Faces Of Foreclosure

A proposal: Keep track of every mistake your bank/lender makes. If we do our “homework” with due diligence, you may save your home (if foreclosure is looming) and not only will your finances be in better shape, but we can help banks do their job efficiently and accurately. Why should we? Because their screw ups do NOT cost them; they cost us. Each bank client ultimately pays for the bank’s messes and the only way to straighten this out is to call them on it.

WHY are the keepers of our money allowed to operate carelessly and sometimes outside of the law? Apparently it’s been sloppy for 15-20 years and no one has called them on it. This is our money we are talking about: yours, mine, ours. People work hard only to have their income carelessly handled by banks and lenders. Where is the control over these institutions? Who owns the Federal Reserve? Apparently, no matter who is “in charge,” of America’s lending institutions, they are not paying attention (or are looking the other way for profit/percentages).

Important note: I do not hate banks. They pay reasonably well, still provide benefits (health insurance and vacations), and have a growth plan for their employees . . . including funding for additional schooling. In my 20s, I worked in Bank of America’s Corporate Finance Department in their San Francisco Headquarters under A.W. Clausen and Robert Frick, both of whom rose to prominence in national and international banking. They were fine men. And most bank employees are wonderful people — although, unfortunately, I’m now thinking someone needs to be watching the store because of the multitude of errors made by those wonderful people.

Bank errors are costing you a fortune (as are erroneous credit reports, but that is another story). Start tracking the errors — when they are bank errors and not such things as overdrafts caused by your mismanagement of your own accounts; that IS your responsibility.

Setting the stage: Around 1997, my then-home-loan was sold to Washington Mutual. I wasn’t informed. I sent my payment to the prior lender and it was lost in the transfer process. After ONE YEAR of getting nowhere in straightening this out, I pulled a negative Better Business Report on Washington Mutual. I put on my best business suit and stood outside their Greenbrae, California branch handing them out to people with a suggestion that they read the report before doing business with WaMu. After successfully turning away several people, I explained my process to the bank manager and insisted he straighten out the missing payment mess immediately or I would continue handing out the BBB report. Bristling, he demanded, “Are you threatening me?” Calmly I responded, “No. I’m promising you that I will hand out this negative report re WaMu.” He cleared the record while I waited. Technically, I should have taken that further; because of the resulting poor credit report due to the lost payment, my home loan interest was higher than it should have been.

More setting the stage: In 2007 and 2008 Wells Fargo Bank lost payments on my home loan. Because of the WaMu fiasco, I began tracking all conversations and letters to/from Wells Fargo.

When the mortgage payments did not clear my account, I called Wells who informed me they did not have the checks. So I paid by phone with their assurances that they would NOT put through both payments should they find the missing checks. However, they found the “lost” payments and put both checks through. The result: $580 in overdraft fees. In 2007 I let the overdrafts go as it takes too much time to deal with bank mazes. However, in 2008, I’d had it: It took almost a month, several phone conversations and five letters to straighten this out. They reversed the overdrafts for 2007 and 2008; however, a great deal of time was spent in cleaning up their mistake. Of course, I wasn’t covered for that.

In December 2008, when I began “negotiating” for a loan modification with Wells Fargo, I began tracking all conversations and letters and now have a four-inch-thick binder and nine typed pages of who said what to whom. I’ve learned far more about banking than I ever wanted to know.

So, back to the list you should keep and the whys of it all: On December 28, 2009, curious about the volume of mistakes made by Wells Fargo since they have held my mortgage beginning July 2006, I started counting from my lists of who said what to whom.

As near as I can figure there are TWENTY-ONE errors during the past year alone. Wells’ mistakes include repeatedly lost documents resulting in denials, misinformation during telephone conversations, two outright lies (one before a Superior Court Judge and one in writing in response to a Congressional Inquiry) . . .

I’m not alone. This IS how banks are doing business – sloppy, as is indicated by my timeline, conversations with others, checking blogs with complaints about various banks, and as indicated by the loss of original mortgage papers for thousands (millions) of people.

