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The Judicial Foreclosure – Due Process? Not in Foreclosure. And in the Future in a Lot Less Areas as a Result.

January 12, 2014 Leave a comment

Not much to say except that I have seen a great deal of this first hand. As someone who has had doubts in the two governmental branches where officials are truly elected (with the exception of local judicial elections), I have always trusted the judiciary was the true “check” on our government. The branch that was “for the people”, who made the hard decisions such as Brown v. Board. Truly the admirable branch. Not anymore (with the exception of the Judges I have seen that truly try to remember there are two parties to a case). People are now sold for expediency, and the settlements and promises from the other two branches helped to make it happen. Disgusted. The future backlash on our notion of due process will create a backlog where “expediency” over human rights is the rule of the day. Can you imagine that in ALL areas of law? Be concerned. And no backlog problem is solved through expediency. Reversals coming down from appellate judges who truly believe in the American ideal of due process will remind us once again that no amount of legislative funding can buy due process.

“Despite the seemingly favorable stories about the economy and real estate, Florida homeowners are now worse off than ever before. Banks continue their culture of mortgage fraud, and foreclosure litigation has become the legal “wild west.”

For example, on a single day more than 90 foreclosure trials were set to occur before one trial judge. But general magistrates have now become empowered to take the homes of Floridians, despite the fact they were not summoned by any electorate.

In yet another judicial circuit, court staff unilaterally communicates with the bank’s counsel, prompting them on what to file in order to advance the case along.

In yet another circuit, homeowners are being denied routine depositions and discovery.

Banks that ignored the court’s rules for years are not being sanctioned. As if that was not bad enough, courts statewide have been bullied into clearing the backlog of foreclosure cases by the Legislature in order to receive funding. Forget your Pollyanna notions of separation of powers among the state’s branches of government.

The foreclosure crisis is not over; it’s not even close to being over. It’s getting worse. Issue saturation has led to apathy among leaders, the media and the populace. But the due process rights of homeowners continue to be further marginalized on a daily basis across our state.”

http://tbo.com/list/news-opinion-letterday/foreclosure-crisis-getting-worse-in-florida-20140109/

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“We need you to show a hardship. However, we see you are current on your mortgage, and that shows you do not need a modification”

October 3, 2013 1 comment

Now in 2013, it is safe to look back and realize that when Bank of America took over Countrywide’s loans (allegedly) that they inherited a mess.  We realized that years later when we learned of Countrywide schemes that are now the subject of litigation.  Schemes such as the “hustle” would drown homeowners in a matter of years, while the bank made sure enough time had gone by to present a statute of limitations argument against homeowner claims.

Sickening.  We know there was fraud at the inception of these loans, and borrowers were not getting the deal they thought they were, and we know there is clearly fraud at the end, as over and over we see the wrong bank in court.  What about in between?  Have we stopped to think about what Bank of America did when they realized what they had purchased (allegedly)?

What did they do?  They had a systematic plan from the beginning. They knew that adjustable rate mortgages would go up to the point where the homeowner would need help and call to inquire about a modification.  They knew Countrywide had given plenty of those type of loans at the height of the market.

The conventional loans were a bigger problem however.  If the payment remained the same then this underwater loan with a high risk of default would stay on their books, and no one wanted that.  Too high of a risk.  So the conventional loans began to see an “escrow shortage”.  Now granted escrow accounts fluctuate, and payments go up if taxes go up or if insurance does.  How does Bank of America explain an escrow shortage of $12,000 in a little over a year?  Would taxes and insurance have risen to the point of an extra $900 a month?

We’ve seen forced placed insurance that is egregious.  I’ve personally seen earthquake insurance being escrowed against a homeowner in North Florida.  A check of the USGS will show you there are no fault lines here, however.  We’ve seen escrow shortages that truly don’t add up.  Is that how Bank of America and the other big four banks decided to get rid of the conventional loans that they really didn’t want?

They knew the adjustable rate borrowers would call, and a conventional borrower would too if escrow caused their payment to act like an adjustable rate.  And that is where both types of borrowers were given the same line:  “We need you to show a hardship.  However, we see you are current on your mortgage, and that shows you do not need a modification”.  And both borrowers would fall for it understandably.  The person who alleges in court they are the holder of the contract (mortgage) just changed the terms in a big way.  Fannie Mae’s new guidelines for servicers even show they are now aware of this.

Now take the Bank of America affidavits and do the math.  1) No intention of qualifying the majority of applications for HAMP; 2) giving incentives to employees for putting homes into foreclosure or “in-house” modifications because they were more profitable and “in-house” modifications had a higher interest rate than HAMP; 3) HAMP didn’t require a borrower to stop payment for a modification but ironically a borrower is required to be 60-days behind for the “in-house” modification that Bank of America preferred as stated by their employees.

Thus, the borrower is lured into default and into Bank of America’s trap.  The never-ending modification cycle with no intention of giving one.  To the homeowner, it is losing a home when they truly did nothing but follow the bank’s instructions, To the bank, it is an improved portfolio.  Which should our justice system protect?

BOA Defeats Class Certification in HAMP Case…is it Over for Homeowners? Or Just Beginning?

September 5, 2013 3 comments

It’s no secret that eyes watching the foreclosure crisis have been watching the class action against Bank of America (BOA) in Massachusetts for some time now.  Today, the Court declined to certify the class, and what that means to us is not what many may think.

It does not mean that the Court ruled the homeowners claims are without merit.  It means that the Court said the homeowners claims do not meet the class action criteria.  Long story short the claims have to contain numerosity, commonality, typicality, and adequacy.  I used to practice in class actions and I can tell you the courts have gotten extremely stringent on what they allow to become certified class-wise.  Do I agree that the HAMP class didn’t meet the criteria?  No.  But these days it would take 22 sets of identical twins, all suffering the same injury at the same time by the same person under the same weather conditions to potentially meet it.  If one-half the sets of twins are under partly cloudy skies and the others under mostly cloudy skies then forget it.  That is how bad it has gotten.  And the famous Walmart case didn’t help things.

Class actions have their pros and cons always.  The upside is usually that people who cannot afford representation can be represented, the cases are massive and we obtain lots of information that we normally would not get from the other side.  The down side is if you are just part of a class you can end up with a lot less than you think.  I’ve been the associate calling people to tell them all they were getting was a magazine subscription for a year after they sued the company.  Not pretty.

But all hope is not lost.  What BOA has been relying on is that there is no private right of action for a homeowner to sue under HAMP, that HAMP was between them and the government, and the homeowner is not a third party beneficiary entitled to sue under it.  But that isn’t what the Court said, and basically we are left with a ruling that says the claims cannot be resolved as a class but can be resolved individually.

The Judge in the HAMP stated that the “Plaintiffs have plausibly alleged that Bank of America utterly failed to administer its HAMP modifications in a timely and efficient way; that in many cases it lost documents, or pretended it had not received them, or arbitrarily denied permanent modifications…Plaintiffs’ claims may well be meritorious….”

So before BOA gets too excited, I’d think long and hard about that.  Individual cases before juries?  Some with punitive damage claims?  Ouch.  Jurors are often more than ready to teach a big corporation a lesson.  Imagine tens of thousands of those cases.  I’m seeing more and more every day.

I think it is safe to say we have all learned a lot from this case.  From the BOA whistleblower affidavits to the Court’s ruling, the information will be used in courtrooms nationwide.  We’ve already seen Judges forcing modifications.  After how much money BOA took from the government and what their own employees state they did with that money while homeowners were suffering damages as a result, there is little doubt this has only just begun.

http://finance.yahoo.com/news/bank-america-defeats-class-certification-140828605.html

Modification Mess…and the Government’s Inaction

July 6, 2013 2 comments

It is common knowledge that now Bank of America’s own employees have stated the bank would have rather foreclosed or offered higher interest rate “in house” alternatives instead of modifying the loans under the Home Affordable Modification Program and directed them to make sure that goal was achieved.  Given that, would there be a light at the end of the tunnel?  Are the Congressional demands for investigation worth anything?

