MIAMI, Oct. 7 /PRNewswire/ -- A highly innovative new legal strategy was recently confirmed by a Broward County court late this summer as a viable method for protecting struggling condominium and homeowners' associations across Florida. It also holds promise as part of a national solution to the real estate crisis.
The legal strategy, called the "Mortgage Terminator," was conceptualized by the law firm Association Law Group (ALG) -- zealous advocates for the welfare of community associations and legal innovators well regarded for recent strategies including "Blanket Receivership" and "Reverse Foreclosure" that have helped countless associations across Florida.
The Mortgage Terminator provides an innovative solution for associations that own units through their own foreclosure that are worth substantially less than the mortgages affecting such properties and may allow associations to own such units free and clear without any mortgage. Specifically, this new legal strategy requires a first mortgage holder to either initiate foreclosure against the financially upside down unit or release its mortgage from the property so that the association can sell the unit to recover its past due maintenance assessments, late fees, interest, attorneys' fees and costs.
The first Mortgage Terminator case was filed against Citibank earlier this year involving a Miami Beach property where Citibank then volunteered to release its mortgage without a fight, thereby giving the Association title to the unit free and clear. Now the Mortgage Terminator strategy has worked again, this time through a Broward County court case. A default final judgment was entered by the court on August 13, 2010 against Defendant Wells Fargo Bank, N.A., in favor of Palm Aire Gardens Condominium Association, Inc. ("Palm Aire"). Palm Aire had foreclosed on the property and took title on December 22, 2009. However, as of such date and despite its borrower being dispossessed from title to the property, the first mortgage holder, Wells Fargo Bank, was not foreclosing on the property. Palm Aire's attorney, Association Law Group, again implemented the Mortgage Terminator strategy, this time forcing Wells Fargo to either initiate foreclosure on the property or release its mortgage. When Wells Fargo failed to act in defense of such lawsuit and Judge Dale Ross entered a Default Final Judgment in the case in favor of Palm Aire. Among other things, the Judgment provides that "Wells Fargo is declared to have abandoned its Mortgage and any claims it may have on the Property; that it has no estate, right, title or interest in the Property." As such, Palm Aire now owns the property free and clear of Wells Fargo Bank's mortgage. Since this case, Palm Aire has already filed another Mortgage Terminator case and been granted a second judgment stripping another mortgage from a property it owns.
"We believe that these Mortgage Terminator cases are the first time in the State of Florida, and perhaps in the entire country, where condominium associations have successfully stripped mortgages from properties they own," explained Ben Solomon, a partner and co-founder of Association Law Group. "While banks argue that such delays are sometimes related to working things out with their borrowers, in these cases their borrowers don't even have title to the properties anymore. This underscores how some banks are acting in bad faith when they fail or refuse to foreclose on their troubled assets to the severe detriment of condominium associations. It is time for associations to get aggressive against banks who are sitting on the sidelines waiting for the market to improve. ALG's Mortgage Terminator is a legal strategy that finally gives banks a legal ultimatum."
For more information on ALG, please visit their website at www.AssociationLawGroup.com.
Christina E. Daigneault / Orchard Strategies
SOURCE Association Law Group