks. Led by Iowa Attorney General Tom Miller, plans are being made to speak with all relevant mortgage servicers to determine whether they have properly submitted affidavits or signed notices in support of foreclosure actions.

State banks and mortgage regulators are participating both individually and through their Multistate Mortgage Committee, which represents mortgage regulators from all 50 states. As a member of the Executive Committee, Florida has taken a leading role in this multistate initiative. The Executive Committee is also comprised of Attorneys General from Arizona, California, Colorado, Connecticut, Illinois, Iowa, North Carolina, Ohio, Texas, and Washington; and state banking regulators from the Maryland Office of the Commissioner of Financial Regulation and the New York State Banking Department.

McCollum previously initiated an investigation of the Florida Default Law Group, the Law Offices of Marshall C. Watson, P.A.; the Law Offices of David J. Stern, P.A.; and Shapiro & Fishman, accusing the four firms of faulty foreclosure practices. Those firms are fighting back, with one of the legal showdowns taking place last week in Broward County, where lawyers for David J. Stern presented a motion to “quash” the state’s subpoena.

Ruling for the attorney general in his efforts to subpoena the foreclosure records of Stern’s law firm, Broward County Circuit Court Judge Eileen O’Connor denied the Plantation attorney’s motion to quash McCollum’s subpoena.

O’Connor’s ruling was in stark contrast to an earlier ruling in Palm Beach County, where a judge told McCollum’s lawyers they could not subpoena the records of Tampa-based foreclosure firm Shapiro & Fishman.

Stern’s attorney said he would appeal the case to the 4th District Court of Appeal, meaning the difference between the two cases may become an issue at the appellate level. “We respectfully disagree with the judge’s ruling and plan to file an appeal,” said attorney Jeffrey Tew, who represents Stern.

While O’Connor did not provide a reason for her ruling, Palm Beach County Circuit Court Judge Jack Cox stated that “only the Supreme Court controls the conduct of lawyers in the courtroom and in court proceedings,” and that the attorney general did not have a right to subpoena the records.

Meanwhile, Stern’s support company, the publicly traded DJSP Enterprises, confirmed that it was cutting back 10 percent of its workforce. DJSP had grown to about 1,100 employees during the height of the foreclosure crisis. Lawyers from Greenberg Traurig were also retained to mount an internal investigation into allegations that its employees helped fabricate court documents in foreclosure cases.

If you would like to learn more about the mortgage foreclosure crisis or to file a complaint with the Attorney General’s Office, visit their website at www.myfloridalegal.com or call (866) 9-NO-SCAM (866-966-7226).

Source:  The Credit Report with Bill Lewis – Highlands Today, an edition of the Tampa Tribune (Media General Group) – http://www2.highlandstoday.com/content/2010/oct/17/florida-ag-joins-mortgage-foreclosure-multi-state-/  To review Bill Lewis’ entire consumer protection series, please visit http://www.williamlewis.us

William E. Lewis Jr., is a credit repair expert with Credit Restoration Consultants and host of “The Credit Report with Bill Lewis” on AM 1470 WWNN, a daily forum for business and financial news, politics, economic trends, and cutting edge issues.

Wells Fargo Settles Deceptive Marketing Charges


Following news of a mortgage foreclosure moratorium by PNC Bank, Bank of America, J.P. Morgan Chase, and Ally Financial’s GMAC Mortgage unit, Wells Fargo Bank has settled charges of deceptive marketing practices with attorney generals in Arizona, Colorado, Florida, Illinois, Nevada, New Jersey, Texas, and Washington state.

Attorney General Bill McCollum announced last week a multi-state agreement with Wells Fargo over allegations of deceptive marketing regarding payment option adjustable rate (POA) mortgage loans. The agreement settles allegations of misconduct made prior to the acquisition of Wachovia and Golden West Corp., also doing business as World Savings Bank, by Wells Fargo.

According to the allegations, Wachovia and Golden West failed to fully advise mortgage borrowers that the minimum payment due in the first years of a loan did not adequately cover the amount of accrued interest owed. Over time, the amount of a borrower’s loan increased, thus resulting in higher principal balances and higher monthly payments.

