Thursday, July 30, 2009

TRUTH BE TOLD: FILING BANKRUPTCY DOES NOT “STOP” FORECLOSURE

Over the course of the last few months I have had clients that have come to my office for a consultation over their foreclosure tell me that they have gone to a bankruptcy attorney who advised them to go into a bankruptcy to relieve their debt obligations. Now I am not an attorney but I do work close with the attorneys in our company. A bankruptcy is not going to make the foreclosure go away. It is only going to temporary postpone the process. In fact unless the client is facing a sheriff's sale in the next couple of days there may not be a need to go through a bankruptcy. Do not forget you are still going to have to face the foreclosure, once you file bankruptcy, only now your credit is worst off that before your bankruptcy was filed. This is very important as the bankruptcy is going to impact your credit negatively for the next 7-10 years. Besides bankruptcy laws have changed quite a bit that makes it a bit harder to file for one. If you are in a position to defend your foreclosure legally because you have a fraudulent loan or predatory lending violations, your credit will be cleared from the foreclosure as part of the settlement.
Here is a small article on this matter form Jeff Barnes ESQ. for Foreclosure Defense Nationwide.
Although we have published prior articles on this subject on this blog, we continue to receive calls from borrowers who have been told by others that they should “file bankruptcy to stop a foreclosure”. In fact, an attorney who I sought to establish a local counsel relationship with in another state e-mailed me yesterday asking “has your client considered filing bankruptcy to stop the foreclosure?” Once again, as we have stated before and as provided by applicable Bankruptcy law, filing Bankruptcy does not, repeat does not, “stop” foreclosure. It only temporary postpones the process.
Pursuant to 11 USC sec. 362(a), an “automatic stay” is imposed on all proceedings against the person filing bankruptcy when the Bankruptcy petition is filed. This would include any attempted foreclosure, which may be in the form of a foreclosure lawsuit (in a “judicial” foreclosure state) or a scheduled Trustee’s sale (in “non-judicial” foreclosure states). As such, when a person files bankruptcy, any foreclosure proceeding is temporarily halted (but is not permanently “stopped”).
There is a provision in the Bankruptcy laws which permit the foreclosing party to obtain what is called “relief from stay” by the filing of a simple Motion in the Bankruptcy which, when granted (which such Motions almost always are) permits the foreclosing party to resume the foreclosure process outside of the Bankruptcy. As such, the borrower is now left with both (a) having to defend the foreclosure anyway, and (b) all of the consequences of a Bankruptcy (including long-term consequences to the borrower’s creditworthiness, having to surrender credit cards, etc.).
As such, we do not advise clients to “file bankruptcy to avoid foreclosure” because filing bankruptcy does not permanently stop foreclosure nor does it “make the foreclosure go away”. In fact, for most borrowers (whose only real issue is the foreclosure), filing bankruptcy may simply complicate matters and leave the borrower in a worse position than if they simply defended the foreclosure.
Jeff Barnes, Esq.

Wednesday, July 29, 2009

Former subprime lenders stand to profit again

Where is it going to end?
Banks have made loan modifications, which by the way are ILLEGAL, increasingly more difficult to get, regardless what loan mod companies say. Now here is a new wave of "vulture investors" seeking to capitalize on distressed mortgages, but their approach of trying to rework loans itself differentiates them.

Here is what San Francisco Chronicle had to say:

Can folks who made millions peddling subprime loans use that same Midas touch to mint money from the housing market downturn? Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/06/06/BUQN17VPUH.DTL#ixzz0MgSmSwU5

So few perpetrators of financial misdeeds have been held accountable for their actions

After two years of fraudulent after fraudulent activities by the banks and gov. and the cover up stories they want us to believe, we seem to just keep going on with our daily lives and our only answer seems to be "well what can I do?" Over 50,000 foreclosures were filed last year in New Jersey and this year the number might top that. Only 2% of those foreclosures were contested and fought back.

THAT IS SHAMEFULL!

That we as Americans are complaining and asking for help but are not willing to stand up and fight. That we are not proactive in fighting for what is ours and the massive FRAUD that has been perpetrated on us.

As New York times states in the following article:

"Looking for the Lenders' Little Helpers"

IT is hard not to be dismayed by the fact that two years into our economic crisis so few perpetrators of financial misdeeds have been held accountable for their actions. That so many failed mortgage lenders do not appear to face any legal liability for the role they played in almost blowing up the economy really rankles. They have simply moved on to the next “opportunity.”

And what of the giant institutions that helped finance these monumentally toxic loans, or arranged the securitizations that bundled the loans and sold them to investors? So far, they have argued, fairly successfully, that they operated independently of the original lenders. Therefore, they are not responsible for any questionable loans that were made.

