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November 30, 2010

Florida consumers' outlook still strong

For retailers, good news arrived Tuesday in the form of continued strong consumer confidence in Florida and nationwide. Those indicators may lead to solid gains in sales during the holiday season.

Florida’s consumer confidence index , which jumped in October, held on to most of that gain in November, according to the University of Florida.

The index dipped one point to 72 in November.

“This suggests that the big increase in October was not an anomaly, but a return to a higher level of confidence, particularly among Florida’s seniors,” said Chris McCarty, director of UF’s Survey Research Center in the Bureau of Economic and Business Research.
He predicts that holiday retail sales will be stronger than last year.

Nationwide, the Conference Board’s index of consumer confidence jumped to the highest point in five months.

That index rose to 54.1 in November, up from 49.9 in October. That was the highest point since June, when the index was at 54.3.

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Your money Q&A: Can I deduct sales tax this year?

Will state sales tax be deductible this year? I just purchased a car and I want to know if I should tell my accountant? – Richard Abajian, Boca Raton

As of now, the answer is no. But that could change. So hold on to those receipts.

Here’s the issue: Taxpayers who itemize can take a deduction for state sales taxes or for state income taxes. In Florida, where there is no income tax, about one in four returns take the sales tax deduction.

The sales tax deduction officially expired in 2009, meaning you can’t use it on this year’s tax return, but Congress has extended this provision in the past. It still has time to give it another year before 2010 is over.

If the deduction survives, here’s how you use it: You can claim a deduction from a table that the IRS computes on average sales taxes for various income groups. Or, you can save your receipts and deduct what you actually paid. The third option: Use the average from the table and add to it sales taxes on major purchases, such as cars or boats.

That would be your best bet. So keep watching and hope Congress acts.
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Need help with a money problem?
Columnist Harriet Johnson Brackey is working with South Florida financial advisors to get answers. Submit your questions at SunSentinel.com/moneyquestion or call 954-356-4628. To see previous questions, visit SunSentinel.com/PersonalFinanceQandA


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November 29, 2010

Foreclosure: Cases being refiled?

I'm looking for signs, today, that foreclosure cases that had been halted are starting up again. And if these cases come back to life, is it an easy, no-problem, just refile them here, process?

Yesterday, The New York Times' Gretchen Morgenson reported here that the U.S. Trustee overseeing some bankruptcy cases is raising questions about the validity of the foreclosure claims.

The major lenders and servicers in September and October pulled back on hundreds of thousands of cases nationwide after the revelations that "robo-signers" had been preparing documents without verifying them or even reading them in foreclosure lawsuits in Florida and other states.

The lenders and servicers vowed said they'd review their processes and come back to the courts when they cleared up the paperwork problems.

Some of the big ones have said their review is complete.

But what's happening now? Anybody know?


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November 28, 2010

What to do if you don't expect Social Security


Today's column is about working the numbers, for anyone who believes that Social Security won't be around when they retire.

If that's what you believe, then you can't just throw your hands in the air and say retirement is impossible.

You need to look at the problem and prepare. You need to save, but exactly how much?

Of the scenarios I point out in the column, I think saving 12 to 15 percent of your income is the most reasonable plan. Of course, that's a big goal. You can get there, in small steps, if you just get started.

I'd like to hear your reaction.

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November 24, 2010

A peek inside the Consumer Financial Protection Bureau

Professor Elizabeth Warren says the new Consumer Financial Protection Bureau that she heads already know what it'll be working on: Mortgages, then credit cards.

The agency won't have full authority until next summer, but the work has already begun.

Here's a taste of her thinking, from a recent press conference:

"That’s what American families can expect to see from this new consumer agency: the ability to make direct comparisons when they shop for mortgages and credit cards, so families can make the choices that are best for them. We also will be a government agency that puts a cop on the beat to patrol the boundaries of the consumer credit market, and that also works every day for American families, using technology to make that work efficient and effective, " she said.

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November 23, 2010

Foreclosure: Mediation reaches few in Broward

The first report on the process of court-ordered mediation in foreclosure cases in Broward shows that more than half the Broward homeowners who are eligible for foreclosure mediation aren’t taking part in the process.

They haven’t been reached or do not respond to letters and phone calls from mediators who are offering a free session to meet with their lender.

The court-ordered mediation process, mandated by Florida’s state Supreme Court starting July 1, has produced 172 completed mediations so far, said Rebecca Storrow, the American Arbitration Association vice president who is in charge of the program in Broward.

Broward’s figures are higher than Palm Beach County’s foreclosure mediation program. That program recently announced that about 40 percent of homeowners in foreclosure are unreachable.

Storrow said Broward’s program has received 7,134 cases. Of those, 2,981 are in process.

The reasons why the program is in contact with only 57 percent of the homeowners referred to mediation are varied, Storrow said. The program is only available for homesteaded properties, eliminating investor-owned rental houses, and the courts may not have been given the owner’s correct contact information. Other homes are simply abandoned. In some cases, she said, lenders have not paid the fee for mediation, as required by the courts, so the process cannot begin.