Borrowers will first be considered for the federal Home Affordable Modification Program (HAMP) and if the borrower cannot qualify under HAMP or elects not to accept a HAMP modification, Wells Fargo will consider the borrower for its new modification program, known as Mortgage Assistance Program 2 (MAP2R).

From April 1, 2010 through the term of the agreement, over 4,000 Florida POA borrowers will be eligible for loan modifications that are expected to provide approximately $388 million in mortgage relief. This sum includes more than $208 million in principal forgiveness for Florida homeowners.

Analysts say principal forgiveness is the most effective way to end the housing debacle. The federal government and Bank of America announced plans earlier this year to reduce mortgage balances, but critics say the practice remains rare.

In the settlement , Wells Fargo agreed that they will offer loan modifications to approximately 8,700 qualified POA borrowers in Arizona, Colorado, Florida, Illinois, Nevada, New Jersey, Texas, and Washington state between Dec. 1, 2010, and June 30, 2013, who are either 60 days delinquent or facing imminent default. The total economic value of the loan modifications is expected to exceed $772 million by mid-2013.

The agreement also makes a number of substantial servicing commitments for POA borrowers including ensuring adequately staffed help lines to serve consumers, providing a single, primary point of contact to assist borrowers seeking modifications, making decisions on modifications within 30 calendar days of receiving a complete application, establishing a formal second look or appeal process for borrowers who are turned down for a modification, and more clearly communicating with borrowers to avoid confusion during the process.

Wells Fargo will also offer other foreclosure alternatives, including short sale, deed-in-lieu, and relocation assistance. The agreement provides for a compliance monitor and quarterly reporting to the eight Attorneys General. Wells Fargo will also pay more than $10.2 million to the Florida Attorney General’s Office to assist with the state’s efforts to prevent or mitigate foreclosures and prevent mortgage or loan modification fraud, along with investigative costs.

In 2008, McCollum announced a similar agreement with Countrywide Financial Corp., now owned by Bank of America. That agreement called for loan modifications for 57,000 Florida homeowners and foreclosure relief payments of about $6,000 to approximately 2,700 homeowners.

Wells Fargo Bank customers who originally received mortgages from Wachovia or Golden West should call 888-565-1422 for more information on the loan modification program.

If you would like to learn more about the Wells Fargo settlement or file a complaint with the Attorney General’s Office, visit their website at www.myfloridalegal.com or call 866-9-NO-SCAM (866-966-7226).

Source:  The Credit Report with Bill Lewis – Highlands Today, an edition of the Tampa Tribune (Media General Group) – http://www2.highlandstoday.com/content/2010/oct/10/wells-fargo-settles-deceptive-marketing-charges/  To review Bill Lewis’ entire consumer protection series, please visit http://www.williamlewis.us

William E. Lewis Jr., is a credit repair expert with Credit Restoration Consultants and host of “The Credit Report with Bill Lewis” on AM 1470 WWNN, a daily forum for business and financial news, politics, economic trends, and cutting edge issues.

Foreclosure defense: Process servers allegedly filing false affidavits


Recent reports indicate that approximately 462,339 foreclosure cases were pending in Florida as of June 30.

Following foreclosure moratoriums by Ally Financial, Bank of America, J.P. Morgan Chase, and PNC Bank, the settlement of deceptive marketing charges by Wells Fargo, and the Attorney General’s investigation into faulty foreclosure practices at the Florida Default Law Group, the Law Offices of David J. Stern, P.A.; the Law Offices of Marshall C. Watson, P.A.; and Shapiro & Fishman, LLP, investigators have turned up a new problem.

Process servers are now alleged to have filed false affidavits in support of personal service in foreclosure matters.

Foreclosure defense attorneys claim to have documented a number of cases where process servers filed false affidavits. While investigating the law firms that employed “robo-signers,” state investigators are also closely examining service of process in a number of cases.

