Posted by kevin on February 14, 2012 under Foreclosure Blog | 
Last week, with incredible fanfare, the media and the Administration announced a $25 Billion settlement between and among the Federal government, all states except OK, and major banks (Ally, BOA, WF, JP Morgan-Chase, Citi). Clients have been calling or emailing me all week from north in Bergen and Passaic Counties to south (at least for me) in Monmouth and Ocean counties. Is it a good deal? Can they get a reduction in principal to bring the amount due down to what the property is worth? Will the bank/servicers finally deal straight?
Don’t hold your breath. First, the 25B translates to only 5B cash from the banks. 17B is earmarked for a reduction in amount due which will go to about 1,000,000 households that are underwater. Of course, the statistics show that there are over 11 million households underwater to the tune of about $700B. So, about 2.5% of the underwater households will be helped, and most of those households are current on their mortgages. 3B goes to homeowners who are underwater but current with the intended purpose that they will be able to re-finance when they get a reduction in principal. However, the reduction in principal is only about 20K per household. So, who really is going to be helped?
If you have been foreclosed on, then you can get a cash payment of up to $2000. In Northern New Jersey, that will pay for about one month rent or maybe your moving expenses.
Who is going to enforce this deal? Joe Smith, the banking commissioner of North Carolina, is in charge. But, we do not know what staff he has and what type of enforcement powers he has.
Finally, and similar to Obamacare, the deal has been announced and praised but no one has seen the final draft of the agreement. Why? Because my understanding is that it has yet to be finalized and drafted. Once you see the final written copy, you and I will be in a better position to see what’s what. I am afraid, however, that what we are going to find is another deal that is good for the banks and bad for the consumer.
Posted by kevin on February 3, 2012 under Foreclosure Blog |
Appeal dealt with whether trial judge improperly refused to set aside default judgment. Clients were older, African American couple- hard working, nice people who got taken for ride. ARM with max interest of over 14%. Had predatory lending, consumer fraud, HOEPA, common law fraud issues in addition to standing. Trial judge did not see it our way, so filed an appeal.
On our website, we say that we are not a modification company- we fight foreclosures in court. Why? Because we believe that our clients are going to get a better shot in front of a judge or judges (appellate level) than they are going to get with a servicer on a HAMP modification. Yes, it is more work and more money, but we believe that ultimately, the borrower who fights gets a better result.
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Posted by kevin on January 26, 2012 under Foreclosure Blog |
2011 was a slow year for foreclosures in NJ. The robo-signing issue put practically all foreclosures on hold. When the NJ Supreme Court finally gave the go ahead to most of the banks to continue with foreclosure action, the banks decided to sit on the fence for two reasons: first, to get a ruling from the Supreme Court of NJ on what exactly must be presented in a Notice of Intent to Foreclose and what the penalty for non-compliance is; and second, to see if the national robo-signing deal pushed by the Obama administration could be effected. As of this date, neither has occurred. However, if I were a betting man, I would bet that the NJ Supremes will come down with their decision in the Notice of Intent to Foreclose case (Guillaume) before the people in Washington get off their duffs. In fact, that decision should come down any day now.
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Posted by kevin on January 19, 2012 under Foreclosure Blog |
This post is geared more for the lawyers; however, we invite all interested readers to follow.
From Contracts I, we learn that a wronged party to a contract is obligated to mitigate damages. This is black letter law. How can it apply to foreclosure defense? Well, I have some ideas which, at least in New Jersey, are untested. However, when the spigot opens and the lenders start their new wave of foreclosures, I will be testing the theory.
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Posted by kevin on January 15, 2012 under Foreclosure Blog |
The buzz among foreclosure attorneys is that the NJ Supreme Court was going to issue expeditiously a decision in the Guillaume case, which dealt with whether a Notice of Intent (NOI) to Foreclose could just list the name and address of the servicer as opposed to the name and the address of the lender as specifically provided by the statute. Although not an issue in the lower court decision since they ruled that the name and address of a servicer was good enough, the second issue that everyone hopes that the Supremes deal with is what is the remedy for a violation. Some lower courts have said that the only remedy can be dismissal without prejudice; others say that putting case on hold until new notice is sent out is good enough. I believe that dismissal without prejudice is the proper remedy.
