foreclosure

Protecting Against Foreclosure

The recent housing slump occurred in large part due to homeowners borrowing more money than they could afford to pay back. The result has been a 300% increase in foreclosure rates across the U.S. Many families lost their homes and had to find alternate living arrangements.

Without better education for potential and existing homeowners, the foreclosure rate can only be expected to continue to rise.

Why We’re Asking:

Foreclosures are rarely clean transactions. The involve lots of paperwork, phone calls and adherence to strict rules. If a homeowner is unfamiliar with the foreclosure process, they may miss out on possible solutions simply because they don’t understand the laws. We’re hoping to clarify how the foreclosure process works.

Share your thoughts below:

How Can I Protect Against Foreclosure?

When foreclosure threatens, what are your options for keeping your home?

Is there a way to protect yourself legally?

When is it smart to concede to a foreclosure?

Can a realtor or real estate lawyer help prevent foreclosures from happening?

What about taking advantage of foreclosed houses?

Are there any legal requirements for buying a foreclosed house?

We’re excited to hear from lawyers and realtors on this important topic. Check back later for our awards post and comprehensive final article.

Please post your answers in the comment field below!

  • Mark A. Mellor, Esq. 07/17/12

    When foreclosure threatens, what are your options for keeping your home?

    Loan Modification is the most well known way to stay in and keep your home if you get behind on payments. There are a number of programs depending on your lender and servicer that you may qualify for and also if Freddie Mac or Fannie Mae own your loan(s).

    Is there a way to protect yourself legally?

    When faced with the loss of one’s primary asset, one’s home, there are two considerations you must address before structuring a move: (1) What is my deficiency liability to the lender? and (2) What is my debt relief tax liability following the loss of my home?

    The answers to these questions will be state specific, however, in California you must analyze whether the foreclosure is Judicial or Non-Judicial in nature. Only by way of a Judicial foreclosure may a lender pursue you for a deficiency judgment. If the lender in your case is pursuing a Non-Judicial Foreclosure the foreclosing lender waives the right to come after you for any deficiency on the note. Be careful here and note if you have a second on your home and the first forecloses, the second may still pursue you for the deficiency on its note even though the first gave up that right by foreclosing non-judicially.

    Next ask yourself if the mortgage on your home is comprised of “purchase money” or not? If so, you have something in California known as Anti-Deficiency Protection—meaning the lender cannot pursue you for the deficiency even if it wanted to. This applies to purchase money seconds as well.

    Now in California, the best way to protect oneself from a deficiency liability to the lender is to short sale one’s home. Senate Bills 931 and 458 were passed in California to prevent lenders that participate in the short sale process from coming after the borrower for any deficiency liability. This makes the short sale a fool proof protection from deficiency liability to the lender.
    Next, what is one’s tax liability for the loss of one’s home? You see, the IRS and Congress in their ultimate wisdom have a rule that taxes the amount of debt relief you received on your home loans. So if you took out a $500,000 loan and the home is only worth $250,000, you will have debt relief of $250,000. At a 30 percent tax rate, that could have tax consequences to you of $75,000.

    Until December 31, 2012, under the act that Congress passed in December 2007 known as the “2007 Homeowner Debt Relief Act” you are forgiven for the debt relief tax incurred on your principal place of residence. This does not apply to vacation homes, investment homes, or second homes however. In any event, you will need to seek the advice of a CPA that is proficient in the Homeowner Debt Relief Act to see what the potential tax consequences are for you upon the disposition of your home, whether by short sale or foreclosure.

    California has also placed its own debt relief rules to expire with the Federal Government’s on December 31, 2012.
    When is it smart to concede to a foreclosure?

    It is never smart to concede to a foreclosure. First, if you have a non-purchase money second it may pursue you for the deficiency, whereas if you short sale the home instead you can eliminate that threat.

    Second, foreclosure has a more severe impact to your FICO credit score than, does a short sale, e.g. foreclosure is on your credit report for 10 years, short sale on for seven (7).

