California Bankruptcy Attorney Blog

As Riverside foreclosure defense lawyers, we believe "dual tracking" of foreclosures -- in which loan servicers start the foreclosure process while also considering a loan modifiction -- creates unnecessary foreclosures that are bad for the entire market as well as individual homeowners. So we were disappointed to see an April 28 article from HousingWire saying that a proposed ban on the practice died in committee in the state Senate. According to the Los Angeles Times, the Banking and Financial Institutions committee failed to pass SB 729 on a 3-3 vote, with Democrat Alex Padilla of Pacoima abstaining. Democrat Darrell Steinberg of Sacramento, who originally introduced the bill, said he intended to introduce the bill again during this legislative session, and the committee planned to reconsider it.

Dual-track foreclosures are criticized by consumer advocates as misleading and unfair to borrowers. Borrowers who are accepted for a loan modification, make payments on time and have no major financial changes can find themselves foreclosed anyway under a dual-track system, sometimes without notice. This can lead to preventable foreclosures or litigation. Rules for the federal HAMP program forbid the practice, but those rules only apply to HAMP modifications, and there are no penalties for breaking them. A recent settlement between large banks and federal regulators would also forbid foreclosures after a modification is approved, although it said nothing about foreclosures during consideration for a loan modification.

SB 729 would have gone further than either measure by forbidding dual-track foreclosures for all California mortgages. It required lenders to say yes or no to a modification before being permitted to start foreclosure proceedings. If they fail to do so, borrowers can sue them to stop or void a foreclosure for up to a year after a sale. It also required lenders to prove they have the right to foreclose -- the issue in the "robo-signing" scandal -- explain denials of modifications in writing and declare in writing that they were complying with the law when they file foreclosures.

Our Yorba Linda foreclosure defense attorneys wonder what Padilla and the three no voters found so objectionable about these provisions. In fact, we don't believe it reflects well on mortgage servicers that it was necessary to include assurances that they are not breaking the law. Because we've worked in foreclosure defense law since 2008, we know this is a widespread problem for California mortgage borrowers. People who have worked very hard and poured a lot of financial resources into saving their homes should have the right to assurance that the bank means what it says -- and they should be able to hold the bank accountable when it goes back on promises. As things stand, homeowners who are dual-tracked must spend yet more money and effort extricating themselves from unnecessary, unfair foreclosures that are no fault of their own.

Continue reading "Proposed California Law Banning Dual Track Foreclosures Dies in Senate Committee" »

Our San Bernardino County foreclosure defense attorneys agree with consumer advocates that the practice of dual-tracking foreclosures is unfair and potentially predatory to consumers. So we were pleased to see that the Federal Housing Finance Agency has essentially forbidden dual-track foreclosures for a huge proportion of the nation's mortgages -- those owned by Fannie Mae and Freddie Mac. The FHFA ordered the two government-sponsored lenders to make new policies for how servicers handle delinquent mortgages. Among the new policies was a requirement that servicers consider only foreclosure alternatives until the 120th day of delinquency, which effectively puts the kibosh on dual tracking.

The directive from the FHFA, which was created to oversee government-sponsored companies like Fannie and Freddie, was phrased as an order to align their policies. Previously, each company had a different policy for mortgage servicers. But the FHFA also set down specific requirements for the policies on delinquent servicing. In addition to the 120-day rule, Fannie and Freddie will require servicers to formally review cases to ensure that borrowers were considered for an alternative before they may start foreclosure. After foreclosure, they will be required to continue working on alternatives. The order also asked Fannie and Freddie to ensure that mortgage servicers are rewarded and penalized in the same ways at both organizations.

As Costa Mesa foreclosure defense lawyers, we're pleased by this news. News reports from 2008 said Fannie and Freddie owned 31 million U.S. mortgages. Even if only 10 percent of those loans are in default, this rule still has the potential to help millions of Americans. Dual tracking is popular with banks because they believe it saves time, and therefore money, by getting started with the lengthy foreclosure process early. However, the practice leads to foreclosures of people who have already been granted a loan modification or are still under consideration. Frequently, these borrowers have spent months fighting the servicer's seeming indifference or incompetence, which delays a decision on a loan modification long enough for foreclosures to go through.