Homeowners in foreclosure also have received a barrage of calls and letters about their case – making it possible to overlook the mediation notice or to ignore the call. “We are changing what we say to make it very, very clear that this is a court-appointed program,” Storrow said. “Technically they have been order to do (mediation) along with their lender although they have the right to opt out of it.”

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November 22, 2010

Your Money Q&A:Does foreclosure wipe out my debt?

Can my lender come after me, following foreclosure, demanding repayment of my mortgage?

In Florida, yes. In some other states, the lender can’t take any action beyond seizing and selling the house. But under Florida law, if the proceeds of the sale are not sufficient to pay the amount owed on the mortgage, the servicer can seek a deficiency judgment against the borrower, either within the foreclosure case itself or by filing a separate lawsuit, within five years following the foreclosure judgment.

If your lender decides to go this route, under Florida law, the deficiency judgment is in place for ten years and can be renewed for another ten.

Even if lenders does not pursue the deficiency judgement, they can sell the mortgage debt to a collection agency. And that agency would try to collect the debt.

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Need help with a money problem?
Columnist Harriet Johnson Brackey is working with South Florida financial advisors to get answers. Submit your questions at SunSentinel.com/moneyquestion or call 954-356-4628. To see previous questions, visit SunSentinel.com/PersonalFinanceQandA


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November 19, 2010

Foreclosure: Fannie Mae uses firms under investigation

When revelations of faked documents and robo-signers who produced questionable paperwork to support foreclosure cases rocked David J. Stern's foreclosure law firm, a major client pulled its business. Fannie Mae -- the government-owned mortgage giant whose formal name is Federal National Mortgage Association - said it would no longer use Stern's firm.

But Fannie Mae still uses three other foreclosure law firms that, like Stern, are under investigation by Florida's Attorney General for allegations of sending questionable documents to Florida courts in thousands of foreclosure cases.

Fannie Mae this week released its revised list of attorneys that it uses in Florida, in the wake of dropping Stern's firm.

The list shows that while Fannie Mae added eight firms to handle Florida cases, Fannie Mae is still using the three other firms -- the law offices of Marshall C. Watson, Shapiro & Fishman and Florida Default Law Group -- that Florida Attorney General Bill McCollum is investigating.

Fannie Mae says it is monitoring its attorneys' work closely.

"In instances where we learn that a firm is not adhering to our requirements or to applicable law, we immediately engage and take appropriate action, which may include suspending or terminating the firm, and notifying appropriate law enforcement and regulatory authorities," spokesperson Amy Bonitatibus.

The documentation problems have dogged not only law firms, but also major lenders who have halted foreclosures. Among others, Bank of America stopped more than 100,000 cases nationwide after the problems in court documents came to light. JPMorgan Chase, also, is reviewing its foreclosure process and expects to restart cases later this month.

The Attorney General began its probe into the four firms last summer and it is ongoing.

The investigation so far has produced sworn statements from so-called "robo-signers," including one from Stern's office, who said an employee there routinely signed 1,000 documents a day without verifying them. The documents were used in foreclosure cases on behalf of some of the nation's largest lenders against Florida homeowners.

The firms added to Fannie Mae's list for Florida are:

Albertelli Law
Douglas C. Zahm, P.A.
Elizabeth R. Wellborn, P.A.
Greenspoon Marder, P.A.
Kahane & Associates, P.A.
Law Offices of Daniel C. Consuegra
Tripp Scott, PA
Van Ness Law Firm, P.A.

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November 18, 2010

Tax refunds: Nationwide data base, check for your name

The Internal Revenue Service has $164.6 million in tax refunds that it hasn’t delivered, including more than 2,300 refunds destined for South Florida taxpayers.

Did you expect a refund and not receive one? Check our database at sunsentinel.com/refunds to see if your name is there. If you’re due a refund, all you have to do is tell the IRS your current address.

The data base we've created is nationwide and includes Puerto Rico. So search away.

The IRS announced this week that it has refunds for almost 112,000 taxpayers for that haven’t yet been delivered primarily because of address errors.

The average check for Floridians is $1,747.

If you find your name there, you need to update your address with the IRS. You can do this online at irs.gov, using the Where's my refund? tool. The only difficulty you will find there is you need to know the amount of your refund from 2009 to use the tool.

You can reach a telephone version of Where's my refund? 800-829-1954.

Or you can call the main IRS number, 800-829-1040.

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Foreclosures, Florida still troubled

The rate at which home loans fell into foreclosure in Florida in the third quarter increased, even as the huge number of loans already in trouble began to decline.

The Mortgage Bankers Association’s national survey of mortgage delinquencies, released Thursday, paints a still dismal picture of Florida’s residential housing market in which one of four mortgages is in trouble.

Florida has the largest percent of loans in foreclosure – 13.68 percent – of any state. That’s down, slightly, from 14.04 percent in the previous quarter.

