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
The Drag of Foreclosure
Home foreclosure is a drag. Nobody buys a house just to stop making payments and trash their credit. Nobody wants to spend hours on the phone trying to renegotiate their mortgage, or go through the hassle of moving if they do not have to. However, besides the physical and emotional toll foreclosure proceedings can take on you, foreclosure can be a drag in court too, literally speaking. That is not always a bad thing for the homeowner. There seems to be a double standard against the people who have not paid. Continuances are given to the plaintiffs if they do not have their witnesses in place or if they do not have all their paperwork, but if the foreclosure defendant does not come prepared, then he loses. Thus foreclosure defendants have to be Boy Scouts at every hearing—they have to ‘Be Prepared.’ However, they can use a continuance to their advantage. A continuance puts time on the homeowner’s side, and often time is what is needed to pursue an alternative resolution, such as loan modification or short sale. Foreclosure is a drag, but you can use that drag to bring the best benefit to a bad situation. Consult competent legal [...] Read More
Setting New Goals with Legal Advice
If you woke up tomorrow and your life were perfect, what would it look like? (Probably you would not have a foreclosure notice in that picture.) The next question is, What is preventing you from reaching your goal? And what are you going to do about it? You can decide NOT to play Lotto and you are guaranteed NOT to win enough money to save your home from foreclosure. Or you can launch a Foreclosure Defense to try to save what credit you can. If you do not launch a legal defense against a foreclosure lawsuit, in most cases you will wind up with a foreclosure. With a Foreclosure Defense, the idea is to wind up with something else. Foreclosure Defense is not to put off the inevitable; however, time is a positive side-effect, which you can use to pursue an alternative outcome, such as a mortgage modification or a short sale. You are not necessarily going to win Lotto if you launch a legal defense, and you are not going to get a free house. A Foreclosure Defense aims to bring you the best benefit in your circumstances. Remember, life coaches are neither covered by health insurance nor are [...] Read More
Foreclosure Maze
King Minos imprisoned the Minotaur in a labyrinth more than a few millennia ago. Today distressed homeowners enter a maze of the foreclosure process without a map and unsure of the consequences at each option. Foreclosure Defense can review the choices to help you head towards the best benefit. Early labyrinths were designed as a singular, circuitous route—one long path without choices—so if you simply kept moving in the same direction, you would eventually reach the end. The foreclosure process, however, more closely resembles a corn maze, with turns and blind corners full of unexpected results for the layperson. No one can predict the outcome of a legal proceeding, but good legal counsel can let you know what the possibilities are, and what options are available to you at each choice point so you can make informed decisions in the present for the best result in the future. You are not going to come out at Hampton court. Even if you are a geographical genius, a foreclosure defense is not going to bring you a free house. But it does give you an opportunity to look over the top and figure out the best place for you to go (like [...] Read More
Robo-Signers Signing Checks in Foreclosure Settlement
The robo-signers are getting ready to write settlement checks to their foreclosure victims. Nearly all the states in the Union and D.C. sued the five largest mortgage servicers for “misconduct [which] resulted in the issuance of improper mortgages, premature and unauthorized foreclosures, violation of service members’ and other homeowners’ rights and protections, the use of and false and deceptive affidavits and other documents, and the waste and abuse of taxpayer funds” (Case 1:12-cv-00361-RMC Document 4-1)…and they won. The lawsuit paid out $25 billion nationally, with Florida’s portion set at $8.4 billion, some of which went directly to the State and some will go to loan modifications, leaving $170 million to be paid out in cash to Florida borrowers. With a current roster of 167,398 eligible Florida borrowers on the list, each stands to receive about $1,000 if divided evenly and depending on how many of them participate. To be eligible for a check signed by a robo-signer, you have to have lost your house to foreclosure between January 1, 2008 and December 31, 2011 with your mortgage serviced by Bank of America, JP Morgan Chase, Wells Fargo, Citigroup, or Ally Financial. Postcards went out last week to those on the [...] Read More
Some Like It Cheap
