California Bankruptcy Attorney Blog

As Ontario loan modification attorneys, we were disappointed to see a new report suggesting that the number of "underwater" mortgages in the United States has increased steadily in 2009. According to a Nov. 24 report from CNNMoney, 23% of all American borrowers, or 10.7 million, now owe more on their mortgages than their homes are worth. The report estimates that another 2.3 million borrowers are within 5% of having negative equity, bringing the total of threatened homes up to 28% of all active residential mortgages. The data comes from First American CoreLogic, an Orange County-based information firm not related to any bank named First American.

Not surprisingly, the majority of the homes affected are in states with high-value real estate markets, including California, which is 35% underwater. The article suggested that California and the other states, which include neighboring Arizona and Nevada, are suffering because of a particularly high proportion of option adjustable-rate mortgages, which can actually increase the homeowners' debt and create unsustainably high mortgage payments. These data are raising eyebrows because the high rate of negative equity suggests that more foreclosures may be on the way. That would reverse what some saw as a promising trend away from falling home prices, which has raised hopes of a recovery in the housing market. If home prices go up or remain flat, the article said, fewer homeowners are likely to be at risk of default or foreclosure.

However, our Whittier loan modification lawyers know that the health of the real estate market also depends on factors outside real estate itself. In particular, many published reports have shown that unemployment is an important factor in whether any one borrower can make mortgage payments. That means high unemployment rates -- which we're sorry to say we also have in California -- are likely to translate to high rates of mortgage defaults. Homeowners are also continuing to have problems when they contact their loan servicers about a potential loan modification, despite efforts from state and federal governments to give servicers financial and regulatory incentives to help. These, in combination with the high rate of option ARM loans in California, suggest that foreclosures are likely to remain high for the next year.

Continue reading "Report Says One Quarter of All US Homes Are Worth Less Than Their Mortgages" »

A Nov. 23 report from InsideARM confirmed what our Rancho Cucamonga fair debt collection lawyers have been seeing at work: The number of lawsuits filed over unfair or abusive debt collection has gone up. According to statistics from WebRecon LLC, the number of FDCPA lawsuits filed throughout 2009 has already surpassed the number filed in all of 2008. In fact, the 6,638 lawsuits filed last year was surpassed around Nov. 1, the report said, with two full months left to go in 2009. If the trend holds, the publication suggested, observers can expect to see 8,000 or more debt collection abuse lawsuits for the whole year.

The Fair Debt Collection Practices Act is a federal law setting strict standards for how debt collectors may behave in their dealings with consumers. In addition to prohibiting threats, lies, vulgar language and other abusive behaviors, it also sets forth certain conduct that is required, such as a requirement to verify the debt when the consumer makes that request in writing. These requirements are echoed by state laws in multiple states, including here in California. In addition to the 376 FDCPA lawsuits filed in the first half of November, the report said, those 15 days also saw three lawsuits filed under California's Rosenthal Fair Debt Collection Practices Act, three lawsuits filed under a similar statute in Pennsylvania and one each in New York, Alabama, Texas, Florida, Illinois and Nevada.

The report does not give any reasons for the upswing in FDCPA filings. But as Yorba Linda abusive debt collection attorneys, we can provide plenty of anecdotes suggesting that the increase in lawsuits represents an increase in abuses. Because the economy is bad, consumers have less money to spend -- and for some, that means there's no money for paying off debt. With their profits dwindling, some debt collectors have resorted to abusive and illegal tactics designed to scare or bully consumers into paying. When they do that, many are violating the FDCPA and similar state laws. Collection agencies can often get away with this because many consumers don't realize they have rights, but as debt collectors' conduct becomes more and more outrageous, more consumers are fighting back.