Recent foreclosure defense cases allege homeowners never received a court summons even though they still occupied their home, while others allege that process servers did not take the required steps to locate them or filed false affidavits about whom or when they delivered papers.

According to the lawsuits, some process servers violated rules related to the personal delivery of legal papers. Like robo-signing foreclosure documents without reviewing them for accuracy, a number of homeowners are now alleging they were never served with foreclosure papers.

Once rare, “bad service” of process has become more common as lenders and their attorneys speed thousands of foreclosure cases through “rocket dockets” that are designed to clear an ever growing backlog.

“With the foreclosure debacle, it’s become more complicated,” says Carlos J. Reyes, a foreclosure defense attorney with the Reyes Law Group in Fort Lauderdale. “For the sake of expediency, process servers are being rushed. As they are paid by the piece, they have an interest in earning a higher income.”

Homeowners involved in foreclosures are required to receive a summons and complaint personally delivered by a process server. Repeated attempts at personal service are required before court permission can be obtained to publish a legal notice in the alternative.

Some process servers have allegedly cut corners. One recently claimed she could not find a homeowner facing foreclosure on a second home, despite conducting extensive record checks. This held true even though the foreclosure complaint clearly provided a primary home address in Connecticut.

Lenders and attorneys typically contract their summons delivery work to large process serving firms, who sub-contract to private independent servers. In her deposition to state investigators, former Stern paralegal Tammie Lou Kapusta, testified that summons serving procedures were a “complete mess,” with homeowners routinely complaining they never received papers.

She and another former employee, Kelly Scott, said their managers told them move forward with the foreclosures anyway.

Investigators also questioned staff at Stern’s firm regarding billing practices that involved serving multiple parties at an address and billing for each one.

“Good service of process is crucial”, Reyes said. He has heard of homeowners losing their home because they never received a summons and missed filing dates or court hearings.

While a court summons must be accepted by an adult, state law does not require it to be served upon the property owner. No one has to sign, verifying receipt, “which makes it easier to say the person was served, when they weren’t,” Reyes said.

Laws governing the service of process vary from state to state. In Florida, there is no statewide licensing or regulating body for process servers, and rules vary greatly among the 20 judicial circuits.

Among the largest with operations in ten states is Tampa-based ProVest. Although ownership interest by the law firms has been denied, they maintain support staff at the Law Offices of David J. Stern and Shapiro & Fishman in Boca Raton. Marshall C. Watson also uses ProVest.

While ProVest declined to comment on specific cases, company president James Ward stated they “utilize properly licensed or authorized independent contractors” and require them to “fully comply with state and local guidelines.”

To learn more about the mortgage foreclosure crisis or to file a complaint with the Attorney General’s Office, visit their website at www.myfloridalegal.com or call (866) 9-NO-SCAM (866-966-7226).

Source:  The Credit Report with Bill Lewis – Highlands Today, an edition of the Tampa Tribune (Media General Group) – http://www2.highlandstoday.com/content/2010/nov/07/foreclosure-defense-process-servers-allegedly-fili/ To review Bill Lewis’ entire consumer protection series at the Highlands Today, visit www.williamlewis.us.

William E. Lewis Jr., is a credit repair expert with Credit Restoration Consultants and host of “The Credit Report with Bill Lewis” on AM 1470 WWNN, a daily forum for business and financial news, politics, economic trends, and cutting edge issues.

Strategic Default and the FICO or VantageScore


Strategic default is a conscious decision to walk away from a mortgage that is underwater. These defaults take lenders by surprise as borrowers often have excellent credit records and meet all of their other financial obligations. The point of a strategic default is to cut losses on a home that has substantially depreciated in value and negative equity that can never be recovered.

Considered as a viable strategy for managing troubled assets in an era of record foreclosures, high unemployment, and government bail-outs, millions of Americans are considering strategic default or strategic foreclosure. With almost 28 percent of all mortgages underwater, a growing number of homeowners are contemplating this strategy.

While borrowers are contemplating strategic default, lenders are seeking predictive indicators to prevent them through advanced credit scoring technologies.

