Mortgage Settlement - Banks Get "Free Pass"

As the details of the Mortgage Settlement Agreement, the deal between 49 of 50 states and the U.S. on one side, and BanK of America, Wells Fargo, CitiBank, Ally Financial, and JP Morgan/Chase on the other, become analyzed, it a HUGE win for the Banks. The not only received a "Get Out Of Jail Free" card but are now assured that there will no jail and the cost will not hurt profits.

Quoting from the March 13, 2012 American Banker's article about the agreement

"The settlement includes releases from certain federal claims, including errors related to servicing conduct; origination; and errors specifically related to servicing loans for borrowers in bankruptcy

The claim "fully and finally" releases the company and any affiliated entities, from any civil or administrative claims and any civil or administrative penalties -- including punitive or exemplary damages--for:

Servicing claims under the: Financial Institutions Reform, Recovery, and Enforcement Act; False Claims Act; the Racketeer Influenced and Corrupt Organizations Act; the Real Estate Settlement Procedures Act; Fair Credit Reporting Act; Fair Debt Collection Practices Act; Truth in Lending Act; Interstate Land Sales Full Disclosure Act and certain sections of the Gramm-Leach-Bliley Act. Origination claims under RESPA, TILA, Fair Credit Reporting Act; and Interstate Land Sales Full Disclosure Act, and certain claims made under FIRREA.

The Consumer Financial Protection Bureau agreed to release servicers from any claims related to servicing or origination conduct that took place prior to July 21, 2011, when the bureau became an independent agency. But the agency reserved the right to obtain information related to conduct" (emphasis by this writer)

Perhaps the biggest issue for DEBTORS in the long term will be that Servicers and Lenders etc are released from any liability from servicing errors during a Bankruptcy. This is a huge WIN for the mortgage industry. Most servicers cannot keep track of payments for money owed before a bankruptcy and payments made AFTER the bankruptcy was filed. Pre and Post-petition debt transaction history is generally a nightmare. Even Gordion would not have a sword capable of solving his problem.

As with all such programs we will have to wait for the regulations. The settlement is one thing - the details of administration is another.

Author's Copyright by Richard I. Isacoff, Esq., March 2012

rii@isacofflaw.com

www.isacofflaw.com

Foreclosures Down? Not Really!

RealtyTrac, the company that tracks foreclosures (state by state) and gives national figures, reports that foreclosures, meaning homeowners getting a foreclosure notice, is at a 26 month low - ONLY 225,101, down nearly 14% (http://www.realtytrac.com/home/).
Reading and digesting the information further one discovers that the reduction is not due to fewer defaults by borrowers, or lenders/servicers having less work , but rather it is due to IMPROPER FORECLOSURE PROCEDURES.

For months it has been known that some of the largest servicers have been using so-called "robo-signers", unauthorized personnel signing assignments of mortgages and notes, and foreclosure documents. Also, as the suit by States' AGs shows, in their 27 page report, what has to be done to fix the problem. While the servicers have rebelled and are using all tools available to stop regulations, even BofA, the biggest, has made modest changes - like giving returning service members modifications and even PRINCIPAL REDUCTIONS.

The battle is getting so fierce that Sen. Richard Shelby (R), the senior Republican on the Senate Banking Committee has said that the report is a "regulatory shakedown" being conducted to "advance the administration's political agenda" (American Banker 3/9/11 )

Taking the battle over the "mortgage crisis" even further is a letter, being circulated by House Republicans to Treas. Sec'y Timothy Geithner, that calls into questions most of the report's/settlement proposal's recommendations (http://tinyurl.com/4byflk4).

So what is the "TRUTH"? Is the rate of foreclosures falling? Yes, in so far as the "foreclosers" have had to stop or be sued by all 50 states (again) and won't start again in earnerst until they get the paperwork and process straightened out. But, the rate of defaults and the "right to foreclose" have continued to climb. If RealtyTrac counted all of the refilings for corrected documentation, there would have been an increase of 30%!

The future looks bright for auctioneers, dim for homeowners with the current climate.