    Third, most importantly you cannot qualify for financing a new property purchase under Freddie/Fannie guidelines for four to six (4-6) years following a foreclosure; it is two to three (2-3) following a short sale.

    Unless your tax professional gives you a reason to foreclose, as opposed to short sale, you should always short sale if possible in California.

    Can a realtor or real estate lawyer help prevent foreclosures from happening?

    Yes, both can depending on their roles. A realtor can help assist you with the short sale process. An attorney can make sure the foreclosure process is being done appropriately and according to code, and can make sure there are no other irregularities with your particular case and set of facts.

    What about taking advantage of foreclosed houses?

    It is a buyer’s market, and foreclosures can be a cheap way of acquiring real property. However, typically the California Civil Code §1102 disclosures about the property given to the buyers when purchasing a single family home are not provided by the lender following a foreclosure. In these cases it is strictly caveat emptor—buyer beware.

    Are there any legal requirements for buying a foreclosed house?

    As stated previously, you want to be very careful and inspect very carefully when purchasing a foreclosed property. Many times lenders will have addenda that they attach to the purchase agreement wherein you give up substantial legal rights by purchasing the home from it.

  • Connie Carr, Esq. 07/17/12

    The options a homeowner may have if threatened by foreclosure depend on a lot of factors, most importantly, whether the homeowner has regular income to make a mortgage payment if the payment amount was lowered. Under any scenario, a homeowner who wants to stay in the home has to be able to make a regular mortgage payment of some amount. There are several programs ran through HUD and other agencies that are designed to help homeowners avoid foreclosure.

    The web site for HUD’s programs is: http://portal.hud.gov/hudportal/HUD?src=/topics/avoiding_foreclosure/

    Homeowners should also check out the resources at the USA.gov web site: http://www.usa.gov/Citizen/Topics/Family/Homeowners/Foreclosure.shtml

    Also, local community banks, savings and loans and credit unions may have their own programs and regardless, are typically more willing to work with a homeowner to try to resolve the homeowner’s payment issues. For these more locally-based lending institutions, foreclosure is a last resort. It is crucial, however, for the homeowner to reach out to their lender and keep the lines of communication open. A mortgage lender will feel it has no option but to proceed with a foreclosure action if the homeowner is non-responsive or/and not following through on what he or she promised to do.

    Large national lenders are more bureaucratic and the company servicing the loan is typically not the lender. Locating the right person to address the payment issues is often an impossible task. Going through one of the federal programs is most likely the best option for a homeowner in these cases.

    It is important to document everything. When speaking with a representative of the lender or others involved in the threatened foreclosure, keep a record of who you spoke to, the date and what was discussed. Follow up with phone discussions and face to face meetings with written confirmations via email or regular mail.

    If making any mortgage payment is not realistically possible, it may be best to concede to a foreclosure. Some lenders may be willing to accept a deed-in-lieu of foreclosure. However, if the current value of the home is less than the amount outstanding on the mortgage loan, then the deficiency balance will need to be addressed. If the lender is convinced that the homeowner has no other assets or ability to pay the deficiency balance, then it may be more inclined to accept a deed-in-lieu and not pursue the deficiency balance. However, a deed-in-lieu is likely not an option if there is more than one lien on the property, such as a home equity line of credit; particularly if it is through a different lender.

    Often a real estate lawyer (preferably one that specializes in foreclosures) can be helpful. The lawyer may have better luck in getting his or her phone calls returned by the lender and can negotiate a settlement with the lender that is beneficial to the homeowner. Also, if a foreclosure action is inevitable, a real estate/litigation lawyer who specializes in foreclosures will also be in the best position to delay the process, thereby buying the homeowner some valuable time to better plan his or her relocation out of the home.

