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October 28, 2010

Another wrongful foreclosure is reversed


In the second South Florida foreclosure reversal this week, a Broward County court “vacated” the sale of a Fort Lauderdale man’s home that had been sold out from under him, even though he bought the house with cash and never had a mortgage.

The court order, made at the request of Bank of America, reversed the foreclosure sale of Jason Grodensky's house.

Grodensky was the subject of a Sun Sentinel article about wrongful foreclosures last month. He and his father bought the house for cash and didn’t owe money to Bank of America, but the lender had continued to pursue a foreclosure case that began with the previous owner. In July, Grodensky learned that his house had been sold in a foreclosure auction.

The news comes one day after Bank of America disclosed that the court had also vacated the foreclosure sale of a Miramar homeowner’s property — even though the homeowner had secured a mortgage modification.

That court ruling allowed Kamberali Shamji to stay in his house. Shamji’s case was also the focus of a Sun Sentinel article on Sunday about homeowners who thought they had saved their homes by modifying their mortgages only to lose them because the foreclosure process never stopped.

Attorneys general in all 50 states this week began to meet with major lenders to address issues of mistakes and sloppy paperwork in foreclosure cases, according to the Associated Press. In recent weeks, a growing number of reports of documentation improprieties have been reported in Florida and other states as a massive number of foreclosures make their way through courts.

The attorneys general have launched an investigation, following revelations that representatives of Wells Fargo, GMAC and JPMorgan Chase have “robo-signed” affidavits for use in court proceedings without reading or verifying the information contained in them.

Florida Attorney General Bill McCollum met with Bank of America on Oct. 13 and JPMorgan Chase on Oct. 14.

At the same time, Bank of America, JPMorgan Chase, Ally Financial’s GMAC Mortgage and PNC Financial temporarily halted all or parts of their foreclosure process in the 23 states — including Florida — where foreclosure cases are processed through the courts. Bank of America halted foreclosures nationwide.

GMAC said earlier this week that it has resumed some foreclosures and Bank of America announced its plan to resume foreclosure activity over several weeks.

On Tuesday, Wells Fargo became the latest lender to say it had found errors in thousands of its foreclosure cases. However, it has not halted the foreclosure process.

The two South Florida, Bank of America foreclosures that have been reversed are unusual, said Jeff Walsh, a staff attorney at the National Consumer Law Center in Boston. “Until the recent spate of media publicity about robo-signers, it was extremely rate that a mortgage servicer would go into court and say they made a mistake.”

Bank of America spokeswoman Jumana Bauwens admitted the foreclosure sale involving Grodensky’s house was an error when it was first brought to the bank’s attention in September. Bank of America was servicing the loan for its owner, Federal National Mortgage Association (Fannie Mae), the government-owned mortgage giant.

She said the lender would seek court approval to reverse the sale at its own expense. That happened Monday, according to court records.

Grodensky says he's not planning to go back to court to file a lawsuit against the lender to seek compensation for his four-month ordeal. “I hadn't planned on it,” he said. “I'm not out to get anybody. I just want to get it fixed.”

Grodensky bought the house for cash in December 2009 in a short sale. The seller was in foreclosure. Grodensky said he had no idea that the foreclosure process did not stop at that point.

Seven months later, Grodensky learned that the title to his house had been transferred to Fannie Mae. That's when he discovered that his house had been sold at a foreclosure auction.

He spent hours on the phone and searching on the Internet trying to figure out what happened but said his questions to Bank of America and to the law firm Florida Default Law Group that handled the foreclosure were never answered.

Bauwens said there was a miscommunication between Bank of America and its attorney.

Grodensky filed a claim with his title insurance company and was working with that firm to try to resolve the issue. He hasn't yet been notified by the title insurer or Bank of America that the sale was vacated on Monday.

“I'm happy it's over, but I am not holding my breath about it,” he said. “I'm waiting to see if I actually get contacted.”

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October 27, 2010

Foreclosure: Shamjis keep their home

A Miramar homeowner who was facing foreclosure, despite securing a loan modification, will be allowed to stay in his house, according to a court ruling made public Wednesday by Bank of America.

With less than a week to go before he was to lose his house, Kamberali Shamji learned from bank officials that the foreclosure sale of the home has been vacated by court order.

“We are so thankful,” said Shamji, whose case was the focus of a Sun Sentinel article on Sunday about homeowners who thought they had saved their homes by modifying their mortgages only to lose them because the foreclosure process never stopped. He had battled the bank, but he was unable to convince the lender to take action until he contacted the newspaper.

Bank of America said it had tried to stop the sale before it took place. In the wake of the story, the lender asked the investor who owned the loan for consent to get the sale vacated. That took place Monday, said Bank of America spokeswoman Jumana Bauwens.

Shamji fell behind on his mortgage starting in January, as his income as a sales representative for a clothing company declined during the recession. Foreclosure proceedings began in February and he applied for a loan modification in March. His new loan was approved and he made his first payment in September, before the due date of Oct. 1. At that point, Shamji thought his home was secured.

But the foreclosure process did not stop. Shamji said he made dozens of desperate calls to Bank of America and wrote to Bank of America Chief Executive Officer Brian Moynihan in an effort to halt the foreclosure in court.

The home was sold at a foreclosure auction Sept. 16. The current owner listed in county records is BAC Home Loan Servicing, a subsidiary of Bank of America.

When contacted by the Sun Sentinel, Bank of America's Bauwens said the bank had tried to avert the sale. She said the bank sent its foreclosure attorney a request to halt the sale eight days before it took place.

But the postponement did not go through and she said the bank is investigating how that happened.

Shamji and his family – his wife, three daughters and a granddaughter – were days away from being on the street. They had been told to get out of the home by Nov. 1.

He said he intends to make his next payment and as long as he is current on the loan, Bank of America’s Bauwens said the modification will continue to be in force.