But this argument is growing tougher to defend. Some legal experts point to a number of cases in which plaintiffs contend that firms involved in the securitization process, like trustees hired to oversee the pools of loans backing securities, worked so closely with the lenders that they should face liability as members of a joint venture. And these experts see a rising receptiveness to this argument by some courts.
“As we are unpeeling what was happening on Wall Street, we may see that Wall Street didn’t find the safety from litigation risk that it hoped to find in securitization,” said Kathleen Engel, a professor at Cleveland-Marshall College of Law at Cleveland State University. “I think there is potential for liability if borrowers can engage in discovery to see exactly how much the sponsors were shaping the practices of the lenders.”
One example is a suit filed in Federal District Court in Atlanta, on behalf of the borrowers, Patricia and Ricardo Jordan. The Jordans are fighting a foreclosure on their home of 25 years that they say was a result of an abusive and predatory loan made by NovaStar Mortgage Inc. A lender that had been cited by the Department of Housing and Urban Development for improprieties, like widely hiring outside contractors as loan officers, NovaStar ran out of cash in 2007 and is no longer making loans.
Also named as a defendant in the case is the initial trustee of the securitization that contained the Jordans’ loan: JPMorgan Chase. In 2006, the bank transferred its trustee business to Bank of New York Mellon, which is also a defendant in the case. The Jordans are asking that all three defendants pay punitive damages.

“We contend that the trustee has direct liability on the theory that even though they were not sitting at the loan closing table, they were involved in the securitization and profited from it,” said Sarah E. Bolling, a lawyer in the Home Defense Program at the Atlanta Legal Aid Society who represents the Jordans. “The prospectus had been written before the loan was closed. If this loan was not going to be assigned to a trust, it would not have been made.”
IN their legal briefs, the trustees have made the traditional argument that their relationship with NovaStar was not a joint venture and that they are not responsible for any problems with the Jordans’ loan.
A JPMorgan spokesman declined to comment on the case but said that because the bank was no longer the trustee, it was not directly involved in the litigation. A spokesman for Bank of New York Mellon also declined to comment.
A lawyer for NovaStar did not return calls seeking comment.
The facts surrounding the Jordans’ case are depressingly familiar. In 2004, interested in refinancing their adjustable-rate mortgage as a fixed-rate loan, they said they were promised by NovaStar that they would receive one. In actuality, their lawsuit says, they received a $124,000 loan with an initial interest rate of 10.45 percent that could rise as high as 17.45 percent over the life of the loan.
Mrs. Jordan, 66, said that she and her husband, who is disabled, provided NovaStar with full documentation of their pension, annuity and Social Security statements showing that their net monthly income was $2,697. That meant that the initial mortgage payment on the new loan — $1,215 — amounted to 45 percent of the Jordans’ monthly net income.
The Jordans were charged $5,934 when they took on the mortgage, almost 5 percent of the loan amount. The loan proceeds paid off the previous mortgage, $11,000 in debts and provided them with $9,616 in cash.
Neither of the Jordans knew the loan was adjustable until two years after the closing, according to the lawsuit. That was when they began getting notices of an interest-rate increase from Nova- Star. The monthly payment is now $1,385.
“I got duped,” Mrs. Jordan said. “They knew how much money we got each month. Next thing I know I couldn’t buy anything to eat and I couldn’t pay my other bills.”
All the defendants in the case have asked the judge to dismiss it. The Jordans are awaiting his ruling.
Perhaps the most famous case that linked a brokerage firm with a predatory lender was the one involving First Alliance, an aggressive lender that declared bankruptcy in 2000, and Lehman Brothers, its main financier.
More than 7,500 borrowers had successfully sued First Alliance for fraud, and in 2003 a jury found that Lehman, which had lent First Alliance roughly $500 million over the years to finance its lending, “substantially assisted” it in its fraudulent activities. Lehman was ordered to pay $5.1 million, or 10 percent of damages in the case, for its role.
Another case, from 2004, took up the issue of liability for abusive lending that went beyond a loan’s originator. That case, which involved Wells Fargo and a borrower named Michael L. Short, was settled after the court denied two motions to dismiss it.
That matter turned on the language in the securitization’s pooling and servicing agreement, which provides details not only on the types of loans in a pool but also on the relationships of various parties involved in it.
Diane Thompson, a lawyer with the National Consumer Law Center, said that the meaning of the agreement was that “the trustee was a joint venture with the originator and was therefore responsible for everything that happened in that joint venture.”
Many such agreements, she said, create a joint venture by force of law. “Everybody I know that has tried this argument has had pretty good success. Absolutely we are going to see more of these cases.”
And let us not forget that late in the mortgage mania, Wall Street was no longer content simply to package these loans and sell them to investors. Eager for the profits generated by originating these loans, big firms bought subprime lenders to keep their securitization machinery humming. This could expose the firms to liability.
“I think something that hasn’t been explored much is the extent to which the financial services industry has exposure to litigation risk in securitizations,” Professor Engel said. “As the industry got faster and looser, Wall Street just stopped paying attention. And when you stop paying attention, you get in trouble.”

