News, Research & Insights for American Homeowners, Patriots & Constitutional Conservatives
War?
A month ago, Newt Gingrich floated the idea of an alliance with Rick Santorum to defeat Mitt Romney for the nomination. He didn’t exactly specify who would be the leader of that alliance when he floated the notion to Laura Ingraham, but Santorum certainly didn’t get lulled into the idea that he would shortly get [...]
No, not really.
Republicans often laud private-sector experience as a key quality for chief executives, but Byron York throws a little cold water on the notion in an excellent column for armchair historians today. In his estimation, neither the GOP nor the Democratic Party have won with a true businessman-as-leader nominee in decades: The last president elected as [...]
But still expect the unexpected.
Allah reported Public Policy Polling’s remarkable findings last night, and a new survey out this morning seconds the notion that Newt Gingrich could win South Carolina decisively. According to an American Research Group survey released Saturday morning, 40% of people likely to vote in South Carolina’s GOP contest say they are backing the former House [...]
Your charts of the day.
Sometimes, one marvels at the shamelessness of the spin and outright lies politicians tell to deflect criticism of their failed policies. In Harry Reid’s case, one has to marvel also at the unbridled cluelessness of attempting to use easily-checkable claims — such as the notion that the real problem in unemployment is a lack of [...]
It's always redistribution and the guillotine ...
Last week, I wrote that leftist populist uprisings always start with talk about justice, but always end up demanding redistribution — and the guillotine. Zombie and Ringo at Pajamas Media gets a great example of this at the Occupy LA protest, where a speaker scoffed at the notion of change through non-violent protests. Calling Mahatma [...]
But there is another...
It didn’t take long for Pataki-mentum to come to a halt — at least on a national level. Just a few days after floating the notion of a run for the Republican presidential nomination, the former governor of New York has decided not to throw his hat in the ring, and has canceled a trip [...]
A new Labor Party?
The media likes to push the notion that the Republican Party will split in two because of the Tea Party, but they may have missed a real split on the other side of the aisle. AFL-CIO president Richard Trumka announced the creation of a union super-PAC that will “build our own structure” rather than “build [...]
Hmm.
In a country in which more than 55,000 rapes and sexual assaults were reported from 2009 to 2010 alone, some 2,000 protesters marched the streets of Cape Town to contest the notion that what women wear might play into their victimization. The Washington Post reports: Women draped sexy lingerie over their street clothes as they [...]
Stealing Bachmann's thunder?
Rick Perry continues his campaigning in New Hampshire today, where Mitt Romney is expected to perform strongly in the first primary of the nomination process (Iowa is a caucus, of course). The Texas governor and new frontrunner — at least in one poll — campaigned strongly to the right, rejecting both the notion of anthropogenic [...]
3 pm ET!
Today on The Ed Morrissey Show (3 pm ET), Kerry Picket of the Washington Times joins us to catch up on the latest from Capitol Hill, including the status of the debt deal, the notion of “super Congresses,” and much more. In the second half, Steven Crowder will preview his upcoming video! The Ed Morrissey [...]
Nonsense on stilts.
Since the final versions of the debt-ceiling compromise proposals first got floated, the notion of a “super Congress” has banged around the Internet with all of the accuracy one might expect from e-mail chain letters. Unfortunately, it’s also seeping into the national debate. Andrew Malcolm notes an appearance by Republican presidential hopeful Ron Paul calling [...]
Disillusionment.
For the past two years, the Obama administration has tried to sell the American public on the notion that its economic policies created a substantial recovery. Friday’s GDP numbers, especially the revisions that impacted results for the past several years, has put an end to that illusion. Derek Thompson at The Atlantic lowers the boom [...]
I first met Chip Parker long ago when he stepped up and contributed his time and donated money to help consumers across the state of Florida battle the complete take over of our courts when the bankers tried to ram through their Non Judicial Foreclosure Bill. Thanks in part to his efforts, the rights of Floridians to have their foreclosure case heard by an impartial judge was at least theoretically protected.
I say theoretically protected because the general consensus from attorneys around the state is that foreclosure court is a justice system stacked against the homeowner. I recognize the struggle of our courts but I reject the notion that they can simply stand aside and let our judicial system become so corrupted and abused by powerful, arrogant and unrepentant banks and their complicit foreclosure mill law firms.
