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The Florida Bar News - May 15, 2009

FASH volunteers help distressed homeowners
By Jan Pudlow
Senior Editor

What a great feeling to help distraught clients fend off foreclosures and keep their homes.

Five Florida lawyers know that sense of satisfaction that money can’t buy.

They volunteered to take pro bono cases through Florida Attorneys Saving Homes (FASH) — a joint project of The Florida Bar; The Florida Bar Foundation; Florida Legal Services; the Real Property, Probate and Trust Law Section; the Business Law Section; the Young Lawyers Division; Attorneys Title Insurance Fund; and law schools.

They are five of about 1,000 volunteer lawyers statewide handling more than 1,611 FASH cases. This quintuplet of lawyers shared their success stories:

Navin Pasem, who has an LL.M. in Real Property Development and Finance from the University of Miami School of Law:

His client is a janitor in his 50s working the graveyard shift for the City of Tampa. When his son was killed in a tragic accident, he had to scrape up money for a funeral. Meanwhile, his wife had gotten sick, her medical bills were piling up, and she had to take a lot of time off from her job.

In 2004, they jumped at a chance to refinance their modest home to get some cash to pay their mounting bills.

Pasem explained the couple was sucked in by a “teaser” rate of 2 or 3 percent and payments of $400 a month that soon jumped beyond their control.

“When I came into the picture, the interest rate was 11 percent and the mortgage was $1,100 a month,” Pasem said.

The value of the loan was $140,000 and their home was worth “around that much, if that much,” Pasem said.

“Like a lot of people, they were not the most sophisticated mortgage borrowers. It sounded very attractive at that time: ‘Sign up for a new loan and we’ll give you money and you can always refinance again later.’”

When Pasem got involved in late September, his client had already tried to contact his lender and servicer to see if there was anything that could be done about threats of foreclosure.

“He was getting the runaround. He was not talking to the right person. At one point, he got the financial package to them showing hardship, and he never heard back.”

Once, Pasem said, his client had been told to stop making payments because he had to be in default before they would look at his hardship claim. When he tried to get back in touch, they said, “What are you talking about? We never told you to stop paying.”

Another blow: now he owed late fees.

Enter Pasem: From October through December, he said he persistently called representatives of Saxon Mortgage and Deutsche Bank every week.

Being a real estate lawyer and real estate investor myself, I deal with these situations almost daily in this current market," Pasem said. "My experiences have taught me persistence is a key factor in successful workouts and modifications."

“Every time I called, I would try to get a name so they’d be familiar with the situation. That never panned out.”

Finally, around Christmas, Pasem said, he got through to the loan-modification and loss- mitigation section of Saxon Mortgage.

“Amazingly, I got her name and she had the file. I thought that was a step in the right direction.”

After providing her with the financial information for the third time, she finally said: “We will reduce the interest rate to 5 percent” from 11 percent, but they would not agree to waive any late fees, attorneys' fees, or past due mortgage payments that totaled more than $6,000.

“Look, I understand he didn’t make payments, but he was told not to, and you have to waive the late fees and attorneys’ fees,” Pasem told them in January.

“I came into the picture in September, and we’ve had to start over three or four different times. We are not trying to get out of the loan, we’re just trying to modify it. You all are so disorganized, every time you get on the phone with me, we have to start from scratch.”

Pasem waited a month, in February, he called the same woman, who ended up yelling at him: “Do you understand how many loans I’m dealing with!”

The case was bumped up to a woman in another department at a higher level.

“I told her the circumstances and what I was offered. She looked at my client’s financials and a week later, in March, she came back with a very acceptable deal,” Pasem said.

Keep the mortgage at 5 percent for five years. Waive late fees and attorneys’ fees. And past due amounts would be put on the back of the loan. He would not have to pay anything until April.

“When I made the call to my client, he was ecstatic! It was very satisfying to hear his excitement,” Pasem said.

“He told me, ‘I’m not going to forget you. You have done so much.’”

“I told him, ‘You have been given a great opportunity.’”

He advised his client to save money and tuck it away in a bank account, so he’d be ready for future unexpected expenses.

