Being both an attorney and a CPA, Jo Ann Koontz helps clients deal with the legal aspects of residential and commercial real estate, and business and tax law. She came to Sarasota from Ohio just as the housing market started to tank and has considerable expertise in foreclosures and short sales. Since she started her own firm, Koontz & Associates, in 2011, it has grown in leaps and bounds, and it is about to move into new, larger quarters on Main Street in Sarasota. Correspondent Chris Angermann talked to her just before her move.
Jo Ann Koontz, attorney.
Q: What is happening with foreclosures these days?
A: I don’t expect to see a big flood coming on the market, as some people predict. I think the banks are controlling the inventory release of REO properties. There are 16,000 foreclosure cases pending in the 12th Circuit Court, which covers Sarasota, Manatee and DeSoto counties — active cases. So we still have a fair number to wade through.
That backlog is the result of the robo- signing crisis and volume firms or “foreclosure mills,” as they’re popularly known. These law firms were severely understaffed and manned by paralegals and brand new associate attorneys with little supervision or oversight, which led to documents being falsified or executed much later than they should have been. Once it all came to a head — many of them were shut down by the Florida attorney general — there was a stalemate for about a year and a half.
Now, we’re seeing REO cases pick up again, not only in volume but, more importantly, in time frame. I used to be able to say, “Banks are going to wait six or eight missed mortgage payments before they even start to file the foreclosure.” Now, it’s more like four or five months’ missed payments.
Q: What does that mean in practice?
A: The banks are hiring real firms with real lawyers and divvying up the cases into more reasonable workloads. I can tell when a complaint comes across my desk, based on which firm it is, how much attention I’m going to get. If they have 20 days to respond, I get a response in 20 days; whereas with the volume firms, it could be a year and a half before somebody would get back to me — I’m not kidding!
The process is back to what it should be, with people doing proper docketing and calendaring and minding the rules of the court. The downside for homeowners is that there is no more, “It will be three years and no one will throw you out of your home.” That’s gone.
Q: What about refinancing?
A: Refinances are more available now than before as a result of the Home Affordable Refinance Program. HARP allows upside- down homeowners to refinance their property. Requirements include not having missed a mortgage payment in the last 12 months and that the home is the primary residence. Those are the biggies. The loans have good interest rates and good terms. The closing costs tend to be wrapped into the loan, so homeowners don’t have out-of-pocket expenses — they may have to pay for an appraisal or credit report, but they don’t have to bring a check to closing. People like that. The loans generally don’t have debt forgiveness, so if you’re upside by $50,000, you still owe that amount, but you get out from an adjustable-rate mortgage, or you get a lower interest rate on a fixed 30-year mortgage. That makes monthly payments more manageable for people who want to keep the property.
Q: Who is likely to benefit most from HARP?
A: I recommend it when there is an elderly person who is physically unable or unwilling to move or a unique situation: I had a woman with a handicapped child who wanted to stay in her home because it was already outfitted for her needs and it would have cost much more money and hassle to do it again elsewhere. The other situation when I find refinancing acceptable is when the monthly payment is in line with what the owner would pay for rent in other places — as long as the home is in good repair and doesn’t need $20,000 of work. But if it’s a $350,000 house in North Port that’s worth $125,000, I’m reluctant to make that recommendation to a client. In that case, he needs a short sale.
Whether or not a lender participates in HARP depends on the type of loan. It’s good to pursue them, and it’s free to ask. Call your current bank first, and then, if you don’t get any response there, call any bank.NOTEStart You just need to ask the questions — “Do I qualify for HARP refinancing?” — and they’ll say yes or no. The parameters are pretty clear.
