“The way mortgages are bundled and resold, it can be enormously time-consuming just trying to determine what company holds the loan on a property thought to be in foreclosure.”
Susan Saulny of the NY Times gets credit for her story on the front page today. It points out what we have been saying here all along — the “banks” (actually servicers, administrators, trustees et al) are cherry-picking their way through the orchard. They have no investment in any of the properties but they are successfully bluffing their way through foreclosure as if they were the lender. Then when it comes  to taking title or possession, they decide between the most profitable and least profitable properties to grab. Meanwhile entire neighborhoods, indeed cities, are being decimated only for the homeowners to learn later they still own that property they thought was foreclosed. DON’T WALK AWAY — LET THE BANK WALK AWAY!~!!! AS THESE PEOPLE ARE FINDING OUT ALONG WITH THOUSANDS AND THOUSANDS OF OTHERS IS THAT THEY STILL OWN THE PROPERTY AND NEVER HAD TO LEAVE IN THE FIRST PLACE.
And don’t take the rationale they are giving as Truth. They lied before and they are lying now. They are walking away because they can. They have NO LOSS whether the loan works out, the house is foreclosed or the house is abandoned. The REAL reason is buried deep in the article and highlighted above.
Read on—–
March 30, 2009

Banks Starting to Walk Away on Foreclosures

SOUTH BEND, Ind. — Mercy James thought she had lost her rental property here to foreclosure. A date for a sheriff’s sale had been set, and notices about the foreclosure process were piling up in her mailbox.

Ms. James had the tenants move out, and soon her white house at the corner of Thomas and Maple Streets fell into the hands of looters and vandals, and then, into disrepair. Dejected and broke, Ms. James said she salvaged but a lesson from her loss.

So imagine her surprise when the City of South Bend contacted her recently, demanding that she resume maintenance on the property. The sheriff’s sale had been canceled at the last minute, leaving the property title — and a world of trouble — in her name.

“I thought, ‘What kind of game is this?’ ” Ms. James, 41, said while picking at trash at the house, now so worthless the city plans to demolish it — another bill for which she will be liable.

City officials and housing advocates here and in cities as varied as Buffalo, Kansas City, Mo., and Jacksonville, Fla., say they are seeing an unsettling development: Banks are quietly declining to take possession of properties at the end of the foreclosure process, most often because the cost of the ordeal — from legal fees to maintenance — exceeds the diminishing value of the real estate.

The so-called bank walkaways rarely mean relief for the property owners, caught unaware months after the fact, and often mean additional financial burdens and bureaucratic headaches. Technically, they still owe on the mortgage, but as a practicality, rarely would a mortgage holder receive any more payments on the loan. The way mortgages are bundled and resold, it can be enormously time-consuming just trying to determine what company holds the loan on a property thought to be in foreclosure.

In Ms. James’s case, the company that was most recently servicing her loan is now defunct. Its parent company filed for bankruptcy and dissolved. And the original bank that sold her the loan said it could not find a record of it.

“It is what some of us think is the next wave of the crisis,” said Kermit Lind, a clinical professor at the Cleveland-Marshall College of Law and an expert on foreclosure law.

For older industrial cities like South Bend, hard times in the mortgage market began before the recent national downturn, as did the problem of bank walkaways. In the case of Ms. James, a home health care administrator, the foreclosure proceedings began in the summer of 2007, when she could not keep up with the adjustable rate on her mortgage.

In Buffalo, where officials said the problem had reached “epidemic” proportions in recent months, the city sued 37 banks last year, claiming they were responsible for the deterioration of at least 57 abandoned homes; the city chose a sampling of houses to include in the lawsuit, even though the banks had walked away from many more foreclosures. So far, five banks have settled.

In Kansas City, Rachel Foley, a lawyer who handles housing cases, said bank walkaways were “a rare occurrence two to three years ago.”

“We’re seeing them dumped more and more at the moment,” she said.

Experts suggest the bank walkaways are most visible in states where foreclosures are processed through the courts and therefore tend to be more transparent. Other states, like Indiana and New York, have court-mandated foreclosures, but roughly half of the states allow foreclosures to proceed without court intervention, making it difficult to accurately count the number of bank walkaways in recent months.

The soft housing market and the vandalism that often occurs when a house sits empty are the two main factors influencing the mortgage holders’ decisions to walk away, said Larry Rothenberg, a lawyer for Weltman, Weinberg & Reis, one of the larger creditors’ rights firms in the country.

“Oftentimes when the foreclosure starts out, it’s a viable property,” Mr. Rothenberg said, “but by the time it gets to a sheriff’s sale, it might not have enough value to justify further expense. We’ve always had cases where property was vandalized or lost value, but they were rare compared to these times.”

The problem seems most acute at the bottom of the market — houses that were inexpensive to begin with — and with investment properties, where investors and banks want speedy closure by writing off bad loans as losses. Banks and investors typically lose 40 percent to 50 percent of their investment on every foreclosure.

