Faces Of Foreclosure

By JAMES R. HAGERTY

Fannie Mae announced a program aimed at helping ordinary home buyers compete with investors for foreclosed homes.

Under the program, dubbed First Look, Fannie plans to consider offers only from potential owner-occupants and certain public-housing entities during the first 15 days in which a foreclosed home is on the market.

Fannie and its main rival, Freddie Mac, are government-controlled companies that buy or guarantee home mortgages. They are among the biggest owners of foreclosed homes. As of Sept. 30, Fannie said it had 72,275 single-family foreclosed homes on its books. Freddie had 41,133 as of that date.

Many investors can move faster on home purchases because they are able to pay cash and don’t have to wait to qualify for a loan and get an appraisal. Investors often turn the homes into rental units or flip them to other buyers for a quick profit. People seeking to take advantage of the drop in housing prices to buy their first homes have been grousing that they often lose bidding wars to investors.

Fannie said it also would help owner-occupants acquire homes by reducing deposit requirements to as little as $500 and giving them a chance to renegotiate offers after appraisals. Such buyers also are to be allowed as many as 45 days to complete the transaction, up from the usual 30 days.

A Freddie spokesman said the company has similar pilot programs and is helping owner-occupants pay closing costs.

Fannie announced Tuesday that 4.72% of the single-family home loans it owns or guarantees were 90 days or more overdue in September, up from 4.45% in August and 1.72% in September 2008.

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.

If you decide to dig further yourself, we just found a couple of guides at Amazon.com which are far more reasonably priced than the offers we’ve seen on the internet. We do not have copies and cannot attest to their effectiveness; they are here for information and as options if you, like some of us, are at your wit’s end. Anti-Fraud Risk and Control Workbook by Peter Goldman (Wiley; $42.00). Peter D. Goldmann is founder and President of White-Collar Crime 101 LLC, the parent company of FraudAware and publisher of the monthly newsletter, White-Collar Crime Fighter. He has been the Publisher and Editor of White-Collar Crime Fighter for over twelve years and is recognized as a leading expert in the areas of fraud detection, prevention, investigation, and training. His book includes "basic fraud detection tools and techniques." Forensic Mortgage Loan Audit Software by Forensics Plus ($78.00 new) This sofware purports to audit mortgage loans and uncover violations instantly and supports the findings with laws quoted directly from TILA and RESPA. Hopea vioalations uncovered, APR tests high fee violations all covered by the software. The guide shows you how to conduct a forensic audit with each step is outlined and written. Included with the package are: * Forensic Loan Audit Software-Unlimited Use * Forensic Loan Audit Guide * Forensic Loan Audit Manual * Legal Forms Database If you wish to receive updates on Faces of Foreclosure, please fill in the form below. We will keep you apprised of anything that works (and anything that does not work). Please rest assured that this is confidential; we neither  share nor sell information. * Email First Name Last Name City State   * = Required Field

A Forensic Audit may provide sufficient legal ammunition for your negotiators to turn the tables on a predatory lender. When presented with the legal facts, lenders are more likely to be open to negotiations that are favorable to you versus pursuing their legal options. We started looking at forensic audits a few weeks back when we realized that our lender does not want to negotiate (this revelation comes after one year of “negotiating.)

Ultimately, it may lead to reluctant servicers finding a reason to work with you, a more favorable loan modification, or in some cases it may even provide a basis to support principal reductions.

We love NACA and now they are providing FREE Forensic Audits for NACA Members. The Neighborhood Assistance Corporation of America (“NACA”) is one of the nation’s largest non-profits with over 30 offices nationwide. It deals exclusively in community advocacy and homeownership issues.

NACA is one of–if not “the– most effective organizations in helping struggling homeowners obtain loan modifications as they have special “loan restructure” agreements in place with many of the top mortgage servicing companies. If they are unable to come to an agreement with your mortgage servicer, then they are given the opportunity to go directly to the investor who holds the loan.

As a NACA Member, you are entitled to a FREE Forensic Audit on your mortgage loan. This is one of the many benefits that NACA extends to its Members.