However, hope springs eternal:

From a Wall St. Journal article written by Amir Efrati on December 24, 2009: “Now, after the country has been mired in a housing crisis for more than two years, more judges are calling these companies on their paperwork glitches, and in some cases going much further in their efforts to help homeowners.”

and

“It makes sense for judges to demand that mortgage companies follow the rules to the letter if they want to win foreclosure cases in court, says Raymond Brescia, an assistant professor at Albany Law School who has written about the role of the courts in the financial crisis. ‘I don’t think that’s a crazy idea,’ he says. ‘To expect plaintiffs to prove their case is what the judicial system is founded on.’”

SO PLEASE keep a list of your dealings with your banks, lenders (and the credit reporting agencies). For decades I considered these bastions of industry as sacrosanct; I actually thought credit reporting agencies were government agencies. They are not, and, like the banks, they hold your financial life in their shaky hands.

Never afraid of anything in my life, I am now afraid of our mortgage lenders and our banking system; they have too much control, do not manage it accurately or efficiently, seem to have no checks or balances, and can take our homes without having to prove ownership. They have also quite studiously ignored Presidential requests.

In December 2009, I received a three-month forbearance offer. This is wonderful, except that too many forbearance offers disappear into thin air as your lender does not hold the note, has no authority to negotiate anything, and after the three months may foreclose anyway — that IS happening in California.

One of Wells Fargo’s own branch managers expressed worry about this “offer” when I stopped by to give the wonderful news. The manager suggested that I track payments carefully and confirmed what I already know: “Horrible things have happened.”

I love my home and country, and Wells Fargo was a favorite bank of mine until this mess. Because of their history in California, Wells is featured on one of my Web sites (although I’m contemplating taking the time to remove all mention of them from the site), and two of their horses — Molly and King — live in my home (the stuffed ones, not the real ones). This is SO sad.

The following is from a Facebook comment posted by an observant Realtor.

(Editor’s Note: I completely understand the frustration of trying to save one’s home and then losing it. However, I can’t understand destroying something you have loved because it is no longer yours . . . years ago I read Nikos Kazantzakis “Serpent and Lily,” wherein when the artist’s lover says she is leaving him, he kills her. That didn’t make sense. Destroying property does not make sense. There HAS to be a way to bring lenders to their knees but destroying homes isn’t, in part because they have insurance for everything.)

“I showed a home just prior to Christmas that, literally, had liquified feces on the wall used as a “writing” tool and aside from some very choice curse words, there was a very solid message to Litton Loan. While the act was irrational on the part of the former homeowner, what is clear is that they got in trouble and didn’t want to leave the home . . . that is the sad reality and I’ve seen dozens of home where the person being foreclosed on ceases to care and seeks to destroy out of anger and frustration.

“The issue is deep in this country. I don’t want to walk away from real estate after ten years because I don’t believe that homes and home ownership aren’t the foundation of the economy . . . because I do. I’m ready to hang it up because I don’t know if I can ethically and with a good conscience, tell someone to buy now or even during the course of the next year, without risking losing even more.

“I anticipate that, as long as the Congress is more hellbent on shoving healthcare reform down our throats, and spending trillions of dollars a year on poorly thought out plans that do nothing but devalue our currency . . . then we’re in for a very long, very ugly road as far as real estate is concerned.

“I’d almost rather go work at a job with benefits and a guaranteed paycheck and put aside money until homes are worth half or LESS than they are today.

“Mark my words . . . it will happen and right behind it . . . hyperinflation. All the economic indicators are there and the current administration will make Jimmy Carter look like an economic genius.”

We heard of a wonderful win in Marin County, California which then turned into a nightmare. Were it not for the fact I know the following to be true, I probably would think it was some type of urban myth.

Hamilton Federal Credit Union was about to foreclose on a home and scheduled the sale on the courthouse steps for December 21, 2009. However, on December 20, Marin County Superior Court Judge Adams had granted a stay of the sale. The homeowner, concerned about previous actions of the credit union, showed up at the the courthouse to make sure that Hamilton Federal Credit Union had been informed of the stay. It was obvious that Hamilton was going ahead with their bidding war. The homeowner showed them the order “not to sell” from the Judge. They ignored it and went ahead with the sale anyway.

It gets worse: Mike Lundy from Triple Investment Company in Sausalito was there to bid. Because the homeowner had the court order to “not sell,” other bidders backed off. Not Mike Lundy. His reply, which was overhead by an associate, was “I don’t care. I have attorneys to take care of this.” He bid and bought — at a greatly reduced price, of course.

