Bankruptcy Is Not Always A Good Way to Deal With Mortgage Foreclosure.

A recent law review article Saving Homes? Bankruptcies and Loan Modifications in the Foreclosure Crisis provides evidence that Bankruptcy may not be the best route for homeowners facing imminent foreclosure, especially in Judicial Foreclosure states like Oregon. Raising defenses in state court foreclosure proceedings and using that legal leverage to negotiate a smart settlement agreement for homeowners remains the best chance for homeowners to save their homes. Many bankruptcy lawyers try to push struggling homeowners into Bankruptcy too soon.  While Bankruptcy remains a valuable tool for lawyers representing homeowners facing foreclosure, its best value may very well be after state court proceedings are close to a finish.

 

Marc Dann

Oregon Consumer Law Center

marcdann@oregonconsumerlawcenter.com

503-374-9777

Dark Cloud in Silver Lining of Declining Foreclosure Rate

            There is good news over the past few days that the number of foreclosures nationally have declined, but that does not provide much consolation to the thousands of homeowners who remain in the foreclosure process. Even more disturbing for homeowners who have been sued is the news from the Washington Post  that in at least two of the states where our affiliated firms represent homeowners, Ohio and Illinois that those facing foreclosure are deeply under water.

 

            Creating legal leverage to push servicers and investors to to rationalize predatory mortgage loans by reducing principal and interest is more important than ever for homeowners facing foreclosure.

 

            Servicers and Lenders are becoming bolder in try to foreclose on houses where they have a tenuous legal claim based on the failures in the origination, securitization and servicing processes.  This makes it even more critical to at least consult a lawyer before a court can issue a default judgment.  Too often clients come to us with a case that reveals significant legal issues that could be offered in defense of foreclosure, but after a court has issued a default judgment or summary judgment against them.  The barriers remain high to getting a court to look at those legal issues.

 

            At this stage in the foreclosure crisis it is more critical than every to consult with a lawyer experienced in defending foreclosures and suing banks and servicers than ever. The courts operate on strict timelines and a failure to answer could be the difference between keeping a house and losing it.

 

http://www.oregonconsumerlawcenter.com

Wells Fargo to Face Suit for New York AG over Failure to Comply With Mortgage Settlement

This just in:

New York Attorney General Eric Schneiderman has filed Suit Against Wells Fargo

At least on State Attorney General has figured out what we already know, that the major servicers who are subject to the National Mortgage Settlement are not working in good faith to modify loans of homeowners facing foreclosure.

Separately Schneiderman reached and agreement with Bank of America to step up its efforts.

 

Marc Dann

oregonconsumerlawcenter.com

mdann@dannlaw.com

503-374-9777

If You Get A Check from Rust Consultants Related to the Foreclosure Review You Should Review Your Own Situation With A Lawyer

Throughout the country close to Three Million families will be receiving checks ranging from $300 to  $125,000 from someone called Rust Consultants. Rust was the latest contractor hired by the Office of the Comptroller of the Currency (“OCC”) in their disastrous effort to “investigate” foreclosure abuse by the National Banks that they are charged with regulating.

You may remember that the nation’s largest Banks, in collaboration with the OCC wasted billions of dollars that could have gone to consumers who were the victims of fraud, perjury and document fabrication in the foreclosure process that was openly perpetrated by banks, often resulting in homes being taken without any meaningful due process of law, often from homeowners who were not even in default, or who were being promised, government subsidized modifications of their loans.

After spending billions on consultants to review bank files, the OCC and the Banks agreed a few months ago just to let the banks decide who they defrauded and to get the checks out to alleged victim homeowners as soon as possible. (I’m not making this up. The Federal Government agency overseeing banks suspended the independent review of the banks files and decided to let the banks themselves decide who they defrauded)

So each and every one of the 2.9 million checks that Rust Consulting will be sending to homeowners is based on a bank’s own admission that they acted inappropriately in the foreclosure process.

The only good news about the OCC settlement is that specifically states that homeowner’s who receive the checks DO NOT WAIVE ANY LEGAL CLAIMS THEY MIGHT HAVE AGAINST THE BANK THAT FORECLOSED ON THEM. While there has been a little problem of some of the checks bouncing, homeowners who can get the bank to honor them should cash the checks.

But, there is a much more important issue for homeowners receiving checks. You are now aware that the bank that foreclosed on you admits that there was something wrong with your foreclosure.