No.  The government knew that the servicers were engaged in egregious behavior.   As reported over and over again on March of 2013, before the Senate Judiciary Committee, Attorney General Holder stated “I am concerned that the size of some of these institutions becomes so large that it does become difficult to prosecute them … When we are hit with indications that if you do prosecute, if you do bring a criminal charge it will have a negative impact on the national economy, perhaps world economy, that is a function of the fact that some of these institutions have become too large. It has an inhibiting impact on our ability to bring resolutions that I think would be more appropriate.”  The Home Affordable Modification Program (HAMP)’s own page administered by Fannie Mae, acknowledges that servicers told homeowners to stop payment.

When HAMP, once sold to homeowners as a promise of help was revamped, they had procedures in place to deal with homeowners who were told to stop making mortgage payments by the banks in order to qualify for a modification.  Combine that with the BOA affidavits which say there was never an intent to modify and the end result is thousands of foreclosure cases pending, with homeowners willing to pay their mortgages, who were prevented from doing so by the banks.  And to make it worse, they have been drug through years and years of modification attempts where their payments were not accepted, and the bank now has the audacity to come to court and ask for all the back payments they would not accept and attorney’s fees for the bank bringing a foreclosure.  That is the judgment the bank is asking for.  It is extortion at an extreme that is incredible.

One would think this is so horrific – “homeowners told to stop payment for a modification?” that even given the legislative and executive stance (or lack thereof) on the issue, that the judiciary would right this wrong.

Wrong.  The judiciary has consistently held that homeowners are not “third-party beneficiaries” under any of these agreements, new legislation, consent orders, judgments, etc.  Therefore, they have no right to raise the argument, and they have no right to a loan modification (although tort and contract law are still alive and well – just make sure you aren’t suing to get a modification).  So what was HAMP passed for exactly?

Given that when the program was revamped, the government knew of bank errors that were as huge as the “stop paying” deal, it appears HAMP was passed to do absolutely nothing.  The government will shell out billions – if not trillions – to banks pretending to consider files for HAMP, but they will do nothing when a bank accepts that money and doesn’t follow the rules.  The only thing the program managed to do is lure people into default, give them false hope, and make sure the foreclosure goes through.  Why would they not correct the errors of the banks already affected when they revamped the program?  Why wouldn’t they have made it known that thousands of homeowners were sitting in limbo on their home in Court all because a bank caused a default?

Go back to Holder’s comments.  The end result is too big, the end result is too much, the end result hurts the economy.  To truly prosecute them runs way beyond the HAMP scandal.  Were the banks considering loans that they even had authority to consider?  That they had the authority to modify?  Did the loan really belong to someone else?  Why are multiple lenders suing a single homeowner for foreclosure over the same loan?  How many foreclosure mediations were successful?  Mediation rules about the person being there required to have the authority to settle?  How often is Fannie or Freddie at a mediation?

The banks cutting corners all these years has created a mess that the government will not clean up, any willingness to do so stops every time they hear the word “Wall Street”.  So for everyone who has seen “A Civil Action” that remembers the fight John Travolta (playing Jan Schlichtmann) had on his hands that was ultimately lost, until the very end when the Environmental Protection Agency packet is delivered to Robert Duvall (as the Defense attorney for the corporation) and had that “ooooooooooohhhhh” moment.  That the “the government is going to help so it is not over” moment.  Don’t hold your breath this time.

Bank Induced Defaults….and What the Government Knew

July 3, 2013 20 comments

For so long, every time a homeowner was told “You need a modification.  However, we can’t help you get one because you are current on your payments.  You need to get behind payments to show us a hardship so we can modify your loan.” and the homeowner thought they were being considered for HAMP it was a lie.  HAMP didn’t require homeowners to miss payments.

From the HAMP page “Administrative Website for Servicers”, “Administered by Fannie Mae” there is a document called the “HAMP Resolution Matrix” apparently for servicers to follow.