Additionally, 11.02 percent of mortgages in Florida are past due, 30 days or more. That is a small increase from 10.97 percent in the previous quarter.

Add it all up and in the third quarter, Florida had 813,652 loans either delinquent or in foreclosure, which is down from 849,002 in the second quarter.

Although major lenders including Bank of America and JPMorgan Chase began to halt foreclosures or foreclosure sales at the end of September, those announcements came at the end of the quarter and did not have a big impact on the numbers, the association said.

A troubling point in the report was the percent of new foreclosures started, which rose both in Florida and in the nation. In Florida, that figure was 2.32 percent in the third quarter, up from 2.07 percent in the previous quarter.

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November 17, 2010

Money: Missing your refund? Check our data base for your name

The Internal Revenue Service has $164.6 million in tax refunds that it hasn’t delivered, including more than 2,300 refunds destined for South Florida taxpayers.

Did you expect a refund and not receive one?
Check our database here to see if your name is there. If you’re due a refund, all you have to do is tell the IRS your current address.

The IRS Wednesday said it has refunds for almost 112,000 taxpayers for that haven’t yet been delivered, primarily because of address errors.

The average check for Floridians is $1,747.

If your name isn’t on our data base and you still think the IRS owes you money, you can use the tool called “Where’s my refund?” on the IRS’s web site, irs.gov. Or you can call 800-829-1040. But if you use the online tool, you need to have an idea of the amount of your 2009 refund.

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Foreclosure: ProPublica challenges Bank of America testimony

It's not us, it's the investor who owns the loans.......

That explanation, for the whole mess involving loan modifications and foreclosures, isn't true, says ProPublica.

The public interest journalism organization took issue with Bank of America's testimony in the Senate yesterday.

Bank of America's top mortgage official Barbara Desoer, said it is Wall Street investors, not the bank, that are making it hard to help homeowners. “Many investors limit Bank of America’s discretion to take certain actions,” she told the Senate Banking Committee.

But they don't. according to ProPublica's reporting.

You can read the whole ProPublica piece, first published in July, here.

In addition, I heard her remark that Bank of America believes the basis for its foreclosure decisions so far has been accurate.

But not in every case.

Anybody reading our stories here knows that for Jason Grodensky, KamberAli Shamji and for a growing list of other South Floridians, wrongful foreclosures have happened.

The one good thing to say is when the issues have been brought to light, Bank of America has recognized the mistakes and moved to correct them. By going back to court, vacating home sales and even, in one case, trying to fix the borrower's credit report

Here's the thing: The calls keep coming. The stories keep rolling in.

It's been painful for homeowners. The process is far from perfect.

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November 16, 2010

Foreclosure: Senate Banking Committee hearings begin

Watch the Senate hearings live today on mortgage servicing and foreclosures here . The hearing is scheduled from 2:30 to 5:30 p.m.

If you miss the hearing, testimony and archived videos will be here.

“American families should not have to worry about losing their homes to sloppy bureaucratic mismanagement or fraud,” said Senate Banking Committee Chairman Christopher Dodd, D-Conn. “I am deeply troubled by recent revelations and allegations of practices by some of the nation’s largest lenders. Regulators at the federal, state, and local levels have a responsibility to uphold the law and protect consumers from unfair foreclosure, and lenders have a duty to not cut corners around the law.”

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Foreclosure: How badly will robo-signers will hurt banks?

Will the foreclosure crisis bring banks to the brink, again?

That's the question raised about allegations of robo-signing and other documentation problems by a Congressional Oversight Panel that issued one of its reports on the Treasury Department's response to the financial crisis.

The Associated Press says further disruption could threaten banks with billions of dollars in losses and more troubles for the housing market.

According to CNNMoney.com, "If documentation problems prove to be pervasive and, more importantly, throw into doubt the ownership of not only foreclosed properties but also pooled mortgages, the consequences could be severe," the report said.

For the full AP story, go here.

For the CNNMoney.com story, go here.


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November 15, 2010

ACLU wants courts to keep foreclosure cases open to public

A group of Florida news organizations and the American Civil Liberties Union Monday called on Florida’s Supreme Court to preserve open access to foreclosure proceedings.

In a letter to Chief Justice Charles T. Canady, the group cites “numerous reports” of barriers to access for the news media and the general public that have taken place since August in Duval, Hillsborough, Orange and Citrus Counties. The letter is signed by representatives of the ACLU, The First Amendment Foundation, Florida Association of Broadcasters, Florida Press Association, The Florida Society of Newspaper Editors and James Denton, editor of The Florida Times-Union, a newspaper based in Jacksonville.

The letter also referred to an incident in Jacksonville in which a legal aid attorney was told she might be cited for contempt of court in the future after the attorney attended a foreclosure proceeding with a reporter from Rolling Stone magazine.

South Florida foreclosure defense attorney Margery Golant says the closed-door hearings are not taking place in Broward and Palm Beach at present, but it did happen prior to last July, when extra funding from the state court system created the accelerated “Rocket Docket” hearing system. Prior to July, she said, some foreclosure hearings were held in judges’ chambers and access was at times limited. “Now they’re held in courtrooms and nobody cares who comes in,” she said.

