Foreclosure Defense: Issues, Pleadings and Analysis

We are still in process of revising our manuscript for publication with all the forms we can think of. Here is a  summary of our findings thus far.

Generally we have two types of jurisdictions — the non-judicial sale jurisdictions and the mortgage foreclosure jurisdictions. California, Arizona and Nevada are non-judicial sale jurisdictions as are many others. Florida is a judicial sale (mortgage foreclosure jurisdiction) as are many others

 

We also have numerous possible stages at which a borrower can find him/herself

  1. Loan not in default but TILA claims can still be made. 
  2. Loan approaching default. 
  3. Loan in default 
  4. Foreclosure suit filed or sale date published 
  5. Judgment entered 
  6. Sale occurred to either third party or the lender. I have advised people to go to the sale and inform all potential bidders that the matter is in dispute which usually stops anyone from bidding. 
  7. Notice to Vacate -Forcible Detainer
  8. Eviction notice from Sheriff 
  9. Evicted — but TILA claims survive for (a) recovery of money and (b) possibly recovery of house from lender 

Origination of loan:

  1. REAL BANK THAT GIVES MORTGAGE AND HOLDS NOTE THEMSELVES. Direct relationship between the lender and borrower and it is not sold, migrated or otherwise transferred in any manner shape or form. Borrower gave honest information, tax returns etc. My guess is that the only claim here would be fraudulent appraisal but even that is weak because the bank is actually at risk. 
  2. Mortgage broker steering borrower to worst deal for highest fees. Inflated income and appraisals submitted. Lender is selling off or has entered agreements to provide “inventory” to mortgage aggregators who will sell the aggregated loan portfolio to investment bank who in turn will sell “derivative” securities (CMO – collateralized Mortgage Obligations or CDO — Collateralized Debt Obligations) to investors who are defrauded by representations from the lender, appraiser, mortgage aggregator, investment bank, and intermediate sellers of securities. Bank is NOT in any relationship with borrower but that is not disclosed. Bank has no risk or interest in whether borrower pays on loan or not. 
  3. MOST COMMON: A “bank” that is actually a front for one of the major players. In actuality the bank is a mortgage broker steering customers to worst loans for highest fees. 
  4. While the “lender” takes the position that they were defrauded by the borrower, the mortgage broker and the appraiser, the truth is that they intentionally defrauded themselves by setting up the structure and giving themselves the position of “plausible deniability.” Their intent was to create a plausible record for the mortgages and notes they were selling to mortgage aggregators and investment bankers. 

Types of Loans:

  1. Fixed rate 30 year mortgage fully amortized. 
  2. Fixed rate 30 year mortgage amortized but partially negative — i.e. the borrower is paying less than the full payment and the balance owed on the note is going up. Possible TILA violation. 
  3. Fixed rate mortgage interest only, negative amortization. Clear TILA violations in most cases. 
  4. Adjustable rate mortgage fully amortized. First adjustment after teaser rate in 1, 3, 6, 12 or more months. Borrower “qualifies” for mortgage because income figures support paying the teaser rate. At the first or second adjustment however, they no longer qualify and the lender knows it by definition. TILA violation, fraud, etc. 
  5. Adjustable rate interest only, negative amortization 6. Multiple mortgages and notes for multiple properties for speculators — usually involves falsifying information that buyer is going to use the house as primary residence, falsifying income and falsifying appraised values. TILA, fraud etc. 

Authority and ownership of loans — Legal Standing and Jurisdiction

  1. Originating lender still servicing the loan, holds note and mortgage. No assignment, sale or other fancy financial tricks. 
  2. Originating lender is actually mortgage broker, loan migrates to senior lending institution, to mortgage aggregator to investment banker to seller of securities to investor. 
  3. Trustee in non-judicial sale states posts notice of sale based upon information from a source that (a) does not service the loan and therefore does not know if the borrower is in default or not and/or (b) does not own the mortgage or cannot prove that it owns the mortgage and/or (c) does not own the note or cannot prove that it owns the note. In most cases an investor owns the mortgage and note and the people involved in the foreclosure don’t have a clue as to which bundle of mortgages went into which bundle of securities and how many investors bought into that bundle of securities, and there are no proper assignment documents that were designed much less signed in anticipation of being able to establish legal standing in sale, foreclosure or eviction. 
  4. Originating lender files foreclosure or posts notice of sale and does not have servicing rights, ownership of mortgage or ownership of note. 

Potential Pleadings:

  1. Federal Claim for TILA, respa, RICO, fraud etc. 
  2. Memorandum of Law in support of complaint. 
  3. State Court claim for Fraud 
  4. State court action for stay of sale, eviction etc. 
  5. Emergency Petition for temporary Injunctions- State and Federal Courts and memorandums in support thereof. 
  6. Motion to expedite discovery. 
  7. Interrogatories 
  8. Requests for admission 
  9. Request to Produce 
  10. Notice of deposition duces tecum 
  11. Adversary proceeding in Bankruptpcy Court 
  12. Memorandum and pleading in opposition to Motion for lifting stay 
  13.  Demand letter to Originating lender — for documents tracing where the mortgage went and for refunds and damages, enclosing TILA audit. 
  14. Rescission letter 
  15. Form retainer agreement for audit an checklist for retaining auditor 
  16. Form retainer agreement for attorney and checklist for retaining attorney 

4 Responses

  1. Types of Loans should include Interest Only loans? Where there is no principal being paid at all each month so the principal amount remains the same… you’re paying ONLY the interest on the loan.

  2. WE ARE IN CALIFORNIA MY MOTHER HAS
    CANCER .SHE HAS TWO PROPERTIES BOTH WITH COUNTRY WIDE LOANS I BELIEVE THE ASSIGNMENT WAS TO THE BANK OF NEW YORK.SHE IS 88 YEARS OLD AT THE
    TIME OF LOAN ORIGINATION SHE WAS 86
    WITH SOCIAL SERCURITY INCOME THE INCOME WAS FALSEIFIED SO SHE COULD QUALIFY FOR THESE LOANS WHICH WERE OPTION PAY LOANS WITH HUGE AMOUNTS
    OF DEFFERED INTEREST WHICH WERE NEVER EXPLAINED PROPERLY OR DISCLOSED.RAN OUT OF SPACE.

  3. Dear Mr. Garfield,
    Thank you for a very informative website. I am a reverse mortgage lender. I work exclusively with seniors in foreclosure. I refer most of these seniors to legal aid . We then attempt to negotiate a short pay which is funded by a reverse mortgage. After reading your articles I now realize that many of my clients are eligible for rescission, and in many instances the tender amount will be less than that available from the reverse mortgage. This will save me and the attorneys with whom I work a tremendous amount of time. Just finding the party authorized to accept a short pay is a monumental task. Thank you again for sharing your knowledge.

    Sincerely yours,
    Jules J. Dobrowolski, J.D.
    OPERATION: SHIFT
    Senior Homes In Foreclosure Taskforce
    727-460-7852

  4. Hi guys, your info is so good! Can you provide a copy of a lis pending and a quiet title sample for your readers and please note where we file these. Please keep on telling the truth!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: