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Had a client who kept getting foreclosure notices; but the foreclosure sales kept getting postponed. She finally got an eviction notice, so assumed the bank took back the house. Looked up records with the county and it turns out they never foreclosed, yet.....Folks, don't assume an eviction notice means the house got sold. Look into it - you might be getting kicked out of your own house...
Got 4 lawsuits in past month dealing w/certain banks suing borrower/homeowner for foreclosure, as opposed to just listing them for sale in newspaper for auction then selling them without court. Believe this is being driven more by investors, not banks, because sometimes the same bank will do a non-judicial foreclosure on other properties...Important that you negotiate with the bank to ensure that even though you might be getting sued for say, $300,000, that bank really just wants the property and does not intend to sell the property then go after you for the deficiency balance, and of course, if bank cannot by law seek the deficiency, you need to tell them that.
Just won an injunction against B of A stopping a wrongful foreclosure (bank rejectedloan mod application saying it wasn't sent when the application was indeed sent to them, twice); now the folks can stay in their ranch and at least enjoy the holidays.
Got an email from a new client; she and husb had hired another bankruptcy attorney in town to do the bankruptcy, but in the process of the bankruptcy their loan modification got approved. However, the bank wanted court approval of the modification prior to initiating the lower payments, new statements, etc. The attorney essentially said that was not his department and does not work on refinances (of course, this was a loan mod not a refi). Then I came into the picture to provide assistance. I'm not saying a bankruptcy attorney is required to assist in all aspects of issues that come up nowadays with bankruptcy, but at a minimum I always explain the process, inform the client of where he's at and what needs to be done. Depending on the task, I'll either do it for free or for a modest charge. But with banks consistently looking for ways to deny a loan modification or to change their mind after the fact, a little TLC goes a long way.
Went to a record 7 bankruptcy hearings on Tue, and 1 yesterday. Still looking like about 150 filings per month in Central OR. So that's 1800 in a year, and the filings have been fairly strong/consistent since 2008. 3 main causes that I have seen: unemployment, mortgages w/payments that have gone up + the house value is way upside down, and out of control medical costs...
Bend has lots of self-employed folks, after all the unemployment rate is horrible here. Many of those with their own businesses have needed to file for bankruptcy. But note, even if your business is held in an LLC or corp. and the LLC or corp. is not filing for bankruptcy, the assets of the company could still be at risk in a bankruptcy. Too much detail to explain here, but I've seen the trustee take away companies or force the debtor to pay cash to retain their companies. So talk to your bankruptcy attorney about possible complications in a bankruptcy when self-employed.
On a recent lawsuit vs. a major lender, I got the restraining order stopping the foreclosure a couple of weeks ago...Was set to go to a show cause hearing next Mon to get an injunction freezing the foreclosure through trial. But bank's attorney just emailed and requested a voluntary foreclosure freeze plus initiated discussions about a loan modification. That is what the homeowners wanted all along. So we will move forward in good faith to work on keeping the homeowners in their home. Learning point: Easier to fight banks to enforce or obtain a loan mod than it is to get big money damages. After all, the homeowners are trying to get some relief - but are still willing to pay and retain the principal balance.
I'd say roughly the same as last year. About 150+ per mo. chapter 7s filed ,in Central OR and perhaps a dozen chapter 13s per mo. I see no easing off of foreclosures or bankruptcies anytime soon here.
Bank lost the borrower's modification file 16 times. Borrower had to resend the same modification file in 16 times. Bank denies the modification. Borrower tries again few months later. Bank says borrower was approved last year. Borrower asks why wasn't she notified? Bank said they did, but borrower never got paperwork. Borrower asks for replacement paperwork and bank says no, too late. Filed a lawsuit and yesterday got the temporary restraining order to stop the foreclosure set for next week. Need to get ready for the injunction hearing....
Follow-up to the bank that agreed to and was taking out the mortgage payments through the borrower's checking account, then stopped doing the withdraws, then declared the mortgage in default. When my client found out she offered to pay the amount to catch up but refused to pay the late fees since the bank caused it. Bank refused to and foreclosed. Then last week they filed an eviction action against her. I sued the bank and am presently trying to get a restraining order to stop the foreclosure sale.
