What Homeowners Must Know About Filing Bankruptcy Without a Lawyer: Chapter 13 Issues

16 Wednesday Sep 2020

Posted by BNG in Bankruptcy, Borrower, Federal Court, Foreclosure, Foreclosure Defense, Judicial States, Non-Judicial States, Pro Se Litigation, Your Legal Rights

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It is possible to file bankruptcy without an attorney, and Chapter 13 cases present even more challenges for pro se filers than Chapter 7 cases. More forms, more calculations, and a payment plan must be approved by a Chapter 13 trustee and a judge.

Means Test Forms

Chapter 13 debtors must file two forms that together form the Means Test for a Chapter 13 case.

The first form is the Chapter 13 Statement of Your Current Monthly Income and Calculation of Commitment Period, Official Form B122C-1. This calculates your average monthly income and uses that figure to determine whether your case should last three years or as long as five years. In short, if your family income is less than the median for your state, your plan needs to last only three years. If your family income is more than the median, it needs to last five years. The median is the point at which 50 percent of families fall above and 50 percent fall below.

The second form is the Chapter 13 Calculation of Your Disposable Income, Official Form B122C-2 This calculates the difference between your income and your reasonable and necessary monthly expenses. If your income is higher than your expenses, you have disposable income. At least a part of that disposable income will be included in your Chapter 13 payment and will be used to pay allowed claims for unsecured debts like credit cards and medical bills.

While your income may be pretty easy to determine for the first form, there may be room for disagreement on whether certain expenses are reasonable or not on the second form. Some are set out for you in the calculation, based on national or regional averages, but others can be customized based on your particular circumstances. Getting those amounts approved by a Chapter 13 trustee can be the trickiest part of a Chapter 13 case.

Chapter 13 Plans

Once the income and expense calculations have been made and the commitment period has been determined, a payment plan can be calculated. The payment plan will include amounts for

disposable income from Official Form B122C-2.
arrearages owed to mortgage creditors
priority debts like back taxes
arrearages owed to car creditors
attorneys fees, if being paid through the plan
administrative fees to the Chapter 13 trustee
value of non-exempt assets

In some districts, known as conduit jurisdictions, debtors are required to make their entire house payment through a Chapter 13 trustee, not just an amount to cover arrearages. Studies have shown that debtors who make house payments this way are more likely to have a successful Chapter 13 plan.

It is possible to include your entire car payment in the plan and even adjust your interest rate or the amount of the principal you will repay if your car loan was at least 2 ½ years old when you filed the bankruptcy case.

Plan forms are usually specific to the jurisdiction in which a case is filed. Those can be found on the website for the court or the website for the Chapter 13 trustee to which the case has been assigned.

When Homeowner’s good faith attempts to amicably work with the Bank in order to resolve the issue fails;

If you are a homeowner already in Chapter 13 Bankruptcy with questionable liens on your property, you needs to proceed with Adversary Proceeding to challenge the validity of Security Interest or Lien on your home, Our Adversary Proceeding package may be just what you need.

Homeowners who are not yet in Bankruptcy should wake up TODAY! before it’s too late by mustering enough courage for “Pro Se” Litigation (Self Representation – Do it Yourself) against the Lender – for Mortgage Fraud and other State and Federal law violations using foreclosure defense package found at https://fightforeclosure.net/foreclosure-defense-package/ “Pro Se” litigation will allow Homeowners to preserved their home equity, saves Attorneys fees by doing it “Pro Se” and pursuing a litigation for Mortgage Fraud, Unjust Enrichment, Quiet Title and Slander of Title; among other causes of action. This option allow the homeowner to stay in their home for 3-5 years for FREE without making a red cent in mortgage payment, until the “Pretender Lender” loses a fortune in litigation costs to high priced Attorneys which will force the “Pretender Lender” to early settlement in order to modify the loan; reducing principal and interest in order to arrive at a decent figure of the monthly amount the struggling homeowner could afford to pay.

If you find yourself in an unfortunate situation of losing or about to lose your home to wrongful fraudulent foreclosure, and need a complete package that will show you step-by-step litigation solutions helping you challenge these fraudsters and ultimately saving your home from foreclosure either through loan modification or “Pro Se” litigation visit: https://fightforeclosure.net/foreclosure-defense-package/

If you have received a Notice of Default “NOD”, take a deep breath, as this the time to start the FIGHT! and Protect your EQUITY!

If you do Nothing, you will see the WRONG parties WITHOUT standing STEAL your home right under your nose, and by the time you realize it, it might be too late! If your property has been foreclosed, use the available options on our package to reverse already foreclosed home and reclaim your most prized possession! You can do it by yourself! START Today — STOP Foreclosure Tomorrow!

What Borrowers Must Know About Voiding Liens in a Mortgage

06 Sunday Oct 2019

Posted by BNG in Appeal, Bankruptcy, Banks and Lenders, Borrower, Case Laws, Case Study, Federal Court, Foreclosure, Foreclosure Crisis, Foreclosure Defense, Fraud, Judicial States, Legal Research, Litigation Strategies, Loan Modification, Mortgage fraud, Mortgage Laws, Non-Judicial States, Note - Deed of Trust - Mortgage, Pro Se Litigation, Real Estate Liens, State Court, Trial Strategies, Your Legal Rights

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There are numerous methods for voiding questionable liens in any given mortgage. In this post, we’ll discuss an interesting decision by the U.S. Court of Appeals for the Ninth Circuit in Bankruptcy Adversary Proceeding.

This decision from the U.S. Court of Appeals for the Ninth Circuit poses a serious threat to mortgage companies that service mortgages of chapter 13 debtors. Mortgage servicers should be aware of the case’s implications and adjust their internal case monitoring procedures as necessary.

Consider a common situation. A borrower files a chapter 13 bankruptcy case, and her mortgage servicer files a proof of claim for the mortgage balance. The borrower then objects to the proof of claim based on some purported technicality: the signature was forged, the endorsement was improper, the servicer lacks standing to enforce the note, etc. For whatever reason, the mortgage servicer does not respond to this objection, and the claim is disallowed by default.

When this happens, the borrower will often attempt to leverage a favorable settlement, like a mortgage modification, by filing a lawsuit to void the mortgage under 11 U.S.C. § 506(d). This provision allows a bankruptcy court to void a lien if the lien secures a claim that is not “allowed.” Because the mortgage was “disallowed” by default due to the mortgage servicer’s failure to respond, this statute theoretically allows the court to void the mortgage altogether.

Courts generally do not void mortgages that are substantively valid but were disallowed because of a default. The most common solution in these situations is a settlement and a motion to reconsider the disallowance under 11 U.S.C. § 502(j). Bankruptcy courts may grant these motions for “cause” at their discretion, which is typically satisfied if the mortgage servicer can prove the substantive validity of the mortgage. See generally In re Oudomsouk, 483 B.R. 502, 513-14 (Bankr. M.D. Tenn. 2012). This works to everyone’s advantage: the mortgage servicer gets paid through the bankruptcy, and the debtor avoids the risk of post-bankruptcy foreclosure if the lien’s validity is ultimately upheld after the case concludes.

The decision of the U.S. Court of Appeals for the Ninth Circuit in In re Blendheim may change this result. 2015 WL 5730015 (9th Cir. Oct. 7, 2015). In Blendheim, the debtors owned a condominium with two mortgages. After filing chapter 7 and obtaining a discharge of their unsecured debts, the debtors immediately filed a chapter 13 case to restructure their mortgages on the condominium (this process is known as a “chapter 20”). HSBC, the senior servicer, filed a proof of claim for the senior mortgage, but the debtors objected because (a) HSBC attached only the deed of trust, and not the promissory note, to the proof of claim, and (b) one of the signatures on the note was purportedly forged.

For reasons unknown, HSBC did not respond to the objection, and the bankruptcy court entered an order disallowing HSBC’s claim by default. Five months later, the debtors brought an adversary proceeding to void the mortgage under 11 U.S.C. § 506(d). Almost eighteen months after the bankruptcy court disallowed HSBC’s claim, HSBC filed a motion to reconsider the disallowance. HSBC also challenged the debtors’ attempt to void the mortgage because the disallowance was not actually litigated; it was the result of a default. The bankruptcy court disagreed, finding that (a) HSBC had no good reason for failing to respond to the claim objection, and (b) the statute plainly permitted lien avoidance in these circumstances. After the bankruptcy court confirmed the debtors’ plan, which provided for payment of only the junior mortgage, HSBC appealed.

On appeal, HSBC raised three primary issues. First, it argued that Section 506(d) should not operate to void its mortgage, notwithstanding the plain language of the statute, when the order disallowing the claim was not actually litigated but was based on a default. Second, it argued that even if the lien were properly voided under Section 506(d), the result could not be permanent because the debtors, having recently received a discharge in their chapter 7 case, were not eligible for a discharge in their chapter 13 case. Third, it argued that by losing its lien because of a default order in the bankruptcy case, as opposed to a formal lawsuit, it was denied due process.

