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Tag Archives: Loan

What Borrowers Must Know About Voiding Liens in a Mortgage

06 Sunday Oct 2019

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

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enforceability of judgment lien, Foreclosure, foreclosure defense, homeowners, involuntary liens, Lien, lien stripping, lien voidance, liens, Loan, Loan servicing, Mortgage loan, Mortgage modification, Mortgage servicer, Pro se legal representation in the United States, Property Lien Disputes, property liens, Real Estate Liens, Removing Liens, Types of Real Estate Liens, Unperfected Liens, voluntary liens

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

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

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

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

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

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

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

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

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

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

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

What This Means for Mortgage Creditors

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

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

How does this Affect Mortgage Creditors

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

CASE STUDY:  HSBC v. BLENDHEIM

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

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

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

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

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

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

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

 

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What Homeowners Must Know About Foreclosure

12 Wednesday Sep 2018

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

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adjustable rate mortgage loan, Adjustable-rate mortgage, avoid foreclosure, bank forecloses, Deed in lieu of foreclosure, Foreclosure, Foreclosure Crisis, foreclosure defense, foreclosure suit, foreclosures, homeowners, Loan, Loan servicing, mortgage, Mortgage loan, Mortgage modification, non-judicial foreclosure, Pro se legal representation in the United States, Promissory note, Real estate, Real Estate Settlement Procedures Act, RESPA

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

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

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

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

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

How do Foreclosures Work?

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

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

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

How do Foreclosures Relate to Debt?

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

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

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

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

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

What Else Should I Know?

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

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

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

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/loan

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

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

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What Homeowners Must Know About Mortgage Fraud & Restitution

10 Tuesday Apr 2018

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

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Foreclosure, homeowners, Law, Lawsuit, Loan, Monetary Restitution, Mortgage fraud, Nevada, Ninth Circuit, Pro se legal representation in the United States, Restitution

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/

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How Homeowners Can Use Ibanez Case to Fight a Wrongful Foreclosure

26 Monday Mar 2018

Posted by BNG in Bankruptcy, Banks and Lenders, Case Laws, Case Study, Federal Court, Foreclosure Crisis, Foreclosure Defense, Fraud, Judicial States, Legal Research, Litigation Strategies, Loan Modification, MERS, Mortgage Laws, Mortgage mediation, Mortgage Servicing, Non-Judicial States, Pro Se Litigation, Securitization, State Court, Your Legal Rights

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bank forecloses, bankruptcy court, Foreclosure, homeowners, Ibanez Case, Loan, Massachusetts, MERS, Mortgage Electronic Registration System, Pro se legal representation in the United States, US Bank, wrongful foreclosure

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/

 

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What Every Homeowner in Foreclosure Need to Know About Bankruptcy Appeals

27 Wednesday Dec 2017

Posted by BNG in Bankruptcy, Federal Court, Foreclosure Defense, Legal Research, Litigation Strategies

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Appeal, Bankruptcy, bankruptcy appeal, bankruptcy court, Loan, mortgage, Mortgage loan, Pro se legal representation in the United States

Every appeal requires an appellate advocate to understand and follow a series of rules. When an appeal is from a decision by a federal bankruptcy court, there is yet another layer of rules and complexity to consider. This article briefly identifies a dozen important points
about bankruptcy appeals.

1. The Time for Filing a Notice of Appeal in a Bankruptcy Appeal Is Generally Shorter Than in Other Appeals.
Under 28 U.S.C. § 158(c)(2) and Federal Rule of Bankruptcy Procedure (“Bankruptcy Rule”) 8002(a), a party seeking to appeal a decision by a bankruptcy court has 10 days to file its appeal.1 This is 20 days less than the 30 days a party generally is given under the Federal Rules of Appellate Procedure (“F.R.A.P.”) to appeal from district court to a federal appellate court.2 As with F.R.A.P. 4(a)(5), the Bankruptcy Rules permit some leeway if an appellant misses its deadline. Under the Bankruptcy Rules, a bankruptcy court may allow an appellant who fails to timely file up to 20 additional days to file where that appellant can demonstrate “excusable neglect.”3 After 30 days, however, a bankruptcy appellant loses its right to appeal even if there is excusable neglect.4 Factors to be considered in determining whether there is excusable neglect include the danger of prejudice to the appellee; the length of delay and its impact on the judicial proceeding; the reason for the delay; whether the delay was in the movant’s control; and the movant’s good faith.5

2. An Appellant May Waive an Issue Not Raised at the Outset of its Bankruptcy Appeal.
Under Bankruptcy Rule 8006, within 10 days of filing its Notice of
Appeal, an appellant must file and serve a designation of the items to be
included in the record on appeal and a statement of issues to be presented
on appeal. If an appellant fails to include an issue in this Statement, the
issue is waived even if this had been raised and/or decided by the bankruptcy
court.6

3. Those Who Ignore Deadlines and Procedural Rules May Forfeit Their Appeal.
Bankruptcy Rule 8001(a) authorizes dismissal of a bankruptcy appeal when a party fails to take any required step other than filing its Notice of Appeal. Courts adjudicating bankruptcy appeals may dismiss appeals when a party fails to take a necessary step, such as filing its record designations, statement of issues or its brief.7
While the Bankruptcy Rules permit dismissal, however, certain circuits require the appellate court to weigh a series of factors before it dismisses a case in its entirety. For example, the Third Circuit requires the balancing of six factors before a case is dismissed. These are:
• The extent of the party’s personal responsibility;
• The prejudice to the adversary caused by the failure to meet scheduling
orders;
• A history of dilatoriness;
• Whether the conduct of the party or the attorney was willful or in bad
faith;
• The effectiveness of sanctions other than dismissal, which entails an
analysis of alternative sanctions;
• The meritoriousness of the claim or defense.8

4. In Five Circuits, Bankruptcy Appeals May Be Heard in the First Instance by Two Different Types of Courts.
Under 28 U.S.C. § 158(c)(1), an appellant in an appeal from bankruptcy court may choose in the first instance to appeal either to a district court acting as an appellate court or, if the relevant circuit provides for one, to a Bankruptcy Appellate Panel (“BAP”). Even if the appellant chooses a BAP, however, any other party to the appeal may, no later than 30 days after service of the notice of appeal, ask to have the appeal heard by the relevant district court. The First, Sixth, Eighth, Ninth and Tenth Circuits each have a BAP. If an appeal is to a BAP, then the Bankruptcy judge’s decision will be reviewed by fellow sitting bankruptcy judges.

Usually a BAP consists of three sitting bankruptcy judges in the circuit who are assembled for a particular day of argument. By their very nature, BAPs will consist of judges who have special expertise regarding bankruptcy issues, while district courts may not. The BAP may sit in different places in the circuit. For example, the Eighth Circuit BAP conducts hearing in Omaha, St. Louis, Kansas City, and other locations where its bankruptcy courts sit.

