Posts Tagged foreclosure defense

Attorneys at Duke Seth, PLLC (foreclosure defense law firm) forced Citi Mortgage to rescind the foreclosure and offer homeowner a loan modification.

A homeowner in Dallas County approached foreclosure defense attorney Meenu Seth at Duke Seth, PLLC, after Citi Mortgage foreclosed on her property. While reviewing her case some interesting facts surfaced. Few days before the scheduled foreclosure sale, the homeowner was advised by the loss mitigation department of Citi Mortgage via phone as well via email that they have received her loan modification packet and are reviewing her for the same. She was assured that Citi Mortgage will not proceed with the scheduled foreclosure. Homeowner also received correspondence from Citi Mortgage, after the foreclosure sale took place that she is under review for loan modification. Homeowner was beyond shock when she was served with the notice to vacate. It was a clear case of negligent misrepresentation by Citi Mortgage, due to which the homeowner could not seek legal counsel to stop the foreclosure.

Attorney Meenu Seth sued Citi Mortgage for promissory estoppel and negligent misrepresentation. She obtained a Temporary Restraining Order (“TRO”) and stopped the eviction. Attorney Seth demanded Citi Mortgage to rescind the foreclosure and offer loan modification to the homeowner. After two months of rigorous negotiations, Citi Mortgage finally agreed to rescind the foreclosure and offered a loan modification to the homeowner.

Attorneys at Duke Seth, PLLC strive for such happy endings for their client


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Attorney Walker M. Duke Stops Foreclosure with TRO Against Ocwen and HSBC

It was another good day for a Texas homeowner as foreclosure defense attorney Walker M. Duke obtained a temporary restraining order stopping Ocwen and HSBC from foreclosing.  The temporary restraining order, or TRO, was obtained in connection with a lawsuit against these two entities.  In the lawsuit, attorney Duke alleges that the homeowners note and promissory note had supposedly been securitized, or sold to an asset-backed trust to become part of a series of mortgage-backed securities.  The only problem is that the representations that HSBC made to the local county clerk did not match up with the representations HSBC made to the U.S. Securities and Exchange Commission.

“In my view, HSBC is lying to someone–either the SEC or the County Clerk,” Duke said.  “Either way, something doesn’t smell right.”

This particular attempted foreclosure came in the wake of reports that foreclosure filings in at least the North Texas area are down considerably.  Overall trends don’t mean much, however, when it’s your home that the bank is trying to sell.

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The Building Blocks of Securitization

In the practice of foreclosure defense, one of the issues I frequently run into is securitization of mortgages.  We’ve talked about securitization on this site numerous times.  There is also plenty of internet chatter about securitization–some of it legit, some of it little more than crazy talk out of people with way too much time on their hands.

I’ve explained the concept of securitization to many, many people–clients, other attorneys, and judges.  After a thorough discussion, most have a basic understanding of the principles behind it.  But I’ve often wondered what people would think if they saw it in action.

Well, here is your chance.  You want to take on the bank?  Good for you.  Here’s a prospectus for an asset-backed trust (this one happens to be a Bear Stearns trust).  The prospectus describes the trust, and is essentially the sales “brochure” to potential investors.  Want to know how that trust was formed and operated?  Here you go–the Pooling and Servicing Agreement.  The Pooling and Servicing Agreement is basically the the operating manual for the trust.  The posted links take you directly to the documents posted on SEC’s EDGAR website (which lets you search the filings for all publicly traded companies from the comfort of your computer).

You still want to take on the bank?  Then you’d better understand every word of those documents (or similar ones) so you know exactly how the trust was supposed to have handled your mortgage.  After all, you can’t know whether they did something wrong if you don’t know what they needed to do to be in the right.  And then you’d better be able to explain it in terms that are understandable to your mother or grandmother, who has no understanding of Wall Street structured finance.  Why?  Because ultimately, that’s who’s going to be on a jury (if you make it that far) deciding your fate.

