Ormond Beach fighting a plague of zombie homes

Saul Saenz
March 30, 2014

This is one of the zombie house residents in Ormond Beach are trying to fight.

Florida leads the nation in zombie foreclosures.





There’s a group of Ormond Beach homeowners battling a zombie home problem — homes that are standing dead and sucking the life out of entire neighborhoods.

The group is targeting homes that are abandoned and decaying, with so much overgrowth they are hard to look at.

“It is an eyesore and it is exactly a zombie home because we don’t even know at this point who owns the homes,” said Rita Press, president of Citizens for Ormond Beach.

“I think it’s gonna lower the property values if they see a rundown house,” said neighbor Joe Puccino.

The group has identified at least 300 foreclosed homes throughout the city, and numerous abandoned homes with no paper trail that homeowners simply walked away from. One house Press told us about is in the city’s exclusive, historic riverfront district.

The group contacts homeowners in foreclosure to help them through the process before a homes turns into a zombie home. They also want the city to prevent houses from turning into lifeless shells.

But the ultimate goal, Press said, is to get all those homes on the market so that new homeowners can breathe life back into a lifeless Zombie home.


Five of Florida’s housing markets are in the top 10 zombie foreclosures, according to RealtyTrac.

The foreclosure tracking group said there are more than 140,000 homes in Florida that are in zombie mode, or are bank-owned. And zombie homes in Florida are in foreclosure for about 1,095 days.



Regulators Size Up Wall Street, With Worry

March 12, 2014
Money laundering, market rigging, tax dodging, selling faulty financial products, trampling homeowner rights and rampant risk-taking — these are some of the sins that big banks have committed in recent years.
The regulators also said that they have stepped up pressure on the banks’ boards. The regulators hope that more independent-minded directors will demand changes if they see standards and practices slipping, especially in crucial areas like accounting and risk management.To help promote that push, Mr. Dudley said, the New York Fed has bolstered the stature of supervisors who interact with the boards and senior executives. “We’ve put some of our very best people in those spots,” he said.But boards may have very different priorities from regulators.Directors may not see the need for far-reaching changes if a bank is producing large profits that benefit shareholders.JPMorgan Chase’s board took steps to hold management accountable after the so-called London Whale trading scandal that engulfed the bank in 2012 and 2013. Still, in January, JPMorgan’s board approved a large raise in the 2013 pay of Jamie Dimon, the bank’s chief executive.Antony P. Jenkins, the chief executive of Barclays, which has been hit by its own scandals, took a different approach with his 2013 compensation. Earlier this year, he turned down a bonus worth $4.5 million.

And compensation is one area where bank regulators may need to do more if they want to do more to clean up bank culture, according to critics of the industry.

Wall Street’s compensation practices can reward unhealthy levels of short-term risk-taking and entice bankers into ethical lapses. Acknowledging that, regulators around the world agreed after the crisis to overhaul bankers’ pay, in part by requiring them to wait several years before they receive all of their bonuses. The hope is that bankers will behave better if they know their employers can easily take back the deferred part of their pay.

But there is evidence that large American banks are still deferring much less pay than their European peers. The Fed is in charge of regulating compensation at American banks. When asked whether the pay overhaul at American banks had gone far enough, Mr. Dudley said, “There is potential to defer more compensation for longer periods of time.”

One particularly daunting challenge looms over the efforts to improve the ethics of banks. Some banks may be so large and complex that it would be difficult for managers to maintain a clean culture across all of their operations.

But Mr. Dudley said he would not allow size or complexity to be an excuse for ethical breaches. “Either the firm is not too complex, you can manage it, you do know what’s going on,” he said. “Or, if you don’t know, that’s sort of raising the question whether the firm is too complex to manage.”

Fannie Mae worker’s foreclosure kickback trial begins

March 12, 2014


Armando Granillo viewed the kickbacks as commonly accepted behavior and did not intend to defraud Fannie Mae, his lawyer says.

Fannie Mae mortgage sues nine banks

Armando Granillo is accused of defrauding Fannie Mae by failing to get the best possible prices at foreclosure sales, instead promising to provide Arizona broker Angus “Gus” Maughan unlimited foreclosure listings in a preferential deal.

A former Fannie Mae employee accused of soliciting kickbacks from a real estate broker in return for foreclosure listings regarded the practice as commonly accepted behavior.

His defense lawyers said Wednesday in a Santa Ana courtroom that the former employee had no intention of defrauding the home finance giant last year when he accepted $11,200 in cash in what turned out to be a videotaped federal sting.