The court disagreed with HSBC on each issue. First, it held that lien avoidance was appropriate. HSBC cited cases where courts refused to void a mortgage when a claim was disallowed for being filed late. The court distinguished these cases, holding that a creditor who files a late proof of claim is not “actively participating in the case” and therefore cannot have its state law lien rights impacted. See generally Dewsnup v. Timm, 502 U.S. 410, 418-19. But when a creditor timely files a proof of claim then willfully fails to respond to the debtors’ objection to the claim, the situation is fundamentally different. According to the court, the Bankruptcy Code plainly allows permanent lien avoidance when a creditor, like HSBC, “just sle[eps] on its rights and refuse[s] to defend its claim.” Blendheim, 2015 WL 5730015, at *11.

Next, the court addressed HSBC’s second argument and held that lien avoidance was appropriate even though the debtors were not eligible for a discharge. Acknowledging a split of authority, the court clarified that discharge affects only personal liability, not the in rem rights of creditors, so the cases on which HSBC relied were distinguishable. Nothing in the Bankruptcy Code prohibits lien avoidance just because a borrower has no right to a discharge.

Finally, the court held that HSBC’s due process was not offended. HSBC received notice of the claim objection and had ample time to respond. Its failure to do so, while fatal to its lien, did not violate its due process rights.

What This Means for Mortgage Creditors

The Blendheim case may have serious implications for mortgage creditors. This situation is not an outlier: mortgage servicers commonly fail to respond to claim objections. his may be because of the quick deadline to respond to these objections or the use of separate legal counsel for handling administrative functions in bankruptcy versus defending adversary proceedings. Historically, when a claim is disallowed based on a creditor’s failure to respond to a claim objection, bankruptcy courts will grant a reconsideration motion under Section 502(j) if the creditor can prove the substantive validity of the mortgage.

After Blendheim, the result may be different. The Blendheim court, after all, did not seem to care about the underlying validity of HSBC’s claim. Instead, it focused on HSBC’s failure to respond without a good reason.

How does this Affect Mortgage Creditors

Mortgage servicers should be aware of this decision and should make sure that they are closely following the dockets of cases involving their borrowers in bankruptcy. If they don’t, they risk losing their mortgage lien, if any, altogether.

CASE STUDY: HSBC v. BLENDHEIM

[The views expressed in this document are solely the views of the Author. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance]

When Homeowner’s good faith attempts to amicably work with the Bank in order to resolve the issue fails;

If you have received a Notice of Default “NOD”, take a deep breath, as this the time to start the FIGHT! and Protect your EQUITY!

How Homeowners Can Set Aside Foreclosure Sale

06 Sunday Oct 2019

Posted by BNG in Banks and Lenders, Borrower, Federal Court, Foreclosure, Foreclosure Crisis, Foreclosure Defense, Fraud, Judgment, Judicial States, Litigation Strategies, Mortgage fraud, Mortgage Laws, Non-Judicial States, Note - Deed of Trust - Mortgage, Pleadings, Pro Se Litigation, State Court, Trial Strategies, Your Legal Rights

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What are the Reasons a Foreclosure Sale May Be Set Aside

Generally, to set aside a foreclosure sale, the homeowner must show:

– irregularity in the foreclosure process that makes the sale void under state law
– noncompliance with the terms of the mortgage, or
– an inadequate sale price that shocks the conscience.

Sometimes homeowners are not aware that a foreclosure sale has been scheduled until after it has already been completed. Even if your home has been sold, there are some instances where you might be able to have the foreclosure sale invalidated, though this is uncommon. This post will discuss how to set aside a foreclosure sale and the circumstances that might warrant it.

Irregularity in the Foreclosure Process

State statutes lay out the procedures for a foreclosure. If there are irregularities in the foreclosure process—meaning, the foreclosure is conducted in a manner not authorized by the statute—the sale can potentially be invalidated.

Some examples of irregularities in the foreclosure process are:

The loan servicer does not send notice to the borrower.
A state statute requires notice by advertising the sale in a newspaper, but the servicer does not place the advertisement.
The foreclosing lender did not get an assignment of the mortgage.

Example. In U.S. Bank v. Ibanez, the Massachusetts Supreme Judicial Court invalidated two foreclosure sales where the mortgages were assigned to the lender after the completion of the foreclosure sale. The court decided that the foreclosures were void because the lenders lacked legal authority to foreclose.

However, in some states, courts are reluctant to set aside a foreclosure sale based upon violations of foreclosure statutes unless the violation resulted in actual prejudice (harm) to the homeowner. For instance, the homeowner may have to show that the lender’s failure to follow the statutory requirements chilled the bidding at the foreclosure sale and, as a result, the homeowner was liable for a larger deficiency judgment.

Noncompliance With Terms of the Mortgage

If the lender or servicer fails to comply with the terms of the mortgage contract, this may constitute sufficient reason to set aside a foreclosure sale.

Example. Many mortgages and deeds of trust require that the lender or servicer send the borrowers a breach letter giving them 30 days to cure the default before starting a foreclosure. If the servicer doesn’t send a breach letter, this may provide grounds for invalidating the foreclosure.

Inadequacy of Sale Price

Inadequacy of sale price might justify setting aside a foreclosure sale if the price is so low that it “shocks the conscience” of the court. It is often difficult to get a sale set aside on this basis. Usually to get a sale invalidated for inadequacy of sale price, you will also need additional circumstances that warrant voiding the sale.

For instance, courts are more likely to set aside a sale if there is an inadequate sales price combined with:

some irregularity (such as if the sale was advertised to take place at 3:00 p.m., but was actually held at 11:00 a.m.), or
unfairness (like if the lender re-sold the property for a much higher price right after the foreclosure sale, which demonstrates that it could have received a higher price at the foreclosure sale).

Though keep in mind that some courts might be hesitant to void the sale unless the violation resulted in actual prejudice to the homeowner.

How to Set Aside the Foreclosure Sale

The procedures to set aside a foreclosure sale depend on whether the sale was judicial (where the lender forecloses through the state court system) or nonjudicial (which means the lender does not have to go through state court to get one).

Setting Aside a Sale in a Judicial Foreclosure

Attempting to invalidate the sale in a judicial foreclosure can typically be done in the following ways, depending on state law:

If the foreclosure case stays open through completion of the sale process, then you can raise an objection to the legitimacy of the sale in that case.
If the state judicial process terminates once the foreclosure judgment is entered (and not appealed), then you must either file a motion to reopen the case or file a separate action to void the sale.

The actual process is generally determined by statute, rule, or case law.

Setting Aside a Sale in a Nonjudicial Foreclosure

If the property was foreclosed non-judicially, the homeowner will usually have to file a lawsuit in state court to void the sale. It may also be possible in some instances to file bankruptcy and ask that the sale be set aside as part of the bankruptcy case.

There are a few nonjudicial foreclosure states that require a court to confirm the sale. In those states, the homeowner can sometimes raise objections to the sale in the confirmation process. However, in some states the confirmation process is limited to determining whether or not the property sold for fair market value at the foreclosure sale and the court will not review other issues.

What Happens if the Sale Is Set Aside?

If the foreclosure sale is set aside as void, title to the property is typically returned to the homeowner while the mortgage and other liens generally are re-established. However, if the property has been resold to another party following an invalidated sale, some state statutes provide that the subsequent sale to a good faith purchaser eliminates the foreclosed homeowner’s right to challenge the sale on procedural grounds. In these types of cases, the homeowner might be able to seek damages against the lender or servicer.

The reasons that justify, as well as, the procedures for, invalidating a foreclosure sale are complicated. So, if you are considering trying to set aside a foreclosure sale, the earlier you begin the fight using the content found within our package, the better chance of succeeding.

When Homeowner’s good faith attempts to amicably work with the Bank in order to resolve the issue fails;

Home owners should wake up TODAY! before it’s too late by mustering enough courage for “Pro Se” Litigation (Self Representation – Do it Yourself) against the Lender – for Mortgage Fraud and other State and Federal law violations using foreclosure defense package found at https://fightforeclosure.net/foreclosure-defense-package/ “Pro Se” litigation will allow Homeowners to preserved their home equity, saves Attorneys fees by doing it “Pro Se” and pursuing a litigation for Mortgage Fraud, Unjust Enrichment, Quiet Title and Slander of Title; among other causes of action. This option allow the homeowner to stay in their home for 3-5 years for FREE without making a red cent in mortgage payment, until the “Pretender Lender” loses a fortune in litigation costs to high priced Attorneys which will force the “Pretender Lender” to early settlement in order to modify the loan; reducing principal and interest in order to arrive at a decent figure of the monthly amount the struggling homeowner could afford to pay.

If you have received a Notice of Default “NOD”, take a deep breath, as this the time to start the FIGHT! and Protect your EQUITY!

If you are a homeowner already in Chapter 13 Bankruptcy and needs to proceed with Adversary Proceeding to challenge the validity of Security Interest or Lien on your home, Our Adversary Proceeding package may be just what you need.

What Homeowners Should Know About Foreclosure Defense

10 Friday May 2019

Posted by BNG in Banks and Lenders, Case Study, Credit, Federal Court, Foreclosure, Foreclosure Crisis, Foreclosure Defense, Fraud, Judicial States, Loan Modification, Mortgage fraud, Mortgage Laws, Non-Judicial States, Pro Se Litigation, State Court, Your Legal Rights

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Over the past few years, a growing number of homeowners in the foreclosure process have begun to fight back, by stalling foreclosure proceedings or stopping them altogether. The legal strategy employed by these homeowners is known as foreclosure defense.

