Mortgage Modification: Many More Hurdles
The administration's loan modification program has helped 55,000 troubled borrowers so far.
The housing crisis has become very serious and complex and the fixes aren’t so easy according to CNNMoney.com. Most of the loan servicers are flooded by applications, their faxes machines are full and churning out copies of paper 24 hours a day. The foreclosure is rising with the increase in the unemployment rate.
Nearly three months after President Obama first announced his $75 billion mortgage rescue effort, his administration is still refining the program in hopes of reaching its goal to save 9 million homeowners from foreclosure. As the NY times reported few days ago, so far, more than 55,000 borrowers have been put into trial modifications, which become permanent if they keep up with payments for three months. Hundreds of thousands more have applied.
Well, as we speak this loan modification process is getting longer and complicated. The initiative must still get over several hurdles before its chances for success can be determined.
Stressed Servicers:
The program's guidelines were issued on March 4, but it took many servicers weeks to reprogram their systems and train their staffs. Many did not even start accepting applications until early- to mid-April, frustrating troubled borrowers forced to wait to find out if they qualify for lower rates. Servicers are still learning and giving training to their newly hired employees.
This is causing lots of delay and confusion. It is a constant battle of sending the lenders every day something new. I remember in one instance the lender demanded an electricity bill for the month of April, which was promptly sent to them by my staff. Quite often they would not acknowledge anything sent to them, and same happened with us many times. Now, the servicer is demanding a utility bill for the month of May. It is shocking they never receive anything, or refuse to acknowledge something sent already.
Angry investors:
One complicating factor in the mortgage meltdown is the fact that the loans are bundled into securities and then sold off in pieces to investors. Some servicers have blamed the slow pace of mortgage modifications on the fact that their contracts with investors limit their ability to adjust the loans' terms. To address this concern, Congress is currently finalizing a bill that would give servicers a "safe harbor" in modifying mortgages.
"The goal of 'safe harbor' is to allow servicers to use these program to their fullest capacity. Some investors, however, are lobbying hard against the bill, saying that the contracts already give.
Although the administration has since expanded the modification requirement to cover second liens, some investors still aren't satisfied. They want the administration to treat second liens in the modification program the same way it does in the Hope for Homeowners program, which requires these liens to be extinguished.
Escalating unemployment:
The rising unemployment rate is threatening to reverse any gains being made in stabilizing the housing market. When homeowners lose their jobs, they often can't afford to stay in their homes. Modifications often can't help, experts say.
Some of these folks another modification. This may not be an unending process. Another bad thing, which I noticed is that homeowners are getting used to stay free and without any payment for their homes, or feeling any remorse of not paying. This, of course, is a legal and a binding conract. They are dreadful to pay even a modest payment. This is very unfortunate when an attorney modifies the loan on an attractive terms, but still the homeowners are reluctant to take it. We are creating a socialistic mentality. Of course, we live in USA and not in some communist country or even in the former USSR. These are legal contracts, and decent human beings should honor these contracts. The homeowners should be thankful if an aid is provided to them to get through this turbulent time. Of course, it is loan modification, definitely not a loan rewrite or a refinancing. Each loan modification stops foreclosure and also fixed our economy.
Friday, May 15, 2009
Thursday, May 14, 2009
How to Fight Wrongful Foreclosure in Nevada?
Foreclosure is on the rise and especially in Nevada. The last time, (and that was only a few days ago), I had seen some 30 lawyers in the District Court's and all the cases were practically on foreclosure or issues surrounding foreclosures. It broke my heart when the Lenders attorneys' foreclosed and asked judge to sign the eviction orders for 10 homes in less than 20 minutes. Yes, there was no fight in any of the case. Couple of homeowners aka defendants appeared, offered just meek defenses, filed no opposition and begged the judge just for few more days in barely inaudible voices. Please, No, the homeowners does not have to be meek, humble and beg for more time. They can put up a fight, and fight with their bear hands, (tooth and nail of course). Once Winston Chruchill said, that Britian (that of course in second world war) shall fight in the air, in the mountains, and in the seas. That should be the motto of Nevada homeowners. Give them a fight. Give them hell. This is your home. It is your fortress and you should be a foot solider, and fight in this hand to hand combat.
Challenging Wrongful Foreclosure in Nevada
This is a brief guide for lay persons about how to challenge foreclosure successfully. This memo is not a substitute for legal assistance. For legal advice, please only seek qualified and licensed Nevada attorneys.