I applaud Chip for sticking his head up here with this very public criticism of our justice system gone mad. I hope the Florida Bar and our judges know and appreciate the honorable and ethical fight foreclosure warriors like Parker are in–I know that members of the general public do….those members of the general public whose interests are served when good lawyers like Chip stand up and fight not just for his clients, but for every single citizen in the State of Florida…and fact every single citizen in the United States. The fact of the matter is that the issues exposed in this foreclosure war impact every person in this country.
You retirees who think your retirement dollars are safe and sound…..think again. You 4o1k’ers that think your money is there….WAKE UP! Given the scale of fraud and complete breakdown of regulation in the mortgage and foreclosure markets how in God’s name can you possibly believe anything coming out of Wall Street is true? It’s not…..and if they could pull it off with publicly recorded mortgages and (mostly) open courtrooms that are (theoretically) supervised by judges, just what do you think the Wall Street Wizards have already gotten way with in your private investment accounts?
The fact of the matter is it’s too late to stop all of this. Too many people looked away and refused to speak up for too long. Even today, hundreds of thousands of homeowners have just laid down and refused to utter even a whimper of protest. Our jobs are gone…sold overseas. Our technology is gone…sold overseas. Our dollars are gone….sold overseas. Our Congress is still there, but it too was sold out long ago…to the banks that are RECORDING OBSCENE PROFITS YET AGAIN. (Read here to get details and get really angry.)
I’m disappointed and frustrated that more “real” people, more consumers are not sticking their necks out and standing up for one another….standing up to save this country….but I’m proud that there are lawyers out there like Chip Parker who are willing to step up and speak out….FOR ALL OF US….
CHIP PARKER JACKSONVILLE TIMES UNION
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From M. Solimon
Editor’s Note: Pretty Good Entry From M. Solimon discussing aspects of fraud. I would add the following:
- FRAUD: A false statement wherein the speaker knows it is false, intends for it to be relied upon to the detriment of the receiver, who does reasonably rely on it to his/her financial detriment.
- FRAUD IN THE EXECUTION: A trick where the signor believes he/she is signing something other than what the document says it is. Probably applicable in the mortgage mess because the truth is people did not know they were signing the equivalent of their own financial destruction whereas the parties presenting the document pretended it was a standard mortgage loan that had been properly subject to industry standard verification and underwriting standards.
- FRAUD IN THE INDUCEMENT: A lie causing a person to execute a document, and otherwise meeting the definition of FRAUD as above. Examples “This is the fair market value of your new house,” or “Housing prices always go up, nevr down,” or “we’ll be able to refinance the property, give you more money out of it, all before the time for reset of the payments.”
Deceit and fraud are defined separately in statutes. Under Civ. Code §§1709 and 1710, deceit is defined in simple terms. See Civ. Code §§1572 for both actual fraud and 1573constructive fraud.
Loook at Liability for actual fraud is limited to acts committed by or with the connivance of a party to a contract with the intent to deceive another party to the contract and induce that party to enter into the contract. Look under Civ. Code §1572
Deceit is appropriate under a material beach or perhaps cause of action. The notion of a lender, who willfully deceives its borrowers or customers leading to foreclosure so to remedy an investor issue and to avoid recourse.
]I suggest you use it there or for the servicing argument for showing the willful intent to induce the consumer homeowners of a right to modifications ad compliance with 2923. to alter his or her position towards litigation (and eat up the balance of legal reserves their intended for a defense and their attorneys). These guys, I know all too well and it’s all too much. The consumer’s injury or risk is liable for any damage suffered as a result of the deceit. [Civ. Code §1709] etc, etc.
My take on this is too isolate the actual fraud that consists of any of the following acts, committed by or with the connivance of a party to a contract who is the assignor and its agents and not the successors.