Continue reading "Statistics Show Two-Year High Number of Fair Debt Collection Practices Act Lawsuits" »

A Nov. 21 article from the New York Times caught the attention of our Riverside County loan modification attorneys because it its unusual take on the profitability of modifying loans. According to the article, investment firms that specialize in "distressed" ventures have been buying blocks of mortgage loans at a discount from lenders, particularly lenders in financial trouble. These "vulture firms" then help the borrowers refinance their loans, deals that many have had trouble reaching with the original lenders or loan servicers. The trick, the Times says, is that the refinancing comes through loans backed by the Federal Housing Administration and sold to a government-associated loan buyer like Ginnie Mae.

The practice allows the investment firms to make a profit once the proceeds from refinancing top the amount that they paid for their loans. However, the article said, the practice is drawing concern from housing market watchers, who say it puts the risk from these loans onto government agencies rather than into the hands of the investors. Consumers and federal housing agencies also say they often don't know who actually owns their loans, because the investment firms hire go-betweens to handle contact and refinancing. Nonetheless, the practice is beneficial for homeowners like Steven and Marisela Alva of Pico Rivera, whose mortgage balance was reduced from $440,000 to $314,000 by an investor that insisted on remaining confidential.

As Garden Grove loan modification lawyers, we are not sure whether this practice could be good or bad for homeowners in the long run. In the short term, clearly, homeowners whose loans are bought by these investment firms have a remarkable opportunity to reduce their mortgage balances and thus their monthly mortgage payments. However, having loans owned by a shadowy confidential investor could pose problems for homeowners who need more complicated help than a refinancing, or who want to challenge foreclosures. And if the experts in the Times article are right that this could overburden the federal agencies who ultimately assume the risks of the loans, it could ultimately harm the government's financial security -- and perhaps the housing market as a whole.

Continue reading "Wall Street 'Vulture Firms' Generate Profits by Modifying Loans " »

Our Rancho Cucamonga loan modification lawyers were disappointed, but not especially surprised, by a recent report showing disproportionate risk of foreclosure among some minority homeowners. The Associated Press reported Nov. 17 that the William C. Velasquez Institute, a nonpartisan think tank studying issues affecting Hispanics, issued a report the previous week saying black and Latino borrowers were at greater risk of foreclosure because of greater rates of subprime loans and higher unemployment than average. Author Raul Hinijosa, a professor at UCLA, said the ripple effects of foreclosures affected black and Latino homeowners not in foreclosure as well, thanks to lower property values and their effect on the greater community.

The study traced the foreclosure crisis from its start, as far back as 2005. Using data from selected metropolitan areas, it found that Latino and black homeowners were twice to nine times more likely than white homeowners to have high-cost mortgages. Those high-cost mortgages include subprime and "exotic" mortgages as well as conventional loans with high interest rates. The study also found greater rates of unemployment -- currently considered the major driver of foreclosures -- in the two subgroups. The national rate of unemployment is now 10.2%, the AP reported, but it's 13.1% among Latino workers and 15.7% among black workers. The report called on the federal government to stop the crisis by expanding eligibility for the Home Affordable Modification Plan, allowing bankruptcy cramdowns and expanding the federal homeownership tax credit to cover the greater cost of real estate in coastal areas.

As Placentia loan modification attorneys, we have known for some time that minority borrowers are more likely than whites to run into trouble with their mortgages. Studies and individual court cases have shown that racial prejudice drove some lenders to explicitly or implicitly target minorities for subprime loans. Given that subprime loans drove the first waves of foreclosures, it's not surprising that minorities are now seeing disproportionately high rates of foreclosures. Studies have also shown that minorities, particularly those without strong English language skills, are also more likely to be targets of predatory lending, another driver of foreclosures. And the disproportionate effect of unemployment on minority communities suggests that foreclosures in those communities will remain high into the future.

Continue reading "Report Says Black and Latino Borrowers Have Disproportionate Risk of Foreclosure" »

Our Highland loan modification attorneys are seeing more and more reports lately about seeming successes in foreclosure mediation programs. Most recently, on Nov. 17, the New York Times ran an article about a Philadelphia program that has had at least some success slowing the tide of foreclosures in that city. In Philadelphia, lenders may not foreclose on owner-occupied homes before a "conciliation conference," a mandatory face-to-face meeting between the homeowner and a representative from the lender to discuss alternatives to forecloure. While few hard numbers are available to document the program's success, it is credited with allowing hundreds of Philadelphians to keep their homes. Some cities have already replicated the program, and others, including Boston, are hoping to do so.