Since 2007, nearly 4.2 million people in the United States have lost their homes to foreclosure. By early 2014, that number is expected to climb to 6 million. Historically, the legal process of foreclosure, one that requires a homeowner to return his or her house to a lender after defaulting on a mortgage, has tilted in favor of the banks and lenders — who are well-versed in the law and practice of foreclosure.

The simplest way to avoid foreclosure is by modifying the mortgage. In a mortgage modification, the homeowner convinces the lender to renegotiate the terms of the mortgage in order to make the payments more affordable.

A mortgage modification can include:

A reduction or change in the loan’s interest rate.
A reduction in the loan’s principal.
A reduction or elimination of late fees and penalties for non-payment.
A reduction in your monthly payment.
Forbearance, to temporarily stop making payments, or extend the time for making payments.

The goal of the foreclosure defense strategy is to prove that the bank does not have a right to foreclose. The chances of success rest on an attorney’s ability to challenge how the mortgage industry operates. The strategy aims to take advantage of flaws in the system, and presumes illegal or unethical behavior on the part of lenders.

Foreclosure defense is a new concept that continues to grow alongside the rising tide of foreclosure cases. While some courts accept foreclosure defense arguments, others find them specious and hand down decisions more beneficial to banks than to homeowners.

A growing number of victories by homeowners in state and federal courts have altered the foreclosure landscape dramatically, giving optimism to tens of thousands of other homeowners in similar situations. And because many of America’s large banks have acknowledged unorthodox, unaccepted or even illegal practices in the areas of mortgages, loan modifications and foreclosures, they inadvertently have given homeowners additional ammunition with which to fight.

Foreclosure Defense Varies by State

A major strategy of foreclosure defense is to make a bank substantiate clear chains of title for a mortgage and a promissory note. If any link in either chain is questionable, it can nullify a lender’s ability to make a valid claim on a property.

The foreclosure process varies somewhat from state to state, depending on whether your state uses mortgages or deeds of trust for the purchase of real property. A mortgage or deed of trust outlines a transfer of an interest in a property; it is not, in itself, a promise to pay a debt. Instead, it contains language that gives the lender the right to take the property if the borrower breaches the terms of the promissory note.

If you signed a mortgage, it generally means you live in a state that conducts judicial foreclosures, meaning that a lender has to sue in court in order to get a judgment to foreclose. If you signed a deed of trust, you live in a state that conducts non-judicial foreclosures, which means that a lender does not have to go to court to initiate a foreclosure action.

In a judicial state, homeowners have the advantage because they can require that the lender produce proof and perfection of claim, at the initial court hearing. In a non-judicial state, the lender does not have to prove anything because the state’s civil code gives it the right to foreclose after a notice of default has been sent. So in non-judicial states, a homeowner must file a civil action against the lender to compel it to provide proof of claim.

Regardless of whether you signed a mortgage or a deed of trust, you also signed a promissory note — a promise to pay back a specified amount over a set period of time. The note goes directly to the lender and is held on its books as an asset for the amount of the promised repayment. The mortgage or deed of trust is a public record and, by law, must be recorded in a county or town office. Each time a promissory note is assigned, i.e. sold to another party, the note itself must be endorsed with the name of the note’s new owner. Each time a deed of trust or mortgage is assigned to another entity, that transaction must be recorded in the town or county records office.

Foreclosure Defense and Chain of Title

Here is where foreclosure defense can begin to chip away at a bank’s claim on your property. In order for a mortgage, deed of trust or promissory note to be valid, it must have what is known as “perfection” of the chain of title. In other words, there must be a clear, unambiguous record of ownership from the time you signed your papers at closing, to the present moment. Any lapse in the chain of title causes a “defect” in the instrument, making it invalid.

In reality, lapses occur frequently. As mortgages and deeds began to routinely be bought and sold, the sheer magnitude of those transfers made it difficult, costly and time-consuming for institutions to record every transaction in a county records office. But in order to have some method of record-keeping, the banks created the Mortgage Electronic Registration System (MERS), a privately held company that tracks the servicing rights and ownership of the nation’s mortgages. The MERS holds more than 66 million American mortgages in its database.

When a foreclosure is imminent, MERS appoints a party to foreclose, based on its records of who owns the mortgage or deed of trust. But some courts have rejected the notion that MERS has the legal authority to assign title to a particular party in the first place. A court can decide MERS has no “standing,” meaning that the court does not recognize its right to initiate foreclosure since MERS does not have any financial interest in either the property or the promissory note.

And since MERS has essentially bypassed the county record-keeping system, the perfection of chain of title cannot be independently verified. This is where a foreclosure defense can gain traction, by questioning the perfection of the chain of title and challenging MERS’ legal authority to assign title.

Promissory Notes are Key to Foreclosure Defense

Some courts may also challenge MERS’ ability to transfer the promissory note, since it likely has been sold to a different entity, or in most cases, securitized (pooled with other loans) and sold to an unknown number of entities. In the U.S. Supreme Court case Carpenter v. Longan, it was ruled that where a promissory note goes, a deed of trust must follow. In other words, the deed and the note cannot be separated.

If your note has been securitized, it now belongs to someone other than the holder of your mortgage. This is known as bifurcation — the deed of trust points to one party, while the promissory note points to another. Thus, a foreclosure defense claims that since the relationship between the deed and the note has become defective, it renders the deed of trust unenforceable.

Your promissory note must also have a clear chain of title, according to the nation’s Uniform Commercial Code (UCC), the body of regulations that governs these types of financial instruments. But over and over again, borrowers have been able to demonstrate that subsequent assignments of promissory notes have gone unendorsed.

In fact, it has been standard practice for banks to leave the assignment blank when loans are sold and/or securitized and, customarily, the courts have allowed blank assignment to be an acceptable form of proof of ownership. However, when the Massachusetts Supreme Court in U.S. Bank v. Ibenez ruled that blank assignment is not sufficient to claim perfection, it provided another way in which a foreclosure can be challenged.

In their most egregious attempts to remedy these glaring omissions, some banks have actually tried to reverse-engineer chains of title, using fraudulent means such as:

Robo-signing of documents.
False notary signatures.
Submission of questionable, inaccurate or patently counterfeit affidavits.

Exposure of these dishonest methods halted many foreclosures in their tracks and helped increase governmental scrutiny of banks’ foreclosure procedures.

Other Foreclosure Defense Strategies

Another option for a homeowner who wishes to expose a lender’s insufficient perfection of title is to file for bankruptcy. In a Chapter 7 filing, you can declare your home an “unsecured asset” and wait for the lender to object. This puts the burden of proof on the lender to show a valid chain of assignment. In a Chapter 13 bankruptcy, you can file an Adversary Proceeding, wherein you sue your lender to compel it to produce valid proof of claim. The Bankruptcy Code requires that your lender provide evidence of “perfected title.”

Another foreclosure defense argument explores the notion of whether the bank is a real party of interest. If it’s not, it doesn’t have the right to foreclose. For example, if your loan has been securitized, your original lender has already been paid. At that point, the debt was written off and the debt should be considered settled. In order to prove that your original lender has profited from the securitization of your mortgage, it is advised that you obtain a securitization audit. The audit is completed by a third-party researcher who tracks down your loan, and then provides you with a court-admissible document showing that your loan has been securitized.

A foreclosure defense can also argue that once a loan has been securitized, or converted to stock, it is no longer a loan and cannot be converted back into a loan. That means that your promissory note no longer exists, as such. And if that is true, then your mortgage or deed of trust is no longer securing anything. Instead of the bank insisting that you have breached the contract specified in the promissory note, foreclosure defense argues that the bank has actually destroyed that agreement itself. And if the agreement doesn’t exist, how can it be enforced? A corollary to this argument states that your loan is no longer enforceable because it is now owned by many shareholders and a promissory note is only enforceable in its whole entirety. How can thousands of people foreclose on your house?

While the foreclosure defense strategy is legal in nature, and can be handled differently by different courts, it should not be ignored when preparing a case.

The tactic of attacking a lender’s shoddy or illegal practices has proven to be the most successful strategy of foreclosure defense, since most courts are loathe to accept unlawful or unethical behavior, even from banks. If a homeowner can present clear instances of lost or missed paperwork, demonstrate that notes were misplaced or improperly endorsed, or prove that documents were forged, robo-signed, or reversed-engineered, the more likely a court will rule in his or her favor.