The argument is it is with willful intent a lost beneficial interest woefully deceives a trustor or mortgagor to the contract, solely to induce the other party to enter into the contract [see Civ. Code §1572]:
Deceit and Actual Fraud combined
•Servicing rights violate SEC 1122 AB,
•Accounting rules violations under FAS 140, FIN 115,
•Trust assets are restricted to passive investments,
•Lenders controlling interest revoke the powers of sale and foreclosure,
•Parties lack standing to bring a foreclosure by appointment,
•Conspiracy to commit fraud where Trustee, Beneficiary and Transferee are all one in the same
•Bid rigging at trustee sale
•Fraud perpetrated against the country recorder
•A nominal interest has powers that conflict in the original assignment,
•Violations of the Code of federal regulations “CFR”
Your feed back will be critical and evident where I have gone as far as I can. It’s not getting through to skilled litigators that still don’t get it. Maybe I am lacking your codifications eloquence and ledger capacity to zero into the abuses of GAAP in more subtle terms; LOL!
he head of the OCC stated in 2009 “I don’t know why getting relief from offering modifications is not working?”
It’s simple “BECAUSE LENDERS FORECLOSING DON’T OWN THE ASSETS THEY SOLD ….for starters.
That said, even after the effort and inability for the US Secretary to further tweak FASB to get them to completely roll over.
Few are winning here. Even Judges who are deciding the matter favorably are commenting from a wrong perspective. There is no demand on UCC judicial interpretations for perfection in a bonefide sale.
The District Courts hearing these chapter proceedings provide comments after deciding the matter favorably are merely suggesting it’s all about “get it right next time”. That wrong where it says’s to a lender they can bring it back, even when a decision is favorable.
The key arguments come down to the fact the lender transfers each receivable as a “whole loan” sale. For Pete’s sake, looks at the general ledger where the asset was entered as a “Receivable” and “Loan Held for Sale”.
That’s not “Loan Held to Maturity” but “Sale”.
The cost to capitalize and reserve a 30 year loan held to maturity defeats the arguments lenders are making that “they did not sell the subject loan. It’s the old “blank assignment” gimmick. Its arguments are lost in court where the problem peaks the Judges curiosity and that’s about it.
We know the value of the open assignment argument is defining for the court where it’s a bank surety and liquidity play. It’s also a GAAP disclosure fraud.
Therein the consumer is disadvantaged arguing defects after being instrumental in a lenders shuffling of assets for maintaining REPO requirements and in its pursuit for shareholder earnings and profitability.
My take on the matter is to let them have the consumer’s home. The consumer then makes the lender pay the price of foreclosure claiming recognition, for reclassifying the sales as debt and restating earnings.
These UD attorneys are so smart that they may cost these bank power houses a debt load totaling about $3 trillion and more in liabilities left off the books. It’s a scary thought actually where you put Citigroup out while not looking and as they still struggle with a $65 billion tax tab carried by consumer taxpayers. BAC may end fighting for their life with a private right to call receivership.
Foreclosures cannot continue in violation of GAAP and where lenders circumvent basis accounting laws while continuing to force the sale treatment issue and while denying they are controlling assets.
It’s the best of both worlds with sale on the front side and as if it was leveraged borrowing upon liquidation and egress.
As we sit I’ll show you the subtle instances of apparently innocent manipulation and confusion befallen o to the courts from errors and omissions which lenders are getting away with. That is happening as the courts say . . . . So what!
The errors and omissions are the desperate means for seeking to maintain some semblance of SFAS140 adherence while employing lawyers as third parties appointed by agents of agents by a nominal interest.
I personally have given up on the right MERS arguments as MERS is entitled to act as an accommodation and even a nominal interest, possibly.
It’s just so easy for one to see the obvious that it has become lost. The nominee cannot execute instruments upon being replaced by the signature below it. Hello guys, right! That’s the purpose of the nominee! And, while one courts rules in favor of the consumer it misses the call.
Something basic is getting lost and I’m not getting through. Unique “floating” entities cannot appear from nowhere to execute assignments by virtue of meritless appointments.
If one of your cases is picked up by the Fed it should register a nice settlement . As one District court judge put it with disgust. . . “The SEC is turning into a penalty and fine system where they are to quick to settle the matter for a couple hundred million every time allowing the defendants’ to save face.”
“That’s not bad!
The US AG office thinks there is a case for bid rigging but I’m not sure the AG’s office knows where to look. Yet as one Judge told me in court “speak English.”
The precise and distinct GAAP and FASB rules violation are clearly demonstrated in each foreclosure. Lenders are violating GAAP even with the recent codification, including revisions and interpretation.
It’s all mind boggling when you consider the distance in communication here and counsel’s alternative to grab the lowest hanging fruit. . . .A RESPA audit (what is that anyway) and a QWR that together are just not going to cut it.