(Note: I would include Triple Investments and Mike Lundy in the Super Thieves portion of this site; however, after hearing about and observing their actions for the past several months, it seems they are, actually, petty thieves and cowards.)

Now the outcome to the wonderful story below is perched on a precipice.

What kind of people do we have here? The activities of this particular investment company are questionable at best. The person making the comment will be reported to the California Department of Real Estate. The DRE is a fine organization that we assume will look askance at such actions/statements by a investment company working under a broker who is purportedly licensed by the State of California.

If you have an issue with a real estate agent or broker in California, the DRE provides online complaint forms in English, Spanish and Chinese (hard copy only).

The home owner fought back, there is another stay, and she is still in her home after a many harrowing days. All prayers are welcome on her behalf. This, again, shows, the importance of standing up for your rights. In Marin County, F. Manuel Fernandez started a group to help save homes of residents of the North Bay. They are doing a great job. It’s a struggle because the system is against many homeowners, but it helps if you are part of a group. We think more such groups should start . . . or volunteer with a fine organization such as Neighborhood Association of America who is fighting throughout the United States to save homes.

This bears repeating as it is extremely important for all of us: This woman was told by a practicing attorney that she could NOT win. She ignored him. Her condo IS her castle and she wasn’t handing her castle to anyone.

Rather than shrug and walk, this homeowner will have her day in court. Nothing ventured, nothing gained. It’s not over until it’s over. And, as written by Elizabeth Barrett Browning: Measure not the work until the day’s out and the labor’s done.

Ethics for Executives In the event you are a top level executive with questionable ethics who stumbled across this site, here is a link to a selection of books that we highly recommend you read. Apparently ethics courses are not mandatory in today’s business colleges . . . that is apparent, don’t you think?

It has been an embarrassing and painful several months for the homeowner. In addition to the non-responsive lender, notices have been placed on her home and word leaked about her impending doom. Real estate agents have hovered and called.

(Editor’s note: I am a real estate agent. I consider this agressive outreach despicable. Earlier this year, a Santa Rosa agent was seen leading a crying man from his home so that the agent could show the home that afternoon to a prospective buyer! My recommendation to anyone going through this, get the agent’s card and file a complaint with your local Department of Real Estate.)

LET FREEDOM RING

My country, ’tis of thee,
Sweet land of liberty,
Of thee I sing;
Land where my fathers died,
Land of the pilgrims’ pride,
From every mountainside,
Let freedom ring!

My native country, thee,
Land of the noble free,
Thy name I love;
I love thy rocks and rills,
Thy woods and templed hills;
My heart with rapture thrills,
Like that above.

Let music swell the breeze,
And ring from all the trees,
Sweet freedom’s song;
Let mortal tongues awake;
Let all that breathe partake;
Let rocks their silence break,
The sound prolong.

Our fathers’ God, to Thee,
Author of liberty,
To Thee we sing;
Long may our land be bright
With freedom’s holy light;
Protect us by Thy might,
Great God, our King.

This is amazing. I saw Chase’s new site at Keeping Your Home.

Chase’s complaint record is not good — 282,000 as compared to Wells Fargo’s 300+ thousand and BofA’s numbers. Interesting ’cause Chase is not a top home lending institution and does not hold a comparable number of mortgages, so this indicates that they are in bad shape. Chase’s site HAS to be all PR, but it’s excellent PR, unless, of course, you can read through PR and its purpose. Chase rolled out earlier in 2009 on the West Coast of the Americas with a lame ad. Now they have nicely captured a face of America, albeit they are catering to Hispanics.

In any case, Chase will go on the list I contact re helping in Marin. And here’s a test I will try: “Concerned about paying your loan?” Of course, this refers to Chase, WaMu or EMC, however, I am going to test them. They do hold my second and they were polite when I first freaked about finances in December 2008. I’ll call Chase to see if they will take over the first and the second at 5% for 30 years fixed. What the hell. Chase says they have helped 750,000 foreclosures . . . I absolutely do NOT believe that . . . or perhaps their definition of “help” should needs defining.

I want to write a book entitled “You Can’t Tell Us Apart, Can You?” referring to “white” America. This because I am German Jew and Irish Catholic and do not relate to subjects of the Queen of England or the King of Spain, at certainly not any nation Denmark-north.