(Follow the link to RealtyTrac's 3 minute video report on foreclosure activity: http://www.youtube.com/watch?v=wqsyJNy9ppI

Author's Copyright by Richard I. Isacoff, Esq, March 2011
rii@isacofflaw.com
http://www.isacofflaw.com/

Banks, Foreclosures, and Deceit

In his article, in the Tuesday November 15th edition of the New York Times, about foreclosures, David Streitfield discloses the Banking/Mortgage industry’s callousness to the plight of homeowners across the country. Mr. Streitfield writes, referring to Bank of America and JPMorgan Chase "Both have maintained whatever missteps their personnel might have made... No one lost their house who should not have, the banks say". This arrogance is why we cannot fix the mortgage problem. Why did the homeowners end up in foreclosure? Perhaps the Banks and lenders did not follow the LAW about mortgage lending; so by their logic the mortgages should be discharged.

The technicalities that the Banks dismiss are the basis for the protection of property rights. If the foreclosure documents are forged or unverified, the Banks have no way to know if the borrower should have been foreclosed against. This is akin to law enforcement saying that the Miranda warnings given to suspects are not needed because the person would not have been arrested if he/she was not guilty. The same Banks, a mere 2 years ago, argued that they needed federal help to survive, while they really needed help to build profits. Can we hold them to the same standard in dealing with the substance of modifications - that they must grant a modification because the homeowner should have kept his/her house anyway, job loss and bad lending aside?

On the same day, the Times ran another article about the fact that Bank of America, the largest holder of mortgages, has the lowest percentage of Making Home Affordable or HAMP modifications, among the 5 major mortgage servicers/lenders. Maybe there is a mere technicality that will allow some Federal agency to force the mammoth B of A to follow the program in place for modifications, instead of arbitrarily denying such relief just because to paraphrase the Banks, No one will lose their house who doesn't deserve to lose it!

Author's Copyright by Richard I. Isacoff, Esq, November 2010

rii@isacofflaw.com

http://www.isacofflaw.com/

HAMP: "You Probably Think This LAW Is About YOU!"

This posting's title, with apologies to Carly Simon who wrote and sung Billboard's 72nd most popular song ever, is appropriate if any of us think that the Mortgage Modification issues and Programs, like HAMP, are about us; they are all about the Servicers/Lenders and the INVESTORS of the ubiquitous Mortgage-Backed Securities ("MBS").

The program, which has no teeth for enforcement by any entity (Treasury, FDIC, Federal Reserve, etc.) was established to protect the INVESTMENT pools of securitized mortgages. This means simply that the mortgage and investment communities refused to permit any government force-down of a program that might hurt "ROI" or "Return on Investment", or more crudely put, the PROFITS and INCOME made by the owners of these mortgage pools, and by the Goldman Sachs and Lehman Brothers of the world - the people who brought us the "great meltdown"

In fairness, the whole idea behind putting a large number of mortgages together, computing the average interest rate to be paid by homeowners, while at the same time calculating the expected or historical number of "bad" (non-paying) loans, was to enlarge the market of home ownership. By putting the mortgages into securities, all of the mortgage originators, brokers, lenders, banks, mortgage companies, who made these mortgage loans were "off the hook".

As stated in earlier posts, only the investors had anything to lose and they had done their homework. They figured out how much to pay for $1 billion of what became a BOND secured by home mortgages. What could be safer? Based on past experience, the Depression aside, the answer was Nothing Could Be Safer! Or maybe not!!!

During the early musings about what to do as the market was plummeting, and Mortgage-Backed Securities were being valued at $0 - high figures of 40% of face value, there were many theories put forth as to "What Do We Do Now?". One of those concepts was to have Congress and the Supreme Court declare that the contract making up these pools of mortgages, could be broken, for the sake of national security. Remember, our financial stability was gone and the markets were in free-fall.

Rejecting that idea, and rather than one of the Federal Government's arms publicly insuring that no MBS would drop below 70% of face value because the Federal Government would guaranty the FIRST 30% of losses which would have stopped the spiral down, the free-market system functioned as it is designed to do, and we ended up with the mess we are in currently regarding FORECLOSURES!!