These bank execs fail to realize maybe that these and other Enron style crimes, like those stated in the Fastow confessional, will gets you 10 years . . .at least.
M.Soliman
Witness to Counsel
Expert.witness@live.com
Our nation’s economic recession and foreclosure crisis, brought out some of the worst America has to offer. People who saw those at risk of losing homes to foreclosure, not as a tragedy, but as an opportunity, seemed to appear out of nowhere, looking to scam those in distress out of the little money they had left. There’s no way to know how many “scammers” there were, or are, out there, but recognizing that even one is one too many, the call to Congress to act to protect consumers was heard loud and clear.
This has always been an issue that has only one side; there’s never been a “pro-scammer” movement. The question has always been how to protect consumers, without putting the legitimate firms helping consumers out of business at the same time, and this debate intensified when the proposed new rules threatened to take lawyers out of the mix.
In the beginning, back in late February of 2009, when President Obama delivered his speech introducing the Making Home Affordable program, many believed that homeowners wouldn’t need to hire anyone to help them get their loan modified. As the President said, you could call your bank directly, or call a HUD counselor… simple as that.
By the middle of last summer, however, that notion had long since faded into distant memory for many homeowners. After trying what the president had suggested, sometimes for months, many distressed homeowners decided that they either needed or wanted to hire a lawyer to help them persuade their lender or servicer to modify their loan.
Most of the early proposals, at both state and federal levels, focused on eliminating up front fees, and that meant, even if you were a lawyer, you couldn’t be paid for all of the months of work involved when attempting to modify a loan, you could only send your bill once the loan was modified.
Clearly, the unintended consequence of such a rule would be that a distressed homeowner would no longer be able to hire an attorney when at risk of losing his or her home, because no attorney would, or could ever work for 6-12 months, and then hope to be paid once the loan was modified.
The State Bar of California task force has continued to argue that they’ve been investigating hundreds of lawyers for possible involvement in loan modification scams, and have already suspended some and gotten resignations from others. The task force maintains that there is more action to come, but the numbers are certainly not in the hundreds as the State Bar has implied. Their latest press release says:
“Besides the two involuntary inactive enrollments, the State Bar’s Office of Chief Trial Counsel has obtained the resignations of 13 attorneys involved in loan modification misconduct since creation of the Loan Modification Task Force in April 2009. Five loan modification trials are pending. Another 2,000 active investigations related to loan modification are being conducted.”
Carol Needham, who teaches professional responsibility at the Saint Louis University School of Law says:
“The question becomes whether such legislation is done with a scalpel, precisely going after the harm, or with the more blunt force of a cudgel. The financial reform bill can be like the health care reform bill, with a lot of unintended consequences.”
For a while it really seemed touch and go (you can find my latest article on the FTC’s proposed rule here), but finally it seems that the tides have changed, and cooler heads are prevailing. According to the ABA Law Journal:
“A growing list of more than a dozen state bars and the ABA have asked for changes in congressional legislation aimed at protecting consumers from financial fraud because it contains language so broad that the everyday work of lawyers in various practice areas would be swept into the web of federal regulators.”
The competing House and Senate bills that are now headed for conference committee both aim to regulate anyone involved in offering a “consumer financial product or service.” The House version exempts lawyers engaged in the practice of law, along with staff directly supervised by them, or “in matters incidental to the practice and within the scope of attorney-client relationship.”
The Senate version of the bill, however, provides no such exemption, and the ABA and state bars are now asking the U.S. Senate to add the same “practice of law” exemption as found in the House bill.
Thomas Susman, director of the ABA’s Governmental Affairs Office in Washington, D.C. had the following to say:
“We’re not asking them to exempt someone with a JD who sets up some sham-façade non-law business where people think they’re dealing with a lawyer but aren’t being protected by the legal disciplinary arm. When we talk to people on the Hill, they say that kind of activity is the problem. The Senate solution as crafted is much too broad and doesn’t address it.”
The House-Senate conference committee is scheduled to begin negotiating changes to the two bills on June 15, and expect to complete their work by the end of the month. The House bill, H.R. 4173 is called the Wall Street Reform and Consumer Protection Act of 2009 (PDF); Senate bill S. 3217 is called the Restoring American Financial Stability Act of 2010 (PDF).