And because I often wonder what blacks, Hispanics, Iranians, Indians, etc. know about America and immigration. I decided early on that they most people are caught up in their own strife, don’t know, and don’t care much about anyone else.

A friend/associate, whom I adore, said this morning that it seems like we are fighting the Civil War, but admitted that he does not know what the Civil War was about. I explained that the North (under President Lincoln) wanted to abolish slavery, while the South wanted to maintain the black slaves and cheap labor for their plantations. He said, “Oh.”

What many people do not know is that plantations in the South and various Caribbean islands were also “maintaining” Irish (and probably other) “indentured slaves.” Indentured, of course, meaning once you pay off your debt you were free, however you could never pay off your debt so this was a lifetime commitment.

Bizarre what potentially losing one’s home digs up, don’t you think? My family has been in America since 1704 and here I am fighting for my rights. Absolutely bizarre.

A current favorite racial comment — this from a TV drama: The Iranian man said, “We can’t go anywhere. We can’t travel through airports. We can’t travel on subways. You look at us with suspicion at all turns. You check us for bombs.”

The black New York cop responded, “Yeah, but you can get a cab.”

Through Marin Family Action, a woman’s home was just save from foreclosure proceedings which would have started Monday, December 21, 2009!

THE STORY

My country, ’tis of thee,
Sweet land of liberty,
Of thee I sing;
Land where my fathers died,
Land of the pilgrims’ pride,
From every mountainside,
Let freedom ring!

My native country, thee,
Land of the noble free,
Thy name I love;
I love thy rocks and rills,
Thy woods and templed hills;
My heart with rapture thrills,
Like that above.

Let music swell the breeze,
And ring from all the trees,
Sweet freedom’s song;
Let mortal tongues awake;
Let all that breathe partake;
Let rocks their silence break,
The sound prolong.

Our fathers’ God, to Thee,
Author of liberty,
To Thee we sing;
Long may our land be bright
With freedom’s holy light;
Protect us by Thy might,
Great God, our King.

At this point, I feel sorry for anyone who loses homes, even multi-millionaire movie stars. Plus Nicholas Cage is one of my all-time favorite actors. Are there better action movies than “Con Air” or “The Rock” or “Gone in 60 Seconds?” I don’t think so.

Excerpted from CNN Money, New York
November 16, 2009
Nicolas Cage: Movie Star, Foreclosure Victim

Hollywood actor’s financial troubles continue as he loses two New Orleans homes worth $6.8 million in foreclosure auction.

Even Academy Award winners are suffering from financial woes this recession. Actor Nicolas Cage lost two homes in New Orleans worth a total of $6.8 million in a foreclosure auction Thursday. (The image to the right is NOT of an exclusive motel/hotel . . . apparently it is the inner courtyard of one of Mr. Cage’s New Orleans homes.)

Birmingham, Ala.-based Regions Bank purchased Cage’s 1140 Royal Street property in the French Quarter appraised at $3.5 million for $2.3 million. The bank paid $2.2 million for Cage’s 2523 Prytania Street property appraised at $3.3 million in the Garden District.

Cage owed $5.5 million in mortgage payments and $151,730 to the City of New Orleans in real estate taxes, according to Valteau.

Hancock Park Real Estate Co., a corporation through which Cage purchased both homes, is listed as the official property owner. Valteau said attorneys representing Samuel Levin, Cage’s former business manager, set up the corporation so that Cage’s name would not appear on the mortgage documents — a common strategy among celebrities (and among many people with considerable $$ and too much social visibility).

Last month, Cage filed a lawsuit against Levin in California claiming that Levin duped the Hollywood actor out of more than $20 million since 2001 when he was hired.

The suit said Levin “lined his pockets with several million dollars in business management fees while sending Cage down a path toward financial ruin.”

The suit went on to say Cage has “discovered that he is now forced to sell major assets and investments at a significant loss and is faced with huge tax liabilities because of Levin’s incompetence, misrepresentations and recklessness. Rather than attaining financial security, Cage has been forced to dispose of significant assets in order to pay for Levin’s gross misconduct.”

CNN reported that Cage owes more than $6 million in back taxes and his properties in California and Las Vegas have also been foreclosed on and are designated for auction later this month.

