Arizona Foreclosure Mediation Considered

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Editor’s Notes:  

Mediation dropped Nevada foreclosures to much lower levels. That was especially true when the lawmakers put in provisions that made clear that this wasn’t a game. In order to foreclose you had to mediate first. And in order to mediate you had to have a decision maker present. AND if you are saying that the party showing up is a decision maker, you better have proof — which just another way of saying “standing.”

In the article below, it is clear that progress is slow but the proponents of mediation in Arizona are moving forward with a small pilot. Mediation is, after all, what nearly all the distressed homeowners want — a fair chance after some correction for the excesses of inflated appriasals and unaffordable loans foisted on the American public. Most homeowners are actually willing to accept mortgages where the principal due is still higher than the value of the property just so they can stay in the property. It is an unprecedented opportunity for the lender to get out of the mess they are finding themselves with all their REO proeprty subject to title challenges.

But the REAL problem is that strangers to the loan transaction are going to lose money unless the foreclosure goes through. So they are posing as lenders (pretender lenders) and pushing hard on fraudulent foreclosures because that results in a judicial or legal event in which the property was deemed to be in the REMIC pool (even if it wasn’t) and the loss falls on the investors instead of these strangers. These strangers are well known to us — BofA, Citi, JPM, Wells Fargo etc. They are fighting mediation because it threatens to expose the farce — that none of the foreclosures before were real and that the current ones are no more valid, legal or just than the old ones.

Homeowners simply do not owe money to these people posing as foreclosers, and they never did. There is no basis for foreclosure because the money came from investor lenders with whom the borrower never had the opportunity to make a deal because the real facts were withheld from both the investor lenders and the homeowner borrowers. That leaves the banks holding the bag, legally, if the law is applied and that is exactly what should happen. The obligations arising from the funding by pension funds should be settled through mediation and modification. Foreclosures would and should end, and our national nightmare would be over.

Hat tip to DR Blog

Arizona Foreclosure Mediation – Part 1

Last week at the Arizona Bar meeting my colleague Timothy Burr  presented a progress report for the Foreclosure Mediation Unit of ASU’s Lodestar Dispute Resolution Program. The program was well attended and has generated some buzz in the legal community. In some sense this was the FMU’s coming out party as we’ve been keeping a low profile because we’re in its pilot program phase. In my mind there’s nothing worse than rolling out a new program and touting it as a big deal before actually doing anything and then watching it die a humiliatingly public death.

Before talking about the program, a little background. Arizona is a state where almost every foreclosure is a non-judicial foreclosure, although judicial foreclosure is an option it is very rarely used. Non-judicial foreclosures tend to be short and sweet (or bittersweet as the case may be) because they are purely contractual as noted in the deed to the property.  Here’s a link to the best online primer on trustee’s sales I’ve found, and here’s the shorthand version. If you fall behind in your payments and the creditor decides to go forward with a trustee’s sale, a notice is placed on the house’s door announcing a trustee’s sale will occur 90 days from the posting, and the sale occurs on that day unless there’s a serious problem (like fraud or other similarly egregious claims brought in court) or there’s a last minute agreement between the creditor and debtor(s).

In 2009 I worked with others to create an Arizona Foreclosure Mediation Task force, and after several meetings it was clear that we didn’t have the clout to get anything off the ground so we disbanded. However, in late 2010/early 2011 the state was part of a nationwide settlemen with some of the big banks related to mortgage issues, and the Attorney General’s Office set aside part of those settlement monies for grants to assist with the state’s mortgage crisis.  Through this granting source the law school was able to obtain the funds to get foreclosure mediation off the ground. And, once the funds came in we hired Tim to direct and build the program.

