Loan Audit and TRO Successful in Stopping Non-Judicial Sale
Today I learned that one of the attorneys we work with in California successfully obtained a temporary restraining order based on fraud, which halted a foreclosure sale set for tomorrow.
I performed the forensic loan audit for these homeowners and discovered numerous problems with the loan. I found over $15,000 in undisclosed finance charges (including the Yield Spread Premium, which appeared only on the HUD-1 and not in a separate disclosure explaining how the broker was paid), inflated settlement charges, a miscalculated Annual Percentage Rate and no properly completed Notice to Cancel.
While these are mostly Truth In Lending violations, which, as I described in an earlier blog post, will not win a predatory lending case on their own, these problems do point to fraud.
Besides the TILA violations, the bigger issue with this loan that was discovered (and likely millions of other borrowers’ loans), are the discrepancies between the chain of assignment on file at the county recorder’s office and the party attempting to foreclose. They were not the same party, and there was nothing on file at the recorder’s office to explain how the foreclosing party had obtained the right (”standing”) to foreclose on the home.
As we’ve also described in a prior blog post, many times the attorneys who are foreclosing are just foreclosure mills charging $4,000 or more per foreclosure action. In some cases, they do nothing more than generate form documents that are inaccurate in many cases.
This is one of a handful of lawsuits filed on behalf of a homeowner based on one of my loan audits, and I’m really excited to see that these homeowners are having some success. I will keep you posted on their progress.
By the way, I know that many of you are probably thinking that they won because they had an attorney to represent them, and I’d agree that these borrowers had an advantage — but that doesn’t mean that you can’t be successful in defending yourself.
This success is good news for those of you who cannot afford to hire an attorney because it means that many more of you should see success in your efforts to save your homes if your case is plead correctly.
As my friend Richard says, “Keep it simple, and pay attention to the case law — you want to know what the judges are thinking, which is all that matters.” Unfortunately, statutory law hasn’t been as helpful as I thought when I first started writing this blog. Case law has been much more instructive.
I will work on finding a way to post cases that have been helpful for other borrowers, for those of you who might be interested.
Got questions? As always, send me an e-mail at christine@desertedgelegal.com. I love hearing from you!
Inaccuracies on Notices of Trustee’s Sale
In non-judicial foreclosure states, the foreclosure mill attorneys will usually just send out a Notice of Trustee’s sale instead of filing a lawsuit to take your home.
Although it seems like there’s nothing you can do to stop a sale in a non-judicial foreclosure state, that just isn’t the case.
The first step is to review the Notice of Trustee’s Sale. In the past few weeks, I’ve seen quite a few of these, and nearly all of them are sloppily done and just plain inaccurate.
For example, at the top of the notice it says one person is the trustee and in another place, it says that the trustee is someone completely different.
There are a couple of reasons for this: first, these attorneys’ offices who have become foreclosure mills are basically cranking out so many of these forms every month that they don’t pay much attention to their accuracy. By this I mean that there are typographical errors on these, or they just don’t pay attention to what they’re doing.
Another reason relates to the securitization of these loans. For example, the party listed on the Notice of Trustee’s Sale is not the entity who is shown on file at the county recorder’s office. This in many cases is related to MERS, but in some cases it looks like the foreclosing attorney didn’t bother to prepare or record an assignment, or didn’t bother to look at the chain of assignment on file with the recorder’s office and has noticed up the sale with the wrong information.
The point I’m trying to make here is that just like your mortgage documents, people are making mistakes on the Notices of Trustee’s Sale. My thought is that these errors are enough to get a sale stopped if you file a suit asking for injunctive relief. You have to do this BEFORE the sale, and don’t wait until the last minute either.
So, before you give up and let them take your home, review the Notice of Trustee’s sale for errors — compare the person who is foreclosing with the party who is shown at your local county recorder’s office as being the lender.
If they don’t match, there’s a problem!
Is it fraud? Maybe — why would you let someone who doesn’t have authority to foreclose on your home foreclose on it?
I am seeing homeowners filing a lawsuit to request a restraining order to stop a fraudulent sale in non-judicial foreclosure states.
Yes, you will have to spend some money to do this. (If you don’t have $300 to file a lawsuit to save your home, I’m sorry, but there isn’t much I can do for you.)