Whether you are still in your home or not you should consider consulting a lawyer in your state who is experienced in consumer, banking and foreclosure issues to determine whether or not you may still have a civil claim against the bank, or even whether the fraud in your case was so egregious that a court might be persuaded to unwind the foreclosure all together.

www.oregonconsumerlawcenter.com

State AGs Sell Short in LPS Settlement But Admissions May Be Helpful to Homeowners Facing Foreclosure

The Settlement announced today between State Attorneys General and Lender Processing Services (LPS) has some important implications for homeowners facing foreclosure and those who have been foreclosed upon over the past several years.

LPS is the company that is one of the most notorious players in the foreclosure crisis. Employees of their subsidiary, Docx were profiled in a 60 Minutes Segment admitting to signing other peoples names to documents and signing documents endorsing loans, assigning mortgages and swearing to facts under oath without authorization from the company on whose behalf they were signing.

Several LPS employees have also been indicted on criminal charges in Missouri and Nevada.

These forged documents were then used and continue to be used to foreclose on homeowners from Oregon to Ohio.

If LPS were taking homes away from citizens with guns instead of forged documents, the Chief Law Officers of 46 States would not have rested until the culprits were in jail. But apparently, since LPS was just taking those houses with admittedly forged documents under their contracts with the largest banks and mortgage servicers in the country a slap on the wrist was the outcome of their “investigation.

Oregon Attorney General Ellen Rosenblum settled out on behalf of the entire state for LPS contribution of $3,000,000. No money for homeowners. No damages for homes fraudulently taken. No Jail for anyone.

There is a bright side for homeowners facing foreclosure. LPS has admitted in the consent decree to be filed in 46 State that it did the following:

1. Admitted that LPS produced documents had defects.
2. That documents used in foreclosures had unauthorized signatures
3. That documents used to foreclose on homeowners were not signed by the person who the documents said sign them.
4. False assignments of mortgages were recorded with clerks and recorders throughout the United States.
5. Documents used in foreclosures had notarizations that were false.

These admissions can be used on behalf of homeowners facing foreclosure to form the basis of counterclaims against lenders or to challenge the right of lenders seeking foreclosure to use the courts to take people’s homes.

The AGs fortunately did not have the power to waive those claims on behalf of individual homeowners. This development makes it more important than ever for those facing foreclosure or who have been foreclosed on since 2008 to consult with legal counsel to determine whether there are claims that can be brought against LPS or the lenders they worked for or whether there are defenses that can be raised to the right of such lenders to foreclose.

For More Information See:

http://www.oregonconsumerlawcenter.com

OCC Settlement Allows Lenders to Decide who Gets How Much to Pay Aggrieved Homeowners: Fox Firmly in Control of Chickenhouse

Unlike State Attorneys General and the US Department of Justice who, in their settlement at least created enforceable parameters for payments, principal reductions and other relief for homeowners, the Office of Comptroller of the Currency isn’t even pretending to exercise control or oversight of the settlement that they announce yesterday.

The Huffington Post reports:

“Under the new process, OCC officials explained, banks would take the 4.4 million foreclosed mortgages involved in the original review and broadly classify them into 11 “buckets” corresponding to the level of fraud during the foreclosure process. Borrowers with foreclosed loans that fall into the highest-priority bucket, such as foreclosures illegally conducted on U.S. troops while they were fighting overseas, will qualify for a payout of as much as $125,000. Those in the lowest-level group, such as loans with a clerical error, will qualify for at least $250.”

But here is the outrageous part:

“Banks will be making all the “slotting” decisions, something OCC officials said was needed to speed the process.”

Speed is certainly important but putting the criminals in charge of determining restitution is unprecedented in american jurisprudence.

http://www.OregonConsumerLawCenter.com

The Jury is Out on the Possible OCC Settlement with 14 Banks on the Horizon

The New York Times reports that the Office of Comptroller of the Currency (OCC) is close to a deal with 14 banks who service mortgages valued at around $10 Billion.  The deal is reported to include direct payouts to homeowners wrongly foreclosed upon of over $3 Billion, with the bulk of the rest being dedicated to support modification of loans for existing underwater homeowners.

As with the Department of Justice/Attorney General’s Settlement the yet to be revealed details of the agreement will matter most.  Most intriguing for homeowners facing default or foreclosure is the possibility that tens of thousands more homeowners might be able to negotiate modifications of their underwater mortgages that include reductions in principal.

Homeowners in Oregon are facing an uncertain legal future as recent court decisions make it extremely likely that lenders who seek to foreclose will be forced to file suit and bring Judicial Foreclosures. While the foreclosure process in the state has slowed recently, it is expected that foreclosure filings will recommence in earnest in the next few months.

This settlement, along with the early settlement should put more resources on the table to bring better resolutions for homeowner’s facing foreclosure.

Making sure that homeowners facing judicial foreclosure are protected is the primary goal of the Oregon Consumer Law Center.