Archive for September, 2010

Temporary Loan Modifications – the ultimate scam

I’ve seen a ton of horror stories in recent weeks with loan modifications, but this one takes the cake.  As a matter of routine,

Banks are telling homeowners they’re being considered for a loan modification, and their lawsuit is “on hold,” even though the banks’ lawyers are moving the foreclosure lawsuit forward, full speed ahead.

What particularly frustrates me about these situations, aside from the fact that banks are lying to homeowners time and time again, is that homeowners are pinning all of their hopes into a loan modification process that is an absolute scam.  It’s not just that the lawsuits are still going forward – the loan modification process itself is a joke!  As I’ve said before, hoping a temporary modification evolves into a permanent one is like waiting for Santa Claus to come down the chimney on Christmas Eve.

To illustrate, take a look at this Temporary Loan Modification that came into my office today from a potential client.  It requires the homeowner to make monthly payments in October, November, and December of more than $1,800/month.  What does the homeowner get in exchange?  Read the second page – absolutely nothing.  Wells Fargo has ”no obligation to enter into any further agreement.”  Hence, it has no obligation to approve a permanent modification, even if the homeowner makes all of the payments.  In fact, page two specifically says “the loan must be brought current or an arrangement to satisfy the arrearage must be executed.”  That means the homeowner has to pay up once the three-month period is over.  Even worse, “the lender, at its option, may institute foreclosure proceedings according to the terms of the note and security instrument without regard to this agreement.”  Yes, incredibly 

Wells Fargo is giving itself the right to foreclose even while this agreement is in place!!! 

In other words:

The foreclosure case against this homeowner can proceed, even if the homeowner is paying!! 

The document is titled “Forbearance Agreement,” but if Wells Fargo isn’t agreeing to halt the foreclosure, even temporarily (i.e. “forbear”), then what’s the point?  All this agreement does is put more money into the bank’s pocket – the end result of foreclosure is still the same. 

To illustrate, and this is the most sickening part of all:

Even after entering this “forbearance agreement,” and making the first payment, Wells Fargo still sold this home at a foreclosure sale! 

The homeowner paid the October payment early, in mid September, and Wells Fargo kept the check, but it still proceeded with the sale!   Think about that for a minute. 

This homeowner entered a temporary modification agreement, paid what she agreed to pay, and her home was still sold at a foreclosure sale!

Now for the legal stuff.  Let’s say I represented this client, filed a motion to vacate the judgment and cancel the sale, and the judge agreed with me.  Even if  I “won” and got the Final Judgment vacated, this agreement was only good through the end of the year.  Hence, even if this client “won” in court, come January, Wells Fargo could still set another hearing on a motion for summary judgment of foreclosure, and short of defeating summary judgment, there’s nothing this homeowner could do about it! 

I sincerely hope this example illustrates an important point; typically:

Temporary loan modifications are a SCAM

Usually, as we saw here, banks enter temporary loan modification agreements as a way to induce homeowners to make more payments, even as the foreclosure lawsuit proceeds full speed ahead.  I’m convinced banks do this without any intention of entering permanent, meaningful modifications (as homeowners want), but as a way to collect more money prior to a foreclosure being entered.  If you disagree, let me ask you:

How did this agreement help this homeowner? 

She paid more money and still got foreclosed! 

This brings me to the final, most important point of all. 

If your bank is proposing a temporary loan modification or forbearance agreement, make sure you bring it to a competent foreclosure defense attorney.  And do not, under any circumstances, let the bank convince you that your case is “on hold.” 

If a bank tells you your foreclosure lawsuit is “on hold,” tell them “Good, send me a letter saying so.”  When the bank refuses, that should be a wake-up call for you.  Chances are, YOUR CASE IS NOT ON HOLD!!  (Even if the bank agrees, and gives you proof in writing, I’d still be careful – I’ve seen instances where the bank put it in writing and still proceeded with the foreclosure suit.)  To sum it up:

Temporary Loan Modifications are a SCAM!

They put more money into the banks’ pockets and don’t keep homeowners in their homes.

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Congressman Grayson Speaks

This is an awesome clip – a “must see” for all, particularly if you’re unfamiliar with foreclosure issues in states such as Florida.

Congressman Grayson Speaks

It’s a shame more people in positions of authority don’t realize the problems cited by Congressman Grayson.

I applaud you, Congressman Grayson.  Thank you for having the integrity to stand up and say “enough is enough.”

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It’s here … Title Insurance Problems

With the recent news about GMAC and Chase, I’ve been telling everyone who will listen that it’s only a matter of time before title insurance companies start to change their business models (if they can keep writing policies at all).  In fact, I blogged about this at length, below, just the other day. 