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Posted by kevin on December 25, 2011 under Foreclosure Blog |
Last week, the Appellate Division came down with a case that may have some implications for borrowers. There were two defendants which collateralized a business loan with New Jersey real estate. They defaulted on the payment of the loan. The bank sued on the note. If it is not a residential first mortgage, the lender has the option to foreclose, sue on the note or do both at the same time.
Ultimately, the parties settled. The settlement agreement was drafted by the lender and was very involved and in legalese. In essence, the borrowers would give up two properties by deeds in lieu of foreclosure. The lender gave one borrower a release and the other a $4,000 credit. The collateral left a balance due in excess of the $4000. So, the bank sued the one borrower for the difference.
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Posted by kevin on December 14, 2011 under Foreclosure Blog |
Last week, I argued before the Appellate Division to set aside a default judgment. My client had good arguments that the loan was predatory, that the plaintiff lacked standing and that the Fair Foreclosure Act may have been violated. However, the judges focused on the fact that my client never hired a lawyer until more than a year after default judgment had been entered. I made creative arguments to get around this “bad fact”- arguments that are a little too detailed and, perhaps, too boring to be presented here.
Without going into detail, there is a lesson to be learned irrespective of how the Appellate Division rules. When you get served with a Notice of Intent to Foreclose or a Complaint, hire an attorney to file an answer. I know that at the same time these papers are coming in, the servicer is bombarding the borrower with letters about modifications containing statements that the lender wants to work with you to save your house. That is usually a lot of hot air especially when you look at the dismal percentages on permanent modifications being granted even at this late date.
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Posted by kevin on October 3, 2011 under Foreclosure Blog |
In the last 8 months or so, there has been little activity on the foreclosure front. The NJ Supreme Court directive slowed down foreclosures and basically stopped sales. However, most of the big lenders have now complied with the minimum standards required by the courts, and are now sanctioned to continue with the foreclosures.
The spigots are opening. Notices are going out. We can expect to see a large increase in filings.
However, when I speak with prospective clients, they are reluctant to retain counsel. Cost of representation is now an issue.
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Posted by kevin on September 29, 2011 under Foreclosure Blog |
This is a part of the game that the consumer does not see. The SEC is investigating Credit Suisse and RBS for misleading investors as to the number of bad loans that had to be repurchased (or should have been repurchased) by the originators for failure to live up to the warranties and representations made in the Pooling & Servicing Agreements (PSA) or other like documents.
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Posted by kevin on September 15, 2011 under Foreclosure Blog |
Almost every client that I interview has a story about how he or she was jerked around unmercifully by a servicer. Some servicers suggest that payments not be made so that the borrower can apply for a HAMP. Others “lose” paperwork more than once. Others take 7-8 payments instead of the required 3 and then deny a permanent modification.
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Posted by kevin on September 7, 2011 under Foreclosure Blog |
A few weeks ago, things were looking good for the “too big to fail” predatory banks. The feds (FDIC) were ready to make a deal. Most of the State AG’s were backing off. The carnivore, Schneiderman, was dumped from the leadership group of AG’s. In NJ, the big lenders got the OK to continue foreclosing with new and improved certifications (looked eerily like the old and unimproved certifications to me). A couple of zigs and a couple of zags, and the banks could get out of this mess. Then, last Friday the Federal Housing Finance Agency, the overseer of FANNIE MAE and FREDDIE MAC, filed lawsuits against every major lender in sight claiming fraud and demanding upwards of $50B.
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Posted by kevin on September 6, 2011 under Foreclosure Blog |
If you have been checking into this blog with any frequency, you know that we are providing both facts and comments on what is happening in foreclosure defense, especially in New Jersey. We are giving you cutting edge information- what the law is and where it is going; what settlement strategies are bearing fruit; how the trial courts are reacting to issues and how the appellate courts are reacting to the trial courts.
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Posted by kevin on August 30, 2011 under Foreclosure Blog |
Lenders are licensed in New Jersey. That means that doing business- mortgage business- is not a right but a privilege. Yes, you can make money as a lender or mortgage broker. But you have an obligation to the public, an obligation to the State.
