How Homeowners Can Remove Public Records From Their Credit Reports

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Public records can impact your credit score in a variety of ways. In the world of credit reporting, public records can include bankruptcy, judgments, liens, lawsuits, and foreclosures. Anything that might be considered a legal liability is a matter of public record, and will usually show up on your credit report.

Public records can be tough to remove from your credit report, but it can be done. It’s usually not as simple as removing a late payment or a credit inquiry, because when you are dealing with public records, courts are always involved.

Courts are required to keep certain types kinds of records archived online at the Public Access to Court Electronic Records (PACER). You won’t find records protected by privacy laws (criminal records, medical records, etc.), but you will find anything relating to a financial matter that was settled by a court. Unfortunately, those records nearly always find their way to the credit bureaus.

When you set out to try to remove a public record form your credit report, you can approach it one of two ways.

  1. You can attempt to get the public record expunged at the court of record, which is not going to be an easy battle.
  2. Or, you can attempt to remove the entry from your credit reports.

While it may be easier (but certainly not easy) to get your way with the credit bureaus, it’s important to remember that even if you are successful, the records will remain at the court. The three primary public records that you will contend with on your credit reports are bankruptcy, civil judgments, and tax liens.

How can I remove a bankruptcy from my credit report?

If you have a bogus bankruptcy on your report, you need to contact the court and ask them for a written statement that verifies you did not have a bankruptcy on file. If the court does have a bankruptcy on file, you will need to work with them to resolve the issue, usually by providing identification and other records to prove something went wrong somewhere.

Once you get everything you need from the court, send it with copies of your identification and, of course, your dispute letter via certified mail to each of the major credit bureaus. It will usually take a few weeks for the changes to be recorded on your credit reports, as long as everything you sent checks out.

If you have a legitimate bankruptcy on your credit report, it will be much more difficult to remove the bankruptcy before the required 7-year reporting period after filing a Chapter 13 bankruptcy, or 10 years for a Chapter 7 bankruptcy.

The first thing you should do is look for any kind of inaccuracies in the way your bankruptcy is being reported. Even if it’s just a wrong date or an incorrect dollar amount. If you find something that looks like a mistake, or even something that looks like it could be a mistake, seize on it as an opportunity. Send a dispute letter and ask them to correct the mistake and remove the bankruptcy. The hope is that one of these steps will expose some kind of problem or technicality that occurred during the process and will ultimately be grounds for removal.

If you’re looking at 7-10 years with a tainted credit report anyway, why not give it shot? If it seems like too much work for such a small chance of success, you might want to consult with a bankruptcy attorney or credit repair company to assess your situation and see if they can help you better your chances.

How can I remove a civil judgment from my credit report?

Experian has a clear explanation regarding civil judgments on their website. If a judgment is accurate, it cannot be removed and will remain on the report for at least seven years. The key thing to focus on with that explanation is the word “accurate.”

You should dispute any type of judgment, again trying to find any grounds possible on which to argue your case. If you dispute an unsatisfied judgment and your dispute is rejected, you should do whatever you can to get the judgment converted to “satisfied,” even if it means borrowing money to do so.

Unsatisfied judgments are especially damaging to your credit report, because they make it clear to would-be lenders that you still owe a balance on an outstanding debt. Furthermore, unsatisfied judgments can accrue interest at unforgiving rates over time. Even if they come off your credit report seven years after filing, they can reappear on your report as a “refiled” judgment until the debt is finally paid.

Satisfied judgments are less damaging than unsatisfied judgments for obvious reasons, but they still stay on your credit report for seven years after filing. Vacated judgments are usually pretty easy. Dispute them and send proof they were vacated, and they should come off your report usually within 30 days.

How can I remove a tax lien from my credit report?

When state, local, or Federal tax agency places a tax lien when you fail to pay your tax debt on time, they are essentially filing a legal claim against your property. Your property can include your home, your cars, your valuables, any business interests you might have – even your bank accounts and investments.

As long as they remain unpaid, tax liens can stay on your credit report indefinitely. While it’s possible the credit bureaus may remove an unpaid tax lien after a period of ten years, there is no guarantee that will still be the case ten years from now. The best thing to do if you have an unpaid tax lien is pay it in full as soon as possible.

There are programs in place designed to help taxpayers begin the process of repairing their credit faster than they can with most other types of delinquencies. The IRS, for instance, has a program that will allow you to request a withdrawal of the public notice of a lien.

To apply for an IRS withdrawal, you need to fill out a Form 12277, Application for the Withdrawal of Filed Form 668, Notice of Federal Tax Lien. The form can be used for paid and unpaid tax liens, but it’s important to remember that if you are successful in getting an unpaid lien withdrawn from public notice, you are still required repay the outstanding debt that will remain on file at the courthouse.

There are certain criteria that you must agree to and/or qualify for in order to be eligible for an IRS withdrawal. It’s important to make sure you specify that you want all three credit bureaus to be notified when you complete the Form 12277.

These programs make sense for both the citizen and the tax authority. The hardline provisions related to tax liens in the Fair Credit Reporting Act, are designed to be a deterrent, not a punishment. The government wants your money. Despite how it may feel when you get hit with a lien, they are not seeking to punish you to the point that it’s impossible for you to pay them anymore.

When completing the Form 12277, you will be required to provide a reason for the withdrawal request. You may want to consider telling them that the lien is hurting your credit score, which is causing you financial hardship due to higher interest rates on existing credit balances, which in turn are hindering your ability to pay future taxes. This will incentivize them to give you a break because they’ll see it as a worthwhile investment of their time. Again, even though it may feel like they want you to suffer, the reality is they just want their “fair” share of your money.

What happens if my attempts at removal are not successful?

If you’ve exhausted all options with a public record entry on your credit report, and it just doesn’t look like you’re going to succeed, there are things you can do to improve your credit score. The first thing to do is develop a financial strategy to prevent any future judgment or any other types of delinquencies on your credit report.

You can cut expenses like cable, data plans, dining out, and other non-essentials. You can seek to increase revenue by taking on overtime or a second job. Anything you can do to get your revenue and expenses into a healthy balance will help you in the run.

It’s OK to borrow money within reason, since lenders want to see successful borrowing history. But you should avoid taking on loans that can hurt you if you run into temporary financial trouble like a lost job or medical emergency.

Make sure you make all your loan payments and credit card payments on time, and again, you need to do whatever it takes to satisfy any unpaid judgments or tax liens.

If it starts to feel overwhelming, you might want to consult with a reputable credit repair company, tax attorney or bankruptcy attorney. When it comes to public records, it often makes sense to leave the legal and technical challenges to the experts who have devoted a lifetime to solving these kinds of problems. You can think of it as an investment in your financial future, and it can help you avoid even more stumbling blocks down the road.

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 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/

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How Homeowners in Foreclosure Can Quickly Improve their Credit Score

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When homeowners find themselves in an unfortunate situations like recent foreclosures, there are few things that can help a homeowner get back on track to purchase a New Home, and one of those things is Improved Credit Score.

A good credit score can give you a lot of freedom. A bad credit score can be prohibitive in more ways than one, making it harder to get loans with reasonable interest rates, or even to get a loan to begin with.

So, what is a good credit score?

According to Value Penguin, a credit score of 720 or more is considered excellent, 660 to 719 is good, 620 to 659 is poor, and anything under 620 is bad. In 2015, the average FICO credit score in America reached an all-time high of 695.

There are several different scoring models out there, and the average FICO score will vary based on age and location, but most will fall between 660 and 720.

So this article is going to discuss why your credit score is important, and give you eight ways you can improve your credit score quickly (potentially within 30 days).

Why is Your Credit Score So Important?

There are many reasons why your credit score is important.

Many landlords will check your credit report before renting to you. They want to make sure you can and will pay your bills on time, so a poor credit score could influence your ability to find a place to live.

Your credit score also affects how much you pay in home and auto insurance, and even whether or not you are approved for a cell phone plan.

Most importantly, your credit score determines the cost of your future purchases. A good credit score gets lower rates on loans and credit cards, resulting in lower overall costs.

To put this into perspective, someone who has a credit score of 650 and gets a 30-year $400,000 mortgage loan is likely to pay over $70,000 more in interest than someone who gets the same loan, but has a credit score of 750.

As you can see, you can save A LOT of money by maintaining a good credit score.

Top 8 Ways: How to Improve Your Credit Score

1. Pay your bills on time.

This may seem like a no-brainer, but 35% of your credit score is determined by your ability to pay your bills on time. Even a payment that is a few days late can significantly impact your credit score.

If you have missed one or more payments, that’s OK. By consistently paying your bills on time after your late or missed payments your score should start to improve, but it may take a few months before you see results.

2. Raise your credit limit.

By raising your credit limit you are decreasing your credit utilization rate. That is, as long as you don’t adjust you’re spending habits accordingly.

Then you would just end up at the same credit utilization rate and owing more.

To put this into perspective, if you have maxed out a $2000 credit card, and you call the creditor and get approved for a credit limit increase to $4000, you instantly cut your credit utilization rate in half.

You should see results in an improved FICO score within a month or two with this method.

3. Use different types of credit.

Using different types of credit like personal loans from credit unions and installment loans for things like furniture, in addition to maintaining a credit card or two, shows your ability to pay your bills and manage the different types of credit.

Once you successfully pay these loans off, making all the payments on time, the credit reporting agencies will see you as a good borrower and your score will increase.

4. Dispute discrepancies and errors.

You should examine everything in your credit report, particularly focusing on accounts that show late payments or unpaid bills. If you find any information to be inaccurate, you can report the inaccuracies on line through Experian, TransUnion, and Equifax.

Additionally, you may consider contacting a credit repair company like Lexington Law for their assistance in repairing your credit.

The reporting agency will open an investigation if they find your claims to be substantiated, and things should be resolved in one or two months.

You are entitled by law to one free credit report each year. You can request your free annual credit report from the major reporting agencies at AnnualCreditReport.com.

5. Strategically open credit accounts.

Opening too many accounts in a short amount of time can have a negative impact on your credit score.

When you apply for credit, a hard inquiry is made on your credit report, which will dock your credit score a few points. So, the more times you apply for credit the more points that will be docked from your credit score.

If you have one or two accounts with low credit limits and haven’t opened any new accounts within the last six months, opening a new credit card account can improve your score.

This works because by opening a new credit account you are increasing your overall credit limit, which if you don’t increase your spending habits, decreases your credit utilization rate. You could also achieve this by contacting your current credit providers and requesting a credit increase.

It cannot be stressed enough to spend only what you can afford to pay every month.

6. Pay your bills twice a month.

Most creditors only report balances to credit bureaus once a month. Even if you pay your card off each month, if you are running up large balances, it could appear like your overusing your credit.

For example, if you use a rewards card to pay for everything and max it out or close too every month. Even though you pay your bill in full, when the credit reporting agency sends in their monthly report it will look like your utilizing most of your credit, which will decrease your score.

You can counter this glitch in the system by splitting up your credit card payments, and paying on your balances at least twice per month to keep your running balance down. If you make a large purchase and have the cash, you should pay it off immediately.

7. Become an authorized user.

In order to become and authorized user, you need to have someone who manages their money very well and is willing to add you onto their credit account and issue a card in your name.

Obviously this person will need to care about you and trust you a whole lot to add you to their credit account. You should have no intention of using this credit card and should be asking this favor of someone only to improve your credit score.

Once you are an authorized user, the account will show up on your credit report as well as the credit utilization rate and all the on-time payments associated with the account. As a result your credit score will increase.

8. Reduce the amount you owe.

Ultimately the best thing you can do to increase your credit score is to reduce the amount you owe.

The amount you owe determines 30% of your credit score, but with financial discipline it can be easier to reduce the amount you owe than clean up a late and missed payment history.

By paying on time, twice per month, and decreasing the amount you owe, you can control the factors that collectively make up 65% of your score.

So by diligently focusing and committing to reducing the amount you owe and paying bills on time, you will dramatically improve your score.

