Archive for November, 2012
CNBC.com is reporting today that Bank of America is about half way to its requirement of providing $7.6 billion worth of consumer relief in connection with the mortgage fraud mass settlement (reached in connection with potential liability for robo-signing and other nefarious acts). Bank of America claims to have completed or approved a total of $15.8 billion in consumer relief for about 164,000 homeowners as of September 30, 2012. In case you’re wondering how $15.8 billion equates to half of $7.6 billion, the bank does not get dollar-for-dollar credit for their efforts.
On its face, it sounds like Bank of America is finally stepping up and working with homeowners. That is, until you look a little deeper. Only about 30,000 customers have gotten relief in the form of first-lien loan modifications. On the grand scale of all of Bank of America’s millions of loans (which includes the portfolio of Countrywide loans they acquired), that’s not very many. Of the $15.8 billion in relief the bank touts, $7.4 billion of that was in the form of short sales or deeds-in-lieu of foreclosure. Short sales and deeds-in-lieu were the “relief” for over 62,000 BoA customers–over twice as many as those that received modifications.
In my experience as a foreclosure defense attorney, short sales and deeds-in-lieu of foreclosure (also referred to as cash-for-keys) are rarely considered success stories for homeowners because they mean that the homeowner loses their home. Short sales and cash-for-keys are often the consolation prize when the bank refuses to work towards a solution that keeps the homeowner in their house long-term. In other words, they are the best option when the bank refuses a loan modification or realistic reinstatement. Don’t get me wrong–in some instances, short sales or cash-for-keys is the perfect solution. But that tends to be the exception rather than the rule, since these options clash with most homeowners’ goal of keeping their house.
When I see that the biggest chunk of Bank of America’s “relief” for homeowners is a short sale or deed-in-lieu of foreclosure, I know that it’s just business as usual for BoA. They aren’t interested in working with homeowners and providing real relief. And it’s confirmation that the mass foreclosure settlement was little more than a big PR move for all the banks. Maybe BoA has provided $15,8 billion in “relief” on paper. However, that may be as simple as waiving a $450 “foreclosure inspection” fee or $275 “underwriting fee.” That’s not real relief, in my opinion.
Don’t be fooled by the headlines. Bank of America, as well as all the other suspects, are still foreclosing on homeowners. Fortunately, the number of foreclosures appears to be decreasing, but that’s more likely the result of an improving economy (albeit VERY SLOWLY improving) than anything else. Don’t assume your lender will work with you. If you are facing foreclosure, it is important to go on the offensive rather than simply hoping they will work with you.
I am happy to report that two North Texas foreclosure defense law firms have merged. My firm, Duke Law Office, P.C. has combined with the Law Office of Gagandeep (Meenu) K. Seth, P.L.L.C. to form Duke Seth, P.L.L.C. I am very excited about this merger and our increased abilities to help homeowners who are facing foreclosure in Texas.
When you’re a foreclosure defense attorney, and you stay up on developments in the world of foreclosures and mortgage lending, the news tends to be of the bad variety. So I love it when some good news actually comes out. The Dallas Morning News reports that the number of “distressed homes”–the polite way of saying foreclosures–on the market is just a little more than half the number from a year ago (a 4.6 month inventory today versus a 7.4 month supply in early 2011). The DMN is also reporting that foreclosure filings are down 10 percent this year to the lowest levels in three years.
This is still too many foreclosures, in my opinion, but these numbers suggest things are moving in the right direction. Representing homeowners facing foreclosure really is one of the most unique opportunities in law and litigation. In most lawsuits, there is a winner and a loser. Even if there is a settlement, one party typically receives money while the other party pays. One party wins at the expense of the other.
But foreclosure defense is not like that–it really creates the opportunity for a win-win. Most banks aren’t terribly interested in owning another REO (another foreclosed-on house) if they don’t have to. They’d rather have a performing loan. And most homeowners who want to keep their house are willing–and often times, able–to make ongoing payments. These objectives are not mutually exclusive. In fact, they complement each other. This really is unique in litigation. It sometimes just takes a little creativity and a willingness to work together for the mutual good.