A dynamic number reflecting an individual’s ability to repay, credit scores are assigned by companies like Fair Issac or VantageScore. They play a critical role in determining where an individual is eligible for a loan, the loan amount, interest rates and repayment terms.

Fair Isaac, creator of the widely-used FICO score, recently introduced an enhanced version of its popular scoring model, the FICO 8 Mortgage Score. This model will make it tougher for most consumers to secure mortgage loans.

Offered as a credit rating product directly by the Equifax, Experian and Trans Union consumer reporting agencies, and not nearly as popular, the VantageScore is also undergoing significant changes.

Both credit-scoring models have been enhanced to better anticipate consumer behavior amid a foreclosure crisis and tough economic times. Specifically, they have fine-tuned their predictive powers to assist lenders in determining which borrowers are likely to strategically default.

According to a recent Experian-Oliver Wyman Market Intelligence Report, strategic defaults rose 53 percent in the first half of 2009, to 355,000 foreclosures. Previous studies found that 588,000 strategic defaults occurred in 2008, double the level that took place in 2007.

“Many borrowers are being advised to stop paying their mortgages,” says Carlos Reyes, a foreclosure defense attorney with the Reyes Law Group in Fort Lauderdale. “Making the decision to simply walk away is bad for the homeowner. Borrowers should consider their rights and contemplate the long ranging consequences of such an action.”

While the details of FICO and VantageScore credit scoring models are proprietary, some facets of each are known.

Fair Issac introduced the FICO 8 Mortgage Score in October 2010. VantageScore 2.0 will be introduced next month.

Claiming to save in excess of $1 billion by helping to prevent 115,000 foreclosures, FICO officials indicate their new model is 15% to 25% more accurate in predicting strategic defaults than its predecessor.

“The FICO 8 Mortgage Score’s broad availability means that all U.S. lenders and servicers can now easily access scores that are fine-tuned for mortgage performance,” said Jordan Graham, executive VP of Scores and president of Consumer Services at FICO. “Moreover, by combining this superior predictive performance with the FICO Economic Impact Service, lenders are able to adjust policies and strategies quickly based upon forward-looking economic modeling. This is what we mean by the FICO analytic advantage: the ability to use the most advanced predictive analytics to compete and win in this highly challenging environment.”

When the VantageScore debuted in 2006, it was based on an analysis of 21 million credit files over a two-year period. To devise its new scoring model, dubbed VantageScore 2.0, the company examined a larger set of credit data over a longer period of time.

VantageScore 2.0 is based upon an analysis of 45 million active credit reports. Those reports came from 15 million anonymous consumers whose credit histories were examined across the Equifax, Experian and Trans Union consumer reporting agencies. VantageScore’s updated scoring system also covers overlapping three-year time periods from 2006 to 2008 and 2007 to 2009 to account before and after the recession.

As a result, the improved VantageScore 2.0 has been dubbed a “recession-era credit scoring model.”

“We’ve recently experienced a variety of economic scenarios, including an increase in foreclosures in the housing market and changing payment hierarchy among consumers,” said Barrett Burns, President and CEO of VantageScore Solutions. “Building VantageScore 2.0 using a blend of consumer behaviors from 2006-2009 produces greater score stability over time.”

For consumers, what is most important about the improved VantageScore is that it places more emphasis on certain areas of your credit behavior, and less emphasis on others.

The single biggest change with VantageScore 2.0 is that shopping for credit or opening new accounts could impact more than it had previously. Under VantageScore 2.0, recent credit activities, such as submitting new credit applications, now account for 30% of the score. Under VantageScore 1.0, inquiries and recent credit activities comprised just 10% of the score.

Likewise, account balances and length of credit history are of less significance under VantageScore 2.0. They now account for 9% and 8%, while under VantageScore 1.0, they accounted for 15% and 13% of the score.

FICO scores range from 300 to 850 points. The VantageScore ranges from 501 to 990 points. Even though I manage credit wisely, I was recently surprised to learn that my FICO score from Equifax was 837 while my VantageScore was an almost perfect at 988.