Conclusion

It is important to understand that the quickest you will see an increase in your credit score may be a few months.

You can easily ruin your credit score within a year’s period, and it will take even longer than that to repair the damages of irresponsible credit usage. It is a lot easier and less stressful to maintain a good credit score, than it is to fix one.

The best advice is to not spend more than you can afford and to pay all of your bills on time. In the event that you lose employment and cannot pay, many creditors will work with you until you find new employment.

You have choices and the ability to improve your credit score, no matter how bad your score is. All you have to do is take action.

Do you have any tips on how to improve your credit score quickly? If so, please leave them in the comment section below.

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 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/

What Homeowners Must Know About the Residential Mortgage Lending Market

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Introduction and Background

Residential mortgage lenders have long been required to disclose to their borrowers (i) the cost of credit to the consumer and (ii) the cost to the consumer of closing the loan transaction. These regulatory disclosure requirements arise from two statutes – the Real Estate Settlement Procedures Act of 1974 (RESPA) and the Truth In Lending Act (TILA). The regulations were designed to protect consumers by disclosing to them the costs of a mortgage loan (TILA) and the cost of closing a loan transaction (RESPA). These disclosures have in the past been enforced by multiple federal agencies (the Federal Reserve Board, Housing and Urban Development, the Office of Thrift Supervision, the Federal Trade Commission, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the National Credit Union Administration) and provided to consumers on multiple forms with sometimes overlapping information (the Truth in Lending disclosures, the Good Faith Estimate, and the HUD-1 Settlement Statement).

The Dodd Frank Act and CFPB

In 2010, the Dodd Frank Wall Street Reform and Consumer Protection Act (the Dodd Frank Act) created the Consumer Financial Protection Bureau (CFPB), consolidated the consumer protection functions of the above-federal agencies in the CFPB, transferred rulemaking authority under the statutes to the CFPB, and amended section 4(a) of RESPA and section 105(b) of TILA requiring CFPB to issue an integrated disclosure rule, including the disclosure requirements under TILA and sections 4 and 5 of RESPA. The purpose of the integration was to streamline the process and ensure that the disclosures are easy to read and comprehend so that consumers can “understand the costs, benefits, and risks” associated with mortgage loan transactions, in light of the “facts and circumstances.” 12 U.S.C. 5532(a).

The TRID Rule

The CFPB issued a propose rule in July, 2012. The final TILA-RESPA integrated disclosure (TRID) rule was published in late 2013, amended in February, 2015, and went into effect on October 3, 2015. More than simply streamlining the existing process, the TRID rule replaced the entire disclosure structure, changing the form, timing, and content of the disclosures.

Scope – The TRID rule applies to most closed-end consumer mortgages, but not to home equity loans, reverse mortgages, or mortgages secured by anything other than real property (dwellings, mobile homes, etc). It does not apply to lenders who make five or less mortgage loans a year. It does, however, apply to most construction loans that are closed-end consumer credit transactions secured by real property, but not to those that are open-end or commercial loans.

Forms – The TRID rule replaced the forms that had been used for closing mortgage loans with two new, mandatory forms. The Loan Estimate or H-24 form (attached as Exhibit 1) replaces the former Good Faith Estimate and the early TILA disclosure form. The Closing Disclosure or H-25 form (attached as Exhibit 2) replaces the HUD-1 Settlement Statement and the final TILA disclosure form.

Content – Among other information, the three page Loan Estimate must contain (i) the loan terms, (ii) the projected payments, (iii) the itemized loan costs, (iv) any adjustable payments or interest rates, (v) the closing costs, and (vi) the amount of cash to close. If actual amounts are not available, lenders must estimate. Among other information, the Closing Disclosure must contain (i) loan terms, (ii) projected payments, (iii) loan costs, (iv) closing costs, (v) cash to close, and (vi) adjustable payments and adjustable rates as applicable. The required forms are rigid and require the disclosure of this information in a detailed and precise format.

Timing – The TRID rule requires a creditor (or mortgage broker) to deliver (in person, mail or email) a Loan Estimate (together with a copy of the CFPB’s Home Loan Toolkit booklet) within three business days of receipt of a consumer’s loan application and no later than seven business days before consummation of the transaction. A loan application consists of six pieces of information from the consumer: (i) name, (ii) income, (iii) social security number, (iv) property address, (v) estimated value of property, and (vi) amount of mortgage loan sought. 12 C.F.R. §1026.2 (a) (3)(ii). After receiving an application, a creditor may not ask for any additional information or impose any fees (other than a reasonable fee needed to obtain the consumer’s credit score) until it has delivered the Loan Estimate.

The TRID rule also requires a creditor (or settlement agent) to deliver (in person, mail or email) a Closing Disclosure to the consumer no later than three business days before the consummation of the loan transaction. The Closing Disclosure must contain the actual terms of the loan and actual cost of the transaction. Creditors are required to act in good faith and use due diligence in obtaining this information. Although creditors may rely on third-parties such as settlement agents for the information disclosed on the Loan Estimate and Closing Disclosure, the TRID rule makes creditors ultimately responsible for the accuracy of that information.

Tolerance and Redisclosure – If a charge ultimately imposed on the consumer is equal to or less than the amount disclosed on the Loan Estimate, it is generally deemed to be in good faith. If a charge ultimately imposed on the consumer is greater than the amount disclosed on the Loan Estimate, the disclosure is generally deemed not in good faith, subject to certain tolerance limitations. For example, there is zero tolerance for (i) any fee paid to the creditor, broker, or affiliate, and (ii) any fee paid to a third-party if the creditor did not allow the consumer to shop for the service. Creditors may charge more than the amount disclosed on the Loan Estimate for third-party service fees as long as the charge is not paid to an affiliate of the creditor, the consumer had is permitted to shop for the service, and the increase does not exceed 10 percent of the sum of all such third-party fees. Finally, creditors may charge an amount in excess of the amount disclosed on the Loan Estimate, without any limitation, for amounts relating to (i) prepaid interest, (ii) property insurance premiums, (iii) escrow amounts, (iv) third-party service providers selected by the consumer and not on the creditor’s list of providers or services not required by the creditor, (iv) and transfer taxes.1 If the fees and charges imposed on the consumer at closing exceed the fees and charges disclosed on the Loan Estimate, subject to the tolerance levels, the creditor is required to refund the consumer within 60 days of consummation of the loan.

If the information disclosed on the Closing Disclosure changes prior to closing, the creditor is required to provide a corrected Closing Disclosure. An additional three-day waiting period is required with a corrected Closing Disclosure if there is an increase in the interest rate of more than 1/8 of a percent for fixed rate loans or 1/4 of a percent for adjustable rate loans, a change in loan product, or a prepayment penalty is added to the loan. For all other changes, the corrected Closing Disclosure must be provided prior to consummation. If a change to a fee occurs after consummation, then a corrected Closing Disclosure must be delivered to the consumer within 30 calendar days of receiving information of the change. If a clerical error is identified, then a corrected Closing Disclosure must be delivered to the consumer within 60 calendar days of consummation.

Impact on Relationships Between Lenders and Vendors

The TRID rule is detailed and highly technical and the CFPB has published very little official guidance as to the interpretation of the rule. As a result, the various members of the industry are interpreting the rule widely differently and applying it with the according lack of uniformity. An example of the kinds of disagreement arising is the issue of whether the final numbers can be massaged in order to avoid re-disclosure and delivery of a new Closing Disclosure at closing or after. This has led to significant conflicts between creditors and settlement agents as to what the TRID rule requires. Some have described it as a “battle field” with settlement agent’s following creditor’s varying instructions but documenting “everything.”

Impact on Secondary Mortgage Market

The implementation of the TRID rule has also apparently begun to cause delays in closing consumer mortgage loan transactions, with closing times up month over month and year over year since October. Loan originators are also reporting decreases in earnings and attributing some of that decrease to implementation of the TRID rule. Moreover, Moody’s has reported that, because some third-party due diligence companies have been strictly applying their own interpretations of the TRID rule in reviewing loan transactions for “technical” violations (i.e., inconsistent spelling conventions and failure to include a hyphen), these firms have found that up to 90% of reviewed loan transactions did not fully comply with the TRID rule requirements. The fact that most of these compliance issues appear to be technical and non- material has not dampened concerns.

MBA Letter

Indeed, these concerns were set forth by President and CEO of the Mortgage Bankers Association David Stevens in a letter to CFPB Director Richard Codray on December 21, 2015 (letter attached as Exhibit 3). In the letter, Stevens identified the problem, proposed a possible interim solution, and asked for ongoing guidance. The problem, according to Stevens, is that certain due diligence companies have adopted an “extremely conservative interpretation” of the TRID rule, resulting in up to a 90% non-compliance rate. This could put loan originators in the position of being unable to move loans to the secondary market or having to sell them at substantial discounts, and could ultimately lead to significant liquidity problems. It is also unknown how the government sponsored entities (GSEs) will interpret the TRID rule, and whether they too will adopt such conservative interpretations and ultimately demand loans be repurchased and seek indemnification for the lack of technical compliance. Stevens proposed written clarification on a lender’s ability to correct a variety of these technical errors, but also noted a significant need for ongoing guidance and additional written clarifications.

CFPB’s Response

On December 29, 2015, Director Cordray responded to Stevens’s letter, reassuring him that the “first few months” of examinations would be corrective, not punitive, and focused on whether creditors have made “good faith efforts to come into compliance with the rule.” Cordray also noted the GSEs have indicated that they do not intend to exercise repurchase or indemnification remedies where good faith efforts to comply are present.2Cordray also addressed the ability to issue a corrected closing disclosure in order to correct “certain non- numerical clerical errors” or “as a component of curing any violations of the monetary tolerance limits, if they exist.” Interestingly, in this context Cordray raised the issue of liability for statutory and class action damages, noting that “consistent with existing . . . TILA principles, liability for statutory and class action damages would be assessed with reference to the final closing disclosure issued, not to the loan estimate, meaning that a corrected closing disclosure could, in many cases, forestall any such private liability.”

Cordray went on to say that, despite the fact that TRID integrates the disclosures in TILA and RESPA, it did not change the “prior, fundamental principles of liability” under either statute and as a result that:

(i) there is no general assignee liability unless the violation is apparent on the face of the disclosure documents and the assignment is voluntary. 15 U.S.C. §1641(e).

(ii) By statute, TILA limits statutory damages for mortgage disclosures, in both individual and class actions to failure to provide a closed-set of disclosures. 15 U.S.C. §1640(a).

(iii) Formatting errors and the like are unlikely to give rise to private liability unless the formatting interferes with the clear and conspicuous disclosure of one of the TILA disclosures listed as giving rise to statutory and class action damages in 15 U.S.C. §1640(a).

(iv) The listed disclosures in 15 U.S.C. §1640(a) that give rise to statutory and class action damages do not include either the RESPA disclosures or the new Dodd-Frank Act disclosures, including the Total Cash to Close and Total Interest Percentage.

Cordray concluded his letter by noting that “the risk of private liability to investors is negligible for good-faith formatting errors and the like” and that “if investors were to reject loans on the basis of formatting and other minor errors . . . they would be rejecting loans for reasons unrelated to potential liability” associated with the disclosures required by the TRID rule.

While the promise of a good faith implementation period and the assurance that TRID does not expand TILA liability to RESPA disclosures offers some comfort to creditors, Cordray’s letter is not a compliance bulletin or supervisory memo, was not published in the Federal Register, and does not appear to be an official interpretation of the TRID rule that would bind the CFPB or any court. Moreover, his comments focus primarily on statutory damages and do not take into consideration potential liability for actual damages and, importantly, attorney’s fees.

Potential Areas of Liability

Despite these assurances, creditors still must concern themselves with potential liability for TRID violations. The following is list of the main sources of potential liability for TRID violations.