The Philadelphia program combines mandatory loan modification meetings with education and support for borrowers. Nonprofit organizations visit foreclosed homes in person to explain this right to homeowners and connect them with free housing counselors. At the conciliation conference, homeowners get counseling and sometimes a volunteer attorney to help them understand their rights. The nonprofit Philadelphia Volunteers for the Indigent Program says that, of 61 cases it has resolved, 35 produced loan modifications. Five others ended in conventional foreclosure sales, while the remainder ended up with loan forbearance and repayment plans; bankruptcies; sales or deeds in lieu of foreclosure. However, all of the loan modifications the Philadelphia program has produced are temporary, which critics say allows lenders to erect obstacles to renewal.

Nonetheless, the program provided at least a temporary respite for Philadelphian Christopher Hall. Hall, 42, was at risk of losing the row house that once belonged to his grandfather and mother. He bought the house from his grandfather in the 1990s, but took out a new mortgage in 2006 to pay off debt and make repairs. That mortgage turned out to be a variable-rate loan, something he says he didn't understand at the time. His payments nearly doubled, and then he lost his job as a union roofer, sending his income plummeting. He expected to lose the home at a foreclosure hearing in October, but thanks to the conciliation conference, he got a six-week delay intended to give his housing counselor time to work out a more permanent loan modification.

As Perris loan modification lawyers, we are pleased to see reports of foreclosure prevention programs doing the job they're designed for: preventing avoidable foreclosures. This article describes Philadelphia's program as similar to the federal Home Affordable Modification Program, but mandatory. We agree that requiring participation is certainly one way to increase loan modifications, but we also believe the face-to-face meetings, in the presence of a counselor or attorney, are an important part of this plan. As a Boston city official notes in the article, the ability to look the other side in the face can be "disarming," especially if you're armed with delays, excuses and half-truths. And having a professional, well-informed advocate can make a huge difference simply by educating homeowners about their rights and their legal options.

Continue reading "Mandatory Face to Face Mediations Lower Foreclosures in Philadelphia" »

As San Diego County fair debt collection attorneys, we are used to seeing horror stories from people who have been the targets of debt collectors. But a Nov. 13 post on The Consumerist blog (owned by the parent company of Consumer Reports) added a new twist: harassing debt collector calls to the adult son of an older couple who made some bad decisions with their retirement income. The son, referred to as Jay in the post, said he was put down as a reference on some of his parents' purchases. When his parents failed to make all of their payments, he said, debt collectors began calling him to demand payments. He wrote to the Consumerist blog asking for advice.

According to the post, the harassment goes beyond repeated phone calls. Jay wrote that the phone calls, which come from blocked numbers, come not only to his home, work and cell phone numbers, but also to his neighbors. He said he tried politely explaining that he can't control his parents' actions, but it didn't work. Instead, the post said, debt collectors started asking him to pay the debts, and threatening him with arrest and lawsuits when he declined. Reasoning that "this has got to be highly illegal," he began a log of all of the calls and planned to file a police report, but wanted some advice. The Consumerist suggested that he get names of companies, record or have a witness for phone calls and report them to his state's attorney general. If they are retailers rather than debt collectors, the blog said, he should ask them to remove him from the account.

As Corona debt collection harassment lawyers, we're glad Jay was smart enough to realize that this is indeed highly illegal behavior -- at least if the phone calls are coming from actual debt collectors rather than the original creditors. If they are, we spotted at least five violations of the Fair Debt Collection Practices Act described in his letter. The FDCPA, a federal law, does not allow debt collectors to call anyone about the debt but the debtors themselves and any attorney or spouse. That includes adult or minor children and other relatives as well as neighbors. Collection agencies may also not demand payment from someone like Jay who is not a party to the debt, and certainly may not sue such a person for failure to pay it. And they may not threaten anyone at all with arrest, because we do not arrest people for debt in the United States, and the FDCPA explicitly forbids threatening impossible legal actions.