Source:  The Credit Report with Bill Lewis – Highlands Today, an edition of the Tampa Tribune – Media General Group. http://www2.highlandstoday.com/content/2010/dec/05/strategic-default-and-the-fico-or-vantagescore/

To review Bill Lewis’ entire consumer protection series at the Highlands Today, visit www.williamlewis.us.

William E. Lewis Jr. is a credit repair expert with Credit Restoration Consultants and host of “The Credit Report with Bill Lewis” on AM 1470 WWNN, a daily forum for business and financial news, politics, economic trends, and cutting edge issues.

Florida Attorney General Cracking Down on Foreclosure Mills


Homeowners, attorneys, and Florida’s judiciary have long sounded the alarm over insufficient or fraudulent documents being used to take thousands of properties from unsuspecting homeowners in the foreclosure process. Not only has the Florida Supreme Court amended the rules of civil procedure in relation to home foreclosures, judges throughout the state have reversed foreclosure sales, dismissed cases for insufficiency, and created additional steps to ensure the proper filing and disposition of cases.

Coming on the heels of an investigation into the Florida Default Law Group, Florida Attorney General Bill McCollum announced Tuesday that his office has launched a new investigation into allegations of unfair and deceptive actions by three law firms handling residential foreclosure cases in the Sunshine State.

Handling over 35 percent of all foreclosure cases in the state of Florida, the investigation names the Law Offices of Marshall C. Watson, P.A.; the Law Offices of David J. Stern, P.A.; and Shapiro & Fishman, LLP. The Florida based law firms were hired by loan servicers to begin foreclosure proceedings when consumers were in default on their mortgages.

The Attorney General’s Economic Crimes Division is investigating whether documentation may have been fictitiously created and filed with Florida courts to speed up foreclosure processes, potentially without the knowledge or consent of the homeowners involved. Thousands of final judgments of foreclosure against Florida homeowners may have been the result of the alleged improper actions of the law firms under investigation.

Because many mortgages have been bought and sold by different institutions multiple times, key paperwork involved in the process to obtain foreclosure judgments is often missing. On numerous occasions, fabricated documents have allegedly been presented to courts in support of a final judgment against homeowners. The investigation will focus on whether these law firms created and filed improper documentation with Florida courts in an effort to deceptively strip Floridian’s of their homes.

The attorney general’s investigation will also look at whether the law firms created affiliated companies outside the United States where the alleged false documents are being prepared and then submitted to the law firms for use within the Florida court system.

“On numerous occasions, allegedly fabricated documents have been presented to the courts in foreclosure actions to obtain final judgments against homeowners,” stated Attorney General Bill McCollum. “As Attorney General, my job is to protect the rights of all Floridian’s by investigating unlawful activities and putting a stop to deceptive practices. To this end, my office will continue to investigate.”

News of the Florida Default Law Group investigation led to a number of complaints from homeowners and attorneys about the Law Offices of Marshall C. Watson, P.A.; the Law Offices of David J. Stern, P.A.; and Shapiro & Fishman, LLP. Subpoenas were served on each of the law firms demanding documents dating back to Jan. 1, 2008. The subpoenas also seek information on 18 specific foreclosure cases, in addition to general information about the law firms’ operations.

Defense attorneys who have long reported widespread fraud in home foreclosure cases called Tuesday’s announcement from the state’s chief law enforcement officer a “bombshell” for Florida’s foreclosure system.  “The fact that Bill McCollum is expanding his investigation into potentially unfair and deceptive practices should be commended” said Fort Lauderdale foreclosure defense attorney Scott Kleiman of Kalis & Kleiman. “The attorney general doesn’t spend limited state resources investigating these types of cases without reason.”

According to McCollum, 245 complaints have been filed against the Florida Default Law Group while 48 complaints have been filed against The Law Offices of David Stern. The Law Offices of Marshall C. Watson and Shapiro & Fishman each have 12 complaints pending. A number of other complaints are under review and additional subpoenas may be issued.