If this post seems a little snarky, I promise that’s not the intent.  But I firmly believe that homeowners need to know what they’re up against, particularly if they have any inclination of doing it alone.  It’s simply not enough to read Neil Garfield’s Living Lies blog,, or  Those are great websites, don’t get me wrong, but there’s a big difference between reading commentary and analyzing the building blocks of securitization on your own.  You need to be able to find, read, analyze, and comprehend the primary sources concerning your mortgage–the trusts’ prospectuses and pooling and servicing agreement.

Taking on the big banks in defense of a foreclosure is serious business, and homeowners should be prepared for the fight.  Generalization about some case three states over isn’t going to convince any judge.  You need solid evidence about YOUR mortgage, and that includes an analysis of the asset-backed trust that may, allegedly, hold your note.  Just like the old saying, don’t go into a gun battle with a knife.

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“How Do I Stop a Foreclosure?”

“How do I stop my foreclosure?”  This is one of the most common questions I get asked.  Nevermind the news headlines about robosigners, nevermind the legal jargon and Wall Street gibberish–homeowners usually have one primary question:  how do I keep the bank from foreclosing on my house.  It’s a difficult yet fair question, and it cuts to the heart of what I do as a Texas foreclosure defense attorney (and what my colleague, Charles Parson, does as a Utah foreclosure defense attorney).

I will tell you what I do to stop foreclosures in Texas, which is a “non-judicial” foreclosure state.  In non-judicial states, banks generally do not need a court order to foreclosure on a property.  All that is required is the filing of a few documents with the local county clerk and sending notice to the homeowner.

Well, I will tell you what I do to stop a foreclosure in Texas in a moment.  First, I will explain the context of a foreclosure.

A “foreclosure” is the sale of a property.  State laws dictate the method and manner in which foreclosures are to be done.  In Texas, foreclosure sales take place on the first Tuesday of the month on the courthouse steps (this is something that will vary from state to state).  A foreclosure sale is exactly that–a sale.  It does not mean the sheriff or constable is going to kick you out of your house.  While it certainly can be a scary process, you will sleep in your own bed in your home the day after a foreclosure sale.  Removing you from your home, which most people think of in terms of having the sheriff put your furniture out on the street, takes a separate judicial purpose, known in Texas as a “forcible entry and detainer” action.  It’s basically a separate lawsuit, and you should have plenty of notice about it.  Being foreclosed upon does not mean you are instantly kicked out of your house.

Many people have the misconception that simply hiring a lawyer will automatically get their foreclosure stopped.  I wish I had that magic wand.  The reality is that hiring a competent foreclosure defense lawyer probably gives you the best shot at stopping a foreclosure, but there are unfortunately no guarantees.  In a non-judicial state like Texas, the laws are set up where the bank can foreclose unless they voluntarily pull the foreclosure sale (which are frequently called a trustee’s sale or substitute trustee’s sale) or a court orders that the foreclosure be stopped.  This is where I come in as a foreclosure defense attorney.

I always first try to negotiate with the bank and the trustee who is conducting the foreclosure sale (in Texas, Chase, Wells Fargo, U.S. Bank, PNC, and Citi usually use outside law firms to serve as substitute trustees and conduct the foreclosures; “Recontrust” usually conducts Bank of America foreclosures, particularly since BAC Home Loans was absorbed back into BoA).  To gain as much leverage as possible, I look at several things.  First and foremost, I look to see if the technical notice and filing requirements were followed.  They usually are, so I then look at the substantive issues.

The first substantive issue I look at when I fight a foreclosure is the chain of title.  Most counties are pretty good about putting their property records online, so there is usually quite a bit to examine for irregularities.  Do the dates match up?  Was the note and deed of trust assigned by a defunct entity, such as IndyMac Bank, F.S.B.?  At this point, I am looking for errors that appear on the face of documents.