The family has owned the home since 2005.

Here's a link to my original story about the Shamjis.

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Foreclosure: Chase holds foreclosure prevention event

Today in Sunrise, JPMorgan Chase is hosting a free foreclosure event along with county, city and state officials.

Borrowers whose home mortgages are from Chase, Washington Mutual and EMC can meet with loan advisors to discuss their options.

Also participating are state Rep. Hazelle Rogers, D-Lauderdale Lakes, Broward County Commissioner Albert C. Jones and Broward County Task Force representative Phyllis Brown.

The foreclosure prevention event runs from 11 a.m. to 6 p.m. at 13450 West Sunrise Blvd., Suite 250 in Sunrise.

The multilingual loan advisors speak English, Spanish or Creole. They will be available to discuss loan modification, special forbearances and other options for homeownership preservation.

Those attending should bring:
• Most recent 30 day’s pay stubs (6 months for self-employed homeowners)
• Most recent year’s tax returns and W-2s
• Most recent monthly bank statement (4 months for self-employed homeowners)
• Documentation for any other income (such as rental income or unemployment)
• Proof of taxes paid
• Proof of insurance paid
• Proof of HOA dues paid (if applicable)

Homeowners seeking more information can call the Chase Homeownership Center, 954-846-8817.


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October 26, 2010

A brighter outlook from Florida's consumers

The national consumer confidence index released today is up a little, at 50.2, but it really has barely budged since October last year, when it was at 48.7. The report, from the Conference Board, was quite different from Florida Consumer confidence index.

The index of Florida consumer confidence jumped six points to 74, the highest level in six months. The unexpected increase, according to Chris McCarty, director of research for the survey conducted by the University of Florida, attributed it to historically low interest rates, bargain prices on condos and the recent halt to foreclosures by some of the country’s largest lenders.

But the mood may not last. McCarty suggested that as the holiday season approaches, confidence may fall if gas and food prices continue rising.

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Take a peek at someone else's financial life

A lot of people could identify with Suzan McDowell, single mom, marketing firm owner in Miami and a person with far more questions about her finances than answers.

Boring? No way. I wouldn't have believed that personal finance would make for great videos but what this new series The Invested Life on MSN.com shows is that it's not about the money at all. It's about the stories.

McDowell's has to get ready for her daughter Sydney's college expenses in four years and her own eventual retirement. And in the episode I just watched, she had to get over her own shopping habits. No, you can't buy it just because you like it.

Ben Tobias, certified financial planner and head of Tobias Financial Advisors in Plantation, is just the person to go in there, give a hug, and to lead her through the process of figuring all this out.

Ben is real. He's no actor. He's a financial planner I've known for years and I know no one else could write his script.

The Invested Life takes real people and pairs them with experienced financial advisors in cities around the country. The videos, which began airing in late September, document the issues they're facing and how they resolve them.

You can look into their financial lives here.


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October 25, 2010

Foreclosure: Even a loan modification won't always stop a foreclosure

Here's a link to my story from Sunday. And I pasted it below. hjb:


More bad news for the deeply troubled homeowners grasping for a way to save their homes: Even South Floridians who are able to negotiate a loan modification can have their homes sold out from under them.

The reason: The foreclosure cases against them never stopped.

In the chaos surrounding hundreds of thousands of Florida mortgages that are delinquent or in foreclosure, legal experts say a growing number of mix-ups are being reported in which a foreclosure is not called off, even though the homeowner and the lender have agreed to a modification.

“It does appear to be happening quite a bit,” said Debra Koprowski, director of advocacy for Coast to Coast Legal Aid of South Florida and Legal Aid Service of Broward County. Even Freddie Mac, the government-owned mortgage finance company, has set out guidelines that try to prevent mix-ups that can lead to borrowers thinking they’ve saved their homes through loan modifications only to lose them to foreclosure.

Kamberali Shamji is in the middle of one such case. Shamji bought his Miramar home in 2005, where he lives with his wife, three daughters and a granddaughter. Now, the family is days away from being forced out, he said.

Shamji, a sales representative for a company that produces and imports cotton clothing from India, said his income, based on salary and commissions, dropped severely last year. He was three months behind on his mortgage by January. “Commission started becoming zero, so I applied for a modification,” he said.

In February, he said foreclosure proceedings began. In March, he applied for a loan modification. That was approved in August. Shamji made a payment in September — before the due date of Oct. 1 — but a foreclosure judgment was issued and the home was sold Sept. 16. He still lives there, however, as the lender — Bank of America — determines how to proceed.

“How can it be on the one hand [I am] modifying my loan, I make the first payment and it is accepted and on the other hand you sold my property?” he said. “How can you do this to me?”

Bank of America spokeswoman Jumana Bauwens said the bank sent its foreclosure attorney a request to postpone the foreclosure sale eight days ahead of time.

“Unfortunately, we were unsuccessful,” Bauwens wrote in an e-mail, saying the bank is still trying to determine why the postponement didn’t go through. “We are currently waiting to hear back from the investor [who now holds the loan] on our request to rescind the sale.” The investor must agree to that, she said. She did not respond to requests for the name of the investor or the foreclosure attorney.

Shamji said he contacted the bank’s foreclosure department repeatedly trying to postpone the sale and said he was assured it would happen.

Bauwens said the bank acted in accordance with the guidelines of the Obama administration’s Making Home Affordable Program, known as HAMP. According to its website, “foreclosure sales may not be conducted while the loan is being considered for a modification or during the trial period.”

Shamji says the bank’s representatives have told him to vacate the property by Nov. 1.

“I’ve seen this problem before,” said Fort Lauderdale attorney Craig Sackler, whom Shamji consulted after the sale. “Basically if you’re going to stop a sale where the modification has just been put in place, you have to call the mortgage company about every day for two weeks until this thing is stopped.”

