Archive for February, 2012
Sometimes you just have to sit back and laugh for a minute. And comments like this from Warren Buffett would add a bit more levity if they were not so shocking.
According to Mr. Buffett, big banks such as Bank of America and Wells Fargo, were actually the victims of homeowners cashing out on lines of credit and home equity loans before eventually losing their homes in foreclosure. Let that sink in for a minute.
Luckily, we do not still live in a world of telegraphs and guys with press badges stuck in the brims of their fedoras posturing to shout questions in a Scoops Callahan accent.
While propaganda still exists, this is beyond the pale. Certainly, Mr. Buffett is looking to buoy his billion dollar investments in both Bank of America and Wells Fargo, but anyone with a pulse who has done 3 seconds of research on this topic understands the banks were not victims. Far from it. They were nothing more than paper pushers selling poorly researched investments to one group and handing piles of money to homeowners, deserving or not.
Regardless, the banks were, or should have been, the gatekeepers. They had no underwriting standards. They simply recognized a trough of cash and took it by the truckload while replacing it with loans they knew nothing about. The victims were those who believed the banks were telling the truth regarding the securities they were selling, only to find out later it was a shell game that reaped billions in profits and billions in hand-outs from the federal government.
Sorry Mr. Buffet. Your claims ring hollow around here. The facts simply do not support your propaganda.
Robo-signing has been in the news for many, many months. The collapse of Bear Stearns and Lehman Brothers, and the near implosion of the entire financial system is coming up on 4 years removed. Yet here we still sit, supposedly coming out of the Great Recession, in the midst of continued rampant foreclosure abuse, as reported by Reuters.
A recent audit of 400 foreclosures in San Francisco showed that 84 percent of them appeared to be illegal. A separate study in North Carolina of 6,100 mortgage documents filed with the local county clerk concluded that about 4,500 of them showed signs of “signature irregularities.” Robo-signing, as the rest of the world knows this fraudulent practice.
One reason cited by the Reuters report for the high number of wrongful foreclosures in San Francisco was that California is a non-judicial foreclosure state. That means that there is no court oversight of foreclosures. In nonjudicial foreclosure states, which includes my home state of Texas, all a person has to do is file a notice of foreclosure sale with the county clerk, pay a nominal filing fee (usually in the $20-30 range), mail a few letters, and PRESTO!…you can foreclose on a house. It’s literally that simple. Believe it or not, having actual proof that you are legally entitled to foreclose is NOT a requirement!
The ease of nonjudicial foreclosures is absolutely terrifying. I understand the reason these laws were set up. Lenders wanted a relatively simple, low cost way to resolve a bad debt (which is a secured debt). When the foreclosure laws were written, this made more sense. The most relevant portions of the current Texas foreclosure laws go back at least 30 years, when residential lending was much simpler. You went down to your local bank, you got a loan, and then you paid them back for the next 30 years. If you didn’t make a payment, you knew what company wasn’t getting their money back (and the bank probably knew you by name as well).
Today, however, residential mortgages are sold, packaged, and re-sold to investors through the process known as securitization. Determining who actually owns your loan is much more complex than it used to be. Because of this, declaring a default and foreclosing on a home is a much riskier proposition than it used to be as well. It’s easy for a bank to get it wrong. What are the consequences for them? Practically none. What are the consequences for homeowners? Losing their home. The deck is clearly stacked in one direction.
Well, the deck isn’t totally stacked in favor of the banks. Part of my job is to make sure banks have consequences for getting it wrong. I’ve stopped foreclosures and evictions dead in their tracks with a temporary restraining order/TRO and injunctions. If you think you’re being illegally foreclosed on like the many, many cases in San Francisco and North Carolina that the Reuters report identified, you need to make sure the banks face consequences as well.
The news lately seems to be somewhat buzzing about an uptick in the economy–that more jobs were added, that the stock market is getting back to levels that haven’t been seen since before the Great Recession, and that the housing market, and hence foreclosures, are improving. Macro economic numbers are fine, but do they really reflect the reality on Main Street? I can tell you anecdotally that as a foreclosure defense lawyer, I’m still seeing plenty of homeowners hurting.
Well, a story recently came out in the Dallas Morning News that made me even more suspicious of the talking heads’ opinions of the housing market. According to the recent study, almost 1 in 10 Texans missed a mortgage payment in the last part of 2011. That adds up to over 276,000 homeowners.