This morning, word broke that Old Republic has stopped issuing title insurance policies on GMAC properties until further notice:

I fear this is just the tip of the iceberg and that more fallout is coming.  The ramifications could not be more severe.  Property values are already depressed.  It’s only going to get worse if title insurance companies won’t issue title insurance on foreclosed properties.  After all, who wants to buy a property without assurances that title is clear? 

I sincerely hope that everyone, particularly the judiciary, realizes – before it’s too late – that continuing to push through foreclosure cases at the current pace is going to have far-reaching negative consequences for the entire economy. 

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Breaking News – JP Morgan Chase halting foreclosures

Hot off the presses …

JP Morgan Chase is halting foreclosures, essentially for the same reasons as GMAC. 

That makes two of the biggest mortgage companies in the country who have openly admitted the affidavits that cause foreclosure judgments to be entered have not been done correctly.  In the words of the Chase spokesman:

“It has come to our attention that in some cases employees in our mortgage foreclosure operations may have signed affidavits about loan documents on the basis of file reviews done by other personnel — without the signer personally having reviewed those loan files,” said Tom Kelly, a Chase spokesman. “As a result, we have begun to systematically re-examine documents we have filed in current foreclosure proceedings to verify that the affidavits and other documents meet the standard of personal knowledge or review where that is required.”

The obvious question, of course, is:

When banks are admitting their evidence is faulty, how can judges keep entering summary judgments of foreclosure?

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Florida Supreme Court rejects Congressman Grayson, punts the issue

The Florida Supreme Court rejected Congressman Grayson’s request that it put a moratorium on all foreclosure cases instituted by the foreclosure mills being investigated by the Florida Attorney General.  Incredibly, the Florida Supreme Court did not address the request on the merits; it punted the issue.  Essentially, the Florida Supreme Court said it is powerless – asserting it has “no authority” to intercede into pending cases and “no jurisdiction” to evaluate attorney misconduct. 

With all due respect, this explanation is such a copout.  The Florida Supreme Court has the exclusive authority to create rules of practice and procedure in all courts in the State of Florida, a power that is expressly granted to it by the Florida Constitution.  Hence, if the Court wanted to impose a temporary moratorium, it could do so very easily.  One idea, just off the top of my head, would be to create a rule of procedure preventing a court from granting a summary judgment in a mortgage foreclosure case for some period of time.  It would be so simple – create an amendment to Rule 1.510 (the summary judgment rule) that says:

“Notwithstanding all of the foregoing, this Rule cannot be used to seek or obtain summary judgment in any lawsuit in which the Plaintiff is seeking a mortgage foreclosure at any time between now and December 31, 2010.” 

If that Rule were passed, guess what?  There would be a moratorium, as judges would not be permitted to enter a Final Judgment of Foreclosure via summary judgment. 

Lest there be any dispute about the Court’s ability to do this, recall the Court’s recent invocation of Fla.R.Civ.P. 1.110(a), requiring that all mortgage foreclosure complaints over residential property be verified.  This would be no different.  The Court can create such a rule if it wants to; it has chosen not to.  Whether you agree with that decision or not, let’s at least call a spade a spade.  Contrary to what it told Congressman Grayson, the Florida Supreme Court has the ability to intercede if it so chooses. 

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What will it take, judges?

Connecticut Attorney General Richard Blumenthal on Monday accused GMAC of using “defective foreclosure documents” in its filings and said he ordered a moratorium “to forestall horrendous, illegal harm against homeowners.”

California Attorney General Edmund G. Brown Jr. on Friday called GMAC’s document review process a “sham.”

In Illinois, Attorney General Lisa Madigan said she “wants to see GMAC stop the filing of foreclosures in Illinois as well until this situation can be remedied,” a spokeswoman said.

Iowa, North Carolina and Texas have also opened criminal and civil investigations into GMAC’s lending practices as well as those at other large mortgage companies, officials said.

With all of this in mind, I have to ask … What’s it going to take, judges? 

How many high-ranking officials have to speak up before you’ll stop pushing through foreclosure judgments? 

How much proof do you need? 

It’s one thing, I suppose, for homeowners to cry “fraud” – you’ve convinced yourself their cries don’t matter because the homeowners are self-interested, didn’t pay their mortgage, and are trying to stay in their homes.  But how can you “explain away” the positions of the AGs of numerous states?  What’s their self-interest? 

 I’m quite certain these AGs aren’t facing foreclosure, yet they’re appalled and disgusted at the conduct of the banks and the foreclosure mills.  Why aren’t you?