Justice Canady replied to the letter saying he was directing the State Courts Administrator’s office to make recommendations for corrective actions.

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Your money Q&A: How do I check a caregiver's license?

I’m looking for a Florida-licensed caregiver for my wife who has Alzheimer’s. I'm planning to use my long-term care insurance to offset this cost. How can I be sure that the caregiver has a valid license?
-Charles Kleinerman

“Usually a long-term care insurance policy requires that the person be certified,” said Phyllis Timlin, president of At Home Senior Care of Broward. She says it is not hard to check a person’s credentials. Call the Florida Board of Nursing at 850-488-0595 to verify the information.

But check your policy before you make any decisions. Julie Gelbwaks Gewirtz, a long-term care insurance specialist at Gelbwacks Executive Marketing Corp. in Plantation, points out that most older long-term care policies require you to use an agency to employ the caregiver. That route does have benefits, she said. The agency will check credentials and submit bills, relieving you of those responsiblities that you'd have if you hired an independent caregiver.


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Need help with a money problem?
Columnist Harriet Johnson Brackey is working with South Florida financial advisors to get answers. Submit your questions at SunSentinel.com/moneyquestion or call 954-356-4628. To see previous questions, visit SunSentinel.com/PersonalFinanceQandA


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November 12, 2010

Foreclosure: Loan servicing industry needs scrutiny


This is part of an insightful speech that Federal Reserve Board Governor Sarah Bloom Raskin gave Friday. A link to the whole speech is here.


Because consumers cannot choose to hire or fire their servicers (other than by paying off the loan), the industry lacks the level of market discipline imposed in other industries by the working of consumer choice. For this reason, if servicers do not actively maintain adequate and trained staff and do not establish and heed internal controls, if investors do not monitor their servicers' behavior, if regulators do not conduct meaningful examinations, if courts do not stand guard against unfair practices, both substantive and procedural, then it will be much less likely that a well-functioning housing market will reemerge from this crisis. Because the very structure of the loan servicing industry as it currently operates inevitably leads to misaligned incentives and a propensity to defer costly investments, a more significant re-thinking of the basic business model must also be undertaken if we are to avoid repeating prior mistakes.

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Wrongful foreclosure: Lauderdale homeowner's struggle not over yet

On Monday, Jason Grodensky should show up in the public record as the owner of his house.

Call that an achievement.

The Fort Lauderdale homeowner's path to this point has been twisted, amazingly difficult and probably a sign of how complicated things have been come in the world of foreclosures, short sales, loan servicers, foreclosure law firms and Broward County public property records.

Today, he is not listed as the owner of his home. Next week, he will be again.

Here's how this happened:

Grodensky and his father bought a Fort Lauderdale house in December 2009 from Aaron Schulman.

Schulman was in foreclosure at the time. Grodensky bought it for cash, in a short sale.

Seven months later, Grodensky noticed that the title on his property had been transferred to Federal National Mortgage Association or Fannie Mae.

The house was sold out from under him. It had been foreclosed upon, even though Grodensky did not have a mortgage.

It turned out that the foreclosure case against Schulman never stopped. And no one in the courts was informed that the property was sold.

Grodensky tried for months to straighten things out, but couldn't get any answers.

Bank of America, the lender behind the foreclosure, acknowledged its error when contacted by the Sun Sentinel.

The bank moved to vacate the sale Oct. 25.

Schulman was checking his record this week and realized that although the vacated sale was recorded at the property appraiser, the records indicated that the house was back in Schulman's name.

You begin to wonder what it takes to get this one straight.

Grodensky was concerned, especially since at this time of year, property owners get tax notices and he's anxious to get it paid on time.

When contacted by the Sun Sentinel, the property appraiser's office straightened out the error -- which centered around the documents not being put in the proper order.

Schulman's off, Grodensky is on and a new tax notice is supposed to be mailed shortly to the right person.

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Collision course: Foreclosure and loan modification

Is there any way for a borrower who needs a loan modification to avoid foreclosure?

Some South Floridians who are applying for a loan modification to save their homes have ended up in foreclosure anyway.

What the borrowers say is happening is the exact opposite of what the big mortgage servicers -- Citigroup, Bank of America and Wachovia Wells Fargo – say is their process. Representatives for each one said that applying for a loan modification doesn’t mean foreclosure begins at the same time.

The Obama administration’s Making Home Affordable program, the mortgage modification process known as HAMP, also requires that a foreclosure sale not take place or that a foreclosure can’t begin while someone is being evaluated for a HAMP loan.

There are some things borrowers can do to protect themselves from getting caught in the squeeze between the two. More on that in a bit.

Wrongful foreclosures may be caused by miscommunication between banks and their law firms, borrowers who don’t fully understand the process, mistakes or foreclosure-clogged courtrooms. Or maybe it’s something deeper than that. But the end result is wrongful foreclosures continue to happen.