If you are considering a foreclosure defense, you have two options, you can either represent yourself in the Court as a Pro Se Litigant, (USING OUR FORECLOSURE DEFENSE PACKAGE), if you cannot afford to pay Attorneys Fees, as foreclosure proceeding can take years while you are living in your home WITHOUT PAYING ANY MORTGAGE. Or You may retain a Legal Counsel to Defend you. If you chose the second option, it is imperative that you retain the services of professional legal counsel. Regardless of how educated you are about the process, this is an area of law that requires a well-thought-out, competent presentation in a State or Federal court. Nonetheless, the Attorneys fees for foreclosure defense can accumulate over the years to thousands and even tens of thousands of dollars, that is why most homeowners, opt to represent themselves in the proceedings which can take anywhere between 1-7 years, while homeowners are living in their homes Mortgage-Free. The good news is that most foreclosure defense Attorneys equally use the same materials found in our foreclosure defense package to defend homeowner’s properties, and with these same materials, you can equally represent yourself as a Pro Se (Self Representing), litigant.

A successful foreclosure defense may prohibit or delay the foreclosure process or it simply may induce a lending institution to negotiate a loan modification that allows you to stay in your home — which, of course, was the goal in the first place. You can equally be awarded damages by the courts for mortgage law violations by the lenders, in addition to loan modification.

When Homeowner’s good faith attempts to amicably work with the Bank in order to resolve the issue fails;

If you have received a Notice of Default “NOD”, take a deep breath, as this the time to start the FIGHT! and Protect your EQUITY!

How Home Buyers Can Avoid Traps In Foreclosed Homes

07 Sunday Apr 2019

Posted by BNG in Foreclosure, Foreclosure Crisis, Foreclosure Defense

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While foreclosure activity is dropping in most major cities, there are some metropolises where foreclosed properties still account for too large of a percentage of homes on the market.

Here’s the question for home buyers: Do high-foreclosure markets actually represent an opportunity? Do these cities give buyers a chance to get into city neighborhoods that they otherwise might not be able to afford?

Yes, they do. But buyers have to be careful: Purchasing a home that is in foreclosure can lead to big problems.

Home buyers who want a good deal in real estate invariably think first about buying a foreclosure. They think, sure, I’ll do a little work to get a cheap price. They believe banks are desperate to dump these awful homes, and that’s not true, either.

Some well-meaning buyers have this picture in their mind of a cute little house, surrounded by a white picket fence that is owned by a widowed mom who fell on hard times, but that scenario is generally far from reality. The real picture is often ugly.

The homeowner either abandoned the home or voluntarily deeded the home to the bank. You will hear the term the bank taking the property back, but the bank never owned the property in the first place, so the bank can’t take back something the bank did not own. The bank foreclosed on the mortgage or trust deed and seized the home. There is a difference.

A foreclosure is a home that belongs to the bank, which once belonged to a homeowner.

Sellers stop making payments for a host of reasons. Few choose to go into foreclosure voluntarily. It’s often an unpredictable result from one of the following:

Laid-off, fired, or quit job
Inability to continue working due to medical conditions
Excessive debt and mounting bill obligations
Squabbles with co-owner, divorce
Job transfer to another state
Maintenance issues they can longer afford

During the market crash from 2005 through 2011, many homeowners simply walked away from their homes because the values had fallen and they owed more than their homes were worth. This was not the best solution, in most cases, but it was immediate relief for homeowners.

Negotiating Directly With Sellers in Foreclosure

Investors who specialize in buying foreclosures often prefer to purchase these homes before the foreclosure proceedings are final. Before approaching a seller in distress, consider:

Foreclosure proceedings vary from state to state. In states where mortgages are used, homeowners can end up staying in the property for almost a year; whereas, in states where trust deeds are used, a seller has less than four months before the trustee’s sale.
Almost every state provides for some period of redemption. This means the seller has an irrevocable right during a certain length of time to cure the default, including paying all foreclosure costs, back interest and missed principal payments, to regain control of the property. For more information, consult a real estate lawyer.
Many states also require that buyers give to sellers certain disclosures regarding equity purchases. Failure to provide those notices and to prepare offers on the required paperwork can result in fines, lawsuits or even revocation of sale.
Determine whether you’re the type of person who can easily take advantage of a seller’s misfortune under these circumstances and/or put a family out on the street. Oh, critics will argue it’s just business and sellers deserve what they get, even if it’s five cents on the dollar. Others will feign compassion and trick themselves into believing they are “helping” the homeowners avoid further embarrassment, but deep inside yourself, you know that’s not true.

Buying a Home at the Trustee’s Sale

Check with your local county office to find out how sales in your area are handled, but common denominators among those are:

No loan contingency
Sealed bids
Proof of financial qualifications
Sizable earnest money deposits
Purchase property “as is”

Sometimes buyers are not allowed to inspect the house before making an offer.

WARNING: The problem with buying a house sight unseen is you can’t calculate how much it will cost to improve the structure or bring it up to habitable standards. Nor do you know if the occupant will retaliate and destroy the interior.

On top of that, you may need to evict the tenant or owner from the premises after you receive the title, and eviction processes can be costly.

Buying a Foreclosure From the Bank

Many banks do not sell homes directly to investors or home buyers. If a bank is willing to sell homes individually and not in bulk sales, the bank will generally list the home through a real estate agent. There are REO agents who specialize in foreclosure listings.

It is more common to buy a foreclosure directly from the bank in a bulk sale purchase. In bulk sales, the banks will package a bunch of properties into one transaction and sell them all at once to one entity. That is the best way to buy a foreclosure if you can afford it because the discounts are typically the steepest.

Foreclosure Traps to Avoid

You’ll find the lowest prices for foreclosed homes by buying them at auction. But the auction process is also the riskiest way to buy foreclosures. That’s because you won’t have the chance to inspect a foreclosed home beforehand.

Once you get your “bargain” home, you might find that it needs costly repairs that can quickly eat up the savings you thought you’d enjoy. A foreclosed home purchased through auction might also have liens filed against it, such as liens for outstanding tax payments. You might be on the hook for those unpaid taxes, and need to reach a settlement with the IRS.

The best news for buyers is that banks are required to pay off any liens filed against these properties. Buyers can also hire home inspectors to tour the homes before they buy them. These inspectors can help buyers determine how much they’ll need to spend in repairs. Buyers can then calculate whether a particular foreclosure is a bargain or a potential money pit.

A foreclosed home can present a savvy investment opportunity under the right circumstances. Do your homework, and you might just come away with a diamond in the rough.

——————-

When Homeowner’s good faith attempts to amicably work with the Bank in order to resolve the issue fails;

If you have received a Notice of Default “NOD”, take a deep breath, as this the time to start the FIGHT! and Protect your EQUITY!

What Homeowners Must Know About Deficiency Judgment After Foreclosure

20 Sunday Jan 2019

Posted by BNG in Banks and Lenders, Foreclosure Crisis, Foreclosure Defense, Judgment, Judicial States, Mortgage Laws, Non-Judicial States, Note - Deed of Trust - Mortgage, Restitution, State Court, Your Legal Rights

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A common misconception among consumers is that after foreclosure they will not owe their mortgage lender. Many homeowners who go through foreclosure are surprised to learn that they still owe money on their house, even though they no longer own it!

Most mortgage lenders require borrowers to personally guarantee the amount of the note, leaving the lender with two avenues of in the foreclosure scenario. Lenders can take back the real estate, and in many vases, sue the borrower personally if the house doesn’t sell for the full value of the money that was lent.

What is a ?

When a borrower loses their home to foreclosure and still owes their lender money after the sale, the remaining debt is usually referred to as a deficiency. Lenders can sue to recover this amount.

For example, if you owe $500,000 on your mortgage and can no longer afford to make payments on the note, your lender will institute foreclosure proceedings against you and will eventually sell your home at a public sale. If the home sells for $400,000 and your state allows lenders to collect deficiency judgments, you will owe your lender $100,000 once they obtain a judgment for the deficiency.

In many cases, this deficiency judgment is a tough pill to swallow for the borrower who just lost their home and yet still owes their lender after foreclosure.

Homeowners’ responsibility after foreclosure

Borrowers who are left facing a large deficiency judgment after foreclosure often turn to bankruptcy in order to protect their assets. In order to determine whether you will owe money to your lender after a foreclosure sale of your home, it is important to get a handle on two important items of information:

1. How much is your home worth?

Regardless of your state’s deficiency laws, if your home will sell at a foreclosure sale for more than what you owe, you will not be obligated to pay anything to your lender after foreclosure. Your lender is obligated to apply the sale price of your home to the mortgage debt. Only when a home is “underwater” — meaning the borrower owes more on the mortgage than the home is worth — will he or she potentially face a deficiency judgment after a foreclosure.

2. Does your state have an Anti-Deficiency Statute?

Not all states allow lenders to collect on the note after a home has been foreclosed on. These states are referred to as “non-recourse” states because they only allow the lender to take back the collateral for the loan (your home). They do not allow the lender the additional remedy of going after the borrower’s personal assets if the sale of the home does not satisfy the mortgage.

Non-recourse mortgage states

In a non-recourse mortgage state, borrowers are not held personally liable for their mortgage. If the foreclosure sale does not generate enough money to satisfy the loan, the lender must accept the loss.

Some states that have anti-deficiency legislation qualify it by only making it applicable to seller-financed or “purchase-money” mortgages. North Carolina is a good example. North Carolina’s anti-deficiency statute applies when the seller of real estate provides the financing for the purchase. In such a situation, the legislature has prohibited the seller/lender from seeking a deficiency judgment after foreclosure. The purchase-money lender has recourse only against the collateral for the loan and not against the purchaser/borrower in her individual capacity. Banks who have made mortgages in North Carolina are allowed to seek deficiency judgments against borrowers.

