Latest Moratorium Extensions Are Two-Edged Sword

The new president is facing incoming fire from all directions. If he does not extend the moratorium on foreclosures and evictions, hundreds of thousands of people are going to be homeless. But the extension does not come without costs.
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As you have seen on these pages, I am quite confident that none of the scheduled payments from homeowners are legally due. On the other hand, I am loathe to tell homeowners or tenants that they should withhold payments if they can make them.
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The reason is basically extortion or duress. By withholding a scheduled payment without a court order telling you can don’t need to make the payment, you put yourself and your home in jeopardy. the Wall Street foreclosure team will use that as their excuse for pursuing collection and enforcement ending in foreclosure and eviction if you don’t properly defend.
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The situation with tenants is even more dire. Many if not most rental units are owned by small landlords who do not possess the resources to get through this pandemic period. When the time comes that their units are exempted from moratoriums by time or edict, they will be required to pay the “arrearage” just like everyone else. Those homeowners who are using the moratorium as an excuse to withhold payment without having a plan of attack are headed for trouble — possibly the kind they can’t fix.
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The obvious answer to this problem is for homeowners to launch preemptive lawsuits against the securitization team. But my observations and experience show that most judges will not allow such lawsuits to go forward. this is because it is seen as an attack on the financial system generally and because judges are afraid that allowing such lawsuits will invite many more that will clog all the court systems. I have had many judges agree that the lawsuit did state a claim but dismissed it anyway sometimes after as much as 14 months of sitting on the motion to dismiss.
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Some people believe that the judges don’t get it. But most of them do “get it” — at least in part. Since those judges believe the loan exists, the loan account exists and that the homeowners almost certainly owe the payments, they see little harm in waiting until enforcement action is brought against the offending homeowner. Then they will occasionally rule in favor of a homeowner who reveals fatal deficiencies in the proof of the claim.
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It is during the moratorium periods that homeowners have an unprecedented opportunity to start actions against the securitization team — but not entirely the way most might think. By sending a proper Qualified Written Request and Debt Validation Letter you open up a more palatable action for the Judges in advance of enforcement. This is the opening step in the homeowner’s challenge.
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They must answer and they risk some rather harsh sanctions if they lie — so they withhold information. But the information they give in response to the statutory inquiries will most likely contain inconsistencies with their correspondence.
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Your questions need to be very specific. And they should start with existence, ownership, and authority over a loan account receivable on the ledger of some company; that entry can only be legal and valid if value was paid in exchange for a conveyance of ownership of the loan account receivable (aka underlying debt or underlying obligation). This is the most basic requirement established by law and custom over centuries in English common law and statutes, American common law; it is also established as the law in every jurisdiction in their adoption of Article 9 §203 of the Uniform Commercial Code.
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Next, the homeowner can file a complaint with the Consumer Financial Protection Board and the Consumer Division of the Attorney General of their State. Once again a response is mandated by statute and the securitization/foreclosure team does no dare withhold a response. but once again their response is going to be filled with legalese evasion of admitting the simple fact that they don’t own the loan account receivable and they have not been given any authority from anyone who does own it.
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Homeowners should not allege nor try to prove that all securitization of residential “debt” is a fraudulent scheme or a lie, even though that is true. It scares judges and it sounds like a conspiracy theory to them. So keep it simple and to the point.
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Foreclosure is about restitution for an unpaid debt. If the claiming party has no actual ownership of the debt arising from a real-world transaction in which they paid value in exchange for owning the loan account receivable they fail the test of the condition precedent set forth in 9-203 of the UCC. And that opens the door to “limited” actions for violations of the FDCPA (title X, 124 Stat. 2092 (2010) and other statutes. Those statutes have a bite to them and the foreclosure mills are afraid of them.
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The advantage of the preemptive action by the homeowner is that very often the securitization/collection/foreclosure team is not ready with fabricated documents containing false information about transactions that never occurred.
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The rule of thumb is to create a vehicle that can be gradually expanded as more information is obtained and the judge is gradually educated as to the true facts of the case. And remember that attorney fees are often recoverable in such actions along with statutory or compensatory damages.
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Once filed and discovery is underway, the best practice is to take information gleaned from discovery and then request a leave of court to amend the pleadings to include a broader action for declaratory, injunctive, and supplemental relief.
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The homeowner would be seeking damages for illegally trying to enforce a debt, and disgorgement of amounts paid to parties who had no nexus to ownership, or authority over the claimed “debt.” While this premise is true in virtually all cases in which securitization claims were in play, it can only be established by revealing the inability or unwillingness of the opposition to answer the most basic questions about existence, ownership, and authority over the debt.
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They can’t but you must do much more than accusing them. You must out litigate them which is why you most likely should have a lawyer who knows how to file motions to dismiss, discovery requests and motions to enforce discovery requests, along with motions for sanctions, motions for the court to adopt a negative inference against the opposition and motions in limine.
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If small landlords take heed, they can force the situation to tilt in their own favor, pass some of the savings to tenants and come out the other end of this crisis somewhat intact. If they don’t then it is unlikely that many of them will survive after the moratorium ceases unless their tenants have been paying rent in a timely fashion.
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Neil F Garfield, MBA, JD, 73, is a Florida licensed trial and appellate attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.
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FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT. THE FORECLOSURE MILLS WILL DO EVERYTHING POSSIBLE TO WEAR YOU DOWN AND UNDERMINE YOUR CONFIDENCE. ALL EVIDENCE SHOWS THAT NO MEANINGFUL SETTLEMENT OCCURS UNTIL THE 11TH HOUR OF LITIGATION.
  • But challenging the “servicers” and other claimants before they seek enforcement can delay action by them for as much as 12 years or more.
  • Yes you DO need a lawyer.
  • If you wish to retain me as a legal consultant please write to me at neilfgarfield@hotmail.com.
Please visit www.lendinglies.com for more information.