Our initial question was – how do we even get into the game?  In judicial foreclosure states it’s pretty easy to know how to do this.  Other non-judicial foreclosure states such as Nevada, Washington, Oregon, and Hawaii have created statutory schemes requiring mediation before the trustee’s sale. Such legislation has been proposed in Arizona since 2008 or so, but it hasn’t gone anywhere. Thinking that the only sure fire mediation referral source would be a court, I spoke with the Pro-Se Clerk at the Bankruptcy Court and asked if a foreclosure mediation program might benefit the court. To my surprise he happened to be looking into ways to deal with pro-se bankruptcy filers who were filing for bankruptcy simply to hold up trustee’s sales. While bankruptcy can slow down the trustee’s sale process, the creditors typically are allowed to go forward with the sale when the court finds there’s no legal reason to keep it from going forward (again, the handy primer).  So far that’s been the vast majority of cases in the bankruptcy court. At the end of last summer we presented a foreclosure mediation proposal to the court. In this meeting the judges talked about the numerous cases where there clearly was a communication problem between the debtor and the mortgage servicers and/or holders, and they liked the idea. So, we entered into an agreement to report back after 25 referrals, at which time the court and the FMU would decide whether we should go forward with another 75 referrals.

My next post will present data about our first 25 referrals, which formed the basis of Tim’s presentation last week. And just so you know, we are going forward with the next 75 referrals.

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16 Responses

  1. McCain wrote me that they cannot get involved in Judicial cases. Boo !

    Pite Duncan’s Carrie Jones helped Citimortgage ‘steal’ my property while the OCC report is still pending.

    The firm is soooo proud of the job that they are doing for their customers that:

    Oregon Appellate victory!

    Pite Duncan, LLP is proud to announce a successful result in the Staffordshire Investments matter that it won in the Oregon Court of Appeals

    It is a published case that greatly limits liability for servicers in wrongful foreclosure cases.

    The Court stated, “We conclude that, as a matter of law, although plaintiff was the high bidder at the foreclosure sale, the discovery of the agreement to postpone the sale before the execution of the trustee’s deed renders the contract void and plaintiff’s remedy is limited to return of the purchase funds and, if applicable, interest. This result properly restores the parties to the positions they would have occupied had the wrongful sale not occurred.”

    While the case is based on Oregon state law, it is in essence an extension of the authority Pite Duncan, LLP established under California law in 2003 when it won the published case of Residential Capital in the California Court of Appeals. Partner John Duncan stated, “We are proud to be a firm that pushes the envelope in defense of our clients and in the establishment of published cases that may be relied on as precendent in defense of future matters. We are also grateful to our clients for having confidence in Pite Duncan’s attorneys.”

    Please do not hesitate to contact John Duncan at jduncan@piteduncan.com if you would like a copy of the Staffordshire Investments or the Residential Capital case.

    BOO ! from MariK

  2. BSE said, “Rocks will melt and the sea will burn….”

    Have you been outside lately?

  3. This can expand rapidly to every state when they see it works, we already have the capacity to manage the conferences, and the best part is it won’t cost the state[s] anything.

  4. I would love to see if something like this can be presented in Texas. Texas is a non-judicial state. It seems that everyone would benefit from some forced negotiations.

  5. I just don’t understand how N.A.’s can own mortgage Notes. Was the law repealed (National Bank Act) that stipulated that National Bankls and/or subsidiary Mortgage companies cannot retain the Note?

  6. Rocks will metl and the sea will burn before AZ resolves any help for homeowners. John McCain and Brewer preferr their peasant peaple of the valley to continue with financail suffering or be forced to the street curb.

  7. javagold, i am going to speak with Neil, he will set the vetting process,if you know attorneys in other States and counties were you are located please get them aboard. If the several states force conference programs on the parties we can fix more then we lose.

    If Neil is willing to put together a course to prepare only the best of the best, i will gie the webinars on how to operate the entire platform.

    The advertising will a part of the application so neil can make a few bucks for spearheading the project and it will be a nominal charge. Americans are no longer reliant on servicers who may or may not run NPV findings, use different discount rates, and blatantly lie to homeowners and the courts on who qualifies and who does not.