But that’s not all. Whenever you have an issue this politically charged in an election year, you’re going to have more than one federal agency looking to make its mark on protecting the American consumer.
The U.S. Department of Housing and Urban Development, is proposing a rule that would define any lawyer helping clients negotiate loan modifications as a “loan originator” or “third-party loan modification specialist,” and the result would be newly required federal licensing and registration. This proposal, it’s worth noting, may also allow licensed real estate and mortgage professionals to become licensed and registered to assist homeowners with loan modifications.
And the FTC is proposing a rule, under the banner of Mortgage Assistance Relief Services, that would allow lawyers to represent homeowners seeking loan modifications, but would also establish a specific fee structure that lawyers would have to employ whenever helping clients renegotiate mortgages or avoid foreclosure.
And… the ABA says that it has asked both agencies to expand exemptions for lawyers engaged in the practice of law.
So, while it’s not a slam dunk, by any means, it does seem to me that the powers that be have finally come to understand that many homeowners do in fact need help when attempting to avoid foreclosure and obtain a loan modification.
It also seems, as I have always believed in my heart of hearts would be the case, that my country would not take away my ability to hire a lawyer to represent my interests when I feel I need one. And thank the good Lord for that. (At least not in an election year.)
Stay tuned to Mandelman Matters for updates and insight on the House and Senate Bills, and for updates on both the HUD and FTC proposals. Because when the law will have an impact on homeowners, Mandelman Matters will have an impact on the law.
The notion that nobody is going to approve of borrowers getting a free house is a myth. It isn’t up to anyone but the people who own those homes. If given the choice they would negotiate in good faith. Given no choice, they won’t pay.
Just Say NO. That is the battle cry of more and more people as they survey their situation. They were snookered by a false appraisal and “borrowed” money on “collateral” that wasn’t worth anywhere near what was told to them and confirmed by their “lender.” Steered into loopy loans by people whose “commission” grew with each added element of stupidity, they ended up with payments that they either can’t afford or simply refuse to pay.
We’ve written about strategic defaults before. Now it is the obvious choice for many homeowners who find that they can keep their homes months or years without making ANY payments. The servicers, aggregators and investment banks who are running this show had their own reasons for not modifying the loans down to true fair market value on reasonable market terms — as long as the loan is non-performing they make more money. Sounds counter-intuitive but nonetheless true.
Now enters the NY Times with a front page article that says what I have been saying for years — if the financial services industry doesn’t get their act together and do something smart like addressing REALITY, the people are going to take matters into their own hands. Their greed may land them in jail because when the smoke clears and thousands of these people end up with clear title to their property the investors are going to realize that it is not the servicer they should be suing so much as the investment banker who created this show.
In my view the only way for the investor to improve their outcome is by settling directly with borrowers. They will see far more money from homeowners who are motivated to keep their homes than they will be relying on an industry that is consumed with greed and gaming the system for every penny they can get.
If the investors as creditors don’t get engaged in this process their losses are going to mount. The only way they can plug the leak is by entering this three-ring circus and bring it to a halt. The notion that nobody is going to approve of borrowers getting a free house is a myth. It isn’t up to anyone but the people who own those homes. If given the choice they would negotiate in good faith. Given no choice, they won’t pay.
That litigation is starting to grow. In discovery the investor is going to find out that the investment banker made a profit, called a yield spread premium, the moment they bought a mortgage backed security which started a transaction that ended with a borrower signing a mortgage or deed of trust. The investors had no idea they were the start of the scheme. They presumed that the loans had been made and that someone in the line of securitization had been at risk when they approved the underwriting of the loan.
When the truth emerges that the investment banker was pocketing as much as 40% of the investments in mortgage backed securities, using the investor’s money to fund mortgages whose nominal value was 60% of the investment, and whose actual value was close to zero both for reasons of false appraisal, false ratings, etc., they may have something to say about it.
The Obama administration needs to give up its mythological belief that nobody would be that stupid and make policy and direct actions that start with giving in to reality. The people on Wall Street are just as stupid as anywhere else. Like a kid in candy store without parental controls, they scarfed down everything they could because they could.
——————————————————
May 31, 2010Owners Stop Paying Mortgages, and Stop Fretting
By DAVID STREITFELD
ST. PETERSBURG, Fla. — For Alex Pemberton and Susan Reboyras, foreclosure is becoming a way of life — something they did not want but are in no hurry to get out of.
