Judges Siding With Some Homeowners In Mortgage Court Fights

New York Times:

FOR decades, when troubled homeowners and banks battled over delinquent mortgages, it wasn't a contest. Homes went into foreclosure, and lenders took control of the property.

On top of that, courts rubber-stamped the array of foreclosure charges that lenders heaped onto borrowers and took banks at their word when the lenders said they owned the mortgage notes underlying troubled properties.

Read the whole story: New York Times

Comments

[investingonline]

where are the unemployment benefits we need?

he's right: http://finnanceopinionss.blogspot.com

./

[dfranz]

I say follow the commissions. Lenders were making absurd fees for refinancing jumbo mortgages. A broker could make up to $20,000 a transaction for Adjustable rate mortgages in which the homeowner was paying something like $600.00 a month for a $600,000 loan. The commission fees were just tacked onto the loan. As is being discovered by the foreclosures, many of the borrowers could not afford what they were sold. Many lenders or brokers phonied up income statements and appraisals to make these loans fly. These finance people made big money doing this and they still have it, while the banks that were stuck with the bad loans are paying a steep price as are all Americans who have lost wealth due to the collapse.

[LHB58]

It's interesting that whenever a Blog is posted about debtors revolting against unreasonable, arbitrary tems imposed on them by creditors, advocates of ostentatious "personal responsibility" loudly proclaim that borrowers should have read the CC contract through a magnifying glass and that it is THEIR responsibility to understand all the nuances of contract law before swiping their credit cards. Then, when debtors demand simple documentation of an alleged mortgage debt, those same "personal responsibility" fanatics seem to be arguing that debtors are abusing their alleged creditors by demanding that they adhere to the most fundamental principle of contract law, and prove that a contractual relationship between the debtor and creditor existed in the first place.

Why are individuals held to such an incredibly high standard of rationality and responsibility when it comes to finance, but financial institutions (which "do" nothing BUT finance) seek to be excused from their irrationality and irresponsibility at every turn?

[SecretSister]

Great comment.

[abdik8]

Creditors should have their documents in order if they want to get paid back. End of story. Debtors should not have borrowed money they couldn't possibly pay back, and if they did I don't feel sorry for them. Both need to be responsible.

The law or the government cannot be arbitrary. If a lender screwed up, they should bear the cost, although most likely they will go out of business and get rescued by taxpayers. If a lender didn't screw up, though, we cannot just seize their collateral anyway because the debtor has an emotional story. Once we do that, nobody sane will lend money and housing and the economy will crash so hard this will have looked like a picnic.

[Artemis34]

"Oh, what a tangled web these mortgage lenders weave...."

Indeed.

Banks should have to produce proof of the debt and title to the property. If they cannot, the deserve to lose.

Otherwise everyone who needed health care could just claim to hold the health insurance company's CEO's mortgage and foreclose on the mansion to pay for their chemo.

[Twopennygal]

My partner and I have just taken the first step to take our lender to court, we're having a forensic audit done of our mortgage. If the auditor thinks we have a case, which is likely, we'll be going to court. After reading this article, I hope we get a settlement we can live with before it goes to court. I'd hate to have our house in limbo the way this one has ended up in.

[kareemachan]

It was interesting reading this, as just last night we watched "Capitalism : A Love Story". This directly echoes Marcy Kaptur's speech there, where she says not to accept foreclosure without making them produce a mortgage audit. Sounds like she knew what she was talking about... And the fun part was reading a Republican's response at the time to what she said. Jim Moody said, "I think she's clueless. This is goofy. Of course, the attorneys file the proper paperwork." Yeah, right, Jim. Now, Jim Moody is a realtor and tried to run for mayor Toledo. Bummer you didn't make it, Jim.

[Grannysue]

Chalk one up for the little guy finally, my mortgage with Countrywide was sold or taken over by Bank of America yet each month I receive statements from both? These people in their quest to rip off Americans have shuffled so much paper they don't even know who holds the mortgage anymore.

[DEXTERMORGAN]

moutonnoir­,shockmago­g

I agree with u guys in that the goverment and CEOs have taken our tax money and squandered it in war and exuberant excess. what I h@te is that now we're supposed to let the citizen do it this too, what is this a new let them have" a piece of the pie" in irresponsible Americ@! then we wonder y we can afford health care for all Americ@ns.

[Artemis34]

Think of it as a tax refund.

[Lakshmi0000]

The Grapes of Wrath...21th century style......

[DEXTERMORGAN]

You can say that again...by the way Brother can ya spare a dime?

[Santos A Perez]

The double-edged sword called the "law" at it's finest... On the one hand an activist Court may harm the innocent.... on the other hand, it can do wonders, even if procedurally (ergo substantively) flawed....

[DEXTERMORGAN]

That's the way the law works blindly and erratic!

[Artemis34]

This is how it is supposed to work when you can't make your case, you lose.

[Gasparilla]

If you have been paying mortgage payments to a company, and to no one else, aren't you acknowledging that they indeed hold the mortgage?

[amdezurik]

try reading?

[Gasparilla]

Maybe you? Did you comprehend what I said? If you have been paying a mortgage company, presumably because they have sent you a payment book, and you are paying, aren't you acknowledging that they hold the mortgage? Try an answer?