5. BAP Rules Vary by Circuit.
Just like the individual federal circuit courts of appeal, the various BAPs each have their own rules. These vary between each circuit. Any party in a BAP appeal, therefore should know the specifics and particularities of the specific BAP’s rules and should follow these.
Among these specialized rules, for example, are that, in the Eighth Circuit BAP, parties are limited to opening briefs of 6500 words.9 The Ninth Circuit BAP Rules provide that only those portions of transcripts included in the excerpts of the record will be considered in an appeal and that these must include excerpts necessary for the BAP to apply the required standard of review to a matter.10 The First Circuit BAPRules generally limit argument to 15 minutes per side.11 The Tenth Circuit BAP requires that a brief include a statement of related cases—i.e., one that includes the same litigants and substantially the same fact pattern or legal issues – that are
pending in any other federal court.12 The Sixth Circuit BAP Rules provide
for a possible pre-argument conference and mediation.13

6. The Bankruptcy Rules Generally Govern Appeals to the District Court.
As noted in the prior section, BAPs have elaborate rules that govern all aspects of appeals before them. By the terms of the Bankruptcy Rules, these specific rules can supersede conflicting terms in the Bankruptcy Rules. However, when an appeal is to the district court, the Bankruptcy Rules generally apply in the absence of a local rule or district court rule specifically addressing bankruptcy appeals, which are much less common.

While not as comprehensive as the F.R.A.P., the Bankruptcy Rules have 20 provisions governing all aspects of appeals.14 These rules addresses appellate issues, including, among others, the filing and service of appellate papers;15 the filing and service of briefs and appendices;16 the form of briefs and their length;17 motions;18 oral argument;19 disposition of the appeal;20 costs;21 and rehearing,22 among others. (These rules also provide for the accelerated filing of district court appeals, as an appellant is to serve and file its brief within 15 days after entry of the appeal on the docket; the appellant is to serve its brief within 15 days after service of the appellant’s brief and the appellant is to serve its reply within 10 days after service of the appellee’s brief.)23 In the absence of rules to the contrary, opening briefs may be up to 50 pages and reply briefs up to 25 pages.
Under Bankruptcy Rule 8012, oral argument is to be generally allowed in all cases. In practice, however, oral argument is much less common before district courts. When an appeal is before district court, there is some question about whether its decision has precedential effect.24

7. Bankruptcy Appeals Often Include an Extra Tier of Review.
Generally, before an appeal reaches a federal circuit court of appeals, it is adjudicated by either a BAP or a district court. The findings of these first tier courts are not binding on the circuit court of appeals and, the appellate court owes no deference to the decisions by the BAP or district court.
Review by the circuit court of appeals is plenary.25 Nonetheless, some circuit courts have noted that the first tier of appeal acts as a helpful filter.26
An appellate court may reach issues brought up before but not decided by the district court or BAP.27

8. Direct Appeal to the Circuit Court of Appeals Is Allowed in Limited Instances.
Pursuant to Section 1233 of the Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”), a circuit court of appeals has discretion to permit a direct appeal frombankruptcy court where there is uncertainty in the bankruptcy court, either due to the absence of a controlling legal decision or a conflicting decision on the issue and the issue is of great importance, or where the court finds it is patently obvious that the bankruptcy court’s decision either was correct or incorrect, such that the first tier of review in the district court or BAP is less efficient and helpful.28

9. At Each Tier of the Appeal, The Bankruptcy Court Is Given the Same Level of Deference and Same Form of Scrutiny.
Courts in bankruptcy appeals review issues of law de novo and findings of fact for clear error.29 Courts of appeal apply the same standard of review as do BAPs and district courts.30 Courts of appeal generally review issues of procedure under an abuse of discretion standard. These include motions to compromise or to lift a stay, for example.31

10. This Is a Greater Threat of Mootness in Bankruptcy Appeals Than in Other Federal Appeals.
A bankruptcy appeal may become constitutionally moot where events may occur that make it impossible for the appellate court to fashion effective relief.32 Thus, for example, if, while an appeal is pending, a plan is confirmed pursuant to which all assets are distributed, all creditors with allowed claims are paid in full, and the bankruptcy case is closed such that the debtor no longer exists, an appeal against that debtor is moot because there is no meaningful relief that may be granted.33 An appeal may also be considered “equitably moot” where a change in circumstances makes it inequitable for a court to consider the merits of an appeal.34
However, if there remains any possibility that an appeal may result in a tangible benefit to the appellant, it is not moot.35

11. Only Those Persons Aggrieved Have Standing to Bring a Bankruptcy Appeal.
Only those whose rights or interests are directly and adversely affected pecuniarily by an order of the bankruptcy court have standing to bring an appeal.36

