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
Pomp & Circumstance
“Pomp and Circumstance” has been around over one hundred years, and popular at graduations since its commencement debut at Yale in 1905. It is what brings seniors a tassel closer to adult responsibility, and sometimes that means financial problems. Unemployment, debt, loss of income, and medical hardship—those are circumstances that can lead to bad credit. Sometimes those things combine to make compound problems, and all the more difficult to deal with as you try to move forward. Everybody counts on credit—whether you want a car loan, a student loan, or a home loan. If you have circumstances holding down your credit score, you are not going to get much pomp out of life. Legal resolutions depend on personal circumstances. There is no one single resolution that will work for all debtors. Seek competent legal counsel to review your circumstances and to help you set a path towards a financial goal that fits you. Congratulations to the Class of 2013. For those of you graduated from high school, many of you can now be tried as an adult, and for those graduated from college, your student loans are due. Read More
Mistaken Identity in Foreclosure
Mrs. Widow Homeowner had paid her mortgage all her life, even after her husband passed away, and she was still making her payments on time every month. First, Woolworth Wealth sent her a foreclosure lawsuit, and then she received another foreclosure lawsuit from Montgomery Mortgage. You can imagine the Judge’s surprise when both plaintiffs showed up in the courtroom against Mrs. Homeowner, especially when Mrs. Homeowner arrived with a pocketbook full of cancelled checks from her regular payments. It happens. Banks and loan servicers do not always have their records right. Just because a bank or loan servicer has the experience of handling thousands of similar accounts, that does not necessarily mean they have yours right. You may need to seek legal counsel to defend you against mistaken identity. Read More
Co-Signer a.k.a. ‘The Borrower’
What do you call someone who co-signs a loan: borrower. If you are a co-signer, then you are a borrower, you have a debt and it is your responsibility to make sure that the payments are made in full and on time. Whether you sign or co-sign, that debt affects your credit score. If you sign your name on a loan, that loan is yours. If the signer defaults, then your credit can be dinged, the debt sold, and your accounts or wages garnished before you are notified. A signer and a co-signer are jointly and individually liable. Be careful who you co-sign for, you may get more than you bargained for. Read More
Good for the Goose & Good for the Gosling
Once upon a time Mother Goose ran a big commercial bank that made home mortgage loans. She did well and had quite a number of nest eggs. Then one of them hatched and wanted to be just like her. ‘Oh my dear, it is a very difficult market right now,’ she warned. ‘How about you go off and become a nice attorney instead.’ Yet despite his mother’s honking, you Gosling Junior went out and made a private home loan to the first buyer he could find who was breathing. He did everything just the way he had imprinted from his mother, including the loan interest calculation. That was all very well and good, except he failed to disclose his methods. Sure enough, just as Mother Goose had warned him, the home loan market was tough and Gosling Junior’s borrower started missing payments. The Gosling went to foreclose and that is when he got his feathers ruffled. The Judge agreed that the borrower owed money, but the homeowner cried foul when it came to the interest calculations. The borrower accused Gosling of mallard-justed interest calculations. ‘Yes, but they are the standard calculations used by commercial banks,’ Gosling tried to explain. The [...] Read More
The Ladybug & the Home Loan
Ladybug! Ladybug! Fly away home—your house is in foreclosure! Once upon a time, Ms. Ladybug was out shopping and her house caught fire. It was not a very big house, but it was all that she had. Fortunately firemen were able to save most of it, and she got a loan to repair the rest. She moved out for the rebuilding, but that compromised her homestead status. While Ms. Ladybug was living elsewhere, she defaulted on her home loan. It was not a very big loan nor did it have a very high interest rate, but it was more than she could afford on a fixed income and with the added expense of living elsewhere. She very dearly wanted to return to her newly repaired little home, but the Big Bad Bank tried to foreclose instead. Ladybug Ladybug had to file bankruptcy just so she could fly away home. Financial trouble does not always come in threes; sometimes it comes in legions. Whether you have a single reason or multiple causes driving your debt, seek financial and/or legal counseling (depending on where you are in the default process) to help you review your options and make decisions toward your best [...] 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
Closet Space
High-end real estate is trading on closet space. For those who have everything, they need somewhere to put it, and what spells luxury better than an acreage of outfits you can only wear once? Going for $60,000 up to a half million dollars, the walk-in closet remodeled into a live-in dressing suite is all the rage for high-end homeowners. On the lower end of the housing market, increased closet space has an advantage too. For homes with closets large enough to live in, they can be converted into rentable rooms, offering affordable housing to those recently bereft of a mortgage, or those needing to consolidate multi-generational mortgage payments under one roof. The popularity of renting has increased along with higher mortgage mortalities. Payments on an upside down mortgage may be as practical as cufflinks made of cheese, thus prompting distressed homeowners to short sell their homes in favor of more affordable abodes…and that can mean renting (especially as preferable to pitching a tent in foreclosure land or sleeping under the stars of bankruptcy). If you are struggling to make a mortgage payment, examine your legal options with a competent attorney to determine what is best for you…even if you have [...] 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