Slowing Down Foreclosure

[SHELLY]

If slapped with a foreclosure--ask for PROOF that the trustee owns the note; it can buy you some time.

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Banks Lose to Deadbeat Homeowners as Loans Sold in Bonds Vanish

Feb. 22 (Bloomberg) -- Joe Lents hasn't made a payment on his $1.5 million mortgage since 2002.

That's when Washington Mutual Inc. first tried to foreclose on his home in Boca Raton, Florida. The Seattle-based lender failed to prove that it owned Lents's mortgage note and dropped attempts to take his house. Subsequent efforts to foreclose have stalled because no one has produced the paperwork.

``If you're going to take my house away from me, you better own the note,'' said Lents, 63, the former chief executive officer of a now-defunct voice recognition software company.

Judges in at least five states have stopped foreclosure proceedings because the banks that pool mortgages into securities and the companies that collect monthly payments haven't been able to prove they own the mortgages. The confusion is another headache for U.S. Treasury Secretary Henry Paulson as he revises rules for packaging mortgages into securities.

``I think it's going to become pretty hairy,'' said Josh Rosner, managing director at the New York-based investment research firm Graham Fisher & Co. ``Regulators appear to have ignored this, given the size and scope of the problem.''

More than $2.1 trillion, or 19 percent, of outstanding mortgages have been bundled into securities by private banks, according to Inside Mortgage Finance, a Bethesda, Maryland-based industry newsletter. Those loans may be sold several times before they land in a security. Mortgage servicers, who collect monthly payments and distribute them to securities investors, can buy and sell the home loans many times.

..............http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aejJZdqodTCM

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[Mango]

This is going to be an even bigger problem in New York because the land records departments are antiquated still in the respect that everything is recorded by hand. It goes into a computer, but no on-line access to check anything. They will bounce back documents if they are printed in the wrong color ink, missing signatures etc.

During the refinance boom, in New York we would do assignments of mortgages to avoid paying up to 2% mortgage tax. An assignment is when a new note is prepared for the new Bank. Then a payoff is issued at a refinance to the old Bank and recorded. I can't begin to tell you how many times when title reports came in that the Bank who owned the loan was not on the title report. It would hold up a closing because the title company had to get proof of who they would be paying off. Even if one didn't refinance and your loan was sold to multiple Lenders, if the Assignment was not recorded properly or at all, there's no way to prove the Bank has interest in the property. It can become more confusing because sometimes Banks sell servicing. You make payments to one, but another entity owns the actual loan. Eventually they will get the Assignment from the past or current lender, but if it is defunct, especially subprime entities, it could take time.

This is going to become a nightmare and slow down the inevitable. It will take longer to work out of this whole mess. People like Mr. Lent not making payments for 6 years on their huge mortgages shouldn't be proud of this. This is definitely an exception though. I can't see foreclosures being dragged out that long with missing Notes or Assignments. Matter of fact, I didn't even believe it when I read it.

[SHELLY]

This is going to become a nightmare and slow down the inevitable. It will take longer to work out of this whole mess. People like Mr. Lent not making payments for 6 years on their huge mortgages shouldn't be proud of this. This is definitely an exception though. I can't see foreclosures being dragged out that long with missing Notes or Assignments. Matter of fact, I didn't even believe it when I read it.

...so do you believe that attorneys are going to ignore this detail (demanding the trustee submit proof that they own the loan) that has been "overlooked/rubber-stamped" previously? If I was in this situation, I'd make the lenders jump through every last flaming hoop, and then some.

One person voiced the possibility that "the originating mortgage banks may have pocketed the recording fees paid by the loan purchaser and never recorded the assignment. As the loan changed hands everyone else pocketed the recording fees and never recorded the instrument."

Lots of crap went on behind the scenes as these mortgages were sliced and diced and sold--it's entirely possible that there were major screw-ups along the way.





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[Mango]

...so do you believe that attorneys are going to ignore this detail (demanding the trustee submit proof that they own the loan) that has been "overlooked/rubber-stamped" previously? If I was in this situation, I'd make the lenders jump through every last flaming hoop, and then some. .

