Emerald Coast Legal Beat

I am proud to announce the launch of the firm’s new personal bankruptcy website at www.destinbankruptcyattorney.com. The website provides information tailored to the firm’s personal debt relief services focusing on Chapter 7 and Chapter 13 Personal Bankruptcy.

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Effective April 1st, 2009: MANDATORY MEDIATION IS NOW REQUIRED IN “OWNER-OCCUPIED” RESIDENTIAL MORTGAGE FORECLOSURES in the First Judicial Circuit.

Pursuant to Administrative Order 2009-18 (signed March 17, 2009), as of April 1st, 2009 lenders (other than individuals) who desire to file foreclosure in Okaloosa, Walton, Santa Rosa, or Escambia County, Florida, must comply with Administrative Order 2009-18 (requiring mediation and setting forth specific procedures for same).

There are a number of new procedural requirements in the Administrative Order. For more information or assistance with compliance issues, feel free to contact The Gilmore Law Firm, P.A. at (850) 650-0546 or via E-mail: rob@myfloridalawyer.com 

Website: www.myfloridalawyer.com

Robert Gilmore

Attorney Blogs destin, foreclosure, mediation

The Florida Supreme Court is reviewing a request for rule changes requiring all foreclosure cases be submitted to mandatory mediation prior to foreclosure judgment being rendered. Given the vastly different rules throughout the state circuits, a statewide uniform rule set will prove valuable for lenders and will provide a chance for borrowers to actually discuss their circumstances with their lenders prior to the final hearing. I am in favor of the proposed rule change.

Rob

• The Gilmore Law Firm, P.A.
• Visit - www.myfloridalawyer.com

Attorney Blogs defense, destin, florida, foreclosure

It is an utter shame the Okaloosa County Commissioners voted to walk away from the planned Okaloosa Courthouse Annex this week (and after years of planning and millions of taxpayers dollars spent). A safe, secure and adequate judicial facility is needed in Okaloosa County. I can’t believe this is the final chapter. However, I do believe local attorneys and the judiciary need to do a better job of educating the public and explaining the need for a new judicial facility in the future - because spending on a new annex will never be a politically correct project.

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The government announced the specific guidelines for qualifying for refinancing of distressed loans under the Federal Government Mortgage Bailout will be announced on March 4th. However, the latest CNN reports today indicated the bailout guidelines will closely follow recent guidelines set forth in the FDIC INDYMAC PROCEDURES. You can review the FDIC INDYMAC program at http://www.fdic.gov/consumers/loans/modification/indymac.html or by visiting www.fdic.gov for more consumer information. 

As reported on CNN, federal mortgage modification/refinance programs will (in general)  first consider a lower interest rate to reduce monthly payments to within prescribed debt to income ratios, then longer amortization periods, and finally principal forebearance may be reviewed. 

It will be interesting to review the specifics when released and to see how many local banks participate in the mortgage bailout programs. Given that a considerable number of the local foreclosure properties are investment properties, it is yet to be determined if or to what extent the federal bailout programs will effect the local real estate markets.

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We have received multiple calls and requests for consultations over the past month involving foreclosure and questions regarding alternatives to foreclosure.  The inquiries generally fit into one of two scenarios: (a) a foreclosure complaint is imminent or has been filed and a defense to the foreclosure is sought; or (b) the mortgagor is current on the mortgage but income can no longer support the debt service and people are asking what to do, what are the alternatives, what are the consequences. If you fit in either of these categories, you are not alone. 

Every situation is different depending on the type of loan, type of property, value of the property, the lender, specific documentation, and the details of the borrower’s financial and personal situation. Thus, this article is not intended to be legal advice or relied upon as legal advice by any person, but is offered only as general comments on foreclosure and frequently asked questions.

What will happen if I just walk away and don’t make any more payments? Your credit score will be damaged and all matters tied or related to having a good credit score will be damaged. The credit damage will be severe and lasting. Foreclosure proceedings will be commenced, your property sold at auction, and depending on the amount bid for the property - a deficiency judgment could be entered against you (which could be foreclosed against other property you own).