Continue reading "Debt Collectors Harass and Threaten Man Over Debts Incurred by Parents" »

As Fullerton loan modification attorneys, we are following with great interest a new bill intended to stem the tide of foreclosures. Assembly Bill 1588, the Monitored Mortgage Workout Program, would allow borrowers whose loans are in default to choose a monitored foreclosure mediation program in which a qualified monitor supervises the loan modification process. A press release published Nov. 12 by California Newswire reported that Nevada's Speaker of the Assembly, Barbara Buckley, traveled to Sacramento to testify about the success of her state's foreclosure mediation program. The Assembly Banking & Finance Committee also heard from housing experts, banks and consumer-oriented nonprofits about the effects of the proposed plan.

According to an earlier press release, AB 1588 was sponsored by Los Angeles Mayor Antonio Villaraigosa and introduced by Assembly Speaker Karen Bass, Assemblyman Ted Lieu of El Segundo and Assemblyman Pedro Nava of Santa Barbara, all Democrats. They hope to make loan modifications more accessible by having a mediator from the California Housing Finance Authority oversee them. Borrowers must elect to participate within 30 days of the notice of default, and lenders may not take further steps toward foreclosure until the process is completed. The state-appointed mediator helps both sides analyze the affordability of the modification for them, versus a foreclosure, and is authorized to propose alternatives if the parties cannot agree. If either side rejects the proposal or acts in bad faith, the bill allows the foreclosure to go through (in cases of homeowner bad faith) or allows homeowners to sue to enforce the alternative modification (in cases of lender bad faith).

As Redlands loan modification lawyers, we like what we know of this program. It has become clear through loan servicers' actions throughout 2009 that they do not want to make loan modifications. Nonetheless, they continue to offer them, and simply find reasons to delay or deny modifications, or offer sham workouts that don't improve the situation. Nevada's program, which uses similar rules, has already seen massive demand, with 80 to 100 borrowers a day requesting the program as of late September, according to Investors Business Daily. The same article said two of the first four cases ended in a viable loan modification and the third resulted in a deed in lieu of foreclosure. Nevada Supreme Court Chief Justice James Hardesty said he believed the program might incentivize lenders to take action before foreclosure -- an outcome we believe would be even better.

Continue reading "Lawmakers Hear Testimony From Nevada Assembly Speaker About Foreclosure Mediation" »

As West Covina loan modification attorneys, we were interested to see the Treasury Department's monthly report on the progress of the federal Making Home Affordable plan. Lenders participating in the mortgage relief program have been under fire almost since its inception, from government officials, consumers and advocates who say lenders have dragged their feet on offering sustainable loan modifications. The Associated Press reported Nov. 11 that lenders have improved a bit, offering temporary loan modifications to about 650,000 eligible homeowners nationwide. However, consumer advocates now charge that few of the trial modifications have been converted to permanent modifications.

HAMP modifications were always intended to have a trial period of three to five months, during which homeowners must make payments on time to remain eligible. The report said 29% of eligible homeowners have been offered loan modifications under the program and 20% are actually participating. However, only about 1,700 permanent loan modifications had been made as of early September. The program was launched in March, so the waiting period may account for some of the lack of conversions -- but an assistant Treasury secretary said the department's early data showed a lag. Consumer advocates agree, according to the AP, and would like more aggressive penalties for banks that fail to follow through.

As Artesia loan modification lawyers, we think they're right to be suspicious. The history of HAMP shows that lenders moved very slowly to start making loan modifications, despite the incentives the government provided. It took a polite dressing down by federal officials over the summer to convince lenders to take the program seriously. Now, as the first wave of temporary loan mods becomes eligible to be converted to permanent ones, we would not be surprised to see more reluctance from lenders. History and studies have shown that lenders don't believe loan modifications serve their best interests, even though they seem to think appearing to comply with HAMP is important. Lenders may need another meeting, or enforcement laws with some teeth, to convince them to follow through.

Continue reading "Treasury Department Report Shows Temporary HAMP Loan Mods Have Increased" »

Our Ontario fair debt collection lawyers have seen a flood of complaints in recent months about underhanded tactics by collection agencies. So we were disappointed, but not very surprised, to see an article in the Tulsa World Nov. 11 about a series of statements to Oklahoma residents from a debt collector trying to illegally collect on old debts. According to the article, RJM Acquisitions Funding LLC has been contacting Oklahomans with demands for thousands of dollars to pay off debts that go back many years. What it doesn't tell the recipients is that Oklahoma has a five-year statute of limitations on debt, meaning that consumers aren't obligated to pay debts older than five years.

The article says New York-based RJM is a junk debt buyer, which means it pays very little for older debts that the original creditors have given up on collecting. Junk debt buyers then call the debtors and demand payment without mentioning any applicable statute of limitations. They hope to reach consumers who don't understand their rights and will agree to pay up. When they do, the debt is again considered valid and collectable under the law. Not only will this not improve the consumer's credit, but it can put the consumer on a list of "easy marks," setting him or her up for more harassing phone calls. Instead of paying, the article recommends that consumers request validation of the debt in writing. If the debt isn't valid, this may be enough to drive the debt collector away.

As Orange debt collection harassment attorneys, we're pleased to see articles like this, which try to educate consumers about their rights. As the article notes, collection agencies frequently rely on consumers' ignorance to get payments they aren't legally entitled to request. In our experience, they also depend on lack of consumer education to protect them from legal consequences for their use harassment, threats, verbal abuse and other practices that are banned by the Fair Debt Collection Practices Act. Debt collectors cannot legally put consumers in jail, request more money than owed, contact relatives (other than a spouse) and neighbors or use vulgar language -- but media reports show that they do it anyway.

Continue reading "Oklahomans Warned About Debt Collector Demanding Payment on "Dead" Debts" »

Our San Bernardino loan modification attorneys have long believed that loan servicers aren't doing everything they could to help homeowners who've applied for loan modifications. So we were pleased to see an article in the Columbus Dispatch Nov. 6 saying that Ohio's attorney general has taken action against at least two banks he believes have violated the law by failing to reasonably consider loan modifications. Attorney General Richard Cordray sued American Home Mortgage Servicing for violating the Ohio Consumer Sales Practices Act with its sluggish responses to loan modification applications. It's the second such lawsuit by the attorney general's office, following a July suit against Carrington Mortgage Services of California.

According to the article, the attorney general alleges that American Home has ignored requests from borrowers; provided "incompetent" customer service; failed to modify loans in a timely manner and offered unfair and deceptive terms when it did modify loans. It wasn't clear from the article whether prosecutors believe American Home did this intentionally or through bad management. The office said it has received 119 complaints about the Texas-based company, which is the second-biggest subprime loan servicer in the country. American Home responded aggressively to the suit, filing a lawsuit of its own seeking a court's declaration that it is in compliance with Ohio law. Cordray dismissed this as a "sideshow" and said lawsuits against other services may be coming.

As Garden Grove loan modification lawyers, we are delighted to see someone calling out loan servicers for their apparent inability or unwillingness to modify loans. As we have written on this blog, we believe loan servicers have chosen not to modify loans because they believe (rightly or wrongly) that they can make more money by allowing the loan to go into foreclosure. That was confirmed most recently by a National Consumer Law Center study in which researchers simply "followed the money" and found that loan modifications cost money for loan servicers, but foreclosures can actually generate fees for servicers, who often don't have a stake in actual repayment. Rather than simply refuse to offer loan modifications, however, lenders have continued to offer them -- but in a way that we think is designed to ensure that few are completed. Thus, millions of borrowers continue plugging away at a system not designed to do what they desperately want it to do.