Donald and Belinda Williams of Lauderhill started the HAMP loan modification process late in 2009 and received the final paperwork making their modification permanent in April 2010.

The Williamses say they have been making their payments on time under the modification. But they are getting notices from Bank of America saying they are in foreclosure and refusing to accept their payments.

Even though they were getting threatening letters, there is no open foreclosure case against the couple in Broward County court records. Meanwhile, “We were calling the bank every other week,” Belinda Williams said.

Bank of America spokeswoman Jumana Bauwens said what happened was a mistake. Bank of America posted a payment incorrectly in December, she said. Although she didn’t say this threw the Williamses into foreclosure, she said that Bank of America is reviewing their file to make sure that all foreclosure codes were removed from the account.

And there was other damage that they suffered due to the mis-reported payment. We’ve put in a request to fix their credit reports,” too, Bauwens said.

Banks do make mistakes. I’ve written about two foreclosure sales that have been vacated recently, both from Bank of America. One that should never have happened because the borrower did not have a mortgage and in the other, the borrower had a valid loan modification but the foreclosure proceeded anyway.

The Treasury found that servicers violate HAMP guidelines about 5 percent of the time, according to survey released in August.

Or, the problem could be that when mistakes happen, they are difficult to reverse in the foreclosure-clogged courthouses of South Florida.

Iredia Idukpaye is trying to reverse the foreclosure sale of his Hialeah home.

Idukpaye, a case manager for a company that works with troubled juveniles, secured a loan modification in September. But his house was sold Oct. 29 despite his desperate appeals to the law firm of Shapiro & Fishman, which was handling the foreclosure for Ocwen Financial Corp.

“What happened here is not the fault of the law firm,” said attorney Gerald Richman, who represents Shapiro & Fishman, the law firm that handled the foreclosure. He said the law firm received information from its client, Ocwen, too late to cancel the sale through the clerk of court’s office and the attorneys could not get the issue heard in court at the last minute.

Shapiro & Fishman has asked the court to vacate the sale. A hearing is set for later this month.

The lessons for borrowers: If you are getting a loan modification, keep your eyes wide open and document everything you can.

When you sign a loan modification, include a letter with that first payment indicating you expect foreclosure proceedings to stop or to not be filed. Keep a copy of the letter and the loan modification, as proof that you can show to a judge.

Call your lender if you receive anything that seems to be related to foreclosure and demand that it be investigated.

Check to see if a foreclosure suit has been filed, even if you haven’t received notices. Enter your name in the civil case files at www.browardclerk.org or www.mypalmbeachclerk.com.

If you are in a HAMP loan modification and suspect that foreclosure has begun call The Homeowner’s Hope Hotline at 888-995-HOPE (4673) and ask for “MHA Help.”

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November 9, 2010

Goldman Sachs: Mortgage unit Litton not "material"

In a filing with the Securities and Exchange Commission Tuesday, Wall Street giant Goldman Sachs revealed that it is reviewing practices at its Litton Loan Servicing unit, which last month suspended evictions and foreclosure and real estate ownes sales in Florida and the 22 other judicial foreclosure states.

But like other mortgage servicers, Goldman's filing declares that the underlying mortgages are valid.

Litton is one of the loan servicers that Attorney General Bill McCollum has questioned and invited to Tallahassee to discuss the situation of false affadavits filed in Florida foreclosure cases. His investigation is in coordination with all 50 states' attorneys general.

Goldman's filing notes that it was not a major originator of residential mortgage loans. Through September, it said it has repurchesed less than $50 million of loans based upon claims from buyers who alleged misrepresentations in those purchases. Goldman incurred an "immaterial" loss on those repurchases.

In addition, Litton, which was purchased in 2007, doesn't make a big impact on the bottom line, the filing said.

"As of September 30,2010 the value of the firm’s mortgage servicing rights was not material and any impact on their value would not be material to the firm. Similarly, at this time the firm does not expect the suspension of evictions and foreclosure and real estate owned sales to lead to a material increase in its mortgage servicing-related advances, " the filing says.

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Foreclosure attorney subject of Florida Bar probe over pay


My colleague Diane C. Lade and I wrote this story.


The Florida Bar has launched an investigation of a well-known Deerfield Beach foreclosure defense attorney over a New York Times report that he allows distressed homeowners take out second mortgages in order to pay his fees.

Peter Ticktin, whose license has been suspended by the bar twice since 2009, told the Times that the second mortgage would take affect only if he succeeded in having the foreclosure dismissed and the homeowner’s loan reduced. He also said his firm never would foreclose on his own clients should they stop paying on their second mortgages.

Elizabeth Tarbert, the bar’s ethics chief, refused to say whether the unusual payment arrangement detailed in the article violates bar rules governing conflicts of interest. Bar spokeswoman Francine Walker said only that the disciplinary body’s investigation centers on Ticktin’s quotes in the Times article.