Tuesday, July 28, 2009

LOAN MODIFICATIONS ARE AS ILLEGAL AS ALL OF THE SUBRIME LOANS

The Loan Modification Brain Washing by the media, banks and goverment towards the American Homeowner is just as Illegal as all these subrime loans that were given out the past decade or so. Big Bank is trying to scam homeowners once again, cover their tracks and prolong the foreclosure process untill it is to their advantage to foreclose.

What they DO NOT TELL you is that loan modifications do not justify the fact that they gave out an illegal loan to begin with. All the so called loan modification companies and experts that are out there to quote "Help The Homeowner" and get you a modify payment, are paid by the bank to do so. The banks want you to go through that avenue, they want you to think you are being helped. That's how they cover the bigger picture, the HUGE SCAM they have being doing all these years. This is a GLOBAL SCAM.

As reported on foreclosure defense nationwide:

Mortgage Meltdown: “Entire Industry Is A Scam,”

Says NY AG As Subpoenas Go Out To 14 Loan Modification Firms; “Intent To Sue” Sent To Another

Bloomberg News reports:
New York Attorney General Andrew Cuomo subpoenaed 14 loan-modification companies and plans to sue [another] as part of a probe of the “foreclosure rescue” industry.(1) [...] “Many of these companies charge upfront fees which are specifically prohibited by law,” Cuomo said in a conference call. “Sometimes homeowners even end up paying a higher cost after one of these companies gets involved.” Cuomo said that in many ways the “entire industry is a scam” because the U.S. Department of Housing and Urban Development provides assistance to struggling homeowners for free.
For the story, see Cuomo Subpoenas 14 Loan Modifiers, Plans Lawsuit.
See also: New York AG press release, see Cuomo Announces Intent To Sue ‘Amerimod’ Loan Modification Company In Investigation Of Foreclosure Rescue Scams Targeting Homeowners Nationwide (Long Island-Based American Modification Agency Charged Illegal Up-Front Fees and Used Deceptive Marketing to Target Homeowners Facing Foreclosure; Cuomo Also Issues Subpoenas to Fourteen Other Loan Modification Companies Across the Country in Nationwide Investigation).
(1) According to the NY AG’s office, it has served a notice of intent to sue on American Modification Agency, Inc. (“Amerimod”) and its owner and President Salvatore Pane, Jr., accusing the company of charging illegal upfront fees and using false advertising to reel in struggling homeowners. Amerimod is headquartered in Uniondale, NY and claims to operate in all 50 states, servicing thousands of consumers nationwide.
Cuomo has also issued subpoenas to fourteen loan modification companies: American Home Recovery Corporation; CloseMore Financial Corporation; Elite Results Group, Inc.; FLM Law Center LLP, a/k/a Federal Loan Modification Law Center and Federal Loan Modification; Hometown U.S.A., Inc.; Global Modifications, Inc. a/k/a The Law Office of Brett Margolin, P.C.; Loan Modification Affiliate Exchange, Ltd, a/k/a LoanMAE; Nationwide Modification Agency, Inc.; NMA Legal Services, P.C.; Northeast Mortgage Services; People’s First Financial, Inc.; Raymond Lewis & Fitch, Inc.; Settled For Less, Inc.; and the Law Depot, Inc. a/k/a the Loss Mitigation Legal Network.

PLEASE NOTE: The above article mentions that there are outfits that are set up by the goverment that can help the homeowner for free. WHO DO YOU THINK PAYS THOSE OUTFITS?

THE BANKS ...thats who.

BIG BANK HAS ALWAYS BOUGHT WASHINGTON and always will.

Homeowners need to be proactive and fight their own battle with the help of someone that they hire and pay to look out for their best interests. PERIOD

Thursday, July 23, 2009

HOMEOWNERS DON'T YOU GET IT?

America, we the homeowners, got POWER. We got power and it's getting increasingly STRONGER. This Global wide BANK SCAM is coming to it's knees! More and more cases are being settled in the homeowner's favor.

HOMEOWNERS, stand up and fight! Fight for your rights! Fight for the greed and injustice that has beed done against you over years.