Thinking of benefitting through a foreclosure sale . . . Don’t buy a house — yet. This is advice from Kiplinger’s, but his rationale is different than mine. I find benefitting from someone’s loss quite heartless; mortgage lenders are NOT cooperating on restructures to current homeowners; they might reconsider if property does not move and they are stuck with even more empty houses.

Somewhere around 4.8 million foreclosed from 2007 to date at 2.6 people per household on national average equals 12 MILLION men, women, children (and their pets) have had to move. Banks will still not cooperate, and 2010 is expected to be even worse than the last three years.

My question: When does martial law come into play? Martial law is, according to one definition: The imposition of military rule above or in the place of civil authority during times of war and emergency. Isn’t this an emergency? I truly am “just asking.”

ISN’T this a national emergency? Have you seen the images of tent cities springing up across America? Yes, we’ve had them for decades as there is such a thing as “chronic homeless,” but we are way beyond that now; families who lost through foreclosure because they owned the house or they were merely renters have no place to go.

Mortgage lenders have displaced more than 10 million people; wars in “third world” countries do not displace that many men, women and children, yet we consider wars despicable and send troops to defend those families.

Why aren’t we sending troops to defend America’s working families? Again, I am truly curious? This is our country. Working men, women and often children shaped this country into the great place that it is (was?). Why aren’t we being protected? We are being “internally displaced” (meaning having to move within our own country) and rival or exceed international numbers:

2009, Sri Lanka: 300,000 war-displaced Tamils forced into camps;
2009, Yemen: 150,000 people have fled fighting;
2009, Sudan: 250,000 displaced;
2009, Georgians: 192,000 displaced (Moscow, Reuters)
2008, Columbia: 380,000 forced off their farms by guerillas, paramilitaries or drug traffickers;
2008, World: 4.6 million from armed conflicts
2008, World: 20 million displaced because of natural disasters like flooding, earthquakes and storms

Yes, those people know the enemy and are fleeing war zones and moving into tent cities; Americans are confused as to whom the enemy is and are fleeing psychological war zones (actually, sometimes with armed sheriff’s standing by) and moving into tent cities. We are being hit with guerrila warfare according to at least one definition: “Operations carried on by independent or semi-independent forces.” Wouldn’t those lenders currently be considered as “semi-independent” forces given that President Obama is trying to get them to cooperate with homeowners? And won’t they be considered at “independent forces” if they get their way and have no sanction from the Federal Government? Again, just asking. I’m learning as I go here; this is NOT the America I was brought up in.

Kiplinger’s
Steve Goldberg

When housing prices hit bottom, they will languish near those low levels for years to come. So don’t be in a rush to buy.
Mortgage interest rates are at a 50-year low. Last month, Congress extended a tax credit for homebuyers through April. The economy is beginning to crawl out of what by some measures is the deepest recession since the 1930s. One survey already shows house prices beginning to rise.

So isn’t it time to buy a home? Kiplinger’s certainly thinks so. But if I were in the market for a new home, I would wait. Housing prices typically don’t rebound quickly after a bust; instead, they level out and stay near that low baseline for years.

I don’t see why this time should be different. True, prices seem as though they can’t drop further, and in some areas they even show signs of an upturn. But if prices won’t be taking off and might well resume their decline, you lose nothing but a little time by waiting to buy.

What’s your home worth?
Of course, if you’re buying out of necessity — because you’re moving to a new area and need to sell your old house and buy a new one, for example — there’s no need to wait. But if you’re planning to buy your first house, if you want to move to a larger home, or especially if you’re buying a house for investment purposes, take your time.

The housing picture is complex — and frightening. House prices have plunged 30%, on average, from their 2006 peak. But from 2000 to 2006, average prices nearly doubled. That means average house prices are still almost 40% higher than they were a decade ago. Forty percent is a healthy increase — even in a robust economy.

Mortgage Rates Fall to Record Low

The economy is anything but robust. A fragile recovery seems to have begun last summer, but unemployment stands at 10.2% and is likely to rise even higher. Companies were quick to lay off workers, but they are being slow to hire.

As bad as the overall economy is, residential real estate is in much worse shape. About 7 million households — or 12.5% of all homeowners — either are behind on their mortgages by 30 days or more or are in foreclosure.

It’s hard to make the house payment if you’re unemployed. Millions of houses already stand empty — victims of the subprime loans that sparked the Great Recession. Almost a quarter of homeowners owe more on their mortgages than their houses are worth.