12. Appellate Courts Take a Broader Notion of “Finality” in Bankruptcy Appeals Than in Other Appeals.
Because of the length of many bankruptcy proceedings and the waste of time and resources that may result if the court denied immediate appeals, federal courts of appeal apply a broader concept of “finality” when considering bankruptcy appeals under 28 U.S.C. § 1291 than in considering non-bankruptcy appeals.37 Courts apply a number of factors in determining whether to assert appellate jurisdiction. These include:
1) the impact on the assets of the bankruptcy estate;
2) the necessity for further fact-finding on remand;
3) the preclusive effect of the court’s decision on the merits in further litigation,
and
4) the interest of judicial economy.38
Each of these issues, of course, could justify an article in itself. I hope
these provide some helpful thoughts and issues to consider when participating
in a bankruptcy appeal.
NOTE
1 Certain types of motions toll this time for filing until the last such motion
is disposed of. See Bankruptcy Rule 8002(b).
2 See F.R.A.P.4(a).
3 Bankruptcy Rule 8002(c)(2); Bankruptcy Rule 9006(b). Of course where
an appeal is from a district court to a federal circuit court on a bankruptcy
issue, F.R.A.P. 4’s 30-day rule applies.
4 See Shareholders v. Sound Radio, Inc., 109 F.3d 873, 879 (3d Cir. 1997).
The law is unsettled as to whether bankruptcy appellate deadlines are “jurisdictional,”
such that objections to untimeliness may be waived if not promptly
made. See In re Fryer, 2007 WL 1667198 (3d Cir. June 11, 2007) (citing
Kontrick v. Ryan 540 U.S. 443 (2004), and Eberhart v United States, 546 U.S.
12 (2005)).
5 See Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P’Ship, 507 U.S. 380,
395 (1993).
6 See In re GGM, P.C., 165 F.3d 1026, 1032 (5th Cir. 1999). Of course, one
may not first raise new issues on appeal that were not presented before the
bankruptcy court. See In re Ginther Trusts, 238 F.3d 686, 689 & n.3. (5th Cir.
2001).
7 See, e.g., In re Lynch, 430 F.3d 600 (Cir. 2005); In re Braniff Airways, Inc.,
774 F.2d 1303, 1305 n.6 (5th Cir. 1985).
8 Poulis v. State Farm Fire & Cas. Co., 747 F.2d 863, 868 (3d. Cir. 1984).
See also In re Harris, 464 F.3d 263 (2d Cir. 2006) (failure to include required
transcript of oral argument did not warrant dismissal of appeal where lesser
sanctions were available); In re Beverly Mfg. Corp., 778 F.2d 666, 667 (11th
Cir. 1985) (“Dismissal typically occurs in cases showing consistently dilatory
conduct or the complete failure to take any steps other than the mere filing
of a notice of appeal.”).
9 8th Cir. BAP Rule 8010A.
10 9th Cir. BAP Rule 8006-1.
11 1st Cir. BAP Rule 8012-1.
12 10th Cir. BAP Rule 8010-1.
13 6th Cir. BAP Rule 8080-2.
14 Bankruptcy Rules 8001-8020.
15 Bankruptcy Rule 8008.
16 Bankruptcy Rule 8009.
17 Bankruptcy Rule 8010.
18 Bankruptcy Rule 8011.
19 Bankruptcy Rule 8012.
20 Bankruptcy Rule 8013.
21 Bankruptcy Rule 8014.
22 Bankruptcy Rule 8015.
23 Bankruptcy Rule 8009.
24 See In re Shattuck Cable Corp., 138 B.R. 557, 565 (Bankr. N.D. Ill. 1992).
25 See In re Best Prods. Co., 68 F.3d 26, 30 (2d Cir. 1995).
26 See Weber v. United States Trustee, 484 F.3d 154 (2d Cir. 2007) (“In many
cases involving unsettled areas of bankruptcy law, review by the district court
would be most helpful. Courts of appeal benefit immensely from reviewing
the efforts of the district court to resolve such questions”).
27 See Hartford Courant Co. v. Pellegrino, 380 F.3d 83, 90 (2d Cir. 2004).
28 See Weber, 484 F.3d at 157 (citing BAPCPA § 1233, 28 U.S.C.
§ 158(d)(2)(a)(i)-(iii)).
29 See In re ABC-Naco, Inc., 483 F.3d 470, 472 (7th Cir. 2007).
30 See In re Senior Cottages of Am., 482 F.3d 997, 1000-1001 (8th Cir. 2002)
31 See In re Martin, 222 Fed. Appx. 360, 362 (5th Cir. 2007).
32 See In re Focus Media Inc., 378 F.3d 916, 922 (9th Cir. 2004).
33 See In re State Line Hotel, Inc., 2007 WL 1961935 (9th Cir. July 5, 2007);
see also Gardens of Cortez v. John Hancock Mut. Life Ins. Co., 585 F.2d 975,
978 (10th Cir. 1978) (dismissal of bankruptcy petition moots appeal to lift
stay).
34 See Ederel Sport v. Gotcha, Int’l, L.P., 311 B.R. 250, 254 (9th Cir. BAP
2004).
35 See In re Howard’s Express, Inc., 151 Fed. Appx. 46 (Oct. 5, 2005) (conversion
from Chapter 11 to Chapter 7 did not moot appeal because liquidation
was not complete and preference actions remained to be tried, which
could generate assets to satisfy claims of appellants).
36 See In re PWS Holding Corp., 228 F.3d 224, 249 (3d Cir. 2000).
37 See In re Owens Corning, 419 F.3d 196, 203 (3d Cir. 2005).
38 Id.

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Why Michigan Packaged Foreclosure Laws Were Designed to Harm Home Owners

28 Saturday Sep 2013

Posted by BNG in Case Study, Foreclosure Crisis, Foreclosure Defense, Judicial States, Loan Modification, Mortgage Laws, Non-Judicial States, Pro Se Litigation, Your Legal Rights

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Bill, Detroit Free Press, Foreclosure, Home insurance, Loan, Michigan, Real estate, United States

The package of bills (HB 4765, HB4766, SB 380 and SB383) which has since been signed into Law on July 3rd by Michigan‘s Governor is designed to harm homeowners on both the front end and the back end of the foreclosure process by repealing Michigan’s pre-foreclosure negotiation law and by making it possible for banks to eliminate Michigan’s longstanding 6-month redemption period.

By repealing Michigan’s pre-foreclosure negotiation law, homeowners are forced into an increasingly vulnerable position of falling victim to widespread foreclosure scams.  Under the new policy, lender-designated agents are no longer required to meet with homeowners to avoid a foreclosure, and any person regardless of their qualifications can perform the role of a certified foreclosure counselor or legal aid attorney.

According to Detroit Free Press, by eliminating Michigan’s longstanding 6-month redemption period, at-risk homeowners could lose their homes immediately if the bank chooses to evict them.

“This means if a homeowner facing foreclosure has a leaky roof and the bank determines that it has the potential to do ‘imminent’ damage, the homeowner loses the redemption period and along with it, the chance to challenge an illegal or fraudulent foreclosure, come up with the money to save the home, sell it on a short sale or find a safe affordable new place to live. Instead they face immediate eviction.”

Because the laws definition of ‘damage’ is both broad and ambiguous, if the bank finds so much as a broken hinge or a closed off window, they could immediately move to evict the homeowner.  As outlined in SB 383, a bank representative has the authority to stop by a home unannounced to inspect both the exterior and interior of the home for any possible damages, and if denied access by the homeowner, the bank has license to disregard the redemption period and repossess the property immediately.

SEE DETAILS OF THE NEW LAW

NEWS ALERT: Michigan Governor Signs Foreclosure Bills HB 4765, HB 4766, SB 380, and SB 383

The following four Bills affecting Michigan’s non-judicial foreclosure process were signed into law by the Governor on July 3rd.

HB 4765

House Bill 4765 extends the sunset date for MCL §§ 600.3205a-3205d of the Michigan non-judicial foreclosure statute to January 9, 2014. Previously set to expire on June 30, 2013, these sections of the statute include the mandatory 90-day hold requiring loan modification mediations to occur prior to the commencement of non-judicial foreclosure actions of homestead properties where mortgagors “opt-in”. The requirements set forth in MCL §§ 600.3205a-3205d will have to be complied with through June 30, 2014, in regard to any non-judicial foreclosures for which the notice was published prior to January 10, 2014.

SB 380 and HB 4766

Senate Bill 380 and House Bill 4766 create MCL § 600.3206, which was designed to replace the current sections of the Michigan non-judicial foreclosure statute that dictate when mandatory mediations aimed at modifying loans are to occur. Effective January 10, 2014, if the servicer has signed a consent judgment in United States of America, et al. v. Bank of America Corp., et al., then that servicer will be required to send notice (similar to Michigan’s current pre-foreclosure mediation notice) to the mortgagor, allowing the mortgagor the opportunity to “opt-in” to a loan workout meeting prior to commencement of foreclosure proceedings.  Servicers that are not parties to the consent judgment will no longer be required to postpone commencement of non-judicial foreclosures to allow for mediations to occur on homestead properties where mortgagors “opt-in.”

SB 383

Senate Bill 383 adds a provision to MCL § 600.3240, which is the section of Michigan’s non-judicial foreclosure statute dictating post-sale redemption periods. This new provision grants the foreclosure sale purchaser the right to inspect the exterior and interior of the structures after the foreclosure sale as well as periodically during the redemption period. If inspection is unreasonably refused or property damage has occurred or is believed to be imminent, the purchaser may immediately commence summary proceedings to obtain possession of the property. The statute provides examples of what would be considered damage, which include failure to comply with local property maintenance ordinances, broken doors and windows, accumulated trash, stripped plumbing, etc. If a judgment for possession is granted in favor of the purchaser, the redemption period will be extinguished. These changes become effective January 10, 2014.