People, even it appears sometimes judges, forget this simple fact when they are confronted with with continuing mortgage crisis. They pay lip service to the idea that there is enough blame to go around; but when it is time to pony up, only the borrower is left to face the music.
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Posted by kevin on August 21, 2011 under Foreclosure Blog |
The second shoe fell on August 9 when the Appellate Division case of Deutsche Bank, as Trustee v. Mitchell was published. This involved a mortgage foreclosure rescue scam but the decision rested on standing issues. The appellate panel followed Ford and Raftogianis and found that DB did not have standing. DB filed the complaint on May 13, 2008 in which it asserted that it was the owner of the note and mortgage but it was not until May 14, 2008 that WAMU assigned the mortgage to DB. DB then filed an amended complaint which listed the assignment.
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Posted by kevin on under Foreclosure Blog |
Lenders in foreclosure actions had a bad couple of days (August 8 & 9) in NJ. On the 8th, an appellate panel came down with a published opinion in BONY, as Trustee v. Laks. This is a Fair Foreclosure Act case. We use the FFA as a procedural defense to dismiss cases without prejudice. It is important because it is a published opinion right out of the blocks and it involves a pro se plaintiff (someone who is not represented by a lawyer)
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Posted by kevin on August 13, 2011 under Foreclosure Blog |
Previously, we discussed the $8B settlement proposed by Bank of America to certain investors. The Walnut Group filed papers in Court to block the settlement. Well, add to the dissenters, the Attorney General of New York, Eric Schneiderman. This man appears to be a real carnivore. Not only has he jumped in on the BOA settlement (which may be sell out of investors by the trustee), but he has voiced his opinion that the global settlements proposed by the federal regulators are not strong enough.
What caught my eye was an article in the WSJ where Schneiderman said that he is investigating whether the vast majority of the private securitized trusts are valid. It has been our contention that many of the mortgage loans sold to securitized trusts from 2003-2007 never made it properly into the trust. The reason is that the paperwork did not follow the instructions set forth in the pooling and servicing agreements. The ramifications of a such a finding are huge. It means that the trustees do not have standing to sue and, more importantly, the trusts are not REMICS which means that trillions of dollars of taxes could be due State and federal governments. If that is the case, all I can do is echo the immortal words of the late Warren Zevon, ” send lawyers, guns and money, the s*it has hit the fan!”
We have been adding the “trust failure” arguments to our moving papers for the last six months. No traction yet with the Judges but we feel that this will be the ultimate battleground on the standing issue in NJ and around the country. Stay tuned.
Posted by kevin on August 3, 2011 under Foreclosure Blog |
The WSJ had an article yesterday about foreclosed homes in NYC with thousands of violations. It said that tenants are living in horrible conditions. The Pres of the NY Banker’s Association said that homes were actually owned by “lenders, not banks”
What up?
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Posted by kevin on August 1, 2011 under Foreclosure Blog |
Settlements have been all over the lot in the last 12 months. About a year ago, we were starting to see reduction in principal in cases that were open for long periods of time because they were aggressively fought. It reinforced our position that the best way to stop foreclosure was to fight foreclosure. Then, the AG’s and federal regulators started pushing principal reductions. Some of the “too big to fail” banks balked, and then we stopped seeing “reduce principal” offers.
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Posted by kevin on July 9, 2011 under Foreclosure Blog |
About a week ago, financial news services reported that BAC, the BOA sub that bought out servicing rights on Countrywide loans, was entering into a $8B settlement of claims of investors for violations of the representations and warranties sections of various trust agreements. At first blush, that looks good. A trustee, picked by the syndicate that securitized the trust, is doing the right thing and fighting for the rights of the investor group.
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Posted by kevin on June 21, 2011 under Foreclosure Blog |
In New Jersey, there are two approaches to fighting foreclosures in court. The first approach is the procedural approach. That boils down to whether the lender can prove standing and has complied with the Fair Foreclosure Act. The second is to reduce the amount due on the mortgage loan because of violations of the law. Usually, the violations are for common law predatory lending or violations of the Truth in Lending Act.
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Posted by kevin on June 1, 2011 under Foreclosure Blog |
Watched the HBO movie then read the WSJ article about home prices sinking to 2002 levels.