The history of busts
Nationally, housing prices haven’t declined from one calendar year to the next since accurate record-keeping began in 1968. But in 2005, the Federal Deposit Insurance Corp. identified 21 regional housing busts since 1968. (The FDIC defined a bust as a decline of 15% over five years.)

Busts occurred in Texas when oil prices sank in the mid-1980s, in Southern California in the early 1990s amid defense-industry cutbacks, and in much of the Northeast corridor in the late 1980s and early 1990s. The 21 busts happened for varying reasons, and each unfolded differently. But they all shared one common trait: A nasty regional recession triggered each one.

Many (but not all) busts followed booms — just as our national housing crash followed an unprecedented boom.

(Editor’s Note: For those of you who aren’t aware of it, this website — FacesOfForeclosure.com — is the fastest growing website I’ve ever built. I’ve never seen one “climb the charts” so fast.

I sent out the following eMail:

An overview of a conversation with a real estate broker who also has a degree in law:

If you are behind in loan payments and trying to modify your loan and your lender asks that you make three monthly payments after which time they will consider your request, be careful.

Example: In October, my servicer, who does not hold the note, asked me to pay $4309.62 per month for three months after which time they would consider my request in January. That payment amount is actually HIGHER than my payment was in the first place. (I told them I wanted to modify the loan DOWN not UP, and sorry for the confusion — perhaps I wasn’t sufficiently explicit.)

By the time that letter came from my loan servicer, I knew that the servicer CANNOT speak for the holder of the note and my servicer repeatedly told me the holder of the note does not want to negotiate. I’d also been hearing horror stories about people who paid the requisite three months and who were told at the end of that time: “Too bad; the holder of your note does not want to negotiate.”

So my response was “No, this does not resolve anything; I will put the money in a separate account and hold it until there is an offer on the table.” Interestingly, one of the executives of my servicer said the offer sent to me was “ridiculous.” I concur.

This week, I received a letter from my servicer confirming what I suspected: the holder of the note does not want to negotiate . . . obviously the plan was as suspected: get as much as they could out of me and then tell me that there was no deal. They plan on foreclosing anyway . . . whether or not I paid the three months as requested.

The recommendation from the broker/lawyer:

Find out who has the note, contact them, say “I want to keep my home. Please make an offer.” Odds are the people actually holding the note brought it at cents on the dollar. A loan that was $550,000, for example, may be held now at $350,000 . . . meaning if the current lender can get anything over $350,000 out of you, they might be quite happy.

Once you are turned down for modification, the servicer of the note HAS to tell you who holds the note — and so we are also back at “produce the note.”

Now, following are responses to my initial eMail . . . each of which confirms what was written above and each of which confirms that there is something wrong with this picture; I can provide thousands of almost identical responses from families facing foreclosure:

• “This is what happened to me! Chase said (in a written contract) that I WOULD GET THE LOAN MOD after three payments at the reduced rate. After I made the three payments, they said, “Oh, sorry, the “investor” will not modify because they don’t have to, but we will offer you a fully amortized loan at a higher rate.” I cried. My first higher payment was to go into effect on September 1st and my house was foreclosed on July 10th without any notice. Beautiful isn’t it? Watch out for these suckers. I myself am a Realtor and am disgusted!”

• Thanx so much for sharing your info: This entire situation is making me very sick in “this land of freedom and opportunity.” I’m a hard worker and have been dealing with my modification since February. My loan originated with World Savings, Wachovia took over World Savings, and now its with Wells Fargo. I stopped paying my mortgage in June of this year in hopes they would pay attention to me instead of pushing me off month after month.
  I gave the modification department everything they asked for: twice, three times and at the fourth time, they told me we have to start all over again. I told them they can have the house back. It needs a lot of work anyway and that they will have to speak with my attorney as I feel harassed, feel like they wasted my time while I collected bank statements, divorce decrees . . . over and over again. This (saving one’s home) is almost a fulltime job…

In 20 years of building sites, I’ve never had one grow as fast as FacesOfForeclosure.com

Its traffic rank in the U.S. is 806,032; that is amazing given that estimates are 43 million sites. However, Google is reporting 43 billion indexed pages so that would be the true competition figure as each page is searchable.

Struck a nerve, obviously.