The lesson to be learned is that if you owe more on your mortgage than your house is worth and the property is in a state that allows lenders to seek deficiency judgments, you may still owe money even after foreclosure.

Judicial and non-judicial foreclosures

A lender that wants to foreclose on your home has two foreclosure options: judicial and non-judicial. A judicial foreclosure is processed through the courts; some states require lenders to use this process. A non-judicial foreclosure is handled outside the court system.

It is advisable to consult with an experienced bankruptcy attorney to discuss how your state’s laws will affect you. Below is a list of states that have some form of anti-deficiency statute:

Alaska

You are not liable for the deficiency in a non-judicial foreclosure, but you may be liable for the deficiency in a judicial foreclosure.

Arizona

You are not liable for the deficiency if the home is a single one-family or single two-family home on a plot of less than 2 ½ acres. You must have lived in the home for at least 6 months.

California

You are not liable for the deficiency for purchase-money loans in non-judicial foreclosure. You are not liable for the deficiency in judicial foreclosure for property with four units or less, seller-financed loans, or refinances of purchase-money mortgages executed after January 1, 2013.

Connecticut

Under a “strict foreclosure,” you may be sued separately for the deficiency. If your home is sold under a “decree of sale,” you will liable for only half of the deficiency.

Florida

The lender must sue you for the deficiency, and whether you are liable is left to the discretion of the court. You will be given credit for the greater of the foreclosure price or the fair-market value of the home.

Hawaii

You are not liable for the deficiency in a non-judicial foreclosure if the property is residential and you live in it. You are liable for the deficiency in a judicial foreclosure.

Idaho

Your deficiency is limited to the difference between the fair-market value of your home and the foreclosure price.

Minnesota

For a non-judicial foreclosure, you are not liable for the deficiency. In a judicial foreclosure, you are liable but the jury will determine the fair-market value of your home and you will have to pay the difference between that and the foreclosure price.

Montana

You are not liable for the deficiency in a non-judicial foreclosure.

Nevada

You are not liable for the deficiency if your lender is a financial institution, the loan originated after October 1, 2009, the property is a single-family owner-occupied home, the mortgage debt was used to purchase the property, and you haven’t refinanced the mortgage.

New Mexico

You are not liable for the deficiency in a non-judicial foreclosure on the primary residence of a low-income household.

North Carolina

If the seller is finances your mortgage, you are not liable for the deficiency.

North Dakota

You are not liable for the deficiency if the property has less than four units and is on a plot of less than 40 acres.

Oklahoma

You are not liable for the deficiency if you notify the lender in writing at least 10 days before the foreclosure sale that you live in the home and opt out of deficiency judgment.

Oregon

You are not liable for the deficiency in non-judicial foreclosure or in judicial foreclosure on property with four or less units as long as you or a direct family member lives in one of the units.

Texas

You will receive credit for the fair-market value of the home. You are liable for the difference between your mortgage loan amount and the fair-market value.

Washington

You are not liable for the deficiency in a non-judicial foreclosure. You are liable for the deficiency for a judicial foreclosure.

When Homeowner’s good faith attempts to amicably work with the Bank in order to resolve the issue fails;

If you have received a Notice of Default “NOD”, take a deep breath, as this the time to start the FIGHT! and Protect your EQUITY!

What Homeowners Must Know About Foreclosure

12 Wednesday Sep 2018

Posted by BNG in Banks and Lenders, Credit, Federal Court, Foreclosure Crisis, Foreclosure Defense, Judicial States, Mortgage Laws, Non-Judicial States, Note - Deed of Trust - Mortgage, Pro Se Litigation, Real Estate Liens, State Court, Your Legal Rights

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Facing a foreclosure can be daunting prospect for people in trouble with their mortgages, especially when they are unsure of what to do. Across the country, six out of 10 homeowners questioned said they wished they understood their mortgage and its terms better.

When the economy collapsed in 2008, foreclosure became a fact of life for millions of Americans. About 250,000 new families enter into foreclosure every three months, according to the Federal Deposit Insurance Corporation.

The same percentage of homeowners also said they were unaware of what mortgage lenders can do to help them through their financial situation.

The first step to working through a possible foreclosure is to understand what a foreclosure means. When someone buys a property, they typically do not have enough money to pay for the purchase outright. So they take out a mortgage loan, which is a contract for purchase money that will be paid back over time.

A foreclosure consists of a lender trying to reclaim the title of a property that had been sold to someone using a loan. The borrower, usually the homeowner living in the house, is unable or unwilling to continue making mortgage payments. When this happens, the lender that provided the loan to the borrower will move to take back the property.

How do Foreclosures Work?

People enter into foreclosure for various reasons, but it typically follows a major change in their financial circumstances. A foreclosure can be the result of losing a job, medical problems that keep you from working, too many debts or a divorce.

Foreclosures often begin when the borrower stops making payments. When this happens, the loan becomes delinquent and the homeowner goes into default. The default status continues for about 90 days. During this time, the lender will get in touch with the borrower to see whether they will be able to pay the balance of the loan.

At this point, if the borrower cannot pay, the lender may file a Notice of Foreclosure, which begins the process. The lender will file foreclosure documents in a local court. This part of the process usually takes 120 days to nine months to complete. If borrowers need extra time, they can challenge the process in court, and that’s where our Foreclosure Defense Package comes in.

How do Foreclosures Relate to Debt?

Some people facing foreclosure find themselves in this position because of mounting debt that made it harder to make their mortgage payments.

A foreclosure can add to your financial problems if your state allows a deficiency judgment, which means the borrower owes the difference between what is owed on the foreclosed property and the amount it eventually sells for at an auction.

Thirty-eight states allow financial institutions to pursue borrowers for this money.

In cases when a lender does not use a deficiency judgment, a foreclosure can relieve some of your financial burden. Although it is a loss when a lender takes the home you partially paid for, it can be a start to rebuild your finances.

It is a good idea to work with a financial adviser or a debt counselor to understand what kind of debt you may incur during a foreclosure.

What Else Should I Know?

If you are thinking about going into foreclosure, there are a number of things to consider:

A foreclosure dramatically affects your credit score. Fair Isaac, the company that created FICO (credit) scores, drops credit scores from 85 points to 160 points after a foreclosure or short sale. The amount of the drop depends on other factors, such as previous credit score.
Get in touch with your lender as soon as you are aware that you are having difficulty making payments. You may be able to avoid foreclosure by negotiating a new repayment plan or refinancing that works better for you.
States have different rules on how foreclosures work. Understand your rights and get a sense of how long you can stay in your home once foreclosure proceedings begin.

When Homeowner’s good faith attempts to amicably work with the Bank in order to resolve the issue fails;

If you have received a Notice of Default “NOD”, take a deep breath, as this the time to start the FIGHT! and Protect your EQUITY!

What Homeowners Should Know About the National Mortgage Settlement for Borrowers in Bankruptcy and Case Trustees

19 Thursday Jul 2018

Posted by BNG in Bankruptcy, Banks and Lenders, Foreclosure Crisis, Foreclosure Defense, Fraud, Judicial States, Mortgage fraud, Mortgage Laws, Mortgage Servicing, Non-Judicial States, Pro Se Litigation, Your Legal Rights

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The National Mortgage Settlement (the “Settlement”) is an agreement among the federal government, 49 states, and the five largest mortgage servicers and their affiliates (the “Banks”).

The Banks are:
Ally Financial, Inc. (formerly GMAC)
Bank of America Corporation
Citigroup, Inc.
J.P. Morgan Chase & Co.
Wells Fargo & Company

The Settlement provides benefits to borrowers, including borrowers in bankruptcy, whose residential mortgage loans are serviced by the Banks.

Information concerning the Settlement and its impact on borrowers in bankruptcy can be found at a dedicated page on the United States Trustee Program’s website at http://www.justice.gov/ust/eo/public_affairs/consumer_info/nms

In addition, the website http://www.nationalmortgagesettlement.com provides resources about the Settlement, including a copy of the Settlement, an executive summary of the Settlement, a fact sheet, and FAQs. The FAQs on that website discuss general issues, including:

• What Bank conduct is covered by the Settlement?

• What loans are covered by the Settlement?

• What are the financial provisions of the Settlement?

• How will the Settlement be enforced?

Finally, the Settlement requires the appointment of an independent monitor to oversee the Banks’ compliance with the Settlement. The website for the monitor is: www.mortgageoversight.com

Question 1: What do these FAQs cover?

The United States Trustee Program, the component of the Department of Justice responsible for overseeing the administration of bankruptcy cases and private trustees, has prepared these FAQs primarily for borrowers in bankruptcy or borrowers who are considering filing bankruptcy, including those who have lost their homes in foreclosure. These FAQs also address questions that trustees who administer bankruptcy cases may have.

These FAQs are provided as a basic resource and should not be considered legal advice. The United States Trustee Program is prohibited from providing legal advice. If you have any questions, you should consult an attorney.