When I was an intern at the SEC (about a lifetime ago), my boss told me that the best way to get to the root a securities problem was to follow the money. That was good advice.
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Posted by kevin on May 30, 2011 under Foreclosure Blog |
New Jersey went through a Kabuki dance earlier this year on the robo-signing issue. When it dragged out for an additional couple of months, Legal Aid and the Seton Hall Law Center tried to intervene on behalf of the consumer. The intervention was opposed by the court appointed judiciary representative. How bout that. The courts were represented in this process, the banks were represented, but the consumer was not. Read more of this article »
Posted by kevin on May 7, 2011 under Foreclosure Blog |
I hope that everyone has a great mother’s day. Make sure you tell your mom (or wife who is the mother of your children) how much you appreciate them.
Been out of the box for a few weeks. Reason- have been busier than a one armed paper hanger. Two trials in 6 weeks, 4 motions, 1 appellate brief in, one awaiting scheduling order, and one imminent settlement.
As far as the trials go, I lost one but got the other case dismissed for failure to adhere to the Fair Foreclosure Act. They will be back, but my client is in her house for at least another two years. If you represent borrowers, buying time is a victory in and of itself. Not only the obvious; that is, your client still has a roof over her head. But the longer things go, the better the chance that new law will help the cause; the better the chance that the lender will cave and offer an meaningful settlement.
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Posted by kevin on March 5, 2011 under Foreclosure Blog |
Last week, an article ran in the major newspapers that the Obama administration is negotiating a multi-billion dollar deal the mortgage loan servicers which would allow for mortgage modifications which reduce principal amount due on mortgage loans. The “deal” would not create government programs to reduce the principal but would rely on the lenders to make the reduction.
It goes on to say that any settlement would entail that lenders, servicers, federal regulators and state attorney generals all get on board. This is a diverse group with competing interests.
My take. Don’t hold your breath. The lenders and servicers are going to do nothing meaningful on their own accord. They may promise to cooperate and act in good faith, but nothing in the history of mortgage modifications indicates that they will act in good faith.
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Posted by kevin on February 28, 2011 under Foreclosure Blog |
In December, 2010, the Chief Justice issued a directive concerning the “robo-signing” issue. Submission were to be made by the major banks and by a court appointed representative for the public at large. The return date of an Order to Show Cause was scheduled for early February. It was put off until March 1 and now is off until March 29, 2011.
There is speculation that the delay has been caused by negotiations between the court appointed advocate and the banks dealing with procedures to be implemented to “insure” that the system is operating within the Rules of Court.
At direct issue is robo-signing. In basic terms, this means that the lenders assigned specific employees to sign documents- usually many documents per day. The employee was not involved in the preparation of the documents and did not know anything about the underlying facts set forth in the documents. Many times, stacks of signed documents were then sent to a notary who would notarize the document for filing or submission to the court. The problem with that is that the document is supposed to be signed in the presence of the notary.
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Posted by kevin on January 16, 2011 under Foreclosure Blog |
Last week, I notified you that a court in Bergen Cty dismissed a foreclosure complaint without prejudice for failure to comply with the Notice of Intent to Foreclose requirement of the Fair Foreclosure Act (FFA)
As stated previously, the FFA requires that the borrower be given a Notice which must contain 11 different items of information including the name and address of the lender. Many times with securitized trusts, the lender information is not included in the Notice of Intent.
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Posted by kevin on December 31, 2010 under Foreclosure Blog |
On December 17 in Bergen County, I was able to get a case dismissed without prejudice because the plaintiff in that case failed to comply with the Fair Foreclosure Act.
Under the Fair Foreclosure Act, a residential mortgage lender must serve a Notice of Intent to Foreclose by registered or certified mail, return receipt requested at least 30 days prior to the filing of a foreclosure complaint.
The statute requires 11 different items of information to be supplied in the Notice of Intent to Foreclose.
The statute is silent on what happens to the plaintiff in the foreclosure action if there is a failure to comply. However, there have been a few court cases which give guidance.
