By Lane Houk
May 19, 2009
I realized this morning that it’s been a while since I’ve covered the basics of foreclosure defense. For those of you readers who are behind in their mortgage and trying to work something out with the lender (who is usually just the servicer of your loan, not the owner), you should beware that MOST of these institutions do not deal with you, the homeowner in good faith. Every time I see the news media covering some ridiculous thing they call “reporting” of the facts, fair and balanced or whatever, what they “report” is that banks are hurting, the government is going to save the “people” from this mess and servicers are doing everything they can to help. Call this number, call that number and you’ll get help. Go to this government site, or that for more information… yadda yadda yadda.
If you’re reading this right now then you or someone you know is in serious hard times, you’re thinking that it must just be you and your family having such a hard time because the news is telling you how many people are getting help, you’re just not one of them.
Try again. I’m in this fight everyday with regular American people. Hard working types… and they’re trying to survive right now. But it’s not easy. Hopefully this blog can help you get pointed in the right direction…
Regarding foreclosure, you first need to know: If you’re state is a judicial state or non-judicial state. It makes a big difference in HOW the foreclosure process plays itself out. CLICK HERE for a great resource chart on this.
Basically, if you’re in a judicial state, the party claiming a right to foreclose files a lawsuit in the local court system and you’ll get served with that lawsuit. Defend yourself. In what other lawsuit would you just lay down and die. A wise person defends them self against any and all lawsuits that are filed against them. Right?
If you’re in a non-judicial state, no court case is needed. It usually starts by the part serving you with a Notice of Default. The deed in your name is probably being held in trust and will be turned over within a statutory time frame once the state laws have been followed to do so.
My expertise is in the Florida process. Florida is a judicial state. So for this article’s sake, I’ll go through the foreclosure process for Florida.
Step Two: You’ve been served with foreclosure papers (ie. the complaint). Now what? You have 20 days to respond to this lawsuit (30 days in some states). You also have 30 days to dispute the debt under your federal rights found in the Fair Debt Collection Practices Act (you may also have state collection laws that afford your rights as well). So, in other words, you have a right to dispute the exact amount they claim that you owe THEM.
Remember. You have 20 days to respond. Don’t mess around with this. If you’re in danger of missing that deadline, at least file a Motion for Enlargement of Time which is legalese for “I need more time to get my answer filed because I’m still searching for counsel to take my case.”
Which leads me to Step Three: Get an attorney! Hire one, find one but please make sure they know foreclosure defense, really. Ask them how many cases they’ve taken. Be wise, hire an attorney. If they’re being fair to you and not gouging you on the fees, hiring them will save you money, not cost you. Contact me if you don’t understand why or how…
Step Four: Read the entire complaint you were served. You need to read it and try to understand it. Don’t be fool in life… there are far too many people who just don’t take the time to learn and understand how things work. Some because of fear, some become of laziness. Neither is good, ever, but especially when you’re being sued for a lot of money.
What comes next is kind of like a game of ping pong. They file the complaint… you answer the complaint, ball is back on their side, you wait to see what they hit back at you, etc. etc.
This is also the point where every case takes on a life of its own. There’s really no set way that a foreclosure case goes from here. However, generally speaking, the Plaintiff in the case is going to attempt to get a “Summary Judgment” in the case. This is legalese for quick judgment against you. No issues of material fact present. They win, you lose and you have future financial liability with the deficiency if one will exist after they sell the home.
I’ll make the biggest point of the article right here: Most of the Plaintiff’s in these cases DO NOT, I repeat, DO NOT own the Note that they say you defaulted on. These plaintiffs are either servicers or trustees – both agents for a securitized trust. More than this, I see sloppy, missing and even fabricated paperwork filed by the attorneys representing these big institutions; or they have outsourcing companies to do their dirty (paper) work. You know, plausible deniability stuff. Just beware… if they don’t own the loan, they’ll act like they do and create documents (like an assignment of mortgage) out of thin air to make it look like they do. If you think I’m kidding, just CLICK HERE to read an article by Peg Brickley from Dow Jones and posted online at the Wall Street Journal; this article briefly exposes just a bit of what companies like Fidelity National Information Services are doing in the loan default business boon.
A good auditor/investigator knows what to look for, what documents to inspect and where to find the securitized trust documents – or how to get them.
If you and your attorney are successful in defeating summary judgment, this is a big victory. This is what a good attorney is going to do first. Win the smaller battles and you might win the war. Summary judgment is the first battle in a foreclosure case. Look at every other type of civil or criminal case in our court systems and you’ll find that Summary Judgment is rarely granted. I said rarely and you can check that.
Now compare that with civil foreclosure cases… what you’ll find is that Florida judges are granting plaintiff’s motion for summary judgment in MOST cases. Foreclosure is just another type of civil case… why the MAJOR disparity in this? You think the judges don’t have an opinion about this. There are some rare good ones who actually appreciate the law and respect due process rights of citizens and aren’t going to let these institutions just walk into court and do whatever they want with no respect for the lawful process a foreclosure is supposed to go through.
So to have the best chance at defeating summary judgment, the defendant needs to establish (for the record) genuine issues of material fact. These are your affirmative defenses and there are many standard ones that attorneys should be using and there are some “big bullets” if you will that can be quantified through a forensic analysis and audit of all loan documents, notices and disclosures by the lender, servicer, broker, title company, etc. It’s a rare occasion that I don’t find violations. These violations are absolute issues of material fact. Summary judgment would be improper and there is well established case law on this in Florida.
Once summary judgment is denied, this foreclosure case has to go to a full trial. A good attorney files comprehensive discovery on your case. I mean comprehensive too. I want every document that pertains to this loan. It’s all material… I want the transfer records of the Note, the PSA, the Prospectus and Registration Statement, the accounting records, etc. etc. etc.
These documents once requested need to be produced or the court can be moved to compel the plaintiff to produce. Yes, their attorney will try to make some garbage up about the information requested is proprietary or can’t be produced due to privilege or whatever. This is when you can tell these guys just thumb their nose at due process and say we don’t think the consumer deserves it or has a right to it. This is also when you know they’re hiding something. First off, it’s not proprietary knowledge, its PUBLIC DISCLOSURE! It’s a loan that you say some six to seven figure number is owed by the defendant, the documents for these transactions have to be disclosed to the SEC, the IRS, shareholders, certificate holders, trustees, servicers, custodians, master servicers, depositors, issuers and several other federal agencies. But the borrower has no right to see these documents and have them produced for the record in the lawsuit against them. Right. Give me a break.
This game of ping pong can carry on for many months and often times a year and more. The bottom line to this: YOU HAVE FORECLOSURE RIGHTS! You have a right to due process. You have a right to defend yourself and you should! Find the professionals to help you and fight the war on the home front!