Even though the Obama administration’s guidelines for HAMP modifications seem clear and major lenders and loan servicers say they are following them, “there is no law that says they cannot go through with it [a foreclosure sale],” Sackler said.

All participants in HAMP are required to follow its guidelines. When loan servicers modify mortgages using other programs, many say they use the same procedure.

But still, borrowers are falling through the cracks regularly, say those involved in the foreclosure process in South Florida. No firm numbers were available.

“A lot of times, once the customer gets a modification everything is cancelled,” said Alexander Fernandez, director of home ownership preservation at Neighborhood Housing Services of South Florida, which provides counseling to borrowers facing foreclosure. “But a small group do get their house taken even though they have a signed modification in their hands and the proof that they made two or three payments. It’s really sad.”

Borrowers should protect themselves by gathering proof that the lender agreed to the modification, Koprowski said. She suggested that when a borrower sends in the first payment, usually with a copy of the modified loan, that the borrower include a letter saying that it is the borrower’s understanding that foreclosure proceedings now will stop or not be initiated. Keep a copy, she said, so that it can be presented in court if needed.

Brad German, a spokesman for Freddie Mac, added that borrowers have to be “their own best advocates to make sure that if this kind of thing happens, they have all the paperwork and can move quickly to make the servicer aware of their crossed wires.” Freddie Mac, he said, expects its loan servicers to “coordinate their collection and loss-mitigation staffs to prevent the kinds of occurrences you’re writing about.”

Zinaida Amaran of Miami Beach fears it will happen to her. Her daughter, attorney Elizabeth Amaran, said her mother saved for five years to buy her home in 2007 but fell behind when her salary was cut.

Zinaida Amaran was approved for a loan modification last July “and has never skipped a payment. She’s always on time,” Elizabeth Amaran said. Her mother, she said, “is religious” about the payments because she was proud to be able to purchase her home.

But now, Elizabeth Amaran said, her mother fears she’ll lose the home because she has been receiving delinquency notices for months and her credit has been hurt because she said Bank of America reported her payments as late. Bank of America’s Bauwens says Zinaida Amaran is not facing a foreclosure and the lender is working with her to complete the modification.

Elizabeth Amaran said the loan was referred to Florida Default Law Group in September. Florida Default is one of the foreclosure law firms under investigation by Florida Attorney General Bill McCollum.

“As she started to receive notices of delinquency and lateness, this is all she talks about all day long,” said Elizabeth Amaran. “She is very much afraid of losing her home, as she knows she will not be able to purchase a home again.”

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Foreclosure: Fed promises investigation

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Now Ben Bernanke says the Fed is looking, too, into the practices of mortgage servicers:

Here's a link....

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October 22, 2010

Foreclosure: Big banks holding $60 billion bag

How big is the foreclosure issue?

I read estimates this week of $50 to $100 billion.

This morning, Weiss Ratings, the Jupiter-based firm that rates financial institutions and insurers, says that for three large lenders, JPMorgan Chase, Wells Fargo Bank, and Bank of America, the tab is more than $20 billion each. That's how much they have reported holding in single-family mortgages currently foreclosed or in the process of foreclosure as of midyear.

Weiss says it also found that for each dollar these banks held of mortgages in foreclosure, they had additional exposure to more than $2 in mortgages 30 days or more past due.

Some others have avoided the crisis. Here's a chart the firm released:

Table 1.
Large U.S. Banks and Thrifts with Most Foreclosed Mortgages (with total assets of $10 billion or more)
Institution (State)Foreclosed and In Process ($Mil)Past Due Mortgages1 ($Mil)Total ($Mil)
JPMorgan Chase Bank (Ohio)21,73343,39565,128
Wells Fargo Bank (S.D)20,52448,03768,561
Bank of America, NA (N.C)20,29754,60874,905
Citibank, NA (Nev.)6,30319,24725,550
U.S. Bank NA (Ohio)4,2625,3089,570
PNC Bank, NA (Del.)3,4835,5018,984
SunTrust Bank (Ga.)3,2164,1477,362
Branch Banking and Trust Co (N.C.)2,0792,2294,308
Fifth Third Bank (Ohio)1,1381,1992,337
Regions Bank (Ala.)1,0401,1702,211
Bank and Thrift Industry Total125,791253,237379,028
1Past-due mortgages include 30-89 days past due, 90+ days past due, and nonaccruing.
Data Source: SNL Financial Bank Regulatory Data
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October 20, 2010

Foreclosure attorney Stern out as chairman, execs resign at subsidiary

The management deck is being shuffled at the public sublsidiary of the foreclosure law firm of David Stern.

Stern's firm, based in Plantation, is one of the three huge foreclosure firms currently under investigaiton by Florida Attorney General Bill McCollum. The firm's subbsidiary DJSP Enterprises is a publicy traded company that does the back-office work for Stern's firm and others.

Last week, the news out of Stern's office was a 10 percent staff cutback at the subsidiary. Now, the firm has disclosed in a filing at the Securities and Exchange Commission that Stern is no longer chairman of the board of the public company.

But he continues as CEO. Meanwhile, the rest of the executive suite has been cleared out.

Stern's office didn't return calls for comment.

But here's the information, from the subsidiary's SEC filing Tuesday:

On October 19, 2010, DJSP Enterprises, Inc., a British Virgin Islands company, limited by shares (the “Company”), issued a press release announcing that Stephen J. Bernstein, the Company’s Lead Independent Director, has been appointed as Interim Chairman of the Company’s Board of Directors, replacing David J. Stern as Chairman of the Board.

Mr. Stern will continue in his role as Chief Executive Officer of the Company and will also serve as its President.

As compensation for his new position, in lieu of the director fee he was receiving, the Company will pay Mr. Bernstein a director fee of $10,000 per week for so long as he continues to serve as Interim Chairman.