Foreclosure has allowed them to stabilize the family business. Go to Outback occasionally for a steak. Take their gas-guzzling airboat out for the weekend. Visit the Hard Rock Casino.
“Instead of the house dragging us down, it’s become a life raft,” said Mr. Pemberton, who stopped paying the mortgage on their house here last summer. “It’s really been a blessing.”
A growing number of the people whose homes are in foreclosure are refusing to slink away in shame. They are fashioning a sort of homemade mortgage modification, one that brings their payments all the way down to zero. They use the money they save to get back on their feet or just get by.
This type of modification does not beg for a lender’s permission but is delivered as an ultimatum: Force me out if you can. Any moral qualms are overshadowed by a conviction that the banks created the crisis by snookering homeowners with loans that got them in over their heads.
“I tried to explain my situation to the lender, but they wouldn’t help,” said Mr. Pemberton’s mother, Wendy Pemberton, herself in foreclosure on a small house a few blocks away from her son’s. She stopped paying her mortgage two years ago after a bout with lung cancer. “They’re all crooks.”
Foreclosure procedures have been initiated against 1.7 million of the nation’s households. The pace of resolving these problem loans is slow and getting slower because of legal challenges, foreclosure moratoriums, government pressure to offer modifications and the inability of the lenders to cope with so many souring mortgages.
The average borrower in foreclosure has been delinquent for 438 days before actually being evicted, up from 251 days in January 2008, according to LPS Applied Analytics.
While there are no firm figures on how many households are following the Pemberton-Reboyras path of passive resistance, real estate agents and other experts say the number of overextended borrowers taking the “free rent” approach is on the rise.
There is no question, though, that for some borrowers in default, foreclosure is only a theoretical threat for a long time.
More than 650,000 households had not paid in 18 months, LPS calculated earlier this year. With 19 percent of those homes, the lender had not even begun to take action to repossess the property — double the rate of a year earlier.
In some states, including California and Texas, lenders can pursue foreclosures outside of the courts. With the lender in control, the pace can be brisk. But in Florida, New York and 19 other states, judicial foreclosure is the rule, which slows the process substantially.
In Pinellas and Pasco counties, which include St. Petersburg and the suburbs to the north, there are 34,000 open foreclosure cases, said J. Thomas McGrady, chief judge of the Pinellas-Pasco Circuit. Ten years ago, the average was about 4,000. “The volume is killing us,” Judge McGrady said.
Mr. Pemberton and Ms. Reboyras decided to stop paying because their business, which restores attics that have been invaded by pests, was on the verge of failing. Scrambling to get by, their credit already shot, they had little to lose.
“We could pay the mortgage company way more than the house is worth and starve to death,” said Mr. Pemberton, 43. “Or we could pay ourselves so our business could sustain us and people who work for us over a long period of time. It may sound very horrible, but it comes down to a self-preservation thing.”
They used the $1,837 a month that they were not paying their lender to publicize A Plus Restorations, first with print ads, then local television. Word apparently got around, because the business is recovering.
The couple owe $280,000 on the house, where they live with Ms. Reboyras’s two daughters, their two dogs and a very round pet raccoon named Roxanne. The house is worth less than half that amount — which they say would be their starting point in future negotiations with their lender.
“If they took the house from us, that’s all they would end up getting for it anyway,” said Ms. Reboyras, 46.
One reason the house is worth so much less than the debt is because of the real estate crash. But the couple also refinanced at the height of the market, taking out cash to buy a truck they used as a contest prize for their hired animal trappers.
It was a stupid move by their lender, according to Mr. Pemberton. “They went outside their own guidelines on debt to income,” he said. “And when they did, they put themselves in jeopardy.”
His mother, Wendy Pemberton, who has been cutting hair at the same barber shop for 30 years, has been in default since spring 2008. Mrs. Pemberton, 68, refinanced several times during the boom but says she benefited only once, when she got enough money for a new roof. The other times, she said, unscrupulous salesmen promised her lower rates but simply charged her high fees.
Even without the burden of paying $938 a month for her decaying house, Mrs. Pemberton is having a tough time. Most of her customers are senior citizens who pay only $8 for a cut, and they are spacing out their visits.
