The FDIC Footfall on Home Loans
It takes the owner of a loan to modify that loan…the other shoe to fall is FDIC insurance. A foreclosure often nets a bank less than half of the loan’s unpaid balance, so why do they not negotiate instead of letting the home go into foreclosure? Easy answer: money. As banks buy banks and take over loan servicing, they are insured for loss through the Federal Deposit Insurance Corporation. In 1933 the Glass-Steagall Act created a temporary governmental corporation called the Federal Deposit Insurance Corporation (FDIC). The FDIC guarantees the safety of deposits up to $250,000 per depositor per insured bank. Thus bank customers are assured a certain amount backed by the federal government. However, that insurance may interfere with your mortgage negotiations. The bank may let your house go on the courthouse steps for far less than what you could have gotten in a short sale. That is not necessarily the bank being lazy. That is the bank making more money through an FDIC claim (with the added benefit of not having to go through the hassle of negotiation with the homeowner). Because of FDIC insurance, the lender, or servicer, is not highly motivated to modify the loan. That [...] Read More
Putting Time on Your Side in Foreclosure
Improper paperwork has plagued foreclosure plaintiffs. With firms like David Sterns specializing in foreclosure fraud, homeowners have been inspired to seek foreclosure defense. Lenders, however, are sidestepping into voluntary withdrawal so they can straighten up their documents and re-file. The rules of evidence have been largely ignored in the mass of foreclosure filings. An affidavit of the bank, by the bank, and for the bank is hearsay, unless it is a proper business record. For a document to be admissible under this exception, the plaintiff must show that the record (1) was recorded at or near the time of the event, (2) was recorded by or from information transmitted by a person with knowledge, (3) was recorded in the ordinary course of a regularly conducted business activity, and (4) was a regular practice of that business to make such a record. If the lawsuit is unopposed, there is no one to question the admissibility of the documents submitted as evidence. Sometimes in foreclosure defense, as soon as you begin to question the lender’s documents, the lender voluntarily withdraws. This allows the plaintiff to get his paperwork in order and then re-file, (and avoids the risk of having the judge dismiss [...] Read More
Foreclosure Mack Truck
Even if you had a broken leg, you would probably limp to get out of the way of a Mack Truck. Similarly with a foreclosure lawsuit, you may weak financial strength, but a foreclosure defense may be able to help you hobble toward the curb and minimize the negative impact. In most cases, the lender drives right over the homeowner because the homeowner does nothing to get out of the way in a foreclosure suit. Without a legal defense, there is not much to slow the lender or redirect its path. Your finances may be feeble, but if you let that foreclosure truck come at you unopposed, your credit is going to ICU for a long time with a foreclosure on your record. Even with a foreclosure defense, you are not going to hobble into a free house, and your credit will still take a hit. However, if you can steer the lender toward an alternative target like a short sale, your credit has the chance to recover faster than if it is t-boned by a foreclosure judgment. Read More
Lenders Must Wash Hands Before Returning to Work
The President shakes hands with about sixty-five thousand people annually. A private mortgage lender probably does significantly less glad-handing; however, they still have to keep their hands clean, and that means proper disclosures in the note. A standard interest calculation used by the big banks is fine for a private mortgage lender, as long as the method of calculation is disclosed; otherwise, it may leave a spot on the private lender’s hands. Courts of Law deal with just the cold-hearted facts and the application of the cold-hearted law to those facts. Courts of Equity try to provide a remedy that is “equitable” or “fair” to the parties. Courts of Law and Courts of Equity are in the same courtroom and handle the same case at the same time by the same judge, but sometimes there is a distinction in the remedy. In order to get your remedy in a Court of Equity, you must come to Court with “clean hands.” You cannot be the “bad guy.” If a lender comes to a Court of Equity with “unclean hands” the lender could win the legal argument and obtain the legal remedy, but be denied the “equitable remedy.” Sure there is soap [...] Read More
Leading & Following in Foreclosure Cases
Often upon a time, the bank’s lawyer asks the bank’s representative leading questions during direct examination in a foreclosure trial. (Questions like: Is this a business record—yes. Was it posted during the normal operation of doing business—yes. Is it your job to post it—yes.) Without opposition from the homeowner, there is no one to object, and leading questions lead to foreclosures. A foreclosure defense is not a denial of debt, but may be a way for a homeowner to pursue an alternative ending, like a short sale or mortgage modification. A foreclosure defense asks the bank to prove their case—to verify the records on the homeowner, like how much they owe and the interest rate. Meanwhile the homeowner has the opportunity to seek a different outcome. Instead of following the questions that lead to foreclosure, launch a legal defense to aim the case in a different direction. Read More