The Company also announced the voluntary resignations of Richard Powers as President and Chief Operating Officer, Kumar Gursahaney as Executive Vice President and Chief Financial Officer and Howard S. Burnston as Vice President, General Counsel and Secretary.

The press release said Bernstein's role will be full-time. The other executives each had joined the firm only this year.

Here's Bernstein's bio filed with the SEC earlier this year when the subsidiary issued a prospectus, a document required before stock can be sodl the the public:

Stephen J. Bernstein was appointed to the Company’s Board of Directors on March 2, 2010. Mr. Bernstein has managed his own real estate firm, Benchmark Group of Florida, since 2002. Through his real estate firm, he has acquired, managed, repositioned, leased, developed, and sold property, both as a principal and for third parties. Property types have included office, industrial, retail and residential. In addition, he has served as an advisor to private equity companies, investment funds and individual investors. From 1998 to 2002, Mr. Bernstein served as a mergers and acquisitions and business development executive for AutoNation, Inc. and Cisneros Television Group, respectively. From 1996 to 1998, Mr. Bernstein was an Associate and Vice President at Genesis Merchant Group and Latin American Trade Finance, respectively. In those positions, he worked on public offerings, private placements and mergers and acquisitions transactions for high tech, biotech, media and energy companies. Before graduate school, Mr. Bernstein worked for PKF Consulting and Ernst and Young in their real estate groups, where he advised developers, owners and lenders, and later for Bechtel Investments as an asset manager in the real estate division. Mr. Bernstein received his Bachelors of Science from Cornell University in 1989, and an MBA with high distinction from the University of Michigan in 1996.And, the firm's audit committee has commenced an internal investigation.

DJSP Enterprises announced last week that the audit committee of its board of directors had launched its own investigation into the firm's foreclosure process.

The audit committee, according to the prospectus, consists of Bernstein, Jerry Hutter, CEO of CFO Strategies, Inc., a consulting company, and Juan V. Ruiz, a former Lehman Bros. executive, who is now chief investment officer of Federal One Holdings.

The audit committee has retained the law firm of Greenberg Traurig to assist in its probe.

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Foreclosure: Investigations pile up

I was making a list, based on various media reports, about who is investigating the foreclosure process, major loan servicers and lenders. So far, I've got......

50 state attorneys general
The White House Financial Fraud Task Force
The Justice Department
The Securities and Exchange Commission
The Federal Housing Finance Agency
The Federal Reserve Bank of New York
The Federal Deposit Insurance Corp.
The Department of Housing and Urban Development
The Office of the Comptroller of the Currency
The Federal Bureau of Investigation

Did I miss anyone?

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October 18, 2010

Bank of America: Foreclosures start again next week

Bank of America and Ally Financial’s GMAC Mortgage have begun to lift their freezes on more than 100,000 foreclosure cases in Florida and other states, saying they’re not finding flaws in their paperwork.

Late Monday, Bank of America issued a statement saying that it expects to begin going back next week to courts in the 23 states where foreclosures are a judicial process, including Florida. A statement from spokesman Dan Frahm said the lender is preparing to re-submit documents in 102,000 foreclosure cases already underway.

Also Monday, Ally Financial spokesman James Olecki confirmed that GMAC is re-submitting documents in some foreclosure cases including at least one in Florida “as each of those files is reviewed and remediated when needed.”

Among major lenders, Bank of America had called a halt to all foreclosure sales nationwide. It also, along with GMAC, JPMorgan Chase and PNC Financial Services, initiated reviews in the 23 judicial foreclosure states. Bank of America later extended its review nationwide. Wells Fargo did not undertake a review of its procedures.

Major lenders in September began announcing halts to all or parts of their foreclosure processes, after revelations — in sworn statements submitted in lawsuits in which homeowners are fighting foreclosures — showing that employees or representatives failed to verify mortgage paperwork before submitting foreclosure cases to courts.

The so-called “robo-signers” said, under oath, that they handled thousands of documents each month without knowing whether they were accurate, as required by court procedure.

The GMAC and Chase documents surfaced in Palm Beach County cases that are still going through the courts.

On Monday, Bank of America said its “initial assessment findings” have shown “the basis for our foreclosure decisions is accurate.”

GMAC’s Olecki wrote in an e-mail, “Again, we have been in the midst of a review for approximately two months and have found no evidence of any inappropriate foreclosures to date.”

A spokesman for PNC Financial said the lender hasn’t changed its position on reviewing foreclosure documents. A spokesman for JPMorgan Chase repeated the bank’s intention to review about 115,000 foreclosure files and delay foreclosure sales.

Monday’s developments won’t speed the foreclosure process in Florida’s overburdened courts, said Alexander Fernandez, director of homeownership preservation for Neighborhood Housing Services of South Florida. He noted there are more than 50,000 cases in Broward County alone that are still pending. And renewed cases, he said, would probably go to the back of the line.

Foreclosure defense attorneys questioned how the process can be re-started. “Do they simply get to resubmit the document and go on like nothing happened?” said Matthew Weidner, a St. Petersburg foreclosure defense attorney.

Beyond Florida, Bank of America said it would continue its halt of foreclosure sales in the 27 states that do not handle foreclosures through the judicial system.

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Personal Finance Q&A: What's up with the gift tax?

Need help with a money problem?
We'll work with South Florida financial advisors to find answers to your questions.
Submit your questions at SunSentinel.com/moneyquestion or call 954-356-4628. To see previous questions, visit SunSentinel.com/PersonalFinanceQandA
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Can you supply details regarding how the federal gift tax operates, including whether there is a carryover in gifts made one year to following years. Also, since there is no inheritance tax for 2010, does this affect the gift tax? SK

Jay Shein, certified financial planner and head of Compass Financial Group in Deerfield Beach, answered your question based on the way the law is now, but knowing that tax law changes may be coming before the end of this year. "Who know what's going to happen," he said. "But here's how things stand now."

