Bankruptcy and Foreclosure Attorney Blog

The Mortgage Electronic Registering Systems, Inc. (MERS) is a mortgage tracking system which was developed about 10 years ago. Until just recent, MERS used to be heavily involved in foreclosure litigation and bankruptcy disputes. MERS would actually claim to hold mortgage interests and thus had legal "standing" to sue.

How or why MERS thought it had an equitable interest in these mortgages is still puzzling, but nevertheless, courts allowed them to do it. MERS also claimed it had the right to transfer or assign mortgages. A recent case in New York seems to dispell that notion and that any puported mortgage transfer by MERS was invalid and not enforeceable. This is a defense to a foreclosure lawsuit. There are many undetected issues in foreclosure cases that only experienced attorneys can discover.

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If you are a homeowner and are behind on your payments, how do you know when the lender will attempt to foreclose? Usually, the lender will send what is called a "notice of acceleration" even though they may not label it in that particular manner.

This notice provides the homeowner/borrower that the lender has accelerated the loan and or the total arrears. Now, the lender considers you to be in default and the only to reinstate the loan is to pay the full amount in arrears or pay the full value of the loan.

Most people cannot afford this type of payment and are forced into foreclosure. The foreclosure process can drag out and take months even years to complete. Meanwhile, the borrower/homeowner is able to save for a downpayment on a new place. If the bank never sent you a notice of acceleration and your house is being foreclosed on, you have at least one defense in your case.

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Lender Processing Services (LPS) has reported that mortgage delinquency rates through the end of June increased sharply. However, the overall number of delinquencies is lower than it was at this time last year. LPS reports that there are a total of about 6,452,000 mortgages that are gong unpaid in the United States. 2,167,000 of these are actually in foreclosure while the remaining 4,285,000 are past due but have not yet been referred to a foreclosure attorney.

Continue reading " Mortgage Delinquency Numbers Rise in Florida " »

With the rash increase in foreclosures brought on by the collapsed housing market over the last few years, the banks have found themselves in possession of an increasing inventory of foreclosed homes. Getting these houses off of the banks books and back into homeowner's hands is an essential part of the housing market recovery process. With so many of these houses on the market, the low prices fetched at bank owned sales is bringing down the property values of surrounding homes. RealtyTrac reports that these homes are generally sold at 35% less than homes that are not in foreclosure.

Miami and Phoenix are the two markets that have the highest percentage of bank owned properties in the U.S. Until this inventory is diminished home values will likely remain stagnant. A still unrealized side effect of the rampant foreclosure fraud allegations prevalent in places like Florida may be potential clouds on title that could scare buyers off or otherwise complicate sales of bank owned homes. It is hard to say what type of impact this could have on the market, but if the banks do not do a better job with their paperwork, this could prove to be another bump in the road for the real estate industry.

Continue reading " Bank Owned Sales Weighing Down Property Values " »

When homeowners have a loan amount that is higher than their house value it is called negative equity. Negative equity is often referred to as being "underwater". For a lot of borrowers in this position it can become the rationale to cease making loan payments to the lender. When this happens the lender has to make a choice to either lower the loan amount (principal reduction), charge off the forgiven loan amount, and possibly issue the borrower a 1099 for the forgiven debt or to foreclose on the property and possibly sue the borrower for the balance of the loan.

Borrowers who voluntarily stop making mortgage payments on an underwater home who have the ability to make payments, are said to have "strategically defaulted" on their loans. The reasoning behind it is that the house is not going to regain value equal to what the loan amount is and therefore the borrower feels they are just throwing good money after bad. So they stop paying the mortgage, live in the house as long as possible until the bank forecloses and sells the property, and use the money they have saved to get another property or rent.

Traditionally so called "always performing loans" or loans that usually remain current tend to be concentrated in markets that have held their value above the national average. However, since the values of these homes have been falling over the last year, their loan to value ratios (LTV) have begun to surpass the average LTVs for loans that have defaulted. Moody's believes this dynamic increases the likelihood of strategic defaults.

Moody's analysts expect home prices to continue to decrease through the first quarter of 2012, further exacerbating a climate in which strategic defaults may become prevalent.

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According to Hope Now's (an industry-created alliance of mortgage servicers, investors, counselors, and other professionals) monthly mortgage data, foreclosure sales have declined for a second month in a row. Foreclosure sales nationwide decreased by 7 percent from 73,000 in April to 68,000 in May. However, foreclosure filings have increased 8 percent from 163,000 in April to 176,000 in May.

Hope Now has also reported that sixty plus day delinquencies have increased slightly at a rate of one percent to a total of 2.67 million for the month of May. Modifications completed under Home Affordable Modification Program (HAMP) increased in May by twelve percent from the previous month.

With the current state of the economy and unemployment rates over nine percent, it's hard to imagine the real estate market bouncing back any time soon. If you are in a house that is underwater (fair market value is less than the outstanding loan amount) your options may be limited. It will be almost impossible to sell the home without incurring a personal obligation to pay the remainder of the loan amount. However, some banks are offering principal reductions in some cases.