Regulatory (CFPB) – The CFPB has the ability investigate potential violations via its authority to issue civil investigative demands, a form of administrative subpoena. 12 U.C.C. §5562(c). Upon a determination of a violation, the CFPB can issues cease-and-desist orders, require creditors to adopt compliance and governance procedures, and order restitution and civil penalty damages. CFPB may impose penalties ranging from $5,000 per day to $1 million per day for knowing
violations.

(A) First tier – For any violation of a law, rule, or final order or condition imposed in writing by the Bureau, a civil penalty may not exceed $5,000 for each day during which such violation or failure to pay continues.

(B) Second tier – Notwithstanding paragraph (A), for any person that recklessly engages in a violation of a Federal consumer financial law, a civil penalty may not exceed $25,000 for each day during which such violation continues.

(C) Third tier – Notwithstanding subparagraphs (A) and (B), for any person that knowingly violates a Federal consumer financial law, a civil penalty may not exceed $1,000,000 for each day during which such violation continues.

12 U.S.C. § 5565(c)(2).

Other Governmental Liability – Creditors could also face potential additional claims pursuant to the False Claims Act and the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA).

Consumer Actions – While statutory damages may be limited under TILA to $4,000 in individual suits and the lesser of 1% of company value or $1 million in class actions, that does not account for potential liability for actual damages and attorney’s fees.

Contractual Liability – Absent a specific contractual carve out for technical violations of TRID, originating lenders and creditors may also face potential liability for violation of contractual representations that the loans they are selling were originated “in compliance with law.”

Conclusion

The problem with the TRID rule is that, like the legendary metal bed of the Attic bandit Procrustes, it is a one size fits all regulation and industry participants are going to get stretched or lopped in the process of attempting to fit every transaction into the regulation’s apparently inflexible requirements. Time may well bring additional CFPB guidance, either in the form of the CFPB’s formal, binding interpretations of the rule or in the form of regulatory decisions. Such guidance may then give industry participants a better understanding of how to make and close mortgage loans and avoid liability in process. In the meantime, we can expect further delays, disagreements, and, ultimately, enforcement and litigation.

1 There had been disagreement on whether transfer taxes (property taxes, HOA dues, condominium or cooperative fees) were subject to tolerances or not. On February 10, 2016, in a rare instance, the CFPB issued an amendment to the supplementary information to the TRID rule to correct a “typographical error” and clarify this issue, amending a sentence that had read that these charges “are subject to tolerances” to read that such charges “are not subject to tolerances” (emphasis added).

2 In fact, Fannie Mae and Freddie Mac both issued similar letters on October 6, 2015 advising that “until further notice” they would “not conduct routine post-purchase loan file reviews for technical compliance with TRID,” as long as creditors are using the correct forms and exercising good faith efforts to comply with the rule. In these letters, the GSEs further agreed not to “exercise contractual remedies, including repurchase” for non-compliance except where the required form is not used or if a practice impairs enforcement of the loan or creates assignee liability and a court, regulator, or other body determines that the practice violates TRID. Similarly, the Federal Housing Administration issued a letter that “expires” April 16, 2016, agreeing “not to include technical TRID compliance as an element of its routine quality control reviews,” but noting that it does expect creditors to use the required forms and use good faith efforts to comply with TRID.

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 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/

 

What Homeowners Must Know About Mortgage Fraud & Restitution

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During the peak of the housing boom in Las Vegas, Russell, a mortgage loan processor for a large bank, reviewed a mortgage application. Everything appeared to be in order: this particular type of mortgage loan required no income verification because the buyer had excellent credit and the home would be an owner-occupied property. Russell approved the loan for the bank.

Unbeknownst to Russell and the bank, the applicant was actually a “straw buyer,” using his name and credit to buy the house at the insistence of his business partner, but not actually intending to live in the house. All the applicant had to do was sign a few documents and both the applicant and his business partner would profit from exploding housing prices. The applicant’s credit would allow the pair to purchase a single-family residence for $295,000, and then, before the first mortgage payment came due, they would flip the property, that is, immediately sell the home, and profit from the home’s extraordinary short-term appreciation. The applicant never planned on living in the house nor making any mortgage payments, despite his execution of loan documents to the contrary.

Unfortunately, housing prices did not continue their fantastic escalation and the pair were unable to sell the home. Not surprisingly, neither the applicant nor his business partner made any mortgage payments and the home went into foreclosure. At the time of the home’s foreclosure, the house had a fair market value of $265,000. However, the bank that relied on the applicant’s information had too many similarly situated properties at the time of the foreclosure and decided to keep the home in inventory until it could sell the home at a later date.

Meanwhile, the financial institution became suspicious of the applicant and realized he never even moved into the house, despite claiming on his Uniform Residential Loan Application that this would be an “owner-occupied” property.

Concerned with an increase in mortgage fraud, the lender tipped off authorities, who subsequently investigated and arrested the straw buyer and his business partner. Almost a year later, the partners pled guilty and were sentenced, inter alia, to pay restitution to the financial institution. At the time of sentencing, the home had a fair market value of $145,000.

The court ordered restitution based on the Mandatory Victims Restitution Act (MVRA) concerning fraud and property. The victim, in this case the bank, argued its amount of loss equaled $295,000 (the amount originally borrowed) less the current fair market value of the property returned, $145,000; thus, the court should order the defendants to pay restitution of $150,000. On the other hand, the defendants argued that at the time the property was returned to the financial institution, the value of the home was $265,000. And because the bank had control over the property since that point in time, and had the ability to sell it any time, the defendants should not be liable for the further declining
market conditions. Thus, the defendants argued they only owed restitution of $30,000. Alternatively, the judge could consider a third possibility: recent  recommendations from US Sentencing Guidelines. Under these new guidelines,
the court determines the fair market value of the home on the defendants’ sentencing
date.

But, if the bank had not sold the home by that date, that fair market value would be based on the county’s assessed value of the property. In Clark County, where Las Vegas is situated, the Assessor’s Office updates property values annually and, depending on the specific time frame in this hypothetical, the assessment value can range from a lagging property assessment valuing the home at $280,000 to a more current assessment valuing the home at $125,000.

Which measure of restitution and subsequent calculation is best? That is, which value most adequately compensates the injured victim without unfairly burdening the defendants? The Ninth Circuit would side with the defendants in this case, having previously held that the value of the home on the date the bank gains control is the proper measure of restitution. Accordingly, the defendants in this case would be ordered to pay only $30,000 in restitution. On the other hand, the Seventh Circuit would hold that the “property” stolen was the money used to finance the home purchase, and not the actual home.

Subsequently, the “property” is not returned to the victim until the bank sells the
house and gets the entire amount it loaned to the defendants back. For that reason, if the bank sold the home by the sentencing date for $145,000, the defendants would be ordered to pay $150,000 in restitution. And if a judge considered the US Sentencing Guidelines, she would look to the local assessor’s office to determine the correct value. Thus, the amount of restitution a defendant pays depends on where the mortgage fraud takes place and whether the presiding judge considers the US Sentencing Guidelines. Accordingly, mortgage fraud restitution is not uniform throughout the United States.

This note discusses the circuit split in applying the Mandatory Victims Restitution Act of 1996 to mortgage fraud crimes—specifically, the difference in the mortgage fraud restitution formula. In Part I, I provide an introduction to mortgage fraud. In Part II, I provide background on the Mandatory Victims Restitution Act of 1996, which established a directive to courts to order restitution to identifiable victims. Further, the Act indicated, albeit imprecisely, that the restitution amount is based on the property’s value on the sentencing date, less the property’s “value” on the date the property is returned. Regrettably, the Act does not provide a definition of the word property,” which has resulted in a circuit split. Three circuit courts calculate the mandatory restitution as the property’s “value” based on the date the property is returned—that is, the property’s fair market value on that date. On the other hand, four circuits insist that the “value” of the property can only be determined when the bank actually sells that property. In Part III, I will discuss the circuit split where courts disagree on the “appropriate” restitution calculation.

In an effort to provide a uniform calculation, last year the US Sentencing Commission proposed changes to the US Sentencing Guidelines. While the Guidelines are only advisory and not mandatory, these recent amendments result in a third possible calculation that I discuss in Part IV.

Finally, in Part V, I critique each of the three imperfect approaches. In addition, I provide comparisons to various state foreclosure deficiency statutes as an illustration of alternative calculations. I conclude by proposing an amendment to the Mandatory Victim Restitution Act that, in the cases of collateralized loans obtained by fraud, defines “property” as the actual property fraudulently obtained: cash. In addition, I propose an additional “good faith” clause to the amendment to prevent banks from holding onto a foreclosed property longer than necessary. The sooner a property is sold, the sooner the bank recuperates some of its lost funds and the sooner a defendant knows the restitution
amount he must pay.

A. What is Mortgage Fraud?

In the hypothetical above, the partners executed mortgage fraud by using the applicant’s name and credit as a “straw buyer.” That is, a person who allows his name to be used in the loan process but has no intention of actually making any mortgage loan payments. Mortgage fraud comes in a variety of forms. For example, a person commits loan origination fraud when he misrepresents or omits information on a loan application upon which an underwriter ultimately relies to write a loan. Mortgage fraud can also occur with illicit programs aimed at current homeowners who are having trouble with their payments. Lately, this type of foreclosure rescue fraud is increasing. These types of scams focus on homeowners on the verge of foreclosure. Criminals promise to “stop or delay the foreclosure process,” and, in return, homeowners sign over their property to the criminals.

Mortgage fraud can also include “flopping.” Flopping occurs when a bank agrees to a short sale with the homeowner who then attempts to get the lowest price possible by purposefully damaging the soon-to-be-sold house. The house is then bought by an accomplice, cleaned up, and immediately flipped for a profit of upwards of 30 percent. In 2011, Nevada ranked second to Florida in the Mortgage Fraud Index (MFI), a ranking of states based on reported fraud and misrepresentation investigations. The FBI investigates mortgage fraud through Suspicious Activity Reports (SARs) filed by financial institutions.

The number of mortgage fraud SARs filed in 2011 was 93,508. To put this in perspective, in 2003 the number of reports filed was less than 7,000. However, mortgage fraud may be decreasing: 2012 SARs are down 25 percent compared to the previous year.

B. Why Does Mortgage Fraud Matter?

Mortgage fraud is a “significant contributor” to our economic crisis. Mortgage fraud has contributed to an increasing number of home foreclosures, decreasing home prices, and tightening of credit because of investor losses attributable to mortgage-backed securities. Further, “[t]he discovery of mortgage fraud via the mortgage industry loan review processes, quality control measures, regulatory and industry referrals, and consumer complaints lags behind economic indicators—often up to two years or more, with the impacts [of the fraud] felt far beyond these years.” Undeniably, reports of mortgage fraud persist and are continually emphasized in the news.

Lenient underwriting standards and a booming housing market have shaped a perfect backdrop for fraud to thrive. However, “[b]y 2007, real estate values began to fall and mortgage lenders began experiencing large losses due to fraud, reducing their ability to fund new mortgage loans.” The economic implications of mortgage fraud are staggering. The actual dollar amount attributed to mortgage fraud is unknown, however in 2010 alone “more than $10 billion in loans originated with fraudulent application data.”

Moreover, in fiscal year 2012, 70,291 SARs were filed with losses of $2.69 billion. And while the number of mortgage fraud instances has decreased, the dollar amounts involved in instances of fraud has increased.

C. Why Restitution?

Until the early 1980s, courts did not habitually consider restitution as part of sentencing guidelines. In fact, if a court ordered restitution, it was usually based on the defendant’s ability to pay. The passage of the Victim and Witness Protection Act (VWPA) in 1982, its subsequent revision in 1986, and later the Mandatory Victims Restitution Act (MVRA) in 1996 empowered federal judges to order restitution to victims of certain crimes without consideration of the defendant’s ability to pay. Unfortunately, victims receive only a fraction of the costs from crimes through restitution, as not all defendants have the resources to pay the restitution and their income potential diminishes significantly once they are in jail. However, as courts consider both the MVRA and the frequently cited public policy argument for restitution (making the victim whole), courts consequently order restitution awards to mortgage fraud victims. Indeed, “[v]ictims in mortgage fraud cases are statutorily entitled to restitution.

