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Southern Points

Safely guiding you through today's changing mortgage environment

Spring, 2013 
In This Issue
Legislative Updates
Bankruptcy Blunders
Unknown Heirs in BK
Update to HUD Conveyance
CFPB Bulletin 2013-01
Tenant Evictions

Positive Words from Clients and Borrowers!

"Thank you for coming to visit and working alongside us.  It definitely makes our job a lot easier when working with a firm like Rubin Lublin. We found great value in your visit."

- Client


If you've received great service, we'd love to hear from you!  Please email with your comments. 

Need Training?
Do you have any new staff that need training on mortgage default laws in Georgia, Tennessee or Mississippi? 

Want to update existing staff or provide more in depth information to managers?

We are happy to prepare materials and deliver learning sessions on site for you! Just email to discuss your needs. 

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Giving Back
We feel it's important to stay active in our community, as well as yours!  Here's some of the charitable efforts we've been involved in this quarter:
  • MBA Georgia Lend-A-Hand Annual Fundraiser
  • Toys for Tots
  • StreetWise Coat Drive
  • Food Drive benefiting Norcross Co-Op
  • Junior Achievement of Tampa Bay
  • Hofstra University
  • Hospice
  • Greenfield Hebrew Academy
  • Veterans Empowerment Organization
  • Disabled American Veterans

Glen headshot

Remember when compliance was merely an afterthought? Well not anymore, as they say. During the recent mortgage crisis, our industry came under attack from the media, politicians and various consumer organizations. The actions of a few created a perception of an entire industry gone wild. I hear from many in the industry that the resulting regulation of our industry was overblown. In fact, many believe it has produced the exact opposite results that were intended. Nevertheless, as we emerge from the housing crisis of the late 2000's, this is our new reality.

Our most recent newsletter brings you updates on the legislation, regulations and perplexing court decisions currently confronting our industry. I hope your find them meaningful.

Also with this issue, we also celebrate our foray into the State of Alabama. With a robust Alabama presence, we have become a true regional firm in only our first 4 years, offering our clients the full array of mortgage default related legal services in 4 southeastern states.  Thanks to our dedicated attorneys and staff, as well as our valuable clients for making this all possible.       



Glen D. Rubin

Managing Partner 

Rubin Lublin, LLC    






Mid Session Legislative Updates: Georgia, Tennessee, Mississippi

 Written By: Heidi Billington, Partner


To keep our valued clients abreast of important changes affecting our industry, we've compiled a second mid session legislative update covering Georgia, Tennessee and Mississippi.  We will also be distributing an end of session update to alert you on bills that did pass. 


To read our Georgia 2013 2nd Mid Session Legislative Update, click here

To read our Tennessee 2013 2nd Mid Session Legislative Update, click here.

To read our Mississippi 2013 2nd Mid Session Legislative Update, click here.


Litigation Corner: Bankruptcy Blunders - Trustee Strips Lien 

 Written By: Hannah Groh, Associate


In February 2013, the Supreme Court of Georgia held that a security deed that lacks an unofficial witness signature does not provide a subsequent bona fide purchaser (BFP) with proper notice, regardless of whether the attached rider contains an unofficial witness signature. Further, such a situation does not put a BFP on inquiry notice.

The security deed at issue in Wells Fargo, N.A. v. Gordon omitted the unofficial witness signature. Attached to the security deed was the Adjustable Rate Rider, Planned Unit Development Rider, and Waiver of Borrower's Rights (the "waiver"), which were specifically "incorporated into and made a part of the security deed." The waiver was signed by the borrower, unofficial witness, and notary.

The Supreme Court noted that O.C.G.A. 44-14-33 requires that a security deed must be attested to by a notary public and one additional witness. Only a properly attested security deed that is recorded can provide constructive notice to subsequent bona fide purchasers. O.C.G.A. 44-14-33. The Court held that "the attestation of the waiver in this case cannot be substituted for the proper attestation of the security deed. Such a construct could be false and contrary to the purpose of attestation, namely for the witness to verify that the document in question has been executed by the signatories." Gordon, No. S12Q2067, 2012 Ga. Lexis, p. 6. The Court next held that the properly executed waiver fails to provide inquiry notice as to the security deed because it does not identify or describe the property purportedly to be conveyed or encumbered by the reference security deed. Gordon, No. S12Q2067, 2012 Ga. Lexis, p. 8.