Why do the big shots refuse to talk about bankruptcy or walking away from the mortgage as an option? Sometimes it must be done. There are those times to stick it out, but not every time. Talk to friends, family, and a legal expert to best know if its your time.
Saw an article in the paper today about dealings between the bank industry and an industry-friendly group that lobbys congress. Topic was a possible deal to prohibit many anti-foreclosure type lawsuits against banks if banks will reduce principal on many mortgages. Don't know how it will play out yet, but always knew banks were too powerful to permit the lawsuits to go on forever, even if deserved (which many of them are). Despite what you're hearing in the media lately, its not about democrats vs. republicans, its about what the banks and their brothers on wall st. want.
Bank lost my clients' file 16 times; they wouldn't return calls, said the loan modif was approved but only after the time to accept it had expired - so then it was too late. Also bank suggested a temporary loan mod, took one payment, then changed their mind and refused to take 2nd payment then closed the file and said the foreclosure is back on after all, in just 10 days. So after consultation w/the borrowers, I just filed suit against the big bank. My 7th lawsuit vs. a bank. Will keep you posted!
Go this question today from a new client. No, you don't have to be delinquent on accounts to file for a bankruptcy. That's usually the case, but I've had cases where it was obvious that given the income and debt picture, the financial picture was not stable or sustainable. In that type of case, some file without waiting for the creditor phone calls, etc. and don't linger with it. This method generally results in less of a credit hit and therefore a quicker return to credit scores of 650+. (By the way, I heard from a news radio show that over 60% of the country has a credit score below 650). Yes I can believe that.
I've recently had 2 cases where the second mortgage got settled out through negotiation. About 30% of the original balance, plus the borrower did not have to short sale or let the house foreclose to get it done (pretty rare). Typically banks will settle, but want the house liquidated in the process (short sale or foreclosure). But if you have the time and want to keep the house, might be worth a try (unless you are too wealthy-then you would not be able to show hardship).
Looks like from review of several cases and after multiple consultations, short sales are becoming more widely adopted by banks. Short sales are a good way to avoid a foreclosure or perhaps a bankruptcy. Banks/servicers still take too long before issuing approvals, although its not nearly as lengthy or full of errors that you'll get trying a loan modification. BEFORE closing on a short sale transaction, make sure you check with a legal professional before signing anything....
You've probably seen articles commenting about several cases where lenders who foreclosed (or tried to) have had their foreclosures halted in state court, federal court or bankruptcy court. This is because in many states, courts have held that a lender cannot foreclose without first showing the chain, or history, of where who owns the trust deed and note signed by you, the borrower. After all, it would be grossly wrong for a bank to foreclose without proof that they have the right to foreclose. For example, did they buy the debt/account? Should they not need to prove that? Although it sounds like a technicality, it is real and courts in Oregon appear so far to be accepting this theory, at least so far as to issue TROs, injunctions and rule against banks that attempt to dismiss these types of cases. Prediction? We still need to see at least one written opinion from a court arising from a trial. When I hear of one I'll let you know.
Remember that in a chapter 7 bankruptcy, if you're expecting a tax refund the bankruptcy trustee will take it from you when you file, unless you've already spent it. Filing an extension will not help you.
Bank continually failed to apply entire payment to principal and interest; instead it took some of the pmt and applied it to a "suspense account." Then charged monthly late fees, and eventually put house in foreclosure. Took a year after suing bank in federal court, but finally settled it. Homeowners really wanted to keep the house - sometimes not worth keeping the house, but if good reasons, I'll fight it.
Bank verbally promises loan mod, very detailed over the phone (need to get that recording), then changes mind, doesn't tell homeowners and tries to foreclose w/out notice. Homeowner found out by accident that he was going to be thrown out in days. Got bank to voluntarily freeze sale but took a lawsuit to do it. Am trying now to get loan mod all over again per bank's request but if fails, litigation will continue.
Have clients who got a loan mod in writing, but when bank sent paperwork, they made the first pmt due date prior to the date they already had rec'd the paperwork - so if they signed it they'd be immediately in default. Bank said they'd correct it but instead threw them into foreclosure. Got an injunction to freeze foreclosure sale, no trial date set yet hoping we can settle.