First, the cases hold that partial compliance is not compliance. Either the plaintiff provides all 11 items of information or it is non-compliance with the law. Second, at least one appellate level court in NJ has ruled that a failure to comply must result in a dismissal of the case without prejudice. Without prejudice means that the case can be refiled, but only after a new and correct Notice of Intent to Foreclose is served on the borrower. This can give the borrower an additional year in their home and make the chances for favorable settlement that much higher.
Posted by kevin on December 26, 2010 under Foreclosure Blog |
to all. The past year has brought some difficult challenges to borrowers in or about to be in foreclosure. However, windows of opportunity are opening for borrowers’ attorneys. Moreover, I am beginning to see trial modifications with substantial principal reductions. However, those mods are being offered to borrowers who have demonstrated that they can beat the lenders in court.
As 2010 draws to a close, I am happy and thankful to say that all my clients are still in their homes, and I am working hard to keep it that way.
My advice for the coming year. Be proactive. Hire competent counsel when you are falling behind on your mortgage not when you get notice of a sheriff’s sale.
Merry Christmas and Happy New Year.
Posted by kevin on December 13, 2010 under Foreclosure Blog |
The problem with the current mortgage crisis is that payments on adjustable rate mortgages increased while at the same time the value of the property decreased. The homeowner found herself “underwater” with higher monthly payments.
When the borrower defaulted, and the lender filed foreclosure, the difference between the amount due and the value of the collateral increased. The question became, who was going to be responsible for the fact that the property was underwater. Were the lender and the borrower going to share the loss in value, or was the borrower going to have to eat this loss?
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Posted by kevin on October 30, 2010 under Foreclosure Blog |
You are behind on your mortgage. You call your lender or, more probably, your servicer and ask for a forbearance or a modification. You get bounced around on the telephone, no one calls back, and then finally after about a month you speak with a real person. You are sent modification papers. You fill them out, send them in. Nothing happens. You call again. In the meanwhile, you get a notice to foreclose followed by a foreclosure complaint. After a month or two of calling the servicer, you get someone on the phone who is responsive. She tells you that they lost or did not get your papers, and you have to send in a new set with updated information.
So, you start the process again. You do not think that you need to get a lawyer to answer the complaint because you are working with the lender. Moreover, every letter they send to you tells you that the lender is there to help. After another month or two, you are put on a trial modification. You make the payments for 3 months. You tell yourself that everything is all right. Then, out of nowhere, you get papers in the mail from the lender’s lawyers saying that they have entered final judgment by default. The double whammy comes two weeks later when you get a letter saying that your permanent modification has been denied.
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Posted by kevin on October 11, 2010 under Foreclosure Blog |
You are behind on your mortgage 6 months. Your monthly payment, including taxes and insurance, is $3,000 per month. Your lender has filed a foreclosure complaint. What to do? Can filing bankruptcy help? The answer, like most answers involving legal issues, is that it depends. First of all, the filing of any bankruptcy acts as an automatic stay on most efforts to collect a debt including foreclosure. So, if you are facing a sheriff’s sale, the automatic stay will halt that sale. But, for how long?
In a Chapter 7, the stay lasts until the Trustee abandons the property, a creditor obtains relief from the automatic stay from the court, or the earlier of the time that the case is closed or a discharge is granted or denied. A trustee will usually abandon property if he or she determines that there is no equity in the property. That means that the mortgage is greater than the value of the property. This will happen about the time of the first meeting of creditors which occurs about 4-6 weeks after the filing. The trustee sends out a notice of abandonment. If no one objects , then the abandonment is processed by the clerk and notice is sent out to creditors. The whole process takes about 8 weeks and the foreclosure marches on.
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Posted by kevin on October 5, 2010 under Foreclosure Blog |
I have spent the last 6 months or so in court handling about 20 foreclosure cases. I want to share with you what I am seeing. But first a little background. The concepts that we use at FIGHTFORECLOSURENJ.COM come out of a series of bankruptcy court and state court decisions from outside of New Jersey. The first cases came out of the bankruptcy courts in Ohio. Then, Florida, Massachusetts, California and Missouri. New Jersey was slow to catch on
In New Jersey, foreclosures are handled in the Superior Court, Chancery Division. There is usually only one chancery judge per county- so the same judge hears all foreclosure cases. In 2008 and the 2009, the chancery judges were of the mindset that if you borrowed the money and did not pay it back, you were guilty. Concepts like predatory lending and the right to sue (called “standing”) were mere distractions. So, the first thing that borrowers’ lawyers had to do was overcome a mindset. It was not easy.