Foreclosure is a complex areas of law and one should not venture into it without proper legal help. However, at this time it is meant as only education purposes. It is divided into the following parts:
• Filing Bankruptcy before Foreclosure Occurs
• Suing to Enjoin Foreclosure before It Occurs
• Suing to Set Aside a Foreclosure that Has Already Taken Place
• Filing a Counterclaim in the Detainer Action after Foreclosure Has Occurred
• Filing Bankruptcy after Foreclosure
• Procedural Grounds for Challenging the Foreclosure
• Substantive Grounds for Challenging the Foreclosure
Filing Bankruptcy before Foreclosure Occurs
This is often the shortest and simplest procedure. It has the following advantages:
- a bankruptcy filing automatically prevents foreclosure temporarily and sometimes permanently;
- you have the opportunity to cure a default in your payments by paying the delinquent amount in installments over a reasonable period;
- you may be able to reduce or eliminate the fees of the lender’s attorney;
- you may be able to avoid interest on the amount you are delinquent (though not interest on the loan itself).
Hire a qualified lawyer for bankruptcy. A paralegal would not understand all the issues. It is not just the forms needed to be filled and filed. Also, you need an expert who can give you a qualified opinion considering all of your target areas. You must file before the foreclosure sale takes place, a time that usually is only 20 or so days after the foreclosure process starts with a letter to you or a notice in a newspaper.
Suing to Enjoin Foreclosure before It Occurs
To obtain an injunction, you must file a complaint in a court. You will need a lawyer. Only a qualified lawyer can tell you how to obtain an injunction. Sometime a bond is required, and more often the requirements of a bond are dispensed with based on proper grounds.
Temporary injunctions require:- a “clear” showing of “immediate and irreparable injury, loss or damage”
- balancing of equities;
- or “that the acts or omissions of the adverse party will tend to render final judgment ineffectual.” Judges take this requirement seriously.
- The most difficult requirement of all may be the need to give a bond “in such sum as the court … deems proper” unless you successfully obtain permission to bring the action as an indigent person.
- A homeowner with only modest amounts of other assets and income may be unable to qualify as indigent and may also be unable to find anyone willing to provide a bond, especially one on short notice.
Suing to Set Aside a Foreclosure that Has Already Taken Place
The grounds for setting aside a foreclosure are limited to “some evidence of irregularity, misconduct, fraud, or unfairness on the part of the trustee or the mortgagee that caused or contributed to an inadequate price.” Defenses like the absence of a delinquency or violations by the lender of federal or state commercial law may not be raised.
You have the burden of proof in a lawsuit to set aside a foreclosure. Damages are the only remedy. There is nothing to prevent a third-party purchaser from keeping your house even if he knows of your claim against the lender and even if he believes that your claim is meritorious.
Filing a Counterclaim in the Detainer Action after Foreclosure Has Occurred
Foreclosure may be challenged by a counterclaim when the lender (or other new owner of the property) seeks possession by a “detainer” action. It is better to file the counterclaim in writing, and the grounds for doing so are discussed below. It is preferable that you use a lawyer to assist you, but most persons do not.
Lenders may assert that a wrongful foreclosure may not be challenged even when the parties are before the court on the issue of possession, the right to possession is necessarily founded on ownership, and ownership depends on the lawfulness of the foreclosure.
On the other hand, if the new owner is successful in the detainer action, it is entitled not only to possession but also to the rental value of the property from the date of foreclosure until the date of removal.
Must Furnish a Bond.
The amount of it can be prohibitive: a “sufficient amount to cover, besides costs and damages, the value of the rent of the premises during the litigation.” Even the furnishing of an affidavit of indigency may be insufficient to retain possession during an appeal.
Filing Bankruptcy after Foreclosure
It is possible to set aside the foreclosure through the bankruptcy process. The grounds that may be asserted are discussed below.
There is some good news even if you lose the challenge; bankruptcy usually discharges all or part of a deficiency judgment against you for any amount still due after the foreclosure occurs.
Procedural Grounds for Challenging the Foreclosure
• Failure to Give Personal Notice. No personal notice to a borrower is required by statute. However, we believe that federal and state constitutions require personal notice to each borrower, either by summons or by certified mail that is actually received, and we are litigating cases so as to establish this principle.
• Insufficient Notice by Newspaper Publication or Posting in Public Places. Under Nevada statutes, advertisement of a foreclosure sale must be made three different times in “some” newspaper “published” in the “county where the sale is to be made.” Only 20 days’ notice is required, and the use of publications read almost exclusively by lenders and lawyers is permitted. Both the shortness of the time and the use of obscure newspapers seem vulnerable to constitutional objection.
• Failure to Give Notice Required by the Deed of Trust. Many deeds of trust require notice of foreclosure by certified mail, or at least by mail, in addition to notice by newspaper publication. Many also require notice – before foreclosure is sought -- that the entire sum has been declared to be due because of a late payment or other default.
• No Meaningful Opportunity to Dispute the Foreclosure. This too is a constitutional challenge to Nevada’s foreclosure process. It is based on the notion that making you find a lawyer and file a lawsuit in 15 days, assume a high burden of proof, and furnish a bond are unfair hurdles imposed on you.