What are the alternatives to foreclosure ? Generally, the alternatives are either: (a) to seek a loan modification; (b) sell the property or short-sell the property; or (c) seek to give the lender a deed-in-lieu of foreclosure. This list does not provide all possible alternatives, just the most common. For example: in some situations, people may desire to seek a defense against the foreclosure, or seek protection through bankruptcy (a last resort alternative in my opinion).

LOAN MODIFICATION: Call your lender’s loss mitigation department and ask if they offer or have any options for modifying your loan.  However, in my experience, if you are current on your mortgage, the lender will not likely be receptive to modifying a loan that is current. If you are behind on your mortgage (or in foreclosure), be prepared to provide your lender with current financial information (income, debts, assets, liabilities, etc.).  Loan modification relief generally means -possibly an interest rate reduction, a longer amortization, interest-only payments for a short period of time, deferred payments for a short period, or some other form or combination of loan modification to lower your payments. However, understand, this is not automatic and it is up to the individual lender and their guidelines as to whether or not you may qualify for a loan modifications.

NOTES/COMMENTS: If Congress grants greater authority to bankruptcy courts to modify loan documents in certain circumstances, lenders may become more receptive to loan modification requests prior to actual defaults. We will have to wait and see if this becomes reality though.  

SHORT-SALES: A short-sale is basically where a lender agrees to release their mortgage for less than the current mortgage balance due on the property (thus allowing the property to be sold for a price less than what is owed on it).  I suggest obtaining a current market analysis from a professional realtor or a real estate appraiser to come to a current value of your property. If you are seeking approval of a short-sale of your property, you will be required to obtain your lender’s approval (a written contract detailing the terms of the sale and closing). The lender will require your current financial information, a proposed/draft settlement statement detailing the proposed sale and closing, a hardship letter from you detailing your personal and financial reasons for seeking the short-sale, and other documentation and agreements - all to determine whether or not they will approve the short-sale and also to determine the terms and conditions of their approval (including how deficiency will be handled). In terms of deficiency amounts, I have heard of lenders forgiving the difference (raises other tax issues), but more than likely (and depending on your particular situation) the lender will either want to collateralize the deficiency with other property you own and/or will require you to enter into an unsecured promissory note for the difference. Of course, there is no standard here, it’s all on a case-by-case and lender-by-lender basis.

COMMENT: Be aware of anyone trying to sell you assistance with a short sale negotiation if their agreement or services contract gives them a right to place a lien on your property to secure payment of their fees. First, short-sale approval is never automatic, and if the short-sale is not approved, you could end up with an additional lien on your property to secure payment of fees for a failed attempt to negotiate a short sale. I would highly recommend a real estate attorney to assist with short-sale negotiations and documentation.

DEED-IN-LIEU: In limited circumstances, you may be able to negotiate with your lender to deed the property back to the lender in lieu of foreclosure. The usual reasons why a lender would do this are to avoid time delay and the costs of litigation and foreclosure proceedings. In reality, I have yet to see or hear of a single institutional lender accepting a deed in lieu of foreclosure. However, I cannot say it does not happen, especially where the mortgage is held by private companies or among individuals.  The advantages on the borrower side include less damage to personal credit scores and, depending on the circumstances of the deed-in-lieu, possible forgiveness of any deficiency amount.

COMMENT: If you are considering a deed-in-lieu of foreclosure, I would strongly recommend you hire a real estate attorney to either prepare or review the actual deed-in-lieu language prior to the execution and delivery of the deed - because it is important that the language be correct.

FORECLOSURE: If you are facing foreclosure you should contact a lawyer immediately. Do not ignore a foreclosure complaint. You only have 20 days to respond. Each case is different and there may be defenses available, it depends on the circumstances of each loan. However, in addition to potential ssible defenses, there may be options regarding future deficiency judgmentsthat may either avoid or reduce potential deficiency judgment.  

Feel free to contact the firm for more information or to schedule a consultation.

Robert Gilmore

Robert Gilmore / E-Mail: rob@myfloridalawyer.com

www.myfloridalawyer.com

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Today, President Obama took the oath of office as our country’s 44th President.  I witnessed the historical ceremony as it happened (via CNN/ABC) with my wife and 2 year old.  What a day for our country. I am proud and a bit overwhelmed at the enormity of it all. I cannot remember a time in my lifetime when a man has inspired so many. I am among those inspired by the message of hope, hard work, and unity. Again, I am again reminded that we are blessed to live and work in the greatest country on the face of the earth. When inspired, no hardship can endure against our people’s collective effort and hard work.