    The biggest advantage to buying a foreclosed home is obviously pricing. It’s typically much lower than market. However, when buying a home at sheriff’s sale or from the lender after it has taken title, a buyer is taking title to the property ‘as is, where is’, with no warranties, and often with no or little ability to thoroughly inspect the home ahead of time. When it works, it works well. When it goes wrong due to unforeseen problems in the home’s structure, it can go horribly wrong and there is no recourse. When considering the price, a buyer should factor in at least 10% more for the repairs likely to be needed upon taking title to the foreclosed property.

    Also, when purchasing a home out of foreclosure, the buyer is taking it subject to any liens on the property. Having a title report prepared by a reputable title company is a worth every penny spent. A real estate agent that knows the neighborhood and has specific experience in buying and selling foreclosed homes can also be very useful to the buyer.

    In addition to any documentation required by a lender selling a foreclosed loan, which should be reviewed by legal counsel, legal requirements for buying a foreclosed home will differ from one locality to another. For example, in some cities, if there are housing violations on the property, the title won’t transfer until the violations are corrected and it may have to go through a housing court to be resolved. A knowledgeable real estate agent or local real estate attorney would know what requirements apply in a given location.

  • Tina Maraj 07/18/12

    I will answer the question: Can a realtor or real estate lawyer help prevent foreclosures from happening?
    A Realtor can prevent a foreclosure from happening by listing the property and selling it in a short sale. As long as you have enough time this is a great option to foreclosure and I will explain why.
    Homeowners looking to stop foreclosure have opportunities. One of these opportunities is a short sale. One of the primary reasons to explore a short sale is to save your credit. In most cases if this is possible, it is something one certainly should pursue. Let’s look at the facts:
    Credit History-
    Foreclosure: Stays on your credit report for 10 years or more & remains a part of public record forever.
    Short Sale: Is NOT reported on your credit history. There actually isn’t a specific reporting item for ‘short sale’. The loan is typically reported ‘paid in full, settled’. Your may or may not see the late payments on your report though but you won’t see “short sale”
    Credit Score-
    Foreclosure: A credit score can be lowered 250 to 300 points in the event of a foreclosure. You can expect your score to be affected for over 3 years.
    Short Sale: If a short sale is successfully orchestrated on your home only late payments on your mortgage will show (as it is now). After the sale the mortgage will be recorded on your credit score as “paid or negotiated”. You can expect your score to be lowered by 50 points. A short sale’s affect can be as brief as 12 to 18 months. (Information from http://www.cdpenow.com)
    Choosing to get a Realtor involved and letting them assist you sell your home in a short sale vs. letting it go into foreclosure can save you points on your credit report & years of bad credit.

  • Earl H. Cohen 07/18/12

    Dealing with the obvious first, foreclosure avoidance begins with the application for financing. Borrowing too much of the purchase price, or the value of the home on a refinancing, has tended to be a chief cause of financial issues leading to foreclosure. Other issues at the time of application involve applying for an adjustable rate loan in a period of interest rate volitility.

    But if a homeowner is already facing the threat of foreclosure they need to consider their desire and ability to retain the home. Is the home underwater-that is, is the balance due on the home greater than its value? Is their job secure and will they be able to make the payments going forward? Have the costs of the home become too large a share of the family’s budget and will it be a struggle to keep the home? Careful consideration must be given to these and other factors. If the homeowner is in financial difficulty already, whether a result of medical bills, other debts, job loss, they should consider working with the lender to modify the loan by reducing the interest rate, extending the maturity date or even reducing the principal balance due. If, after working with a financial or legal adviser, the owner clearly has no real financial ability to retain the home, for whatever reason, giving the home to the lender by granting a deed in lieu of foreclosure is possible in some cases. In other cases, owners might be able to keep their home and make the payments if they can get relief on their other financial obligations. Such relief may be possible by negotiating a stretch out payment plan with creditors or filing for bankruptcy relief under Chapter 13 (a reorganization of their affairs and a payment plan or 3 to 5 years) or Chapter 7 (liquidation of their non exempt assets and discharge of their debts). In every state there are ways to protect some level of ownership in their home. Filing a bankruptcy petition before the foreclosure sale will stop the foreclosure process, at least temporarily. And we must remember that mistakes on either the loan or the foreclosure have been made by
    lenders, large and small and thus for someone facing foreclosure, having an experienced attorney review the documentation is vital. We have seen lenders attempt shortcuts in the process or simply fail to follow the rules.