Continue reading " Foreclosure Sales Have Declined For Two Months In A Row " »

President Obama recnetly announced that he is extending the forebearance period for those unemployed homeowners that qualify for the program. Initially, the period was only to last for 3 months, but because of the continued housing crisis and high unemployment rates, the program is extended to 12 months.

However, in order to qualify the homeowner must be looking for work AND a partial payment is required during the forbearance period.

With all of this being said, the programs are voluntarily entered into by the banks and they still have the full discretion to determine whether or not a particular homeowner is a candidate.

To learn more about this article, please visit Obama to extend help for unemployed homeowners to 12 months.

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“The continuing decline in the housing market is something that hasn’t bottomed out as quickly as we expected…”, a recent twitter quote from President Obama.

The government is now pressuring banks to modify loans “more quickly”. Why has it taken so long to pressure the banks? So many homeowners across this county have already lost their homes. The Home Affordable Modification Program has been in existence for sometime now and we have all heard the statistics of the Programs success – or lack thereof.

The Home Affordable Modification Program begins with the borrower providing all financial information to bank, including checking account and income information. Borrowers willingly provide this information on the pretext and hopes that a modification will be forthcoming. Once the initial information is provided, the process begins. Borrowers are advised to make a series of monthly payments “Trial Plan Payments” while their permanent modification is being processed. The “trial modification” is supposed to last 3 months but is more likely to last 6 months or more. Meanwhile, late fees and penalties continue to accrue.

At the end of the day, more people have been permanently denied for a “Home Affordable Modification”, than have been approved. No wonder the government is now “pressuring banks to modify loans “more quickly”. The banks have now had years to try to get the process done “more quickly”, yet stories continue to be told of borrowers submitting paperwork to the bank 1, 2, 3, 4, 5, and 6 times – OR MORE!

Continue reading " Federal Government to Put More Pressure on Banks to Approve or Deny Modifications Quicker " »

Wells Fargo is facing a substantial lawsuit from investors who invested in mortgage backed securities issued by Wells Fargo. Typically, when a mortgage and note are taken out, that debt is typically sold to other entities. Many times that entity is in the form of a trust or other investment tool.

The investors of the trust make their investment into the trust and purchase these loans based on the information provided by the originator of the loan. Based on that information, investors decide if they wish to take on those types of risks by purchasing the loan.

Wells Fargo has been accused of misstating some of these risks and investors have lost a substantial amount of money as a result. Therefore, this lawsuit has been brought and alleges that several loans orginiated between 2005-2006 were fraudulently made.

To learn more about this article, please visit, Wells Fargo Agrees To Pay $125 Million To Investors In Mortgage Lawsuit.

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The U.S. Treasury Department and the Department of Housing and Urban Development reported that almost 5,000 homeowners have reduced their principal debt on their homes by an average of $70,000 per borrower. This information comes from the first report to come out of the agency's principal reduction efforts which began in October 2010.

Servicers started more than 21,000 trial modifications that involved principal writedowns. There are approximately 16,000 active trials in place. Government-sponsored companies are not participating in the principal writedowns for loans they own or guarantee. Fannie Mae and Freddie Mac have said that they are not participating in principal reduction alternatives. Some of the major servicers such as Bank of America have been hesitant to reduce principal without taxpayer dollars. In addition, these banks typically state that the reductions will only happen on the mortgages they own and with their investors' approval. Nevertheless, if you fight hard enough you may be able to get a principal reduction with your lender.

Continue reading " Treasury Principal-Reduction Plan Reducing Borrower's Loans " »

The Home Affordable Modification Program also known as HAMP, is a federal program that was designed to help homeowners modify their existing mortgage debt to a more affordable amount. The idea was that lenders were supposed to work with homeowners to lower their monthly mortgage payments. The program has been rather unsuccessful and it seems the Treasury Department is holding several of the biggest banks responsible.

On June 9th, the Treasury Department announced that three of the nation's largest mortgage servicers, Bank of America, J.P. Morgan Chase, and Wells Fargo will no longer receive payments for participating in HAMP until their performance improves. The companies have failed to complete even the most basic requirements of the program, such as contacting the borrowers. It's no surprise that homeowners have had such trouble modifying their loans when the banks won't even speak to them. Not to mention the banks are receiving payments from the government, homeowners' tax dollars, to participate in these programs.

Continue reading " Major Banks No Longer Allowed To Participate In HAMP. " »

A recent audit shows that nearly 75% of assigned mortgages are invalid. Another 9% are considered "questionable." What does that mean? It means that most entities that claim they own the mortgage and the note are not the true owners.

That becomes important in foeclosure cases. In order for a Plaintiff to bring a lawsuit, such as a foreclosure, the Plaintiff must have standing. Standing refers just refers to an interest in the matter. If a party does not own something that it is trying to enforce, there is no interest in that item. Most mortgages and notes are transferred or assigned to a new entity. The same note and mortgage could be transferred on multiple occasions.

Therefore, it is imperative for these lenders to maintain adequate records of each transaction. However, for the most part, the banks are not keeping adequate records and are filing false pleadings in court.

To learn more about this article, please Southern Essex Registry of Deeds Audit Reveals That 75% of Assignments of Mortgage Are Invalid; O’Brien Says Banks Responsible for an Epidemic of Fraud.

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