What is the Purpose of a Forensic Audit?
The purpose of the Forensic Mortgage Audit is to provide the reader with an in depth third party forensic investigation of the loan attributes, sequence of events, business and compliance practices followed throughout your Mortgage loan transaction.

The Forensic Mortgage Audit Report will identify potential deficiencies, discrepancies, errors and statutory violations of consumer protection statutes that may present opportunities for negotiation, litigation or settlement within your mortgage loan such as TILA, RESPA, ECOA, HOEPA, FCRA, & State UDAP. The audit may also reveal the presence of TILA violations as grounds for you to exercise the extended (three year) right to rescind the mortgage loan.

CMAC’s proprietary Violation Assessment Model (VAM) is easy to read and articulates the specific statute violations revealed during the course of the examination, their cause, applicable regulation and/or case law and possible remedies available.
In addition to the review of documents, you will be interviewed to find your perspective on the events leading up to the loan closing, and later to events leading up to default and foreclosure – if this stage has been reached.

If you are having trouble paying your mortgage and/or are already in default, consider working with NACA. All services are free. Visit their website and find out about their process: Neighborhood Assistance Corporation of America. It seems that no other entity is having the success rate of NACA. They do not seem to accept roadblocks . . . founder Bruce Marks finds a way around. Their three-day visit to San Francisco to meet directly with people needing assistance turned lives around (and brought tears to my eyes throughout the day).

More information on NACA and a few photos of their event that was held in San Francisco in October.

I’m personally to the point where I think NACA is my only hope.

• I recently heard that a 60+ year old gentleman will shoot himself the day they take his house (which he has lived in for 37 years; he does own a gun). His home is in in foreclosure under questionable circumstances. A feisty Marin group got the issue into Federal Court and all is hanging by a thread.
• Warren Buffett, in discussing the mortgage crises during a recent interview said, “This is war.”
• This site — FacesOfForeclosure.com — is the fastest growing website I’ve built in 20+ years of building websites.

You hired Randy Shilts to cover gays a couple of decades ago when that was a hot topic.

Millions of hard-working people are being displaced . . . the very people who were your subscribers through the decades.

What about hiring or consulting with someone who has been in the midst of the mortgage mess?

Covering this from reality, instead of inane quotes from self-interested lenders, could increase your readership. Type in “Wells Fargo Mortgage complaints.” Result: 33,800 items; Type in “Bank of America Mortgage complaints.” THREE. Yes. THREE.

Of course, you COULD just be practical and focus on that bottom line since many of us WILL lose our homes. Perhaps Tom Stienstra could do a story on just what gear you will need to live under one of the Bay Area’s freeways. Advertisers: REI, LL Bean, North Face, Kaplan’s (are they still around?)

I’ve nothing better to do until Wells Fargo decides whether or not I have a home. As we are more than 330 days into that, I’m avoiding holding my breath. I have been trying for a remod since December 2008 with that lender. The word “inept” is paramount, immediately followed by “white collar crooks.”

Wells Fargo’s definition of “helping,” must mean “corresponding without resolution.” Wells Fargo’s new campaign: “We are here for you.” Really? Define “here.”

I have five typed pages, single spaced, 12 pt. Calibri of who said what to whom on what date. Haven’t yet talked with the same person twice. One week a letter arrives indicating “we can help,” followed a couple weeks later by a request for more paperwork (’cause they lost earlier submissions), followed by a rep saying “Uh, well, no, the note holders do not want to negotiate” followed by a letter or call that indicates they are “considering my request.” Initially I deemed Wells execs crooked. Now I think they are staggeringly inept on top of being larcenous. There is no indication that Wells knows what they are doing. And they sure as hell are “not here for you” or me or anyone. I’m trying to not “hate” them because it is such a negative emotion and causes “dis-ease.” However, I think I am losing that battle.

Check www.MarinFamilyAction.com. They just might feret out Marin’s white collar thieves in this mortgage mess and have just filed a report with the District Attorney on one questionable group. “Insider trading” seems to have a lot as to who gets what.
Want a duplex in Tiburon worth about $2.5 million for less than $1 million? Might be on the market soon due to lies and subterfuge. I’m serious. This all sounds nuts. Actually, it is nuts. But it is also true.

