About Those Attorney Fees Awards to Bank Attorneys: Double Dipping+?

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When I was litigating 24/7 I used to say that all the best ideas I ever had for the Courtroom came from my clients. I think the reason is fairly simple: they had to live with the result I didn’t. No matter how passionate I was about their cause, nobody cared more about their case than they did. And that’s a good thing because, as any lawyer who has represented himself knows, getting too close removes your objectivity and tactical advantages. You are more likely to think through the consequences of adopting one strategy over another if you have the longer view.

But sometimes you we miss the simple questions as we speed toward our desired victory. It’s when you lose that you start realizing some things that maybe you should have brought up before. One highly educated pro se litigant asked me a simple question relating to a current case and it stopped me dead in my tracks.

The litigant had brought all the usual claims for quiet title, lack of standing and fabricated documents and, as is the tendency still, especially in Arizona, judges tend not to believe that these claims and defense are anything more than a gimmick to defeat an otherwise valid debt. So the homeowner lost and is now on appeal. The homeowner also lost the eviction (FED) action and now that is up on appeal but not before they were actually evicted. There was an issue about supersedeas bond and the timing of when it could be posted.

Supersedeas bond is meant to provide some measure of protection to the the winning side in the event the appeal fails. So for example if the rental value fo the property is $1,000 per month, the court might estimate the length of the appeal and set supersedeas at the rental value so the other side wouldn’t be prejudiced by a frivolous or losing appeal. The banks have been using supersedeas as a weapon against homeowners knowing that they have limited resources and they have sought to raise the bar on supersedeas as high as it can go.

In their effort to increase the supersedeas bond and thus further demoralize the homeowner they have gone one step too far, I think. But I missed the point until the litigant himself asked me about it. His question was essentially this: “if the mortgage and note state that in the event it becomes necessary to sell the property to satisfy the borrower’s obligation, the proceeds shall be first applied to attorneys fees and costs of foreclosure. Why then does supersedeas include attorneys fees and costs (with some judges)?

His question got my brain moving. The property already has been sold, at least according to pretender lender bank doctrine, and the trustee deed has been issued. The bid is whatever is stated on the Trustee deed, and in some cases, the property is even sold a third party. So the if the bid was $100,000 and the fee award was $50,000, isn’t that already covered? Isn’t that attorney fee award improper as applied against the homeowner — especially in a non-deficiency state like Arizona? In most cases, the “lender” can’t pursue the homeowner for a deficiency judgment if they elect non-judicial procedure. Why are attorneys fees an exception to this rule?

The answer appears to be that attorneys fees and court costs are not an exception to the rule regarding the prohibition against the banks against pursuing a non-deficiency judgment, but hey are doing it anyway through these attorney fees awards. And then they are bootstrapping it into a demand for supersedeas bond that includes attorney fees and costs. This is improper.

In a declining market, such as we have, where the rental values are dubious at best and where the marketability of title and property is dead in the water, supersedeas should be nominal — a few hundred dollars. But lawyers are making the mistake of not raising this issue at the hearing on supersedeas and of course pro se litigants are making all kinds of mistakes because they didn’t go through 3 years of law school and decades worth of practice in the courtroom.

The moral of the story is that when opposing counsel comes in asking for a fee award against the homeowner, the homeowner or counsel should object based upon the the prohibition against pursuing deficiency judgments. That legal bill is for the bank to pay and not for the homeowner to pay. Even if the Judge were somehow inclined to enter an order setting the amount of fees, it would still be for the bank to pay and not the homeowner. And frankly even if it was the homeowner’s bill, the amount would ordinarily be covered by whatever the value is of the property, low though it might be.

So these awards are actually double dipping — because the investors are not getting complete reports. The award is first used against the homeowner illegally and then used against the investor pool so that the house goes to the servicing bank, which was the their goal all along. The reason these pretenders are fighting for homes that were not financed by these pretenders and where the obligation was never purchased by these non-lenders is that they know that the investors have abandoned the claim against the homeowners as hopeless and they are instead demanding that the investment bank pay them back 100 cents on the dollar because of the fraudulent sale of mortgage bonds.

The abandonment by the investors has caused a vacuum which has spawned “moral hazard” as they say on Wall Street and “theft” as they say on Main Street. People and entities who had nothing to do with the loan transaction and who might, in certain cases have served as conduits for a small part of the money that flowed from the borrower, have stepped in with immunity from any liability because the investors who have the claim don’t want any part of the claim.

Why? Because the amount the investors advanced was (a) far less than the amount that was loaned which was (b) far less than the value of the loan which was (c) depreciated further by the appraisal fraud at origination of the loan which was (d) even further depreciated by the fall in property values caused by millions of homes being dumped on the market. Add counterclaims by homeowners for predatory and deceptive lending and you have essentially a negative value for going after homeowners — unless of course you have nothing to lose because you invested nothing, like the pretender lenders.

