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Balky banks gum up foreclosure courts, benefiting some owners

Deutsche Bank has delayed taking back Danny Berry’s house in Clearwater. “It’s still a burden on me,’’ says Berry, who moved out.


Deutsche Bank has delayed taking back Danny Berry’s house in Clearwater. “It’s still a burden on me,’’ says Berry, who moved out.

With foreclosures, final doesn't always mean final.

Some Tampa Bay residents are still living in their homes long after the final judgment of foreclosure because banks have canceled the public auction two, three, even five times. Others have had their houses sold at auction, only to have the sale reversed later.

Either way, here's a surprising result: Banks' slowness to take title to thousands of homes and condos might actually be helping to stabilize Florida's beleaguered real estate market.

"It's helped keep the values up a little bit in that we have a pent-up demand'' for foreclosed houses, says Scott Samuels, a liquidation specialist for Keller Williams.

In some cases, banks delay taking ownership to avoid maintenance bills or homeowners association fees.

In other cases, houses and condos have yet to get beyond the final judgment stage because of problems with foreclosure documents and errors by lawyers representing the banks.

In 2005, Jason Leeb and his mother, Judith, bought a house in Clearwater for $178,000. When their gymnasium business foundered, they defaulted on their mortgage and the Bank of New York Mellon started foreclosing.

In October, a judge ordered the house to be auctioned on Jan. 4 unless the Leebs paid $172,000.

Then they got a break. On Jan. 4, the bank's attorney faxed the Pinellas Clerk of Court a motion to cancel the auction that day because Bank of America, which services the loan, "is reviewing issues'' raised by regulators in the wake of the robo-signing controversy.

But the motion to cancel didn't arrive until after the clerk's office had sold the house back to the bank.

On March 2, a judge vacated the sale, meaning the house remains in Judith Leeb's name.

For the past six months, her son has continued to live in the home rent-free. The bank has done nothing except send Jason Leeb what he calls "mediation packages'' even though it had declined to modify loan terms before the final judgment.

"I've … read a lot of cases where the outcome is like this," Leeb says. " 'We're not going to give you your house for free, but you can stay there as long as you want.' ''

Stall tactics

This spring, banks filed motions to cancel scores of foreclosure auctions in the Tampa Bay area, giving months-long reprieves to many homeowners but causing headaches for the courts.

Of the 3,500 or so cases handled by Pinellas Circuit Judge Pamela Campbell, the number that have dragged on more than 24 months is "increasing dramatically and I suspect most of them are mortgage foreclosures,'' she says.

One reason for the slowdown is repeated motions to cancel foreclosure auctions.

"Is it frustrating?'' she says. "Yes.''

In July Campbell castigated Shapiro & Fishman, a Tampa law firm that represents banks, for several errors that have served to drag out a St. Petersburg case since 2009. Among the problems: the name of a lawyer who had left the firm years earlier appeared on a motion to cancel a foreclosure sale that hadn't even been scheduled yet.

"The conduct by the Shapiro & Fishman firm in this case … has resulted in a waste of the court's valuable resources and taxpayers' dollars that fund the judiciary,'' Campbell wrote in an order.

And last week, Campbell blasted Fort Lauderdale lawyer Roy Diaz, saying he was "either totally incompetent or totally unaware of what the law is'' because his firm had moved to cancel the auction of a St. Petersburg condominium in violation of a court order.

Homeowners associations complain that banks seem reluctant to take title to condos because they must pay delinquent and future assessments.

Countrywide Home Loans began foreclosing in 2006 on a Clearwater condo whose owners have since died, leaving the Sandalwood Club Association unable to collect thousands of dollars in fees needed to help maintain the complex.

"This case has been lingering for such an extended period of time that a person could have started law school, graduated from law school, passed the Florida Bar exam, obtained an L.L.M. degree and started practicing law,'' Shawn Brown, the association's attorney, wrote in opposing the bank's "emergency'' motion to cancel the sale — again.

Burden on owners

Even some homeowners want the banks to move more quickly.

Hit with unexpected funeral bills and escalating payments, Danny and Brenda Berry fell behind on the mortgage on their Clearwater home. Deutsche Bank got a final judgment in January 2010 but canceled two public auctions for reasons that included improperly notarized loan documents.

The bank took back the house at an auction last April but quickly got a court order to vacate the sale, claiming it had worked out a loan modification.

Berry, shipping manager for a car dealership, says nothing was worked out. The house remains his responsibility even though he and his wife moved out a few months ago because they can't afford to fix the leaky roof.

"It's still a burden on me,'' says Berry, who took Friday off to try to find someone to mow the knee-high grass.

James Selvey, president of the Greater Tampa Association of Realtors, notes that it typically costs a bank $35,000 to $40,000 to take title to a property.

"So consequently they're not taking ownership; (the houses) are just sitting there,'' he says. "As the inventory dries up, it does cause demand and prices to rise and then the banks will shove a few more homes into the market.''

In Pinellas, Pasco and Hillsborough, just 974 of nearly 20,000 active residential listings are bank-owned. Samuels, the liquidation specialist, says the number in mid and south Pinellas dropped from as many as 350 in December to 120 or so now.

"It's a good thing when short sales and foreclosed properties are in shorter supply,'' says Ann Guiberson, president of the Pinellas Realtor Organization. "It does force the market back into looking at nondistressed property.''

Susan Taylor Martin can be contacted at [email protected]

Balky banks gum up foreclosure courts, benefiting some owners 09/06/11 [Last modified: Wednesday, September 7, 2011 3:40pm]
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