Hello to everybody. I miss The Chronicle every day and hope you are all well.

Oh, one more thing . . . this from the National Association of Realtors to Realtors:

“You help to stabilize the community, and without homeownership, there can be no stability in communities,” Stevens said. “Together, we must never let overexuberance overtake the housing market again, and interrupt the housing market and the lives of untold millions of Americans. Our goal must be nothing less than to craft a solid, sustainable housing market, a market with a secure foundation for the future.”

Is this before or after writing off the current millions of men, women, children, dogs, cats, etc. who are about to lose their homes? Just asking.

This is not intended to help you get your house for free. The primary goal is to delay the foreclosure notification and eviction process and to put pressure on the lenders to negotiate with you. Despite all the hype about lenders wanting to help homeowners avoid foreclosure, most borrowers have a different experience.

Too many homeowners face lenders that resist all efforts to work out a payment structure to keep them in their homes. Many homeowners just want these lenders to give them reasonable terms on their mortgages, and help them work through economic hardships.

The following is from LoanSafe.org:

From what I’ve been reading, a COPY of the note is not going to be good enough for the court for the plaintiff to prove that they have the right to foreclose on the borrower. It has to be the ORIGINAL blue ink copy–no electronic copies; it has to be the original and the original only.

This strategy does not require an attorney. All you have to do is fill out the form and file it with the court clerk in your county and they will serve it on the plaintiff’s attorney.

“Produce the Note” is not a technicality that should be treated lightly by the lender or by the Court. When a lender can’t “produce the note,” allowing a foreclosure to proceed puts the homeowner at risk of owing that debt again to another party.

Let’s start with the basics. If a lender wants to foreclose on a property, it has to be able to show that it is, in fact, the appropriate person to whom the money is owed. That right to foreclose belongs ONLY to the person who has legitimate POSSESSION OF THE ORIGINAL NOTE – not a copy, not an electronic entry, but the original note itself with the signature of the person who allegedly owes the money.

So if you are faced with a foreclosure, you have every right to demand that the person trying to take your property, first, prove to the Court that it has possession of the original promissory note.

What often happens, however, is that the lender claims it doesn’t have the original note, because that note has been lost or destroyed. What does the law require the lender to prove?

The “Uniform Commercial Code” is a set of laws governing commercial transactions that many states, such as Florida, have adopted. It contains a specific provision on this subject (Section 3-309) which states that a person can enforce a promissory note without having the original, BUT only under certain limited circumstances. All of the following must be proven:

1. The person has to claim that it no longer has the original note;
2. The person has to prove that it was properly in possession of the note and entitled to enforce it WHEN it lost possession of the note;
3. The person has to prove it didn’t “lose” possession simply because it transferred the note to someone else (i.e., it’s not really lost); and
4. The person has to prove that it cannot produce the original note, because the instrument was destroyed, or its whereabouts cannot be determined, or it was stolen by someone who had no right to it.

All of these matters have to be proven by the person trying to foreclose on the property. It is not the obligation of the borrower to prove or disprove any of this.

It is up to the Court to determine whether the lender has satisfactorily explained why it no longer can produce the original note. The Court also has to be satisfied that when the original note was lost, the person trying to foreclose on the property had possession of the note at the time it was lost. Until the Court has been satisfied of all of this, the foreclosure cannot proceed; if it does, the borrower is still at risk.

Why? Because incredibly, even if a Court has found that the original note is lost and the foreclosure sale is finalized, if someone later turns up with the original note and proves that it is the proper holder of the note, and not the person who foreclosed on the property, the original borrower is STILL LIABLE.

And one more . . .

WHO OWNS THE NOTE? Your goal is to make certain the institution suing you is, in fact, the owner of the note (see steps to follow below). There is only one original note for your mortgage that has your signature on it. This is the document that proves you owe the debt.