Question 2: What bankruptcy issues did the Settlement address?

The Settlement addresses misconduct by the Banks in bankruptcy cases, including:

• Inflated or inaccurate claims.

Some of the Banks filed inflated or inaccurate documents in bankruptcy courts. When a borrower files for bankruptcy relief, the Bank may file a proof of claim or motion for relief from the automatic stay. These documents tell a bankruptcy court how much the Bank claims the borrower owes the Bank. The proof of claim also governs what a borrower in bankruptcy must pay through a chapter 13 repayment plan, and the motion for relief can determine whether the Bank may seek to commence to foreclose upon a home even if the borrower is in bankruptcy.

The accuracy of these documents is crucial. A number of parties, including the borrower in bankruptcy, the bankruptcy court, the trustee administering the case, the United States Trustee, and other creditors, rely on these documents.

When a Bank inflates or misstates what a borrower in bankruptcy owes in these documents, the consequences can be severe. For example, the Bank may be paid too much and other creditors may not receive amounts they are owed. At worst, the borrower in bankruptcy is unable to propose a repayment plan that can be approved and the bankruptcy case is dismissed, or the Bank improperly obtains relief from the automatic stay and is permitted to foreclose on the borrower’s home. As a result, the borrower in bankruptcy loses the ability to keep the home and obtain a fresh start in bankruptcy.

• Improper accounting of mortgage payments made by borrowers in bankruptcy.

Some of the Banks misapplied payments made by borrowers in bankruptcy. When a Bank does this, it appears on the Bank’s books as if the borrower has failed to make regular monthly payments and the Bank can file a motion seeking relief from the automatic stay to foreclose upon the borrower’s home. This misapplication of payments also results in the Bank improperly asserting that the borrower is behind on mortgage payments and can lead to the Bank imposing loan default fees and other charges.

• Adding improper fees and charges to the mortgage accounts of borrowers in bankruptcy.

Some of the Banks charged borrowers in bankruptcy for services not warranted, or in amounts not allowed. For example, some of the Banks sought to recover escrow payments twice, and conducted unnecessary or excessive property inspections and appraisals.

• Charging “hidden fees” to the mortgage accounts of borrowers in bankruptcy.

Some of the Banks also imposed “hidden fees” – fees that are assessed during the bankruptcy case but are not disclosed until after a borrower in bankruptcy receives a discharge. This can result in borrowers believing they are current on their mortgages, only to have a Bank claim the borrowers owe additional amounts. This deprives borrowers in bankruptcy of the “fresh start” promised by the bankruptcy discharge. These hidden fees also often violate bankruptcy court orders finding that borrowers are current on their mortgages.

• Seeking relief from stay to foreclose while borrowers in bankruptcy have pending applications for loan modifications.

Some of the Banks separated their bankruptcy operations from other aspects of their mortgage servicing business, so they did not have a clear picture of the status of a borrower in bankruptcy’s mortgage.

For example, the Banks sometimes provided borrowers in bankruptcy the opportunity to modify the terms of their home loans. Modification has benefits for both the Bank, which continues to receive payments, and the borrower, who receives a more manageable monthly payment.

However, while applications for loan modifications were being processed by one group of the Bank, its bankruptcy operations might move forward with requests for relief from the automatic stay so the Bank could commence foreclosure.

Question 3: Will the Settlement impact borrowers in bankruptcy?

Yes. The Settlement requires the Banks to collectively dedicate approximately $20 billion toward various forms of financial relief for borrowers including principal reduction, forbearance of principal for unemployed borrowers, short sales and transitional assistance, and specific benefits for service members.

The Banks must also make payments to state and federal authorities exceeding $5 billion. Of this amount, $1.5 billion has been set aside to establish a “Borrower Payment Fund” administered by Rust Consulting LLC (the “Settlement Administrator”).

Much of this relief is available to borrowers in bankruptcy. A borrower should contact the appropriate Bank (see question 4) to determine eligibility for relief. A borrower should contact the Settlement Administrator regarding the Borrower Payment Fund (see question 5).

Additionally, the Banks must implement extensive new mortgage servicing standards, including provisions specific to borrowers in bankruptcy. These standards address what occurs when borrowers fall behind on their mortgage payments, including when borrowers file for bankruptcy relief. As explained in these FAQs (see questions 7 through 11), the servicing standards require, among other things:

• A single point of contact at each Bank for borrowers in bankruptcy, who want information or assistance when they fall behind on their mortgage payments;

• New processes to ensure that the Banks provide accurate information about the amount that borrowers in bankruptcy owe on their mortgages;

• Better dispute resolution processes;

• Clear itemization of the principal, interest, fees, expenses and other charges incurred prior to bankruptcy that the Banks claim in bankruptcy cases;

• Prompt posting of payments and proper designation of pre-and post- petition payments and charges;

• Timely disclosure of fees, expenses, and charges incurred after a ` borrower files for chapter 13 bankruptcy.

Question 4: How will borrowers in bankruptcy know if they are eligible for financial assistance under the Settlement?

The Banks may directly contact borrowers, including borrowers in bankruptcy. However, borrowers should not wait to be contacted. To determine eligibility, a borrower or their attorney should contact the appropriate Bank:

Ally/GMAC: 800-766-4622

Bank of America: 877-488-7814

(Available Monday – Friday, 7:00 a.m. – 9:00 p.m. (CT),
and Saturdays, 8:00 a.m. – 5:00 p.m. CT))

Citi: 866-272-4749

J.P. Morgan Chase: 866-372-6901

Wells Fargo: 800-288-3212
(Available Monday – Friday, 7:00 a.m. – 7:00 p.m. (CT))

A borrower should not use these phone numbers for questions concerning payments from the Borrower Payment Fund. See question 5 for information concerning these payments.

Question 5: Who can a borrower contact for information concerning payments from the Borrower Payment Fund?

The Settlement required the Banks to pay $1.5 billion to a “Borrower Payment Fund” that will be used to make payments to borrowers who lost their homes through foreclosure between and including January 1, 2008 and December 31, 2011. The Settlement Administrator has mailed Notice Letters and Claim Forms to eligible borrowers.

If you believe that you are eligible for relief and have not received a Notice Letter or Claim Form or have other questions concerning the Borrower Payment Fund, please contact the Settlement Administrator at 866-430-8358, Monday through Friday, 7:00 a.m. – 7:00 p.m. (CT).

Question 6: What if a borrower in bankruptcy already has a claim against a Bank?

The Settlement includes a release of liability by the federal government and the participating states for certain conduct by the Banks that occurred prior to the Settlement. The Settlement does not release claims a borrower, including a borrower in bankruptcy, may have under state or federal law, and a borrower does not need to choose between accepting relief under the Settlement and pursuing those claims.

Question 7: Can borrowers in bankruptcy participate in the Settlement and receive financial assistance from other sources?

Yes. Borrowers, including borrowers in bankruptcy, may participate in the programs offered under the Settlement and other programs. For example, borrowers may be eligible for a separate restitution process administered by the federal banking regulators, including the Office of the Comptroller of the Currency (the “OCC”). For more information about the federal banking regulator claims process, please visit www.independentforeclosurereview.com or call 1-888-952-9105.

Question 8: Is there someone at the Banks whom borrowers in bankruptcy can contact with questions concerning their mortgage?

Yes. Each Bank has a single point of contact for borrowers (a “SPOC”), including borrowers in bankruptcy, who want information or assistance when they fall behind on their mortgage payments. The SPOCs for borrowers in bankruptcy must be knowledgeable about bankruptcy issues. Also, the Banks must have adequate staff to handle the calls.

Question 9: Do the Banks have special contacts that chapter 13 trustees can utilize to address trustee inquiries?

Yes. The Settlement requires that each Bank establish a toll-free hotline staffed by employees trained in bankruptcy to respond to inquiries from chapter 13 trustees.

Trustees should have received information regarding these hotlines. Any chapter 13 trustee who has not received this information should contact their local United States Trustee office.

Question 10: How does the Settlement address the Banks’ filings in bankruptcy courts going forward?

The Settlement imposes new standards on the Banks to ensure the accuracy of information they provide to bankruptcy courts. These standards are designed to ensure that the Banks provide accurate information about the amount that borrowers in bankruptcy owe on their mortgages.

Moreover, under the new servicing standards, the Banks must implement better dispute resolution processes. If a Bank files inaccurate or misleading documents in a bankruptcy case, a borrower can use these new procedures and make a complaint with the Bank.

In addition, with respect to proofs of claim and certain affidavits attached to documents filed in bankruptcy courts, the Banks must correct any significant inaccuracies promptly and also provide notice of the correction to the affected borrower or counsel to the borrower.

Question 11: What kind of information must the Banks provide concerning a mortgage when a borrower files for bankruptcy?

For a borrower in a chapter 13 (repayment) case, if a Bank files a proof of claim, the Bank must include an accurate and clear statement of exactly what the Bank claims the borrower owes. That statement must itemize the principal, interest, fees, expenses, and other charges that the Bank claims is owed as of the filing of the bankruptcy case.

Question 12: How does the Settlement affect how the Banks apply mortgage payments made by borrowers or a trustee in bankruptcy?