“When you call the lenders and servicers and tell them you are a lawyer, they have to take it more seriously and not think it’s just a homeowner they can shove off, which they are doing,” Pasem said.

Why did he agree to sign up for three FASH cases — even if just one case took 20 hours total, more time than he expected?

"As lawyers, we are equipped with unique skills and with these skills a certain level of power,” Pasem said. “With this power comes an obligation and duty to assist those less-privileged.”

Anthony Rodriguez, an associate at Foley & Lardner in Tampa:

Anthony Rodriguez hasn’t been a lawyer long — just since September 2008 — but already he can chalk up a pro bono success of helping a couple enduring hardships keep their home.

“It’s such a good feeling to be able to help a family in such a very real way. They were at risk of possibly losing their home. You assist them in understanding the language of the finance world, which can be tough,” said Rodriguez, a member of the firm’s Real Estate, Tax and Individual Planning and Tax and Employee Benefits practices.

Rodriguez describes his clients’ situation as “in an adjustable rate mortgage and they had several hardships that occurred recently. One of the spouses suffered from fairly serious health problems. The other spouse was let go from a job, due to the economic climate. It’s been a tough period for them. The payments were becoming overwhelming.”

Though his clients hadn’t actually been threatened with foreclosure, Rodriguez said, “It was a fear they had. They wanted to stay in their home.”

On the bright side, his clients had a contact in the loss-mitigation department of the servicer for the lender, who was already somewhat familiar with their dilemma. Over a three-month period, Rodriguez compiled financial records and kept the conversations polite while negotiating an agreeable deal that the investor signed off on:

The original interest rate was adjustable and ranged from 6.5 percent to 12.5 percent, pegged to an index. The new deal lowered the interest rate to 3 percent for the first two years, then increased to 5 percent by the fourth and fifth year.

“It put them in a fixed rate so they didn’t have to worry about that interest rate over time. It made it much more manageable and they are able to make the payment. No debt was forgiven. In this case, it was really just lowering the interest rate, and that is all that was needed.”

The lender was satisfied because the loan was being paid back with a return. And the homeowners are happy because they are staying in their home.

“They weren’t looking for a handout,” Rodriguez said. “They wanted to make good on their promise to repay the loan. They just needed help to get back on their feet.”

Mark Grand, of Grand and Grand, in Hollywood:

“The bottom line is you can’t take ‘no’ for an answer,” is how Mark Grand described his strategy of saving his client’s home after more than four months of calls and letters.

When Grand met his client, she was already embroiled in a foreclosure case, a situation that FASH was actually not set up to help.

“She had been receiving demands and threatening letters from the lender. She was getting conflicting demands. One department was telling her: ‘OK, we are reviewing the modification you proposed.’ Another department was telling her: ‘You are in default of your balloon.’”

The servicer, not the lender, had sued its client — another company paid to collect the payments and manage the mortgage loan.

“It is absolutely tricky, because you’ve got a type of animal that didn’t used to exist. A trust, which is a pool of mortgages, is managed for a group of investors. It’s not the kind of thing we used to see,” said Grand, a lawyer with 22 years experience in estate planning, probate, real estate, and civil litigation, who said he learned from the best, his dad and law partner Leonard Grand.

“We weren’t able to avoid foreclosure, but the lender agreed to forbearance, and if she made certain payments for several months, they would put the case on ice. They would not dismiss the foreclosure, but they stopped working on it.”

His client was struggling to make payments of $2,400 a month, and she was supposed to pay a big lump sum — $13,000 at the end.

“There was no way she would be able to make it,” Grand said. “That is when we got involved. What I started attempting to do was contacting the servicer for the lender, and I was trying to get them to lower her interest rates. She was paying close to 10 percent. If we could get that lower to around 5 percent, it would produce a monthly payment she could manage.”

Nice try, but no dice.

“That led me to make more calls and write some more letters.”

In his communications, Grand said, he finally convinced the servicer for the lender that it was better to turn a problem loan into a performing loan. They don’t need to take back more properties, and pay carrying costs, real estate taxes, and association maintenance payments, he argued. And even if they could sell the property, they would have to sacrifice it at a reduced price and pay commissions and closing costs.