Lady had her acct w/bank set up to have pmts taken automatically out of her checking acct. For no known reason, bank stops taking the pmts out of checking acct, then forecloses on house. Lady was unaware, is old, has terminal cancer and difficulty reading mail. Bank now threatening to evict the lady. No decision yet, but I think she should go after the bank, stop the eviction and sue for damages.
Sued bank for sending out loan mod papers to wrong address, so caused delay, so when my client sent back papers arrived late now bank is denying loan mod, threw him into foreclosure. I stopped foreclosure w/court help but still fighting. Bank, not borrower, caused the delay then denied the mod.....
Sued a bank for putting my client in a worse position with the new loan mod than his previous loan. Scam. They transferred it out of state court and moved it to federal court to try to dump it w/paper shuffling to avoid trial. We'll see; fighting hard.
Just got through mtg w/clients today; realtor advised him to do a short sale, when it resulted in short sale deficiency of $50,000 owed by clients. Now clients faced with whether to go bankrupt or go after realtor for wrong advice. Not a good scenario for anyone - some realtors need more education, and the good ones advise their client to see an attorney, to be sure.
Usually first mortgage forecloses, and in the process forecloses out the second. (Unless you default on both; second may file suit against you on the note prior to foreclosure by the first). But if there is equity in the house, after the balances on the two mortgages, even if not "complete" equity (i.e, not enough equity to completely; only partially paying off the loans) then the second might choose to foreclose instead of the first. If so, the second will likely pay off the first at auction then pay itself what it can. This scenario might work to the homeowner's benefit in that it may result in no deficiency owed by the homeowner (or former homeowner's) benefit. See a lawyer on this scenario.
According to Housing Wire Update, "The average age of a loan in foreclosure hit 492 days in October, and appears as if it will only loom ever-longer in the months ahead." My experience in Central Oregon is that it takes a little less; about one year or less.
I've sued Chase Bank, Onewest Bank, and Wells Fargo Bank. Each for a variety of reasons, but all related to wrongdoings against borrowers in connection with loan modifications, servicing, and foreclosure. I don't advise ever suing a multi-billion dollar institution without giving it much thought. And there are instances in which it is a suitable choice.
Quick Examples: Lenders should not post the wrong payment amounts on your loan, or throw your payment into a "suspense account." Lenders should not approve a loan modification, then either change their mind, or issue a deadline to comply with the paperwork already having expired before getting the paperwork. Lenders should not misrepresent borrowers on the terms of a refinance or loan modification.
What about when the lender keeps losing the paperwork and stalling on the modification? Can that win a lawsuit? Maybe, or perhaps provide for an injunction to hold off the foreclosure sale
I called B of A to make a payment, and although I never asked for loan assistance, the representative asked me if I reside in the house. Thought that was an unusual question as I was simply making a payment, not requesting a short sale, not going into bankruptcy etc.
Sounds like B or A (and perhaps other large banks) are getting more savvy and since the calls are recorded, are establishingwho does or who does not occupy the house which is the basis for loan assistance.
Because it varies from state-to-state whether, in a short sale, the bank will choose to sue the homeowner for the deficiency.
A Chapter 13 bankruptcy is much more expensive that a Chapter 7. Although it is appropriate for certain situations, you should know that a Chapter 13 will require a "plan." The plan must be approved by the trustee - and he probably won't approve it if you're unemployed - he wants to see steady income to show that you can perform on the Chapter 13 repayment plan.
If you decide to pay up on the late amount owed on your first mortgage to avoid foreclosure, make sure you call the foreclosure trustee (name and number listed on the notice of sale given to you) to confirm the exact balance to pay. Also confirm the address. You also must pay this prior to 5 days before the foreclosure date - or the lender can reject your payment and foreclose. (Tip - send via fedex or wire it)
Yes, in most cases. Most people I come across believe that filing a bankruptcy (Chapter 7 or Chapter 13) means you must dump the house. That's a misnomer. The real question, at least in these times, is whether you should keep the house.
In these days of homes that are upside down, know that, in most cases, it is highly likely that right when the first mortgage lender forecloses, the second mortgage lender will be coming after you. (sometimes even before the foreclosure). In those cases where you are the target of a second mortgage lender, however, oftentimes they will negotiate the remaining balance. Different lenders vary greatly on the amount that they will settle upon. It is best to have an experienced and knowledgeable negotiator undertake that task; for example a real estate attorney.