BEWARE: MORATORIUM ON FORECLOSURES MAY NOT STOP SALES OF THE PROPERTY

In a nutshell, moratoriums will do very little for homeowners or the courts. First unless a specific moratorium order states that it bars sales and evictions it is only the foreclosure action that is temporarily suspended. At some point in the near future, homelessness will spike because of a new tidal wave of foreclosures.

Second a moratorium does nothing to forgive payments. So when the moratorium expires, all the payments are due unless you ask for and receive some sort of forbearance agreement from servicers (who probably don’t have any authority despite all appearances to the contrary).

Third, don’t rely upon your own interpretation of what you read on the Internet. There is no substitute of a three year legal education and law degree and there is no substitute for decades of experience in and out of the courtroom.

Fourth, DO use this time to prepare for a confrontation with the banks and companies claiming to be servicers. Do not admit to anything —even the existence of your obligation even if that makes you feel uncomfortable.

Fifth start the administrative process by sending out a Qualified Written Request under RESPA and a Debt validation Letter under FDCPA. But stop thinking you know how to do that. Overbroad generalizations and conclusions are a perfect excuse not to answer you or evade your questions.

*Neil F Garfield, MBA, JD, 73, is a Florida licensed trial attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.*

FREE REVIEW:

If you want to submit your registration form click on the following link and give us as much information as you can. CLICK HERE FOR REGISTRATION FORM. It is free, with no obligation and we keep all information private. The information you provide is not used for any purpose except for providing services you order or request from us.In the meanwhile you can order any of the following:

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*FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT.  IT IS NOT A SHORT PROCESS IF YOU PREVAIL. THE FORECLOSURE MILLS WILL DO EVERYTHING POSSIBLE TO WEAR YOU DOWN AND UNDERMINE YOUR CONFIDENCE. ALL EVIDENCE SHOWS THAT NO MEANINGFUL SETTLEMENT OCCURS UNTIL THE 11TH HOUR OF LITIGATION.