The Making Home Affordable ("MHA") program which gave birth to "HAMP" really was a deal with the mortgage and securities industries. The program is about making sure that profits stay high enough to continue to attract buyers of MBS. The way to accomplish that goal is to NOT make modifications that will hurt the INVESTOR - Homeowners be damned. 9%-10% unemployment is no excuse for defaulting on your mortgage payment. If you can catch up fast enough you get to keep your house. If not, well, the house goes to sale at auction -but you can't bid -HA! Gotcha!

Realize that the reason the rules do not help most of the homeowners applying for modifications, or foolishly, a principal write-down, is that they are not supposed to. The rules are there, as written, to protect investors. Well, YES and NO!. If the investors take significant losses, the spiral down starts again and soon a family homestead will consist of two large tents.

Author's Copyright by Richard I. Isacoff, Esq

http://www.isacofflaw.com/

rii@isacofflaw.com

"...and Wining, Winning, Winning" - (re-post)

As a solo practitioner I must acknowledge my work limitations; I cannot compete against the Boston or other big-city law firms employing 20 or more attorneys.

In the Foreclosure Prevention work I have been doing, I have had to bring actions against players like HSBC (and its subsidiaries HFC, Beneficial, Household Finance), America Home Mortgage Servicing Inc ("AHMSI"), Wells Fargo, CitiMortgage, etc. In so doing I lost my ability to do any work other than fighting these lenders, which hire Big Firms, 40th Floor Boston, 50th Floor New York, water-front Rhode Island etc. offices. They have associates, attorneys trying to become partners, being paid to fight anyone who gets in the way of a foreclosure.

The fighting is "civil" - sort of. The filing of a claim brings a ream of paper filled with questions for my client (Interrogatories) meant to elicit the smallest details about the case, and pages of "Request for Production of Documents". These legal tactics are used in reality to flood a small office with paper and consume time. Well I just drowned in the latest flood and there was no one to perform CPR.

Make no mistake - these firms are within their legal rights to protect their clients through any legal means, but are they and their clients acting "morally" or, using the word in the common sense, ethically? In many cases I believe the Lenders/Servicers/Investors are not. They claim not to have any responsibility for the loans they made/service, regardless of how onerous, regardless of "bad faith", "bait and switch", unconscionable, and just plain improper and misleading. What's worse is that by the time the problem hits, most of the laws enacted to protect consumers have run their course - the "Statute of Limitations" has expired - it's too late to argue about the violations.

The Lenders are about taking no losses, granting no relief to someone facing foreclosure, just WINNING! I concur that winning is nice but how about DOING WHAT IS RIGHT?

I have been generally successful in preventing foreclosures and reversing some that have occurred, and in getting modifications. I have been unsuccessful in making a living because I could spend every week, all week, working on foreclosure cases where the BIG FIRMS for the BIG LENDERS know how to kill a case - bury the other "guy" in paper.

The best and most apt summary of what it's like to work against the lenders is from lyrics of one of Don Henley's (formerly of the Eagles) songs:

"Today I made and appearance downtown.
I am an expert witness, because I say I am.

And I said, 'Gentleman....and I use that word loosely...I will testify for you; I'm a gun for hire, I'm a saint, I'm a liar - Because there are no facts, no truth, just data to be manipulated.

I can get you any result you like....what's it worth to ya? Because there is no wrong, there is no right; And I sleep very well at night;

No shame, no solution No remorse, no retribution.

Just people selling t-shirts just opportunity to participate in this pathetic little circus

And winning, winning, winning' "

Author's Copyright by Richard I. Isacoff, Esq, July 2010
rii@isacofflaw.com
http://www.isacofflaw.com/

Massachusetts Passes Homeowner Relief Bill

Yesterday, the Massachusetts legislature passed and Governor Duval Patrick (D) signed a bill that will grant additional safeguards to homeowners facing foreclosures.

In short, Lenders/servicers/anyone trying to foreclose on a 1-4 family residence will have to give the homeowner a 150 day notice that there is a default and that if it is not cured/paid within 150 days from the date of the notice, the foreclosing party will have the right to start a foreclosure proceeding.

The bill also makes lenders offer a modification or other workout plan unless a formula shows that to do so will net the foreclosing party less than a foreclosure sale (net present value test).