What's now a million-dollar question was only a 25-cent question yesterday, because everyone already knew the answer: How long does it take for your credit scores to recover from a short sale or a foreclosure? Years, right? These incidents remain on your credit reports for seven years and short sales are reported as either charge-offs or settlements. Those two events, as well as foreclosures, are all seriously negative and could significantly damage your credit scores for many years.
So why has this suddenly become a topic of debate, discussion, and conflicting answers? Because in March 23rd’s American Banker, Barrett Burns, the CEO of credit score provider VantageScore Solutions claimed, "...it can take borrowers as little as nine months to repair their credit score after a short sale or foreclosure."
Wow, that’s great news! Or is it? I found this difficult to believe, so I interviewed Craig Watts from FICO – credit score inventor, and VantageScore’s prime competition – to get the company’s input on how long it takes to repair your credit scores after such an event. Here’s the full transcript of my interview, unedited.
Ulzheimer: Is FICO willing to go on the record discussing the impact of a foreclosure and/or a short sale on a consumer’s credit score?
Watts: "FICO has consistently found that past payment history is the single most predictive category of information when we empirically develop credit scoring models using consumer credit histories. As an example, we recently looked at a sample of about 10 million credit reports representing a highly diverse U.S. population. We examined that group's most recent, twelve-month performance window. We found a default rate of 2.9% for the subset of all consumers with a clean credit record, and a default rate of 49% for the subset of all consumers who had had a recent foreclosure. In other words, consumers who recently experienced a foreclosure were about 17 times more likely to default on a credit obligation in the next 12 months than were people with a clean credit record. Obviously, recent credit defaults are vitally important when one is objectively assessing default risk."
Ulzheimer: How long does it take for a consumer’s score to recover after a short sale or foreclosure? And by recover, I mean fully recover.
Watts: "A consumer with a foreclosure or similar default on her credit report can expect her score to begin recovering after a couple of years if she consistently pays all her bills on time, keeps any credit card balances low, and takes on new credit only when needed. As the default event ages on her credit report its influence on her score will diminish, until the credit bureau removes the record from her file after seven years."
The bottom line is this: You can't fully repair your credit score in as little as nine months unless you can convince the credit bureaus to remove the items from your credit reports. And as long as the items are accurate they will remain for seven years. Your scores will begin to recover in time as the item gets older and older and loses predictive value, but unfortunately it won’t happen after only nine months.
John Ulzheimer – Credit scoring and credit reporting expert and author, John is the President of Consumer Education for Credit.com. Formerly with Equifax and Fair Isaac, John shares his unique insight of the inner workings of credit scoring models and the credit reporting industry on CreditBloggers.com.
Blurb from Bloomberg.com. "Banks may be forced to resort to a remedy thethey've been trying to avoid - principal reductions - as another wave of foreclosures looms and payments on risky loans rise, Bloomberg BusinessWeek magazine reports in the Jan. 18 issue....
Check out this link: www.housingwatch.com/2010/01/25/the-new-mortgage-revolution-walk-away/ The author views walking away strictly as a business decision, and invites the reader to set aside "morality" concerns. Worthwhile reading, although there's no discussion about the risks/consequences of this option, which vary from state to state.
Met a client - no, I do not recommend having another child just to have enough members in the household to meet the income test in a Chapter 7 bankruptcy. I would never make such a recommendation. If you want to have another child for other reasons, go for it. What if the child is not born at the time you file the bankruptcy? I'm not going there.
I just got done meeting w/a client who can't get her loan modification accomplished on her own. The lender keeps losing her file and she keeps re-faxing it. They always ask her the same questions again and again. She wanted to simply move out of the house, live with a friend and let the house go to foreclosure. I advised her that under Oregon law, if she does not occupy the house at the time foreclosure commences she could be susceptible to paying the deficiency, or the difference between what she owes and what the house sells for. She will now remain in possession to comply with the law and minimize her chances of paying that deficiency.
John Ulzheimer – Credit scoring and credit reporting expert and author, John is the President of Consumer Education for Credit.com. Formerly with Equifax and Fair Isaac, John shares his unique insight of the inner workings of credit scoring models and the credit reporting industry on CreditBloggers.com.