The Attorneys and staff at Rubin Lublin are trained to identify potential issues with the security deed or deed of trust. It is better to identify a potential issue and be proactive in resolving it before the lender's lien position is challenged. Once the issue is identified, we immediately begin attempts to cure the defect. There are three options to cure the defect: obtain an affidavit from the witness, file a civil action, or incentivize the borrower to execute a corrective security agreement or loan modification. The key is to act decisively before a borrower files bankruptcy, which would jeopardize the creditor's secured lien position.


 Unknown Heirs Filing Bankruptcy 

Written By: Jim Sturm, Associate

anonymous man The issue of unknown heirs filing bankruptcy or being of existence during the foreclosure process has presented itself as an area of potential concern for the mortgage default Industry. The good news: no law, whether it be federal bankruptcy law or state law in Tennessee or Georgia, imposes a duty on lenders and their attorneys to search for heirs all over the world. However, the bad news is that since no foreclosure or bankruptcy statute contemplates this issue, it leaves open the possibility for costly litigation in the future.

 Therefore, we advise lenders take preventative measures at the outset of the foreclosure.   

When a borrower dies intestate, meaning without a valid will, lenders are first presented with the issue of unknown heirs. In all states, heirs consist of the same classes of people: surviving spouses, children, grandchildren, parents, siblings and so forth. For lenders and servicers, if there is no known spouse and no affidavit of heir-ship/descent appears in a title search, there is no practical way of knowing who the heirs of a borrower truly are. On top of that, the statute notice requirements do not mention unknown heirs as an "interested party" that would require notice in a foreclosure proceeding.

However, there are several "what ifs?" that should be considered. What if an unknown heir takes rights in a borrower's property, files bankruptcy, and while the automatic stay is in effect a lender conducts a foreclosure? What if an unknown heir eventually contacts the lender proving to be an heir of the borrower? This is where it is best to instill preventative measures to alleviate the possibility of future problems.

If an unknown heir contacts a lender claiming to be an heir of the borrower, a referral from the lender to the attorney should include information pertaining to the name, last known mailing address, and relationship to the borrower of that heir. The lender should also make an inquiry with said heir to determine if any other heirs of the same class exist. Sometimes, heirs may come forward claiming they have a lawful interest to a borrower's property, however that heir does not have the means and desire to retain the property. To alleviate any possible concern in this instance, the heir can quitclaim the deed.  

Lenders and servicers are best advised to keep these issues in mind. If a concern ever arises regarding the effect an unknown heir may possibly have, it is always best to consult with your attorney before taking further action. 


Update to HUD Conveyance Requirements

Written By: Craig Bower, Associate


In order to ensure that servicers and mortgagees are kept abreast of changes to FHA conveyance policies, HUD periodically issues updates in the form of Mortgagee Letters. Last year, HUD released Mortgagee Letter 2012-11, which updated HUD policies regarding four specific topics covered by Mortgagee Letter 2002-19: 1) Property Taxes, 2) HOA/Condo fees/liens, 3) Utility Bills, and 4) Manufactured Home Titles. Though there are changes to some specific policies under each heading, the most substantial change is to the reporting requirement. For each, mortgagees must now verify that the requirements have been met by documentation in the Mortgagee Comments section of Form HUD-27011 Part A. HUD may reconvey if the mortgagee fails to meet these documentation requirements.


1)  Property Taxes

Property taxes on foreclosed FHA loans must be paid in full prior to conveyance. In addition to the specific requirements set out in 2002-19, mortgagees are now required to:

        I.  Certify that all taxes on the subject property are paid in full;

      II.  Document those payments, and identify the most recent pay period in the Mortgagee Comments Section of Form HUD 27011 Part A;

    III.  Provide any documentation (receipts, bills, etc.) needed to verify payment; and
    IV.  Retain all bills/receipts/invoices, etc. in the claim file, and be prepared to provide to HUD within 24 hours of a document request.


If these requirements are not met and properly documented, HUD may reconvey or require the mortgagee to pay the back taxes and any deductions caused by the delay before submitting the insurance claim to HUD.


2)  HOA/Condo fees/liens

HOA/Condo fees are not required escrow items for FHA single-family mortgages, so payment of the fees is the mortgagor's responsibility. Upon default, the mortgagee must name and properly serve the HOA/Condo association to minimize HUD's responsibility for unpaid fees. These requirements are laid out in 2002-19. Mortgagee letter 2012-11 adds the following to these requirements:

        I.  Mortgagee must pay HOA/Condo fees not extinguished by foreclosure prior to conveyance;
      II.  Mortgagee must ensure that any pre-foreclosure HOA/Condo fees are removed prior to conveyance.