    For buyers, purchasing a home in foreclosure can be very tricky, depending on the stage of the process and whether the proposed transaction is a short sale (for a price that doesn’t cover all of the outstanding debt). No one should attempt to purchase a property that has been in foreclosure without knowledgeable legal counsel. The rules relating to the transfer of a home in foreclosure are different in virtually every state. Without the necessary title exam and insurance, we have seen people buy a home for the balance due on the first mortgage and take title to the second mortgage, without knowing anything about the second mortgage, even the balance due. This is truly an area where the old saying is true. Buyer beware!

  • Charles R. Gallagher III, Esquire 07/20/12

    Options for Homeowners in Default and Foreclosure

    Trying to navigate your way around a foreclosure without an attorney is like doing open heart surgery on yourself. It’s also like bringing a knife to a gun fight. It’s never smart to concede to a foreclosure. Borrowers have options, especially in this climate of robo-signing, lost documents, mortgage backed securities and the nation’s financial crisis.

    So what if you are underwater and paying your mortgage, why won’t your lender help you? Well, if it’s a matter of cash flow, with you making your payments, the lender has no incentive to assist you. It’s when you remove the cash flow from the lender that they will consider default solutions, which are in their best interest. In fact, most banks will candidly tell you that you have to miss payments in order to qualify for any assistance. However, be careful of any agreements your bank asks you to sign in connection with a forbearance or modification, as you may be giving up valuable rights and defenses under these agreements.

    If you find yourself served with a foreclosure lawsuit, what should you do next? Depending on the state’s laws, you have a set amount of time to respond to the lawsuit. If you don’t timely respond, the Court will enter a default against you which results in having all of your rights and defenses waived and you essentially excluded from the case. The lender will then swiftly proceed to take your home without any resistance.

    Additionally, it’s the bank’s burden to prove that they own the loan in question, that you have defaulted on your mortgage and that they are entitled to take your home and leave you with a judgment against you. With mortgage servicing companies filing foreclosures on behalf of owners/investors there are increased defenses and issues which preclude a quick foreclosure.

    While there are a lot of perils in foreclosures, the biggest one is doing nothing and ignoring the lawsuit. Burying your head in the sand is a recipe for disaster. The other danger is a deficiency judgment. While the idea of losing your home is bad enough, you are at the risk of losing your home and having the Court enter a judgment against you. A deficiency judgment is a money judgment against you personally for any difference between the final judgment of foreclosure amount and what the house sells for at the foreclosure sale “on the courthouse steps.” While lenders have a credit for the entire judgment amount, they only bid a nominal amount ($100) to avoid the cost of documentary stamps and recoding fees. That means that you would have a money judgment against you for all but $100 of the amount you owe! If you decide to do nothing, expect that you will lose your home and have a deficiency judgment entered against you.

    While you might put stock in getting a help from a government program, be careful not to ignore defending your lawsuit. While there are a variety of government programs, HAMP and Making Home Affordable Programs, these programs have not yielded widespread help. Lenders have a horrible track record in timely processing these applications for assistance and an even worse record of assisting homeowners. Statistics show that lenders are not taking advantage of these programs. By no means are these programs a practical solution.

    So what are your options:

    A. Mortgage Modification

    It’s possible to keep your home with some terms of your loan modified. Lenders can adjust the interest rate and payment, and in some cases the principal amount of the loan in order to keep you in your home while receiving some payment on the loan.