Bankruptcy is not for everybody. Neither is foreclosure. Some homeowners may be better suited in a loan modification program, while others would benefit most from a short sale. Modern room rates at the Waldorf Astoria in New York start in the $300’s, but some couples can enjoy the famous hotel’s hospitality for only $16.80 per night. If you are old enough to have a reverse mortgage, you could be eligible for 1950’s pricing at the Waldorf. However, though you might benefit from room service at the Waldorf, certain conditions apply: it had to be your honeymoon and you have to have the 1950’s hotel receipt…and you have to still be alive. Similarly, certain conditions apply to various debt resolutions plans for homeowners. No single solution is going to fit everybody. There is an assortment of options, which differ in eligibility and benefit for homeowners, depending on their situations. Seek competent legal counsel to review the options available to you, and which would bring the best advantage given your circumstances. Read More
Foreclosure Forefront: Compensation to Some Borrowers
The lawsuit brought against Bank of America, JP Morgan Chase, Wells Fargo, Citigroup, and Ally Financial for misconduct in lending practices and foreclosure procedures has paid out compensation to Florida homeowners in the form of loan modifications, principal reductions and other relief benefits. But there is still money left in the bag. Florida borrowers have received nearly a quarter of the benefit due from a landmark lawsuit involving most of the Union against five of the nation’s largest lenders. Florida borrowers have been paid $1.7 billion so far. That is good news…unless you are one of the homeowners still waiting for some of the nearly $6 billion leftover. The State has collected its full payment of $334 million, and a recent report states about 23,000 Floridians have received funds from the case, with benefits averaging $74,000. That is good news…with more good news still due. Read More
Mediation In Lieu of Foreclosure
Foreclosure Mediations are often a waste of time…except when they are not. Many Foreclosure Mediations have ended in a HAMP (Home Affordable Mortgage Program) modification, which the homeowner is entitled to anyway without the time and expense of mediation. While Foreclosure Mediations are no longer mandated in Florida, homeowner distress—mental and in real estate—continues to thrive in mediations and other legal procedures. In many cases there are no good answers, but when your home and financial future are at stake, it may be worth looking at your legal options. And every now and then a resolution stands out that is better than the rest. Every now and then, instead of a HAMP modification, a Foreclosure Mediation results in a Deed-In-Lieu of Foreclosure. A Deed-In-Lieu of Foreclosure (DIL) is defined in layman’s terms by the Florida Bar as “a cancellation of your mortgage if you voluntarily transfer title of your property to your mortgage company. Usually you must try to sell your home for its fair market value for at least 90 days before a mortgage company will consider this option.” However, once the process is begun, generally it has to be completed within 90 days of initiation. While a DIL [...] Read More
Quick Draw of Non-Judicial Foreclosure
Texas has the fastest foreclosure in the West…and any other part of the United States according to numbers at the end of last year on RealtyTrac. While the national average was 348 days, Texas could foreclose in only 90. Florida was averaging 806 days, and New York was the empire state of slow foreclosure at 1,019 days. A foreclosure is a legal proceeding for the collection of real estate mortgages and other types of liens on real estate, which results in cutting off the right to redeem the mortgaged property and usually involves a judicial sale of the property to pay the mortgage debt. And how lenders deal with that proceeding differs from state to state depending on whether or not a judge is involved in the process. The slow draw of judicial foreclosure is good news for homeowners, giving them an opportunity to examine and question the claim against them. The problem with non-judicial foreclosure is that it is a shortcut of due process and gives the oversight to the lenders (not a judge). You cannot put up a defense just to put off the inevitable, but with time as a side-effect of a foreclosure defense, you have the [...] Read More
FDIC & Where Did My Mortgage Modification Go?
The good news is that there has not been a run on the banks. The bad news is that FDIC insurance could be responsible for your bank’s reluctance to modify your mortgage loan. In 1933 the Glass-Steagall Act created a temporary governmental corporation called the Federal Deposit Insurance Corporation (FDIC). Seventy-nine years later, 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. Because of FDIC insurance, banks are often better off to foreclose instead of modifying. When one bank buys another, the buying bank is not inspired to mitigate the losses since FDIC will pay the buying bank at a profit for distressed property. Thus the lender, or servicer, is not highly motivated to modify the loan. What is good for the bank is not always good for the homeowner, and vice-versa. Read More