If you are the victim of a mortgage foreclosure fraud, file a complaint with the Attorney General’s Office by calling (866) 9-NO-SCAM (866-966-7226) or by visiting their website at http://www.myfloridalegal.com.

William E. Lewis Jr., is a credit repair expert with Credit Restoration Consultants and host of “The Credit Report with Bill Lewis” on AM 1470 WWNN, a daily forum for business and financial news, politics, economic trends, and cutting edge issues

Stop Annoying or Harassing Phone Calls


Are you receiving annoying or harassing phone calls from telemarketers or debt collectors? In these tough economic times, your telephone seems to ring more often. There are actions you can take to reduce the number of calls you receive. First, you must determine whether the caller is a telemarketer attempting to solicit a product or charity, or a debt collector attempting to collect a past due bill.

To stop most telemarketers from calling your home or cell phone, you must sign up through the Do Not Call Registry offered by the Federal Trade Commission. Registration can be made online at www.donotcall.gov or by calling 888-382-1222 from the number in which you seek to block.

The national Do Not Call Registry gives you an opportunity to restrict most telemarketing calls received on your home or cell number. Once you register, telemarketers covered by registry rules have up to 31 days to remove your phone number from their calling lists. Should the telemarketing calls continue, you have a right to file a complaint with the FTC.

The Federal Trade Commission says that “because of limitations in the jurisdiction of the FTC and FCC, calls from or on behalf of political organizations, charities, and telephone surveyors would still be permitted, as would calls from companies with which you have an existing business relationship, or those to whom you’ve provided express agreement in writing to receive their calls. However, if you ask a company with which you have an existing business relationship to place your number on its own do-not-call list, it must honor your request. You should keep a record of the date you make the request.”

Distinguished from the telemarketer, is the debt collector. If you owe a past-due bill, debt collectors have the right to call you – but not harass you. The Federal Trade Commission enforces the Fair Debt Collection Practices Act (FDCPA), a federal law that prohibits debt collectors from using abusive, unfair, or deceptive practices to collect from you.

There are many types of debts covered by the FDCPA. Personal, family, household debts, auto loans, medical bills, and even your mortgage are all protected under the law. The FDCPA, however, does not cover debts incurred to run or operate a business.

Some of the most common questions about debt collectors and consumer rights can be answered by visiting the Federal Trade Commission’s Web site at www.ftc.gov. Although the FTC will not normally intercede on behalf of an individual consumer, they act as a clearing house for complaints and have been known to initiate legal action against the most abusive collectors in the industry.

Should a Florida resident have a complaint about abusive debt collection tactics, they can file a complaint through the Florida Office of Financial Regulation (OFR), the state agency in charge of debt collectors, at www.flofr.com. In this instance, the OFR will open a file and forward the complaint to the offending agency.

If a debt collector violates the FDCPA, you can take legal action.

“You have the right to sue a collector in a state or federal court within one year from the date the law was violated,” the FTC said. “If you win, the judge can require the collector to pay you for any damages you can prove you suffered because of the illegal collection practices, like lost wages and medical bills. The judge can require the debt collector to pay you up to $1,000, even if you can’t prove that you suffered actual damages. You also can be reimbursed for your attorney’s fees and court costs. A group of people also may sue a debt collector as part of a class action lawsuit and recover money for damages up to $500,000, or one percent of the collector’s net worth, whichever amount is lower. Even if a debt collector violates the FDCPA in trying to collect a debt, the debt does not go away if you owe it.”

Whether you receive an annoying or harassing call from a telemarketer soliciting a product or charity, or a debt collector attempting to collect a debt, you can stop your phone from ringing by simply learning your rights.

William E. Lewis Jr., is a credit repair expert with Credit Restoration Consultants and host of “The Credit Report with Bill Lewis” on AM 1470 WWNN, a daily forum for business and financial news, politics, economic trends, and cutting edge issues.

http://www2.highlandstoday.com/content/2010/mar/21/lc-stop-annoying-or-harassing-phone-calls/columns-welewisjr/