Continue reading "Ohio Sues Mortgage Servicer for Incompetence in Failing to Modify Loans" »

As Chino loan modification attorneys, we know it's a sad truth that not everyone is eligible for a loan workout. People facing foreclosure because of a job loss, for example, are unlikely to qualify because they simply don't have the income to make payments unless they can be re-employed quickly. Nonetheless, with unemployment at record highs, both homeowners and the housing market itself may be in serious trouble if this situation creates another wave of foreclosures that leaves families homeless and housing prices low. So we were pleased to see an announcement in the Los Angeles Times Nov. 6 that Fannie Mae, the government-associated mortgage buyer, is planning a "deed for lease" program that allows foreclosed homeowners to stay in their homes as renters.

According to the Times, the program is open to borrowers who are facing foreclosure but cannot qualify for a loan modification. The home must be the borrower's primary residence and any subordinate liens on the property would have to be removed. Homeowners would sign over all interest in the homes to Fannie Mae. In exchange, they would pay market-rate rent that is no more than 31% of their gross income. A Fannie Mae spokesman said this would ease the transition to renting, leaving school and community ties in place. It would also allow Fannie Mae to make some money off properties that are "underwater," meaning that it cannot sell them for the balance of the loan anyway, at least right now. Converting borrowers to renters keeps the properties in good condition until the market improves.

Our San Dimas loan modification lawyers are pleased to see the government-related agencies addressing this problem head-on. We, and many of our clients, have already learned through experience and numerous media reports that jobless borrowers don't have many options with completely private lenders. This solution won't allow borrowers to save their homes, but it does offer advantages for the borrower, Fannie Mae and the market as a whole. Borrowers get time to transition into a rental, while Fannie Mae gets some rental income -- and the possibility of keeping properties in good condition for sale in the future, when the market may be better. And of course, communities have fewer foreclosed properties around to create eyesores and lower property values.

Continue reading "Fannie Mae Announces Plans to Lease Homes Back to Foreclosed Homeowners" »

As Santa Ana unfair debt collection attorneys, we were pleased to see another report about a debt collector facing penalties for serious wrongdoing. According to a Nov. 3 article from the Associated Press, American Corrective Counseling Services agreed to pay $2.55 million to settle a class-action lawsuit by thousands of Pennsylvanians who say they were lied to by the agency. The company is in bankruptcy and has also been sued by national consumer protection group Public Citizen in three other states for violations of the Fair Debt Collection Practices Act.

According to Donald Driscoll of the Community Justice Project in Pittsburgh, the debt collector paid county prosecutors in Pennsylvania to resolve bad check cases out of court. It then sent letters to bad check writers, telling them they had committed crimes -- but could avoid jail if they paid inflated fees and the cost of a "mandatory" finance class. Driscoll said one victim was an elderly woman who had bounced a $27.17 check, but -- like most of the victims -- was unlikely to be prosecuted because it was an honest mistake. The letter demanded $242.17 from the woman, who Driscoll said was afraid she'd go to jail.

An attorney for Public Citizen, Deepak Gupta, added that consumers caught up in this scam frequently don't realize that they're talking to someone other than the county prosecutor. Prosecutors usually don't intend to prosecute these people anyhow, he said, and appreciate the extra money they can get from lending their names to the scheme. However, he believes they frequently don't realize that their authority is being used to scare debtors. While American Corrective Counseling Services is in bankruptcy, Gupta said, it has also re-formed as National Corrective Group and follows the same practices.

As Carlsbad debt collection harassment lawyers, we're disappointed that a supposedly bankrupt company can simply re-form and continue its illegal practices without notice or interference from the Federal Trade Commission. Under the FDCPA threatening legal action not expected or not actually contemplated is illegal. Of course, debt collectors may not prosecute anyone -- and the prosecutors involved reportedly had no intention of taking victims to court over small bounced checks. Given this, the collection agency's actions seem like a clear violation of the FDCPA. If regulators cannot shut down debt collectors like these, we hope they are at least keeping a close eye on their activities and tactics.