During the lending boom, most mortgages were flipped and sold to another lender or servicer or sliced up and sold to investors as securitized packages on Wall Street. In the rush to turn these over as fast as possible to make the most money, many of the new lenders did not get the proper paperwork to show they own the note and mortgage. This is the key to the produce the note strategy. Now, many lenders are moving to foreclose on homeowners, resulting in part from problems they created, and don’t have the proper paperwork to prove they have a right to foreclose.

THE HARM: If you don’t challenge your lender, the court will simply allow the foreclosure to proceed. It’s important to hold lenders accountable for their carelessness. This is the biggest asset in your life. It’s just a piece of paper to them, and one they likely either lost or destroyed.

When you get a copy of the foreclosure suit, many lenders now automatically include a count to re-establish the note. It often reads something like: “ . . . the Mortgage note has either been lost or destroyed and the Plaintiff is unable to state the manner in which this occurred.” In other words, they are admitting they don’t have the note that proves they have a right to foreclose.

If the lender is allowed to proceed without that proof, there is a possibility another institution, which may have bought your note along the way, will also try to collect the same debt from you again.

October 22, 2009
LEGAL ETHICS & PROFESSIONAL RESPONSIBILITY
Lawyers Resign Over Mortgage Scam
By Don J. DeBenedictis
Daily Journal Staff Writer

SANTA ANA – The State Bar announced Wednesday that four Southern California lawyers accused of cheating homeowners seeking mortgage modifications have given up their bar licenses, while three more lawyers are close to losing theirs.

The bar made the announcement in its fourth press release in as many months about its efforts to protect consumers from lawyers who take money from homeowners in trouble but then do little or nothing to help stave off foreclosures.

In a highly unusual move criticized by defense attorneys, the bar last month named 16 lawyers it has under investigation for loan-modification scams. Usually, the bar only can identify lawyers in trouble after it has filed formal charges.

In response to the huge number of consumer complaints, the State Bar set up a special task force of five lawyers and eight investigators in its Los Angeles office to look into mortgage modification scams, according to its chief, Suzan Anderson. The task force currently is looking into 738 complaints involving about 200 lawyers, according to Wednesday’s press statement.

Those lawyers who resigned recently are Cameron Edwards, 29, of the Alliance Law Center in San Diego; Ronald Rodis, 45, of Rodis Law Group and America’s Law Group in Newport Beach; and Jeffrey Nemerofsky, 51, of U.S. Advocacy Law Group and U.S. Financial Products, in Laguna Niguel.

The fourth lawyer, James Parsa, 44, “has advertised heavily throughout California for the past several months, offering to help homeowners facing foreclosure,” according to the bar. But Parsa resigned when the bar discovered that he had not reported to the bar his two misdemeanors convictions for sex with an underage girl in 2001.
Other lawyers identified in the bar’s latest news release include Christopher L. Diener, 41, of the Diener Law Group and Home Relief Services in Irvine. The State Bar put Diener on inactive status involuntarily on Oct. 9. He is also being sued by the state attorney general’s office in Orange County Superior Court for allegedly bilking thousands of homeowners out of thousands of dollars each. People v. Home Relief Services, 30-2009-00125949-CU-MC-CJC (Orange Super., filed July 13, 2009)

The bar said it also is seeking to force two more lawyers into inactive status, Paul Lucas, 48, of Lucas Law Center in Aliso Viejo, and Sean Rutledge, 34, of United Law Group in Irvine.

Rutledge is scheduled for a hearing in the State Bar Court in Los Angeles on Friday, but he was recently injured in a serious motorcycle accident, according a colleague and a State Bar prosecutor.
None of the lawyers named in the bar’s release could be reached Wednesday.

However, Rodis on Wednesday referred questions to an attorney, Nancy C. Eng of Darling & Risbrough in Los Angeles, who represents Rodis in a suit by the FTC. Eng would not discuss her client or ongoing litigation.

Paul J. Lucas of Aliso Viejo, did speak earlier in the week.
Besides action from the State Bar, Lucas, 48, founder of Lucas Law Center, is being sued by the Federal Trade Commission. In interviews Monday and Tuesday, Lucas said that his company obtained mortgage modifications for close to 500 homeowners.

Accusations against him are “heavy-handed and politically motivated,” Lucas said. “You can’t beat them,” he added about the FTC.