One person can give $13,000 to any other person each year without tax consequences. In your lifetime, a single donor can exclude $1 million in gifts from tax. The limit is the same as it was last year.

The gift tax isn't directly linked to the discussion about what will happen to the estate tax, which expired this year. It is set to resume next year.

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October 15, 2010

It's official, no Social Security hike in 2011

The Social Security Administration today announced that benefits won’t go up next year, to the dismay of seniors who say their cost of living is rising.

“The Consumer Price Index may show a zero increase for 2010, yet everything has gone up – food, gas, medicine,” said William J. Perry of Coconut Creek. “They need a different indicator.”

For the second consecutive year, almost 700,000 South Floridians – among more than 58 million nationwide -- won’t see their benefits go up. Not only has that provoked the anger of some seniors, but economists say it’s going to mean a hit to consumer spending. Almost one of every five Floridians is over the age of 65, and most of those depend on Social Security benefits for all or part of their income.

“It’s really a terrible situation,” said Paul Goldstein, 64, a Boca Raton resident who has been retired for a year. “People work their whole lives, and you can’t manage to give them a 3 or 4 percent increase?”

The largest senior lobbying group AARP on Thursday urged Congress to do something to help the millions of older Americans who won’t be getting a raise. Last year, seniors received $250 checks as part of the stimulus bill. AARP didn’t specify what it would like to see happen.

“The loss of money is greater to Florida than to most other states,” said Mark Vitner, senior economist for Wells Fargo Securities. Florida receives an estimated $48 billion in Social Security retirement benefits each year. “Much of that money would have been spent. The inflow of Social Security dollars was one of the things in the past that has insulated Florida from recessions.” Not so now, Vitner said.

“Our insurance keeps going up; our medications, even though they are covered by insurance, keep going up.” said Barbara Schlossman, 72, a retiree in Delray Beach. “Our costs just keep going up, and there’s nothing coming in to balance the situation.”

Until last year, Floridians could count on steadily rising payments because benefits had risen with inflation for 34 years. Federal law has mandated automatic cost-of-living adjustments for Social Security since 1975.

For 2009, the cost-of-living adjustment was large, a 5.8 percent increase, primarily because inflation was high in 2008 due to rising gasoline prices. That was the biggest jump in the previous 10 years.

But in 2010, the trend changed. The cost-of-living adjustment law dictates that when inflation goes down, Social Security benefits are unchanged the following year. Nationwide, consumer prices went down 0.4 percent in 2009. Social Security benefits were flat.

The benefits are pegged to the Consumer Price Index for Urban Wage Earners, which is not the same as the widely known indicator of inflation.

The indexes are calculated by the Bureau of Labor Statistics. The best-known indicator is the Consumer Price Index for all urban consumers, designed to represent the prices that affect most of the population.

The Consumer Price Index for Urban Wage Earners touches on consumer prices paid by 32 percent of the population. This index is often used to set wage agreements.
And Social Security benefits.

The law dictates that Social Security payments increase when the third-quarter index is higher than it was during the previous year’s third-quarter.

In a year like 2010, when there has been no increase, the index has to be higher than the third-quarter of two years ago to trigger an increase.

So far this year, it’s running below that level.

Many seniors claim the prices paid by urban wage earners don’t fairly reflect their costs, such as heavy spending on medical care. The Bureau of Labor Statistics is experimenting with a separate index for seniors, but that index hasn’t yet been tied to Social Security benefits.

The impact of a second year of flat benefits varies. Some seniors say they’ll cut extras; others complain they’ll have to make drastic spending choices.

“Maybe this sounds crazy, but we’re both 69 years old, and you want to be able to have some fun in your life,” said Betty Coviello, who with her husband, Dave, is retired and living in Lighthouse Point. No increase means their quiet life will get a little quieter, she said. “We travel when we can by car; we own a hybrid and the mileage is good. But mostly we stay close to home.”

Seniors are getting a break on one cost. Next year, monthly premiums for Medicare part B, which covers hospitals and some other costs, will remain the same.

Three-fourths of those on Medicare paying Part B premiums will be charged $96.40 a month, as they do now, while those who enrolled this year will continue paying $110.50. The small fraction of seniors who make more than $85,000 a year will pay higher part B premiums, up to $353.60 a month, and those won’t go up.

Experts expect Medicare co-payments for doctor and hospital bills to remain about the same, although seniors may see increases in co-payments and premiums in some Medicare prescription drug plans and health plans. In general, the increases are expected to be small.
Still, seniors expressed disbelief that costs of medical treatments, utilities and fuel are not rising.

“We’re not talking about a wealthy nation in a good economy,” said Goldstein. “We’re talking about tough times.”

Staff writers William Gibson and Bob LaMendola contributed to this report.

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October 14, 2010

Social Security: Not next year

You may be aware that on Friday it looks likely to become official that Social Security recipients will not receive a cost of living adjustment to their benefits in 2011. That's because the official measure of inflation has not increased since last year.

Yes, yes, I hear you when you say what's official isn't what the almost 700,000 South Floridians are facing when they go to the store, pay for utilities or send in the checks for their insurance premiums.

But it is official.

This no-raise year, the second in a row, might have you longing for the old days of high inflation.

Here are the increases in benefit checks that retirees have had in the past:

Social Security Cost-Of-Living Adjustments Year COLA
1975 8.0
1976 6.4
1977 5.9
1978 6.5
1979 9.9
1980 14.3
1981 11.2
1982 7.4
1983 3.5
1984 3.5
1985 3.1
1986 1.3
1987 4.2
1988 4.0
1989 4.7
1990 5.4
1991 3.7
1992 3.0
1993 2.6
1994 2.8
1995 2.6
1996 2.9
1997 2.1
1998 1.3
1999 2.5
2000 3.5
2001 2.6
2002 1.4
2003 2.1
2004 2.7
2005 4.1
2006 3.3
2007 2.3
2008 5.8
2009 0.0

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Foreclosure probe, what will that do to Florida's economy?