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Help for servicemembers facing foreclosure?

Several clients of Stopa Law Firm are in the military, so in the midst of my many blogs, I’ve tried to discuss some of the laws that are unique to servicemembers.  That’s why this article caught my attention.  Supposedly, Fannie Mae is willing to help servicemembers and their families who are struggling to pay a mortgage due to the death or injury of a servicemember. 

I say “supposedly” because I’ve seen many such programs and, candidly, have seen very little in the way of results.  That said, the brave men and women of our military should at least be aware that they may be a candidate for some assistance.

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Final Judgment of Foreclosure – Without a Hearing!

I’ve had a lot of wild experiences in foreclosure cases, but this one might take the cake. …

On September 2, 2010, I attended a hearing before Judge David Demers in Pinellas County Case No. 2010-CA-2846.  The hearing was on a Motion to Strike or Continue a summary judgment hearing that Plaintiff’s counsel had set for September 8, 2010.  Judge Demers granted my motion, in open court, and ruled that the September 8, 2010 hearing was stricken from the calendar.  Shortly thereafter, acknowledging Judge Demers’ ruling, opposing counsel filed a Notice of Cancellation of the hearing, which appeared on the docket on September 7, 2010.  As far as all parties and the presiding judge were concerned, the September 8, 2010 hearing was not going to occur.  I did not attend, nor did opposing counsel.  It was a victory for my client – the summary judgment hearing was off. 

Incredibly, despite this sequence of events, I received a conformed copy of a Final Judgment of Foreclosure in the mail on September 22, 2010.  It was signed by Judge Lorraine Kelly on September 8, 2010, and it directed a foreclosure sale of my client’s homestead on October 13, 2010.  Suffice it to say I was astonished. 

The summary judgment hearing had been cancelled, and nobody attended, yet the Court entered a Final Judgment of Foreclosure.

I’ve already filed a Motion to Vacte the Final Judgment, and, to his credit, opposing counsel stipulated to an Order granting that relief.  For me, though, the issue is much bigger than what happened in this case. 

From the minute I received the Final Judgment of Foreclosure, I wondered “How could this happen?” 

How can a judge who is not assigned to a case enter a Final Judgment of Foreclosure when the presiding judge ruled that the hearing had been cancelled? 

How can a judge who is not assigned to a case enter a Final Judgment of Foreclosure when Plaintiff’s counsel filed a Notice of Cancellation, which was filed in the Court file prior to the hearing?  

How can a judge who is not assigned to a case enter a Final Judgment of Foreclosure when neither side attended the hearing?  

These questions troubled me, so I did some investigating.  As it turns out, plaintiff’s counsel did nothing wrong.  Plaintiff’s counsel was required to submit the summary judgment “package” (including copies of the Final Judgment of Foreclosure) to the Court at least 7 business days before the hearing.  As of September 2, 2010, the date Judge Demers cancelled the hearing, Plaintiff’s counsel had already sent in the foreclosure “package” to the Court.   

The problem, though, was not that the package was submitted – it’s that a judge signed it.  Here’s where things really went awry.  Apparently…

Pinellas County has a “procedure” where, when a summary judgment hearing begins, the judge covering that hearing will inquire whether the Defendant or his counsel is present.  If not, the judge grants summary judgment, and signs a Final Judgment of Foreclosure, even without Plaintiff or Plaintiff’s counsel being present. 

That’s so outrageous it’s worth repeating:

Standard procedure in Pinellas County is for judges to enter Final Judgment of Foreclosure if a Defendant is not present at a summary judgment hearing, even if Plaintiff or Plaintiff’s counsel is not present.

As a result of this “procedure,” Judge Kelly did not realize the hearing had been cancelled, and since she didn’t look in the file and didn’t talk to either side, she signed the Final Judgment of Foreclosure that had been provided with the foreclosure “package” sent by Plaintiff’s counsel seven days prior. 

I found this so outrageous that I wrote a three-page letter to Chief Judge Thomas McGrady.  Respectfully, I cannot fathom that Pinellas judges would not require, before signing a Final Judgment of Foreclosure, any argument from opposing counsel, or, at minimum, some type of representation that summary judgment is appropriate on that case.  To ignore those safeguards, and to enter a Final Judgment of Foreclosure without even require Plaintiff’s counsel to attend the hearing, is truly astonishing to me.   Essentially, the Pinellas judges say:

“Set a hearing, and if nobody shows up to oppose the motion, we’ll enter a Final Judgment of Foreclosure.”

What transpired in my case shows the fundamental flaws with this procedure.  Most significantly: 

Judges aren’t even looking at the file before granting a Final Judgment of Foreclosure!