[NoPartyFan]

If the mortagage company that you are making payments to has sold your note and the company is not longer in existence due to the collapse of some companies, isn't that fraud by the bank?

[Gasparilla]

Could you explain that? Presumably the mortgage company has acquired your mortgage somewhere along the way. I know mine was sold within a year and I paid it off eventually and got a payment in full notice.

[Twopennygal]

Servicers don't own the mortgages. They represent the lenders. If the mortgage changes hands and the new lender stays with the old servicer, you may never (probably won't ever) know who owns it if you never ask.

[mairausch]

Thank God! A judge is finally holding the servicer/bank accountable! Our mortgage was sold; we were never notified. Our first attempt to modify, we were told by servicing company, National City, there were investor's on our loan and should wait until the investor decided to adopt the HAMP plan. NCM gave us a forbearance agreement and lowered the payment for four months.

Two months later we were notified that the servicer was changed to GMAC Mortgage. We had to start the modification over again. GMAC would not accept agreements from NCM. GMAC asked for our loan docs at the start of servicing our mortgage, stating docs hadn't been transferred yet. Aren't they supposed to have the originals? Our title changed to GMAC as lender this month.

We have been sent modification docs that conflicted within themselves; have $50,000 in arrears interest, fees, servicing charges. Are signed up for the HAMP plan; GMAC wants us agree to principal increase. We won't sign it. Now, we don't qualify for HAMP, because we are not going through "trial" payment period on an amount we don't agree to. We have been told by GMAC, "This is it, there is no negotiations with the documents."

We need another solution. We will not settle for anything less than principal reduction on a modification. Or we need to find a great attorney in OR to help us.

DO NOT SIGN! - homeowners revolt against unfair mortgage practices and bogus modifications!

[spinns17]

you need to contact your state reps about this.they will direct you to the right people.

[mairausch]

I sent out good old fashioned letters to Senator Wyden, Congressman Walden, Governor Kulongoski, Rep Stiegler, and our Mayor with copies of all the predatory modifications asking for an audit of all paperwork including the original loan. Wish us luck!

Fighting in Oregon!

[abdik8]

GMAC doesn't have to worry about you, they are too big to fail and getting government help.

[Twopennygal]

Check out usloanauditors.com and uslegaladvisors.com and take them to court.

[ie]

I personally know of another situation where this should be the outcome. The note's been sold so many times, no one knows who owns it. The servicer pushed for foreclosure and refused to negotiate with the homeowner. The original loan was predatory (it was an equity loan and valued the house at about 3 times what it's worth). I think the judge is about to toss it out, also.

I can only imagine some of the garbage the judges are seeing these days. This mortgage situation is made up of many many stupid and bizarre stories--bad behavior on all sides. If we don't change the rules, the game will continue to be "played" by people trying to take advantage of someone.

[abdik8]

A loan that values a house at 3 times what it's worth isn't predatory, it is suicidal. There is no way they will get their money back. And are you saying the borrower didn't know it was an insane loan? A person who borrows that much deserves to lose and whoever lends that much deserves to lose it. The judge should penalize all of them.

[tiredofthesameoldstuff]

So tell me how would borrowers needing money be able to understand these loans when even professors at top financial universties and their students cannot even understand the loan contract?

[abdik8]

Just think how easy it is going to be to get a mortgage if banks no longer feel secure they can get their money or their collateral back if the homeowner defaults. This could whack another 80% off the price of houses as only people with cash will be able to buy them.

[diana68]

Maybe I'm just not understanding this correctly. But shouldn't the homeowner still owe something on the home. To just forgive all debt? That isn't right either. Why should the homeowner get a free home. We all have to pay to live somewhere.

[AtticusinPa]

The article is incomplete. Under bankruptcy law, the U.S. Trustee (or private trustee if one is appointed) represents the unsecured creditors (utilities, doctors, credit card companies etc.) who usually get little or nothing when there is a secured lien ahead of them. In this case, if the lien is gone but the debt is admitted on the initial bankruptcy filing, then the trustee gets to sell the house to pay the unsecureds. They are likely to get the windfall, not the owner. Depends on what her unsecured debt schedule looks like. P.S. When pushed, the lender is likely to find the note in someone's vault, they usually do. But judges around the country are showing impatience.

[HamletsMill]

AtticusinPa,

I am enjoying your posts very much. You seem very knowledgeable as if you are a lawyer which I think you are. I am, therefore, very curious about what you think of the arguments set forth on these sites?

http://livinglies.wordpress.com/

http://www.msfraud.org/

http://www.counterpunch.org/martens10212009.html

It appears a legal case is developing from the tactic of connecting chains of fraud right to Wall Street in the whole debacle. See Neil Garfield's article about the "hidden spread" in the securitization process where both the homeowner and the pension fund investor were defrauded.

I agree with one of your comments that the courts will most probably decide this and not politicians. I add that it will be state by state. And it will be bloody. It is the perfect storm upon the failure of the college and University system of the United States. When a society produces dumb lawyers for careers on Wall Street we are in very real trouble. Same with Congressman, Senators, and Presidents.

So it goes.

[Artemis34]

To whom? If no one knows who owns the mortgage, to whom would they pay?