• Defects in the Foreclosure Sale. Nevada judges have said that the foreclosure must occur in the county in which the property is located; it must take place at an accessible location; and a lender may not use a purely technical default as a basis for foreclosure. However, when the lender demands the full amount of the debt, they have refused to let the borrower cure the delinquency by paying the disputed amount before the foreclosure occurs. They also have ruled that there is no minimum price that must be paid and have allowed the lender to recover a deficiency judgment if the amount received in the sale is less than the amount owed. They have yet to decide whether the combination of a shockingly low price and another procedural defect are sufficient to disallow the foreclosure.
Substantive Grounds for Challenging the Foreclosure
The following claims and defenses are among those that may be raised so as to defeat a foreclosure altogether or reduce the amount of any deficiency:
• Late Payments Were Accepted on Other Occasions. This suggests that the lender waived the right to refuse late payments and was estopped from foreclosing.
• The Lender Refused to Supply a Pay-Off Amount or Accept Full Payment so Foreclosure Could Be Avoided. Despite unfavorable precedent, this could be a viable ground.
• A Borrower was in Military Service at the Time of the Foreclosure.
• The Loan was Unconscionable. That is, the inequality of the bargain is so manifest as to shock the judgment of a person of common sense, and the terms are so oppressive that no reasonable person would make them on the one hand, and no honest and fair person would accept them on the other.
• The Making of the Loan, or the Servicing of It, was Riddled with Unfair and Deceptive Practices that Violated the Nevadae Consumer Protection Act.
• The Servicer Collected Unauthorized Fees for the Escrow Account, or as Late Charges, or as Attorney Fees during the Foreclosure Process.
• One Spouse Was Required to Sign the Mortgage Note even though the Credit of the Other Spouse was Sufficient.
• One or More Borrowers Lacked the Mental or Physical Capacity to Borrow.
• The Mortgage Broker Was Paid an Unlawful Sum by the Lender.
• The Lender Violated a Relationship of Trust with the Borrower that Developed in the Lending Process.
• There Was Fraud or Misrepresentation by the Lender in the Making of the Loan.
Challenging Wrongful Foreclosure in Nevada
This is a brief guide for lay persons about how to challenge foreclosure successfully. This memo is not a substitute for legal assistance. For legal advice, please only seek qualified and licensed Nevada attorneys.
Foreclosure is a complex areas of law and one should not venture into it without proper legal help. However, at this time it is meant as only education purposes. It is divided into the following parts:
• Filing Bankruptcy before Foreclosure Occurs
• Suing to Enjoin Foreclosure before It Occurs
• Suing to Set Aside a Foreclosure that Has Already Taken Place
• Filing a Counterclaim in the Detainer Action after Foreclosure Has Occurred
• Filing Bankruptcy after Foreclosure
• Procedural Grounds for Challenging the Foreclosure
• Substantive Grounds for Challenging the Foreclosure
Filing Bankruptcy before Foreclosure Occurs
This is often the shortest and simplest procedure. It has the following advantages:
- a bankruptcy filing automatically prevents foreclosure temporarily and sometimes permanently;
- you have the opportunity to cure a default in your payments by paying the delinquent amount in installments over a reasonable period;
- you may be able to reduce or eliminate the fees of the lender’s attorney;
- you may be able to avoid interest on the amount you are delinquent (though not interest on the loan itself).
Hire a qualified lawyer for bankruptcy. A paralegal would not understand all the issues. It is not just the forms needed to be filled and filed. Also, you need an expert who can give you a qualified opinion considering all of your target areas. You must file before the foreclosure sale takes place, a time that usually is only 20 or so days after the foreclosure process starts with a letter to you or a notice in a newspaper.
Suing to Enjoin Foreclosure before It Occurs
To obtain an injunction, you must file a complaint in a court. You will need a lawyer. Only a qualified lawyer can tell you how to obtain an injunction. Sometime a bond is required, and more often the requirements of a bond are dispensed with based on proper grounds.
Temporary injunctions require:- a “clear” showing of “immediate and irreparable injury, loss or damage”
- balancing of equities;
- or “that the acts or omissions of the adverse party will tend to render final judgment ineffectual.” Judges take this requirement seriously.
- The most difficult requirement of all may be the need to give a bond “in such sum as the court … deems proper” unless you successfully obtain permission to bring the action as an indigent person.
- A homeowner with only modest amounts of other assets and income may be unable to qualify as indigent and may also be unable to find anyone willing to provide a bond, especially one on short notice.
Suing to Set Aside a Foreclosure that Has Already Taken Place
The grounds for setting aside a foreclosure are limited to “some evidence of irregularity, misconduct, fraud, or unfairness on the part of the trustee or the mortgagee that caused or contributed to an inadequate price.” Defenses like the absence of a delinquency or violations by the lender of federal or state commercial law may not be raised.