The Banks must promptly post payments received from a borrower or trustee while a borrower is in bankruptcy and accurately designate payments between any arrearage owed before the bankruptcy filing and what is owed for regular mortgage payments after the filing. The Banks must also reconcile accounts, including funds held in suspense accounts, at the end of each bankruptcy case and update their records so they are consistent with the account reconciliation.

Question 13: How does the Settlement affect what the Banks charge after a borrower files for bankruptcy?

The Banks must timely disclose fees, expenses, and charges incurred after a borrower files a chapter 13 bankruptcy case. A Bank waives fees, expenses, and charges of which the Bank has not given timely notice to the Borrower. The Banks must also timely give notice to a borrower of any changes in payments the borrower will have to make due to, for example, interest rate adjustments or changes in the escrow amount.

Question 14: Should a trustee administering the case of a borrower in bankruptcy seek to recover funds received by the borrower under the Settlement?

Eligible borrowers in bankruptcy may receive payments from the Banks as a part of the Settlement. A trustee should consider all relevant circumstances when deciding whether to seek turnover of the payments in a particular case. Factors to consider include:

• The payment amount and any interest of a non-debtor spouse or other person in the payment;

• The cost of recovering and administering the payment, including litigation with a borrower in bankruptcy who may seek a judicial determination regarding whether the funds are subject to administration;

• The extent to which recovering the payment will enable creditors to receive a meaningful distribution; and

• The applicability of state and federal exemptions.

The United States Trustee Program will not seek to compel a trustee to recover payments that the trustee, in the exercise of discretion, decides not to recover.

Question 15: How does the Settlement affect the trustees’ review of the Banks’ proofs of claim?

Generally, the Settlement will not alter a trustee’s review of claims filed by the Banks. If a trustee concludes, based on a review of a Bank’s bankruptcy filings, that a Bank violated the Settlement, the trustee, usually will contact the United States Trustee’s office in the jurisdiction in which the case was filed.

When Homeowner’s good faith attempts to amicably work with the Bank in order to resolve the issue fails;

What Homeowners Must Know About Reinstating their Mortgage Loan

18 Monday Jun 2018

Posted by BNG in Banks and Lenders, Foreclosure Crisis, Foreclosure Defense, Judicial States, Loan Modification, Mortgage mediation, Mortgage Servicing, Non-Judicial States, Pro Se Litigation, Your Legal Rights

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Once you fall behind on your mortgage, the amount you’re behind is called the arrears.

In the past, we have discussed how you may have loan modification options available to you that let you stay in your home and resume making mortgage payments without having to pay your arrears all at once.

But sometimes homeowners would rather pay their arrears, get current on their mortgage loan and resume making their regular mortgage payments.

This is called reinstating your loan. Reinstating your loan means you pay the entire amount you’re behind (arrears) plus all related fees (such as interest and late fees) to bring your loan current. After you reinstate, your loan will appear as paid to date in the lender’s records and you will resume making your original mortgage payments.

If you have fallen behind on your mortgage payments and want to reinstate your loan, your first step is to determine whether the lender has initiated the foreclosure process.

Reinstating before the foreclosure process has started

If you’re not in the foreclosure process yet, you want to cure the default on the loan. You need to ask your lender to give you a reinstatement quote. This document can be issued 30 days in advance of your payment date. For example, on May 1 you can order a reinstatement quote good through June 1 so you know how much will be due in 30 days.

If you pay the amount listed on the reinstatement quote, the default will be cured and you can resume making regular mortgage payments. The lender will then be unable to start foreclosure.

Make sure you pay the full amount listed on the reinstatement quote

Simply adding up missed mortgage payments and sending that amount may not be the actual amount due. Based on the terms you signed in your original note, the lender may add late fees for missed payments. If you don’t pull a reinstatement quote and send only what you believe is owed, the lender may deem this a partial payment. They will likely keep the partial payment but refuse to show the loan as fully up to date. This could lead to foreclosure.

Don’t accept any verbal reinstatement payoff amount, whether on the phone or in person. Make the lender give you the quote in writing. Verbal reinstatement amounts may be inaccurate and they may change. They are also impossible to verify later. If you send payment based on a verbal quote, the lender could change their mind and you would have no way to prove what they originally told you.

Reinstating after the foreclosure process has started

If you have fallen behind on your mortgage payments and want to pay your arrears but your loan has entered the foreclosure process, rather than talk to your lender, work with the Trustee. The Trustee is the party who issued your Notice of Trustee’s Sale (NOTS). Their contact information should be listed in the NOTS.

Once a lender starts foreclosure and hires a Trustee, the Trustee is in charge of the foreclosure. They are responsible for documenting and holding all reinstatement amounts and quotes.

Things to know and things you should do:

Legal fees paid to the Trustee by the lender may be added to your total reinstatement amount. So, if you decide to reinstate the loan you may see additional legal fees added to the total amount due.
Make sure you receive your reinstatement quote directly from the Trustee, not the lender. At this point in the process, to ensure that you’re making a full payment, the Trustee is the only one who has that number.
Make the request in writing. Include your name, loan number, and Trustee Sale number found on your NOTS. Write “Please send me a reinstatement quote good through (Date) at (my contact information).”

Fax the request to the fax number provided on the NOTS and to your lender. Call the Trustee to make sure they received the fax and continue to follow up until they send you the quote.
In the state of Washington, you’re allowed to reinstate your loan up to 11 days before your foreclosure sale date. If you believe reinstatement is the right move for you, make sure you request the quote and gather the funds so you can send payment before that 11-day mark.
Ask your Trustee how they would like to receive payment. Most Trustees want a cashier’s check made out to the Trustee but payment processes are different for each Trustee. Have this conversation with them before you make payment.

How does reinstatement affect foreclosure?

If you fully reinstate before the 11-day deadline, the Trustee will cancel the foreclosure of your home and withdraw from the case.

You will resume making monthly mortgage payments outlined in your original loan.

You have to track your foreclosure date to make sure the sale actually is canceled. Get written confirmation from the Trustee that they have canceled the sale.

Are the fees attached to the reinstatement quotes negotiable?

Sometimes. It is important to review all late fees and attorney’s fees attached to the reinstatement quote. Some Trustees and Lenders will take advantage of a reinstatement situation by tacking on fees in excess of work performed. There is little regulation on these fees, so it is important to review the fees carefully.

If you see something that looks excessive, request a full accounting of each fee. The Trustee should be able to provide you a breakdown of how they arrived at the reported fees. Request a breakdown for excessive late fees sent by the lender to make sure they only reflect legal late fees for missed mortgage payments.

Are there any exceptions to the 11-day requirement to reinstate?

If you believe that you may be able to reinstate your loan, but not before the 11-day deadline, reach out to the Trustee and tell them your situation.

If you can prove that you fully intend to reinstate and have the ability to do so, the Trustee or lender may provide you more time in order to reinstate the loan. Reinstatement is generally good for lenders. They want you to pay them back and get current. Many times, lenders agree to postpone foreclosure in order to allow you to reinstate, but you have to demonstrate your ability to reinstate in a persuasive way.

We recommend putting together a package including:

A signed and dated letter stating that you intend to reinstate the loan
- Include how you plan to come up with the funds
- Give a date for when you’ll have the funds
- Ask for a foreclosure postponement of a certain time (e.g. 15 days, 30 days, etc.). Asking for a general, indefinite postponement likely won’t work.
- Do everything you can to indicate that you are serious about wanting to reinstate
Proof of funding: Demonstrate how you will come up with the funds. For example, if the funds are in a retirement account, send the retirement fund statement showing that the money is there. If you are borrowing the money, have the people you’re borrowing from sign and notarize a letter stating that they will be lending you money. Include the amount borrowed and the source.

Fax the package to the lender and the Trustee. Call to make sure they received the fax. While you’re on the phone, find out who is looking at your request and see if you can email them directly. It is not enough to simply fax the package, you have to push both the lender and the Trustee to pay attention to your request.

Is a partial payment ever acceptable?

It may be an option for you to offer a partial payment of the full reinstatement amount in order to get a postponement that will give you time to gather the full funds. Lenders may agree to take a portion of money in exchange for foreclosure postponement.

Be careful with this option. Unless you are absolutely, 100% certain you will be able to fully reinstate, you shouldn’t send money or you may lose it. Never send money without an agreement in writing that the lender will postpone in exchange for a lump sum received.

Because you’re in default, the lender will keep the money you paid regardless of whether you’re able to fully reinstate. Don’t do this unless you know will be able to come up with the rest of the money.

Modification options instead of reinstatement

If you’re barely making it through the month in your current financial situation, reinstating the loan may not be the best solution for you. If the reasons why you defaulted are still part of your life, it may be better for you to pursue an alternative like a loan modification or a short sale so you can get to a more affordable housing situation.

Some homeowners think reinstatement is the only way to stay in their home. That’s not always true.

Don’t spend thousands of dollars to get current on a loan you may not be able to maintain. Call us to learn about all your options to tailor the best plan to fit your situation.

If you think you want to reinstate, keep it as your last option. After all, you can reinstate all the way up until 11 days before the foreclosure sale. Other options may allow you to stay in your home and avoid having to pay a large lump sum.