Continue reading "Debt Collector Settles Lawsuit Claiming It Threatened Prosecution of Debtors" »

Our Fontana loan modification attorneys work frequently with at-risk homeowners who are frustrated by the lack of responses or care in their interactions with lenders. So we were intrigued to see a Nov. 2 article in the New York Times suggesting that state attorneys general are also frustrated -- and are considering using their power as their states' top consumer protection officials to take action. Thanks to a Supreme Court decision from June, state attorneys general have regained the power to file legal claims against federally regulated banks, an ability they lost with new federal rules in 2004. Now, the Times says, some of the top prosecutors are considering suing certain banks for fraud, under the theory that they made exotic loans they knew couldn't be paid back.

The article focuses on Arizona attorney general Terry Goddard. He said his (and the federal government's) attempts at gently persuading banks to modify loans aren't working. After the Supreme Court's ruling in Cuomo v. Clearing House, Goddard and his colleagues got new powers to sue banks they believe are responsible for serious fraud against the people of their states. The new power brought lenders into Goddard's office, but he said most of them couldn't or wouldn't provide basic information about their loans. Meanwhile, his office is flooded with complaints from Arizonans who say their paperwork was lost and the banks are ignoring their calls. Unless he sees a more prompt solution, Goddard said, he will consider a consumer fraud lawsuit that would probably be a joint effort with other states.

As Corona loan modification lawyers, we're glad to see that attorneys general have and will use this tool, even if it's not their first choice. As Goddard told the Times, a lawsuit is not the prompt solution that homeowners and regulators would prefer. However, months of evidence shows that lenders aren't able or willing to address the problem on their own -- and meanwhile, foreclosures reached a record high in the third quarter of 2009. All of those foreclosures represent real people and families who paid thousands of dollars into homes that were lost. Unfortunately, studies continue to show that they also represent more profit for lenders than loan modifications could provide, regardless of the effect on individual homeowners or the wider market. If it takes a multi-state class-action lawsuit to salvage the salvageable loans, we support it.

Continue reading "Top State Attorneys Consider Fraud Lawsuits Against Recalcitrant Mortgage Lenders" »

As San Bernardino mortgage loan modification attorneys, we were pleased to see a recent editorial on problems with California's foreclosure process in the San Francisco Chronicle. On Nov. 1, the newspaper called for more attention to the legal side of foreclosures, from the process itself to the lack of legal representation for homeowners who cannot afford it. The Chronicle said homeowners facing foreclosure should have a day in court and more notice of foreclosure sales of their homes. And it called on the Legislature to allow legal services organizations to receive existing federal funding, a cost-free fix that would give more low-income people access to game-changing representation.

In California, the vast majority of foreclosures are non-judicial, which means lenders do not need to file a lawsuit to repossess and sell a home. Instead, lenders must file a notice of sale at least two weeks before the sale is to take place and notify the homeowner at least 20 days before by letter and by posting a sign. The Chronicle compared this system unfavorably to tenants' rights laws, noting that no personal notice is required even for the foreclosure sale. And once homeowners do receive notice, it said, they are unlikely to know what to do about it, even in cases of clear wrongdoing. An attorney quoted in the article said most Californians need an attorney to identify predatory lending or other problems that could form the basis of a challenge to the foreclosure. The Chronicle called for more access to legal aid or court-appointed attorneys for low-income people, as well as more access to the courts themselves.

As Chino loan modification lawyers, we're sorry to say that we agree. Just like in other parts of the legal world, people involved in a foreclosure tend to get better results if they have the resources to hire an attorney. This is partly because attorneys have the experience and knowledge to identify problems with the foreclosure proceeding or the underlying mortgage, and to take quick action on those problems. (This is also true at the beginning of the mortgage process, when people with no legal knowledge can become victims of those willing to exploit them for a quick dollar.) However, we have also noticed throughout the housing crisis that our clients get more attention and better results from lenders after they hire us, suggesting that lenders know they can't get away with the same behaviors once attorneys are on the job.