    B. Short Sale

    If you don’t want to stay in your home, but want to avoid the exposure of the underwater mortgage balance, lenders can agree to a short sale, where you sell the home to a third party buyer for less than you owe. You want to make sure that the bank discharges you from the debt on the note, irrespective of what the bank sells the home for. This is sometimes referred to as a “deficiency waiver.” Otherwise you could owe the difference in the amount of the balance and what the buyer paid for the home.

    C. Deed-in-Lieu of Foreclosure

    A deed in lieu requires that you deed your interest in the home back to the bank in lieu of the bank having to proceed with a foreclosure action and foreclosure sale. You also want to make sure that the bank discharges you from the debt on the note, irrespective of what the bank later sells the home for. Again, this is referred to as a “deficiency waiver.” You want to make sure that your obligation to the bank is fully resolved once you sign the deed.

    D. Forbearance of Payments

    In some cases, you only need a limited amount of time to get your finances back together. In some cases, banks will let give you a brief “payment holiday” in order to get your finances back in order.

    Whatever your goal is in foreclosure, it’s vital that you don’t ignore the lawsuit. You have options but those options can be lost if you don’t timely preserve your rights with the court.

    If you have any specific questions regarding mortgage and foreclosure matters, please feel free to contact Gallagher & Associates Law Firm, P.A.

  • Greg Cook 07/20/12

    The best first step for a homeowner is to decide if they really want to
    keep the house. The easy answer is usually yes, but it may
    not be the best answer.

    The next step is to proactively contact their lender to see what options
    are available to them. Most lenders will offer a forbearance
    program where missed payments are tacked on to the end of the mortgage. For
    families with a temporary hardship this may be a viable solution,
    but if their life circumstances have changed (unemployment, divorce, death)
    making financial recovery unlikely, forbearance only delays the inevitable.

    Even though the government actively promotes it’s HAMP (Home Affordable
    Modification Program), very few loan modifications are actually completed.
    Many of those will reduce the payment and then have graduating payments for
    five years. Unless there are increases in income on the horizon, the
    homeowner may only be delaying the inevitable.

    Every family’s situation is different, so there isn’t a one size fits all
    solution. But sometimes “stopping the bleeding” is the best way to save the
    patient and continuing to make house payments they can’t afford may financially devastate a
    family’s financial future.

  • Roy Oppenheim 07/20/12

    Can a real estate lawyer help you stay in your home? Just ask our clients! But seriously, seeking out and hiring a competent and experienced foreclosure defense attorney should be one of your first steps whenever it is feasible for you to do so.

    It may sound like a self-serving statement, but that doesn’t mean it isn’t true. Your chances of staying in your home go up when you have legal counsel. The unfortunate truth is that it is harder to go into court, by yourself, and get a judge to hear you out. There’s a reason Florida’s foreclosure docket has often been called a “Rocket Docket” Most people going into court think they will have all the time in the world to plead their case, many come in with all the right documents and are extremely prepared, only to find their hearing ends in the time in took me to write this sentence.

    Whether you have an attorney or not, you need to get of copy of every single document relating to your home. Make sure you know who owns your note, and your mortgage, they are often not the bank you got your mortgage from in the first place. There isn’t any valid reason why you should not challenge the validity of those documents, even post-servicing settlement there is a chance your foreclosure may not be legally valid.

    The worst thing you can do is nothing. Usually once you’ve been served you have between 20-30 days to respond to a foreclosure. Sometimes when people get served, and they see an unfamiliar lender’s name on the documents they ignore it, or they think they have no chance, so they just give up right there on the spot.

    If you don’t fight, you have no chance, plain and simple. You’ll get a clerk’s judgment against you and then you’re screwed. You should never EVER leave your home until the deputy is at your door to kick you out. Stand your ground and engage the banks. There are still plenty of missing or fraudulent documents turning up in our cases, even post-servicing settlement.

    It is imperative that every homeowner make the bank prove that they own the mortgage, and that they have the legal standing to foreclose on you. If you engage the banks, you will suddenly find you have options that were not previously presented to you. Even if you do end up losing your home, fighting your case will give you time to put aside money, so you can get your life back on track.