Well, first I know that you wouldn't get yourself in this situation. Do you really feel sorry for someone who got a 1.5 million dollar loan who was self employed and has been gaming the system for six years?

But to answer your question, that detail can't be ignored. I don't even think a lis pendins can even be filed without evidence of ownership of the Note. Usually title cos. do a search first for the Bank attorneys.

The article is just pointing out a problem that could slow things down. The Lent case is not the norm. Title companies have to protect themselves. A Bank will not be able to foreclose that doesn't own the Note and cannot provide proof.

How Lent probably got away with it was his loan may have been sold a couple of times, WAMU probably owns the Note and has possession, but one of the Assignments is missing and therefore he is making them look for it. But, I have never heard it taking six years. Believe me, if an assignment is missing, the foreclosing Bank is not going to spin their wheels finding it. But it will buy some time for some people.

I just saw your edited post related to originating Banks pocketing recording fees. The Banks do not have access to that money. It is taken at closing by the title companies along with payoffs, mortgage taxes and anything else related to title. There may have been some iffy title agents who may have done this, and because the Banks were so busy they may have missed receiving copies of the recorded Note or Assignments. They have departments that check for that. But really, in comparison to other fees collected by title cos, recording fees are nominal and I do not see that as being a major problem.

[SHELLY]

Believe me, if an assignment is missing, the foreclosing Bank is not going to spin their wheels finding it. But it will buy some time for some people.

The article says the following:

Lost-Note Affidavits

When the mortgage servicers and securitizing banks that act as trustees of the securities fail to present proof that they own a mortgage, they sometimes file what's called a lost-note affidavit, said April Charney, a lawyer at Jacksonville Area Legal Aid in Florida.

Nobody knows how widespread the use of lost-note affidavits are, Charney said. She's had foreclosure proceedings for 300 clients dismissed or postponed in the past year, with about 80 percent of them involving lost-note affidavits, she said.

``They raise the issue of whether the trusts own the loans at all,'' Charney said. ``Lost-note affidavits are pattern and practice in the industry. They are not exceptions. They are the rule.''

Judges are becoming increasingly impatient with plaintiffs who produce no more proof of ownership than a lost-note affidavit or a copy of the note, said Michael Doan, an attorney at Doan Law Firm LLP in Carlsbad, California.

``If the homeowner doesn't object to the lost-note affidavit, the judge rubber-stamps it,'' Lents said. ``Is it oversight, or are they trying to get around the law?''
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So it makes sense for the borrower to produce his original loan documents, point to the documents and say, "Judge, I'm objecting to that lost-note affidavit, my mortgage clearly states that Joe Bloggs Mortgage is the owner of my note--Bank of America should be required to produce the original assignment."


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[Mango]

So it makes sense for the borrower to produce his original loan documents, point to the documents and say, "Judge, I'm objecting to that lost-note affidavit, my mortgage clearly states that Joe Bloggs Mortgage is the owner of my note--Bank of America should be required to produce the original assignment." .

and maybe Shelly the courts should rule that even though there is a mortgage recorded, but because the loans servicing was sold or the trust that owns it can't produce the Note and it's not in the MERS system,which 50% of servicers didn't use, that these subprime Borrowers should all be able to keep their house free and clear. Oh, and let them not prove they paid off their mortgage while we're at it. I mean who are the fat cats anyway who made these mortgages to these people when they couldn't pay? (end jest)

All it's doing is delaying the inevitable. In the meantime, these people are NOT paying taxes into the community or their common charges to their Associations thus bringing down the rest of the community. Matter of fact, Bloomberg's article failed to mention that about Ohio AG Dann (http://www.housingwire.com/2008/02/15/commentary-ohio-ag-sees-foreclosure-push-backfire/):
Ohio Attorney General Marc Dann suffered his first setback Monday in a novel effort to slow foreclosure filings in the state – and in doing so had his ethics questioned by a Hamilton County magistrate.
Dann argues that lenders can’t foreclose unless they can prove they own the mortgage they say is in default …
Monday, however, Common Pleas Court Magistrate Michael Bachman rejected Dann’s argument.
He further said Dann was acting against the interests of his clients – the taxpayers of Ohio – by moving to dismiss foreclosure cases in which the state has liens against the properties.
Turns out that Bachman did much more than reject Dann’s motion; he obliterated it. It also turns out that Dann himself thought to argue the motion personally in front of the magistrate, just for effect.