Ticktin said he was not aware of the most recent bar investigation but defended the practice, saying his research indicated regulations allow attorneys to secure fees using mortgages. The bar already had examined his retainer agreement in Tampa’s judicial district, where he also has an office, and found nothing inappropriate, he said in a telephone interview Monday.

“We believe it is ethical, appropriate and the only way some people will get representation,” he said.

Darryl Wilson, a professor and real estate expert at Stetson University’s College of Law, said allowing foreclosure attorneys to place liens on the same properties they are trying to save opens the door for abuse. “I can see some action being taken to standardize or eliminate the practice,” he said.

Ticktin’s firm has about 3,000 foreclosure defense clients, and so far has second mortgages on five of their homes. Clients pay between a $330 to $650 monthly fee, and agree to take out a second mortgage equal to 40 percent of any negotiated reduction in their loan.

Bar rules prohibit attorneys from having a “proprietary interest” in the subject of any litigation a lawyer is conducting for a client, with two specific exceptions. One is exception is for retaining liens, which are placed when an attorney has possession of the file or the client’s funds. The other is for charging liens, which gives attorneys the right to money paid out as recovery because of a lawsuit, as in a personal injury case.

Foreclosure defense attorneys agree that getting paid for their work can be challenging, as many of their clients need their services because they’ve had money troubles.

Ticktin said other foreclosure defense firms, which he didn’t name, are taking second mortgages as collateral or had asked for copies of his retainer agreement. But none of the lawyers contacted by the Sun Sentinel Monday said they were following that payment model.

“I don’t do it,” said Thomas Ice, a prominent foreclosure defense attorney from Royal Palm Beach. Instead, Ice says he has monthly payment plans and contingency fees built into his client agreements. He said he also receives attorneys’ fees, paid by a lender, when a foreclosure case is dismissed.

Roy Oppenheim, a Weston real estate attorney who now is handling 500 cases involving some stage of foreclosure, said his firm was aware of the second mortgage payment model and that he didn’t think it would be against bar rules.

“I don’t want to say we never would do it,” he said. But for now: “We don’t care for it. It strikes a bad chord with me.”

This will be the third time since 2009 that Ticktin has landed in hot water with the organization that regulates attorney conduct.

Last spring, the Bar cited Ticktin for paying New York foreclosure defense attorney and real estate investor Hilton Wiener for client referrals and other work. Wiener, who worked with the Ticktin firm until May 2009, says he went to the Florida Bar with a number of complaints about the firm’s operations.

“The reality is the attorneys there are spending the majority of their time recruiting new business,” he said, rather than actually pursuing the cases they had. “There were stacks of hundreds of messages of unreturned phone calls.”

Ticktin agreed to a 15-day suspension for giving Wiener a 25 percent referral fee for bringing cases into the firm, as well as payments for other work. Wiener, who is licensed to practice law in New York, is not licensed in Florida. Bar rules prohibit attorneys from sharing legal fees with non-attorneys.

Wiener is now working with a different foreclosure defense law firm in Broward County.

Ticktin also was sanctioned in 2009 regarding several matters involving Paul R. Johnson, the CEO of the Pony Express delivery business who was facing criminal and civil charges. The bar complaint said Johnson and Ticktin entered into a business transaction, in which Ticktin replaced Johnson as CEO but continued to do legal work both for Johnson and the company.

Ticktin said he had been “in an impossible position” in the Johnson case, and that he knew the two suspensions would surface when he began appearing in national stories about foreclosure defense. “I agree, it’s a black mark. But I think I paid the price for the mistake I made,” he said.

The Supreme Court, writing that Ticktin’s “misdeeds are egregious and constitute serious violations of the rules governing every Florida lawyer’s professional conduct,” rejected a mediator’s suggestion that Ticktin just be admonished. Although the court agreed Ticktin had not acted dishonestly, the justices ordered a 91-day suspension.

The New York Times contributed material to this report.

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November 8, 2010

Your Money Q&A: What is an ETF and why am I hearing about them so often?

I never heard of an ETF till suddenly every commercial for every broker is completely filled with ETF this and ETF that references. Given the history of financial bandwagons, is there any reason I shouldn’t expect ETFs to be the primary source of the next financial meltdown?
-Tom Horsley

A. Jason Whitby, a certified financial planner and senior financial advisor at Investor Solutions, says he appreciates your skepticism, but it is highly unlikely that the exchange-traded funds (ETFs) will be the source of a financial crisis.

An ETF is very much like a mutual fund - a pooled basket of individual securities. But unlike open-end mutual funds which price and trade at the end of the day, ETFs price and trade throughout the day like stocks.

Many investment management firms have been using ETFs for well over a decade, but it has taken some time for the ETF product structure to gain steam with the public.

Today there are more than 700 different types. Some ETFs are wide and general, allowing investors to purchase the entire U.S. stock market or a European market or an emerging market with a single purchase. Other ETFs are very narrow, allowing investors to isolate segments technology stocks or Brazilian small company stocks.