D. The Split

When a court convicts a defendant of mortgage fraud, and the defendant’s return of the property alone is not enough to fully restore the identified victim, the court will try to offset this deficiency in one of two ways. The Second, Fifth, and Ninth Circuits determine restitution based on the property’s fair market value the day the victim receives title to the property. The Third, Eighth, Tenth, and, most recently, Seventh Circuits hold the shortage is calculated based on the actual sale of the collateral real estate. Thus, the value of the property is unknown until the property has been sold and the lender receives the net proceeds. Consequently, this split “sets up a potential case for the U.S.
Supreme Court to decide whether the MVRA requires a court to determine restitution based on the fair market value of collateral real estate on the date it is returned to a victim . . . or the cash value upon foreclosure sale.”

II. THE MANDATORY VICTIMS RESTITUTION ACT OF 1996

Congress first enacted legislation in support of victims’ rights with the Victim and Witness Protection Act of 1982 (VWPA). The act included a broad provision for victim restitution. In considering the bill, the Committee on the Judiciary indicated that [t]he principle of restitution is an integral part of virtually every formal system of criminal justice, of every culture and every time. It holds that, whatever else the sanctioning power of society does to punish its wrongdoers, it should also insure that the wrongdoer is required to the degree possible to restore the victim to his or her prior state of well-being.

However, while this report indicated the importance of requiring restitution,
the Act only provided that a Court may order the defendant to pay restitution. Congress expanded and amended legislation for victims in future legislation, most notably in the Mandatory Victims Restitution Act of 1996. Congress identified one of the primary purposes of the Act as “requiring Federal criminal defendants to pay full restitution to the identifiable victims of their crimes.” In addition, Congress specifically made mandatory restitution applicable to fraudulent crimes against property. Moreover, Congress explicitly identified the legislation’s purpose:

This legislation is needed to ensure that the loss to crime victims is recognized, and
that they receive the restitution that they are due. It is also necessary to ensure that
the offender realizes the damage caused by the offense and pays the debt owed to the
victim as well as to society. Finally, this legislation is needed to replace an existing
patchwork of different rules governing orders of restitution under various Federal
criminal statutes with one consistent procedure.

If restitution is appropriate, a court may only award it to identifiable victims. A
federal crime victim is defined as “a person directly and proximately harmed as
a result of the commission of a Federal offense or an offense in the District of Columbia.” Further, restitution is only applicable to crime victims when the
defendant is actually convicted. In addition, “[a] ‘victim’s’ participation in a
fraudulent mortgage scheme . . . will generally exclude the victim from
restitution.”

It should also be remembered that restitution, “like all criminal sanctions . . . is a sanction of limited application.” Restitution is only complete, then, when payment of the obligation is complete. In jurisdictions that allow “extended or nominal payment mechanisms,” which can prolong the repayment, the variable time value of money may cause any restitution to be technically incomplete, even once the balance is repaid in full. Unfortunately, only 17.4 percent of measured property offenses resulted in criminal charges. Where convictions of mortgage fraud do result, however, courts consider the language of the MVRA in awarding restitution:

The court may also order restitution . . . . The order may require that such defendant
. . . return the property to the owner of the property . . . or . . . if return of the property . . . is impossible, impractical, or inadequate, pay an amount equal to the greater of . . . the value of the property on the date of the damage, loss, or destruction, or . . . the value of the property on the date of sentencing, less the value (as of the date the property is returned) of any part of the property that is returned . . . .

Accordingly, when the return of the property is inadequate restitution, the MVRA states that the offset value must be determined as of the date the property is returned. However, the statute is silent as exactly how to measure the value of the property on that date. Consequently, in the absence of clear guidelines, three possible formulas have arisen.

III. THE CIRCUIT SPLIT

With a lack of clarity in defining “property” in the MVRA, the circuit courts have split in their interpretations of restitution. Two circuits have followed the Ninth Circuit in determining that the value of the property is the fair market value on the date of the property’s return, arguing that once the property is returned to the victim, the victim has control over the property and may dispose of the property whenever it chooses. Accordingly, these courts calculate the fair market value of the property based on the date the property is returned rather than waiting for a later sale. Conversely, four circuits hold that the “property” can only be valued when the house is eventually sold and the proceeds are provided to the victim because cash, not real estate, was the actual
property the defendants took from the victim.

A. The Ninth Circuit Method

A bank would say a restitution calculation can only be determined when the property is sold, but a defendant would argue that if a bank holds on to the property in a declining market, it is unfair for the defendant to pay more in restitution than what the property was worth when the victim regained control of it. The Ninth Circuit method considers the fairness of a bank refraining from selling a property immediately, and ultimately agrees with the defendant’s argument.

After the passage of the Victim and Witness Protection Act in 1982, the Ninth Circuit became the first circuit court to consider mortgage fraud restitution. The court turned to an earlier decision in a timber theft case for property valuation guidance. In United States v. Tyler, the defendant was ordered to pay restitution for his theft of timber from a national forest. However, the victim, the federal government, did not sell the timber upon its seizure and in fact purposefully held onto the timber, claiming it needed the timber for evidentiary purposes in its case against Tyler. During the period between the
arrest and sentencing, timber prices declined. The district court found that the
amount of restitution equaled the difference of the timber’s value from sentencing
date and the higher value when defendant actually stole the timber. The Ninth Circuit disagreed with the District Court and held that the defendant should not have an increased restitution when the victim decides to retain the property. The court reasoned that the defendant’s conduct did not cause the subsequent loss the government experienced and therefore restitution was properly calculated as the property’s value on the date the victim regained control of the timber.

The Ninth Circuit subsequently applied this logic to a mortgage fraud context in United States v. Smith, where the defendant obtained loans secured by speculative real estate. The court determined that the credit against restitution should be based on the value of the property on the date title is transferred to the victim. The court noted, “[a]s of that date, the new owner had the power to dispose of the property and receive compensation.” Because the victim has control over the property’s sale once the property is returned, “[v]alue should therefore be measured by what the financial institution would have received in a sale as of that date.”

The Smith decision served as the “keystone for all of the subsequent decisions.”
The Ninth Circuit reinforced this valuation method in later cases. Further, in United States v. Gossi, the court elaborated on its prior decisions that value should be based on the date the victim has control over the property. Specifically, the court noted that what comes with control of the property is the power to dispose, which allows the victim to sell the property anytime and provides no immediate calculation of restitution. Subsequently, the court cited Smith, stating the “[v]alue should therefore be measured by what the financial institution would have received in a sale as of that date.” Finally, this past year, the Ninth Circuit upheld its mortgage fraud restitution calculation in United States v. Yeung. In Yeung, the defendant enlisted five people in a scheme involving false information on straw buyers’ loan applications in order to purchase and refinance homes in Northern California during the booming housing market. The district court considered a sentencing memo indicating that Yeung should pay restitution in the amount of the “outstanding principal balance on the defaulted loans less any money recovered from a sale of the properties used as collateral for the loans.”

Applying the US Sentencing Guidelines, rather than the MVRA, the district court ordered a restitution award in excess of $1.3 million. The Court of Appeals, however,
indicated that a financial institution has control of the property either when the
property is sold or when, citing Smith, the lender “had the power to dispose of
the property and receive compensation,” and therefore restitution should be
based on the fair market value on the date the property is returned. One distinction in Yeung, however, involved a loan purchased on the secondary market. One of the loans had been sold from the originating lender to a loan purchaser at a discount. The court indicated that the “property” in such circumstances is the actual loan, and not the original real property. The court determined that the restitution calculation in this type of circumstance must consider how much the loan purchaser paid for the loan, “less the value of the real property collateral as of the date the victim took control of the collateral property.”

Further, the court disagreed with the district court’s calculation of one property’s value. The district court determined the value of one of the properties as $363,863—the amount the victim received from the property’s sale. However, this sale did not occur until sixteen months after the victim took control of the property. Accordingly, the court found the actual value should be determined from the date the victim took control of the property. Two circuits follow the Ninth Circuit’s restitution calculation. In both United States v. Reese and United States v. Holley, the Fifth Circuit maintained that a property’s value is determined based on the date the collateral property is returned to the lender. Further, in Holley, the Fifth Circuit specifically analogized the facts of Holley to the Smith case in subscribing to the Ninth Circuit calculation

Relatedly, in United States v. Boccagna, the Second Circuit performed an extensive analysis of how property value should be measured, ultimately agreeing with the Ninth and Fifth Circuits. The Boccagna court noted that the MVRA does not define how to determine the value of property. Instead, the court stated, the “law appears to contemplate the exercise of discretion by sentencing courts in determining the measure of value appropriate to restitution calculation in a given case.” The court found the property’s sale price was lower than the fair market value and remanded the case to determine this value as part of the restitution calculation.

B. The Seventh Circuit Method

In contrast, four circuit courts presume the fair market value is determined only by the actual sale of the property. I have referred to this calculation as the Seventh Circuit method because of that court’s recent decision in which it analyzed all circuit holdings to date. However, these decisions begin outside of that circuit. The Third Circuit, in United States v. Himler, observed that the return of the property would be inadequate to compensate the victim, and explicitly disagreed with the Ninth Circuit’s view that value of the property is “as of the date the victim took control of [it].” The court noted instead that real estate is an illiquid asset, and “is only worth what you can get for it.” Thus, the court held that restitution would equal the original loan amount, less the eventual amount recovered from a sale. Surprisingly in this case, waiting until the sale actually
occurred resulted in the defendant paying less restitution than he would have if the fair market value had been used. The condominium in Himler sold for significantly more than its presumed value when title was transferred, due to favorable market conditions.

The Tenth Circuit, in United States v. James, also concluded that value is based on the actual foreclosure sales price and not an appraised value when the property is returned to the mortgage holder. The court noted that the MVRA “generally uses the term ‘value,’ and does not limit calculation of ‘value’ only to the use of the ‘fair market value’ of the property at issue.” Further, because the statute does not specifically mention value as being fair market value, there are other examples of value that may be appropriate, such as foreclosure sales price and replacement price. The court subsequently noted that
value can be a flexible concept, and a court with discretionary powers should keep in mind the purpose of restitution—to make the victim whole. The court concluded, therefore, that the foreclosure sale price in that case reflected a more accurate measure of the victim’s loss. Similarly, the Eighth Circuit, in United States v. Statman, used the foreclosure sale price of a fraudulently purchased bakery business in calculating the restitution award to a state’s small business-funding agency. While the defendant wanted the court to consider the appraised value of the bakery, the court cited James and determined that a foreclosure sale price was a permissible calculation method. The court also agreed with the Tenth Circuit; its decision aligns with the public policy concerns, which justify the existence of restitution in the first place—the need to make victims whole for the actual loss. While this case involved financial fraud, and not mortgage fraud per se, the chosen calculation method aligns this circuit with the sale-price camp.

Most recently, in United States v. Robers, the Seventh Circuit joined the Third, Eighth, and Tenth Circuits concluding “it is proper to determine the offset value [of property that is returned] based on the eventual amount recouped by the victim following sale of the collateral real estate.” The court observed that because the victim loaned cash to the defendants to purchase the property, the cash was therefore the “property” taken, not a home. Basing its opinion on the plain language of the MVRA, the Seventh Circuit decided that “ ‘property’ must mean the property originally taken from the victim,” the value can only be determined by the amount of cash returned to the victim from a sale.

IV. YET ANOTHER PERSPECTIVE—US SENTENCING GUIDELINES

The US Sentencing Guidelines are advisory rules that set out uniform sentencing guidelines for various offenses. The Guidelines are not mandatory,
and while judges have discretion in sentencing, courts must consider the Guidelines
in determining a defendant’s sentence. Moreover, a court of appeals reviewing a sentence that follows the Guidelines will consider the sentencing reasonable per se. Under these Guidelines, the factors considered when imposing a sentence include restitution to the victim. Further, the Guidelines state that, “[i]n the case of an identifiable victim, the court shall . . . enter a restitution order for the full amount of the victim’s loss, if such order is authorized under 18 U.S.C. . . . § 3663.”