    As far as your options? Selling your home via short sale is an increasingly viable option for underwater homeowners who want a fresh start You can , and walk away without the credit and financial hit a foreclosure will bring. You can walk away without a deficiency judgement, and often the banks will give up thousands of dollars which you can use to start a new life in a more affordable home or a rental.

    By hiring an attorney, or at the very least write to the court, you will get added time to either fight the case or find a resolution that is beneficial to you.

  • Shane Fischer 07/20/12

    There aren’t many ways to make a foreclosure just “go away,” similar to the way other lawsuits get dismissed. This is because the nature of a foreclosure action. A foreclosure is really two parts: the legal part where they sue you for breaching the promissory note, and what’s called the equitable action where they’re asking a judge to enforce a specific right; that is, the right to take possession of your home if you fail to make payments pursuant to the note. In fact, that’s all a mortgage is, the security for the note. So when people say they make a mortgage payment, it’s technically inaccurate. In reality they’re making a payment on the promissory note, which is secured by the mortgage.

    If you are unable to make the payments but want to keep your home, you may want to consider Bankruptcy, which at the very least will delay the process by tying up the foreclosure process. Bankruptcy may allow you to keep the home with restructured payments.

    Realtors are part of the reason we’re in this foreclosure mess because they’re really nothing more than glorified salespeople who don’t care if you can afford the house; rather, they want you to buy the biggest house so they can get the biggest commission. As a result a lot of people bought houses they couldn’t afford based on bad realtor advice and are now facing foreclosure because they can’t make payments.

    A real estate lawyer CAN help you prevent foreclosure IF you get them involved before you default. Unfortunately, many people wait until the final judgment hearing on their foreclosure is right around the corner, making it too late to do anything. If you get involved before you’re sued there may be ways the lawyer can help with refinancing, or working out some sort of resolution (short sale, deed in lieu of foreclosure) without going through foreclosure.

    Sometimes it’s smart to agree to a foreclosure because it doesn’t make sense to keep throwing good money after bad. If you bought your house at the height of the real estate boom and are significantly underwater, and can’t afford the payments, it might be in your best interest to just walk away. The hit to your credit might be bad, but it’s not as bad as paying your mortgage while skimping on other necessities.

    A lot of people are taking advantage of buying foreclosed houses, but you have to know what you’re doing, because a low price doesn’t necessarily mean a good deal. A lot of foreclosed homes were abandoned, with the copper and HVAC removed by thieves. You might wind up buying one of these homes “as is,” thinking you’re getting a great deal only to discover the house needs tens of thousands of dollars in repairs.

  • Neil F Garfifeld 07/22/12

    ALL THIS IS DISCUSSED IN MY SEMINAR IN CHANDLER THIS THURSDAY 7/26 AT 9:00 AM.

    If you are not interested in keeping the house the options are
    (a) simply walking away from it after you have spent a few months (or years) rent free,
    (b) a short-sale in which banks are sometimes paying some serious money to avoid litigation,
    (c) modification but there are two kinds. The first is the one the bank steers people into which merely puts off the inevitable foreclosure and where you waive all your defenses, of which there are many more than you might think. The second is a HAMP or similar modification which can be forced in litigation because the truth is they are not considering the modification offer and certainly not transmitting it to the investor lender who bought a bogus mortgage bond. So a well reasoned well documented modification proposal should be followed by a motion or lawsuit stating that they violated the HAMP statute by not considering it and that you can prove it — by showing that your proposal produces a far better result for the investor than the impending foreclosure. Our experience shows that when you demand to see what the “servicer” used as a standards or what the investor used as standards to consider the modification proposal the case settles on the terms or close to the terms proposed by the borrower, because they have no formula or even a record of who considered the proposal, much less any analysis showing a reasonable basis for rejecting the borrower’s offer.
    (d) Wrongful foreclosure lawsuit for damages: This is favored by many lawyers especially for those who no longer want to live in the home. It is a lawsuit for money damages only and includes the possibility of punitive damages. Some awards have been in the millions of dollars.

