Archive for July 5th, 2011

A typical inquiry, and my response

Below is a comment posted on this blog and my Response, below. 

The question here is not atypical, so my Response is something that can be applied universally.

In 2009 I became unemployed when the company I worked for almost went bankrupt and remained unemployed for just about one year. After spending just about all of my savings in saving the home and other financial obligations, I applied for a bank modification (IndyMac Bank) and was accepted. Much to my surprised the bank decided to lump the unpaid months to the back end of the mortgage raising it to @ $268K. The house is worth in today’s market approximately $180K.

Since the employment opportunities here in the State of Florida were extremely poor within my line of work, namely Aerospace, I had no choice but to accept a position in Cincinnati, OH that paid a salary commensurate with my experience. I spent eleven months paying for two households with the hope that the situation would improve in Florida. Finally, about three months ago I was able to obtain an interview with a company located in the Jacksonville area, and subsequently, was extended a job offer. The job offered paid approximately $3,000 less than my salary in the previous company.

Again, I found myself paying for two households while struggling to make ends meet. I accepted this position simply because it would allow me to be with my wife more often than when I was living in OH. We are planning to relocate to the Jacksonville area but I am trapped with the current home.

After much deliberation with my wife, we have decided that it is not worth our while to continue to hang on to the house when the possibilities of turning it into a positive investment are quite remote. We are not gamblers by nature. Our decision is to stop making payments on the house and eventually foreclose on the property. I am current on my payments but would like to explore my options including eliminating the possibility for the bank to pursue a financial deficiency against us. I did speak to your receptionist this morning but I wanted to follow my voice message with this e-mail.

Your legal counseling regarding this matter will be greatly appreciated.


I cringed when I read your first paragraph.  I hate seeing people tell me they spent all their savings on a mortgage that, in retrospect, they clearly can’t afford.  Obviously you cannot change the past, but this is a good illustration to anyone else reading this that depleting savings to pay a mortgage is almost never a good idea.  As for you, I hope you see that it’s not a good idea to keep spending any savings you have left. 

I also cringed when I read how you were making payments under a temporary modification.  I’ve heard horror story after horror story about this.  As you indicate, even in a best-case scenario, all that happens is the arrearages get put on the back of the mortgage.  (Worst case is that you keep paying and get foreclosed anyway, not realizing the foreclosure suit was proceeding forward.)  Basically, a temporary modification is like a doctor putting stitches on a wound that needs surgery or a tourniquet – you can keep trying to re-stitch the wound, but eventually, something else is needed to fix the problem. 

Given your situation, it certainly seems reasonable for you to go with your instinct – stop making payments, stop the bleeding, try to save money, and try to get a deficiency waiver.  Eventually, you’ll save enough money that you can afford to start somewhere fresh, with a new house, and unlike now, you won’t be paying a lot more for that house than it’s worth.  Yes, there is risk here (i.e. the risk you don’t get a deficiency waiver), and that doesn’t sound like your preference, but from the situation you have described, I’m not sure you have much choice. 

We’d be happy to help you as you embark on this next stage of your financial future.

Mark Stopa

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Quantitative Easing Explained

This video is making the rounds on Youtube. 

Yes, it’s a cartoon, but if it weren’t a must-watch, I wouldn’t be putting it here. 

Mark Stopa

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How the Casey Anthony Verdict Applies in Foreclosure Defense

At first blush, today’s verdict in the Casey Anthony trial appears to have nothing to do with foreclosure defense.  After all, Casey Anthony is a murderer (in all probability), whereas, contrary to what banks want everyone to believe, homeowners in foreclosure certainly aren’t criminals. 

Today’s “not guilty” verdict is another illustration, though, of one inescapable truth – when a case goes to trial, you never know what a jury is going to do.  Even in a case like Casey Anthony where the evidence seems strong (30 days without reporting child missing, out partying, puts dead body into trunk, then trash bag, duck tape over mouth, numerous lies to police), you just never know for sure how the judge/jury is going to rule.  

Yes, most foreclosure trials are bench trials (with a judge, not a jury), but the moral is still the same.  If you go to trial, you never know for sure what the outcome will be.  Here, the evidence was viewed as overwhelming to most observers, yet the verdict was a “not guilty.”

Everyone who works in the criminal justice system is well aware of this uncertainty.  Banks and their lawyers are as well.  And that’s the moral of the story – homeowners need to recognize the uncertainty and use it to their advantage in foreclosure lawsuits.  How?  Simple.  Just like Casey Anthony did, force the bank to go to trial. 

We all know (now more than ever) that the outcome at trial is never certain.  Banks and their lawyers know that as well.  Hence, if you’re a homeowner, you should force the bank to prove its entitlement to foreclosure – through trial if necessary.  If you’re willing to hold their feet to the fire, you never know (as we saw today) what kind of unexpected result you might procure. 

So if you’re thinking about whether to defend a foreclosure, remember Casey Anthony.  Don’t remember her for the vile, disgusting things she did; remember her for the way the criminal justice system sometimes creates results that you might not anticipate, even if you think you have no defense.

Mark Stopa

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