The US Sentencing Commission annually reviews the current Guidelines and proposes amendments to reflect inadequacies in recent sentences. Recent revisions to the Guidelines, however, are not consistent with the latest Seventh Circuit decision in Robers. In the Dodd-Frank Wall Street Reform and Consumer Protection Act, Congress issued a directive to the US Sentencing Guideline Commission to review and amend federal sentencing guidelines related to “persons convicted of fraud offenses relating to financial institutions or federally related mortgage loans and any other similar provisions of law.” The amendment subsequently attempts to address the inconsistencies with Application Note 3(E) and “credits against loss rule,” which offsets a victim’s
loss by any credit the victim has already received. In general, the rule deducts the fair market value of the property returned to the victim from the amount of restitution the defendant is required to pay. In other words, the restitution is offset by the collateral’s fair market value. The Commission specifically addressed the situation that the circuit courts have wrestled with—when the victim gets the collateral back but has not disposed of the property, resulting in a problematic value calculation. The Commission noted this and, in an attempt to provide uniform guidelines, it proposed two changes. The first change established a specific date of the fair. market value determination: “the date on which the guilt of the defendant has been established.” The second change “establishes a rebuttable presumption that the most recent tax assessment value of the collateral is a reasonable estimate of the fair market value.” The Commission suggests that a court may consider the accuracy of this measure by examining factors such as how current the assessment is and the jurisdiction’s calculation process. In sum, a court ordering restitution following these Guidelines would establish the value of the property based on the official date of the defendant’s guilt. In addition, if the property has been returned to the victim but remains unsold, a court will use the local tax assessor’s value of the property to determine the property’s value.

V. CRITIQUE OF THE THREE CALCULATIONS

The absence of a definition for the term “property” in the MVRA is the root of the different applications of the statute throughout the country. “When the court defines ‘property,’ the question is whether the statute refers to the property stolen or the property returned. They are not necessarily equivalent, particularly in the context of complex financial instruments . . . .” However, as stated previously, the Act’s purpose is to make the victim whole, and no matter which formula is used, each calculation has the potential to not achieve this goal.

A. The Ninth Circuit Method: Control as the Impetus

There are several advantages to the Ninth Circuit mortgage fraud restitution calculation method, which holds that the fair market value should be calculated based on the date the property is returned to the financial institution victim. First, the date reflects the date that control over the property has been returned to the victims. Accordingly, the bank then has the power to dispose of the property at its discretion without additionally penalizing the defendant if the victim refrains from selling the property on that date. For example, a victim may decide to hold on to the property, as in United States v. Tyler or United States v. Smith, coincidental with a declining market. A victim may have too
many properties in inventory to immediately put a particular property up for sale. Or a victim may be making a calculated business decision to retain the property for a certain period of time for accounting purposes. No matter the purpose behind the retention, it is unfair to place the additional penalty that coincides with declining real estate prices on the defendant who had no control or even influence over the property’s sale.

Second, this specific date requires no guesswork when attempting to calculate the amount of restitution, which results in better efficiency. On the date the bank gets the property back, an appraisal can determine the property’s fair market value. The court can immediately calculate the restitution amount with this figure. Waiting until the property actually sells could result in a delay of months or years to determine how much the actual proceeds from the sale are. As a result, the court has an almost immediate figure to apply to the calculation and can order the restitution award right away. On the other hand, the Ninth Circuit calculation method has some considerable weaknesses. First, real estate is an illiquid asset, and determining fair market value of an illiquid asset is difficult. An appraisal only suggests what the house could sell for, not what the house actually will sell for. In addition, appraisals are based on historical data of home sales, and during sharp market increases or decreases an appraisal will not reflect the most up-to-date real estate prices.

Second, the recent housing bubble created an economic environment where home prices decreased at a radical rate. Traditionally, such sharp declines are not a concern with real estate over the long run because, while real estate prices fluctuate, they eventually trend upward. However, in situations like the recent drops in home values, the victim-lender can be punished for the market decline, despite the fact the victim was actively trying to sell the property. In addition, amidst tightening credit conditions, fewer buyers may qualify to purchase a home. This results in too much supply, not enough demand, and
consequently puts further downward pressure on home prices. The victimlender
is therefore penalized for market conditions beyond its control and consequently
does not receive complete restitution. Further, a victim financial institution is not in the business of selling homes; it is in the business of making collateralized mortgage loans for qualified buyers. Not only will the lender have costs associated with selling the
home (for example, carrying costs or realtor commissions), the lender cannot make a sale magically happen, especially if the home is situated in a market flooded with other foreclosure sales. Thus, when the lender eventually sells the home, it can potentially face a greater loss, an inequity beyond its control.

B. The Seventh Circuit Method: Cash Proceeds are the “Property”

As discussed in Part II, the Seventh Circuit, along with three other circuits, requires a sale of the property in order to establish the net proceeds offsetting a restitution award. These circuits distinguish that the property fraudulently obtained was the cash proceeds to finance a real estate purchase, not the actual home. Thus, this method recognizes the illiquidity of real estate and instead requires cash proceeds from a property’s sale; therefore, no return of the property for restitution purposes occurs with just the transfer of title or “control” over the property.

In addition, this method provides a more exact amount to the restitution calculation. With an appraisal, a court only has an approximation of what the house is worth. With an actual sale, the court knows specifically what the home sold for, and also has information on the true net proceeds to the lender.

Finally, this method also provides a buffer of protection for a victim trying to sell a property in a declining housing market. If the victim is unable to sell the property immediately, and home prices continue to plummet, the victim will not be financially punished by an ensuing lower sales price of the property. Thus, by treating the property as cash proceeds and not calculating the restitution award until there is a sale of the property, this allows the victim to come closer to achieving full restitution because the funds returned are the original amount that was taken.

This calculation method, however, has some distinct disadvantages. First, calculating the amount of time a home will be on the market is a challenge. For example, in a downturn economy, is it appropriate for the defendants to wait for the home to sell for months or years? At what point should the restitution award sentence be official? Without an established time period for a requisite sale, there will be a decrease of both efficiency and certainty as the defendant will have to wait longer to find out what the value of the property is and therefore how much restitution is necessary. In addition, what if the lender purposely holds on to the property longer than necessary? Indeed, victim banks could make a “business decision” to hold onto a property for years before attempting to sell. This type of allowance does not encourage an efficient method of asset redistribution, which can delay economic recovery in a down economy. Further, what if the victim holds an improper foreclosure auction—for example, by failing to advertise the foreclosure sale—and subsequently purchases the home itself for an amount far lower than fair market value because of a (not surprising) lack of buyers? Should the
lender be rewarded for its misbehavior? On the other hand, some would argue
that between the two parties—a convicted criminal who attempted to defraud a
financial institution and a more innocent lender who trusted the criminal borrower—
the defendant should absorb the risk.

Further, it is possible in a booming housing market that a defendant will owe no restitution. For example, if the defendant fraudulently obtained a home loan for $200,000 and the victim lender subsequently sold the property for $205,000, the defendant will be absolved from restitution. However, if part of the goal of restitution is to make the victim whole, the victim is more than compensated in a booming housing market.

Moreover, this type of calculation can have an adverse effect on other types of property. Knowing that the value of the property is not calculated until the item is actually sold, a criminal has little incentive to actually return the property. This would not be a concern for real property, but the same legal framework could be applied to other forms of collateral that can be moved and hidden, like cars. Thus, a thief can choose to hold on to the property or never return the property because of a lack of incentive to return it immediately. Accordingly, “[t]he decision is focused on the statute’s goal of making victims whole but potentially interferes with the statute’s goal of returning property to
victims.” Consequently, “[i]f a defendant is going to be on the hook for the offset amount regardless of when the property is sold, then why return the property? Also, the decision may have the unintended consequence of interfering with the marketplace . . . .”

Finally, the loan in question in these circumstances is for a collateralized asset. The actual home provided security to the lender. As such, the lender bore the risk when it made the loan; however, the lender also understood it could foreclose on the home in case of default. Thus, this cost of doing business is already accounted for and a victim lender understands this type of risk when providing mortgage loans.

C. US Sentencing Guidelines: Local Property Assessment is the Real
“Value”

As discussed in Part IV, the US Sentencing Guidelines establish the date of valuation as the conviction date of the defendant. In addition, if the property has not sold by that date, the local property tax assessor’s value of the home is the value of the property for restitution calculation purposes. There are several advantages to this approach. First, if every circuit applied this approach, these guidelines would result in a uniform application throughout the country and would eliminate the conflicting restitution awards. In addition, this approach sets a number that can be calculated and independently verified. An individual could easily confirm the tax assessor’s value of the property and calculate the restitution.

Moreover, the Guidelines allow flexibility. For example, if a court determines that an assessed value is too divergent from a property’s fair market value, the court has discretion to address these differences and assign a fair market value.

The Guideline method, however, has potential disadvantages. First, as previously
noted, the assessed value may not be near the fair market value of the property, and a battle of experts may ensue as both the defendant and the victim claim otherwise. In addition, this discrepancy may afford too much discretion to judges when the goal of the Guidelines is to set a uniform policy.

In addition, this approach disregards the Seventh Circuit method recognizing that the property taken was the actual cash for the home loan. Instead, by relying on a tax assessor’s value if the home remains unsold, the Commission determined that the “property” is the tangible real estate, and not the cash that was lent. Again, if the victim were unable to sell the home in a declining housing market, the restitution award would fail to compensate the victim for its true loss.

D. Alternative Methods of Calculation – State Deficiency Statutes

The problematic issue of fair market assessment is not unique to restitution.
Every state and the District of Columbia have a deficiency statute, whereby a lender can obtain a deficiency judgment to recover the difference between a foreclosure sale price and the current outstanding balance owed on the mortgage loan. Not every jurisdiction, however, calculates this deficiency in the same way. For example, Nevada calculates the home value based on the actual sale price, not the fair market value when the property is returned to the lender. However, the court may also consider the home’s appraised
value in its determination.

Some states maintain that a foreclosure sale price determines the value of the home when calculating a deficiency judgment. In other words, these states determine that a property’s value is only determined at the time of the property’s sale. Therefore, this calculation is similar to the Seventh Circuit method whereby a property’s value can only be determined following a sale of the real estate.

Other states consider the fair market value of the property when considering a deficiency judgment. States that consider the fair market value at the time the property is returned coincide with the Ninth Circuit calculation method. Notably, some of these states are states that have had a high number of foreclosures and are within the Ninth Circuit: for example, Arizona and California. Other states provide that the courts have discretion to determine the appropriate value of the property. This discretion is analogous to the alternative offered by US Sentencing Guidelines. This alternative is available when a court deems the property’s assessed value is inappropriate and provides that a court has authority to consider other evidence in its determination of a property’s value.

Thus, just as there is a lack of uniformity in the restitution calculation depending on which state you live in, there is a corresponding lack of uniformity regarding deficiency judgments. While most states follow the foreclosure sale approach recognizing the property’s value can only be determined with an actual sale, this approach does not account for the amount of time a financial institution can choose to hold onto the property. It further fails to account for the lack of control a mortgagor has over the sale process. On the other hand, while the fair market approach recognizes the importance of the control aspect, this approach does not consider a mortgagee’s potential inability to sell in a down economy.

E. Analysis

Restitution is founded primarily on the idea that the victim should be made whole for his property loss. The actual property that was defrauded from a victim in mortgage fraud is the money lent as part of the real estate transaction.
Therefore, until the actual money is returned, equity has not been restored to the victim. However, equity also demands that a victim not take advantage of the criminal defendant and hold on to the returned real estate property longer than necessary to sell the real estate property. Therefore, there should be a limitation to ensure a victim does not unreasonably allow the property to languish. Accordingly, a “good faith” requirement should be included in any amendment to the MVRA, requiring a victim to sell the property to recoup funds with good faith. Thus, a defendant who believes a victim unfairly held onto a property for too long may petition the court to reduce the amount of restitution owed if the victim did not commence the sales process with good
faith.

