Credit Card Lawsuit Lawsuit News

November 8, 2012

Boca Raton couple tormented by foreclosure that won’t go away

Deborah Strassburger fans her hands in front of her face trying to stem the tears. She sighs.

“I’m sorry,” she apologizes unnecessarily.

It’s been three years since the foreclosure, the eviction notice, the yard sales.

Time has passed since she and her husband, James, were given 10 days to vacate their Boca Raton home of 19 years, the one where she raised her two children.

The couple — Deborah is 60, James 58 — moved into a small ground-floor apartment and tried to move on.

Then the phone rang.

Here, at the tail end of 2012, Florida’s new foreclosure filings have tapered from their 2008 and 2009 peaks. Palm Beach County’s high of nearly 32,000 new filings in 2009 dipped to about 12,000 last year. Many have wended through the court system, selling at foreclosure auction for a fraction of what was owed on the mortgage.

And, it’s probably safe to say, most homeowners hope that is the end of it.

But in 42 states and the District of Columbia, lenders can continue to pursue the borrower for the unpaid debt, called a deficiency judgment. In Florida, the lender has five years to file to claim that debt and up to 20 years to collect it. Banks can pursue the debt themselves, or, it may be sold to private collection firms for pennies on the dollar.

Last month, the inspector general of the Federal Housing Finance Agency, released a report that said foreclosure losses could be reduced if lenders and mortgage servicers more aggressively go after borrowers for that unpaid debt, especially those homeowners who can afford to make payments but choose not to.

Federal mortgage backers Fannie Mae and Freddie Mac pursued just 35,231 deficiencies nationwide in 2011 with a combined total value of about $2.1 billion. Of that, just $4.7 million, or 0.22 percent, was actually recovered, according to the report.

In Palm Beach County, the clerk of court’s office found 73 motions for deficiency judgments were filed in the past year, some dating back to foreclosures originally filed in 2007.

“I would assume we’ll see more of this happening,” said Delray Beach-based foreclosure defense attorney Audra Simovitch, about the effort to collect the unpaid mortgage debt.

Because on the national foreclosure roller coaster, just when you think the ride is done, there’s another curve ahead.

The man calling Deborah Strassburger on a Friday afternoon last month was from NSM Debt Recovery, a division of Texas-based Nationstar Mortgage. He told her she owed more than $100,000 in unpaid debt stemming from the foreclosure.

The Strassburgers were shocked and confused. It wouldn’t be the first, or the last, time.

One West Bank, acting as a servicer for a private trust, is the entity that foreclosed on them — not Nationstar. They also thought their deficiency was waived during the lengthy foreclosure proceeding.

It had been a long, cruel journey, they said.

The couple refinanced into an adjustable rate mortgage in 2006 that ended up with high-risk lender IndyMac Bank. They realized they were in trouble in 2009 when their rate was about to adjust and James’ flooring business collapsed with the economy. By then, IndyMac had filed for bankruptcy in what is considered one of the largest bank failures in U.S. history. The Strassburgers applied for a loan modification and began negotiations with IndyMac successor One West.

During the process, they were foreclosed on.

The home was sold at auction in February 2010 and they were evicted.

“We got rid of all our possessions to cram into this apartment,” said James Strassburger, who got a job with the apartment complex doing service repair calls on units. “We put $3,800 down and signed a year lease.”

Then, six months after the foreclosure auction, they got a letter congratulating them on their successful loan modification. The bank vacated the foreclosure sale.

“You should be happy, we just gave you back your house,” Deborah remembers the bank’s attorney saying.

“We weren’t getting the house back, we were getting slapped with huge back payments that there’s no way we could pay,” said Deborah, a career nurse.

They tried to execute a short sale on the home and went through mediation with the lender. When all failed, the house returned to the auction block. It was bought back by the bank in January and sold to a new owner for $110,000 in July.

The foreclosure judgment against the Strassburgers was for $338,000. They say they were told during mediation that the lender wouldn’t pursue the deficiency — typically the difference between what is owed and how much the home appraises for at the time of auction.

“But we could never get them to put it in writing,” said Simovitch, who represents the Strassburgers.

One West declined to comment for this story. And it’s unclear how Nationstar got involved. It did buy Colorado-based Aurora Loan Services in July, but how Aurora got the Strassburger debt is also unclear.

Douglas Hannah, managing director of Silverleaf Advisors in Miami, said debt collectors and lenders have been waiting for the market to improve before pursuing people for unpaid mortgage amounts. Silverleaf buys mortgages from lenders, processes the foreclosure and decides whether to pursue the deficiency.

“I’m not interested in throwing Mr. and Mrs. Jones out into the street,” Hannah said. “Our business model is for strategic defaulters who are hoarding cash and not paying on their commitment.”

A strategic defaulter is defined as someone who can afford to pay the mortgage but walks away for other reasons, such as the home’s lost value.

Hannah said he typically can recoup between 15 percent and 20 percent of the deficiency. But if a person declares bankruptcy, he may not get anything.

“When you sign a personal guarantee, you are saying you stand behind it and you will pay that debt, but a lot of people are turning their back on that obligation,” Hannah said.

The Strassburgers said they tried to work within the system to keep their home and make the bank whole. But after three years, financial ruin and their retirement dreams dashed, they just want to be free of the foreclosure.

“It is emotionally tearing me apart,” Deborah said.

“This is like the case that will never end,” said Simovitch, who took on a new client last month being pursued for a deficiency judgment stemming from his 2009 short sale.

Then the phone rang again.

Nationstar said the Strassburgers had been referred to its debt collector “in error,” a fact its attorney confirmed to The Palm Beach Post. That was it. Doesn’t mean the debt disappeared. But Nationstar said it is no longer pursuing it.

“That will be nice if it’s true,” Simovitch said. “You can’t trust that a debt collector won’t come after them at some point,” she added.

It’s hard to hope anymore.

“I don’t know how much more of this I can take,” said Deborah, whose nurse’s composure cracks only once when talking about the ordeal. Sitting in her small dining room, felt pumpkin placements on the table, she’s asked whether here is someone else is living in her former home. There is.

“It was ours for 19 years,” she says holding back tears. “We drive by every once in a while, just drive by.”





Phone number:

Email address:*

Comments and questions:

* - required fields.