Above and Below: Triple Investment Offices 2300 Bridgeway, Sausalito, California Photographer, D.A. Levy November 2009

We’re curious about a firm named Triple Investments, 2300 Bridgeway, Sausalito, CA 94965. Triple Investments was mentioned in conjunction with a Marin County foreclosure in the Marin Independent Journal on November 7, 2009 and they seem to have a couple of others on the books.

Principals are purportedly Scott Dixon, John Lundy and Joe Giraudo (with Georgina Giraudo listed to receive services) and Peter Kerman.

The only person licensed as a broker or realtor as of 11/12/2009, per State of California DRE, is Joseph John Giraudo who was doing business as Charter Properties active from 11/15/1971 to 07/01/1985 (noted as cancelled); no current DBAs, no current branches, no current affiliated corporations, one salesperson. The company has no website and no short sale listings (per the woman who answered the phone).

As of October 29, 2009, Joe Giraudo is listed as a member of the San Francisco Association of Realtors at Giraudo Realty, 2300 Bridgeway, Sausalito, CA 94965. 415.339.2222, along with Mark Jason Giraudo (as a salesperson out of Tiburon, License 01182248 expired 12/29/07); both are noted as part of Giraudo Realty in Sausalito. We did not find any indication of Giraudo Realty with the California Department of Real Estate.

If you have worked with them . . . or if they purchased/sold your house through foreclosure, please leave a message here and if you would like to remain confidential, please indicate so; messages are not automatically posted. They need to be approved and will not be posted if you want to remain behind the scenes.

We are merely curious. I’m fascinated by the paths of foreclosures and am following a few to see who said what to whom and, of course, to see who actually holds the note, does that really make a difference (and one hopes that it does), AND to see “who wins.”

What seems to be happening in general is that some banks are suggesting that a client intentionally defaults before they will consider modification. Once that happens, they refuse to negotiate and sell the house out from under the client they instructed to default in the first place.

Dennis’ foreclosure

This is going from dreadful to insane starting with a request for loan modification from Wachovia/Wells Fargo in Octoaber 2007. From the November 7, 2009 Marin Independent Journal story: “A medical supply salesman who works at home, Temple said he was never told why the bank refused his regular $2,633 payments after his October 2007 modification request . . . Asked to explain why the bank refused Temple’s payments when no modification was done, Hammond responded in an e-mail that “monthly payments not equal to the amounts specified in the original contract (partial payments) would not be accepted. Bank officials would not confirm whether Temple’s rejected payments were partial amounts.”

The Sausalito company trying to take Dennis’ home has also recently foreclosed on two other Marin County residents with questionable methods/ethics.

On November 4, 2009, the Sausalito investors said Dennis could have 20 days to sell his house and/or move. Within 48 hours, the investors–who purchased Dennis’ home for $387,860–put it on the market for $199,888 through a real estate auction house. (The term “money laundering” is being bandied about in connection with the Sausalito firm).

The investment group also got Dennis to sign an agreement to NOT sue them (I’m not clear where this yet fits in).

It may be time for Dennis to ask for the note . . . if he has not already done so.

This just in:

If you would like to see a current, somewhat notorious application of produce-the-note, I direct you, this very day, to the Federal Bankruptcy Court in San Jose. Over the past few months the judge has issued repeated injunctions against foreclosure on the Peninsula home in question. The lenders have been unable (or unwilling) to produce original documentation. Today, I understand, it’s put up or shut up. If lenders can’t/won’t produce the note, the judge is likely to issue a permanent injunction. Check it out!