    I have noticed many homeowners and attorneys telling me that they are pushing everyone intot he HAMP backup at 5%. This allows the former GSE’s to recapitalize new loans (not original) new new new, name the NA’s as the new lender and still make a 3% rip on the new debt service,and than they reinsure them at the higher MTM LTV.

    This is a scam, weneed to seize fannie and freddie right now before they socialize all their losses through them to the taxpayer. Were do you think the 400 billion in losses have come from.

    There are enoguh smart people on this site tomake this happen. i will create the letter that we can send to our court administratorsand county politicians. if we can’t beat at the Fed level, we make them negotiate through new county laws, including increased fees to pull an index number.

  8. iwantmynpv,
    let me know when you are ready in NJ…..i will be your first client !

  9. I was ordered by the Judge to file, an affidavit regarding my statements at summary judgment hearing which denied the Plaintiff, ***, as successor…..ABCDE2007HE2. He wanted me to list what I thought I owed Plaintiff. I said it has not been proven that I defaulted or owe Plaintiff anything, they haven’t proven their standing and went on to say other things.

    I offered the court that I could put in an affidavit of how much monies were collected by certain entities from me. Which he allowed. We are scheduled for trial. Working on discovery request.

    There is alot more in my case which resembles Horace and then some.

    I will continue to defend myself to the best of my ability.

    I have had two heart attacks, due to the stresses, I’m sure due to what has taken place over the past three years.

    I thank this site as well as many others I have come across, which I have learned from to defend myself.

    Thanks to all of you, God Bless.

  10. @E.Tolle

    I really believe they (the corrupt powers that be) think that if the illegal foreclosures don’t go through then our country will see a total collapse. Those are their two choices: Foreclosures…or America no more. “There’s just too much fraud…if we start doing the right thing NOW—well—it would be a worse disaster than we already have…if we give one homeowner due process than we have to give them all due process…we’re just not prepared for that kind of honesty…our country would not survive…so—full speed ahead!!!”

  11. I’m certainly glad everyone’s getting together and think-tanking these issues. By the time we get passed the pleasantries, introductions, and cocktails, maybe there will be someone left to save.

    Where are the professors at the venerated law schools? What in the hell good are they, or what exactly are they teaching that they can ignore such incredible denials of due process in complete silence?

    I wrote my senator last week imploring the sponsoring of a prove-it or lose-it foreclosure bill and enclosed the NY bill as a primer. I received a response from a staffer suggesting that any look-see would have to take place in 2013, as they’re in the interim. OK, you folks go off to Disneyworld while another million folks are tossed to the curb. Rat Bastards.

    THEY are perfectly willing to foreclose America. The only way to stop them is through pitchforks and tar. Rev 2.0.

  12. So far we have three people who can adminsiter software. I will handle New York, Matt can handle Florida and Neil gets AZ.

    The law firms that use our software have received substantial business from pro se defendants who try to modify on their own, get fustrated and hire a licensed attorney direct over the platform.

    Any potential law firms will be screened by a panel, and must allows payment plans that makes the defnense more affordable. We have just launched a successful model in NY and are updating heriarchies to allow and adminsitrator for each state.

    No unlicensed modication or loss it firms need apply. The requirements to license the software at cost is only available to licensed practioners in each county, who can properly define the agent-principal relationship between the member banks and the FHLB, must understand secutiization conduits for mortgages, credit cards and school loans (cdo’s) and must be able to handle both legal defense and bk,when appropriate,must have knowledge to challenge lender servicer motion to lift stay.

    In turn, the adminsitrators in each state will benefit from advertising and crowd funding strategies which apprently work very well.

  13. Problem with mediation in states like Florida where they can sue you for deficiency is that the first step in mediation is that the borrower has to file all current financial information. The ‘bank’ mostly will not in return show the title chain or who really owns the obligation. You don’t offer your financial info to somebody who is currently sueing you!