“The longer I’m in foreclosure, the better,” she said.
In Florida, the average property spends 518 days in foreclosure, second only to New York’s 561 days. Defense attorneys stress they can keep this number high.
Both generations of Pembertons have hired a local lawyer, Mark P. Stopa. He sends out letters — 1,700 in a recent week — to Floridians who have had a foreclosure suit filed against them by a lender.
Even if you have “no defenses,” the form letter says, “you may be able to keep living in your home for weeks, months or even years without paying your mortgage.”
About 10 new clients a week sign up, according to Mr. Stopa, who says he now has 350 clients in foreclosure, each of whom pays $1,500 a year for a maximum of six hours of attorney time. “I just do as much as needs to be done to force the bank to prove its case,” Mr. Stopa said.
Many mortgages were sold by the original lender, a circumstance that homeowners’ lawyers try to exploit by asking them to prove they own the loan. In Mrs. Pemberton’s case, Mr. Stopa filed a motion to dismiss on March 17, 2009, and the case has not moved since then. He filed a similar motion in her son’s case last December.
From the lenders’ standpoint, people who stay in their homes without paying the mortgage or actively trying to work out some other solution, like selling it, are “milking the process,” said Kyle Lundstedt, managing director of Lender Processing Service’s analytics group. LPS provides technology, services and data to the mortgage industry.
These “free riders” are “the unintended and unfortunate consequence” of lenders struggling to work out a solution, Mr. Lundstedt said. “These people are playing a dangerous game. There are processes in many states to go after folks who have substantial assets postforeclosure.”
But for borrowers like Jim Tsiogas, the benefits of not paying now outweigh any worries about the future.
“I stopped paying in August 2008,” said Mr. Tsiogas, who is in foreclosure on his house and two rental properties. “I told the lady at the bank, ‘I can’t afford $2,500. I can only afford $1,300.’ ”
Mr. Tsiogas, who lives on the coast south of St. Petersburg, blames his lenders for being unwilling to help when the crash began and his properties needed shoring up.
Their attitude seems to have changed since he went into foreclosure. Now their letters say things like “we’re willing to work with you.” But Mr. Tsiogas feels little urge to respond.
“I need another year,” he said, “and I’m going to be pretty comfortable.”
I’m probably partly to blame for this notion so I want to correct it. The goal is NOT to get your house for free, although that COULD be the result, as we have seen in a few hundred cases. The simple answer is “No Judge I am not trying to get my house for free, I’m trying to stop THEM from getting my house for free. They don’t have one dime invested in this deal and payments have been received by the real creditors for which they refuse to give an accounting.”
The obligation WAS created. The question is not who holds the note but to whom the note is payable, and what is the balance due on the note after a full accounting from the creditor.
So don’t leave your mouth hanging open when the Judge says something like that. Tell him or her that they have the wrong impression because they are getting misinformation from the other side which is trying to get a lawyer’s argument admitted as evidence. Tell him you want the deal you signed up for — including the appraised value that the lender represented to you at closing.
Don’t say you won’t pay anything. Offer to make a monthly payment into the court registry — not in the amount demanded, but for perhaps 25% of the amount demanded. Tell him you refuse to pay someone who never lent you the money, who is not on the closing documents and is relying on securitization documents which contain multiple conditions, many of which they have violated.
Tell the Judge you deny the default because you know they received third party payments and they refuse to allocate the payments to your loan, and they refuse to inform you or the Court as to whether these third party insurers and guarantors have equitable or legal rights of subrogation. Subrogation is taking the place of another person because you are the real party in interest.
“Why should I lose my house just because I didn’t pay them. The note isn’t payable to them. Even if they have an assignment, it violates the terms under which they are permitted to accept it, and even if they were permitted to accept it, it wold be on behalf of the true creditors who were the investors who advanced the funds and now could be anyone because of the transactions in which the investors were paid or settled.
“The question is not whether I made a payment, it is whether a payment is due after allocation of third party insurance, credit default swap and guarantee payments. Who are they to declare a default when they refuse to give a full accounting?”
“At the end of it all, the notion of the second stimulus was planted in the nation’s consciousness, and that was the goal. When, likely in a few months’ time, the topic resurfaces, there will be a recognition factor that will make it go down much more easily. It’s how you sell stuff, and how you sell ideas.”
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