If you find yourself in an unfortunate situation of losing or about to your home to wrongful fraudulent foreclosure, visit: http://www.fightforeclosure.net

44.314844 -85.602364

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What Homeowners Need to Know About Federal Laws that Govern Mortgage Origination and Servicing

10 Saturday Aug 2013

Posted by BNG in Affirmative Defenses, Banks and Lenders, Foreclosure Crisis, Foreclosure Defense, Fraud, Judicial States, Mortgage Laws, Non-Judicial States, Pleadings, Pro Se Litigation, RESPA, Your Legal Rights

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Adjustable-rate mortgage, Closed End Credit, Finance, Finance charge, Loan, Security interest, Statute of Limitations, Truth in Lending Act

There are eight (8) major federal laws pertinent to mortgage origination and servicing.

                   Truth-in-Lending Act (TILA); 15 U.S.C. § 1638.

Purpose. TILA is largely a disclosure statute that requires that lenders make certain disclosures to borrowers and potential borrowers. The Act is meant to insure that borrowers are informed of all of the terms of the loan before they take out the loan and can make an informed decision.

Scope. TILA applies to consumer credit – both closed end credit (like mortgages) and open ended credit (like credit cards) – extended by a creditor.

To constitute as “consumer credit” under the statute:
• The consumer must be a natural person.

• Credit is the right to defer payment of debt or to
incur debt and defer payment.

• The credit must be payable, by written agreement, by more than four
installments or subject to finance charges.

Under TILA, a “creditor” is:

• An entity that regularly extends consumer credit. Regularly means six or
more real estate secured loans, two or more high cost loans (or one or
more if made through a broker), or 26 or more in other cases per year.

• The creditor is the entity to which the obligation is payable to on its face.
Arrangers, like brokers, are not covered by TILA.

Exceptions.

• Business, agricultural, organizational and commercial credit.
• Credit over $25,000 unless secured by real estate or a dwelling.
• Public utility credit in some instances.
• Securities or commodities accounts.
• Certain student loans.
• Home fuel budget plans if no finance charge is imposed.

Protections.

Fundamentals. Lenders must disclose the following terms and conditions:

1. Amount Financed The amount financed is the amount of money that the borrower receives for his own benefit. Generally, this would include the proceeds of the loan, the purchase price of the goods/services being purchased, and the amount of pre-existing debts being paid off by consolidation or refinancing. Amount financed is roughly the same as the concept of “principle” but it is distinct from how principle is construed under state usury laws.

2. Finance Charge. Any charge that a consumer pays, directly or indirectly,
that is charged by the creditor, directly or indirectly, as incident to or a condition of the extension of credit. Examples include interest, service charges, points, origination fees, and many other costs associated with credit.

3. Annual Percentage Rate (APR). The cost of credit as a yearly rate.

Required Disclosures for Closed End Credit – Failure to disclose the following terms and conditions gives rise to Statutory Claims.

1. Total Finance Charge. Consists of all finance charges as defined above.

Exceptions
a. Under certain conditions, charges by third parties, closing agent fees,
debt cancellation coverage, and overdraft fees.
b.Application fees so long as they are charged to all applicants, whether or
not credit is extended.
c. Late fees.
d.Certain closing costs, so long as they are bona fide and reasonable.
e. Voluntary credit life, health, accident and loss of income insurance so
long as the voluntary nature, cost and term are disclosed and the consumer
separately agrees to the insurance in writing.
f. Credit property insurance premiums so long as the consumer is aware
that he can purchase insurance elsewhere.
g. Certain security interest related charges.
h.Annual fees or fees periodically charged as a condition to credit.
i. Seller’s points.
j. Interest reductions in time deposits.

2. Amount Financed. The principle part of the loan minus all charges
deemed to be finance charges.

3. Annual Percentage Rate.
4. Payment Schedule.
5. Total Number of Payments.
6. Security Interests.
7. Special Formatting Rules.

The disclosures must be clear, obvious, separate from other information and in a form that the borrower can keep. Disclosures must be provided in a timely manner, in a way that the borrower can keep before the consummation of the loan.

Lenders must also give the borrower a Notice of Right to Cancel, which informs the borrower of his right to rescind and contains the forms that the borrower needs to exercise that right.

Relief and Statute of Limitations. Under TILA, the borrower has an absolute right to rescind for three business days after the consummationof the loan. After three business days, a borrower may have the right to rescind up to three years if the disclosures were not made to the client. Damages and attorney’s fees are recoverable under the statute.

Home Ownership and Equity Protection Act (HOEPA); 15 U.S.C. § 1639

Purpose. HOEPA is designed to protect all borrowers, but especially
borrowers that apply for and take out high cost loans. HOPEA is
associated with TILA and is often considered a part of TILA.

Scope. Same as TILA.

Protections. Special Disclosures for Variable Rate Closed End Loans (like
ARMS)

1. The lender must disclose the maximum interest rate that could be charged over the life of the loan in the loan note.

2. The lender must give the borrower a copy of the ARM brochure that contains generic information about ARMs as well as more specific explanations of the aspects of each variable rate plan that the borrower is considering.

3. These disclosures must be given when the application is furnished
or before the payment of a nonrefundable fee, which ever is first.

4. During the life of the loan, the lender must send rate adjustment
or change notices before the loan rate will change.

HOEPA prohibits prepayment charges and balloon payments in a limited amount of cases, higher interest rates after default, negative amortization, more than two payments being made from the loan proceeds, pattern/practice of extending credit without taking into consideration the borrower’s ability to pay, and payments directly to home improvement contractors.

Relief and Statute of Limitations. A party can recover damages and rescind under HOEPA. Attorney’s fees and costs are also available. The Statutes of limitations for affirmative actions is one year. For rescission, the statutes of limitation is three years.

Equal Credit Opportunity Act (ECOA); 15 U.S.C. § 1691

Purpose. The purpose of the ECOA is to stop discrimination in the lending industry.

Protections. ECOA has three important aspects:

1. First, it prohibits discrimination in any aspect of credit based on race, color, religion, national origin, sex, marital status, age, assistance income.

2. Second, the ECOA requires creditors to take specific actions when approving or denying credit, prevents certain factors from being used to determine creditworthiness, mandates when an existing account may be closed, and restricts the ways that information is reported to credit reporting agencies concerning spouses.

3. Third, the Act imposes certain notice requirements on the credit issuer
when a loan application is approved or denied. If the creditor makes a counter offer (for more or less credit), then it must notify the borrower in writing of the new terms.

   How ECOA Protection Can Be Applied to Foreclosure Fraud

Bait and switch tactics may give rise to a claim under the ECOA. If a creditor gives credit in a much larger amount than the borrower requested and never gives the borrower an opportunity to deny the additional amount, then the creditor violated the procedural terms of the ECOA by failing to provide the borrower with written notice of all action taken on the original loan application. This tactic is often used in predatory lending. A creditor will give more credit to pay borrower’s debts that the borrower expressed no interest in paying. The new amount is often disclosed too late in the process for the borrower to feel as if he can object.

