Archive for November, 2011

Homeowners In Utah Finally Get Good News Out Of The Federal District Court

While we spend a lot of time on here discussing big picture issues, in many cases, our client’s arguments rest on violations of state law.

In Utah, for example, only attorneys and title companies may actually conduct a foreclosure sale.  This is explicitly set forth in Utah’s Code, and has been on the books since 2001.

Silly little things like the law have not stopped ReconTrust, Bank of America’s foreclosure arm, from conducting thousands of foreclosures in the state over the past 10 years, however.

Unfortunately, there was no specific relief set forth in the Code for violations of the statute listed above. Naturally, this left homeowners who had just been foreclosed on and evicted from their homes to bear the burden of finding an attorney who even knew anything about foreclosure law, pay the money to hire said attorney to fight their case, and then try and win a lawsuit.  Put simply, it did not happen.

Luckily, this year the Utah Legislature finally put some teeth in the law and provided for specific relief to Utah homeowners who had been illegally foreclosed upon.  Now, Utah law provides for actual damages or $2000 (whichever is greater) and attorneys fees to any homeowner who can show the trustee was not allowed to conduct the sale.

Despite this, Bank of America has continued to thumb their nose at the homeowners, legislature and attorney general of Utah and continued to foreclose under their ReconTrust arm.

Good news out of the United States District Court for the District of Utah came last month when Judge Dee Benson denied Bank of America’s request to dismiss a lawsuit claiming violation of Utah law.  He disagreed with Bank of America’s argument that they are exempt from Utah law because they are a National Bank, and allowed the matter to continue on.  The case is Coleman v. ReconTrust, No. 2:10-cv-1099.

This is significant for Utah homeowners, and should embolden them to come forward and pursue claims against Bank of America, ReconTrust, and any other company breaking Utah law, knowing they may receive damages as well as attorneys fees as a result.

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Are Fannie Mae and Freddie Mac Encouraging Questionable Foreclosures?

CBNC is reporting that Congress is seeking information as to why Fannie Mae and Freddie Mac have charged “penalties” adding up to about $150 million for “failing to conduct foreclosures fast enough.”  Congressman Elijah Cummings, in an open letter to Fannie Mae and Freddie Mac, expressed serious concerns that these massive penalties may have contributed to widespread abuses by mortgage servicing companies and law firms attempting to meet arbitrary deadlines to expedite foreclosures.

As a foreclosure defense attorney, I have am troubled by these massive penalties.  Many foreclosure cases that I’ve handled have turned up glaring errors made by banks, servicers, and the lawyers who defend them.  In some instances, home loans are sold and assigned by parties who have no interest in them.  In most cases involving securitization of loans, there are blatant misrepresentations made either to the local county clerks where mortgages are publically recorded, or to the U.S. Securities and Exchange Commission, which regulates the securitization industry.  When I point out these mistakes to banks and their lawyers, I’m usually greeted with indifference or flat out denial.  Fannie Mae in particular, in my recent experience, has been especially resistant to working with homeowners.

Perhaps now I know why.  Servicers and foreclosure attorneys might rather face the wrath of the court for a wrongful foreclosure or an angry homeowner than a monetary penalty from Fannie Mae or Freddie Mac for not foreclosing fast enough.  After all, they can claim they “were just following orders” if they acted improperly.

This underscores my mantra to homeowners–take control of your own destiny.  Don’t assume that the bank or servicers, or their lawyers, are actually trying to help you keep your home–even if they are working with you on a modification.  As highlighted by the CNBC report, there may be another motive behind their actions–keeping up with a pre-set foreclosure pace to avoid fines and penalties.

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