Now, what, you might rightly ask, is the Attorney General doing intervening in a private civil action on behalf of borrowers to, at best, delay the day of reckoning? You’d be right to ask the question, as you would to ask a similar question: What’s this got to do with his job as Attorney General of the State of Ohio? The answer to the last question is “nothing” and the answer to the first is “to get himself some more press, so he can advance his political career.”
Unfortunately for Dann, Deutsche Bank, the trustee handling the foreclosure, didn’t back down, and fought Dann. Worse, Dann ran into a state court magistrate who not only kicked his fat tukus off the bandwagon, but also took his name.

[Pirate]

When did not paying your bills become acceptable? I hope they kick the bum out in the street in the middle of the night in his skivvies and lien everything he owns.

While some foreclosure stories are sad stories that deserve everyones compassion, this isn't one of them.

[jlweathers]

One person voiced the possibility that "the originating mortgage banks may have pocketed the recording fees paid by the loan purchaser and never recorded the assignment. As the loan changed hands everyone else pocketed the recording fees and never recorded the instrument."



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most mortgages that were readily traded on the open market were initially recorded with a mers #(mortgage electronic registration system) which eliminated the need to do an "assignment of mortgage"....not to mention that the $ pocketed would be about $18.50...at least in Florida. More likely scenario is someone forgot to record an assignment rather than tried to pocket $18.

[SHELLY]

First it's No-Doc Loans....now it's No-Doc Foreclosures :idontno:

Now Bank of America is proposing they dump the whole mortgage mess on the US taxpayers:

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http://www.nytimes.com/2008/02/23/business/23housing.html

"A confidential proposal that Bank of America circulated to members of Congress this month provides a stunning glimpse of how quickly the industry has reversed its laissez-faire disdain for second-guessing by the government — now that it is in trouble.

The proposal warns that up to $739 billion in mortgages are at “moderate to high risk” of defaulting over the next five years and that millions of families could lose their homes.

To prevent that, Bank of America suggested creating a Federal Homeowner Preservation Corporation that would buy up billions of dollars in troubled mortgages at a deep discount, forgive debt above the current market value of the homes and use federal loan guarantees to refinance the borrowers at lower rates.

“We believe that any intervention by the federal government will be acceptable only if it is not perceived as a bailout of the bond market,” the financial institution noted.".................
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Personally, I think the banking/mortgage system and the deadbeat homeowers deserve each other.

Sad to say, I believe this entire thing may well end up on the backs of the taxpayers.

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[full time]

Shelly is right on this one. Foreclosure can typically be done in a summary manner (which means quickly). Losing the note turns it into an ordinary process which can take much longer (the Lents situation looks more like lazy lawyers for the lender because 5 years is a little ridiculous). If the note is loss (which is looking like it might be a common problem), the borrower with a decent lawyer is probably going to get more time than the 90 days being proposed by the democrats.

[wrobert]

Personally, I think the banking/mortgage system and the deadbeat homeowers deserve each other.

Sad to say, I believe this entire thing may well end up on the backs of the taxpayers.

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They are going to continue to whittle away at any incentive someone has for showing up at work every day.

[Babyblue]

If the banks can charge you 30 bucks for a .99 cent over draft I say they should have their paper work in order.

[Joe]

When did not paying your bills become acceptable? I hope they kick the bum out in the street in the middle of the night in his skivvies and lien everything he owns.

While some foreclosure stories are sad stories that deserve everyones compassion, this isn't one of them.

I agree. Without knowing the facts and basing it on the article this person deserves Debtors Prison.

[BeachKing]

I agree. Without knowing the facts and basing it on the article this person deserves Debtors Prison.