Relief and Statute of Limitations. The ECOA allows home owners to pursue relief higher on the food chain than the original lender, and provides for actual and punitive damages (up to $10,000 in an individual action), equitable relief and attorney’s fees. The statute of limitations is one year.

Real Estate Settlement and Procedures Act (RESPA); 12 U.S.C. § 2601 et seq.

Purpose. The purpose of RESPA is to protect home buyers from
abusive practices in the residential real estate industry. The Act controls
the manner in which settlement services for a residential real estate loan are provided and compensated.

Scope. RESPA applies to federally related mortgages, meaning those made by federally-insured depository lenders, HUD-related loans, loans intendedto be sold on the secondary market to Fannie Mae or Freddie Mac or to creditors who make or invest more than a million dollars per year in residentially secured loans. Most home equity loans (as well as refinancings), mobile home purchase loans and construction loans are covered by RESPA. A loan for vacant land is excluded unless a structure will be constructed or a manufactured home will be placed on the property within two years of settlement of the loan. There are some exceptions to RESPA. If a lender makes a loan from its own funds, holds the loan for varying periods of time and then sells the loan on the open market, it is not covered. Also, certain lenders that originate loans through a computer system are generally exempt from RESPA’s requirements.

Protections. RESPA requires that no later than three business days after the application, the consumer must receive a “good faith estimate” of settlement costs (usually via the HUD-1 settlement statement) along with a booklet explaining the costs. At closing, all settlement agents must use the HUD-1 settlement kickbacks and unearned fees. No person shall give or accept any fee, kickback or gift for a referral of a settlement service. Additionally, RESPA requires servicers to notify consumers about the possibility that their mortgages may be transferred and when one is imminent, and to have a mechanism that allows borrowers to make inquiries about their account to a servicer and to have corrections made to
their accounts, if necessary. Servicers have a substantive duty to pay the property taxes, homeowner’s insurance and other escrowed monies to the appropriate recipients as long as the borrower is current. Further, RESPA limits the amount that a lender can require that a borrower place in escrow, and prohibits a lender or servicer from charging the borrower for the preparation of statements required by TILA, the HUD-1 settlement statement, or escrow account statement.

Statute of Limitations. The statute of limitations is one year except for servicer violations which has a 3 year limitation.

                      Fair Housing Act (FHA); 42 U.S.C. § 3605

Purpose. The FHA prohibits discrimination on the basis of race, color,
religion, sex, handicap, familial status, or national origin in the making of
or purchasing of residential real estate loans and any other related financial assistance.

Scope. The FHA applies to loan brokers, financing consultants and anyone else providing financial assistance related to the making of the loan as well as the secondary market in the purchasing of loans, debts or securities, thepooling or packaging of these instruments, and the marketing or the sale of securities issued on the basis of loans or debts.

Protection. To prove discrimination, the consumer must show that the defendants intentionally targeted on the basis of a protected class when trying to obtain credit or that there was a credit-grant policy that had a disparate impact on that basis.

Relief and Statute of Limitations. Under the FHA, the court can award actual and punitive damages, attorney’s fees and costs. The statute of limitations is two years from the occurrence or from the termination of the discriminatory practice for affirmative claims.

                         Federal Trade Commission “Holder” Rule

The FTC’s “Holder” rule, or the FTC Rule on Preservation of Consumers’ Claims and Defenses, allows a consumer to make a claim against a subsequent holder of a loan for the acts of the original lender. The original lender may be judgment proof, and it is unlikely that a consumer would effectively be able to defend against a collection action and bring an affirmative suit against the original lender. The rule creates an incentive for the lending industry to police itself and subsequent holders of a debt are in a better position to sue the original lender than the borrower.

Fair Debt Collection Practices Act (FDCPA); 15 U.S.C. § 1692 et seq.

Purpose. FDCPA restricts debt collector’s efforts to obtain payment and
to choose venue. The Act protects debtors from abusive or harassing
debt collection practices.

Scope. The Act is generally used in the non-mortgage context because mortgage servicers are exempt because they usually acquire servicing rights before the mortgage goes into default. A debt collector generally includes collection agencies, creditors using false names or collecting for other creditors, collection attorneys, purchasers of delinquent debts, repossession companies, and suppliers or designers of deceptive forms, but generally excludes companies collecting their own debts.

Protections. The Act protects the consumer from an invasion of privacy, harassment, abuse, false or deceptive representations, and unfair or unconscionable collection methods. Specific acts that are prohibited include late night or repetitive phone calls, false threats of legal action or criminal prosecution and communications with most third parties regarding the debt.

FDCPA provides the consumer the ability to stop all debt collection action with a letter, makes the collector deal with the consumer’s attorney if the consumer has one, and gives the consumer the right to dispute the existence, legality or amount of the disputed debt.

Relief and Statute of Limitations. The plaintiff can recover actual damages, statutory damages (up to $1000), attorney’s fees and costs and perhaps punitive damages and injunctive relief. Class actions are also authorized and the statute of limitations for all actions is one year for affirmative claims.

Racketeer Influence and Corrupt Organizations Act (RICO); 18 U.S.C. §§ 1961-1968

Purpose. RICO can be used to provide a civil remedy to abusive
consumer credit practices.

Scope. Any cause of action under RICO must have the following elements: the existence of an enterprise, the enterprise is engaged in interstate or foreign commerce, the defendant has engaged in one or more of four prohibited activities in section 1962, and the prohibited conduct cased injury to the plaintiff’s business or property.

Protections. Every RICO violation involves a collection of an unlawful debt (gambling debts or usury under state or federal law, at a rate at least twice the enforceable usury rate) or a pattern of racketeering activity. RICO can provide a remedy when a lender misrepresents that its rates are better than other lenders’ rates or that its loan will pay off other debts when it will
not. A well-plead allegation may state a claim for mail fraud in a loan flipping case under RICO. A borrower may also successfully plead a claim under RICO when there is a spread premium case where the payment of the premium is not revealed and the cost of the premium is passed onto the borrower in the form of a higher interest rate and where the broker represented that it would provide the lowest available rate, money was exchanged between the broker, the assignee, the funding lender and the title company and mail was used in furtherance of the scheme.

Remedy and Statute of Limitations. A person injured in his business or property can sue for treble damages but no physical or emotional damage claim can be made. The statute of limitations is four years in affirmative cases.

For More Information on How You Can Effectively Use Solid Arguments that are Structured on Your Lender’s Violations of Federal Laws, Which to Your Advantage, Will Subsequently Reduce Your Mortgage Payments and Save Your Home from Foreclosure Visit: http://www.fightforeclosure.net

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How Backdated Mortgage Assignment Came Back To Haunt Foreclosure Lender

08 Monday Jul 2013

Posted by BNG in Appeal, Case Laws, Case Study, Foreclosure Defense, Judicial States, Legal Research, MERS, Non-Judicial States

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Foreclosure, Ibanez, Juarez, Loan, Massachusetts, Mortgage loan, U.S. Bancorp, US Bank

(1st Cir. Feb. 12, 2013)

U.S. First Circuit Court of Appeals Reinstates Borrower’s Wrongful Foreclosure Claim. (What Makes This Case Appealing is the Ibanez Ruling As Earlier Published on this Blog).