In paragraph 26 it states:  “Homeowner Advised to Miss Payment (1) Confirm with homeowner (or homeowner advocate) that the property is the homeowner’s principal residence. (a) If no, explain that a homeowner can never be required to miss a payment however, under HAMP Tier 2 there is no risk of imminent default review when the mortgage loan is secured by a rental property. Explain the HAMP Tier 2 eligibility criteria and close case. (b) If yes, advise homeowner (or homeowner advocate) that they are NOT required to miss a payment. (Advise homeowner that they will be reviewed against imminent default criteria for principal residence.)(3) Obtain evidence that homeowner was advised to miss payment(s) including name and contact phone number of servicer’s representative.(4) Confirm with servicer. (a) If servicer acknowledges error, require servicer to communicate correct status to homeowner (or homeowner advocate). (b) If servicer denies allegation, communicate misunderstanding to homeowner (or homeowner advocate), discuss next required actions before closing case.”

https://www.hmpadmin.com/portal/programs/docs/hamp_servicer/escalated_case_docs/hampresolutionmatrix.pdf

How dare they?  “If servicer denies allegation communicate misunderstanding to homeowner…”?  Are you kidding?  Forcing a homeowner into default by misrepresenting the HAMP requirements and then dragging them through a fraudulent modification scheme to collect government funds and foreclose instead of modifying (as seen in the BOA affidavits) to profit.  And relying on the servicer to admit or deny it?  That is a “misunderstanding” to communicate to a homeowner?

NO – it is estoppel.  PERIOD.  And court decisions will show you that the court has the power to put homeowners in situations like this right back to where they were when the bank uttered those “stop payment” words.  If they are out arrearages and fees, it is their own doing.  Recently I encountered a case, not on “stop payment” grounds but on the grounds that the homeowner made the trial payments and the bank sent them back.  And the Judge didn’t like that so much, so the bank will answer for their own causing of arrearages and fees, along with sanctions and attorney’s fees because had it not been for their behavior the client would not have had to hire me.

Bank of America contracted out a lot of their HAMP work to third party vendors such as Urban Lending Solutions.  The problem?  They instructed the third party vendors on what to do to violate what they took government money to do.  Those vendors, along with Bank of America induced defaults, and then thwarted the modification process in a fraudulent scheme.   The employee affidavits show just as much.  Other banks did just the same, and the defaults were their own doing.

Let’s get real clear.  What this document labels a “misunderstanding” is no misunderstanding at all.  In law, we call it fraud.

Where is Common Sense? Where is Morality?

October 19, 2012 Leave a comment

It’s an election year.  Nothing is being done.  Example of why common sense should rule.  Bank of America: Stops paying taxes in full, and homeowner finds out about it when the payment goes up $1,000 a month.

Homeowner wants to save the home for his daughter and her husband and their four small children. Homeowner calls and asks for a modification because they can’t afford it. Homeowner has a perfect credit rating. Homeowner is told by Bank of America that if they do not stop paying they cannot show hardship for a loan modification (if you are current you can’t show that you have an inability to pay). Homeowner stops paying at Bank of America’s request. Bank of America declines the modification. Bank of America puts homeowner through two more modification rounds and forces homeowner to spend hundreds of dollars on faxes, etc. to them. Bank of America refuses to allow homeowner to resume making payments. Then Bank of America files for foreclosure. Homeowner says “why? You are the one that made me stop paying and refunded what I did pay after that.” Bank of America says “Because Freddie Mac owns the loan”. Homeowner says “but you are the Plaintiff?”. Bank of America says “we are just the servicer. Freddie Mac owns the note and mortgage.” Homeowner’s lawyer says “how can Bank of America sue and say they own a note and mortgage that they do not own?”. Courts say it doesn’t matter. Bank of America tries another modification and forces Homeowner to quit claim the deed to daughter and son-in-law who have to pay $1400 for the deed in order to be considered for the modification.