Right along side the anyone who had a hand in this on the banks end. It takes Two ,,,,:wub:

[wishwewerethere]

Shelley,"Personally, I think the banking/mortgage system and the deadbeat homeowers deserve each other. Sad to say, I believe this entire thing may well end up on the backs of the taxpayers."

WRONG - I think this will be what breaks the camel's back. Maybe banks will try and forestall, (AMBAC bailout rumors late Friday) but the majority of US homeowners are secure in their homes and own them for other reasons than a quick buck, and will not allow a "bail-out' to be placed on them or their children., imho.

[SHELLY]

WRONG - I think this will be what breaks the camel's back. Maybe banks will try and forestall, (AMBAC bailout rumors late Friday) but the majority of US homeowners are secure in their homes and own them for other reasons than a quick buck, and will not allow a "bail-out' to be placed on them or their children., imho.

I would hope that you are right--and I would have said the same thing had this not been an election year


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[wishwewerethere]

Shelly,
On a previous post, on another subject, you lamented responsible growth, ie JOE., and referred back to the 70'. Just so you know, I surfed what is now known as "Watercolor Beach" in the 80's and somehow found myself on the otherside of the chainlink fence later in the 90's.
Growth can be controlled by upscale developments like JOE and Ally's Beach, or you can buy up all the land around you. Be thankful! - or move on, imho.

[SHELLY]

Shelly,
On a previous post, on another subject, you lamented responsible growth, ie JOE., and referred back to the 70'. Just so you know, I surfed what is now known as "Watercolor Beach" in the 80's and somehow found myself on the otherside of the chainlink fence later in the 90's.
Growth can be controlled by upscale developments like JOE and Ally's Beach, or you can buy up all the land around you. Be thankful! - or move on, imho.

Oh, I pray to St JOE every night.


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[sowalgayboi]

Shelley,"Personally, I think the banking/mortgage system and the deadbeat homeowers deserve each other. Sad to say, I believe this entire thing may well end up on the backs of the taxpayers."

WRONG - I think this will be what breaks the camel's back. Maybe banks will try and forestall, (AMBAC bailout rumors late Friday) but the majority of US homeowners are secure in their homes and own them for other reasons than a quick buck, and will not allow a "bail-out' to be placed on them or their children., imho.

I'm sure many a US checking/savings account holder was secure in there finances in during the S/L debacle, but the government still stepped in.

[slandmarks]

http://www.loansafe.org/index.php


Above is a web site with some forum discussions, etc. related to the topic of this thread.


Below is an article on the originater of this web site.


http://www.pe.com/business/realestate/stories/PE_Biz_D_loansafe12.288354d.html


Corona man uses blog to coach homeowners on how to save their property



08:29 PM PST on Monday, February 11, 2008

By LESLIE BERKMAN

The Press-Enterprise

Blogging at his laptop computer in Corona, Moe Bedard coaches a team of 1,000 homeowners racing an obstacle course to save their homes from foreclosure.

They have joined Bedard's Internet site, LoanSafe.org, founded in August as a grass-roots forum for homeowners who face the prospect of losing their homes to skyrocketing adjustable mortgages.

"I think people can help each other. There doesn't have to be so many foreclosures," Bedard said.


Moe Bedard, of Corona, operates LoanSafe.org, a free Web site that provides information and support for homeowners facing foreclosure. He says it has helped save 19 homes so far.
Bedard, who previously sold Web site marketing for mortgage lenders, said he learned that lenders were being inundated by requests from homeowners who needed to refinance out of burdensome mortgages but couldn't qualify for new loans, often because they didn't have enough equity.

A viable alternative that isn't well-known, Bedard said, is for the homeowner to negotiate with the lender to modify the existing mortgage to make the monthly payment affordable. That can be done by lowering or freezing the interest rate or by extending the length of the mortgage.

To date, LoanSafe takes credit for helping members save 19 homes from foreclosure. Their stories are chronicled on the site, and Bedard said they are meant to inspire others.