Judges aren’t even looking at the file before granting a Final Judgment of Foreclosure!

Yes, it sounds impossible to believe, but

Judges aren’t even looking at the file before granting a Final Judgment of Foreclosure!

If you don’t believe me, let me ask you this.  If the Judge (or an assistant or a case manager) had looked in the file (or looked at the docket), wouldn’t she have seen the Notice of Cancellation of the hearing from Plaintiff’s counsel?   Check the docket for yourself – it was filed on September 7, 2010.  Unfortunately, it seems that judges are too intent on “pushing through” foreclosures to do things like look at the file. 

Here’s the scary part. 

If judges are so oblivious they don’t realize a hearing had been cancelled, how could they possibly be evaluating the propriety of summary judgment? 

How could they possibly be reading the Plaintiff’s affidavits, motions, or other filings? 

How could they possibly be evaluating the case for the fraud with which we’ve all become far too accustomed? 

If I wasn’t diligently representing this client, what would have happened?  Simple – mistake or not, the client’s homestead would have been sold on October 13, 2010.  Let’s say I didn’t receive the Final Judgment of Foreclosure in the mail – same thing; the property would have been sold on October 13, 2010. 

Here’s the really scary part.  I’m counsel in a lot of counties, and Pinellas County is actually pretty good when compared to other counties.  They’re light years ahead of the procedures in Lee County Palm Beach County, among others.  So if this is going on in Pinellas, then I can hardly imagine what’s happening in those counties.

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Strategic default – on the rise

In recent weeks, I’ve seen a significant increase in inquiries from potential clients about strategic default.  I’ve blogged about the pros and cons of this in detail, below, but here’s the short version – many homeowners are tired of paying their mortgages when similar houses in the neighborhood are selling for one-third of they owe.  A lot of people just don’t see the benefit of paying $200,000 on a mortgage for a house worth $75,000. 

Apparently, the increase in strategic defaults is not limited to my practice, as numerous media outlets are reporting the same thing (throughout the country):

These articles seem to suggest that as many as one-third of all foreclosures are “strategic” in nature.  Apparently, the stigma of going into foreclosure is lessening with each passing day.

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Foreclosure fraud – from coast to coast

I just read this article and I loved it so much that I cut and pasted it below. From the suggestion of a foreclosure moratorium to the realization that taxpayers are now paying for investigations of foreclosure cases (which the greedy banks and their lawyers should have been doing on their own), this author “gets it.”  It’s great to see the media finally starting to side with homeowners.

posted by: Jessica Pieklo 6 hours ago

Foreclosure Fraud Expands to California

This week California officials demanded that Ally Financial Inc stop foreclosing on homes in the state after reports show the mortgage lender was violating the law.  The report comes on the heels of significant problems with GAMC foreclosures and shows just how little help consumers are getting in the foreclosure process.

Just cease-and-desist letter was the result of testimony from that Florida case where a foreclosure official admitted to signing thousands of documents in foreclosure cases without even reviewing the homeowners’ loan documents.

Attorneys general in Texas, Iowa, Illinois and Florida are also investigating the mortgage giant for similar instances of fraud.

The process now coming under scrutiny is known as “robo-signing” and one that is nothing short of fraud on the court.  The affidavits that get signed are executed, under penalty of perjury, that the signer has personal knowledge sufficient enough to warrant the extraordinary relief of re-taking possession of a person’s home.

The process also shows the significant economic machine that processing residential foreclosures has become.  Ultimately it is not just the homeowners that lose when this happens, it is the taxpayer.  We will now have to weed through hundreds of thousands of foreclosure proceedings to determine the fraudulent from the legitimate-a process that is supposed to happen before filing.  Had sufficient regulatory oversight of the lending industry existed, in any fashion after the meltdown of the housing industry, this is a crisis that would have been avoided.

Just to show how out of control those initiating foreclosure are, including the enormous banks involved, is news like this--homeowners having homes sold out from under them, without their knowledge, by lenders like Bank of America, despite the fact that the homeowner didn’t have a mortgage at the time.

Put these stories together and what emerges is a singular narrative of greed at the expense of individual homeowners.  The foreclosure process is expensive and ultimately damaging for the overall economic health of our communities.  But there’s not enough incentive for banks and attorneys to work with homeowners, despite the fact that many, if given a fair opportunity, would be able to save their homes. 

Given the scope of the foreclosure industry, unfortunately I think we are only going to hear more of these kinds of stories.  Given the scope of the fruad that has come to light, Congress should demand a halt on all residential foreclosures until the legitimate cases can be sorted from the illegitimate ones.

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