Continue reading "Federal Regulators Order Fannie and Freddie to Forbid Dual Track Foreclosures" »

As Upland foreclosure defense attorneys, we've read a lot about the practice of robo-signing -- foreclosing lenders signing foreclosure documents without reading them or making any attempt to verify the information they contain. In addition to constituting perjury, this practice makes it possible for foreclosures to go through based on incorrect information. When the story first broke, lenders argued that it was only a technical error and no wrongful foreclosures had taken place. At least one Louisiana bankruptcy judge now seems to think differently. As the Florida Times-Union reported April 14, U.S. Bankruptcy Judge Elizabeth Magner has ordered financial sanctions against Lender Processing Services Inc. for wrongfully attempting to foreclose on one couple.

Ron and LaRhonda Wilson filed for bankruptcy when they were behind on their mortgage payments. They made a Chapter 13 bankruptcy and started making payments under their bankruptcy plan in 2008. Their loan servicer, Option One Mortgage Corp. (now known as American Home Mortgage Servicing Inc.), hired LPS to handle loan servicing while the Wilsons were in bankruptcy -- and LPS, acting for Option One, tried to foreclose two weeks later, saying they were in default even though they weren't. That was denied because the servicer could not show that the Wilsons were in default. So the companies filed a new affidavit, robo-signed by an LPS employee, saying they had not paid their mortgage for four months.

That was not true, but the Wilsons' payments hadn't been credited correctly due to communication problems the judge later blamed on LPS. When challenged in court, the LPS employee said she would have signed the affidavit even if she had known it was false, because the company's law firm had submitted it. As the Wilsons challenged the foreclosure, the Justice Department intervened because it was separately investigating LPS for similar acts of potential fraud. In an April 7 ruling, the bankruptcy judge said the affidavit was a farce and criticized the entire mortgage servicing industry for shoddy and sloppy practices. She will hold a hearing on sanctions. LPS was hit a week later with a federal consent decree requiring it to repay borrowers and servicers for any financial injury stemming from its robo-signing.

Our Norwalk foreclosure defense lawyers hope other loan servicers sit up and take notice of what is happening to LPS. Submitting false, perjuring affidavits in court is not just against the law, but can also produce injustices like this one, which undoubtedly cost the Wilsons extra money and stress to fight. Even if the Wilsons' case is unique, it demonstrates that robo-signing is not just a "technical" issue -- it has real effects on real people, many of whom are already struggling financially. As the state attorneys general negotiate a robo-signing settlement with major banks, they should keep those effects in mind when determining appropriate and effective penalties.

Continue reading "Judge Sanctions Loan Servicing Firm for Robo-Signing Leading to Wrongful Foreclosure" »

Our Moreno Valley foreclosure defense attorneys have written here before about the Mortgage Electronic Registration Systems, the huge national database that large banks have created to keep track of loan ownership among themselves. The system has no legal authority or accountability and in fact bypasses local registration systems, but courts have frequently ruled that it can be used as an owner of a loan for legal purposes. Interestingly, an April 19 article from HousingWire reported on a ruling that went the other way -- it said assigning interest in a loan to MERS did not give it authority to assign the loan to another institution. If adopted outside the Southern District of California, the ruling could throw the role of MERS into doubt for foreclosures of securitized loans.

The case was filed by Eleazar Salazar, who was trying to invalidate a foreclosure sale by U.S. Bank. According to the article, MERS, not U.S. Bank, was the original beneficiary of the deed of trust, but U.S. Bank was the trustee for the security into which Salazar's loan was bundled. Salazar sued and later filed for bankruptcy, claiming U.S. Bank had no standing to foreclose because it was not the beneficiary of record and hadn't recorded an assignment of interest in the loan as required by California law. In essence, this meant he claimed U.S. Bank did not own the loan. U.S. Bank countered that California law does not require assignments of interest for deeds of trust, just for mortgages -- and that MERS obviated the need for interest in the loan to be reassigned.

The bankruptcy court disagreed. It said that even if MERS was the beneficiary of record when the foreclosure took place, it had no authority under California law. The ruling may contradict one out of the state's Fourth District Court of Appeal, Gomes v. Countrywide, which said the deed of trust itself contains the language necessary to give MERS the right to foreclose. The bankruptcy attorney for Salazar said one vital difference in the cases was that Gomes signed a document explicitly giving MERS the right to foreclose.

As Mission Viejo foreclosure defense lawyers, we're interested to see what other developments come in the way California courts handle MERS. MERS is an oddity: It is a private corporation taking the place of local land use or deed recording offices. Unlike the county, it is not accountable through elected officials or public records laws. For that reason, we think it's a good thing that judges are casting a critical eye on the way MERS is used in foreclosures. After the robo-signing scandal, courts and homeowners have stopped trusting (if they ever did) that lenders' paperwork is truthful or in order. When ownership of the note is in question, MERS can be used to simply fabricate that ownership. When a foreclosure is at stake, it's important for judges to watch this kind of behavior carefully.

Continue reading "Southern California Bankruptcy Court Rules MERS Has No Authority to Assign Deeds" »

As Fontana foreclosure defense lawyers, much of what we do involves suing lenders that have failed to fairly consider our clients' applications for loan modifications. While there's never a guaranteed outcome to any legal action, we have found this to be an effective way to stop foreclosures in the short term while forcing lenders to take our clients' legal rights seriously. So we were disappointed to read an April 17 article in the Sacramento Bee about an increase in fraud against homeowners in that position, by unscrupulous attorneys or people who are not attorneys at all.

The Bee says foreclosure lawsuits have more than doubled in Sacramento and Placer Counties compared to two years ago. However, many of these lawsuits aren't succeeding. An investigator for the State Bar of California, which regulates unauthorized practice of law and lawyer ethics, said some people are charging desperate homeowners high fees, but then delivering little or nothing. One person profiled in the article hired a paralegal to prepare his paperwork, something a State Bar spokesperson said was illegal. The article noted that about a fifth of recent plaintiffs are representing themselves, something legal experts noted lowers their chances of success. Indeed, 12 of 13 homeowners who sued in 2009 lost their homes eventually, the newspaper noted.

Our Corona foreclosure defense attorneys understand all too well what creates such dismal statistics. When borrowers file lawsuits alleging mortgage fraud, they are going up against well-funded major banks. Those banks have teams of attorneys at their disposal to pick through the borrowers' papers and find real or exaggerated mistakes that they can use to get the case dismissed. And unfortunately, it's hard for people who represent themselves to produce strong filings, because they have to do a lot of time-consuming research and understand the requirements, something that's hard to balance with a full-time job and other obligations. Even if they don't get scammed by "lawsuit mills" or nonlawyers, these people may still end up spending a lot of money for nothing.

Continue reading "Nonlawyers and Fraudsters Increasingly Offer Foreclosure Defense Lawsuit Services" »

Our Norco foreclosure defense lawyers have written here before about the unfair but industry-standard practice among banks of starting foreclosure proceedings while they're still considering whether to grant a loan modification. An April 14 article in the Los Angeles Times gives the practice another name: "dual tracking," which is the name used by banks. Consumers and their advocates say the practice is unfair and deceptive because it misleads homeowners and doesn't give them a full chance to modify their loans. Regulators and politicicians have made several attempts to restrain the practice, including forbidding it in HAMP rules, federal agreements that limit parts of the practice and proposed legislation in state and federal legislatures.

The Times illustrated the problem with the story of Shirley Robinson of Oxnard. Robinson owned the home she lived in and another property when her small business lost clients. When her primary home was put up for foreclosure sale, she got Chase to postpone that sale so she could apply for a loan modification. Then she sent in her application -- three times, because Chase claimed paperwork was missing from the first two packages she sent. On the same day she sent in her third package -- ahead of the deadline Chase had set -- the bank sold her home at a foreclosure auction. She is now suing Chase, claiming it essentially stole the equity she had in the home. A ban on dual tracking is part of the proposed robo-signing settlement from the group of state attorneys general, and California is considering a law against the practice.

As Seal Beach foreclosure defense attorneys, we hope some form of a ban is instated, because dual tracking is underhanded, unfair and deceptive. Homeowners should be able to rely on their lenders to give fair consideration to their requests for a loan modification. When the lender forecloses before the request is considered, they can't get fair consideration because the house is gone. Indeed, it's hard not to wonder if perhaps the goal of dual tracking is to take away the need to consider a loan workout at all -- especially when people like Robinson are asked to submit the same information several times. This often drives up profits for loan servicers, but it is bad for borrowers, neighborhoods and the overall housing market.

Continue reading "'Dual Tracking' Increasingly an Issue for Housing Regulators and Attorneys General" »

On March 15, the hip-hop world lost a major voice when Nate Dogg passed away from congestive heart failure at the age of 41. The rapper, whose birth name was Nathanial Hale, was most famous for his work with Warren G. -- he was featured on the hit "Regulate" -- and with Snoop Dogg. Hale had suffered several strokes since December of 2007 and been unable to work. For that reason, it was disappointing but not entirely surprising when our Redlands foreclosure defense attorneys read that his home in Pomona was foreclosed on March 17, just two days after his death. It was unclear whether any family members would be evicted from the home, although some reports said Hale did not actually live there.

Celebrity gossip website TMZ.com broke the news April 11 that foreclosure papers had been filed for the home March 17. That report said Hale hadn't made any payments since December and was $5,924 in default. Hale had been in bad health since his initial stroke in late 2007, which left him partially paralyzed on his left side. That stroke was followed by another in 2008, when longtime collaborator and friend Warren G said it was unclear whether Hale would be able to continue his career. Later reports said he had suffered memory loss and was unable to speak before his death. Warren G and other friends announced plans in late 2010 to raise money for Hale's medical needs, suggesting other financial trouble.

As Costa Mesa foreclosure defense lawyers, we know that medical problems are all too commonly a precursor to financial problems. In fact, a series of studies showed that medical bills were the direct or indirect cause of more than 60 percent of all bankruptcies in the United States. Hale had been ill for more than three years before his death, with a serious illness that likely required intense medical care and may also have required him to get help with daily life tasks. Both of these are very expensive Furthermore, his illness apparently kept him from making a living by performing or recording albums. Under those circumstances, it's not surprising that he'd fall behind on his mortgage, just like millions of other Americans with high medical costs.

Continue reading "Pomona Home of Rapper Nate Dogg Foreclosed Just Two Days After His Death" »

As Riverside foreclosure defense attorneys, we know southern California is home to a lot of military families, who have special constraints when making housing choices. So we were disappointed but not surprised to read an April 11 article in the Sacramento Bee about the disproportionate effect the foreclosure crisis is having on those families and the cities they live in. According to Irvine-based RealtyTrac, foreclosures have risen higher in ZIP codes near military bases over the past three years, although of course foreclosures are up throughout the region. Eight southern California cities, four of which are near Camp Pendleton in north San Diego County, were in the nation's top 20 military towns with high foreclosure rates.

Experts told the newspaper that part of the problem stems from servicemembers' inability to stay put and just ride out the market, as civilians might. Military families may buy a property where they're stationed, but when they're reassigned, they have to sell that property. That's very difficult in the current southern California market, where properties are underwater and sales are slow. There is a federal law intended to prevent civil actions like foreclosure against servicemembers deployed overseas, but even that can be ignored by loan servicers. A veterans' foundation spokesperson added that predatory lending is also a factor, with lenders eager to exploit young, inexperienced servicemembers. A veterans' hotline in Los Angeles said calls about housing payment problems were 40 percent of all calls in 2010.

This reflects badly on our country, but as Oceanside foreclosure defense lawyers, we're sorry to say we're not surprised. At the height of the housing bubble, when home loans were easy to come by, it's easy to see how a steady military paycheck could be attractive to lenders. Meanwhile, young military servicemembers and their families would have had clear housing needs -- but not necessarily the financial experience to understand what they were agreeing to pay. Military families and veterans have resources to draw on and some laws to protect them, but it's difficult to fight foreclosure while you are overseas literally fighting a war. And the rise in military foreclosures hurts all homeowners indirectly in military-heavy towns like Moreno Valley, Murrieta and many in San Diego County.

Continue reading "RealtyTrac Finds California Military Towns Hit Particularly Hard in Foreclosure Crisis" »

Our Rubidoux foreclosure defense lawyers wrote last week about the agreements federal regulators made with large banks accused of "robo-signing." The agreements were made under the radar early this month, even as a group of 50 state attorneys general is involved in much more public settlement negotiations with the lenders. In both cases, the lenders are seeking to settle charges against them brought after they were caught submitting thousands of false affidavits in foreclosure cases, a move that pushed foreclosures through the system faster but removed oversight intended to prevent incorrect foreclosures. As the New York Times reported April 11, consumer housing rights advocates are criticizing these federal agreements as ineffective.

Robo-signing got its name because bank employees or their underlings would sign thousands of affidavits a day without reading or verifying their information. This is a form of perjury that could have invalidated thousands of foreclosures in judicial foreclosure states, and temporarily stopped foreclosures in many places as judges scrambled to ensure the process remained fair. The state AGs got together to determine whether there was a prosecutable crime and decide on an appropriate penalty. That group's leadership proposed a settlement designed to address other problems in the foreclosure process, including ending robo-signing and other blatantly illegal practices, foreclosing while a loan modification is pending, and -- in the most controversial provision -- requiring principal write-downs in at least some cases.

The federal settlements reached in early April are expected to de-fang at least some of these proposals, or hurt negotiations between the AGs and the banks. A group of national and local consumer advocates has written a letter to regulators protesting the agreements as ineffective at stopping avoidable foreclosures. Georgetown University law professor Adam Levitin told the Times the settlements were a "sham" worse than no settlement at al, because it gives the banks political and possible legal cover for refusing to negotiate with the states. Tom Miller, the Iowa AG who is leading the group, said the federal agreements would not preempt or affect the group's work.

As West Covina foreclosure defense attorneys, we hope he's right. The federal agreements are generally more lenient than the settlement proposed by the AGs, and they certainly don't contain the principal reduction provision that banks have strongly opposed, so it's not hard to see Levitin's point. If lenders can use the more lenient settlements to convince the public that they are already doing what's reasonable, the AGs will have a weaker starting point for negotiations. That would be a shame, because it would remove an opportunity for the AGs to make meaningful changes to the way loan servicers handle foreclosures. That includes providing accountability and enforcement of the law -- something HAMP lacks that has clearly affected our clients' ability to modify their loans.

Continue reading "Consumer Advocates Say Federal Robo-Signing Agreements Won't Protect Consumers" »

Our Ontario foreclosure defense lawyers were interested to see an editorial in the Wall Street Journal promoting an idea that we've heard before: guaranteeing foreclosed homeowners the right to rent their homes for a few years after a foreclosure. Economist Dean Baker promoted the idea in an April 11 commentary for the Wall Street Journal. Baker says he proposed the idea in 2007, but took the opportunity to promote it again in the editorial tied to the health of the housing market. He writes that allowing people to stay in their homes after foreclosure would benefit the homeowners/renters, the banks and the overall housing market by encouraging stability and possibly incentivizing lenders to be more serious about loan workouts.

Baker suggests that state foreclosure laws could simply be changed to give foreclosed borrowers the legal right to stay on as renters after foreclosure. The rent would be set at market rate by independent appraisals, and they would be treated like any other renter. For a set period of time, they would be guaranteed the right to stay in the home even if it is sold. This would provide security and continuity for the borrowers, he says. For the banks, it would create responsible stewards and discourage the vandalism and lack of upkeep that drives down foreclosures' values. He also believes this could give banks a stronger reason to negotiate loan modifications seriously. And, he notes, it could be implemented without more government funding or bureaucratic structure.