"It's like being an online coach," Bedard said of his role, which includes monitoring the Web site to keep out unauthorized for-profit solicitors, answering questions and giving encouragement from 5 a.m., when clients on the Eastern Seaboard begin to log in, until 10 p.m.

He said the site has gotten about 500,000 hits, and they keep coming at a rate of about 5,000 a day.

Modifying a Loan

The Web site is where people who use such sign-on names as luvmyhouse and madashell can anonymously vent their anger and worries, share their experiences and cheer one another on.

Bob Sweigart, of San Diego, said he was one of the first to use the Web site as a tool to obtain a loan modification after the interest rate on his 5.99 percent adjustable-rate mortgage had jumped to 9.75 percent and was set to increase again.

Sweigart said someone at Countrywide had interviewed him by phone and determined he was "prequalified" for a loan modification, but then he heard nothing more for six months. He made 40 calls to Countrywide but got no response.

He said he learned on the LoanSafe Web site that lenders are legally obligated to answer a letter, and another Web site member offered vital e-mail addresses, including one for Countrywide's president.

Within 24 hours of sending a barrage of e-mails to Countrywide, Sweigart had an agreement from the lender to push the interest rate on his mortgage back to the low introductory rate for five years, he said.

"I am one of the lucky ones," Sweigart said. "There are so many people out there who don't have a clue. They don't know what loan modification means. I am on the Web site all the time helping people by telling them these are the steps that I took. Do what I did."

Government and mortgage industry officials have repeatedly advised homeowners to call their lenders as soon as they realize they will be forced to default on their mortgages when their introductory interest rates are raised.

However, Bedard said homeowners wanting to modify their mortgages routinely encounter resistance from lenders and loan servicing companies. He said homeowners are often frustrated by the need to make repeated calls and to overcome repeated rejections and delays before reaching help. The process is particularly stressful for borrowers who have to act quickly to avoid a loan default or a foreclosure sale.

Bedard said he understands that lenders are deluged with more requests than they can efficiently handle. They are also reluctant to grant concessions to borrowers who may be able to make a higher mortgage payment.

Contact Information

A visit to the LoanSafe Web site can show the phone numbers of government-approved counseling services and the phone numbers and e-mail addresses for lending organizations.

Unlike other foreclosure-prevention services on the Internet, Bedard said, LoanSafe gives information and advice free of charge. But it also is a for-profit enterprise that survives because of the paid advertising of a Beverly Hills mortgage lawyer, Marshall E. Rosenbach, he added.

Bedard said a number of the homeowners who come to the Web site describe circumstances that indicate they have been the victims of broker or lender fraud. Whenever this occurs, he said, Web site members have used the threat of going to court to nullify the mortgage as leverage to obtain more favorable loan terms.

While Rosenbach said he has received plenty of referrals from the Web site, he and Bedard stress that homeowners usually can get their mortgages modified without hiring a lawyer. The keys are patience and persistence.

Support System

Bedard acknowledges not everyone who bought or refinanced a house has enough income to keep it. When he learns this in blogging with a Web site member, he said he advises that renting is the best option and may give someone an opportunity to live more cheaply in a nicer neighborhood.

Nathan Fransen, a Corona lawyer who previously advertised on Bedard's Web site, said he is concerned that members tend to give one another legal advice that may not be sound. Still, he said, he believes the Web site is helpful and performing an important service.

"The fact it is popular is evidence it is needed," he said.

Ted Grose, a mortgage broker and past president of the California Association of Mortgage Brokers, said he is familiar with LoanSafe and finds it is a consumer-friendly resource that gives good information on alternatives to foreclosure and reassures people in crisis that they are not alone.

"It is very common for consumers to pull the sheets over their heads when what they need to do is reach out," Grose said.

Reach Leslie Berkman at 951-893-2111 or lberkman@PE.com

[AAbsolute]

If the banks can charge you 30 bucks for a .99 cent over draft I say they should have their paper work in order.

There is a #1 priority law involving real estate known as the Statute of Frauds which in short form states that any encumbrance such as this that can effect the title to real property must be evidenced in writing.

We shouldn't give banks a pass on this basic rule when the average homeowner is completely subject to it.