Guy Cecala, publisher of Inside Mortgage Finance, an industry newsletter, said some properties had become such liabilities for investors that it was not even worth holding on to them to strip valuable fixtures, like kitchen appliances, toilets and hardware.

“The whole purpose of foreclosure is to take title of the property, sell it and recoup what money you can,” Mr. Cecala said. “It’s just a sign of the times that things are so bad no one wants to take possession of the property.”

In South Bend, boarded-up houses for whom no one has stepped forward are dotting the landscape, adding a fresh layer of blight to communities that were already scarred from the area’s industrial decline.

The city is hoping to create a new type of legal mediation process that would bring together the homeowners and the mortgage holders to settle their disputes while allowing the owners to remain in the home — considered crucial to any stabilization effort.

“I’d say in the last three or four months, we’ve seen dozens of these cases,” said Chuck Leone, the South Bend city attorney. “We see it one of two ways. One is that the bank will simply dismiss the foreclosure complaint. The other is that the mortgage holder will follow through and take a judgment of foreclosure, but then not schedule the property for sheriff’s sale.”

In Ms. James’s case, it has been impossible to determine who canceled the sheriff’s sale, since her last mortgage holder went out of business. Even the city clerk’s records did not provide an answer.

“Nobody has any idea who owns what or who’s responsible,” said Judy Fox, Ms. James’s lawyer at the Notre Dame Legal Aid Clinic. “It’s a very common story.”

Mayor Stephen J. Luecke of South Bend added: “It’s just a crime the way it puts people in limbo. They first off have gone through the grief of losing their house, then they move out and find out that they still own it and have responsibility for it.”

In Jacksonville, Fla., Sylvester Kimbrough Jr. found himself caught in the limbo between foreclosure and ownership last year, 10 years into his 30-year mortgage on a $42,000 two-bedroom house.

Mr. Kimbrough, 56, a former driver for a car dealership who is now unemployed, had already moved out when he learned that the foreclosure had been stopped.

“That move really almost destroyed us,” Mr. Kimbrough said. “It was all for nothing.”

12 Responses

  1. I got home loan through CW in 2009 n couldnt keep up with my payments n left the house in JUN/2010 since then I have been waiting on foreclosure. When I checked city’s website I still look like the owner of the house. I am gonna file bankruptcity after foreclosure dont know what to do

  2. I could use some advice. I have a Countrywide mortgage. Last January (08) my ARM adjusted and I lost my job. I couldn’t make the $500 increase on top of the $1400 a month payment. In June I received a letter they were starting foreclosure process. Rather than be kicked out and embarassed in front of my neighbors, I got a rental and moved. I received a letter shortly thereafter from CW stating they had been to the property and knew it was empty. Then received a notice of foreclosure sale for Dec. 3 (08). February I receive calls from CW asking what I’m planning on doing with my house. I told them I thought it had been sold at foreclosure. They said they had no record of a foreclosure sale. They finally gave me a phone number for the attorney handling the foreclosure. I called the attorney and they said that the Dec. 3, 2008 sale date had been postponed pending workout and rescheduled for February 23, 2008. Today I get another call from CW. They say they don’t have ANY record of any foreclosure sale dates having ever been scheduled. They take some information and say they are putting it in for a modification. I haven’t lived in the home for a year, thought it was foreclosed on long ago and sold but now find out they are saying I still own the house. I now live 150 miles away! What should I do?

  3. I received improper legal advice from several attorneys when I initially was dealing with my foreclosure matter. I then decided to represent myself Pro Se in the state of Maryland. The Prince George’s county court system and Judge Herman Dawson, who is presiding over the foreclosures in that county is a real joke. The improper way the judge overlooked motions filed and allowed the attorneys and trustees to steal people’s houses is inexcusable. How can trustees who never have the note in posession at the time of docketing, sale etc. say they sold the house and put the owners out of their home, then present the judge with a lost note affidavit 9 months later? Then the judge ratifies the sale!!! How does the judge allow them to do that? How can a judge do that and say they are helping people in a just way? That is not fair to tax paying citizens and makes the civil justice system so unfair – where is the true justice? The people in Prince George’s county Maryland need help in getting fair representation by the court system.

  4. I received a Motion To Substitute a Party. Countrywide Home Loans, Inc is trying to sub in Countrywide Home Loans Servicing, LP. I have challenged their initial Foreclosure Complaint and requested discovery evidence regarding chain of title, they refused to provide it to me, it has been in limbo for several months, I have not received a Motion for Summary Judgement yet. Is this their first step in trying to get summary judgement? MERS as a nominee for Americas Wholesale Lender is the mortgagee on the note/mortgage. Should I file a motion to dismiss at this point? I was hoping they would walk away, but doesnt look like it. I spoke to a lawyer non profit, who said I should propose a loan mod, I told him Countrywide had no standing, he didn’t disagree but seemed to steer me away from trying to get the suit dropped. Thanks for any opinion.