If you decide to dig further yourself, we just found a couple of guides at Amazon.com which are far more reasonably priced than the offers we’ve seen on the internet. We do not have copies and cannot attest to their effectiveness; they are here for information and as options if you, like some of us, are at your wit’s end. Anti-Fraud Risk and Control Workbook by Peter Goldman (Wiley; $42.00). Peter D. Goldmann is founder and President of White-Collar Crime 101 LLC, the parent company of FraudAware and publisher of the monthly newsletter, White-Collar Crime Fighter. He has been the Publisher and Editor of White-Collar Crime Fighter for over twelve years and is recognized as a leading expert in the areas of fraud detection, prevention, investigation, and training. His book includes "basic fraud detection tools and techniques." Forensic Mortgage Loan Audit Software by Forensics Plus ($78.00 new) This sofware purports to audit mortgage loans and uncover violations instantly and supports the findings with laws quoted directly from TILA and RESPA. Hopea vioalations uncovered, APR tests high fee violations all covered by the software. The guide shows you how to conduct a forensic audit with each step is outlined and written. Included with the package are: * Forensic Loan Audit Software-Unlimited Use * Forensic Loan Audit Guide * Forensic Loan Audit Manual * Legal Forms Database If you wish to receive updates on Faces of Foreclosure, please fill in the form below. We will keep you apprised of anything that works (and anything that does not work). Please rest assured that this is confidential; we neither  share nor sell information. * Email First Name Last Name City State   * = Required Field

If you received a home loan between 2001- 2008, a mortgage loan audit may be in order. We are leaning in that direction with our own requests and are researching companies who perform such audits for others.

The #1 goal of a mortgage audit is to determine whether there were violations of federal law.

If these violations are found, then the borrower may be eligible for complete relief of the loan (particularly if it was “predatory” to begin with) or a very favorable loan modification. Complete relief of the mortgage is called as a loan rescission, meaning the lender takes back the “predatory loan” and awards or credits back to the borrower all interest made on payments thus far, loan origination fees, all applicable lenders fees, penalties and attorney’s fees.

Apparently, more than 75% of mortgage loans contain legal errors that may provide defense against foreclosure, enable an aggressive loan modification, reduce your loan balance, or even result in legal action against your lender.

Government laws regarding your mortgage are very strict, yet rarely enforced because you cannot perform the audit yourself, and the lender won’t do it for you–ever! Only a mortgage document audit performed by mortgage industry compliance experts–backed by attorneys–give you the answers you need.

You may want to check for violations of Federal Mortgage Laws prior to accepting a loan modification or refinancing.

Here’s the forensic loan document audit procedure:

1. Interview client and all applicable parties
2. Complete loan document and disclosure review/audit to determine if the loan terms and calculations are accurate, truthful, and met the requirements of the applicable federal statutes. The primary goal is to determine whether there were violations of federal law. If these violations are found, then the borrower may be eligible for complete relief of the predatory loan.
3. Truth in Lending Act (TILA) and Real Estate Settlement & Procedures Act (RESPA)
4. Reverse engineering of your loan terms and Annual Percentage Rate (APR) for possible TILA violations
5. Report with all violations and findings

This can be done by means of a loan modification or a new affordable loan. This allows the borrower to get a new loan with a smaller principal and lower rate, meaning a more affordable mortgage for you the homeowner.

People who may benefit from a mortgage loan audit include:

1. Anyone rejected for a loan modification
2. You believe your mortgage is illegal
3. You can’t refinance your ARM mortgage
4. You need foreclosure defense

After completing a forensic document audit, the most common option is to mediate the loan with your lender and fight for an affordable loan modification based on the legal violations on the loan. This is a win-win situation: The homeowner has their loan fixed and may have their principle balance may be reduced also. The lender does not lose their shirt because they have mediated the matter without employing their full legal staff on the file.

Another note of caution:

Mortgage lenders who were sloppy with important paperwork in the hey-day of the housing boom are now turning to questionable practices to clean up their mess so they can foreclose on homeowners. It all stems from the lenders inability to “produce the note” when they try to take someone’s home.

To get around the break-down in paperwork, these companies hire people to be “fake” Vice Presidents to sign documents from one company to another, so a foreclosure can proceed. The St. Petersburg Times exposed the practice in an investigative report, in which they interview CWN founder Chris Hoyer.

From the St. Petersburg Times, Florida:

Companies help lenders transfer home loans to foreclose
By Susan Taylor Martin, St. Pete Times Senior Correspondent
Sunday, May 3, 2009

PALM HARBOR

Despite the turmoil in the lending industry, Bryan Bly seems to have no trouble finding a job.

