Wednesday, September 22, 2010

Foreclosure fraud alleged as GMAC withdraws affidavits and halts foreclosures

GMAC and its lawyers confirmed what many already suspected. GMAC has filed tens of thousands of foreclosure cases, seeking summary judgment. In those cases, affidavits were filed alleging that the person signing had personal knowledge of the facts and circumstances. However, one individual, Jeffrey Stephan, admitted to signing approximately 10,000 of such affidavits per month. Mr. Stephan stated the obvious when he acknowledged that he did not have personal knowledge of what he was signing.

In order to obtain a foreclosure judgment in Florida, the Plaintiff must file affidavits based on personal knowledge. The Stepan affidavits are admittedly not based on personal knowledge. So summary judgment should not and cannot be granted in these cases.

After a Florida judge threw out a foreclosure case based upon one of these improperly filed affidavits, GMAC announced that it was taking "corrective action". Its not clear what GMAC means by that, or how. GMAC's lawyers have been filing notices in pending cases withdrawing the affidavits that have been filed. In the article below, GMAC announces that it is putting foreclosures "on hold". But what happens to those who have already been foreclosed upon?

Monday, September 21, 2009

Foreclosure and brainlessness

A recent New York Times article illustrates the nonsensical nature of the foreclosure industry. After landlord Imar Hutchins missed one monthly mortgage payment on his apartment building, the bank immediately filed for foreclosure. Mr. Hutchins lender, then Washington Mutual, refused his payment thirty days later and refused the next series of payments he attempted to make. While Mr. Hutchins was sending checks in the amount of $3500, $7,500 and, finally, $25,000, the lender was proceeding towards a foreclosure judgment.

When Hutchins learned of the action, he was able to set aside the default and is now attempting to settle the case with his lender. But the bank departments not knowing what the other was doing- one negotiating with a very willing borrower and the other steamrolling towards foreclosure- illustrate a common problem many borrowers are currently facing. Borrowers who are attempting to negotiate loan modification need to be aware that their lenders may still file a foreclosure action, even if the loan modification appears to be going well. This may, sadly, be due to the fact that the lender’s litigation department may not know what the loan modification department is doing (if only we’d all communicate just a little more). Or, it may, as some suspect and just as sadly, be because the lender is misleading the borrower- stringing him/her along with promises of modification which are not being made in good faith.

Either way, it is borrower beware. If you are behind on your mortgage, a foreclosure action may be filed against you at any time. It does not matter if the loss mitigation/loan modification officer tells you otherwise.

Friday, September 4, 2009

Wells Fargo loan servicer taken to Court: Loan Modification Supervisor summoned to appear for questioning in homeowner’s bankruptcy case.

Many people are wondering, just what does it take to get a response to a loan modification request sent to a mortgage servicer and how to get a faster response. One woman received an unusual opportunity to question the servicer about the status of her loan modification- under oath.

As explained in a recent New York Times [] article, an Arizona bankruptcy judge summoned a senior Wells Fargo executive to appear and answer questions, under oath, about a loan modification. The homeowner, who was forced into bankruptcy after losing her job, had been waiting months for a response. After cross examination by the homeowner (I can think of many people who would love the opportunity to question their loan servicer’s representative under oath), the Wells Fargo executive, who initially denied that the homeowner had supplied sufficient documentation, eventually admitted that everything requested had been provided. It turns out, the loan modification was denied months ago. However, Wells Fargo failed to notify the homeowner.

The judge’s decision is yet another example of the growing frustration with mortgage servicers who, for unknown reasons (although we could speculate on them) are slow to offer loan modifications to troubled borrowers. While little was accomplished in that bankruptcy proceeding (no one was sanctioned and, although the executive promised to resume negotiations with the borrower, the situation does not appear positive), by summoning Wells Fargo to court, the judge made a statement to loan servicers, which they will hopefully hear. A small victory of sorts for all those homeowners who have been waiting for months to hear back from the bank.

Tuesday, September 1, 2009

Want to keep your home? Short pay refinance may be an option

You have probably heard about the short sale process, where the lender allows the home to be sold for less than what is owed on the mortgage. In addition to the complications of needing the lenders approval (banks can take months deciding on whether or not to accept, during which time the buyer simply walks away), a buyer is needed. A short sale also does not help those who want to stay in their homes. Enter another solution: the short pay refinance.

In a short pay refinance works like this: Let’s say you owe 400,000 on your home, you are currently paying 8% interest on an adjustable rate loan and your home is worth about 330,000. You obtain a new mortgage for 330,000 or less than this amount (somewhere in the range of 80-90% of the value of your home) at a rate of 6% fixed for 30 years. Your payment decreases, you are no longer underwater, which gives you more incentive to continue paying your mortgage as you are building equity and there will be no interest rate increase in the future.