From Nick Adams
EzineArticles
November 2009

One of the defenses against foreclosure that is becoming more widespread is the so-called “produce the note” strategy. Numerous cases have been thrown out once the bank has been unable to provide the note to prove that it owns the loan. Without having possession of the original note and being able to produce it for the homeowners’ inspection, a foreclosure may be declared invalid.

For homeowners to use this defense, however, it is important that you put together all of the information needed and do the required amount of research. Not every court will look kindly upon borrowers raising this defense if there is no legitimate basis for it. Homeowners defending themselves are already viewed as more of an annoyance than anything, so they should do their best to prepare for this type of defense.

The first question homeowners may want to ask is if a copy of the mortgage or note is already attached to the complaint. This can be a good starting point to determine if the bank has access to the original note, although a copy is not definitive proof of owning the note. Banks may attach a copy obtained from a previous owner of the loan but not have actual possession of the original.

Borrowers also may want to research if a copy of the mortgage or note is required in their state. Civil rules of court procedure would be the place to find this information, and can save homeowners a great deal of time if the state does not require the copy to be attached.

Also, homeowners should look in the foreclosure complaint for any affidavits from the lender relating to the original note. For instance, the mortgage company may include an affidavit stating that the copies of the note are true and accurate representations of the original. Another affidavit may state that the bank is in possession of the original note and mortgage. If these are present, the homeowners may wish to request that the original note be produced for their inspection.

Finally, homeowners should look into requesting the original mortgage and note to be included in the lawsuit paperwork for their inspection. This can usually be done through the discovery process, where homeowners are requesting other relevant documents and attempting to get straight answers out of the bank regarding the mortgage and foreclosure process. As other documents are requested (like payment histories), the original note can be requested to be produced.

If the bank fails to produce the original note for the homeowners’ inspection, the case may be dismissed on this basis alone. Of course, borrowers should consult with competent legal counsel, but this new strategy to defend foreclosure is being used with more regularity due to the inability of banks to keep accurate records of the original note.

Steps to get you through this insane process include:

1. Contact your lender and inform them that you are not able to make the mortgage payments. Tell your story and provide the requested documentation. You do not have to continue calling them; they will call you. You have to know when to talk and when not to talk.
2. Start keeping records of every phone call: Date, time, phone number called, who you talked to and notes about who said what to whom. This may well be your strongest defense down the road. (I have 6 pages typed, single lines with my mortgage lender.) Keep everything in a binder in chronological order. This will help save your sanity also and it will be quite effective when a judge notes that the letters from your lender are unsigned do not have anyone’s name (which is the case with Wells Fargo and probably others). It will also be worthy to note that contradictory letters will come from your lending institution within days of each other. The lenders are shockingly sloppy.
3. Tell your friends and relatives. The more people know about your situation, the more chances you will have to get “lucky.”
4. NEVER walk away from your home. The foreclosure process can be a short one or a long one, depending on your actions. You are in control, believe it or not.
5. Stop paying your credit cards. I hate saying this because in my own case, the credit card agencies were wonderful to work with, whereas the mortgage company has been a nightmare. However, your credit card debt is generally unsecured . . . except for your car . . . I lost mine to reposession. But the house is your first priority.
6. Do not pay for help. Call some of the counseling services just to see what they offer. Most counseling services, unfortunately, offer little. The largest groups that seem to get some positive results are NACA (NACA.org) and Acorn. I strongly recommend working with a professional group . . . one that does NOT request payment as nothing can be guaranteed. Also, It is now illegal in the State of California to charge legal fees for services relating to loan modification
7. After the first three months the bank can initiate a legal action. They can send you collection letters. This is the time to request forbearance agreement. Sometimes it is free but usually your lender requests partial payments.
8. Do not rely on Home Affordable Programs out of Washington, D.C.. Sadly, it was not structured to help the homeowners. Trying this avenue is like hitting your head against wall.
9. An “option” is to request a short sale. I hate this “solution” as you do lose your home and while it does not hurt your credit as much as bankruptcy and/or foreclosure, it still hurts. I would go in this direction ONLY if there is no other choice.
10. How long you have until foreclosure is up to you and how much work you put into saving your home: It can be three months or it can be three years.
11. You may be your own best resource. There are ways to delay the process and stay in your home mortgage free while you save enough to move if you must . . . or figure out a way to earn the money to get back on track, which is not easy, but it is possible.