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Dog Days of Summer

Pet Trusts? Due to the response I have received from pet owners on this topic, I offer the following brief introductory article.

Historically, upon disability or death, pet owners provide for their pets through informal arrangements with family or friends. Some pet owners may make their wishes known in a last will and testament. However, there is an alternative for pet owners interested in having a more defined and legally enforceable plan for the care and welfare of their furry (or not so furry) family members.  

Florida’s Trust Code, Section 736.0408, Florida Statutes, allows a pet owner to setup an express (written) trust for the care and welfare of the owner’s pets that are alive during the owner’s lifetime. In a nutshell, a pet trust is a written document (the “trust”) signed by the pet’s owner (the “settler”) that provides funds (“property”) to be held in trust and managed/expended by a person (“trustee”) for the care and welfare of an animal. Pet trusts are required to be in writing and can be accomplished either inter vivos (during the owner’s life) or by testamentary instrument (upon the owner’s death), provided in either case that the pets are alive during the owners life. The owner can set forth in the trust instrument when the trust will terminate (prior to the pet’s death). By law, a pet trust terminates on the death of the pet, or, if the owner has more than one pet alive during the owner’s life, the pet trust can be setup to terminate on the death of the last surviving pet. Fla. Stat. 736.0408(1).

Enforcement of the pet trust is generally by a trustee or enforcer designated in the trust instrument. However, if no trustee is appointed (or the last designated trustee is no longer able or willing to serve) the court may appoint someone to enforce the trust upon request from a person having an interest in the animal’s care. See, Fla. Stat. 736.0408(2) (2008). The provision for enforcement overcomes the prior legal hurdle of unenforceability due that pets are not natural persons, do not qualify as beneficiaries, and cannot enforce the trust terms. 

The trust funds to be used for the pet or animal may only be expended for the intended use set forth in the trust (the care and welfare of the animal). Although the statutory language “intended use” leaves considerable flexibility, the court retains authority to determine if the value of the trust property exceeds what is required for the intended use. Any excess funds must be distributed to the owner (if alive) or as part of the owner’s estate (if deceased). See, Fla. Stat. 736.0408(3) In the absence of direction from the statute itself (or from court interpretation via case law), the recommended course of action as to “how much money can we leave for our pets” would be to exercise reasonableness and prudence under the circumstances. Thus, it is not advisable to leave Boots, your eighteen year old poodle, the million-dollar inheritance from your great uncle. However, if Boots is a 2 year old pure-bred race horse headed for the triple crown, a million dollars may not be sufficient. 

 Issues pet owners may want to consider regarding formation of a pet trust:

• The type and number of animals (and their estimated lifespan);
• The pet’s standard of living:  recreational activities, grooming, toys,  veterinarian care, services, medications, disabilities, and current/future special needs of the pet.
• Amount of funds required and how the trust will be funded.
• Persons to be designated trustee and alternates.
• Authorities to be given the trustee.
• End of life issues and health care decisions for the pet.  
• Arrangements for the pets burial or cremation.
• Whether or not the trustee will be paid for services or reimbursed for expenses.
• Contingencies for termination of the trust prior to the pet’s death; 
• Disposition of any remaining trust property upon termination.

Because more and more of today’s pet owners consider their pets equal members of the family, pet owners may desire legally enforceable plans for their pets future care and welfare. The Florida Trust Code provides one viable and legal alternative for those interested.

I welcome comments on the article and/or topic of trusts for pets.

Robert Gilmore, Esq.

The Gilmore Law Firm, P.A.

www.myfloridalawyer.com

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We have invested in new computers and software upgrades for the new year. The upgrades are slated to be installed the second week of January. We ask for everyone’s patience as we upgrade our systems and complete the transition.  We will be replacing our current system with ABACUS LAW and updating our server software to alllow our attorneys and staff much greater flexibility, speed and remote-access. All of the changes are geared to improving client service and lowering costs through greater efficiency in our operations.

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