My brother bought a house in Florida three years ago.  Now the house is worth less than the loan and because he does not live in the house, he is also charged a heavy property tax on it.

Renting it out is often problematic.  He has no need for the house anymore, so he is paying a mortgage and heavey property tax on a house that he is not living in. 

Is foreclosure is only option if the mortgage will not agree to a short sale?  And even if the mortgage agrees to a short sale, what is he does not sell? 

Is foreclosure the only option for him at this time.  He has been trying very hard to keep up the mortgage for quite a while now, but it is becoming difficult.

May (more…)

The lender lost your mortgage note!  Did they?  Maybe they did – or maybe they’re just lazy. 

Now it’d be bad enough if they said ‘the dog ate my homework’ but ladies and gentleman it’s much worse than that.  It’s more like: “The dog ate your promissory note and now I’m going to FORECLOSE ON YOUR HOME!”  Something doesn’t seem right about that.  No, it’s definitely wrong, (voice of Rain Man) definitely definitely wrong. 

I think the response should be: “The dog may have eaten my promissory note but now you won’t foreclose – you’ll work out my loan terms or allow me to sell my home to avoid foreclosure”.  Yeah, I like that better; much better (bet two for good).

A widowed homeowner in Lehigh Acres, Florida was named as the defendant in two foreclosure actions last month.  American Home Mortgage filed suit against her on October 1st and Deutsche Bank brought their lawsuit on October 16th.  Take a look at the complaints.  They each contain a provision for “REESTABLISHMENT OF NOTE” or “REESTABLISHMENT OF LOST NOTE”.  Sadly, that’s an all too common count in lender pleadings.  There seems to be a (small?) problem with this one though.  American Home Mortgage and Deutsche Bank BOTH brought these foreclosure actions based on the SAME lost note!

American Home Mortgage later withdrew its suit.

So, what does all of this mean?  I borrowed money from someone, right?  And I owe money and now I am the subject of a foreclosure filing – lights out, game over.  No, not quite.  If you’ve been named in a foreclosure complaint, you need to respond and (among other defenses) challenge the plaintiff’s claim of lost note.  According to the National Consumer Law Center “Foreclosures” (p. 24, 2008 Supp.):

“When some of the largest financial institutions in the world repeatedly file lawsuits in the names of the wrong parties, and do so primarily in cases brought against unrepresented and defaulting defendants, it is more than fair to ask whether these plaintiffs are making honest and unavoidable mistakes.  This is a particularly valid question to raise in view of the fact that these institutions typically offer to correct their pleadings only in the rare instances when a judge or defendant points out the problem.”

Dasma Investments LLC v. The Realty Associates Fund III L.P., 459 F. Supp 2d. 1294 (S.D. Fla 2006) is a real hoot.  Dasma (the alleged lender) attempted to foreclose on Realty Associates (the borrower) on a note that Realty Associates had already paid in full.  Additionally, Realty Associates had possession of the note with evidence of its cancelled status.  Crazy!  There’s some case law for anyone who has an issue with challenging the lender’s claim of lost note.

Maybe State Street Bank and Trust Co. v. Hartley Lord, 851 So. 2d 790, 51 U.C.C. Rep. Serv. 2d 191 (Fla. Dist. Ct. App. 2003) is a more common occurrence.  These loans change hands so many times in Wall Street’s harebrainedchild that they don’t truly lose the note, but rather attempt to (shortcut the system?) establish the promissory note with a copy that is payable to another party and is not properly endorsed.  In the State Street case, the Court notes: “The undisputed facts show that the note was lost before the assignment to State Street was made…Were we to allow State Street to enforce the note because some unidentified person further back in the chain may possess the note, it would render the 673.3091 rule meaningless.”  And finally, the Court concludes with “we recognize that applying the statute as we do will result in a windfall to the mortgagor and a likely injustice to the mortgagee unless it is able to obtain new evidence.” Mortgagor is the borrower and mortgagee is the lender, so windfall we’ll accept in this case.  Injustice?

The real injustice is with a lender’s refusal to modify a borrower’s mortgage loan to a truly affordable amount or with a lender’s insistence on having the borrower sign an unsecured note on a short sale.  Challenging the lender’s standing in a foreclosure action when they request the “reestablishment of lost note” is simply a means of leveling the playing field for consumers.

Once again I say – The lender lost your mortgage note! 

But now you know what to do about it.

How many toothpicks came out of that box, Ray?

246.

This author is not an attorney and this information should not be considered legal advice.  Please consult an attorney for legal advice.

Hello Paul,

In August 2007 I was sued by a collection company for a credit card debt in the amount of $5879.94. In October 2007 the collection company and I settled out side of court for $3,180 (so I thought).

In October 2008 I received a letter in the mail from a different collection company but for the same credit card debt that I still owe the remaining balance of $2699.94.