As Gardena foreclosure defense attorneys, we do see some merit to this plan. However, we believe Baker is ignoring the much bigger problem of why we have so many foreclosures in the first place. We strongly disagree with him that HAMP has failed because it's bureaucratic. In our experience, HAMP hasn't worked because it contains no provisions to ensure that lenders follow the rules or treat borrowers fairly. Indeed, lenders have been openly flouting the rules, denying loan workouts for no good reason and inventing thinly disguised reasons to delay action until the borrower is broke. Before advocating a new system that banks are sure to resist, we think it's better to at least try to fix problems with the existing system.

Continue reading "Economist Promotes Plan to Rent Same Homes to Homeowners After Foreclosure" »

Our San Bernardino County foreclosure defense lawyers have written here before about the federal Hardest Hit fund, which granted money to states particularly affected by the housing crisis. California was one of those states, and it has used that money to start a series of programs collectively known as Keep Your Home California. Originally, eligibility was restricted to homeowners who had never taken out a home equity line of credit or refinanced for cash. As the Los Angeles Times reported April 6, such people will now be eligible for three of the four programs under Keep Your Home California. Eligibility was also expanded to include people whose loans originated after Jan. 1, 2009.

The three programs with the expanded eligibility include a program providing temporary relief for unemployed homeowners; one providing moving assistance for people who lose their homes; and one that gives people struggling to stay current on their loans financial assistance. People who had previously applied and been turned down because of loan origination date or refinance status were encouraged to reapply. A spokesperson for the state said that in the two months of the program's life, its management realized that they'd be more effective with more eligible homeowners, especially given high unemployment. The fourth program, which reduces principal for qualifying homeowners, has not been changed and is getting a tougher reception with banks.

As Dana Point loan modification attorneys, we'd prefer to see more attention to the principal reduction program, since experts agree principal reductions are most effective at helping clients keep their homes. But we're pleased that more mortgage holders will now be able to participate in Keep Your Home California. HELOCs and refinances for cash are sometimes pointed to as irresponsible behavior by homeowners "using their homes as ATMs," and no doubt there are cases where that's true. But in our experience, homeowners often have good reasons for tapping into their equity -- including illness or needed repairs -- and lenders certainly showed no hesitation about granting them when they stood to make money. And regardless of the reasons for the foreclosures, preventing them is good for the overall housing market.

Continue reading "California Housing Finance Agency Expands Eligibility for Foreclosure Relief Programs" »

One of the most powerful weapons we have as Ontario foreclosure defense attorneys is a lawsuit. A lawsuit gets our clients' cases in front of a judge, who is a neutral third party and an expert in the law with the power to correct mistakes and rights violations by lenders. So we were very pleased to see an April 2 article from the Ventura County Staron the difficulty of getting a loan modification for county residents, and the increasing use of lawsuits to shed light on an often under-the-radar process. The newspaper said lawsuits at one major servicer, Bank of America, have nearly doubled between 2009 and 2010, from 14 to 22, and seven have already been filed this year.

The article started with the story of Patrick Rawlings of Simi Valley, who got behind on his mortgage when he lost his job in 2008 and then was hospitalized for three months in early 2009 with a tumor. Not surprisingly, he lost some income, so he contacted Wells Fargo to ask for a loan modification. Since then, he said, he has submitted all of the information the bank asked for several times, but it's never been enough for Wells Fargo. The bank is currently trying to foreclose on the home he's lived in since 1994, but Rawlings took a friend's advice last fall and hired a foreclosure attorney. His lawsuit alleges that because Wells Fargo took bailout money in 2008, it has an obligation to help borrowers -- help Rawlings is not getting.

Our Los Angeles foreclosure defense lawyers frequently pursue lawsuits like this, for people who have been wrongly denied modifications or endlessly delayed as they watch their savings dwindle. Many clients come to us after months or even several years of delays -- just like Rawlings -- from loan servicers that don't seem to be satisfied with anything they submit. Borrowers have been told that they didn't submit paperwork, even when they did; that their information is out of date, after the lender sat on it for months; or that paperwork was lost repeatedly. Having practiced in this area since the beginning of the housing crisis, we know servicers stand to lose nothing if the bank forecloses, but gain a lot in fees. That's why it's very important to hold them accountable whenever possible -- their financial interests are opposed to yours.

