Modifications Up, Foreclosures Down, Scams Up

Thanks to all who inquired about my health. I am fine. Just busy with cases getting ready for trial.

Recent trends show a number of things. First, more actual judgments are being rendered in favor of borrowers. Sometimes, it is procedural, like the statute of limitations that limits actions to 5 years in Florida. But most times, it is simply that the Plaintiff or forecloser could not make its case. They produce professional witnesses who know nothing, were previously employed outside of the industry and are basically being thrown under the bus by the banks who already know they will lose if the homeowner’s attorney is an experienced trial attorney.

Recent laws and local rules are getting more and more judges applying laws and rules that require the forecloser to have their ducks in a row. The answer is that they have no ducks, so they can’t get them in a row or any other configuration. They are strangers to the transaction with the homeowner. And there is a growing awareness that homeowners are not seeking a free house but a true lender or creditor with whom they can engage in meaningful discussions. But the banks are still successful in insulating the real parties in interest from any contact with each other or even any knowledge of who the other party is or where they can be contacted.

As one Judge told me recently, he has come to realize that clearing his docket is easier than he thought. Just require the a party seeking foreclosure to prove that they or the predecessor actually made a loan to the homeowner. Add to that a comprehensible chain of documentation that tracks actual transactions, and you end up with nearly zero foreclosures. This is especially true where the foreclosing party has failed to allege the existence of a loan and instead has alleged only that paperwork was signed. Judges who continue to “infer” that the loan was made are skipping a basic premise of pleading. Either it happened or it didn’t. The use of inference requires the homeowner to state an affirmative defense and prove it when he should only be required to deny that allegation. Motions to dismiss based on that premise are starting to be granted.

So it is no wonder that I am getting daily calls from previously intractable parties seeking foreclosure pursuing a global settlement. They want it “Global” because they know we will pursue damages for slander and wrongful foreclosure. They also want “settlement” because they know they can’t win in court. But it remains true that where the client comes to a lawyer after judgment has been entered or after the sale, the road remains rough and unpaved. And the fact remains that if they can’t make case for foreclosure they don’t have the authority to settle or modify the loan. But that can be bridged if the Judge approves the settlement in words that prevent anyone else from making a claim, and if a Guarantee of Title is issued by the title company. (Different from the normal owner’s policy).

Modifications are being offered with increasing sincerity as lawyers start balking at filing documents that they know or believe were fabricated and forged. The recent tribulations of David Stern and Marshall Watson sounds a warning bell to all firms “processing” foreclosures that they might face disbarment or worse.

But wherever there is desperation and fear and vulnerability, the scam artists come out of the woodwork spouting phrases, laws and rules they know nothing about and promising to end the ordeal of the investor who bought homes during the mortgage meltdown or the homeowner who bought or refinanced homes during that period. Some of them use the word “asset protection” which is in reality a highly complex world in which navigation is extremely challenging. The bottom line is that if the person is not a licensed professional with some obvious credentials their advice should be neither sought nor taken with anything larger than a grain of salt. That ought to get some more hate mail coming my way. Some of the old-time tricksters are finding it difficult to get gigs as “experts” because, well, they are not experts, they have insufficient knowledge, and they don’t know how to explain anything to the court.

In the end, you must accept the premise that the transactions were fatally defective from the beginning (most of them). Signing a note might enable someone to START a lawsuit but it doesn’t allow them to win it. A judge is committing error when he or she denies a motion to dismiss based upon the fact that the “lender” failed to allege that he ever fulfilled his side of the bargain — i.e., that he made a loan to the “borrower.” That allegation alone will knock out at least half of all foreclosures. Judges who are faithfully following the rules of pleading and proof are having no difficulty in clearing their dockets because most of the foreclosures are being initiated in judicial and non-judicial states by parties who, as the San Francisco study put, are “strangers to the transaction.”

While the paperwork on loans is mysterious and opaque the facts of the deal are not. Either there was a transaction for which the paperwork is evidence, or there was no transaction, in which case the paperwork is worthless.

Report of Referee: Former ‘Foreclosure King’ David Stern Could be Disbarred for Foreclosure Fraud
http://4closurefraud.org/2013/10/30/report-of-referee-former-foreclosure-king-david-stern-could-be-disbarred-for-foreclosure-fraud/

Financial Crime: Foreclosure Rescue Schemes Have Become More Complex, and Efforts to Combat Them Continue
http://gao.gov/products/GAO-14-17

Increased mortgage modifications have scaled foreclosure down
http://www.foreclosuredefenseinny.com/2013/increased-mortgage-modifications-have-scaled-foreclosure-down/

FORECLOSURE SCAMS INCREASE IN NUMBER AND CREATIVITY

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EDITOR’S NOTE: Hoak’s article only points out three varieties of scam but there are many more. The long and short of it is that homeowners do need help in gathering information and using it effectively with the assistance of a licensed attorney. But they are not getting the help they need in most instances and they are not getting effective counsel. Here are three categories of scams:

The first is foreclosure rescue. Anyone telling you that the foreclosure will stop if you pay them money is lying to you, pure and simple. The only thing that will stop a foreclosure is a Judge’s order. The automatic stay in bankruptcy is the order of the court. So unless if you have sought and obtained a signed order from a Judge or filed for bankruptcy relief, there is no stopping the foreclosure. Period. Most of these people take your money and run. Some fo them are lawyers who will tell you they are working on it but are doing nothing and won’t return  phone calls once they have your money.

The second uses a short-sale as a vehicle for fraud. There are many varieties of this. Some demand fees up front to get it done, some interpose themselves as middlemen, not submitting the bid they should submit, the list is endless. The worst case scenario is that  you get foreclosed and don’t even know it. You move out thinking the sale went through when in fact nothing happened.

The third one she mentions ought to be the first. It is the false payoff. This hurts everyone. Mostly used in “refis” it  often happens in sales. The writer could have written a full investigative article about this. These “payoffs” send money to someone who has no interest in the deal, no right to receive the money and no authority to release the old mortgage. OR the title or closing agent simply keeps the money from the new deal and doesn’t pay anyone. They get away with it because nobody knows who the creditor is anyway. The homeowner in a refi starts paying the new mortgage source but the old mortgage is still on there going into “default.

SEE FULL ARTICLE ON SCAM IN WALL STREET JOURNAL

By AMY HOAK

Fraudsters will always finds ways to scam lenders and homeowners. And in recent years, they’ve shifted their tactics to profit from the market’s downturn.

Today, there’s less identity fraud and misrepresentation of income or employment to obtain a mortgage, mainly because of stricter validation criteria, says David Johnson, vice president of fraud and consortium solutions for CoreLogic, a provider of financial, property and consumer information. But other types of fraud are replacing those scams.

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