A full analysis will appear on Monday August 2, 1010

Author's Copyright by Richard I. Isacoff, Esq. July, 2010

rii@isacofflaw.com

http://www.isacofflaw.com/

Class Actions for Modifications or Divine Intervention

There has been movement in some state courts to shore-up the failure of the legislation enacting the Making Home Affordable program initiatives to modify loans (HAMP etc); Federal Courts seem paralyzed.

As stated in an earlier post, there is no private right of action under the Home Affordable Modification Program ("HAMP") or any of its siblings. Congress, the Treasury, Federal Reserve, and all of the alphabet soup of regulators (FDIC, OCC, OTS, TARP Oversight, etc), evidently did not want (or caved-in to the mortgage investment community) homeowners to be able to sue mortgage servicers and actual lenders just because the servicers and lenders uniformly and regularly ignore the intent and actual RULES and REGULATIONS set out in the MHA/HAMP enacting legislation/rule-making.

The lack of this "private right of action" means that no matter how slip-shod, devious, lying, resistant, unethical, and immoral the servicers and lenders are in reviewing, analyzing, and denying modifications, homeowners/borrowers CANNOT sue in Federal Courts, and specifically Bankruptcy Courts, to force a modification OR sue because the servicer/lender has REFUSED to follow Federal regulation, rules, and guidelines. Even if the home is foreclosed and sold after the servicer/lender promised a modification, Congress and the White House, in their hurry to curry favor with the Banking interests (Goldman Sachs, Chase, Bank of America) and keep lobbyists happy, failed to put any teeth in its MHA/HAMP legislation.

Only the regulators like the Treasury, FDIC, Office of Thrift Supervision ("OTS"), Federal Reserve, can even recommend/urge/push the Banks and Investors in mortgages and Mortgage-Backed securities to follow the rules. There are no teeth in the rules and regulations.

Some State Courts have seen fit to force Lenders and servicers to show that they have acted in good faith when a Homeowner manages to get before a judge. The key here is "acting in good faith". If there has been no "good faith", or worse, demonstrated "bad faith", State Courts are allowing injunctions to stop foreclosures. No one expects there to be a modification when a homeowner is 30 months behind and cannot make a payment even if it based on 2% interest rate for 40 years, unless the problem was fraud in the origination of the loan. But most issues are regular people with regular problems in today's economy: job loss, reduced income, illness or death.

The exception may be CLASS ACTION SUITS. Simplifying a complicated legal issue, simply put, if there can be shown that as a pattern and practice a lender/servicer systematically and consistently rejects modifications, or acts so negligently as to de facto reject modifications (never gets paper processed etc), and there are enough diverse persons affected, then there may well be a "CLASS" of persons affected enough to demonstrate that all are "third-party beneficiaries" of the federal law.

Homeowners and their attorneys should begin to think about such Class Actions. Perhaps if there are enough suits against Lenders/servicers and the "investor-managers" of the Mortgage-Backed Securities, Congress may take action: Don't count on the mortgage industry or the Banks to help any more than they are forced to by some higher power (as morality is out, do not plan on Divine Intervention).

Author's Copyright by Richard I. Isacoff, Esq, July 2010

rii@isacofflaw.com

http://www.isacofflaw.com/

"...And Winning, Winning, Winning' "

As a solo practitioner I must acknowledge my work limitations; I cannot compete against the 40th floor Boston or other big-city law firms.

In the Foreclosure Prevention work I have been doing, I have had to bring actions against players like HSBC (and its subsidiaries HFC, Beneficial, Household Finance), America Home Mortgage Servicing Inc ("AHMSI"), Wells Fargo, CitiMortgage, etc. In so doing I lost my ability to do any work other than fighting these lenders, which hire Big Firms, 40th Floor Boston, 50th Floor New York, water-front Rhode Island etc. offices. They have associates, attorneys trying to become partners, being paid to fight anyone who gets in the way of a foreclosure.

The fighting is "civil" - sort of. The filing of a claim brings a ream of paper filled with questions for my client (Interrogatories) meant to elicit the smallest details about the case, and pages of "Request for Production of Documents". These legal tactics are used in reality to flood a small office with paper and consume time. Well I just drowned in the latest flood and there was no one to perform CPR.