Meanwhile, Bank of America admits in an Amended Complaint in Court that they bought the loan from Countrywide FSB who merged with Bank of America in 2009. Homeowner challenges how Countrywide then assigned the note (according to court documents) in 2012 if they didn’t exist after 2009. Courts say it doesn’t matter. Bank of America says daughter and son would qualify for a modification, and we had them execute a quit claim deed for that, but the Homeowner has to qualify after all and they can’t. Sorry. Then why the $1400 for the quit claim deed? This is the worst scheme that I have ever seen.  Freddie Mac and Fannie Mae are exempt from the Attorney General Settlement.  The federal government has forced these banks (and Fannie and Freddie) to lower their debt.  NO other way than to stop paying insurance and taxes and force payments up through escrow shortage and then wrongfully foreclose.  Something has to be done.

This is the way they go:  check your escrow accounts.  They stop paying taxes and insurance on purpose – they have to get the bad loans off the books.

Fannie and Freddie: Hear no evil, speak no evil, see no evil.

June 30, 2012 Leave a comment

Reportedly, new housing finance has been under a strange shadow.  The typical news is that those self-employed have to show two years of tax returns in order to get financed.  But what those tax returns must show is not.    If a self-employed person makes $30,000 a year, but has a bunch of tax write-offs and reports income of only $15,000 a year, then the bank goes by the income that is reported to the IRS.  That’s right.  Better watch your Schedule K.  It won’t matter what your bank statements say, it’s all what you told the IRS.  The government can control tax write offs based on what you are financed for.  In an age where there are two government bailed out mortgage entities, Fannie Mae and Freddie Mac, that is scary news. Government is getting more involved by the day buying up loans.  Why the secrecy? Fannie is “under a lot of political pressure, and wants to keep everything” quiet, says Paul Miller, managing director of FBR Capital Markets.

What most people working with lenders don’t understand is that when Bank of America tells someone they are being considered for a loan modification and then declines that modification that one of these entities is the reason.  When you ask “why” you were declined, Bank of America won’t hesitate to point to Freddie Mac’s guidelines.  If you ask who owns your note through a legal letter, Bank of America will often tell you it is Freddie Mac or Fannie Mae.  However, when Bank of America sues you for foreclosure, don’t be surprised when they put in the Complaint that they actually own the Note.

One would think the time for secrecy should be over in order to fix the problem. From Robo-signing to break ins, the foreclosure crisis has pretty much run the gamut.   In New York they are trying to make this fraud punishable by criminal penalty.  Why isn’t that happening everywhere?  It has been reported that such entities are drilling through locks and breaking into properties in foreclosure.  Their reasoning?  They can because when you signed your mortgage you agreed to it.  But unless you remember being told at closing that by signing your mortgage you were waiving your Fourth Amendment right to be free from unreasonable searches and seizures, then someone is running against the law.

Our government is claiming that they can mandate healthcare for the general welfare of the public.  At the same time, in courtrooms, congressional hearings, and executive meetings the subject of foreclosure practices is going by the wayside.  Sure they  have offered to have banks rent the homes back to the homeowners.  The same entities that you can’t write off taxes for and get approved if you are self-employed?  The same entities that wrongfully foreclosed because they didn’t have the note and got away with it?  The same entities that broke into homes when there was no final judgment of foreclosure?  I’m sure we would all love to rent from them.

Just know that the private servicers loans are being bought up by government bailed out entities.  And if it isn’t happening through the government here, then it happens overseas.  Recently, one mortgage company sold off to another in the European market that helped make them quite a bundle over there.  Of course that doesn’t benefit us much.

Speech is being silenced if it is against banks by those speaking out, and everything that is being sold is some big secret.  Hear no evil, speak no evil, see no evil, right?  If we want to fund huge programs, then the economy has to be able to.  You cannot run a car without gas or unless you charged it up.  Fixing the real estate crisis is key to doing just that.  The question is how many of our rights do we have to give up to get there.  The Fourth Amendment?  The First?

These are not merely just people who stopped paying a mortgage.  Many of them were told to in order to get a loan modification by the very lender who claims they own the note.  The information that is being put out is pure propaganda, and the secrets being held the truth.  No viable solution has been offered to fix this problem, and everywhere people would rather turn their heads than deal with it.  That is until you start to hear the drill at your own door.

http://www.americanbanker.com/issues/176_243/fannie-mae-secretly-become-mortgage-servicing-giant-1044951-1.html?zkPrintable=true