2012-11 provides a chart, breaking down the fee payment requirements between jurisdictions where pre-foreclosure unpaid Condo/HOA fees:

        I.  Survive foreclosure:  mortgagee must ensure fees/liens are paid or removed;
II.  Are extinguished by foreclosure:  mortgagee must ensure that any HOA/Condo claims are resolved.
HUD will continue to reimburse mortgagees for 100% of fees incurred between the date of foreclosure and conveyance. However, 2012-11 adds that mortgagees may also claim reimbursement for penalties/interest and other related fees/charges incurred by the former mortgagor and paid by the mortgagee.


All of the final bills, lien payments and removal of all pre-foreclosure liens must be documented in Mortgagee Comments Section of Form HUD 27011 Part A. HUD may reconvey if the mortgagee fails to meet this requirement.


3)  Utility Bills

The requirement set out in 2002-19 that mortgagees must pay water, sewer and other assessments against a property secured by an FHA loan remains. In addition, 2012-11 requires that all final bills/lien payments must be documented in the Mortgagee Comments section of Form HUD-27011 Part A. HUD may reconvey if the mortgagee fails to meet these requirements. 2012-11 also adds that when a contract for sale has been consummated, upon receipt of a work order from the Asset Manager or Government Technical Representative, the Mortgagee Compliance Manager shall:

        I.   Issue a notice of Non-Compliance, and 
      II.  Demand payment from the mortgagee in an amount sufficient to satisfy any lien or encumbrances, including penalties/interest, which prevent or delay a sale.


4)  Manufactured Home Titles

2012-11 leaves the Manufactured Home Title requirements of 2002-19 in place, adding only the requirement that all documentation supporting the proper surrender of title to the DMV by the mortgagor must be entered into the Mortgagee Comments section of Form HUD-27011 Part A. Insufficient verification may be rejected by HUD.



In conclusion, Mortgagee Letter 2012-11 puts mortgagees on notice that failure to fully document the efforts made to satisfy these HUD conveyance requirements may result in reconveyance. Since the reconveyance process results in substantial costs to clients, servicers should take the necessary steps to ensure that mortgagees remain in compliance with HUD's reporting requirements.


CFPB Bulletin 2013-01

Written By: Victor Kang, Partner

CFPB In the past few months, the Consumer Financial Protection Bureau ("CFPB") has been releasing bulletins on various aspects of Regulation X ("RESPA") and Regulation Z ("TILA").    As we lead up to the January 10, 2014 effective date of the recent amendments to RESPA and TILA, the CFPB released an advisory on how mortgage servicers are to handle service transfers.  For many in the mortgage default industry, service transfers have become a daily occurrence.   In light of the National Mortgage Settlement Agreement ("NMS"), many of the largest servicers had to transfer servicing of loans to other servicers.  Parts of the NMS also dealt with the issues of service transfers occurring during loss mitigation.   This combination of having to transfer large amounts of loans to new servicers and heightened loss mitigation requirements led the CFPB to issue a bulletin on February 11, 2013 clarifying issues pertaining to service transfers.   While the effects of the amendments to RESPA and TILA won't take effect until next year, the bulletin advises that servicers should consider implementing many of the new rules as soon as possible in advance of the deadline.   A copy of the Bulletin is available here.

The main focus of the bulletin is to ensure that the borrowers are not harmed by the transfer of servicing of their home loans.  The risk factors evaluated include what policies and procedures are in place during the transfer, so that unnecessary delays in loss mitigation do not occur.  The biggest risk for servicers during these transfers is the interruption (or, in a worst case scenario, cessation) of loss mitigation with the borrower.   The CFPB bulletin details several points of information that they will require from servicers during a transfer, including numbers, volume, training of staff, processes and procedures and troubleshooting. 

What servicers and the attorneys involved in the transfers should take away from this bulletin is that there will be an increased scrutiny on their internal service transfer processes.  While these revisions won't be in effect officially until next year, servicers should be following these procedures currently as good practice.  Not being properly prepared in service transfer situations can lead to litigation and unnecessary publicity for 'dropping the ball' in loss mitigation situations.  As attorneys for the servicers, we must be vigilant and try to prevent any situations of communication breakdowns between the servicers during the transfer.  Calls from borrowers showing conflicting letters or deadlines should be red flags that are escalated immediately.   Service transfers can be a confusing time for all parties involved, but it doesn't have to be.  By creating the plans and policies now, servicers can get a head-start on the looming amendments and improve general business practices as a whole. 