Make no mistake - these firms are within their legal rights to protect their clients through any legal means, but are they and their clients acting "morally" or, using the word in the common sense, ethically? In many cases I believe the Lenders/Servicers/Investors are not. They claim not to have any responsibility for the loans they made/service, regardless of how onerous, regardless of "bad faith", "bait and switch", unconscionable, and just plain improper and misleading. What's worse is that by the time the problem hits, most of the laws enacted to protect consumers have run their course - the "Statute of Limitations" has expired - it's too late to argue about the violations.

The Lenders are about taking no losses, granting no relief to someone facing foreclosure, just WINNING! I concur that winning is nice but how about DOING WHAT IS RIGHT?

I have been generally successful in preventing foreclosures and reversing some that have occurred, and in getting modifications. I have been unsuccessful in making a living because I could spend every week, all week, working on foreclosure cases where the BIG FIRMS for the BIG LENDERS know how to kill a case - bury the other "guy" in paper.

The best and most apt summary of what it's like to work against the lenders is from lyrics of one of Don Henley's (formerly of the Eagles) songs

"Today I made and appearance downtown.

I am an expert witness, because I say I am.
And I said, 'Gentleman....and I use that word loosely...I will testify for you; I'm a gun for hire, I'm a saint, I'm a liar - Because there are no facts, no truth, just data to be manipulated.
I can get you any result you like....what's it worth to ya?
Because there is no wrong, there is no right; And I sleep very well at night; No shame, no solution No remorse, no retribution.
Just people selling t-shirts just opportunity to participate in this pathetic little circus

And winning, winning, winning' "

They have won...I have lost! So have my clients!!!!!!

Author's Copyright by Richard I. Isacoff, Esq, July 2010

rii@isacofflaw.com

http://www.isacofflaw.com/

FORECLOSURES 1 - MODIFICATIONS 0

There is no way to maintain this BLOG as frequently as would be liked because FORECLOSURES ARE NOT DECREASING! We are saving at least one (1) house a week and for a small office that is a huge investment of time.

If you have your home sold at a foreclosure sale and you have not taken all possible steps to stop the sale, shame on you. If you never knew what options were available, shame on the attorneys and the mortgage industry. Keep in mind that a MORTGAGE SERVICER would rather foreclose than modify despite HAMP. The why is simple!

Servicers are paid a fee to handle the payments and billing on a monthly basis, of all loans in the portfolio. If a percentage of those loans get delinquent enough to warrant legal action the servicer wants no part of the process. They are paid for collecting money and sending bills, and referring mortgages to legal firms for foreclosure. THEY ARE NOT PAID FOR MODIFICATIONS! Yes, there is a provision in the Making Home Affordable package that theoretically pays $1,500 to a servicer for each modification, but that only applies to FannieMae and FreddieMac loans.

MOST IMPORTANT, A SERVICER LOSES NOTHING IF A HOUSE IS FORECLOSED AT A HUGE LOSS. The owner of the loan losses but the Servicer does not care. It gets paid for servicing the loan and gets paid for taking it to foreclosure. For example,there is no loss TO THE SERVICER because the loan was for $200,000 and the foreclosure sale resulted in the mortgagee (lender) buying the house back and then selling it for $100,000. No one has any risk of loss except the HOMEOWNER

So, we are left with the problem of a company spending money (salaries) to try to work on a modification by contacting the owner(s) of the loan and asking for permission and not getting paid for the work. Now, most servicing agreements (the contract between the owner of the loan, or the Trustee of the Mortgage Backed Security that actually owns the loan) grant a certain amount of leeway for the servicing company (A.S.C., AHMSI (old Option One), Ocwen, HomeEq, CitiMortgage etc, Chase Mortgage etc., ETC.). This flexibility is very limited. What is not limited is foreclosing, and each foreclosure gets money to the servicer for finalizing the loan.