    If you DO want to keep the house you must follow the rules as to when to object, when to seek a Temporary restraining Order etc. As I explain thoroughly, it is far better to DENY AND DISCOVER that to make allegations where the burden is on you to prove facts that are exclusively known by the other side.

    This is particularly effective after a bankruptcy where one party gets the automatic stay lifted and another party forecloses. That is as close to open and shut as we get. The Judges’s order usually includes a finding that the party who moves for relief from stay is the owner of the loan. So the second party to actually foreclose, without getting a court order lifting stay for them to foreclose is in deep doo-doo. They can’t say it doesn’t matter because there has already been a finding of fact that the the first one to come to court alleged that they were the owner of the loan and the court entered the order on that basis. The second one is a stranger to the transaction, against which compensatory, punitive, exemplary damages are awardable and there is one developing case law showing that it is possible to get an award for emotional distress. The action is a cause of action called wrongful foreclose and it is recognized in all states in common law and in many states as statutory law.

    Be patient and make them commit to what their proffer is tot he court so they can’t turn it around alter saying they made a mistake. Wells Fargo, US Bank and BOA are among the banks fined millions for misrepresenting their true status in the loan chain and thus misrepresenting the status of the loan.

    Whether you are seeking damages for a home lost or trying to prevent the home from being lost, do not fall into the trap of following the documents. All evidence points to the fact that the documents from beginning to end were fabricated and were not the result of ANY financial transaction, even with you when the loan was funded.

    There were two loan closings when you closed — one which you knew about where a “naked nominee”with no money, no authority and nothing to do with the transaction rented their name to Wall Street to play the part of the lender and named on a note as the lender and named on the mortgage as the lender protected by the collateral of the house. But you never had a financial transaction with THAT lender. And the closing agent should have informed you of the fact that there were two closings occurring. But they didn’t. You thought there was due diligence and confirmation of the appraisal when it was just the reverse. The appraiser was told if they didn’t come back with an appraisal at least $20k higher than the contract price or refi price then they would never work again.

    So the first closing had documents but no transaction. The second closing was a transaction but was not documented where the investor lender and borrower agreed to terms. There was no note, so that is why the battle cry of those defending these bogus foreclosures is DENY and DISCOVER.

    Most lawyers and realtors don’t understand or even want to understand the securitization scheme of Wall Street. They just want to use tired old procedures and defenses to justify their fee rather than win their case. The fact is that in many if not most cases, the servicer was paying the creditor your monthly payment whether you paid it or not, thus reducing the creditor’s claim against you making the notice of default and notice of sale invalid.

    The second major issue is that, as the San Francisco study and many others like it across the country discovered, was that the creditor who submitted a “credit bid” at auction had no right to order the auction much less submit a credit bid lieu of cash.

    While the attempts to “get a free house” are ascribed to homeowners, the real culprits are the banks and servicers who are seeking a free house by making it appear as though they are legitimate “lenders” or that they purchased the loan, and then they show the assignment. But if in discovery you ask to see the transaction where they paid for that assignment and if you ask to see the trail of money where your loan was funded, you will find that nothing in the documents that were fabricated, forged, robo-signed etc. is true. There was o transaction and the actual creditor has received payments that were not recorded and may well have settled and moved on to another investment vehicle.

    If you are getting the feeling that the banks claimed losses to get bailout and insurance money when they had actually used money of investors (often without the investors knowing there were ANY investments in mortgages) then you are right. The banks lost nothing on loan defaults and the bailout was a sham. And the odds are overwhelming in your favor that the part of the obligation that was intended to be secured with the collateral of the home was in fact never secured and therefore not subject to foreclosure.

    Before taking any action on anyone’s opinion in this column make absolutely certain you consult with an attorney who is fully conversant with the current mortgage and foreclosure climate. It is far different than it was ten years ago.

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