I have tried talking to the collection company to explain that the debt has already been settled. Now they are telling me that they are going to garnish my wages. Don’t they need a court order to do that? And can they sue me twice for the same debt?

So confused,
Hailey (more…)

$40K question with Indymac.  They are willing to look at $25K now I spoke to them.  I offered them $1K cash and a $10K note to get it over with. They rejected it and will only look at $25K.  I thought about getting a BK lawyer to write them a letter to state that I am available for BK, but I am afraid they might close my file.  Only part of my loan is recourse.  I purchased for $580K did two refis and my loan was transferred.  Loan was “as stated”.  I can’t file BK because I am getting an inheritance and yes I embellished on my application.  Should I just take it and make them sign something that no further action should be taken. 

Vicky from LA (more…)

Paul,

how do you go about finding out to see if you had a Tila violation to see if you qualify for the 3 year rescission time frame ?
 
I think I maybe able to do this on my house.

Ronnie (more…)

First time your are top guns helping people.

Thank you !

Manuel

I’ve seen Experian ‘update’ a fresh date of status as a response to a consumer dispute all too often and here’s a case where it backfired on them.

Consumer did a deed-in-lieu of foreclosure in May 2002.  The Experian report listed the following prior to his July 2006 dispute:

“Status: Creditor received deed/Foreclosure proceedings started. $8,702 past due as of Oct 2002. Account history: Creditor received deed as of Oct 2002. Foreclosure proceedings started as of Sep 2002, Aug 2002, June 2002, 120 days as of May 2002, 90 days as of Apr 2002, 30 days as of Mar 2002” (emphasis added)

Dispute then gets filed with Experian in September 2006 and as a result HSBC informs Experian that the deed-in-lieu was May 2002.  Not only did HSBC verify the May 2002 date, but the customer sends in a copy of the deed-in-lieu as verification!  Doesn’t matter to Experian; they provide an updated ‘date of status’ for the consumer (IMO as a special thank you), as evidenced by the following after the dispute:

“Status: Creditor received deed/Past due 180 days. $8,702 past due as of Sep 2006. Account history: Creditor received deed as of Sep 2006, 180 days as of Sep 2002, Aug 2002, 120 days as of Jun 2002, 90 days as of May 2002, 60 days as of Apr 2002, 30 days as of Mar 2002. This account is scheduled to continue on record until Dec. 2008” (emphasis added).

Experian was taken to Court on this one and there’s a possibility that there could be punitive damages awarded in this case.  There’s a lot more going on than what I’ve typed (particularly that Experian loves the ACDV system and claims “we don’t do any other independent investigations”), but all in all, this opinion and order is a solid smack on Experian’s behind. 

Maybe the credit bureaus will get the message, and maybe they won’t.  Punitive damages are awarded for willful violation of the FCRA which per the Supreme Court includes “reckless disregard”.  Gorman may be entitled to punitive damages for Experian’s reckless disregard.  In my opinion, that would help them get the message.

Gorman v. Experian Information Solutions, Inc. et al (07 CV 1846 (RPP), S.D.NY, 2008)

My husband and I have been trying to sell a house in Pittsburgh for 11 months now. We have been making every payment on time even though we are not living there. At this point, we need to get out from under the house. 

Our agent has suggested a short sale.  However, the banks won’t talk to us until we are two months defaulted on the loan. Our credit scores are in the high 700′s.

Do we default on the loan and risk lowering our score to get out from under the house?

Denise (more…)

I do not want to short sell.  Most folks want to stay in their homes I know I do, and let inflation bail them out.  Am I dreaming?  Is it possible to get a loan mod, and then another loan mod?

Does the Hope Now program have a lot of promise? Is the following statement true about the Hope program?

The bank reduces your principal to 90% of what the house is worth today. The FHA guarantees a loan in this amount. You in turn must share any equity appreciation with HUD.

Tammy (more…)

Paul,

I own a home in NJ that I purchased in 2005 for $760,000. I refinanced one year into the ownership, I now owe $735,000 over an 80/10/10. I also own another home with equity of about $50,000 where I live, and I own 1/4 of a home in NC, with equity of about $50,000. I have about $30,000 in retirement accounts.

I am a Realtor, my income has decreased from approx. $300,000/annually to about $100,000/annually. I cannot afford to carry the house with the $735,000 loan (PITI is around $5,000/mo.). I have had it on the market for about 60 days, currently asking $745,000, no interest.

Both the 80% and 10% loans are with Wamu. I am not behind on any of my loans at this point, so I don’t think Wamu is going to work with me too much on short sale at this point.

My question is this – since I owe 80% on the first and 10% on the second, I can easily sell and clear the 80% loan. Do you think the short sale is easier to get on the 10% second, or would they allow me to take that on as a personal unsecured debt, or tack it onto my primary home?

What is your recommendation as to the best course of action to take?

Jessica (more…)