You’ll also have to represent yourself, because it’s not going to be easy to find a lawyer who gets it that is affordable.
You just need to explain to the judge that the person who is attempting to foreclose isn’t the lender on file at the county recorder’s office. That’s pretty easily understood!
So, pull out those Notices of Trustee’s sale and review them for errors and inaccuracies BEFORE you let them take your home in a non-judicial foreclosure sale.
Happy Holidays! Here’s a Gift for You!
By now you all know that I think a loan audit is the first step to determine how to proceed with your loan, whether you decide to short sell, modify, file a lawsuit, etc.
So, to say thank you, we’re offering a discount on loan audits until December 31, 2009. The discounted price is $500 (regularly $600 and going up to $750 in January!).
There is one catch: you have to be a member of our e-mail list. You can opt in here.
The cost of the audit includes a complete review of your mortgage documents received at closing (you either ship them to me or scan them and e-mail them) and a substantial report that outlines the inaccuracies, violations and chain of assignment issues.
Got questions? Send me an e-mail at Christine@DesertEdgeLegal.com.
Happy Holidays and thanks for reading the blog!
Christine
Everyone’s Defaulting, Aren’t You?
Here’s a link to an interesting article on one of my favorite sites, Slate.com, on the subject of strategic defaults. Apparently, there are people that are worried about the future of capitalism if too many people walk away from their mortgages. (The people making these comments usually work for the mortgage industry!)
As the writer of this article, Daniel Gross, points out, there are gigantic companies who strategically default on their obligations all the time, including Morgan Stanley, Six Flags and others.
Interestingly, the article also mentions the paper published by University of Arizona Professor Brent White’s (see my post on this topic here) that discussed the issue of walking away from homes that are upside down.
Gross says that strategic defaults are “the American Way” and concludes the article with:
“Rather than worry about whether Americans will take cues from modest homeowners who make a tough decision not to stay current on debt, perhaps we should worry about middle-class Americans taking cues from billionaires and Fortune 500 companies who make the rational decision not to stay current on debt.”
If billionaires don’t feel guilty for walking away from their debts, why should homeowners?
Video: Updates for December 21
Video: Update on Jane’s Foreclosure Story
Video: Jane’s Foreclosure Story
Case Law Decisions Draw a Road Map
Last week I went to the Maricopa County Superior Court’s law library, which has free access to Westlaw. Westlaw is a service that provides case summaries within weeks of decisions. It’s expensive — most law firms have a subscription to the service, so having access to the service for free was a major score, although I did have to drive downtown and pay for parking.
I pulled up quite a few cases in both state (Arizona) and Federal and learned some interesting things.
Here’s my disclaimer: I’m not a lawyer and this is not intended to be construed as legal advice. This is just my interpretation on the case summaries I read — if you have questions, do your own research or talk to an attorney.
As much as I’ve been talking about TILA and RESPA violations, it appears these claims, on their own, don’t win a case for the borrower. The judges, especially in Arizona, have specifically dismissed these arguments because they want the legislation to address the problems instead of judges legislating from the bench.
What seems to be working is for borrowers is to file a lawsuit in federal court alleging fraud — in other words, that the entire loan transaction was based on fraud.
TILA/RESPA, in my opinion, bolster the argument on fraud, but most of what I read indicates that the judges will likely dismiss these unless your lawyer really knows what he/she is doing.
Federal court judges consistently dismissed counts under TILA, RESPA, HOEPA, RICO, ECOA, but they usually did not dismiss claims of fraud. Interesting, eh?
It’s taken nearly a year of case law, but I think the courts have drawn a road map on how homeowners can prevail on the suits filed by homeowners against the banks.
I think if you’re going to pursue a predatory broker, state court might be the way to go, although an attorney I work with says that brokers’ bonds or insurance usually pays out claims to homeowners for predatory loans if the fact pattern is there.
So, as always, starting with a loan audit to get a clear picture of what’s going on with your loan. Without a loan audit, you don’t have a case.
Now that it’s becoming more clear how to proceed against the banks, I think the loan audit is even more important because it will tell you and your attorney how to proceed if you’ve been the victim of a bad loan.
If you’re a lawyer sitting on the sidelines ( I know there are a lot of you out there!) there is plenty of information out there on how to win these cases! Contact me if you need help defending homeowners!