Continue reading "San Francisco Chronicle Calls for More Legal Aid, Better Regulations for Foreclosure" »

Our Pomona loan modification lawyers work frequently with homeowners involved in the Obama administration's Home Affordable Modification Program -- or people who would like to be involved. Because we've been following and working with the program for months, we understand some of its limitations. So we were pleased to see an Oct. 30 article in the Cleveland Plain Dealer in which a Treasury Department official said more changes to the program are on their way. Speaking at a fair lending conference, senior policy analyst Mark McArdle told listeners that the agency is retooling HAMP to address lenders' reluctance to participate. He also said his agency is considering measures to address the effects of rising unemployment.

As would-be participants know, HAMP got off to a very slow start, with very few modifications granted and many lenders complaining of bad service and repeatedly lost paperwork. McArdle told the conference that the number of trial modifications under the program now exceeds 560,000, surpassing a goal the administration has set. However, McArdle acknowledged that more was needed. He said new guidelines would require lenders to respond to applications in 10 days, possibly putting an end to borrowers' complaints about months-long delays. He also said the Treasury Department was looking at ways to help the growing number of unemployed homeowners avoid foreclosure. Other new or proposed changes include allowing modifications for second mortgages; requiring lenders to clearly and in writing state reasons for a denial; and streamlining documentation requirements.

As Yorba Linda loan modification attorneys, we are pleased that the government is actively looking for ways to improve HAMP. Though many originally had high hopes for the program, it has fallen rather short of its promise as lenders give borrowers the runaround and incorrectly deny modifications. (In fact, at least two studies suggest that lenders may be doing this on purpose, because foreclosures generate more profit with less risk.) If the requirement for a quick response is given some teeth to back it up, it could end the three-month waits that borrowers routinely report enduring, and the surprise foreclosures that sometimes follow. And the changes to accommodate unemployed homeowners, if done right, could nip a future wave of foreclosures in the bud and help preserve the beginnings of recovery in the housing market.

Continue reading "Treasury Department Spokesman Announces Changes to HAMP" »

As Corona loan modification lawyers, we have long believed that the deck is stacked against homeowners when it comes to foreclosure proceedings. That's why we were pleased to read that some judges and borrowers are starting to crack down. The New York Times reported Oct. 24 that in at least a handful of recent cases, judges have refused outright to enforce debts or allow foreclosures when the lender cannot produce the title. This is a marked contrast to the typical procedure before the housing downturn, when judges were likely to rubber-stamp foreclosures and debts. The article suggested reasons including the greater volume of foreclosures, the lax lending standards behind many foreclosures and the trend toward securitizing mortgages, which can make paperwork hard to find and ownership hard to establish.

The article called out a consumer bankruptcy case involving a homeowner from White Plains, NY. The unnamed woman bought her home in 2001 and refinanced 4 1/2 years later, but then had trouble making her payments. Her attorney filed for bankruptcy on her behalf, hoping to convince lender PHH Mortgage to allow a loan modification. PHH was not the original lender for the purchase or refinance, but filed a claim with the bankruptcy court for debt the woman allegedly owed. The attorney said PHH was dragging its feet on the case, so he asked the court to force PHH to prove it owned the debt. The ensuing paperwork not only did not prove ownership, but exposed PHH for overcharging the homeowner for foreclosure fees and interest. In response, the bankruptcy judge simply canceled all of the woman's mortgage debt, saying he had serious doubts about who owned it.

This is not the first "show me the title" case our Covina loan modification attorneys have encountered, but it's pleasing to know that judges are willing to crack down on sloppy paperwork when the circumstances require it. Foreclosures and bankruptcies are about more than just getting paperwork in order; they affect the lives of the people behind them in real and lasting ways. When someone is at risk of losing her home or being tied down for years by hundreds of thousands in debt, she deserves to have the creditor held to higher standards. And as the article notes, mortgage lenders and other institutions have, to some extent, invited this kind of trouble by failing to verify whether borrowers could reasonably pay their loans, then habitually failing to properly track and document ownership of securitized mortgages.

Continue reading "Borrowers and Judges Increasingly Demand to See Title Before Allowing Foreclosures" »