If Congress were to amend MVRA, it should provide a definition of the term “property” to help distinguish between properties at the different phases of a financial transaction. Because of the diverse types of financial fraud—e.g. mortgage fraud compared with securities fraud—the term “property” may have more than one meaning within these contexts, and may also change throughout the transaction. For instance, consider a scheming debtor who fraudulently obtained a margin loan to purchase both mortgage backed securities and corporate bonds. The property “stolen” initially in this case is the fraudulently obtained cash used to purchase the assets. However, after the margin loan is received, the property now consists of two types of financial instruments within
the debtor’s portfolio. Indeed, the property in its current form (financial assets)
can be converted back to the form of the original property (cash). However, with the current definition of property, it is unclear if that conversion is even required.

The definition of property should state that “property” is defined as the specific or particular type of asset (such as cash) that the defendant secured from the victim. This way, the “property” returned to the victim (money) will be the same type of property stolen (money used to purchase the home). In addition, similar to many state statutes prohibiting insurance companies from operating in bad faith, the Act should prohibit victim-lenders from operating in bad faith.

VI. CONCLUSION

Defendants, like the partners in the fictional story in the introduction, could face varied restitution awards depending on which state they commit the mortgage fraud in. This lack of a uniform approach results in inadequate restitution to victims. If the goal of the MVRA is to make victims whole, a more standardized and consistent calculation of restitution is required. Providing a definition of property in the MVRA would provide this uniformity. Further, requiring victims to act in good faith as they attempt to convert property back to the type of asset they were deprived of will help ensure defendants aren’t unfairly punished.

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 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/

What Homeowners Need to Know About Liens in the Homes

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If you are a property owner, you want to own your property “free and clear” of anyone else’s claims. That is, you do not want anyone else to be able to have a legal claim to a portion of your apartment, house, or parcel of land.

Whether by the homeowner’s choice or the actions of a disgruntled creditor or contractor, there are a number of ways that the owner’s title to the property can be “clouded” by the existence of liens meant to secure payment.
After all, if others can lay claim to the property, your resale value diminishes. Not only will buyers pay you less, since you cannot sell them a property with “clean” title, but you might have trouble finding any buyers at all. After all, a buyer is unlikely to engage in an expensive real estate purchase if concerned that other claimants might come out of the woodwork.
As a property owner, you need to know about the various types of real estate liens that could cloud the title to your property. A lien is a claim against property made by someone in order to secure payment of a debt. The lien essentially makes the property collateral against monies or services owed to the other person or entity.
Collateral is an asset that has been pledged by the recipient of a loan as security on the value of the loan. If the recipient of the loan is unable to repay the loan, the lender will look to the collateral as a source for payment on the debt.

Types of Real Estate Liens

There are two main types of real estate liens: voluntary liens and involuntary liens.
Voluntary liens are created by a contract between the creditor and the debtor. The most common type is a mortgage, which is essentially a bank loan that is secured by the property itself. Banks give home buyers sums of money in exchange for a promise to pay back that sum, with additional interest and costs, over a certain period of time.
The bank, of course, retains ultimate legal ownership of the property until the loan is paid off. Voluntary liens like mortgages are easily found and quantified; after all, you are most likely the person who agreed to its terms. At some point, you as the homeowner agreed to the terms of the mortgage and you (theoretically) have a plan for when you will pay it off and gain ownership of the property outright.
Involuntary liens tend to be peskier, because they weren’t created by the homeowner. Many of them are either tax liens or construction liens.
Tax liens are imposed by the federal, state, or local government based upon back property taxes that are due and owing against a particular parcel. Not only can these seriously impact your credit report, but until they’re paid off, they hamper your ability to sell the property.
Construction liens are usually the result of unpaid renovations conducted on your property. As an example, imagine that you hire a contractor to re-landscape your backyard. You give the general contractor a sum of money to complete the job, which might include planting, installing a pool, and constructing a fence. The general contractor might, in turn, use some of that money to hire subcontractors to complete specific tasks (e.g., excavating the pool) or supply specific materials (e.g., stone walkway).
What happens if your general contractor fails to pay one of these subcontractors or suppliers? These subcontractors and suppliers are not in contract with you as the owner, meaning that they cannot sue you for breach of contract. However, they can file a lien on your property in the office of the county clerk. Typically, this would cause a dispute between you and your general contractor, and you would try to force the contractor to pay off the lien. But meanwhile, this lien (sometimes called a “mechanic’s lien”) represents a cloud on your title.
Other, less common involuntary liens include judgment liens, which are imposed to secure payment of a court judgment, and child support liens, which can be imposed based on unpaid child support. Both require court approval before they can be imposed on the homeowner.

Perfected and Unperfected Liens

Liens may be “perfected” or “unperfected.” Perfected liens are those liens for which a creditor has established a priority right in the encumbered property with respect to third party creditors. Perfection is generally accomplished by taking steps required by law to give third party creditors notice of the lien. The fact that an item of property is in the hands of the creditor usually constitutes perfection. Where the property remains in the hands of the debtor, some further step must be taken, like recording a notice of the security interest with the appropriate office.

Selling Property That’s Encumbered by a Lien

If you are planning on selling property that has a lien on it, it is unlikely that the sale will close unless the debt is taken care of. A buyer will expect liens to be paid to allow for a transfer of clear title.

Checking for Existing Liens When Purchasing Property
When purchasing real estate, it is important to make sure there is no lien on the property that will keep you from securing a clear title to the property. Generally, a bank or other mortgage lender will not provide mortgage financing until all liens on the property have been removed. A title search will usually indicate whether or not a lien exists and whether the seller is the legally recognized property owner. It should also indicate the exact legal description of the property, as well as providing details regarding a lien or other encumbrances against the title.
You can conduct your own search at the county clerk’s office in the property’s county. Some county clerks have websites that allow for title searches on the Internet, but these may not provide complete records. Therefore, you may want to hire an attorney or an abstract company to conduct the title search for you.

Transferring Property Without Removing Liens

The law does not require that liens be removed before title to property can be sold or transferred. But the lien will need to be cleared up if the buyer needs financing or wants clear title. If property is transferred without the lien being paid off, it remains on the property. Thus, in transfers between relatives, the new owner may be willing to take title to property that already has liens encumbering it.

Property Lien Disputes

If you have a property lien dispute, you may have to dispute it yourself at the local courthouse or contact an experienced real estate attorney to help you resolve the dispute.

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 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/

How Homeowners Can Use Ibanez Case to Fight a Wrongful Foreclosure

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Many homeowners who found themselves in wrongful foreclosure situation may have a valid defense, against the perpetrators of these crimes.

How much does it cost to get justice, when a bank forecloses on your house illegally? Thousands of ex-homeowners don’t pursue their rights to a financial settlement because they assume they couldn’t pay the legal fees.

In fact, it costs less than you fear. Consumer lawyers take a few cases at no charge. More likely, you’ll pay fees — upfront or on a monthly plan — tied to the lawyer’s estimate of the time it will take and your ability to pay. If they win your case, they’ll collect from the financial institution, too.

Before readers attack the “greedy lawyers” for defending “deadbeat” clients who couldn’t repay their mortgage loans, let me quote from a groundbreaking decision of 2011 by the Massachusetts Supreme Court. The court reversed two foreclosures because the banks — Wells Fargo and U.S. Bancorp, acting as trustees for investors — couldn’t prove that they actually owned the mortgages. Judge Robert J. Cordy excoriated them for their “utter carelessness.” The fact that the borrowers owed the money was “not the point,” he wrote. The right to deprive people of their property is a powerful one and banks have to prove they have the legal standing to do so.

American law cannot allow property seizures based on backdated, incomplete, or fraudulent documentation, no matter what the circumstances are. Otherwise, no one’s home is safe. Courts enforce private property rights through the cases brought before them. In other words, lawyers.

The Massachusetts case began not with consumers, but with the banks themselves. They asked the courts to affirm that the foreclosures were valid so they could get title insurance. That pulled the borrowers — Antonio Ibanez and Mark and Tammy LaRace — into the fray. When the horrified courts looked at how the foreclosures had gone down, they said, “no way,” and gave the former owners their property back.

Ibanez, a special ed teacher, bought the home for investment in 2005 and defaulted in 2007 on a $103,500 loan, according to the court papers. Even since, the house has been boarded up. Ibanez filed a Chapter 7 bankruptcy, so he now has title to the home and no obligation on the debt. The mortgage investors will take the loss.

The LaRaces borrowed $103,200 to buy their home in 2005 and also defaulted in 2007. They had an offer on their home, but the servicer foreclosed anyway. (During the trial, the foreclosing law firm admitted that servicers are graded on how quickly they can liquidate a mortgage.)

The LaRaces have moved back into their long-unattended home, but first they had to clean up mold, fix plumbing, and make other repairs. They would gladly resume payments on the mortgage, their lawyer Glenn Russell says. But the trustee bank doesn’t own the loan. The investors don’t own it because the mortgage was never transferred properly. The original lender, Option One, no longer exists. So whom do they pay?

This important case opens the door to thousands of foreclosure do-overs in Massachusetts at the time, and continuing and equally influenced courts in other states, as well. But there hasn’t been a rush by lawyers to get involved, probably because the field is complex and not especially remunerative. No class actions have been certified, as at that time or shortly thereafter, so the cases proceeded one by one. The financial trail can be hard to track (the Massachusetts documents were unwound by mortgage-fraud specialist Marie McDonnell).  The lawyer — often, a sole practitioner — is up against the awesome resources of major financial institutions.

Neither Ibanez nor the LaRaces were charged for their lawyer’s services. Collier had file a claim for wrongful foreclosure and was paid from any settlement. Russell did the same. At the time, Russell also thinks the LaRaces are owed something for the cost of repairing their home.

Very few cases start as pro bono, however. Lawyers who defend consumers have bills to pay, just as the banks’ corporate attorneys do. You may opt to fight it Pro Se using the package from our website, or if you want to fight an unfair foreclosure, you might be offered one of several arrangements:

An upfront fee. “Many of my clients were formerly very successful individuals,” Russell says. On average, the value of the homes of the people who contact him is “somewhat north of $500,000.” He suggests a fee based on their means.

Monthly payments. If you’re not making monthly mortgage payments, some portion of that money could be applied to legal expenses. Collier says he puts the payments into escrow and retains them if he gets the house back (he says he always does, in predatory lending cases).

Bankruptcy payment plans. The clients of North Carolina bankruptcy attorney Max Gardner are usually in a Chapter 13 monthly repayment plan. Each state sets the maximum attorney’s fee, payable as part of the plan.

Mostly, the attorneys get paid by suing the financial institutions, who settle claims or suffer court judgements due to their own illegal activity. People who beat up on consumer lawyers scream that they bring frivolous cases just for the fees. But consumer lawyers only get paid if their case is good, so they’re pretty rigorous about whom they choose to represent. “I was called crazy for practicing in this area of law, as in ‘I would be broke’ by not getting enough fees,” Russell says. “Three years later, I am still here and still living my motto of helping people first.”

Most homeowners are successful fighting there case Pro Se using the package we offer for fighting Foreclosure, as your interest is at stake, and you have the most to lose, not Attorneys. They gets paid whether you win or lose. However, homeowners equally have options when fighting wrongful foreclosure.

If you think you have a case, your toughest challenge isn’t fees, it’s finding a lawyer with the expertise to press your claim successfully, Gardner says. If you don’t have a personal reference for a qualified lawyer, the best place to look is the website of  the National Association of Consumer Advocates. Next best: the National Association of Consumer Bankruptcy Attorneys. In either case, ask if the lawyer has won other securitization, mortgage servicing, and foreclosure cases. “They have to know what documents to ask for,” Gardner says. That’s what wins.