You have the burden of proof in a lawsuit to set aside a foreclosure. Damages are the only remedy. There is nothing to prevent a third-party purchaser from keeping your house even if he knows of your claim against the lender and even if he believes that your claim is meritorious.
Filing a Counterclaim in the Detainer Action after Foreclosure Has Occurred
Foreclosure may be challenged by a counterclaim when the lender (or other new owner of the property) seeks possession by a “detainer” action. It is better to file the counterclaim in writing, and the grounds for doing so are discussed below. It is preferable that you use a lawyer to assist you, but most persons do not.
Lenders may assert that a wrongful foreclosure may not be challenged even when the parties are before the court on the issue of possession, the right to possession is necessarily founded on ownership, and ownership depends on the lawfulness of the foreclosure.
On the other hand, if the new owner is successful in the detainer action, it is entitled not only to possession but also to the rental value of the property from the date of foreclosure until the date of removal.
Must Furnish a Bond.
The amount of it can be prohibitive: a “sufficient amount to cover, besides costs and damages, the value of the rent of the premises during the litigation.” Even the furnishing of an affidavit of indigency may be insufficient to retain possession during an appeal.
Filing Bankruptcy after Foreclosure
It is possible to set aside the foreclosure through the bankruptcy process. The grounds that may be asserted are discussed below.
There is some good news even if you lose the challenge; bankruptcy usually discharges all or part of a deficiency judgment against you for any amount still due after the foreclosure occurs.
Procedural Grounds for Challenging the Foreclosure
• Failure to Give Personal Notice. No personal notice to a borrower is required by statute. However, we believe that federal and state constitutions require personal notice to each borrower, either by summons or by certified mail that is actually received, and we are litigating cases so as to establish this principle.
• Insufficient Notice by Newspaper Publication or Posting in Public Places. Under Nevada statutes, advertisement of a foreclosure sale must be made three different times in “some” newspaper “published” in the “county where the sale is to be made.” Only 20 days’ notice is required, and the use of publications read almost exclusively by lenders and lawyers is permitted. Both the shortness of the time and the use of obscure newspapers seem vulnerable to constitutional objection.
• Failure to Give Notice Required by the Deed of Trust. Many deeds of trust require notice of foreclosure by certified mail, or at least by mail, in addition to notice by newspaper publication. Many also require notice – before foreclosure is sought -- that the entire sum has been declared to be due because of a late payment or other default.
• No Meaningful Opportunity to Dispute the Foreclosure. This too is a constitutional challenge to Nevada’s foreclosure process. It is based on the notion that making you find a lawyer and file a lawsuit in 15 days, assume a high burden of proof, and furnish a bond are unfair hurdles imposed on you.
• Defects in the Foreclosure Sale. Nevada judges have said that the foreclosure must occur in the county in which the property is located; it must take place at an accessible location; and a lender may not use a purely technical default as a basis for foreclosure. However, when the lender demands the full amount of the debt, they have refused to let the borrower cure the delinquency by paying the disputed amount before the foreclosure occurs. They also have ruled that there is no minimum price that must be paid and have allowed the lender to recover a deficiency judgment if the amount received in the sale is less than the amount owed. They have yet to decide whether the combination of a shockingly low price and another procedural defect are sufficient to disallow the foreclosure.
Substantive Grounds for Challenging the Foreclosure
The following claims and defenses are among those that may be raised so as to defeat a foreclosure altogether or reduce the amount of any deficiency:
• Late Payments Were Accepted on Other Occasions. This suggests that the lender waived the right to refuse late payments and was estopped from foreclosing.
• The Lender Refused to Supply a Pay-Off Amount or Accept Full Payment so Foreclosure Could Be Avoided. Despite unfavorable precedent, this could be a viable ground.
• A Borrower was in Military Service at the Time of the Foreclosure.
• The Loan was Unconscionable. That is, the inequality of the bargain is so manifest as to shock the judgment of a person of common sense, and the terms are so oppressive that no reasonable person would make them on the one hand, and no honest and fair person would accept them on the other.
• The Making of the Loan, or the Servicing of It, was Riddled with Unfair and Deceptive Practices that Violated the Nevadae Consumer Protection Act.
• The Servicer Collected Unauthorized Fees for the Escrow Account, or as Late Charges, or as Attorney Fees during the Foreclosure Process.
• One Spouse Was Required to Sign the Mortgage Note even though the Credit of the Other Spouse was Sufficient.
• One or More Borrowers Lacked the Mental or Physical Capacity to Borrow.
• The Mortgage Broker Was Paid an Unlawful Sum by the Lender.
• The Lender Violated a Relationship of Trust with the Borrower that Developed in the Lending Process.
• There Was Fraud or Misrepresentation by the Lender in the Making of the Loan.
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