Some might say innovation has given way to over-commercialization. Some of the innovations allow speculators to quickly and easily take huge bets with ETFs, trading in and out of various sectors, or using ETFS that are leveraged -- which add debt to amplify the return of the funds or ETFs that are inverse -- which provide the opposite of the return of a sector, so that investors can bet against it.

Yet when used properly, ETFs are a great investment product. Not a threat to the financial system.

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Need help with a money problem?
Columnist Harriet Johnson Brackey is working with South Florida financial advisors to get answers. Submit your questions at SunSentinel.com/moneyquestion or call 954-356-4628. To see previous questions, visit SunSentinel.com/PersonalFinanceQandA


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November 5, 2010

Stern foreclosure law firm details layoffs

Stern made it official by filing the following news release with the Securities and Exchange Commission:

DJSP Enterprises, Inc. Announces Further Staff Reductions

PLANTATION, Fla., November 5, 2010 (GLOBE NEWSWIRE) – DJSP Enterprises, Inc. (Nasdaq: DJSP, DJSPW, DJSPU) today announced that it has instituted further staff reductions as a result of announcements by Fannie Mae and Freddie Mac that they had terminated their relationships with DJSP’s primary client, The Law offices of David J. Stern P.A. DJSP has reduced its staffing levels by an additional 416 employees bringing the total number of layoffs to more than 700 since the reduction in staff was initiated.

POSTED IN: Foreclosure Crisis (84)

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November 4, 2010

Read the Stern layoff memo

Here's the email memo to about 560 employees of the Law Office of David J. Stern in Plantation that tells them they are fired. The email was time-stamped 10:30 a.m. and the memo says their employee badges would be deactivated by 11:30 a.m.


Dear Employee,

As you are likely aware, recent turbulence in the mortgage industry has had a profound impact on our business. The referral of new business has decreased by over 90 percent in the last six months. This week Fannie Mae and Freddie Mac announced that they will no longer be utilizing our services. While we are doing everything possible to guide the company successfully through these difficult times, these developments mandate that we take immediate action to align the business with current realities.

It is with a heavy heart that I must announce that due to the loss in business, we regret to inform you that we are laying-off roughly 70% of our staff across the company and you have been selected to be part of the cutbacks.

Regretfully, due to how significant these cutbacks must be, many top performing, tenured, and hard working people will be affected. This is not a reflection upon the quality of any one individuals work rather, it is a direct response to the significant decline in business.

I would like to personally thank you for your hard work and dedication during your employment.


There are some instructions for you below regarding collecting your person effects and some paper work you will need prior to leaving.



Sincerely,



David J. Stern





Instructions:



1. Your final check for hours worked from 10/31/2010 to 11/4/2010 will be direct deposited if you have direct deposit set up, if not your check will be mailed to you on our regular scheduled pay date on 11/19/2010.



2. Any unused vacation or PTO will be cashed out as part of your final check.



3. If you have health, vision or dental insurance policies, they will terminate midnight, on November 30, 2010. Under Federal law, Cobra, you may continue your coverage under these policies. Your Cobra notification will be mailed to your address on record by our Outsourcing Company.



4. If you have any voluntary insurance(s), they will terminate midnight, November 30, 2010. Please contact Colonial directly to continue coverage.



5. If you are or ever have contributed to the 401k plan, attached you will find information regarding your 401K account. If additional Information is needed, please contact our representative from John Hancock at 1-800-333-0963 X139646 speak with Rudy St. Rose.



6. Please collect your personal effects. Please do not take any items including, company or law firm records, files, paper work, etc.



7. Boxes are available on each floor



8. Please turn your ID in to an HR staff member who will be present near the elevators.



9. Please turn in any company computers, cell phones, or other company items to the HR staff near the elevators.



10. Please collect your final paperwork from the HR representative on each floor.



11. Security badges will be deactivated at 11:30 AM

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Mass layoff at Stern foreclosure law firm

Here's the story that my colleagues Diane C. Lade, Doreen Hemlock and I wrote. In the next entry you will find the layoff memo sent out this morning. hjb.

Plantation attorney David J. Stern, whose office is under investigation for allegedly fabricating documents in foreclosure cases, laid off 70 percent of his staff Thursday as his major clients abandoned him.

In a memo e-mailed to employees, Stern said the “recent turbulence in the mortgage industry” had cut referrals of new business by 90 percent over the last six months. “These developments mandate we take immediate action,” he said of the move, which eliminated about 560 jobs.

Mortgage giant Freddie Mac this week pulled its pending foreclosures from the firm, which handles paperwork and court filings for lenders and loan servicers. Spokesman Brad German said the move came after Freddie stopped referrals to Stern about three weeks ago and began conducting its own investigation.

German said the foreclosures would be given to other firms, not yet chosen, “so they can be completed in compliance with state law.” The Florida Attorney General is investigating Stern, who at point claimed he handled 20 percent of the state’s foreclosures, for allegedly fabricating documents and shoddy paperwork.