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 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/

 

What Homeowners Must Know About Loan Modification and Refinance Fraud

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Concerns with mortgage loan modifications do not always involve fraud. Each state has provisions and requirements for a senior lien holder to modify a loan and retain their lien position.

A typical fraudulent issue involving loan modifications is as follows:

Borrower submits false income information and/or false credit reports to persuade a financial institution to modify or refinance a loan on more favorable terms.

With respect to any mortgage loan, a loan modification is a revision to the contractual payment terms of the related mortgage note, agreed to by the servicer and borrower, including, without limitation, the following:

1. Capitalization of any amounts owed by adding such amount to the outstanding principal balance.
2. Extension of the maturity.
3. Change in amortization schedule.
4. Reduction or other revision to the mortgage note interest rate.
5. Extension of the fixed-rate payment period of any adjustable rate mortgage loan.
6. Reduction or other revision to the note interest rate index, gross margin, initial or periodic interest rate cap, or maximum or minimum rate of any adjustable rate mortgage loan.
7. Forgiveness of any amount of interest and/or principal owed by the related borrower.
8. Forgiveness of any principal and/or interest advances that are reimbursed to the servicer from the securitization trust.
9. Forgiveness of any escrow advances of taxes and insurance and/or any other servicing advances that are reimbursed to the servicer from the securitization trust.
10. Forbearance of principal whereby the servicer “moves” a certain interest free portion of the principal to the “back-end” of the loan, lowering the amortizing balance and the monthly payment.

Refinancing is the process of paying off an existing loan by taking a new loan and using the same property as security. A homeowner may refinance for the following legitimate reasons:
• In a declining interest rate environment a refinance generally will lower monthly payments.
• In a rising interest rate environment a refinance to a fixed rate loan from an adjustable rate loan will generally allow the borrower to lock in the lower rate for the life of the loan.
• In a period of rising home prices the refinance allows the borrower to withdraw equity.

Examples

o Two years after the origination of a mortgage loan, a borrower contacted the lender, claiming a need to modify the loan. In an attempt to deceive the lender into modifying the loan, the borrower stopped making loan payments. The borrower’s original loan application indicated that the borrower earned $7,500 per month; however, the borrower subsequently claimed income of only $1,200 per month. While evaluating the need for the modification, the bank reviewed the borrower’s credit report and determined that the customer’s supposed annual income of $14,400, was insufficient in comparison to the reported $40,000 per year servicing other debt, which was current. The bank stopped the modification process, as the borrower had intentionally understated income in an attempt to defraud the financial institution.

o A borrower contacted the lender claiming a reduction in income and trouble with making loan payments. The borrower provided the lender with a copy of his most recent tax return, which showed an adjusted gross income (AGI) of $45,000, down from the previous year’s $96,897. The borrower signed Form 4506-T, authorizing the lender to access tax returns filed with the IRS. In reviewing the tax information obtained from the IRS, the lender found that the borrower had recently amended the most recent return, lowering the AGI from $105,670 to $45,000. In this scenario, the borrower had purposely amended the return to reflect a lower AGI, possibly with the intent of amending it a second time to reflect the true amount of income.

o A borrower requests a loan modification for a property that he claims to occupy. Based on the various facts provided to the lender, it appears that the borrower is eligible for a modification. When underwriting the modification, the lender verifies the borrower’s income with the IRS. During the verification process, the lender recognizes two potential problems with the information provided. The address on the tax return is different than the address of the house collateralizing the loan, and the return reflects rental income from real property. After additional investigation, the lender concludes that the customer was trying to modify the loan on rental property and not on the primary residence.

Best Practices
• Underwrite all modifications. The financial institution should ensure that modification files include:
o Documentation of Hardship.
o Borrowers’ willingness and ability to continue to pay debt and retain property.
o Independent verification of information (employment, income, occupancy) provided.
o New credit report.
o Analysis of sustainability of performance post-modification.
o Referral to reputable credit counseling service.
• Establish legal department protocol for review of modification agreement (different states have different laws and language).
• Establish strong post-modification loan performance reports.
• Review Uniform Retail Classification and Account Management Policy
• Ensure proper accounting for delinquencies, trouble debt restructuring, charge-offs, and the allowance for loan and lease losses.

Red Flags
A red flag is an indicator that calls for further scrutiny. One red flag by itself may not be significant; however, multiple red flags may indicate an operating environment that is conducive to fraud.
• Borrower states that the property is his primary residence and is therefore owner-occupied but the mailing address and telephone number are not for the subject property (e.g., property is located in North Carolina; mailing address and telephone number are in New York).
• Vague and/or unrealistic hardship (“the national economy”).
• No documented resolution of hardship.
• No or limited financial analysis in file.
• No employment/income verification.
• Credit Report inconsistent with borrower’s stated hardship.
• Financial reports that reflect low delinquencies that are inconsistent with local economic conditions or the bank’s loan portfolio composition.

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 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/

 

What Homeowners Must Know About Mortgage Servicing Fraud

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As a homeowner, it is your duty to know what is going on, in your home mortgage.

Mortgage servicing typically includes, but is not limited to, billing the borrower; collecting principal, interest, and escrow payments; management of escrow accounts; disbursing funds from the escrow account to pay taxes and insurance premiums; and forwarding funds to an owner or investor (if the loan has been sold in the secondary market). A mortgage service provider is typically paid on a fee basis. Mortgage servicing can be performed by a financial institution or outsourced to a third party servicer or sub-servicer.

Mortgage servicing fraud generally involves the diversion or misuse of principal and interest payments, loan prepayments, and/or escrow funds for the benefit of the service provider. Mortgage servicing fraud can take many forms, including the following:

• A mortgage sells a loan it services, but fails to forward funds to the owner of the loan following the sale. The servicer continues to make principal and interest payments on the loan so the owner is not aware that the loan had been sold.

• A mortgage servicer diverts escrow payments for taxes and insurance for its own use. This action would jeopardize a financial institution’s collateral protection.

• A mortgage servicer that fails to forward principal and interest payments to an institution that holds the note and mortgage, could report that loan as past due for a short period of time, and then use proceeds from other loans to bring that loan current. This would be similar to a lapping scheme involving accounts receivable. Deliberately failing to post payments in a timely manner causes late fees to increase which directly elevates the servicers’ income.

• A mortgage servicer makes payments on loans originated for or on behalf of a financial institution as a means to avoid repurchase pursuant to first payment default provisions.

Examples
o Several insiders of a mortgage company fraudulently sold serviced loans belonging to other financial institutions and kept the proceeds. An insider modified data in the servicing system to make it appear the loans were still being serviced and were current.

o Two executive officers of a mortgage company took out personal mortgage loans in their names which were subsequently sold to an investor, with servicing retained by the mortgage company. The executives did not make any payments on their loans and suppressed delinquency reporting to the investor, allowing them to “live free” for a period of time until the investor performed a servicing audit and discovered the fraud.

Best Practices
• Perform annual on-site review of loan files and servicer reports.
• Establish internal audit reviews that include a sampling of loans handled by each servicer and verify collateral lien status for such loans.
• Obtain and reconcile reports to document and verify total amount of loans serviced, payments and allocation, servicer fees, delinquent loans, etc.
• Verify receipt of funds on loans authorized for sale by a servicer.
• Review, at least annually, the servicer’s registration status, licensing status, financial health and capability, and compliance with the servicing contract/agreement.
• Establish a contingency plan should the servicer be unable to perform its contractual obligations.
• Verify current insurance policies and amounts of coverage (flood and hazard).
• Verify payment of property taxes.
• Review, as documented in board meeting minutes, management reports on mortgage servicers (annual reviews, quarterly performance reports, aging reports, loan modification reports, delinquency reports, etc.)
• Establish appropriate limitations on access to internal bank systems and records.
• Establish appropriate conflict of interest policies prohibiting compensation/ payments from service providers to bank employees.
• Review of internal and external audit reports of the servicer.
• Review customer complaint processes, procedures, and reports.
• Review analysis and trend reports comparing a servicer’s operations and statistics with Mortgage Bankers Association’s statistics.
• Obtain and review samples of original payment documents (e.g., borrower loan payment checks) to verify that the borrower is the source of payments and that funds from other sources are not being used to make payments or hide delinquencies.

Red Flags
A red flag is an indicator that calls for further scrutiny. One red flag by itself may not be significant; however, multiple red flags may indicate an operating environment that is conducive to fraud.
• Failure of the financial institution to perform an on-site review of the servicer (loan documents, servicing records, etc.)
• A review of remittance reports provided to the financial institution by servicer finds a:
o Lack of detail within the remittance reports (principal reduction, interest paid, late fees charged and paid).
o Remittance reports that fail to reconcile with bank records.
• A review of delinquency reports provided to the financial institution by the servicer finds a:
o Lack of detail within delinquency reports.
o High volume of delinquent loans.
• A review of portfolio reports provided to the financial institution by the servicer finds a:
o Lack of detail within portfolio reports (listing of loans owned by the financial institution being serviced by the servicer including current balance).
o Portfolio reports that fail to reconcile with bank records.
• Annual review reveals detrimental information or deteriorating financial condition of the servicer.
• County records indicating lien holders are unknown to the financial institution.
• Excessive delay in a servicer’s remittance of principal and interest payments, escrow payments, or prepayments.
• Cancellation or reductions in coverage on servicer’s insurance policies, including errors and omissions policies.
• Failure of the servicer to maintain copies of original payment documents (e.g., loan payment checks) verifying borrower as the source of payments.
• Excessive errors related to payment calculations on adjustable rate loans or escrow calculations.

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 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/

 

What Homeowners Must Know About Mortgage Fraud Schemes

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Mortgage fraud has continued to increase since the 2005. Declining economic conditions, liberal underwriting standards, and declining housing values contributed to the increased level of fraud. Market participants are perpetrating mortgage fraud by modifying old schemes, such as property flip, builder-bailout, and short sale fraud, as well as employing newer schemes, such as buy and bail, reverse mortgage fraud, loan modification, refinance fraud, and mortgage servicing fraud.

This Post defines schemes as the big picture or secret plan of action used to perpetrate a fraud. There are a variety of “schemes” by which mortgage fraud can take place. These schemes can involve individuals inside the financial institution or third parties. Various combinations of these schemes may be implemented in a single fraud. The descriptions provided below are examples of traditional and emerging schemes that are used to facilitate mortgage fraud.

Builder Bailout
This scheme is used when a builder, who has unsold units in a tract, subdivision, or condominium complex, employs various fraudulent schemes to sell the remaining properties.

Buy and Bail
This scheme typically involves a borrower who is current on a mortgage loan, but the value of the house has fallen below the amount owed. The borrower continues to make loan payments, while applying for a purchase money mortgage loan on a similar house that cost less due to the decline in market value. After obtaining the new property, the borrower “walks” or “bails” on the first loan.

Chunking
Chunking occurs when a third party convinces an uninformed borrower to invest in a property (or properties), with no money down and with the third party acting as the borrower’s agent. The third party is also typically the owner of the property or part of a larger group organizing the scheme. Without the borrower’s knowledge, the third party submits loan applications to multiple financial institutions for various properties. The third party retains the loan proceeds, leaving the borrower with multiple loans that cannot be repaid. The financial institutions are forced to foreclose on the properties.

Double Selling
Double selling occurs when a mortgage loan originator accepts a legitimate application and documentation from a buyer, reproduces or copies the loan file, and sends the loan package to separate warehouse lenders to each fund the loan.

Equity Skimming
Equity skimming is the use of a fraudulent appraisal that over-values a property, creating phantom equity, which is subsequently stripped out through various schemes.

Fictitious Loan
A fictitious loan is the fabrication of loan documents or use of a real person’s information to apply for a loan which the applicant typically has no intention of paying. A fictitious loan can be perpetrated by an insider of the financial institution or by external parties such as loan originators, real estate agents, title companies, and/or appraisers.

Loan Modification and Refinance Fraud
This scheme occurs when a borrower submits false income information and/or false credit reports to persuade the financial institution to modify or refinance the loan on more favorable terms.