The key was finding the right person who would listen.

Finally, Grand said, he was able to get in touch with a supervisor for the servicer.

“He was responsive. Even though he didn’t agree the first few times, ultimately they came back with a proposal to modify the loan and shave $40,000 off the principal. Rather than owing $227,000, the mortgage was cut to $187,000.

His client’s mortgage payment was reduced from $2,400 to $1,900.

“The bottom line was my client was able to keep her home that had been in foreclosure for a year. It’s a wonderful feeling to achieve a good result. She expressed great gratitude. I could certainly sense a big relief, because she had been understandably nervous. It would be unnerving to anyone,” Grand said.

“I think a lot of people feel lost in the system. It can be intimidating for many people. That’s why it’s a great program the Bar has set up. I would encourage other lawyers to join.”

Grand said he’s ready to sign up for his next case.

Gisele Rosado, a lawyer practicing in New York and Florida:

Unexpected expenses piled up for her Ft. White client: The car broke down. Income was reduced. And a family member got sick and moved in with them.

Meanwhile, her clients’ adjustable rate mortgage was set to rise between 1.125 and 2.25 percent every six months after five years. Having defaulted on their mortgage twice in six months, they were on the verge of foreclosure.

“Fortunately, they were able to reach a reduction in their interest rate by almost a full percent, reducing their mortgage payment by about $100 monthly,” Rosado said.

The new mortgage is at a fixed rate of 6 percent for 30 years.

“The rate is not going to adjust. The penalties that accrued on the unpaid monthly balance were forgiven. The payment was reduced. And the missed payments were recast onto the back end of the loan, and put back into the principal. It gives the borrowers more time.”

As a real estate and bankruptcy lawyer, it’s the kind of work Rosado does day-in, day-out. Why did she sign up to do it for free?

“I just figure buying and owning your own home is the American Dream. Why not help someone keep their American Dream if I have the ability to achieve that? My clients were faced with unexpected circumstances. They were not abusing the system, and they were victims of predatory lending practices.”

Her advice: “You have to call until the lender’s phone is ringing off the hook consistently. That is pretty much it. Another challenge is making the homeowner understand what you can do for them in reality. Their loan was brought down to the Obama Plan, which is 31 percent front-end debt-to-income ratio on your monthly gross income. People expect that after this new plan came out, they could reduce their interest rate to 2 percent and reduce their mortgage by $500.

“What a lot of people don’t realize or forget is that lenders are not mandated to do all the Obama Plan incentives, unless they are receiving bailout money from the government. There are built-in incentives for them to do so, but it is not mandatory.

“I have to tell my clients, ‘I am not God, but I will do my best.’”

Rosado said three more FASH cases are on the way.

Ben Diamond, general counsel to Florida Chief Financial Officer Alex Sink:

His clients are an elderly couple who retired to Tallahassee from South Florida and had fallen behind on their mortgage payments.

“Through the FASH program, we were able to negotiate with Countrywide, so they could receive a more manageable monthly payment,” said Diamond, declining to go into financial specifics.

“It took a lot of work, but it was very rewarding to be involved in it.

“Someone told me when I started my legal career that the most rewarding experiences as a lawyer can be made through pro bono representation. I would encourage every lawyer in Florida to consider participating in this program, because it gives you an opportunity to help people who really do need your help,” Diamond said.

He’s ready for another case and is encouraging his colleagues in the Department of Financial Services to do so as well.

At a recent meeting in Tampa with CFO Alex Sink, they met with lending institution representatives and heard from FASH lawyers frustrated that they can’t get through to the right people to help their clients. He knew firsthand how difficult it is to get past the 1-800 numbers. Diamond said they are working to identify the key people to contact at the lending institutions involved in the FASH cases.

What was his client’s reaction that she could keep her home?

“My client was driving back from visiting her grandson in Jacksonville when I reached her on her cell phone. She was so ecstatic that I was concerned that she not crash her car.”