The unusual explanation came on behalf of Armando Granillo, 44, a foreclosure specialist at a Fannie Mae Western regional office in Irvine. Before his arrest in May, he had spent 3 1/2 years overseeing brokers as they cleaned up and sold the foreclosed homes that had swamped Fannie Mae, requiring a $116-billion taxpayer bailout during the subprime mortgage meltdown.

Granillo is accused of defrauding Fannie Mae by failing to get the best possible prices at foreclosure sales, instead promising to provide Arizona broker Angus “Gus” Maughan unlimited foreclosure listings in a preferential deal.

According to conversations recorded by prosecutors, the deal was for Granillo to “cherry-pick” prime listings and make Maughan the No. 1 broker in the Tucson area — but he demanded in return a 20% cut of the commissions that Maughan earned.

“The scheme might have worked except for one thing,” Assistant U.S. Atty. Stephen Goorvich said during opening statements. “Mr. Maughan called the authorities,” who secretly recorded a series of meetings, including Granillo grabbing a cash-stuffed envelope in what was to have been the first in a series of payments.

Deputy Public Defender Jeffrey A. Aaron, one of Granillo’s attorneys, acknowledged during his opening statement that “much of what the government told you is not disputed.”

“But there’s more than that,” Aaron said. “The evidence in this case is going to show you that Mr. Granillo was a Fannie Mae employee working under extraordinarily difficult circumstances and extraordinary stress to fulfill what he was told was Fannie Mae’s mission.”

Aaron said Granillo and other sales representatives were under enormous pressure to get the foreclosures off Fannie Mae’s books. Crediting Fannie Mae’s recent return to profitability to the efforts of Granillo and his colleagues, he said the case would prove “surprising” to the eight-woman, four-man jury.

“The evidence will show yes, Mr. Granillo did intend to deceive,” Aaron said. “But he intended to deceive Mr. Maughan and not Fannie Mae.”

In fact, Aaron said, the defense would show that Granillo could not have delivered on his promises to Maughan because he had no authority to “cherry-pick” properties or to approve their sale at less than market value, as the government contends, without review by higher-ups.

“He did what he believed to be the mission of Fannie Mae — to preserve, deliver and sell properties as fast as he could,” Aaron said.

It was unclear whether evidence from Cecelia Carter, another Fannie Mae foreclosure specialist in Irvine, would be introduced to bolster Granillo’s contention that kickbacks were widespread and tolerated at the government-backed company.

In a pending state court lawsuit, Carter contends Fannie Mae fired her in 2011 after she tried to expose widespread corruption, including her belief that Mary Irvine, a supervisor who oversaw both her and Granillo, was among those accepting kickbacks for property listings. She and Granillo have said they discussed the kickbacks and the agency’s lack of interest in doing anything about them.

In remarks out of the presence of the jury, U.S. District Judge David O. Carter — no relation to Cecelia — expressed dismay that Carter was traveling out of the country with her daughter and not available to testify.

“It’s my fault, your honor,” said Deputy Public Defender David Israel Wasserman, representing Granillo. “She should have been subpoenaed.”

Since 2009, Fannie Mae, the nation’s biggest buyer of home loans, has been a treasure trove of lucrative foreclosure listings — a premium commodity for brokers, as buyers and investors swarmed for bargains in beaten-down housing markets such as California and Arizona.

Burned by the media: Million dollar coffee lawsuit

By Dean Staley

Updated: Tuesday, March 4, 2014

ALBUQUERQUE (KRQE) – It has been more than 20 years since 79-year-old Stella Liebeck bought an 8-ounce cup of coffee at the drive-through of the Albuquerque McDonald’s at Gibson and San Mateo.

She spilled the coffee on herself, sued McDonald’s and won a $2.9 million award.


Video:  Burned by the media: Million dollar coffee lawsuit

In the years since, the story spread across the country and around the world. Over time the details faded, until all anyone remembers was that a woman spilled coffee on herself, sued and made millions. It became an urban legend and Liebeck became the poster child for frivolous lawsuits.

Video:  KRQE report on McDonald’s coffee

The story is now part of our popular culture, including references on the TV shows “Seinfeld,” “Futurama” and country singer Toby Kieth’s music video “American Ride.” Liebeck’s family says being a punch line is a distinction Stella, who died in 2004, never wanted and didn’t deserve.

“Everybody says well, ‘she’s a gold digger, she was just suing McDonald’s because she wants a lot of money,’ and really her only point was she didn’t want it to happen to anybody else,” her grandson, Chris Tiano, said.

He was with her the day of the accident, driving the car while Stella sat in the passenger seat of the Ford Probe. He parked in the McDonald’s parking lot so Liebeck could add cream to her coffee. She had the cup between her legs when she pulled off the top, and the coffee soaked her sweat pants.