And if anyone questions my assertion that investors have abandoned their rightful claims against homeowners, just ask them.

12 Responses

  1. First , it does nothing wrong – nothing. Ignorance prevails over the MERS question and that is killing these foreclosure defenses.

    Almost 60 percent of American homes have Deeds in MERS name. The title holder to fee simple estate and their attorneys will find it tough going in challenges brought against the enforceability of the MERS instruments.

    In a mortgage lenders and secondary delivery scheme the mortgagee is selling the note in advance of settlement or “closing”. The process is known as a funding into forward commitment. No significant claim here either.

    If the lender is not funding into a forward he is closing the loan uncovered. In either instance he benefits from including MERS in the mortgage or deed of trust. This is obvious for marketability reasons.

    As for the MERS question, consider the cancer of the mortgage industry that are prepayment speed categories. Subsequent to closing, the life of loan is cut short by the CPR or Constant Prepayment Rate. The first cause of a weak CPR is reversion as in housing , sales and the sale of ones home. Next is refinancing, then severe delinquency and last is foreclosure.

    In any event, the party who is the assignee is the entity concerned with the MERS opportunity. Its the Seller in most every case. Its never the lender – get it?

    I have advocated the accounting breach over and over and time again. ABS and MBS cannot work without the accounting liberties offered by the FDIC Member Bank and the Seller .

    But the Seller is not the lender. And now the controversy unveils itself in 2004 through 2007.

    What you need to do is first , try and . . . (be back)

    M.Soliman
    expert.witness@live.com

  2. MERS has prevailed in the majority of challenges.
    Why is MERS designed to be so impenetrable?

  3. PIGS GET FAT , HOGS GET SLAUGHTERED “, THE BANKS HAVE ALWAYS BEEN FAT PIGS, THEY GOT GREEDY, AND ATE SUBPRIME SLOP, AND SECURITIZATION SLIME, AND GRANNIES POSSUMM STEW UNTIL THEY TURNED INTO HOGS, NOW ITS TIME TOO TAKE THEM TO MARKET CHOP THEM UP INTO PEICES OF PORK ,AND PROVIDED HOME OWNERS WITH A HARVEST THAT WE CAN FEED ON , AND LIVE ON FOR YEARS TO COMES , TAKE YOUR TIME WHEN YOU COOKED THESE HOGS OWN LOW TEMPERATURE SLOW ROAST THEM, COOK THIER BRAINS , COOK THIER FEET , I WILL EAT THE CHITTERLINGS MEAT.NOW HEAR THIS : these banks are pigs with wigs with lipstick on wee! Wee!

  4. @stone – check out the Jeff Barnes network, he probably has someone in your area. i’ve never met him or worked with him, but i’ve seen his work and it appears to be effective

  5. PETITION—HELP GET THE MONEY OUT OF POLITICS—THIS IS THE REASON WE HOMEOWNERS ARE NOT GETTING HELP—CONGRESS IS BOUGHT BY THE BANKS/WALL STREET:

    http://www.msnbc.msn.com/id/31510813/#44691743

    PLEASE WATCH—VERY IMPORTANT—

  6. I’m in Oklahoma

  7. @stone – what state are you in?

  8. I have a question: If the Mortgage Servicer doesn’t own the loan and is not authorized to make a loan modification, then wouldn’t any modifications they did make be null and void?

  9. At first glance it seems that Neil has “far less” inadventently substituted for “far more” in sub-sections (a) and (b). Nonetheless, the reasoning for outside buyers (the “investors”) abandoning claims against the homeowners as impractical and unrealistic is solid.

  10. tn, can you give me a rough idea what Attorneys fees would be to represent me in a forclosure case. Thank you

  11. I was forced into bankruptcy due to the fact that the Arizona Federal Judge awarded Wells Fargo and US Bank attorney fees. This judge protects illegal who do not pay taxes but the hell with the hard working homeowner who finds themselves living in a deflated neighborhood that will take at least the next 20 years to recover. BK may be the only answer. Fraud, Forgery, and calculated deceit is the way of Arizona law. These bastards will get nothing and like it ! US Bank and you other Owensboro bastards will soon be locked up. The key will buried some where in the sands of Nigeria. It will take centuries unearth it !

  12. Your premise seems rooted in the idea that deficiency judgments are not allowed, which would apply to Arizona. But using the list of recourse/nonrecourse states posted on your site last week, it’s clear that the states that allow deficiency judgments outnumber the ones that do not by nearly 3:1. And the argument seems to meld together costs and fees attributable to the foreclosure and the detainer actions. Even if the foreclosure fees are “bundled” into the bid at the sale, they don’t (and couldn’t) include fees and costs related to the eviction yet to be conducted.

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