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Posted by kevin on March 15, 2010 under Foreclosure Blog |
This was never an issue in the old days. Banks lent you money, and put the Note in their vault until you either paid off the mortgage or sold the property. Nowadays, banks sell your note and mortgage. Many times, the note and mortgage wind up in what is called a securitized trust.
What is a securitized trust? In simple terms, it is a financial product dreamed up by Wall St. to make lots of money. And for awhile, Wall St. did makes lots of money selling interests in trusts. How did it work? An investment company (either by itself or through subsidiaries) buy up hundreds or thousands of mortgage loans. The loans wind up in a trust. The investment firm or subsidiary files papers with the Securities and Exchange Commission stating that they are going to sell to the public interests in the trust. This is generally called an offering. The investment company sells the interests and takes out its money.
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Posted by kevin on March 11, 2010 under Foreclosure Blog |
The Home Ownership and Equity Protection Act (“HOEPA”) is a part of TILA. It was initially enacted in the 1990’s. It applies to re-finances of first and second mortgages of the borrower’s principal dwelling. It usually does not apply to lines of credit. It does not apply to investment properties or second homes.
HOEPA is triggered by certain high interest loans where the APR exceeds by 8% the yield on a treasury security of comparable maturity (10% on secondary financing). HOEPA is also triggered by the charging of excessive costs and fees at closing (more than 8% of the total loan amount). These are commonly known as high cost loans. Although the concept is pretty straightforward, the calculation of these triggers requires expertise and experience.
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Posted by kevin on under Foreclosure Blog |
The Truth in Lending Act, known as TILA, was enacted in 1968. TILA is primarily a disclosure statute.
TILA applies to individuals or businesses that offer or extend credit under the following circumstances:
- the credit is offered or extended to a consumer (as opposed to a business)
- the offer or extension of credit is done on a regular basis
- the credit is subject to a finance charge or is payable by a written agreement in more than 4 installments; and
- the credit is primarily for personal, family or household purposes.
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Posted by kevin on under Foreclosure Blog |
The New Jersey Home Ownership Security Act of 2002, also known as NJHOSA, is a powerful, state statute which protects borrowers.
****NJHOSA applies to both purchase money mortgages (when you buy your home) and refinancings of no more than $350,000 as of the date of enactment, adjusted for inflation. Currently, the ceiling is $4
The loan must be primarily for personal, family or household purposes, in which the loan is secured by a one to six family dwelling which is occupied by the owner as a principal residence, or a manufactured home occupied by a borrower as his or her principal residence. So, NJHOSA does not apply to investment properties or vacation homes.
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Posted by kevin on under Foreclosure Blog |
The New Jersey Consumer Fraud Act ( NJCFA ) is another powerful borrower tool in fighting predatory lending. The statute was enacted in the 1960’s and then amended to specifically cover real estate transactions. The statute has been around long enough to develop a substantial history of case law. And the case law, across the board, has been very favorable to consumers.
NJCFA prohibits unconscionable commercial practices, deception, misrepresentation, and the knowing concealment of a material fact. It does not matter whether the consumer is mislead. The onus is on the seller, or in this case, the lender. The cases say that the statute is to be liberally construed to protect the consumer- and that means YOU!
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Posted by kevin on under Foreclosure Blog |
Bankruptcy still works for some people. If you own a home with or without equity, are not too far behind on your mortgage, have significant unsecured debt like credit card debt, and have a job, Chapter 13 may be a vehicle whereby you can keep your house, get rid of a second mortgage that is completely underwater , and discharge significant amounts of unsecured debt. But here s the kicker. You do not get to lower the amount due on the first mortgage for your principal residence. You pay the mortgage going forward to the lender. If you are in arrears, you can spread the arrears out over up to 60 months, and pay them off monthly.
Congress rejected an amendment to the Bankruptcy Code which would have allowed bankruptcy judges to modify first mortgages in a Chapter 13. Lobbying is alive and well.
For more information about bankruptcy, go to bankruptcy.kevinhanlylaw.com.