“I got her out of the car, I pulled off her terry cloth sweats, had a blanket in the back of the car and wrapped it around her, thinking it’s probably just a water burn,” Tiano said.

But at the emergency room, Liebeck soon discovered she had suffered third-degree burns on some of the most sensitive areas of her body. It took more than a week in the hospital and multiple skin grafts to repair the damage.

According to her attorney, Ken Wagner, the image of a lawsuit-happy old lady is false.

“She wasn’t looking to get rich, she just wanted them to turn the temperature down so other people didn’t suffer what she suffered,” Wagner said.

In fact, before Liebeck sued, she only asked that McDonald’s check the temperature of their coffee and pay her more than $10,000 in medical bills. Only after McDonald’s offered her $800 did Liebeck sue.

At trial, it was revealed that in the preceding nine years, more than 700 people had complained of burn injuries from McDonalds’ coffee. The jury also heard testimony that McDonald’s guidelines for franchisees was to keep the coffee between 180 and 190 degrees, 30 degrees hotter than the coffee produced by a home coffee maker.

In the end, the jury awarded Liebeck $2.9 million. What most people don’t remember is that the award was later reduced by a judge to $480,000 and Liebeck eventually settled for even less.

Video:  CBS report on reduced coffee settlement

Still, the image of a lawsuit-happy old lady getting rich from a frivolous lawsuit lingers.

“Once the media and corporate America got a hold of it, she was maligned and I think absolutely it was unjustified,” says Wagner. For Liebeck’s grandson, the pain is personal, “I’d really like people to realize this story isn’t how its been portrayed for the most part,” said Tiano. “The fact that she went up against McDonald’s to make sure something like this couldn’t happen to any of us, just tells you who my grandmother really was.”

SoFla Woman’s 2-Year Battle Gets Mortgage Wiped Out

By Trina Robinson and Karen Franklin


A South Florida woman succeeded with the unheard of

when she was able to get her mortgage wiped out by a lender.

In an effort to save her mother’s home, Idania Castro waged a two-year battle with the bank.

“The mortgage got wiped out, so I have no mortgage payment, everything was completely satisfied,” Castro said.

The woman, who took it upon herself to go through every document related to the mortgage, finally discovered robo-signing. She said the signatures on her foreclosure documents appeared to have been signed by different people.

“The signatures varied five times and it made me suspicious,” she said.

With the help of attorney Omar Arcia, she won her case. The lender decided to stop all legal proceedings against her because the documents were deemed fraudulent . Castro now owes nothing.

“The moment that we brought that information to light and we brought it to the judge, the parties resolved the case and in that particular case the bank agreed to forgive her entire mortgage debt,” Arcia said.

The attorney stressed the importance of investigating.

“You have to do your legwork and find out if there is anything wrong that was done in connection with your transaction,” Arcia said. “ You may have something that you can go back to the bank with and either negotiate better terms for your loan or sometimes get your mortgage wiped out altogether.”

Abandoned homes haunt Florida’s housing market

By Kimberly Miller

Florida’s real estate market remains haunted by

decaying and abandoned properties

even as new foreclosures slow 

and home values rise. 


These so-called “zombie” foreclosures — properties forsaken by both the bank and borrower — number 54,900 statewide, including 14,600 in Palm Beach, Broward and Miami-Dade counties, according to a new report from RealtyTrac.

The concentration in Florida makes it tops in the nation for zombie foreclosures, with South Florida ranking first among large metro areas.

Illinois has the second highest number of vacant foreclosures by state at 15,510, followed by New York with 10,880. Among metro areas, Tampa-St. Petersburg ranks second nationally, with Chicago coming in third.

“The reality is that new foreclosure activity is no longer the biggest threat to the housing market,” said Daren Blomquist, RealtyTrac vice president. “The biggest threat from foreclosures going forward is properties that have been lingering in the process for years, many of them vacant with neither the homeowner nor the lender taking responsibility for maintenance and upkeep.”

Many of the homes are stuck in limbo because banks filed to foreclose on them years ago, but then walked away from the case after realizing it didn’t make financial sense to take the home back, said Nicole Clowers, director of the U.S. Government Accountability Office.

Clowers and Blomquist spoke Tuesdayduring a housing conference sponsored by the Federal Reserve Bank of Cleveland.

New foreclosure filings nationwide were at their lowest level in February since December 2005, according to RealtyTrac. In Florida, new foreclosures were down 53 percent from the same time last year, while Palm Beach County’s clerk’s office recorded just 518 new cases in February_ a 49 percent drop from 2013.