In a rare victory for a wrongful foreclosure claimant at the U.S. Court of Appeals for the First Circuit in Boston, the court reversed a dismissal of the borrower’s claims, ruling that a back-­‐dated mortgage assignment rendered a foreclosure void.

The case is Juarez v. Select Portfolio Servicing, Inc. (11-­‐2431)

Backdated Mortgage Assignment Proves Fatal

Melissa Juárez purchased a home in Dorchester, Massachusetts on August 5, 2005, financing it with reputed sub-­‐prime lender New Century Mortgage.
The mortgage was packaged and bundled into a real estate mortgage investment conduit (“REMIC”), a special type of trust that receives favorable tax treatment, ultimately being held by U.S. Bank, as trustee.

Juárez could not afford the payments on the mortgage and defaulted.
Foreclosure proceedings began in the summer of 2008, culminating in the sale of her home at an auction in October 22,2008.

She claims, however, that lender did not hold the note and the mortgage at the time they began the foreclosure proceedings against her, and that the foreclosure was therefore illegal under Massachusetts mortgage law.

The problem in the case centered around the mortgage assignment into U.S. Bank, as trustee — the same problem the same bank faced in the landmark U.S. Bank v. Ibanez case.
The “Corporate Assignment of Mortgage,” appears to have been back-­‐dated. It was dated October 16, 2008 and recorded in the corresponding registry of deeds on October 29, 2008, after the foreclosure had been completed. However, at the top of the document, it stated: “Date of Assignment: June 13, 2007,” in an obvious attempt to date it back prior to the foreclosure.

First Circuit Reinstates Borrower’s Wrongful Foreclosure Claims

After federal judge Denise Casper dismissed Juarez’s claims entirely on a motion to dismiss, the First Circuit reinstated the majority of Juarez’s claims.

U.S. Bank claimed that the back–‐dated mortgage assignment was merely a confirmatory assignment in compliance with the Ibanez ruling, but the appeals Court concluded otherwise:

 Nothing in the document indicates that it is confirmatory of an assignment executed in 2007. Nowhere does the document even mention the phrase “confirmatory assignment.” Neither does it establish that it confirms a previous assignment or, for that matter, even make any reference to a previous assignment in its body.

Lacking a valid mortgage assignment in place as of the foreclosure, U.S. Bank lacked the authority to foreclose, the court ruled, following the Ibanez decision. Ms. Juarez will now get the opportunity to litigate her claims in the lower court.

Will Lenders Learn Their Lesson?

The take–‐away from this case is that courts are finally beginning to scrutinize the problematic mortgage assignments in wrongful foreclosure cases.

This ruling may also affect how title examiners and title insurance companies analyze the risk of back titles with potential back–‐dated mortgage assignments.

If a lender records a true confirmatory assignment, it must do much better than simply state an effective date.

To learn how you can use similar invalid assignment arguments to effectively challenge and reverse your wrongful foreclosure, visit http://www.fightforeclosure.net

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Why Every Homeowner Needs To Use RESPA to their advantage

29 Saturday Jun 2013

Posted by BNG in Affirmative Defenses, Appeal, Banks and Lenders, Federal Court, Foreclosure Defense, Fraud, Mortgage Laws, Non-Judicial States

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Business, Loan, Loan servicing, Real Estate Settlement Procedures Act, RESPA, Title 12 of the United States Code, United States Code, United States Congress

The Real Estate Settlement Procedures Act (RESPA), was an act passed by the United States Congress in 1974. It is codified at Title 12, Chapter 27 of the United States Code, 12 U.S.C. §§ 2601–2617

RESPA is a consumer protection statute that regulates the real estate settlement process, including servicing of loans and assignment of those loans. See 12 U.S.C. § 2601 (Congressional findings). The statute imposes a number of duties on lenders and loan servicers. Most relevant here are there requirements that borrowers be given notice by both transferor and transferee when their loan is transferred to a new lender or servicer, 12 U.S.C. §§ 2605(b) and (c), and that loan servicers respond promptly to borrowers’ written requests for information, § 2605(e).

 The details of the requirement for responding to written requests will become relevant here. First, it takes a “qualified written request” to trigger the loan servicer’s duties under RESPA to acknowledge and respond. The statute defines a qualified written request as written correspondence (other than notices on a payment coupon or similar documents) from the borrower or her agent that requests information or states reasons for the borrower’s belief that the account is in error. 12U.S.C. § 2605(e)(1)(B). To qualify, the written request must also include the name and account of the borrower or must enable the servicer to identify them.

Within 60 days after receiving a qualified written re-quest, the servicer must take one of three actions: either(1) make appropriate corrections to the borrower’s account and notify the borrower in writing of the corrections; (2) investigate the borrower’s account and pro-vide the borrower with a written clarification as to why the servicer believes the borrower’s account to be correct; or (3) investigate the borrower’s account and either provide the requested information or provide an explanation as to why the requested information is unavailable. See 12 U.S.C. §§ 2605(e)(2)(A), (B), and (C). No matter which action the servicer takes, the servicer must provide a name and telephone number of a representative of the servicer who can assist the borrower.

During the 60-day period after a servicer receives a qualified written request relating to a dispute regarding the borrower’s payments, “a servicer may not provide information regarding any overdue payment, owed by such borrower and relating to such period or qualified written request, to any consumer reporting agency.” 12 U.S.C. § 2605(e)(3).

RESPA provides for a private right of action for violations of its requirements. 12 U.S.C. § 2605(f). The provision for a private right of action includes a “safe harbor” provision, which provides in relevant part that a transferee service provider like any lender shall not be liable for a violation of section 2605 if, “within60 days after discovering an error (whether pursuant to a final written examination report or the servicer’s own procedures) and before the commencement of an action under this subsection and the receipt of written notice of the error from the borrower, the servicer notifies the person concerned of the error and makes whatever adjustments are necessary in the appropriate account to ensure that the person will not be required to pay an amount in excess of any amount that the person otherwise would have paid.” 12 U.S.C. § 2605(f)(4).

For more info on how you can use RESPA and its provisions to slow or stop your foreclosure proceedings, please visit http://www.fightforeclosure.net

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Qualified Written Request For Homeowners

17 Friday May 2013

Posted by BNG in Loan Modification, Mortgage Laws, Pro Se Litigation, Your Legal Rights

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Escrow, Good faith estimate, Loan, Loan servicing, Mortgage loan, Real estate, Real Estate Settlement Procedures Act, RESPA

There are excellent provisions in RESPA dealing with Qualified Written Requests. Today, we are going to elaborate on these provisions. However, they are not all inclusive. Section 6 of RESPA provides borrowers with important consumer protections relating to the servicing of their loans. Under Section 6 of RESPA, borrowers who have a problem with the servicing of their loan (including escrow account questions), should contact their loan servicer in writing, outlining the nature of their complaint. The servicer must acknowledge the complaint in writing within 20 business days of receipt of the complaint. Within 60 business days the servicer must resolve the complaint by correcting the account or giving a statement of the reasons for its position. This does not absolve borrowers from continuing the payments. They are no defense to payments.
The Real Estate Settlement Procedures Act (RESPA) is a consumer protection statute, first passed in 1974. RESPA covers loans secured with a mortgage placed on a one-to-four family residential property. These include most purchase loans, assumptions, refinances, property improvement loans, and equity lines of credit.