  14. Lynn Syzmoniak- Florida – The Fraudclosure Machine Roars Back To Life!
    July 1st, 2012 | Author: Matthew D. Weidner, Esq.
    Amerikans have developed terrifyingly short attention spans. Amerikans, and especially the press, have grown tired of the fraudclosure story..it’s like some kind of pathetic defense mechanism where we avert our attention from the victim of spouse abuse being beaten in public, or a child who is the victim of violent abuse and we’ve all just decided to look the other direction, diverting our gaze from an uncomfortable scene.

    But we will all still suffer the consequences…

    This increased push to foreclose, especially by trustees of
    residential mortgage-backed trusts, may be the single most
    important development in the American economy in 2012.
    There was a dramatic increase in the number of new foreclosures in
    Florida in June, 2012. In some cases, new filings reached an all time
    high. Bank of New York Mellon filed more new foreclosures in
    Hillsborough County (the Tampa area) in June 2012 than in June of
    any of the preceding four years. In almost every county and for each
    of the banks studied, there was an increase in new filings in June,
    2012 not just when compared with June, 2011. In some cases, the
    new filings were the highest in five years.
    The dramatic increase was not consistent in all counties and with all
    banks. Bank of New York Mellon and Bank of America were more
    heavily engaged in filing new foreclosures than Citi, Deutsche and
    Wells Fargo.
    The number of new Lis Pendens filed in the official county records of
    five Florida counties by five banks are reported below. The banks are
    Bank of New York Mellon, Bank of America, Citi, Deutsche and Wells
    Fargo.
    Bank of New York Mellon is the trustee for most of the CWABS and
    CWALT trusts, the Countrywide Trusts. Deutsche Bank is the trustee
    for most of the American Home Mortgage Asset and Investment trusts,
    as well as many of the Soundview and Long Beach trusts. Wells Fargo
    is the trustee for many of the Option One Trusts.
    The failures of these three sub-prime lenders, Countrywide, American
    Home Mortgage and Option One, proved disastrous for the American
    economy. Even after five years, most bankers and their reporters
    refuse to admit that mass foreclosures drive down home prices and
    result in more foreclosures, creating a death spiral for borrowers,
    communities and investors. The counties chosen each have a
    population of at least one million people. This increased push to
    foreclose especially by trustees of residential mortgage-backed trusts
    may be the single most important development in the American
    economy in 2012.

    Read more at http://mattweidnerlaw.com/blog/2012/07/lynn-syzmoniak-the-fraudclosure-machine-roars-back-to-life/

  15. Neil, received your message regarding software, a little late because it was in my span. Can I repsond to the e-mail still?

    This is exactly how I see the software being effective. An independant SaaS application which allows mediation programs to run NPV results, using any lender or investor discount rates and input variables (court can order disclosure), at the conference there is no longer any cofusion, either you qualify because a benefit exists to modify the terms of the loan, or you are given a handsome relocation package to sell title direct to a third party, at prevailing market. The application can be modified for plaintiff and defense counsel, pro se defendants to exchnage the required documents so we can end the lost paperwork scheme.

    The State court systems are overwhelmed, and to be kind, without the necessary funding to develop software required to maintain regularity with the process.

    The cost of hosting and administration can be borne by the parties, (nominal) and I will work direct with you to get corporations and other parties to advertise. The name of the software is De Novo, which we feel is fitting since Amercia needs a fresh and honest hearing.

    Homeowners and lenders are required to abide by the terms. If you don’t qualify you are reciprocated and release the (whatever we call them now) for fraudulent inducement, and you move on. If you do qualify, regardless of false pooling requirements, investor restriction, and all the other delay tactics, the N.A.’s modify the notes in their possession.

    In three years we will have resolved the credit problem and we cna begin the whole ugly cycle again (with a different credit class),because the me now attitude in America blinds us so as to not learn from our mistakes.

    Wait til they tell us that our govenrment is merged with other governments under the rule of a global banking authority (for the safety of the economy of course). The first steps toward this new scheme has occured across the pond, and the ship of devaluation is steaming toward our shores.

    May God bless everyone who reads this blog, and may we all enjoy independance day, and remember not to take it for granted.

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