It’s still unclear, however, whether the drop in Florida foreclosures is a permanent change or a temporary trend while banks catch up to a new law that went into effect in July.

U.S. Postal Service information on vacancies was used to study the issue of abandoned foreclosures. But the Government Accountability Office also had access to bank records, leading it to the conclusion that lenders will walk away from a foreclosure if it’s too costly to repossess.

“In some cases they initiate the foreclosure and then realize it’s going to be a money-losing venture and stop,” Clowers said.

Suburban Lake Worth resident Mike Herndon doesn’t know if that’s what happened to a moldering house in his neighborhood on Burlington Court, but he’s frustrated the home isn’t being maintained by the bank or owner.

JPMorgan Chase filed to foreclose on the home in 2010, according to Palm Beach County court records. Herndon said the owner left soon after. The most recent court action taken was in July 2013, but there is still no final judgment. A message to Chase was not returned by deadline.

The Burlington Court home has slowly deteriorated. A leak in the roof turned into a large hole that different property maintenance firms have repeatedly tried to cover with a tarp. Last Thursday’s heavy winds pulled the tarp off again, taking roof tiles with it.

Palm Beach County put a $50-a-day lien against the home in July.

“I have been writing letters and emails for the better part of three years trying to get this property taken care of,” Herndon said.

CFPB Takes Aim at ‘Zombie’ Foreclosures (aka Zombie Titles)

By Kate Berry, MAR 12, 2014

The Consumer Financial Protection Bureau plans to address the growing problem of

vacant and abandoned properties that banks and mortgage servicers have walked away from

to avoid maintaining the homes.


Some borrowers are being harmed when a mortgage servicer starts a foreclosure but then fails to complete it, leaving borrowers on the hook for the mortgage debt, taxes and maintenance even though they may have already moved out, said Laurie Maggiano, the CFPB’s servicing and secondary markets program manager.

“The CFPB is beginning to look very closely at abandoned properties and zombie foreclosures,” Maggiano said Tuesday at a conference sponsored by the Federal Reserve Bank of Cleveland. “There is direct borrower harm if a borrower believes a foreclosure on their property has been conducted and they are no longer responsible, and months or years later find out that they are, that there was never a foreclosure and they have large financial responsibilities that they never knew about.”

Consumer advocates have repeatedly asked the CFPB to address the issue, saying servicers are not complying with certain disclosure requirements to borrowers and anti-blight provisions that require banks to release the lien on a property or complete a foreclosure sale, rather than leaving a property in limbo.

The CFPB is participating in several industry-led task forces to try to identify the hundreds of thousands of homes that have been dubbed “zombie foreclosures.”

Bank “walkaways” typically occur on low-value properties. Often a bank or mortgage servicer will determine that the cost to repair a home is more than the property is worth, and may choose not to complete a foreclosure. But that means the borrower has to continue paying the debt, taxes and upkeep.

Servicers typically flood defaulted homeowners with as many 250 letters and phone calls telling them their home is going into foreclosure, says Peter Skillern, the executive director of Reinvestment Partners, a Raleigh, N.C., nonprofit. But they usually fail to notify the borrower when the foreclosure is stalled.

“They are pushing the borrower out of the home, which results in abandonment,” Skillern says. “Servicers need to make sure they are accurately communicating the status of the foreclosure process to the borrower.”

Nationwide there are roughly 152,000 vacant or abandoned homes for which the servicer has not taken title to the home, says Daren Blomquist, a senior vice president at RealtyTrac, the Irvine, Calif., data firm. These properties make up roughly 22% of the 676,000 bank-owned homes that are held by banks and not listed for sale.

These zombie properties are not included in the bucket of roughly 740,000 properties currently in the process of foreclosure. Chicago, Dayton, Ohio and Philadelphia are among the cities with large numbers of so-called zombie properties.

The CFPB found “it was extremely common” for servicers to charge off low-balance loans and not notify borrowers or municipalities if they did not complete the foreclosure and take title to the property, Maggiano said. As a result, borrowers often were not notified that they were still responsible for repaying the mortgage debt, taxes and code violations.

“Most of the time [the servicers] didn’t notify anybody, they just took [the home] off their books. They stopped servicing it,” she said.

Though banks and servicers are not technically required to communicate with borrowers about lien releases or charge-offs, an obscure provision of the Truth-in-Lending Act requires that servicers send periodic statements every month to borrowers who have liability for delinquent mortgage debt.

That provision now is “pushing servicers to release the borrower from liability for the debt,” Maggiano said. “So, it’s not a technical requirement in our regulations…but we consider that to be a responsible communication to borrowers.”

“Servicers are changing their behavior and communicating with borrowers about lien releases,” she added.

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