If this all reads like "Lost in the Fun House" or "One Flew Over the Cuckoo's Nest" or the housing equivalent of FEMA during Katrina in Louisiana, that is because it is counter-intuitive and counter-productive, and costly. The monetary costs can be calculated and written-off as a "cost of doing business". The Servicer or owner of the loan, the Mortgage Backed Security or the Bank, may even receive money from the bail-out programs for foreclosing and "taking a loss"

The good news - It is possible, sometimes, to reverse a foreclosure. I know this because I have done FIVE (5). There are no tricks, no easy ways to do it, and no lender will want to cooperate AT FIRST. Details in the next installment

Author's Copyright by Richard I. Isacoff, Esq, April, 2010

rii@isacofflaw.com
http://www.isacofflaw.com/

Keeping Your House

"Making Home Affordable", Loan Modifications, Loss Mitigation, "HAMP", "HARP" "HASP" - all are programs of one type or another to help homeowners from losing their house. They are not working very well as detailed in prior posts. So, WHAT DO YOU DO TO KEEP THE HOUSE?

There is no easy way. Outlined below are steps that should be followed and followed and followed to stop a foreclosure or fend off the possibility of facing a foreclosure.

1. As soon as you believe that you might have a problem making payments, contact the lender's loss mitigation department or the Making Home Affordable ("MHA") department.

2. Get written instructions from the lender/servicer of the steps to follow and documents needed to get a loan modification.

3. Keep in mind that a loan modification ("loan mod") can be a reduction in rate for the balance of the loan, or just a deferral of a few payments. Do not under-sell your problem and if the suggested solution will not work over the long term, ask for a different program.

4. Typically, you will be asked to supply documents including at a minimum: a. Hardship Affidavit (check http://http://www.makinghomeaffordable.gov/ for the form), b. Financial Statement (form lender directs you to retrieve from website), c. one or two years tax returns, d. your two most recent pay stubs, e. proof of homeowners insurance being in-place on the property, f. copy of recent real estate tax bill g. one or two months bank statements. There may be other documents required.

5. PAY ATTENTION. Provide ALL requested/required documents the FIRST TIME you send in your request/plea for a Loan Mod. The biggest reason for denial of help to a homeowner is that no all of the paperwork was sent

6. Make several copies of everything you send to the lender as the first package has a 50/50 chance of being lost

7. Send the package Certified Mail, return receipt requested. You may need proof later that you DID send the documents

8. Begin calling for the status of your Loan Mod 4-5 days after the package was received. Be prepared to spend 45 minutes on the telephone navigating the computer enhanced telephone answering system. DO NOT JUST HANG UP! This is what military folks call "Hurry up and wait". DO IT!

9. Call every 3-4 days, without fail, to check on the progress. Call even if the customer representative says not to call so often. It is your house at stake, not his/hers.

10. If you are told after 10 days that your package was not received, send a new package. Be sure to update the pay stubs. It shouldn't be necessary to re-submit everything, but it is. Just do it!

11. Check the Lender's/servicer's website to see if the is the ability to track your Loan Mod application online.

12. If you have a problem, call the lender as often as is necessary to get your answer - get a live person on the telephone. You might not get the answer you need, but it is a start

13. If it looks like a foreclosure will begin against you, or if one already has, call an attorney who deals with foreclosure prevention. One of the organizations that can help you find a lawyer is the National Association of Consumer Bankruptcy Attorneys at http://www.nacba.org/ ; another is the American Bankruptcy Institute at http://www.abi.org/ (look for the consumer bankruptcy center). Other resources - your local Bar Association. Explain your problem and ask for a referral

14. DO NOT sign up for the "Send us $2,500 and we will fix your problem" companies. Too many of them are scams.

15. DO NOT WAIT UNTIL THE WEEK BEFORE A FORECLOSURE TO START TO TAKE ACTION. You will lose!!

Below are listed the websites for 5 major lenders' Homeowner Assistance programs.

Wells Fargo https://www.wellsfargo.com/mortgage/account/paymenthelp

JPMorgan Chase https://www.chase.com/chf/mortgage/hrm_options

OCWEN https://www.ocwencustomers.com/openFCLSPreventionPlan.action

Bank of America and Countrywide http://homeloanhelp.bankofamerica.com/en/loan-solutions.html

CitiMortgage https://www.citimortgage.com/Mortgage/Home.do?page=homeowner_assistance
Author's Copyright by Richard I. Isacoff, Esq. January 2010

http://www.isacofflaw.com/
rii@isacofflaw.com