German would not say what Freddie auditors had found or how many foreclosures were involved. But former employees, in court depositions taken by the state’s attorneys, said Stern considered Freddie and its mortgage twin Fannie Mae “his babies” and their loans comprised the vast majority of his business.

Fannie, the nation’s second largest provider of mortgage financing, suspended business with Stern in late October, saying it would hire new firms to process them, said spokeswoman Amy Bonitatibus. Fannie and Freddie have sent staff to Stern’s headquarters, which occupy multiple floors in a Plantation office building, to remove files.

Miami attorney Jeffrey Tew, who represents Stern, said the lay-off memo spoke for itself and had no additional comments. He said the remaining cases would continue to be handled by the firm.

Stern referenced Fannie and Freddie’s departure in his e-mail. Employees were told to immediately collect their personal belongings, and turn in their company IDs and equipment to human resources representatives stationed at the elevators. Their badges were deactivated an hour after the memo was sent Thursday morning.

At the office park where Stern’s operations are located, eyewitnesses said they saw groups of employees leaving the building, some hugging and kissing one another, apparently saying goodbye. It was “heartbreaking,” one bystander said.

Employees there who remained with the company declined comment, with one remarking: “Oh, no, I want to keep my job.”

Chris Simmons, Stern’s head of human resources and investor relations, said the firm will file paperwork required with the Securities and Exchange Commission and other agencies late Thursday or early Friday.

Stern's firm has a publicly traded subsidiary, DJSP Enterprises, which handles the non-legal end of Stern’s foreclosure processing. Last week, its public accounting firm, McGladrey & Pullen, left in the latest of a string of executive departures, according to SEC filings.

DJSP named Jewett, Schwartz, Wolfe & Associates as the replacement.

The company also has gone through several downsizings since rumblings about the “foreclosure mill” firms began several months ago. Besides Stern, the Florida Attorney General also is scrutinizing three other foreclosure law practices: the law office of Marshall C. Watson in Fort Lauderdale, Shapiro & Fishman in Boca Raton, and the Florida Default Law Group in Tampa.

Fannie and Freddie has not pulled referrals to the other firms, its representatives said.

Stern’s firm as been at the center of an expanding investigation into questionable foreclosure practices in Florida and other states.

Stern’s operation was massive by comparison to many South Florida law firms, after going through three years of explosive growth. His practice, worth millions, was built on the foreclosure cases that have flooded Florida’s court system. Most of the employees were not attorneys.

The enterprise had 950 employees at the end of 2009 and that figure jumped by 36 percent in the first quarter of 2010, according to various filings with the Securities and Exchange Commission. That would have brought the payroll to almost 1,300 employees, although that figure is not contained in the SEC documents.

Stern’s firm reported that it had only 350 employees at the end of 2007.

Like the growth in payroll, the firm had an explosion in foreclosure cases. According to the SEC documents, the firm’s foreclosure case load last year was growing by 5,865 a month.

Its total number of foreclosure cases at the end of 2009 was 70,382, up dramatically from 15,332 only three years before. DJSP Enterprises’ most recent public earnings report shows revenues at $127.7 million in the first six months of 2010, with net income of $14.18 million.

POSTED IN: Foreclosure Crisis (84)

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Foreclosure investigation: AG is looking for evidence of kickbacks

Follow the money.

Florida Attorney General Bill McCollum's office is looking for it, in its investigation of the foreclosure law firm of David J. Stern. k0611252.jpg

What's at the bottom of the AG's investigation was almost a throw-away line in a recent hearing in Fort Lauderdale.

Assistant Attorney General Theresa Edwards, in her very last response to a question from Judge Eileen M. O'Conner, says that yes, the AG's office did receive thousands of documents from Stern's firm but not the documents it wanted.

The documents it wanted "may involve kick backs (sic) to the servicers who are hiring them, which surprisingly weren't included in the documents. So that's why we want to keep looking."

Thanks to attorney Matt Weidner, who posted the transcript on his blog today. Here's a link to it.

POSTED IN: Foreclosure Crisis (84)

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November 1, 2010

Your Money Q&A: How long after losing money can I file a claim?

Is there a “statute of limitation” regarding a financial management company that lost a substantial amount of money through bad investments that they never should have put me in?
-Marvin Steinberg

Most investor claims must go through arbitration, rather than through courts. They must be submitted under rules established by the Financial Industry Regulatory Authority, an industry self-regulatory organization. Finra’s code says claims can be made within six years after the event, according to Rose M. Schindler, the former Finra Regional Director in Boca Raton. She is now with The White Law Group. Schindler points out that the Finra eligibility rule doesn’t extend any deadlines for filing claims that are set out in federal or state laws. And if there’s a question, it is up to the arbitration panel to decide whether the claim is eligible for filing.
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Need help with a money problem?
Columnist Harriet Johnson Brackey is working with South Florida financial advisors to get answers. Submit your questions at SunSentinel.com/moneyquestion or call 954-356-4628. To see previous questions, visit SunSentinel.com/PersonalFinanceQandA

POSTED IN: Personal finance questions and answers (36)

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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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