Tenant Evictions & the Protecting Tenants at Foreclosure Act

Written By: Katherine Commander, Associate

Eviction Notice In evictions, dealing with tenant occupied properties can bring some unique issues ultimately prolonging the path to possession for the purchaser at the foreclosure sale. Under the Protecting Tenants at Foreclosure Act, tenants living in properties sold at foreclosure are entitled to additional protections that may allow them to continue to occupy the property under a valid lease agreement. Here, I will discuss an overview of some of those protections, ways to make possession of the property a priority for the new owner, and some unique tenant situations our firm has seen recently.

The Protecting Tenants at Foreclosure Act was enacted in 2009 to protect tenants who entered into leases with landlords who later lost their home to foreclosure. The act requires the purchaser at the foreclosure sale, or the new owner of the property, to provide the current tenant with ninety days notice to vacate the property. Furthermore, if the tenant has a valid lease and is a bona fide tenant, then the tenant will be granted the right to stay in the property throughout the term of the lease. A tenant is only qualified as a bona fide tenant if the tenant is not the former mortgagor or a child, spouse, or parent of the former mortgagor, the lease is the result of an arm's length transaction, and the rental value for the lease is not substantially less than fair market rent for the property.   

When evaluating a lease to determine its validity and bona fide status of the tenant, a good starting place is with fair market rental value. Fair market rental value can be evaluated by pulling comparable rental values of similar properties and then presented to the court with an expert witness who may testify to the calculated fair market rental value of the property. If the rent is substantially below the proven fair market value, then the lease is not valid. This is a determination for a the court. Next, it is also important to look at the relationship between the former mortgagor. For instance, if the tenant is a parent or child of the former mortgagor, then the tenant is not a bona fide tenant who is entitled to protection under the Protecting Tenants at Foreclosure Act. Additionally, a former mortgagor who is also the tenant on the lease is not a bona fide tenant. Finally, the lease should be evaluated as an "arm's length transaction" as well.

When dealing with tenants and leases, we have seen some interesting issues arise. For instance, the former owner and landlord entered into a lease agreement with a former spouse and allowed their minor child to reside in the property. In this instance, a former spouse is not the same thing as a spouse under the protecting tenant's act. Additionally, the child was a minor child and was not listed as a tenant on the lease. This would appear to be a bona fide tenant , despite the close relationship. Another unique situation is when several rooms are rented out in a house, with separate leases for each unit. This makes it particularly hard to gain full possession of the property for the new owner because it is effectively four separate eviction cases and all tenants may not respond in the say way. In instances such as these, alternatives to a traditional eviction may be important options to explore.

As a preemptive effort or alternative to a full eviction to gain possession of a property when tenants are the known occupants, a Move Out Agreement, also known as a Cash for Keys agreement, can be very successful. This agreement will offer the occupant an amount of money as relocation assistance in exchange for an agreed upon move out date. Often, tenants are receptive to this assistance. This agreement is mutually beneficial as it allows the tenants the assistance necessary to move and often cover a deposit at a new residence as well as gaining possession of the property for the new owner at a much earlier date than going through a full eviction process or allowing occupancy for the full lease term.   


Worthy Recognition: 3 Promoted to Partner  

Victor Headshot
Victor Kang
We are thrilled to announce the promotion of Victor Kang, Heidi Billington and Tenise Cook to Partners in the Firm. They join Managing Partner Glen Rubin, Senior Partner Peter Lublin, and Bankruptcy Partner Lisa Caplan.  Mr. Kang and Mrs. Billington have been with the firm since its inception in 2009 while Mrs. Cook came to the firm in 2010.  They are all licensed to practice in both Georgia and Tennessee.

Heidi Billington

"Each of these standout attorneys have helped mold the firm and are very deserving of this achievement," commented Managing Partner Glen Rubin. "We can certainly attribute the growth of the firm to the strong leadership, dedication, resourceful thinking and quality legal work of these three individuals. This is a fitting recognition for all their hard work."

To read more about our newest partners, click here
Tenise headshot
Tenise Cook

Giving Back - MBA Georgia Lend-a-Hand Fundraiser

Rubin Lublin was happy to participate in the MBA Georgia's Lend a Hand
Camp Sunshine fundraiser for the second year in a row.  We had 15 attorneys participate in the bowling event, enough to sponsor 2 teams.  Camp Sunshine provides recreational, educational and support programs for children with cancer and their families. 

MBAG Lend a Hand 2013
Litigation associate Kelsey Grodzicki, foreclosure associate Seth Newsome, and foreclosure partner Victor Kang

April showers bring May flowers y'all,
Lauren Fierman
Marketing Director
Rubin Lublin, LLC
3740 Davinci Court
Suite 150
Peachtree Corners, GA 30092