On Aug. 3, 2007, Bly signed a document as vice president of Option One Mortgage.

On Feb. 13, 2009, Bly signed a document as vice president of Deutsche Bank.

And on Feb. 18, 2009, Bly initialed dozens of documents – this time as vice president of Citi Residential Lending.

In fact, Bly never worked for any of those. His real employer is Nationwide Title Clearing, a Pinellas County company that helps lenders clean up problems that can complicate efforts to foreclose.

Bly, who lives in a Clearwater trailer park, is one of several Nationwide employees authorized by lenders to sign as “vice president” in assigning loans from one company to another. Assignments are key in determining who actually owns the loan, an issue that has become all-important as banks foreclose on millions of loans that were bundled into securities and sold to investors.

Nationwide says the assignments and other services it handles for lenders help ensure everything is legal and above board if they sell a loan or need to foreclose.

“We’re pretty much sticklers that what we put in the record is legitimate,” says Jeremy Pomerantz, a Nationwide spokesman.

Critics, though, say that Bryan Bly and “vice presidents” like him at similar companies are part of an assembly-line process designed to resolve a big problem: In the rush to “flip” loans as fast as possible in order to make more money, the new loan holders often failed to get the proper paperwork showing they owned the loan and had the right to foreclose.

“The problem is that when lenders foreclose, they have to have all their ducks in a row,” says Rob Napolitano, a New Jersey mortgage expert. “They’re trying to doctor up these assignments in order to create an ownership trail that didn’t exist in the first place.”

Excerpted From The New York Times
November 2, 2009
David Streitfield and John Collins Rudolf

“Frustrated by the banks’ inability or unwillingness to stop an avalanche of foreclosures, the states are considering lawsuits over the creation and marketing of millions of bad loans as well as the dismal pace of mortgage modifications.

“We tried to use the tool to be persuasive with the banks,” Arizona’s attorney general, Terry Goddard, said in an interview. “But their waterfall of excuses, the abysmal numbers of modifications, tells us persuasion is not working.”

“As a result, he said, “we’re moving much closer to litigation.”

“While statutes vary, those of every state prohibit fraud in consumer lending. The attorneys general are considering the theory that the banks essentially perpetrated a vast fraud on consumers by marketing exotic loans that would prove impossible to pay back.

” . . . During the boom, the banks earned short-term fee income from generating the loans, then quickly resold most of them to investors or to Fannie Mae and Freddie Mac, two government-sponsored housing agencies that eventually required costly taxpayer bailouts.

“The banks balked at surrendering any information . . . the federal Office of the Comptroller of the Currency filed suit, asserting the states had no authority over national lenders . . . Andrew M. Cuomo, took up the battle. Lower courts agreed with the banks, but the Supreme Court, narrowly, did not . . . “The handcuffs are off,” said Ann Graham, a professor of banking law at Texas Tech University. “The states can pursue justice now.”

“In July, the Illinois attorney general, Lisa Madigan, filed a civil rights case accusing Wells Fargo of predatory lending. . .

” . . . At other times, they merely switched their charters. When Illinois first started investigating the branches of Wells Fargo Financial Illinois for predatory lending in the spring of 2008, the branches operated under a state charter.

Initially, Wells responded to the state’s subpoena. But on July 26, 2008, the branches were put under the control of Wells Fargo Bank, which is nationally chartered. Wells promptly informed the state of this new situation and ceased cooperation.

With such maneuvers, Ms. Madigan said, “it was much easier for people in the banking industry or any other industry to hide their misconduct . . .

” . . . After the Clearing House decision there was “a virtual parade of national officers of national banks” coming through, ostensibly eager to find a common ground to help stop the flow of foreclosures that are running as high as 7,000 a month in Arizona . . . But Mr. Goddard, a former mayor of Phoenix, said the lenders were often unable or unwilling to provide him with elementary information, including how many and what kind of loans they have in the state . . . banks have been imploring Mr. Goddard to tell homeowners in default to get in touch with them, opening a dialogue . . . But the homeowners say they call and get no response.

“People call and get a runaround,” Mr. Goddard said. “The paperwork gets lost. It’s time to stop this absurd dance.”