Continue reading "Frustrated California Borrowers Increasingly Turning to Lawsuits to Save Homes" »

Our Riverside County foreclosure defense attorneys have written here before about the ongoing attempts by state attorneys general to understand and penalize robo-signing. This created a scandal when it was originally uncovered because of the risk of wrongful foreclosures, and because every robo-signed affidavit is perjury, which could have imperiled thousands of foreclosures on procedural grounds. In addition to responses in individual courts, attorneys general from all 50 states banded together last fall to investigate the practice and determine what penalties may be appropriate. Now, Bloomberg News reported April 6, a proposed settlement may be imperiled by deals the banks under investigation have quietly made with federal regulators.

The settlement proposal from the attorneys general was somewhat controversial, with seven AGs arguing that fines and a principal reduction proposal were too extreme. That settlement was pending when banks apparently got in touch with federal agencies including the Office of the Comptroller of the Currency, the Federal Reserve, the FDIC and the Office of Thrift Supervision. They signed deals with at least one of 14 mortgage servicers this week, agreeing to communicate better with lenders and create internal controls. No further details were reported, but the penalties are unlikely to be as extensive as the tens of millions in fines, principal reductions and other proposals by the AGs. A spokesperson for Iowa's Tom Miller, the leader of the group, said the deals won't affect their own efforts. However, analysts told Bloomberg that the servicers may use federal agreements to undermine the states' negotiations.

As Yorba Linda foreclosure defense lawyers, we suspect that was the goal of the federal deals. The article notes that OCC in particular has been "aggressive" in its position that federal laws preempt state laws. Banks, of course, prefer to face as few financial penalties and regulations as possible, despite openly acknowledging that they have broken the law. As the article notes, they may argue that federal law preempts state law, or that they are already demonstrating good faith, as a way to wiggle out of penalties proposed by the AGs. That would leave consumers right back where they started: vulnerable to lenders who break the law because no one is truly holding them accountable, at least outside individual court cases.

Continue reading "Federal Deals With Banks Could Undercut Robo Signing Settlement Talks With States" »

Our Moreno Valley loan modification lawyers know that securitized mortgages -- those that have been sold as investments -- face special challenges when they need to be modified. A March 31 story from ProPublica, a public-interest journalism project, lays out one of those obstacles in detail. According to the story, the trustee for the investors in the securities is often the holdup, not the investors themselves. The trustee is usually a bank, but the homeowners typically don't know that bank is involved in their loans at all, because they deal with a loan servicer instead. This makes it difficult to get a modification, even when the servicer and investors agree that it's in their best interests. It also makes it harder for borrowers to tell whether servicers are following HAMP rules requiring them to ask for permission to modify loans.

The article focuses on a homeowner, Pamela Jeter of Atlanta, who has been declared eligible for a loan modification through her servicer, OneWest. A large majority of the investors in her loan also agreed to a modification through a poll -- but the trustee, HSBC, refuses to allow it, citing contractual restrictions. Jeter is one of about 3,000 homeowners in this situation, and OneWest says 800 of them seem eligible for a loan workout. In an unusual move, OneWest sued HSBC last year, asking a court to declare that the modifications should be allowed. That lawsuit is pending, but unfortunately, OneWest was proceeding with a fifth foreclosure action against Jeter while they wait. One day after the ProPublica story was published, OneWest agreed to stop its foreclosure efforts for at least two months.

We're pleased to see that the story had a positive effect on Jeter's case , but as Santa Ana foreclosure defense attorneys, we wonder what's happening to the other 799 modification-eligible homeowners in the same pool of loans, or the thousands of others across the U.S. in her situation. Lenders attempting to foreclose while modification efforts are underway is a widespread problem, despite the fact that it is not permitted under HAMP rules. (The state of California is considering making the practice illegal.) HAMP has no accountability mechanism, and homeowners rarely have the knowledge or financial means to stand up for themselves, which is why servicers and lenders routinely violate that and other provisions of the program.

Continue reading "Trustees for Investors in Securitized Mortgages Block Loan Modifications for Some" »