Mortgage Servicing Fraud
This fraud is perpetrated by the loan servicer and generally involves the diversion or misuse of loan payments, proceeds from loan prepayments, and/or escrow funds for the benefit of the service provider.

Phantom Sale
This scheme generally involves an individual or individuals who falsely transfer title to a property or properties and fraudulently obtain funds via mortgage loans or sales to third parties.

Property Flip Fraud
A fraudulent property flip is a scheme in which individuals, businesses, and/or straw borrowers, buy and sell properties among themselves to artificially inflate the value of the property.

Reverse Mortgage Fraud
Reverse Mortgage Fraud involves a scheme using a reverse mortgage loan to defraud a financial institution by stripping legitimate or fictitious equity from the collateral property.

Short Sale Fraud
Fraud occurs in a short sale when a borrower purposely withholds mortgage payments, forcing the loan into default, so that an accomplice can submit a “straw” short-sale offer at a purchase price less than the borrower’s loan balance. Sometimes the borrower is truly having financial difficulty and is approached by a fraudster to commit the scheme. In all cases, a fraud is committed if the financial institution is misled into approving the short-sale offer, when the price is not reasonable and/or when conflicts of interest are not properly disclosed.

Two additional fraud schemes, which are briefly addressed below, are debt elimination and foreclosure rescue schemes. While these schemes are typically not perpetrated directly on financial institutions, and therefore not expanded upon to the same degree as the above-mentioned schemes, the end result of the scheme can have a negative impact on the financial institution.

COMMON MECHANISMS OF MORTGAGE FRAUD SCHEMES

This Post Paper defines mechanism as the process by which fraud is perpetrated. A single mortgage fraud scheme can often include one or more mechanisms and may involve collusion between two or more individuals working in unison to implement a fraud.

The following is a list of common mechanisms used to perpetrate mortgage fraud schemes:

Asset Rental
Cash or other assets are temporarily placed in the borrower’s account/possession in order to qualify for a mortgage loan. The borrower usually pays a “rental” fee for the temporary “use” of the assets.

Fake Down Payment
In order to meet loan-to-value requirements, a fake down payment through fictitious, forged, falsified, or altered documents is used to mislead the lender.

Fraudulent Appraisal
Appraisal fraud can occur when an appraiser, for various reasons, falsifies information on an appraisal or falsely provides an inaccurate valuation on the appraisal with the intent to mislead a third party.

Fraudulent Documentation
Fraudulent documentation consists of any forged, falsified, incomplete, or altered document that the financial institution relied upon in making a credit decision.

Fraudulent Use of Shell Company
A business entity that typically has no physical presence, has nominal assets, and generates little or no income is a shell company. Shell companies in themselves are not illegal and may be formed by individuals or business for legitimate purposes. However, due to lack of transparency regarding beneficial ownership, ease of formation, and inconsistent reporting requirements from state to state, shell companies have become a preferred vehicle for financial fraud schemes.

Identify Theft
Identity theft can be defined as assuming the use of another person’s personal information (e.g., name, SSN, credit card number, etc.) without the person’s knowledge and the fraudulent use of such knowledge to obtain credit.

Straw/Nominee Borrower
An individual used to serve as a cover for a questionable loan transaction.

COMMON PARTICIPANTS
Various individuals participate in mortgage fraud schemes. The following list consists of common participants in such schemes and each is linked to the glossary:

Appraiser – One who is expected to perform valuation services competently and in a manner that is independent, impartial, and objective.

Processor – The processor is an individual who assembles all the necessary documents to be included in the loan package.

Borrower – One who receives funds in the form of a loan with the obligation of repaying the loan in full with interest. The borrower may be purchasing property, refinancing an existing mortgage loan, or borrowing against the equity of the property for other purposes.

Real Estate Agent – An individual or firm that receives a commission for representing the buyer or seller, in a RE purchase transaction.

Buyer – A buyer is a person who is acquiring property.

Seller – Person offering to sell a piece of real estate.

Closing/Settlement Agent – An individual or company that oversees the consummation of a mortgage transaction at which the note and other legal documents are signed and the loan proceeds are disbursed. Title companies, attorneys, settlement agents, and escrow agents can perform this service. Local RE law may dictate the party conducting the closing.

Title Agent  The title agent is a person or firm that is authorized on behalf of a title insurer to conduct a title search and issue a title insurance report or title insurance policy.

Loan Servicer – A loan servicer is a public or private entity or individual engaged to collect and process payments on mortgage loans.

Underwriter – The credit decision-making process which can be automated, manual or a combination of both. In an automated process, application information is entered into a decision-making model that makes a credit determination based on pre-determined criteria. In a manual process an individual underwriter, usually an employee of the financial institution, makes the credit decision after evaluating all of the information in the loan package, including the credit report, appraisal, and verification of deposit, income, and employment. Financial institutions often use a combination of both, with the automated decision representing one element of the overall credit decision. In each case, the decision may include stipulations or conditions that must be met before the loan can close.

Originator – The individual or entity that gathers application data from the borrower. Alternatively, a person or entity, such as a loan officer, broker, or correspondent, who assists a borrower with the loan application.

Warehouse Lender – A short-term lender for mortgage bankers. Using mortgage loans as collateral, the warehouse lender provides interim financing until the loans are sold to a permanent investor.

CONCLUSION
Mortgage fraud continues to result in significant losses for financial institutions, as well as, the Homeowners. It is imperative that homeowners understand the nature of the various schemes and recognize red flags related to mortgage fraud. This knowledge and use of best practices will help with the prevention of mortgage fraud, and financial losses to the homeowner.

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 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/

 

What Homeowners Must Know About Appeal-able Orders and Judgment from the Federal Courts

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In order to effectively perfect your Appeal case as a Pro Se Litigator, homeowners must familiarize themselves about Appealing unfavorable decisions.

1. Appeal-able Orders: Courts of Appeals have jurisdiction conferred and strictly limited by statute:

(a) Appeals from final orders pursuant to 28 U.S.C. § 1291: Final orders and
judgments of district courts, or final orders of bankruptcy courts which have been appealed to and fully resolved by a district court under 28 U.S.C. § 158, generally are appealable. A final decision is one that “ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.” Pitney Bowes, Inc. v. Mestre, 701 F.2d 1365, 1368 (11th Cir. 1983) (citing Catlin v. United States, 324 U.S. 229, 233, 65 S.Ct. 631, 633, 89 L.Ed. 911 (1945)).

A magistrate judge’s report and recommendation is not final and appealable until judgment thereon is entered by a district court judge. 28 U.S.C. § 636(b); Perez-Priego v. Alachua County Clerk of Court, 148 F.3d 1272 (11th Cir. 1998). However, under 28 U.S.C. § 636(c)(3), the Courts of Appeals have jurisdiction over an appeal from a final judgment entered by a magistrate judge, but only if the parties consented to the magistrate’s jurisdiction. McNab v. J & J Marine, Inc., 240 F.3d 1326, 1327-28 (11th Cir. 2001).

(b) In cases involving multiple parties or multiple claims, a judgment as to fewer than all parties or all claims is not a final, appealable decision unless the district court has certified the judgment for immediate review under Fed.R.Civ.P. 54(b).
Williams v. Bishop, 732 F.2d 885, 885-86 (11th Cir. 1984). A judgment which resolves all issues except matters, such as attorneys’ fees and costs, that are collateral to the merits, is immediately appealable. Budinich v. Becton Dickinson & Co., 486 U.S. 196, 201, 108 S.Ct. 1717, 1721-22, 100 L.Ed.2d 178 (1988); LaChance v. Duffy’s Draft House, Inc., 146 F.3d 832, 837 (11th Cir. 1998).

(c) Appeals pursuant to 28 U.S.C. § 1292(a): Under this section, appeals are permitted from the following types of orders:

i. Orders granting, continuing, modifying, refusing or dissolving injunctions, or refusing to dissolve or modify injunctions; However, interlocutory appeals from orders denying temporary restraining orders are not permitted. McDougald v. Jenson, 786 F.2d 1465, 1472-73 (11th Cir. 1986);

ii. Orders appointing receivers or refusing to wind up receiverships; and

iii. Orders determining the rights and liabilities of parties in admiralty cases.

(d) Appeals pursuant to 28 U.S.C. § 1292(b) and Fed.R.App.P. 5: The certification specified in 28 U.S.C. § 1292(b) must be obtained before a petition for permission to appeal is filed in the Court of Appeals. The district court’s denial of a motion for certification is not itself appealable.

(e) Appeals pursuant to judicially created exceptions to the finality rule: Limited
exceptions are discussed in cases including, but not limited to: Cohen v.
Beneficial Indus. Loan Corp., 337 U.S. 541, 546, 69 S.Ct. 1221, 1225-26, 93
L.Ed. 1528 (1949); Atlantic Fed. Sav. & Loan Ass’n v. Blythe Eastman Paine
Webber, Inc., 890 F.2d 371, 376 (11th Cir. 1989); Gillespie v. United States Steel Corp., 379 U.S. 148, 157, 85 S.Ct. 308, 312, 13 L.Ed.2d 199 (1964).

2. Time for Filing: The timely filing of a notice of appeal is mandatory and jurisdictional.
Rinaldo v. Corbett, 256 F.3d 1276, 1278 (11th Cir. 2001). In civil cases, Fed.R.App.P. 4(a) and (c) set the following time limits:

(a) Fed.R.App.P. 4(a)(1): A notice of appeal in compliance with the requirements set forth in Fed.R.App.P. 3 must be filed in the district court within 30 days after the order or judgment appealed from is entered. However, if the United States or an officer or agency thereof is a party, the notice of appeal must be filed in the district court within 60 days after such entry. THE NOTICE MUST BE RECEIVED AND FILED IN THE DISTRICT COURT NO LATER THAN THE LAST DAY OF THE APPEAL PERIOD – no additional days are provided for mailing. Special filing provisions for inmates are discussed below.

(b) Fed.R.App.P. 4(a)(3): “If one party timely files a notice of appeal, any other party may file a notice of appeal within 14 days after the date when the first notice was filed, or within the time otherwise prescribed by this Rule 4(a), whichever period ends later.”

(c) Fed.R.App.P. 4(a)(4): If any party makes a timely motion in the district court under the Federal Rules of Civil Procedure of a type specified in this rule, the time for appeal for all parties runs from the date of entry of the order disposing of the last such timely filed motion.

(d) Fed.R.App.P. 4(a)(5) and 4(a)(6): Under certain limited circumstances, the district court may extend or reopen the time to file a notice of appeal. Under Rule 4(a)(5), the time may be extended if a motion for an extension is filed within 30 days after expiration of the time otherwise provided to file a notice of appeal, upon a showing of excusable neglect or good cause. Under Rule 4(a)(6), the time to file an appeal may be reopened if the district court finds, upon motion, that the following conditions are satisfied: the moving party did not receive notice of the entry of the judgment or order within 21 days after entry; the motion is filed within 180 days after the judgment or order is entered or within 14 days after the moving party receives notice, whichever is earlier; and no party would be prejudiced by the reopening.

(e) Fed.R.App.P. 4(c): If an inmate confined to an institution files a notice of appeal in either a civil case or a criminal case, the notice of appeal is timely if it is deposited in the institution’s internal mail system on or before the last day for filing. Timely filing may be shown by a declaration in compliance with 28 U.S.C. § 1746 or a notarized statement, either of which must set forth the date of deposit and state that first-class postage has been prepaid.

3. Format of the notice of appeal: Form 1, Appendix of Forms to the Federal Rules of Appellate Procedure, is a suitable format. See also Fed.R.App.P. 3(c). A pro Se notice of
appeal must be signed by the appellant.

4. Effect of a notice of appeal: A district court lacks jurisdiction, i.e., authority, to act after the filing of a timely notice of appeal, except for actions in aid of appellate jurisdiction or to rule on a timely motion of the type specified in Fed.R.App.P. 4(a)(4).

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 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/