*Please visit www.lendinglies.com for more information.

Green Party Seeks Foreclosure Moratorium

Editorial Comment: I agree with everything they are saying but they have failed to grasp the points that would make such a moratorium justifiable — namely, as President Obama pointed out (only once that I know), they don’t who owns the loan receivable. The Green Party has a wide audience and they make a lot of good points. They need to complete the thought and develop it into policy rather than reaction to injustice.

by Jacon Wheeler, uptake.org

Green Party vice presidential candidate Cheri Honkala said that, were she and presidential candidate Jill Stein to win Tuesday’s election, the first thing they’d do would be to “turn the White House into the ‘green house’ and enact a moratorium on foreclosures in the United States of America.” The Green Party is on the ballot in 36 states and the District of Columbia, and can appear as write-ins in seven more states.

“The Democrats and Republicans are never gonna talk about home foreclosures,” Honkala told an Occupy Homes rally in South Minneapolis late last month. “They’ve participated in bailing out the banks across this country, and quite frankly they don’t give a damn about poor and working people. Already eight million families have lost their homes to foreclosure. How many more families have to lose their homes, and how many more have to be broken up and destroyed? There’s no words to the damage they’re doing to young people.”

Honkala is the first formerly homeless woman to run for the nation’s highest office. “My journey started on 38th Ave when my oldest son was nine years old and homeless, and on a cold winter’s night we housed ourselves in an abandoned house to keep me and my oldest son Mark from freezing to death on the streets of Minneapolis,” she said at a rally for the Cruz family, who were evicted from their home on Cedar Ave last summer. Despite a campaign by Occupy Homes, lender Freddie Mac has refused to renegotiate a loan with the Cruz family. Their house is now for sale.

“We’re anticipating that one million families will face the same situation,” said Honkala. “I’m encouraging those million families to take a page from history, from Rosa Parks. What could they do if those million families just refused to leave their homes? Put an end once and for all to homelessness in the United States of America because it’s possible. We have more abandoned houses than we have people. We stand with the struggles of the Cruz family, and all other Cruz famlies across this nation.”

Following the rally, Honkala told The UpTake that she was sharply critical of the substance and style of the three debates between President Obama and Mitt Romney.

“The word poverty made it into the debates like twice, and that came from Mitt Romney, not from the Obama administration,” Honkala pointed out. “They didn’t talk about the foreclosure crisis. Other than climate change, I don’t know what wouldn’t be at the top of any serious presidential candidate’s agenda other than taking our babies off the streets of this very wealthy nation.”

“If Jill and I had been part of the debate process, we would have talked about ending homelessness; we would have talked about the foreclosure crisis; we would have talked about mass incarceration, and the school to prison pipeline; we would have talked about legalization of marijuana and ending the drug war; we would have talked about the fact that Obama has deported more immigrants in this country than any other president in history.”

But Stein and Honkala weren’t allowed into any presidential debates — not even as spectators. Both were arrested outside the debate at Hofstra University in Long Island on Oct. 16. “Instead of being met by discussion, we were met with handcuffs,” said Honkala. “We were handcuffed to a metal chair for eight hours.”

Despite a democracy deficit at the presidential debates, Honkala said she feels heartened by the Occupy Wall Street movement and how civil disobedience has brought issues of homelessness, the foreclosure crisis and economic justice to the forefront over the past 14 months.

“We are very encouraged by the Occupy process, and in partiuclar the Occupy Homes process taking place across this country. Now there’s even conversations taking place within the Occupy movement about officially endorsing Dr. Jill Stein and myself, which I think is a very important step because we can’t just have a social movement that’s disconnected from electoral politics.”

“If we look at social transformations in different parts of the world, it’s when a social movement and a political party that’s independent of corporations link up, that’s when things really begin to change.”

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