Loan servicing complaints

A borrower may bring a private law suit, or a group of borrowers may bring a class action suit, within three years, against a servicer who fails to comply with Section 6’s provisions. Borrowers may obtain actual damages, as well as additional damages if there is a pattern of noncompliance. The following is a sample qualified written request from you, the borrower, to a lender.

However, as usual, use of this is not equivalent substitute of a licensed Nevada attorney.
Attention Customer Service:
Subject: [Your loan number]
[Names on loan documents]
[Property and/or mailing address]

This is a “qualified written request” under Section 6 of the Real Estate Settlement Procedures Act (RESPA).
I am writing because:
-Describe the issue or the question you have and/or what action you believe the lender should take.
-Attach copies of any related written materials.
-Describe any conversations with customer service regarding the issue and to whom you spoke recently.
-Describe any previous steps you have taken or attempts to resolve the issue.
-List a day time telephone number in case a customer service representative wishes to contact you.
I understand that under Section 6 of RESPA you are required to acknowledge my request within 20 business days and must try to resolve the issue within 60 business days.

Sincerely,

[Your name]

Here is another example:

Attention Customer Service:
Subject: Loan number xxxxxxxxxx
xxxxxxxx xxxxxxxx xxxxxxxxxxx
x xxxxxxx
Xxxxxxxx, CA xxxxx
This is a “Qualified Written Request” under Section 6 of the Real Estate Settlement Procedures Act (RESPA).

I am writing to request:

(1) Copies of all documents pertaining to the origination of my mortgage including my loan application, Right to Cancel, Deed of Trust, note, adjustable rate note, addendum to the note for the interest only payment period, Truth in Lending statements, Good Faith Estimate (GFE), HUD 1, appraisal, and all required disclosures and rate sheets associated with this transaction for the above referenced loan. The copies should be legible and all documents shall be copied in their entirety.

(2) A copy of the loan history including all payments made, all fees incurred, what has been paid out of the escrow account, and how all payments were applied. This information should cover the entire life of the loan.

(3) We have reasons to believe that the loan terms were misrepresented to us at the time of application and further obscured and/or modified prior to signing. I believe that our income was inflated on the application. I also have reason to believe that certain statements were not provided for my approval prior to closing, and that signatures may have been forged on various documents. It is also my /ours belief that certain documents may have not presented at all. Additionally, I believe that a notary was not present to witness my signatures on several pertinent documents and that this transaction did not take place in a legitimate title/escrow/real-estate office with any title/escrow/real-estate professionals therefore leaving us ill advised at the time of closing.

I/we started the process of trying to renegotiate this loan————when I spoke with your HOPE department. On ——-, I faxed a letter of hardship, along with bank statements and pay stubs as she recommended. I was advised that someone would contact me within 7-10 working days and there would be no problem getting assistance to bring the account current and capitalize the negative escrow. On ——-, I called back, as I hadn’t heard from anyone. I was told my payment was going to be ——

Give details, more details, specific facts here about your dealing with your lender on each time you called them.

Most recently you COUNTRYWIDE have sent a demand for payment. This is an enormous amount which just cannot be paid at this time due to very hardship. The situation is urgent. We and COUNTRYWIDE can not drag there feet in this process. We do not want to incur further inflated fees by our home going into foreclosure.

We are very proactive in keeping our family home. This is our primary homes by all means. We do not want to loose it nor do we have to we can make a reasonable payment.

We have been given the runaround by the voice recognition call routing system on numerous occasions.

We have talked to various agents with different versions of what the loan modification process really entails.

We have been re-routed to the wrong department or individual at dozens of times.

We have been disconnected from helpful individuals, when I unsuccessfully tried to call her back I am told it is because she has no extension.

We have been told that the negotiator handling my loan is unavailable to speak to anyone via telephone. All of these calls are documented in your records.

The customer service provided to us has been less than adequate.

We understand that under Section 6 of RESPA you are required to acknowledge our request within 20 business days and must try to resolve the issue within 60 business days.

In closing, we want a payment we know we can live with one that will not get us in trouble again

Sincerely,

REMEMBER: This letter SHOULD NOT be included with your mortgage payment, but should be sent separately to the customer service address.

You SHOULD continue to make the required mortgage and escrow payment until the request is resolved.

You may bring a private right of action under Section 6, if you suffer damages due to the lender’s servicing of the loan. See the RESPA statute and regulations.

Filing a RESPA complaint

Persons who believe a settlement service provider has violated RESPA in an area in which the Department has enforcement authority (primarily sections 6, 8 and 9), may wish to file a complaint. The complaint should outline the violation and identify the violators by name, address and phone number. Complainants should also provide their own name and phone number for follow up questions from HUD. Requests for confidentiality will be honored. Complaints should be sent to:

Director, Office of RESPA and Interstate Land Sales
US Department of Housing and Urban Development
Room 9154
451 7th Street, SW
Washington, DC 20410
Important Tips From HUD:

What Are the Duties of Loan Servicer to Respond to Borrower Inquiries

-(1) Notice of receipt of inquiry
-(A) In general
-If any servicer of a federally related mortgage loan receives a qualified written request from the borrower (or an agent of the borrower) for information relating to the servicing of such loan, the servicer shall provide a written response acknowledging receipt of the correspondence within 20 days (excluding legal public holidays, Saturdays, and Sundays) unless the action requested is taken within such period.
-(B) Qualified written request
For purposes of this subsection, a qualified written request shall be a written correspondence, other than notice on a payment coupon or other payment medium supplied by the servicer, that–
(i) includes, or otherwise enables the servicer to identify, the name and account of the borrower; and
(ii) includes a statement of the reasons for the belief of the borrower, to the extent applicable, that the account is in error or provides sufficient detail to the servicer regarding other information sought by the borrower.
(2) Action with respect to inquiry
Not later than 60 days (excluding legal public holidays, Saturdays, and Sundays) after the receipt from any borrower of any qualified written request under paragraph (1) and, if applicable, before taking any action with respect to the inquiry of the borrower, the servicer shall–
(A) make appropriate corrections in the account of the borrower, including the crediting of any late charges or penalties, and transmit to the borrower a written notification of such correction (which shall include the name and telephone number of a representative of the servicer who can provide assistance to the borrower);
(B) after conducting an investigation, provide the borrower with a written explanation or clarification that includes–
(i) to the extent applicable, a statement of the reasons for which the servicer believes the account of the borrower is correct as determined by the servicer; and
(ii) the name and telephone number of an individual employed by, or the office or department of, the servicer who can provide assistance to the borrower; or
(C) after conducting an investigation, provide the borrower with a written explanation or clarification that includes–
(i) information requested by the borrower or an explanation of why the information requested is unavailable or cannot be obtained by the servicer; and
(ii) the name and telephone number of an individual employed by, or the office or department of, the servicer who can provide assistance to the borrower.
(3) Protection of credit rating
During the 60-day period beginning on the date of the servicer’s receipt from any borrower of a qualified written request relating to a dispute regarding the borrower’s payments, a servicer may not provide information regarding any overdue payment, owed by such borrower and relating to such period or qualified written request, to any consumer reporting agency (as such term is defined under section 1681a of title 15).