Wells Fargo Securities issued its monthly report yesterday on what it expects for the U.S. economy. No surprises there - slow growth from here till tax time next year.VitnerMark.jpg

But I found it interesting to hear what Senior Economist Mark Vitner said he's nervous about.

We chatted, in between two speeches he gave yesterday in Florida. "I am concerned you could see a second recession early next year because of the unanticipated tightening of credit," he said. .

And what would bring that on? "I'm more afraid that may happen today because of this investigation by the state attorney general."

The investigation is into the Florida's largest foreclosure law firms and one of the major foreclosure document processors. The investigation is amplified by Florida Attorney General Bill McCollum's decision to join attorneys general in all 50 states into looking into irregularities in the foreclosure process.

Vitner says there's nothing concrete that he can point to, but he fears the investigation -- without any intention of doing this -- will translate into lenders being less willing to make loans. That in turn would cause another shock to a frail Florida economy. "If there are real problems in the foreclosure process, they need to be fixed," he said. But he said he fears unintended consequences.

"We were headed for a tough road anyway," he said. Florida, he figures, will spend the next 15 years recovering all the jobs lost during this recession.

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October 13, 2010

Foreclosures: JPMorgan Chase delays sales nearly nationwide

JPMorgan Chase said Wednesday that it has doubled the number of foreclosure files that it plans to review and that this change will delay foreclosure sales in 41 states.

That's not a nationwide moratorium on foreclosure sales, as Bank of America has announced, , but it's close.

The note, included in the giant lender's third-quarter earnings report, indicates that JPMorgan Chase plans to address any mistakes found and to re-file affidavits in cases where that's appropriate.

JPMorgan chase said it was reviewing about 115,000 loans. Previously, the bank's spokesman said it was looking at 56,000 files in the 23 states where foreclosures are handled through the courts, including Florida.

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October 12, 2010

Foreclosure: McCollum demands meetings

Will the big mortgage lenders and servicers really come to Tallahassee to meet with Florida Attorney General Bill McCollum?

I don't know, but I think he's got the more realistic timeline in resolving the issues raised by faulty paperwork.

While some of the bank lenders have implied they could get their paperwork in order quickly, now that they've discovered what seem to be rampant problems with the foreclosure process. Four of the five have shut down all or part of their foreclosure processes while they try to straighten it out. McCollum's letters dated Tuesday say it could take "many months" even years to revamp cases built on faulty documents.

He's concern the halting of the foreclosure system could do more harm.

“Florida cannot wait that long to correct the linchpin of our economic recovery -- clearing the foreclosure backlog,” he wrote.

McCollum wrote to the CEOs of Bank of America, JPMorgan Chase, PNC Financial Group, Litton Loan Servicing, a unit of Goldman Sachs, Ally Financial Inc.’s GMAC Mortgage.
unit.

"I am writing to you to express my concern for Florida's economic future and the credibility of Florida's judicial foreclosure system as a result of the actions of your company," he wrote to executives at each firm.
.

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October 11, 2010

Your Money Q&A: Should I add money to my annuity?

Years ago, I purchased a small annuity that pays a guaranteed 4 percent. I can add money to it. The surrender period has ended, so I can withdraw the money whenever I want. Since certificates of deposit are paying less than 4 percent, do you think it’s a good idea to add money to this annuity?- AW

You’re right, that’s a very good rate, said certified financial planner Jon W. Ulin of Ulin Financial Group in Boca Raton.It might be years before we see a similar rate on bank certificates of deposit.

But before you make the move consider a few risks. One is that on the next anniversary of your annuity contract, the rate could be reset, either up or down. You’ll have to check with your carrier to find out that date.

Another risk is that if rates go up while your money is in the annuity, you won’t benefit.

Third, you are taking something of a risk on the creditworthiness of the insurance carrier, although for you, that might be limited if the value of your annuity is small. Although annuities don't carry federal insurance, they do have insurance funded by other insurance carriers. Cash values in annuities up to $250,000 are covered by the Florida Life & Health Insurance Guaranty Association, according to Steven Richman of First Financial Group in Boca Raton.


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Foreclosure: What is Fannie Mae up to?


My question, Friday, was whether Fannie Mae was halting sales of foreclosed properties that it now owned. Since Bank of America is doing it and other lenders are examining what's going on with their foreclosures. After hours, Fannie Mae's spokeswoman answered:

"In instances where we learn of possible issues with the processing of legal documents by a servicer, we immediately halt foreclosures, evictions, and REO sale closings on the affected properties. Transactions on such properties are on hold until the servicer can verify that the problem has been rectified."

My question to you folks out there is: So? What does this mean? Is Fannie Mae halting sales? On a regular basis? Marketwide in Florida? Occaisonally? I don't know the answer. I could ask Fannie Mae, but I suspect the real answers can be found by those handling these sales day to day. Same questions for Freddie Mac.

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Foreclosures: Attorneys General step in

And, here's a story from The Miami Herald saying that the next step might be state investigations by attorneys general in 40 states.

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Foreclosured: Bank of America's halt to sales

Here's the full story on Bank of America's halt to foreclosure sales.

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October 8, 2010

Foreclosure: Bank of America, PNC halt some foreclosure sales

The foreclosure paperwork crisis has spread to another major lender and the nation's largest bank is stoppinig foreclosures nationwide.

PNC Financial announced that it will stop foreclosures in the 23 states where foreclosures take place through the courts. Florida is one of those states. At the same time, Bank of America, which already had halted foreclosures in Florida and the other 22 judicial foreclosure states, has now extended its mortatorium.