In order for a short pay refinance to work, you lender has to be willing to accept the lesser payment on your loan and the new lender needs to qualify you. Generally, a short pay refinance situation will only work if you are current on your mortgage payments but can show that you are having trouble paying. If you have fallen behind, you have much less chance of getting qualified. However, if you are serious about staying in your home, can show the ability to make payments and can find a lender willing to finance the short pay loan, you may be able to convince your current lender to accept the short pay refinance.

Keep in mind that a short pay refinance has some of the same risks as a short sale. The lender who accepted less money may report this information to the credit bureau, which will effect your credit down the road. The lender must also agree to waive any deficiencies associated with the short payment.

A short pay refinance can be a tough sell to your current lender and will likely require a well documented offer as well as careful negotiation.

Thursday, August 27, 2009


In a recent MSNBC article, several members of the Amish community in Elkhart, Indiana were interviewed about the effect of the current recession on their income earning ability. The Amish traditionally shunned employment outside their communities, earning a living through farming and producing and manufacturing home made items. Over the past decade, many began working in factories as their traditional means of earning income no longer sufficed. The current economic struggle forced many, including these adaptive Amish, out of their jobs. Once again, the resilient folks moved on and found a different way to earn a living. Rather than turn bitter, many Amish reported that their lives had changed for the better. Several reported that the decrease in income made them realize just how reliant they had become on the next paycheck and less reliant on doing things or making things for themselves. And the loss of jobs allowed many to spend more time with their families as factory work was replaced with home based businesses.

While the Amish approach to life does not work for many, the “get better not bitter” philosophy is, perhaps, something most of us can use. Those who are struggling to pay their mortgages, and hoping to get their loans reinstated before foreclosure proceedings begin need to change their way of spending and living. Those who are in foreclosure need to look at their options and, in some cases, choose the one that may not seem the most appealing, such as negotiating a deed in lieu of foreclosure with the lender. It is easy to become bitter with these choices, especially since most people making these choices have been forced into them by hard times and unexpected events.
Allowing yourself to become angry and bitter may lead to rash decision- making. For example, some may give up and walk away from a foreclosure action without thinking about the deficiency judgment that may result and others may rush to file bankruptcy. Both of these decisions have serious long term consequences and should not be made without careful consideration of all the options. Instead of becoming bitter, focus on making your situation better, even if those better days are in the long term future.

Friday, August 21, 2009


You are probably wondering what mountain climbing and foreclosure have in common. The answer is that both start from a similar position of being on the bottom and trying to reach a point on the top. If that answer confused you even further, read on and I’ll explain.

During one of my first mountain climbing trips, I looked up at a summit way in the distance and thought, I will never get that far. It was too high, too difficult and I didn’t know that I’d have the energy to do it. I decided to stop looking at the top of the mountain and instead focused on a point not too far away. I told myself I just had to reach that point, and then the next point, and so on. After a while (quite a while actually), I was standing at the top.

Facing foreclosure is overwhelming. There are so many questions. Can you save your house? Should you try to negotiate the loan? How much can you pay? Who can help you? Its like standing at the bottom looking up and not knowing if you can get to the top.

Much like the mountain climber, you need to take things one step at a time. Instead of thinking about how you are going to solve the problem in one big step, focus on that point just in front of you. What are your options?

Speaking with a foreclosure attorney can help you figure out what those options are. If you were served with foreclosure, an attorney can help extend the process and give you time to figure out what you are able to do. If you are behind on your payments and believe foreclosure is coming, you can start working with your lender to prevent this from happening.

You cannot climb a mountain in one step and you cannot deal with a foreclosure or potential foreclosure situation in one step either. You need to address both situations one step at a time.

Friday, August 14, 2009

What is a Qualified Written Request (“QWR”)?

A qualified written request is a letter to the loan servicer requesting specific information about a mortgage. A QWR can be used to request copies of documents, question calculation of outstanding balance and to obtain information about the loan. Once a QWR is sent, the servicer has 20 days to acknowledge receipt of it and 60 days to respond. Failure to respond may result in a fine. When sending a qualified written request, you, the borrower, can request a “life of loan history”- in a nutshell, your servier must tell you everything that has happened with your mortgage since you got up from the closing table.

In foreclosure defense matters, we always send a QWR on behalf of the borrower immediately after being hired. This is the first step in the forensic loan audit process which we highly recommend for our clients. We ask for an extensive list of documents relating to the originally signed note, all assignments of the note and any other servicing documents that may be available. In addition to this extensive document request, we also ask an extensive series of questions regarding the servicer’s relationship with the loan, payment history and accounting of late fees and interest payments.

Many people wonder, why bother with all of this? In most foreclosures, there is no dispute that the borrower owes money to the lender. While this may be true, the lender has an obligation to state not just how much is owed but to prove that exact amount. Even if you are prepared to give up your house, you have the right to know exactly how much you owe, especially since the lender may obtain a deficiency judgment against you for this amount. If you are attempting loan modification, this information will be extremely valuable in negotiating with your lender.