(f) Damages and costs
Whoever fails to comply with any provision of this section shall be liable to the borrower for each such failure in the following amounts:
(1) Individuals
In the case of any action by an individual, an amount equal to the sum of–
(A) any actual damages to the borrower as a result of the failure; and
(B) any additional damages, as the court may allow, in the case of a pattern or practice of noncompliance with the requirements of this section, in an amount not to exceed $1,000.
(2) Class actions
In the case of a class action, an amount equal to the sum of–
(A) any actual damages to each of the borrowers in the class as a result of the failure; and
(B) any additional damages, as the court may allow, in the case of a pattern or practice of noncompliance with the requirements of this section, in an amount not greater than $1,000 for each member of the class, except that the total amount of damages under this subparagraph in any class action may not exceed the lesser of–
(i) $500,000; or
(ii) 1 percent of the net worth of the servicer.
(3) Costs
In addition to the amounts under paragraph (1) or (2), in the case of any successful action under this section, the costs of the action, together with any attorneys fees incurred in connection with such action as the court may determine to be reasonable under the circumstances.
(4) Nonliability
A transferor or transferee servicer shall not be liable under this subsection for any failure to comply with any requirement under this section if, within 60 days after discovering an error (whether pursuant to a final written examination report or the servicer’s own procedures) and before the commencement of an action under this subsection and the receipt of written notice of the error from the borrower, the servicer notifies the person concerned of the error and makes whatever adjustments are necessary in the appropriate account to ensure that the person will not be required to pay an amount in excess of any amount that the person otherwise would have paid.
(g) Administration of escrow accounts

If the terms of any federally related mortgage loan require the borrower to make payments to the servicer of the loan for deposit into an escrow account for the purpose of assuring payment of taxes, insurance premiums, and other charges with respect to the property, the servicer shall make payments from the escrow account for such taxes,insurance premiums, and other charges in a timely manner as such payments become due.
(h) Preemption of conflicting State laws

Notwithstanding any provision of any law or regulation of any State, a person who makes a federally related mortgage loan or a servicer shall be considered to have complied with the provisions of any such State law or regulation requiring notice to a borrower at the time of application for a loan or transfer of the servicing of a loan if such person or servicer complies with the requirements under this section regarding timing, content, and procedures for notification of the borrower.

The Real Estate Settlement Procedures Act (RESPA) is a consumer protection statute, first passed in 1974. RESPA covers loans secured with a mortgage placed on a one-to-four family residential property. These include most purchase loans, assumptions, refinances, property improvement loans, and equity lines of credit. HUD’s Office of RESPA and Interstate Land Sales is responsible for enforcing RESPA.

Loan servicing complaints

A borrower may bring a private law suit, or a group of borrowers may bring a class action suit, within three years, against a servicer who fails to comply with Section 6’s provisions. Borrowers may obtain actual damages, as well as additional damages if there is a pattern of noncompliance.

The following is a sample qualified written request from you, the borrower, to a lender. Use this format to address complaints under the Real Estate Settlement Procedures Act (RESPA). Be sure to read more about RESPA, and your rights under this Act, elsewhere on the RESPA site.

Attention Customer Service:
Subject: [Your loan number]
[Names on loan documents]
[Property and/or mailing address]
This is a “qualified written request” under Section 6 of the Real Estate Settlement Procedures Act (RESPA).

I am writing because:
-Describe the issue or the question you have and/or what action you believe the lender should take.
-Attach copies of any related written materials.
-Describe any conversations with customer service regarding the issue and to whom you spoke.
-Describe any previous steps you have taken or attempts to resolve the issue.
-List a day time telephone number in case a customer service representative wishes to contact you.
-I understand that under Section 6 of RESPA you are required to acknowledge my request within 20 business days and must try to resolve the issue within 60 business days.

Sincerely,

[Your name]

For a more comprehensive ‘Trial Ready’ Qualified Written Request that is inclusive in your Foreclosure Defense package, please visit http://www.fightforeclosure.net

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Means Test Forms Mediation mediation program Medical malpractice MER MERS Michigan Monetary Awards Monetary Restitution money Montana mortgage Mortgage-backed security Mortgage Application Fraud Mortgage broker mortgage company Mortgage Coupon Mortgage Electronic Registration System Mortgage fraud Mortgage law mortgage lender Mortgage loan mortgage loan modification mortgage loan modifications mortgage loans Mortgage mediation Mortgage modification Mortgage note mortgages Mortgage servicer Mortgage Servicing Fraud motion Motion (legal) Motion in Limine Motions National Center for State Courts National City Bank National Mortgage Settlement Natural Negotiable instrument Nelva Gonzales Ramos Nevada Nevada Bell Nevada Foreclosure Nevada mortgage loans Nevada Supreme Court New Jersey New Mexico New York New York Stock Exchange New York Times Ninth Circuit non-appealable non-appealable order Non-judicial non-judicial foreclosure non-judicial foreclosures Non-judicial Foreclosure States Non-Judicial States non-recourse nonjudicial foreclosures North Carolina note Notice Notice of default notice of entry of judgment Nueces County Nueces County Texas Objections Official B122C-2 Official Form B122C-1 Ohio Options Oral argument in the United States Orders Originator overture a foreclosure sale Owner-occupier Payment Percentage Perfected periodic payments personal loans Phantom Sale Plaintiff Plan for Bankruptcy Pleading post-judgment pre-trial Pro Bono Process for a Foreclosure Processor Process Service Produce the Note Promissory note pro per Property Property Flip Fraud Property Lien Disputes property liens pro se Pro se legal representation in the United States Pro Se Litigating Pro Se litigator Pro Se trial litigators Protecting Tenant at Foreclosure Act Protecting Tenants PSA PTFA public records purchase a new home Quiet title Real estate Real Estate Agent Real Estate Liens Real Estate Settlement Procedures Act Real property RealtyTrac Record on Appeal refinance a loan Refinance Fraud Refinancing registered judgment Regulatory (CFPB) relief remittance reports remove bankruptcy remove bankruptcy on credit report Remove Late Payments Removing Liens renewal of judgment renewing a judgment Reno Reno Air Request for admissions Rescission Residential mortgage-backed security Residential Mortgage Lending Market RESPA Restitution Reverse Mortgage Fraud Rhode Island robert estes Robert Gaston Robo-signing Sacramento Scam Artists Scope Secondary Mortgage Market Securitization securitized Security interest Se Legal Representation Self-Help Seller servicer servicer reports Services servicing audit setting aside foreclosure sale Settlement (litigation) short sale Short Sale Fraud Social Sciences Social Security South Dakota Special agent standing state State Court State Courts state law Statute of Limitations statute of limitations for judgment renewals statute of repose stay Stay of Proceedings stay pending appeal Straw/Nominee Borrower Subpoena Duces Tecum 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