Bank of America spokesman Dan Frahm put this statement out this morning:

“Bank of America has extended our review of foreclosure documents to all fifty states. We will stop foreclosure sales until our assessment has been satisfactorily completed. Our ongoing assessment shows the basis for our past foreclosure decisions is accurate. We continue to serve the interests of our customers, investors and communities. Providing solutions for distressed homeowners remains our primary focus.”

Here's the full story on PNC from the Associated Press.

And here is the full AP story on Bank of America.


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A louder call for a foreclosure moratorium

Three large lenders have put a temporary halt to foreclosures, now that the documents that those are based on have been called into question.

Now a coalition of civil rights organizations is renewing its call for every lender to follow suit.

On Thursday, the Leadership Conference on Civil and Human Rights, the National Fair Housing Alliance, National Council of La Raza, the NAACP and the Center for Responsible Lending called - again -- for a nationwide moratorium on foreclosures.

The first time they made the call was more than three years ago, in April 2007.

The groups point out that the most toxic loans were more prevalent in minority neighborhoods. And now they suffer from foreclosures to a greater degree than others.

They called for lenders to stop doing any more foreclosures until they can show that they're following all the laws, regulations and contractual guidelines that they were supposed to uphold.


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October 7, 2010

Breaking news foreclosures: Bill sent back to Hill

President Obama will not sign the bill that would have made it more difficult for homeowners to challenge foreclosures.

Here's the full story.

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After the bills: Do you have anything left?

Taking a break from foreclosures for a moment, I noticed this on the Discover U.S. Spending Monitor, a monthly index based on interview with a sample of 8,200 U.S. adults.

For consumers, having any money left over after paying the monthly bills is only a distant memory. The September report says it has been 18 months since a majority of those surveyed could say tha they had any extra money beyond expenses.

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October 6, 2010

Pelosi calls for Justice Department investigation of foreclosures

House Speaker Nancy Pelosi has called for an investigation of the slipshod mortgage foreclosure processes that we've been writing about.

She wrote to Attorney General Eric Holder, Fed Chairman Ben Bernanke and Acting Comptroller of the Currency John Walsh.

The letter was co-signed by 30 other members of Congress.

None from Florida.

You can see the letter here. (It's a pdf.)

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October 5, 2010

Foreclosure: Shapiro & Fishman get subpoena thrown out

Florida Attorney General Bill McCollum’s investigation into foreclosure documentation problems involving several state law firms suffered a blow Monday, when a Palm Beach County court denied the office’s legal attempt to get information from one of Florida’s largest foreclosure firms.

Read the complete story.

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Financial planner hot line at lunch today

Call us today or visit our web chat for help with your personal finance issues.

Are you on track for funding college or retirement? Do you have a budget? How can you measure how well your 401(k) is doing?

We'll have financial advisors available to answer your questions.

Volunteers from the Financial Planning Association of Broward will be in the newsroom taking your calls and answering your question online.

The Your Money Personal Finance hot line and chat is open today from 11 a.m. to 1 p.m. The number is 954-356-4628, and the chat will be live at SunSentinel.com/moneychat.

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October 4, 2010

Foreclosure: Attorney General's subpoena thrown out

A Palm Beach County judge dealt a blow Monday to Florida Attorney General Bill McCollum’s investigation of foreclosure law firm Shapiro & Fishman.

Judge Jack Cox threw out an AG subpoena, which asked for information on any corporations or other entities in which the Shapiro firm and its partners have an interest as “overbroad, vague, inconsistent and unduly burdensome.”

Gerald Richman, attorney for Shapiro & Fishman, had accused McCollum of “an abuse of government power” which he said “intentionally or recklessly has caused harm to a law firm acting in the best interests of its clients.”

AG’s office spokeswoman Ryan Wiggins said attorneys in her office were “discussing our options, including whether or not we will appeal the judge’s ruling.”

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Foreclsure: Wells Fargo CEO to speak, Rep. Klein to host meeting

Don’t know what all this means...but for what it’s worth

On Thursday, U. S. Rep. Ron Klein, who is a hotly contested re-election campaign against Allen West, is holding an early morning foreclosure roundtable discussion with Realtors, homeowners, lenders and loan mediators in downtown Fort Lauderdale. Klein’s office did not provide further details. For more informaiton call 561-544-6910/

On Tuesday, Wells Fargo & Co. Chief Executive Officer John G. Stumpf is the keynote speaker at the Beacon Council annual meeting at The Biltmore in Coral Gables. The Beacon Council is Miami-Dade’s economic development organization.


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Hotline and live personal finance chat tomorrow

Call us tomorrow or visit our web chat for help with your personal finance issues.

If you need help with a money problem, we'll have financial advisors available to answer your questions.

Call us Tuesday at lunch time to speak live with a volunteer from the Financial Planning Association of Broward. The Your Money Personal Finance hotline and chat will be open Tuesday Oct. 5 from 11 a.m. to 1 p.m. The number is 954-356-4628, and the chat will be live at SunSentinel.com/moneychat.

You can try to beat the rush by sending your questions now at SunSentinel.com/moneyquestion .


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October 1, 2010

Bank of America suspends foreclosures. Fannie Mae warns servicers

By Harriet Johnson Brackey and Paul Owers

Bank of America said late Friday it is delaying foreclosures in 23 states, becoming the third major lending institution to acknowledge mortgage documentation problems. Meanwhile, Fannie Mae stepped up efforts to hold lenders accountable, saying it will warn loan servicers to report any problems with cases that may violate financial laws.

The Federal National Mortgage Association – commonly known as Fannie Mae -- said it is alerting 1,400 loan servicers nationwide that they would be in violation of their contracts on federally-backed Fannie Mae loans if their foreclosure processes don’t comply with state and local laws.

In two South Florida cases, representatives of GMAC Mortgage and JPMorgan Chase have said under oath that they signed tens of thousands of documents in foreclosure cases every month without having personal knowledge of the information that they contain, which is required by state law. Both companies said they have halted some foreclosure procedures as they review those cases in question.

