%1

U.S. Bankruptcy Judge Robert A. Mark ordered 43 condos in the 1300 Ponce building in Coral Gables, Fla., out of chapter 11 reorganization and back into foreclosure in county court, the South Florida Business Journal reported yesterday. Ponce Trust LLC, Dayco Properties and Franco D’Agostino got hit with a foreclosure lawsuit in 2010 over 85 condos in the building at 1300 Ponce de Leon Blvd. In 2012, Ponce Trust filed chapter 11 reorganization to stay the foreclosure case. It reached a reorganization plan with a modified loan payment schedule the following year. The company resumed selling units and now has 43 left. However, it has sold only two condos so far this year after selling 13 in 2015. The mortgage was subsequently sold to CCP Ponce LLC, an affiliate of Tampa-based real estate private equity firm Convergent Capital Partners. On Sept. 12, CCP Ponce filed a motion to lift the stay on pursuing the foreclosure case in county court because Ponce Trust fell behind on loan payments. Ponce Trust was required to pay $3.83 million by Jan 1., 2016 but made partial payments and it still owed $1.65 million, according to the creditor’s motion. Judge Mark granted the motion on Oct. 26.

The percentage of foreclosed mortgages has reached its lowest point in nine years, according to Black Knight Financial Services' September First Look report, NationalMortgageNews.com reported. The presale foreclosure rate of 1 percent represents a 3.38 percent decline from August and a 31.23 percent year-over-year decline. There are 509,000 homes in the presale inventory, down 18,000 from the previous month and 228,000 from last September. There were 61,700 foreclosure starts for the month, a 10.32 percent reduction from the previous month and a drop of 22.78 percent from September 2015. There are 2.17 million properties that are more than 30 days late but not in foreclosure as of Sept. 30, an increase of 14,000, but down by 292,000 from one year ago.

The nation’s largest homebuilder, D.R. Horton, engaged in deceptive practices that forced the bankruptcy of the homeowners’ association for Majorca Isles in Miami Gardens, The Real Deal (South Florida real estate news) reported yesterday. Following a three-day trial, Bankruptcy Judge A. Jay Cristol entered a judgment against D.R. Horton and its employees for $16.3 million in damages, including $12.5 million in punitive damages, and said the company violated Florida’s Deceptive and Unfair Trade Practices Act. Bankruptcy Trustee Barry E. Mukamal of KapilaMukamal, LLP, and his counsel John Arrastia of Genovese Joblove & Battista, worked for more than four years on the case, representing the Majorca Isles Master Association, a homeowners association created by D.R. Horton as part of the planned 681-unit community Majorca Isles in Miami Gardens. According to Mukamal, D.R. Horton appointed its employees as the board of directors of the Majorca Isles Master Association until the association was turned over to the homeowners. During that time, D.R. Horton allegedly did not make a serious effort to collect assessments from the unit owners, and because it had failed to keep useful financial records, was unable to identify whether units had paid or not. Instead, D.R. Horton allegedly shifted the collections from the master association to other condominium associations, in a breach of the directors’ breaches of duty and loyalty.

The ongoing saga of the former Revel casino in Atlantic City, N.J., continued this week as a bankruptcy judge made a ruling that could be a "blow" for owner and Florida developer Glenn Straub but a boon for one of its tenants, the Philadelphia Business Journal reported yesterday. Straub and his legal entity, Polo North Country Club Inc., have been in an ongoing legal battle with IDEA Boardwalk Inc., the club operator tenant at the former Revel, which is now known as Ten after a rebranding last month. IDEA been in litigation against Polo North since at least 2015 when a federal judge approved the casino's sale, and since at least 2013 with former parent company, Revel Entertainment Group, when it emerged from chapter 11 protection. Bankruptcy Judge Michael B. Kaplan recently told Straub and IDEA to take their ongoing battle to state court. On Oct. 21, Judge Kaplan ruled that IDEA could remain in possession of its leased space as long as it lived up to terms of the prior lease agreement with the casino, specifically its obligation to pay rent, according to Michael J. Viscount Jr. of Fox Rothschild LLP.

The mortgage-servicing industry is still struggling to adopt technology that will help them comply with a 2014 Consumer Financial Protection Bureau regulation that placed new rules on the sector, MorningConsult.com reported yesterday. “While we applaud the investments made in compliance by certain servicers, others have not yet made satisfactory progress,” CFPB Director Richard Cordray told this year’s annual conference of the Mortgage Bankers Association in Boston, according to prepared remarks. “Outdated and deficient servicing technology continues to put many consumers at risk. This problem is made worse by a lack of training to use their technology effectively.” The 2014 CFPB rule required mortgage servicers to quickly correct errors reported by consumers and gave extra protection to borrowers in distress or facing foreclosure. Cordray said that the CFPB will try to address the problems he listed by demanding the firms having trouble with compliance work with the agency on “specific and credible plans” listing changes to information technology systems that will help firms with implementation. He also said the bureau will work more closely with the industry when crafting updates to the mortgage-servicing rule that are slated to go into effect in 2017.

A new report from a government watchdog shows that mortgage servicers’ delays in foreclosing on properties and subsequent delays in the conveyance of those properties to the Federal Housing Administration may have cost the FHA as much as $2.23 billion in unnecessary payouts, HousingWire.com reported yesterday. The report, issued late last week by the Department of Housing and Urban Development Office of Inspector General, found that HUD paid claims for an estimated 239,000 properties that servicers did not foreclose upon or convey on time, and those delays cost the FHA an estimated $2.23 billion. According to the HUD-OIG report, the watchdog reviewed a “statistical sample” of 90 claims by HUD out of nearly 250,000 loans that had indicators that they may have missed their deadlines during the past five years. Of those 90 loans, 89 missed a foreclosure deadline, a conveyance deadline, or both, the report showed. According to the HUD-OIG report, HUD paid an estimated $141.9 million for servicers’ claims for “unreasonable and unnecessary debenture interest” that servicers incurred after missing a foreclosure or conveyance deadline.

Fannie Mae yesterday launched its first sale of “reperforming loans” — <em>i.e.</em>, those that were previously delinquent but now have current payments, MorningConsult.com reported. The move is part of its aim to shrink its retained mortgage portfolio, the mortgage company said in a statement. Selling delinquent and previously delinquent loans is part of Fannie’s effort to slim down its mortgage portfolio to meet targets set in a 2012 agreement between the Treasury Department and the Federal Housing Finance Agency. Fannie will sell a pool of about 3,600 loans worth $806 million in unpaid principal balance, with bids due Nov. 1, according to the statement.