If there is a positive spin to this story, it is the fact that the number of Texas homes actually in foreclosure was 1.78 percent, compared to 4.4 percent nationally. But even that figure works out to more than 54,000 homes in foreclosure in the Lone Star State.
In my opinion, the most discouraging statistic in the story was that about 3 percent of Texas homes were 90 days late or more on their mortgage payments. When homeowners fall this far behind, it usually means that a foreclosure is not far off. Banks such as Bank of America, Wells Fargo, Chase, AHMSI, CitiMortgage, U.S. Bank, PNC, and many others simply don’t make much effort at working with homeowners at preventing foreclosure at this point. Oh, they might go through the motions of a modification application, but usually homeowners can only get a call center on the phone, and they are regularly told that they need to submit “additional paperwork for consideration.” In the meantime, a notice of foreclosure sale shows up in the mail, and homeowners are left wondering which story from the bank is the right one.
As I’ve posted on this blog many times before, the best way to avoid foreclosure and get a satisfactory result from your bank is to go on the offensive with them. Don’t wait until you get a notice of default or notice of foreclosure sale to start acting. If you’re behind, take action–even if the bank hasn’t threatened you yet. I can promise you this, you may fall through the cracks at the bank for a while, but eventually, they will notice nonpayments. And when they do, they will most likely pursue foreclosure aggressively at that point.
When clients come to me, one of the first things they usually ask is whether we’ll be able to save their home. I wish I had a crystal ball and could tell them the answer, but I don’t. But I do offer this bit of advice: If you do nothing, you’ll lose your home for sure; if you fight, you may just be able to save it.
We tell all of our clients that this ride is a roller-coaster. Thanks to an inexplicable ruling by federal judge Ted Stewart, on the heels of another inexplicable ruling by federal judge David Sam, we are in the tunnel of the Texas Giant at Six Flags.
The backstory is this: The Utah legislature enacted law that said anyone who wants to foreclose on a house in Utah must do so using either an attorney in Utah, or a title company doing business in Utah. It did not matter if you were the local bank down the street or Bank of America. The rationale was that it would guarantee Utah homeowners facing foreclosure an actual entity with people and an office in the state they could talk to to obtain information about their foreclosure.
Despite this law, and two previous rulings by Judges Waddopus and Benson, Bank of America continued to foreclose on Utah homes using its foreclosure arm, ReconTrust. ReconTrust is neither a bank or a title company.
Several lawsuits have been filed to get a clear ruling on this matter with the two most recent going in favor of Bank of America.
Essentially, both judges held the National Banking Act trumps Utah law, and therefore Utah, or any other state for that matter, is not allowed to write its own laws as to how foreclosures should proceed. Since ReconTrust is based in Texas, Texas law applies to Utah homeowners or, under these rulings, anywhere else ReconTrust wants to foreclose.
It is bad law. There is no way to sugar coat it. Luckily, the Utah Attorney General has intervened in both cases, and they will be appealed to the 10th Circuit. Unfortunately, it could take years for these matters to be resolved by the Appeals Court and leaves current Utah homeowners in limbo.
There are still several grounds for fighting foreclosures in Utah, and one argument now is to apply the much more favorable law in Texas to ReconTrust’s actions. However, it will not be an easy road to navigate.
Regardless, if you are facing foreclosure, contact an attorney today. As fast as this area of law is changing, it truly appears to be your only hope in getting any sort of favorable outcome.
If you’re a regular or even casual reader of our blog, you’ve probably noticed that there’s been an absence of new material for a couple months. Well, I, Walker M. Duke, have a confession to make. I recently got married, and planning that little ceremony (and my lovely new bride) seemed to take up most of the spare minutes out of any day. As a result, updating the Foreclosure Defense Blog went on the back burner. I was still battling Bank of America, Chase, Ocwen, Seterus, Recontruct, U.S. Bank, and all the other usual suspects in court on behalf of clients, and even scored some major victories along the way.
There are still penty of developments in the world of foreclosure law and foreclosure defense, and you can rest assured that this blog will stay on the cutting edge of legal and news developments on these topics. Check back frequently, as I expect 2012 to be an eventful year, particularly in light of this fall’s elections.