The new twists in the foreclosure crisis concerned South Florida real estate executives, lawyers and lenders.

For homebuyers, there may be a slowdown in processing their loans if they’re using one of the large banks that’s in the regulatory spotlight, said Claudine Claus, president and chief executive officer of Home Financing Center, a mortgage firm that operates throughout South Florida.

She said Fannie Mae “won’t mess around. If you don’t do your job as a servicer they will pull the servicing.”

But Rashmi Airan-Pace, a foreclosure defense lawyer in Coral Gables, said this crisis may give “more leverage to the average homeowner” in reaching a solution other than foreclosure – such as a short sale or a reduction in the principal amount owed on a mortgage.

“These are not good things for the real estate market, but they are a good things for people in danger of losing their homes,” added attorney Gary Handin of Coral Springs, who said his firm has handled hundreds of foreclosures, short sales and loan modifications. “Because if proper procedures aren’t followed, we don’t have due process in the law.”

Fannie Mae, which purchases mortgages from lending institutions, has $189 billion in single-family residential mortgages from Florida in its portfolio.
In other developments Friday:

Federal bank regulator the Office of the Comptroller of the Currency confirmed that it instructed the nation’s seven largest mortgage loan services to review their foreclosure procedures. A spokesman said as soon as the GMAC announcement was made, “OCC examiners immediately contacted senior management at our largest mortgage servicers to determine whether procedural breakdowns could be resulting in foreclosure affidavit problems similar to Ally Bank.” The banks contacted are: JP Morgan Chase, Citigroup, HSBC,PNC, Wells Fargo, Bank of America and U.S. Bank.

Chase spokesman Tom Kelly said the lender had no comment on the announcement from Fannie and Freddie.Jason Menke, spokesman for Wells Fargo/Wachovia, said the company continues to stand by its affidavits and “if we find an error, we will take the appropriate corrective action.” Neil Brazil, spokesman for HSBC North America, said the company had not altered its mortgage practices “which is always to regard foreclosure as the last resort.” Amy Vargo, spokeswoman for PNC Mortgage, said no one was available for comment. US Bank spokespeople Steve Dale and Teri Charest could not be reached for comment despite several emails and one phone call. Citi could not be reached for comment despite several phone calls.

Bank of America announced it is delaying foreclosures in 23 states – including Florida -- after the Associated Press reported that a bank official acknowledged in a legal proceeding that she signed up to 8,000 foreclosure documents a month and typically didn't read them. Bank of America did not give an estimate for how many homeowners' cases will be affected.

Maine homeowners filed a suit seeking class action status charging that GMAC Mortgage routinely files false certifications that it has a right to foreclose on Maine homeowners, and false affidavits. It was not immediately clear whether the suit – which must be certified by a judge for class action status -- might extend to Florida borrowers.

Old Republic National Title Insurance, a major title insurer in Florida, told its agents it would not issue title insurance policies for some GMAC Mortgage-owned properties, according to Weston attorney Roy Oppenheim. Old Republic refused to comment. Spokesperson Jodi Fredericksen said the company had “a policy of not speaking to the press.” California Attorney General

California Attorney General Edmund G. Brown Jr. said he has demanded JP Morgan Chase prove immediately that the company is complying with state law or halt its foreclosures in the state. Brown had sent a similar letter to GMAC last week, according to California officials.

The questions surrounding the foreclosures could have both positive and negative ripple effects on the housing market in South Florida and across the nation, lawyers and real estate agents say.

The immediate result is that thousands of foreclosures are being delayed, meaning the market won’t be flooded with these properties for resale. That, in turn, could help stabilize prices in the near term.

But Shari Olefson, a real estate lawyer in Fort Lauderdale, said this recent firestorm won’t suddenly reverse or eliminate foreclosures. The problem is a procedural one that doesn’t have anything to do with delinquent borrowers, she said.

“You still owe the money to someone,” said Olefson, who has represented banks and borrowers. “All the I’s will be dotted and T’s crossed, but we’re still going to have the same outcome. It’s just going to delay the process by a couple of months, and it’ll cost a lot more money. And we all know who’s going to pay those costs.”

A mountain of lawsuits likely will be filed on behalf of clients alleging that they lost their homes to improper foreclosures. Those people will have a hard time getting the homes back, especially if they’ve been resold, but the homeowners still will be seeking damages, said Jerron Kelley, a foreclosure defense lawyer in Delray Beach.

Diane C. Lade contributed to this article.


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Chase suspends foreclosures


Here's our story from this morning on the latest announcement, Chase shutting down its foreclosures.


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About the author
You've got the job of managing your money. No one in school taught you how. But you and I, we can teach each other, how to handle it, how to save for retirement, how to make money last, how to educate the kids, how to make a budget work. The conversations I have with my readers are fun. Money's important, but discussing it does not have to be boring.

Harriet Johnson Brackey Harriet Johnson Brackey, the personal finance columnist for the Sun Sentinel, is an award-winning business reporter. Her columns for 2008 were named "The Best in the Business," a national award chosen by her colleagues at the Society of American Business Editors and Writers.

Brackey has worked at Business Week magazine and at USA TODAY, where she was a founder and part of the original staff of the Money section at the country's first national newspaper. After nearly 11 years there - spent covering the 1980s bull market, the insider trading scandals, the 1987 crash - Brackey left Washington, D.C., and came to The Miami Herald. She spent the next decade writing a column about personal finance that chronicled the stock market's Internet boom and bust, as well as the popular Money Makeover features.

Brackey also has done commentaries for Marketplace Money, which airs on National Public Radio and The Nightly Business Report which is broadcast on more than 250 PBS television stations nationwide. She also has been a radio guest on WLRN’s Miami Herald News.
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