Posted by kevin on March 23, 2013 under Foreclosure Blog | 
New Jersey instituted a mediation program a few years back. The Courts claim that around 40% of the people who apply for mediation get some type of resolution. Now, resolution is a vague term and I do not know whether resolution = modification or can include short sales or deeds in lieu of foreclosure. In other words, I cannot vouch for the purported success rates claimed by the program.
That being said, two recent events impact on the mediation program. First, effective March 1, 2013, the program was de-funded. NJ was using some of its money from the $25 billion settlement to fund the mediation program. Those moneys have been used up, and not replaced by the Christie Administration. HUD counselors and ‘Free” attorneys for borrowers are no longer being paid so they stopped taking on new clients as of 2/28. My understanding is that mediators are still getting paid but that will end also. The judiciary wants lawyers to volunteer to be advocates for borrowers or mediators. One of the judges at the last Bench-Bar conference questioned how long the program will be available.
The second event is that the courts are setting time limits on applying to the program. Before, you could apply anytime before final judgment was entered. That could extend the foreclosure process for months. Now, a homeowner has 60 days from the service of the summons and complaint to file for mediation. After the 60 day period, you can get mediation only upon court order. If you read the prior blog, you will note that courts are clamping down on borrowers who are trying to set aside default judgments. The later you file your motion, the less the chance that the court will set aside the default judgment. You should expect the same treatment with getting orders to allow mediation after the 60 day window closes. In other words, the later you wait, the less likely the court will allow you to take advantage of mediation
What has not changed is that the mediation program is available to only homeowners who reside at the premises which can contain no more than three units.
What is interesting is that the federal HAMP program, as a result of the $25 billion settlement, does not allow a lender/servicer to go forward with a sale or start a foreclosure if the borrower has asked for a modification until a decision has been reached as to whether a modification will be granted. That is called double tracking. However, NJ does not seem to have any problem with double tracking since the mediation notice specifically states that a request for mediation will not stop the progress of the foreclosure action.
Posted by kevin on March 17, 2013 under Foreclosure Blog |
For the better part of 3 years, legal scholars and commentators of mortgage crisis have commented the the Federal government (and many state governments including NJ) has not prosecuted criminally one major bank or Wall Street investment house notwithstanding that there have been numerous incidents of outright fraud in the origination of loans, and the sale of loans to both GSE’s and in private securitization. Frontline had a show on this about a month ago. Lanny Breuer, the head of DOJ criminal division, tapped danced around the issue, and pointed out all the mortgage brokers that were indicted. Little guys without the funds to put together a defense. Yet, the higher ups at the investment houses and the “too big to fail” banks have skated.
Finally, about 2 weeks ago, Eric Holder admitted to a Senate committee that “too big to fail” is, in fact, “too big to jail”. What a disgrace. People, who are not in foreclosure because they continue to work hard and pay their mortgage every month, have lost 40-50% of their pension money and more than 50% of the value of their homes. Why? Because the too big to fail banks broke the law. But nothing is being done. Small monetary fines in relation to the money lost is but a slap on the wrist, and gives these banks and Wall Street no incentive to change their ways.
It no better on the State level. The NJ Supremes held that lenders had to strictly comply with Notice of Intent requirements but waffled on the remedy issue thereby reversing the trend of cases which were decidedly pro-borrower.
Now, there have been a series of cases (Polanco, Russo and this week DeCastro) where three appellate panels have ruled that a foreclosure plaintiff can sell your house without proving that it owns or holds the underlying note if the defendants did not answer the complaint in a timely manner. In Polanco, the plaintiff was listed as a securitized trust. However, research indicated that the trust did not exist. In three sets of submissions to the court, the plaintiff was challenged to prove standing, but did not address the issue. Plaintiff restricted its argument to the fact that the borrower had not responded to the court proceeding until hit with a sale notice. Technically true because the borrower opted to deal with the servicer. Polanco got what they call “double tracked”. The servicer led him down the primrose path and then rejected a short sale after ok’ing it, while plaintiff’s attorneys moved forward to judgment. Dual tracking was declared improper by the Justice Department in the $25 billion settlement. The new HAMP guidelines specifically say you can’t double track. Little consolation for Polanco and his family, though.
In Russo and DeCastro, the appellate panels stated that lack of standing (right person to sue) is not a meritorious defense under Rule 4:50 while deals with setting aside default judgments. Note the in two separate rulings, however, the NJ Supremes said that if a plaintiff does not prove standing, then the court cannot decide the substantive issues of the case. Unless it is explained to me a little better, it would seem that the current foreclosure rulings are at odds with established NJ Supreme court rulings.
I am disappointed by the comments of Breuer and Holder and the decisions of the appellate division especially in regard to standing. I am one of those lawyers (and citizens) that believe that the courts are there to protect the weak from the strong- not the other way around. Clearly, that is not happening. Doing foreclosure work for 3 years now, I get the vibe that the courts want to just get over this mortgage problem. But it should not translate into lowering standards of proof for the plaintiff at the expense of borrower’s homes.
What is the practical lesson? If you find yourself in arrears on your mortgage, try to work out a modification. If you need a lawyer’s help in this regard, get it. If you are served with a Notice of Intent to Foreclose or Complaint, seek out help right away from a lawyer who is active in foreclosure defense. Don’t sit your rights.
Posted by kevin on March 5, 2013 under Foreclosure Blog |
If you receive a notice of intent to foreclose, and do not run to a lawyer, you are a fool. If you get served with a foreclosure complaint but do nothing because you are working with the servicer to get a modification, you are a fool. If you get papers from your adversary saying that they are submitting their final judgment package to the Foreclosure Unit and do nothing, you are a fool. And if you wait until you get notice of a sheriff’s sale before you run to a lawyer (and expect him to pull a rabbit out of his hat for limited fees), you are a fool who will soon be without a house.
The message has been that the majority of chancery judges do not like contested foreclosure cases. The average case does not get to trial for two years. The Administrative Office of the Courts wants foreclosure cases to go to trial within 12 months of the date of the filing of the complaint. If the defendant is not served right away, that could mean that you are going to trial in 6-8 months. Now, some judges are routinely limiting discovery and setting trial dates that are 8 months from trial.
So, do yourself a favor. If you are behind on your mortgage, contact your servicer to see if you can work something out. If not, and you receive a notice of intent to foreclose, at least interview a few attorneys with background in foreclosure defense. Better yet, hire one of those attorneys. If you get served with a complaint, hire counsel immediately and file your answer in a timely manner.
Nowadays, foreclosure cases can be filed electronically through JEFIS. So, that means that the papers can get into the system that much faster. Servicers are regulating the number of foreclosure cases that are filed at any given time so as to not overstress their staffs and, more importantly, not to overstress the Clerk’s office in Trenton. In other words, the process is being speeded up.
If you do not file your answer on time, and the plaintiff enters a default, then you must file a motion to set aside the default in order to file an answer. That means that you have to go before a judge who may not like contested cases. In the old days the policy was that people should have their day in court. Today, I am not so sure if that policy wins the day.
So, remember the old adage, “He who hesitates is lost.”
In future blogs, I will give you examples of recent cases where borrowers took it on the chin for sitting on their hands.