What Can Go Bad Will Go Bad in an Uncontested Foreclosure
What can go bad WILL go bad on your foreclosure case if it is unopposed. The ridiculous amount of leading questions, hearsay, and a mailbag of errors make up some of the things that go on with an uncontested foreclosure. The problems go unchecked if there is no one to oppose the bank or loan servicer with a legal foreclosure defense. Often a foreclosure trial starts with a testiliar and a business record. Is this a business record—yes. Was it posted during the normal operation of doing business—yes. Is it your job to post it—yes. The problem is that in direct address, the bank is asking the bank’s representative leading questions that plainly suggest an answer the bank would like to put forward. Without opposition, there is no one to object. Business records have to be submitted as evidence ahead of time. Banks, however, are so used to being unopposed in foreclosure cases, they do not always submit the entire record. Also, they often use an affidavit (a sworn statement by the bank, of the bank, and for the bank attesting that they own the note and mortgage, that the borrower did not pay, how much is owed, and that [...] Read More
Home for the Holidays…And Beyond
If you have not made a mortgage payment in a while, that might not be Saint Nick knocking at the door. You could be on your lender’s naughty list. Do not look for a fruitcake with a foreclosure summons. Just because you sent Santa a letter does not mean he is going to deliver a Mortgage Modification before you get a foreclosure package from your lender. If you have received a Foreclosure Lawsuit, do not wait until after the holidays to address it. Your time is limited. Seek competent legal counsel to make a proper response to the court summons. Read More
For We Like Sheep…Foreclosure Defense
“For we like sheep have gone astray” may sound nice in The Messiah, but it does not do much for a loan modification or short sale. In negotiating with your lender, quoting Handel is right up there with “The check is in the mail” and “The dog ate my mortgage payment.” Having trouble going to sleep at night? Try counting foreclosures. In November there were 29,612 foreclosure notices issued in Florida. That is a lot of sheep. About one in every 300 housing units received a foreclosure notice statewide. But herd mentality does not necessarily have to apply. Do not let your lender pull the wool over your eyes. Everyone should pay his mortgage, but a lot has happened in recent years. Lenders have made improper assignments of mortgage…and lied about them. We have seen the handwriting on the wall scrawled by robo-signers who move more in penmanship than verification. You may be among the flock, but a Foreclosure Defense is an opportunity to address your case as an individual, and use legal guidance to knit a custom strategy towards the best benefit. Do not let your rights go astray. Seek competent legal counsel to shepherd your resources towards an [...] Read More
Foreclosure Strategy: When to Walk Away…When to Run
Foreclosure options are like poker hands: some are better than others…and you have to play the hand you are dealt. Strategic default has become more popular in recent years, gaining social acceptance, transforming a ‘walk away of shame’ into a ‘smart move.’ Why spend hours on the phone with your lender when you could live in a luxury condo on cheap rent, eating out on the money you save by not having to ante upside down into a mortgage? However, what seems like a good idea in the short run may not be so ‘strategic’ in the long term. The long arm of the Office of the Inspector General (OIG) at the Federal Housing Finance (FHFA) reaches nationwide. They are coming after bad lenders and strategic defaulters alike…and they have guns. If you walk away when you could pay, you may be Wanted. (Makes ‘bankruptcy’ sound so much more attractive!) The best strategy is the well-thought-out strategy, weighing your personal and financial circumstances with your legal options to find a course that brings the best benefit to you fastest. You are not going to beat the bank and win a free house. Ultimately, the house always wins and takes your [...] Read More
Payments & ‘Contributions’ in Foreclosure Land
Charity starts at home. If you made payments on your homestead where you live, but do not own the place, that is not charity…that is wrong. Giving to your lender is not supposed to be philanthropic. Your lender is fund-raising, but not in a non-profit sort of way. A Pennsylvania woman recently found that out when she went to refinance her house and learned that she had paid her lender about $70,000 over the four years she had lived in the house she did not actually own. For more details about this case, go to http://www.abajournal.com/news/article/bank_sends_foreclosure_notice_to_woman_who_made_70k_in_payments_for_house_s/. People should pay what they owe, and they should pay it to the party they owe it to. Just because you owe A money does not mean you should pay that debt to B. Seek competent legal counsel to ensure you are addressing the proper party in a foreclosure suit. Even if you owe money and you know you owe money, you may have a legitimate complaint with the proper party owed. Read More