Morgan quoted this New York Times piece:

WE are all learning, to our deep distress, how the perpetual pursuit of profits drove so many of the bad decisions that financial institutions made during the mortgage mania.
But while investors tally the losses that were generated by loose lending so far, the impact of another lax practice is only beginning to be seen. That is the big banks’ minimalist approach to meeting legal requirements — bookkeeping matters, really — when pooling thousands of loans into securitization trusts.
Stated simply, the notes that underlie mortgages placed in securitization trusts must be assigned to those trusts soon after the firms create them. And any transfers of these notes must also be recorded.
But this seems not to have been a priority with many big banks. The result is that bankruptcy judges are finding that institutions claiming to hold the notes that back specific mortgages often cannot prove it.

Morgan stated:
Lenders need to document the ownership of the note clearly and homeowners have a right to ensure that their rights as a homeowner are not infringed by lenders who are no longer party to the ownership of the home; but this will cause headaches on both sides moving forward as banks try to foreclose and homeowners try to modify mortgages with questionable ownership.

Maybe it’s time to invest in aspirin companies- we’re looking at a lot more headaches going forward.

NEW JERSEY COURT DISMISSES FORECLOSURE

As reported by Foreclosure Defense Nationwide, the fight against the banks is slowly moving on the HOMEOWNERS' side.
Here is why:

NEW JERSEY COURT DISMISSES FORECLOSURE FILED BY DEUTSCHE BANK FOR FAILURE TO PROVIDE DISCOVERY AS TO OWNER AND HOLDER OF NOTE, SECURUTIZED TRUST DOCUMENTS, AND OTHER DOCUMENTS DEMANDED BY BORROWERS

July 14, 2009
In a stunning victory for borrowers, a New Jersey court has dismissed a foreclosure action filed against the borrowers by Deutsche Bank Trust Company America as alleged trustee for a securitized mortgage loan trust after Deutsche Bank willfully, and despite the entry of three (3) separate court orders, refused to produce documents demanded by the borrowers which included documents setting forth the identity of the true owner and holder of the Note and mortgage, the complete chain of title to ownership of the note and mortgage, payment application histories, and documents as to the securitized mortgage loan trust. The Court had given Deutsche Bank multiple opportunities and extensions of time to produce the documents, but Deutsche Bank continually refused to produce any of the documents requested, resulting in the dismissal of Deutsche Bank’s foreclosure action. The Court also ruled that Deutsche Bank is not permitted to re-file any foreclosure action until it is prepared to produce ALL of the subject discovery.
FDN attorney Jeff Barnes, Esq. represented the borrowers, assisted by local New Jersey counsel.
W. J. Barnes, P.A. has numerous other cases pending where similar discovery requests have been sent to Deutsche Bank, none of which have been complied with to date. As such, additional requests for sanctions, including dismissal, are expected to be filed in these cases.
Deutsche Bank was also the subject of a recent ruling in a case in New York where the Court denied Deutsche Bank’s Motion for Summary Judgment, finding that a purported assignment from MERS to Deutsche Bank was defective and that Deutsche Bank, with an invalid assignment of the mortgage and note from MERS, lacked standing to foreclose. Significant in the ruling was the court’s observation and question as to why, 142 days after the borrower was claimed to be in default, that MERS would assign a “toxic” loan to Deutsche Bank. The court also required a satisfactory explanation, by sworn Affidavit, from an officer of the securitized trust as to why, in the middle of “our national subprime mortgage financial crisis”, Deutsche Bank would purchase from MERS, as alleged “nominee”, a nonperforming loan. The court further inquired as to whether Deutsche Bank violated a corporate fiduciary duty to the note holders of the securitized mortgage loan trust with the purchase of a loan that had defaulted 142 days prior to its assignment from MERS to the trust.
It appears that Deutsche Bank may have done so to take advantage of one or more “credit enhancements” inside of the securitized mortgage loan trust which pay benefits upon declaration of default. These credit enhancements are extremely complicated and multi-layered, and are required by law in connection with the issuance and sale of the mortgage-backed securities “backed” by the trust.
The assignment of the mortgage and note to the securitized trust, which were already in default well in advance of the assignment, would permit Deutsche Bank to both realize a profit through payment of credit enhancement benefits (which effect a pay down of the claimed “default”) while simultaneously permitting Deutsche Bank to institute a foreclosure, resulting in a “double dip” for Deutsche Bank. This is, of course, illegal, but unless competent counsel raises the issue, it goes unnoticed and Deutsche Bank, like so many other foreclosing parties, winds up stealing the borrowers’ property and getting paid for doing it.
Jeff Barnes, Esq.
www.ForeclosureDefenseNationwide.com