Foreclosure Mills

Today the Associated Press released a story about David Stern, a Florida foreclosure lawyer who became one of the nation’s top foreclosure lawyers.

“The Florida attorney general‘s economic crimes division is investigating three law firms, including Stern’s, over allegations that they created fraudulent legal documents, gouged homeowners with inflated fees, steered business to companies they owned and filed foreclosures without proving the bank actually had a legal interest in the loan. Florida authorities characterize the foreclosure process at these law firms as a “virtual morass” of “fake documents” and depicted Stern’s operations as something akin to the TV show “Lost” — only instead of people that went missing, it was paperwork. Stern’s employees churned out bogus mortgage assignments, faked signatures, falsified notarization and foreclosed on people without verifying their identities, the amounts they owed or who owned their loans, according to employee testimony. The attorney general is also looking at whether Stern paid kickbacks to big banks.”

Reading the above quote a prospective buyer should carefully understand what has transpired and how it could impact the purchase of a Naples foreclosure home. Not all foreclosed properties have had the same issues.

Many of the foreclosure mills are paid about $1,400 for each successful foreclosure.

With such a low fee, the foreclosure mills can steer the closing business to businesses (title companies) they own. Such was the case with David Stern.

A buyer looking to save some closing costs will utilize the services of a title company associated with a foreclosure mill or the attorney that handled the foreclosure, rather than engaging the services of a real estate attorney.

The article talks about fraudulent legal documents, bogus mortgage assignments, fake signatures, and falsified notarization. What if an attorney handling the foreclosure for a mortgage holder and the attorney owned the title company doing the closing would this information disclosed?

More importantly the title company in such an example does not represent the buyer.

Foreclosed properties can represent an excellent deal for the right buyer.

The buyer of a foreclosed property should utilize the services of a real estate attorney to represent their interests in the purchase. The real estate attorney will review the foreclosure case to determine if the process and documents were or are proper.

The services of a real estate attorney will be well worth the extra expense in the long run.

Why?

“Class-action lawsuits are gathering force, and, with increasing frequency, state judges are tossing out foreclosure suits in favor of homeowners.”

When you purchase a property as part of your closing costs you are buying an owner’s title insurance policy. The title insurance will cover your purchase up to the purchase price. The costs of the improvements and repairs you make to the property are not covered by the title insurance. Should the foreclosure be overturned in the future – you will receive only the price you paid for the property – nothing for the improvements and repairs.