If there are no glaring defects in the chain of title for the note and deed of trust, I then look at securitization issues.  Who noticed the foreclosure?  In many instances, an asset-backed trust will claim to be the current mortgagee and be the party ordering foreclosure.  Was an asset-backed trust in the chain of title?  If the answer to either of those questions is a ‘yes,’ then I look up the securitization trust’s public filings with the U.S. Securities and Exchange Commission.  The SEC has a very good search tool called EDGAR that allows you to search their records.  Among other documents, I read the trust’s “pooling and servicing agreement” and its prospectus.  Both are pretty long, pretty dry documents, but they are important in fighting a foreclosure.

All of this investigation is geared towards giving me leverage in negotiating with the bank or their lawyers.

If the foreclosure cannot be stopped agreeably, the next step I take (in appropriate cases) is filing a lawsuit and application for a temporary restraining order.  Here, I am literally seeking an order from the court that immediately stops the foreclosure dead in its tracks.  Temporary restraining orders are, as their name implies, temporary.  In Texas, they last 14 or 28 days.  To make them longer-lasting, I ask the court to convert a TRO into a temporary injunction (which lasts the life of the lawsuit).

A TRO is not automatic.  They are up to the sole discretion of the judge, as is the longer-lasting temporary injunction.  This is why I usually first attempt an amicable resolution–because the homeowner’s fate is not in the hands of the judge at that point.  If a judge will not grant a TRO and the bank will not voluntarily suspend the foreclosure proceeding, the reality at that point is that there is very little that can be done to stop the sale.  That does not mean the lawsuit is over, and it does not necessarily mean an eviction is imminent.  I have had some very effective negotiations post-foreclosure.  However, it does put the homeowner in a more difficult position because, at least in Texas, the law is stacked against the homeowner.

Of course, there are many more details to stopping a foreclosure, but this is an overview of part of the process that I go through on behalf of homeowners.  As I’ve preached before, it is critically important to be proactive.  Don’t sit back and simply wait (and hope) for your foreclosure to get pulled or for documents to magically fall into your lap, because it won’t without some work.  There are no shortcuts, and what may have happened to some homeowner in a different state 1,000 miles away has nothing to do with your house–and judges know this.  To quote the Oakland A’s general manager, “Hope is not a strategy.”  You or your lawyer has to do the homework and do the dull reading.  It is what will give you an advantage and create the best chance to stop the bank from foreclosing on your house.

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Massachusetts Supreme Court Strikes Down Foreclosures by Wells Fargo and U.S. Bank

The Massachusetts Supreme Court issued a ruling voiding the seizure of two homes by Wells Fargo and U.S. Bank after they failed to show they actually held the mortgage to the homes at the time of foreclosure.  The mortgages of the two homes at issue had been sold and assigned numerous times until they ultimately were placed in a type of trust that was sliced up and sold to investors in the form of mortgage bonds or mortgage-backed securities.  Wells Fargo and US Bank were the entities that supposedly held the title to these houses on behalf of this “holding trust” at the time of the foreclosure sale.  Each bank then bought the home that it foreclosed on, at a price well below market value.

In its ruling, the Massachusetts court ruled that the chain of title of the mortgage from the original lender (the originator) to these holding trusts was not clear.  Therefore, these trusts did not have the right or ability to sell the property, and the purchaser of the foreclosed-upon property did not actually own it.

What will be the fallout from this Massachutes foreclosure ruling?

This is a rapidly developing area of law, but one of the most likely immediate results will be that judges who have been hesisitant to block foreclosure sales may take a second look at the banks’ documentation.  These legal actions to stop foreclosures are being given added legitimacy as more and more of the banks’ practices are coming to light.  If fact, the Massachusetts foreclosure ruling included a scathing rebuke of the lenders, calling their documentation “utter carelessness” and instructing mortgage holders “to take care to ensure that [their] legal paperwork is in order.”

I have personally stopped foreclosure sales and evictions in Texas, and I can tell you from first hand experience that these developments are creating a new legal landscape in which home owners fight to keep their homes.  Judges traditionally have looked at foreclosure-related lawsuits as last ditch attempts to stall a trustee sale.  Now, they are starting to develop a skeptical eye toward the banks.

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