When Homeowner’s good faith attempts to amicably work with the Bank in order to resolve the issue fails;

What Homeowners Must Know After they Have Been Sued in a Bankruptcy Adversary Proceeding

18 Monday Jun 2018

Posted by BNG in Bankruptcy, Federal Court, Foreclosure Defense, Judicial States, Litigation Strategies, Non-Judicial States, Pleadings, Pro Se Litigation, Trial Strategies, Your Legal Rights

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adversary proceeding, automatic stay, Bankruptcy, bankruptcy adversary proceeding, bankruptcy court, Foreclosure, foreclosure defense, homeowners, Law, Lawsuit, Mortgage Electronic Registration System, Mortgage loan, Plaintiff, Pro se legal representation in the United States, United States

This post will be helpful to the Debtor when defending against a creditor’s/trustee’s objection to your discharge or the filing of a Complaint for Nondischargeability based upon fraud/conversion; however, this post may also assist the Debtor in bringing an adversary proceeding should one be necessary.

Introduction

An adversary proceeding is a lawsuit brought within your bankruptcy. This lawsuit normally centers around whether a particular debt or all of your debts are dischargeable (or forgiven) through the act of your filing bankruptcy. These lawsuits usually focus around some alleged improper act on your part, including fraud, misrepresentation, or your failure to abide by the Bankruptcy Code and accompanying Rules.

You are now at the point of the adversary process where you have received, by mail or by personal service, the complaint filed by your creditor which asks the Court to decide whether or not that particular obligation should be part of your bankruptcy discharge or an objection to your overall discharge should be granted.

This section of the adversary proceeding packet is to inform you of what your obligations are in order to prepare for a trial. Note that there are references to the bankruptcy rules: Local Rules of Bankruptcy Practice = LR; Federal Rules of Bankruptcy Procedure = Fed.R.Bankr.P. You may also find both types of Rules at the county law library or you may access the Local Rules at the court’s website http://www.uscourts.gov. You should take a look at these rules if you have any questions about the information given in this section.

Step 1: Answer

After you receive a complaint, you must file an answer with the clerk of the Bankruptcy Court within 30 days after issuance of the summons. (Fed.R.Bankr.P. 7012) You must provide a copy of that answer to the creditor’s attorney.

Step 2: Pre-Trial Conference

Note that the cover sheet you receive from the Court will set forth a pre-trial conference date in the lower right-hand corner of the Summons. You must attend that hearing. At that time, the Court will set parameters for trial. The Court may also discuss with the parties whether or not any settlement is possible. Prior to this pre-trial conference with the Court, and within thirty (30) days after you have answered the complaint, you are required to meet with the attorney for the creditor to discuss how discovery will be conducted in the case. After you have had this discussion and no later than fourteen (14) days after the meeting with the attorney, the parties are required to submit a discovery plan. (Fed.R.Bankr.P. 7016 and LR 7016) This plan is a form which the creditor’s counsel will have and will be filled out by both parties. The form will then be submitted to the Court and the Court will then approve, disapprove or modify the discovery plan and enter any other orders that may be appropriate.

Step 3: Discovery

After you have gone through the preparation of the discovery plan and have had it approved by the Court, you will then conduct your discovery. Local Rule 7026 will provide you with information as to what the parties may or may not do during the discovery process. You may also want to look at Local Rules 7026 through and including 7036 and Fed.R.Bankr.P. 7026 through and including 7036 which gives further information regarding some of the discovery tools or requirements.

Step 4: Motions

You may find that throughout the time frame prior to trial that motions are being filed. Motions may be filed by either party. If you are served with a motion in your adversary proceeding, please be advised that you are required to file your opposition or response with the Court and serve your response to the creditor’s attorney not more than fifteen (15) days after you have received the motion and, in no event, not later than five (5) business days prior to the date set for the hearing on the motion. (Fed.R.Bankr.P. 9013 and Local Rule 9014) Make sure that you provide counsel with a copy of your response.

When you get to Court, you are basically going to supplement what is in your opposition or your motion so the Court can make a well-informed analysis of the situation and then deliver an appropriate decision. Please note that when you are in front of the Court, your time is limited. Generally, a motion is limited to approximately five minutes for both sides. It is the feeling of all judges in our district that if all motions and oppositions are well-drafted and timely filed, there is no reason to spend lengthy periods with oral argument. Therefore, you will be expected to come in to court, make a brief presentation and then sit down.

Step 5: Trial

After you have completed all discovery and all motions, you will then be at the point where the parties are ready to proceed with trial. Your trial date will be assigned to you at the pre-trial conference and the Court will generally schedule the trial within 60 and 120 days depending upon the nature of the matter being tried.

Approximately two weeks prior to the trial, you are required to file with the Court a trial statement, a list of witnesses, and a list of exhibits. You must also exchange these documents with the attorney for the creditor. If you and the attorney for the creditor can agree on what the basic issues in trial are going to be, the trial statement may be filed jointly. In other words, one statement will represent the facts and information for both sides to the Court.

The day before the trial, the parties will mark all the exhibits and any supplemental information that needs to be added to the trial statements. Although you are not required to agree with the attorney for the creditor as to what exhibits may be introduced into evidence, it is strongly encouraged that the parties try to agree to all exhibits to be placed before the Court in an effort to have an economical and efficient adjudication of the case.

Certain documents have been included in this packet so that you will have the ability to understand what needs to be filed with the Court prior to trial. However, it is strongly recommended that you access the court’s website at http://www.uscourts.gov and download a copy of the Local Rules. These will prove very useful to you through the course of the adversary proceeding. You may also wish to check with the county law library for a copy of the Local Rules.

All bankruptcy judges are willing to set up a time to discuss whether or not the case may be settled. Many times, having an impartial third party listening to the problems will allow negotiations to flow freely and hopefully obviate the need for the trial. If a settlement conference is set up, it will not be the judge in front of whom this matter will be heard, so you need not fear that you will be prejudiced in any way if this matter is not settled.

COURTROOM ETIQUETTE BETWEEN THE COURT AND THE PARTIES

1. Don’t take the argument personally (no personal slurs against the other party.)

2. Advocacy does not mean we cannot be civil and communicate with the other side.

3. Adversary proceedings are intended to be negotiated if possible.

4. If you cannot resolve the matter and proceed to trial, remember the following:

a. Dress Appropriately- Nice attire such as a suit or slacks is acceptable. Please no hats, shorts, thongs, tank tops, etc.

b. Your statements should be addressed to the court and not to the other side- The only time you should speak to opposing counsel is during breaks or with the Court’s permission after requesting a break.

a. Do not interrupt the other side or the judge when they are speaking.

b. Remember to follow the rules as explained in the attached documents regarding the filing of your trial statement, list of exhibits, witnesses, etc.

DEALING WITH THE LAW

1. Understand your responsibilities and respond accordingly. You are held to the same standard as an attorney when presenting your case and arguing the legal issues. You may need to educate yourself on the law at issue by visiting the law library and reading the Bankruptcy Code and cases dealing with those sections of the code involving your case.

2. Sanctions – Remember that if you act disrespectful to the Court or opposing attorney, or if you lie in your court pleadings or under oath at trial, the Court has the power to sanction you by either assessing a fee or ruling for the opposing party.

3. If you have any questions regarding your responsibilities, call the other side’s attorney they will answer procedural questions, but cannot assist you with your legal argument.

4. Know the Local Rules – you can obtain a copy by accessing the court’s website at http://www.uscourts.gov You may also be able to obtain the rules from the county law library or from opposing counsel.

When Homeowner’s good faith attempts to amicably work with the Bank in order to resolve the issue fails;

Means Test Forms

Chapter 13 Plans

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Irregularity in the Foreclosure Process

Noncompliance With Terms of the Mortgage

Inadequacy of Sale Price

How to Set Aside the Foreclosure Sale

Setting Aside a Sale in a Judicial Foreclosure

Setting Aside a Sale in a Nonjudicial Foreclosure

What Happens if the Sale Is Set Aside?

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Foreclosure Defense Varies by State

Foreclosure Defense and Chain of Title

Promissory Notes are Key to Foreclosure Defense

Other Foreclosure Defense Strategies

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Negotiating Directly With Sellers in Foreclosure

Buying a Home at the Trustee’s Sale

Buying a Foreclosure From the Bank

Foreclosure Traps to Avoid

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What is a ?

Homeowners’ responsibility after foreclosure

1. How much is your home worth?

2. Does your state have an Anti-Deficiency Statute?

Non-recourse mortgage states

Judicial and non-judicial foreclosures

Alaska

Arizona

California

Connecticut

Florida

Hawaii

Idaho

Minnesota

Montana

Nevada

New Mexico

North Carolina

North Dakota

Oklahoma

Oregon

Texas

Washington

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How do Foreclosures Work?

How do Foreclosures Relate to Debt?

What Else Should I Know?

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Reinstating before the foreclosure process has started

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Introduction

Step 1: Answer

Step 2: Pre-Trial Conference

Step 3: Discovery

Step 4: Motions

Step 5: Trial

DEALING WITH THE LAW

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