  5. My motion for Stay and supporting Memorandum was denied, without explaination by Judge Herman C. Dawson on 03/27/2009.
    With that being said. MFI-Miami/DC have been a blessing of hope in all of this.
    So I would like to piggyback on a eailer post about Prince Georges county, Maryland. I am one of those homeowners that had thier rights taking away, even after the aduit shows fraud and the lenders own atty agreed that they did not file the note prior to foreclosure. The audit, motion to dismiss and the recission letter were added to my court file. Only the title company acknowledged the recission letter that was mailed certified over 35 days ago. I have paid a lawyer over 5k to show me how to file pro se, only to have my injuction denied by the one man dream buster, Judge Herman C. Dawson. There are motion to stay the foreclosure that are being accepted by judges in surrounding counties, (baltimore, howard, annal rundal, calvert) but not in prince georges. Prince Georges lead the state of MD in foreclosure by 3 to 1.

    The lenders’ atty told my dead beat lawyer that they are at fault because they did not record the back of the note when they filed. The atty stated that they will talk with GMAC to determine what kind of deal to offer me.

    Points in my case:
    Refi my personal resident 11/2006 in a ARM @11.58%. My wife whom is on the deed, sign the deed, but not the note.

    Please advise what and where I should go next.


  6. I wish what happened to Mr Kimbrough would rob off on homeowners in prince george’s county maryland where a one man wrecking crew a (judge in the circuit court) is ruling against homeowners evreyday regardless of the overwhelming evidence of fraud against the pretend lenders. In an interview on 01/31/2009 with the washington post, he implored homeowners to file injunctions before their sale dates to even the palying field considering theat maryland is a non-judicial state. I am privy to few homeowners who have done exactly as he asked backed up by a full forensic audit done by a reputable audit firm. Yet he continues to disregard the plight of the homeownes who were alread taken advantage off by the pretend lenders. How do homeowners in PG county Maryland counter this irrational judge?

  7. I am looking for your opinions/information on my situation. Here is some background. I am currently in foreclosure. My original lender was Novastar, who passed the servicing of the loan to Saxon. The plaintiff, however, is Deutsche as Trustee with no mention of MERS, even though the deed of trust names MERS as mortgagee. So I pulled the prospectus on the DBNTC issue. I am not convinced my loan is in that package. In the prospectus there is also no mention of MERS as mortgagee or nominee. The lawsuit contains the “lost note” clause.

    My attorney has raised the question of being the correct plaintiff. However, the interesting wrinkle is that a few months after the foreclosure action was filed by DB, MERS recorded an assignment of the mortgage as “nominee Novastar Mortgage inc.”. In the assignment, there is a clause that states “This Assignment of Mortgage has been executed to replace the original Assignment of Mortgage which has been lost or destroyed prior to” date of plaintiff’s filing. This was filed 6 months after foreclosure, and there was no prior filing between the time the mortgage was recorded and the date of the foreclosure. Is this legal?! My attorney has raised this questionand we are waiting for that; but the whole process looks suspect to me. We have no note, potential the wrong plaintiff, and an assignment after the fact to replace a prior missing assignment. Any thoughts?

  8. Bernie: The odds of Deutsch bank being your lender is about 1 in a million. Go get a forensic review and start pounding on them. You can get it here if you want by going to “In Trouble Now?” on this blog. Don’t take the first, second or third offer. They don’t have the goods. Accept an offer of settlement if it is too good to pass up but make sure you have good title either through title insurance or a quiet title action or both. Don’t believe a word they say — it’s all scripts prepared for people on the phone. Check with “lawyers Who get It” on the blog here and consult with someone who is licensed and doesn’t hit you with huge retainers.

  9. Me again…
    I hit submit prior to noticing the box to check that said “Notify me of follow-up comments via email”.
    Shucks…so please do.

  10. I have been attempting to get a loan modification — not a refinance with the attendant fees. My two loans on our home have been at the former 10.55% and the current 8.25% (primarily due to being one of the risk taking, self employed people that this country so highly touts and the “engine to job growth” but punishes with high credit card and interest rates. After devoting much time to providing all the financial details both by snail mail form and online and gain online after the March 4th Obama plan was announced and after contacting the New York office of one of the new owners of Indymac Bank I was successful at getting through to a V.P. in California and learning for the first time that Deutsch Bank owns my loan (or so I was told). All I want is a more reasonable interest rate.
    Indymac reps, including the Veep, said I should keep current on my house payments, then quickly followed up by saying that Deutsch Bank won’t consider a modification unless I am delinquent?!?!
    If anyone out there has any suggestions please email be at
    I have asked for a copy of my original mortgage contract. They’ve added $10 to my debt for doing so. Of course I haven’t received it yet; but wonder it that will tell me whether Deutsch has legal ownership of the loan; ergo, authority to foreclose?

  11. Send me a copy of that decision please!


    Another PRO SE litigant wins in court. 11th district in Miami. US Bank National ASS.. This morning a summary judgment was denied. Litigant questioned the legality of the “NOTE” and the judge agreed it was NOT the litigant’s signature on it. Judge gave US Bank 30 days to explain the reason why signature didn’t match. Stand up and fight…

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