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Jon Lewis
Jon Lewis
Attorney • (888) 295-7409

Mortgage Foreclosures – What's the Rush?

5 comments

I was talking to a friend of mine this morning who is a defense attorney, and we were discussing some of the facts of the mortgage cases our firm is handling. As I’ve mentioned in previous cases, many of these mortgage companies are representing that they will review the clients’ situation for a modification, or approving their modification, and at the same time, they proceed with foreclosure.

While we were talking, it struck me. What’s the rush? Why are these banks moving so quickly to foreclose? Why are they putting themselves in this position? It doesn’t make sense.

The current situation in the United States is unprecedented. These banks have never had so many loans in default. The banks, even though very large (Chase, Wells Fargo, Bank of America, CitiMortgage, etc.), are not equipped to handle all of these modifications and foreclosures. So, why not slow down? Quit rushing the process. You don’t have to foreclose immediately. You don’t have to commit fraud and misrepresentations. You don’t have to throw people out on the street.

Why are they rushing? Well, I can only think of a couple reasons. First, many of the people handling the modifications and foreclosures are low level employees, and they do not think outside the box. They are given their structure and told what to do, and they are scared to deviate even if it means helping the customer.

Second, there might be some accounting, tax and/or regulatory reasons why the banks have to get these bad loans off their books. If this is the case, then maybe we need new legislation to address the problem. However, if they weren’t losing documents and making people file their packages on multiple occasions, they might not need to rush to foreclosure.

We have been successful in helping a couple people with these issues, but there are thousands suffering. Hopefully, in the future, better processes will be developed, and better decisions will be made. Until then, the court dockets will continue to increase with these types of cases.

Stay tuned . . .

5 Comments

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    The last thing we need is more legislation…let’s face it the law makers with all the laws and committees have failed miserably.

  2. Jon Lewis says:
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    Thank you for the comments Larry. No question that there are some significant problems.

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    John -you are right regarding accounting and regulatory reasons. Banks are being pressed to get “non-performing” or “non-accrual” or “criticized” loans off of their books. That can only be done by foreclosing if a bank actually is holding the loan. Most often though, I find that the loans are part of a Mortgage-Backed Security. The SEC could care less about homeowners

    The Making Home Affordable program, which has no teeth for enforcement by any entity (Treasury, FDIC, Federal Reserve, etc.), was established to protect the INVESTMENT pools of securitized mortgages. This means simply that the mortgage and investment communities refused to permit any government force-down of a program that might hurt “ROI” or “Return on Investment”, or more crudely put, the PROFITS and INCOME made by the owners of these mortgage pools, and by the Goldman Sachs and Lehman Brothers of the world – the people who brought us the “great meltdown.

    Oh, lest I forget, the enacting regulations and legislation give no private right of action against a servicer, lender, or other participant in the program for failing to finalize a modification even if a borrower can be deemed qualified and eligible. No one has the right or legal standing to sue!!! I have been told that in by a judge during a case in Federal Court – some state judges will ignore the issue and find for a borrower, but if pushed the lender (et al) can force the case into Federal Curt and win.

    The Lenders are about taking no losses, granting no relief to someone facing foreclosure, just WINNING! I concur that winning is nice but how about DOING WHAT IS RIGHT?

    I have been generally successful in preventing foreclosures and reversing some that have occurred, and in getting modifications. I have been unsuccessful in making a living because I could spend every week, all week, working on foreclosure cases where the BIG FIRMS for the BIG LENDERS know how to kill a case – bury the other “guy” in paper.

    The best and most apt summary of what it’s like to work against the lenders is from lyrics of one of Don Henley’s (formerly of the Eagles) songs:

    “Today I made and appearance downtown.
    I am an expert witness, because I say I am.

    And I said, ‘Gentleman….and I use that word loosely…I will testify for you; I’m a gun for hire, I’m a saint, I’m a liar – Because there are no facts, no truth, just data to be manipulated.

    I can get you any result you like….what’s it worth to ya? Because there is no wrong, there is no right; And I sleep very well at night;

    No shame, no solution No remorse, no retribution.

    Just people selling t-shirts just opportunity to participate in this pathetic little circus

    And winning, winning, winning’ ”

    Richard I Isacoff, Esq

    further information at
    http://finance-for-us.blogspot.com

  4. Jon Lewis says:
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    Thanks for your comments Richard. I have to believe that, in the end, justice will prevail.

  5. Bill Chestnut says:
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    Jon,
    What’s the rush? Well I can think of a few other reasons than the ones you mentioned. The whole industry is at the point of admitting that the MBS securitizing the mortgages have improper documentation to title and note transfer. Where they are assigned to tranches within an MBS, the MERS system was developed to deliberately avoid assignment of each particular mortgage to a particular tranche, so they could juggle non performing ones into lower tranches after the fact.
    But worse, because of this lack of direct association between mortgage and MBS tranche, it is conceivable that some mortgages have either inadvertnetly or deliberately been assigned to multiple MBS (more fraud.)

    If true, it would explain the rush to foreclose; the banks are
    a) racing to grab an asset that hasn’t got the documentation to support the claim against the asset, before the system realizes they don’t OR
    b) racing EACH OTHER to grab the asset in case it has been securitized against multiple MBS, thereby resulting in competing claims for the asset.

    The mess the banks have made of this is so outrageous and so completely beyond the pale, that one has to consider these possibilities as real.

    I suspect the real fear on the part of the banks is also of having to face put backs by the investors who bought the MBS. They are racing to get assets secured physically because they don’t have them secured legally. It almost seems to come back to that old saying “possession is nine tenths of the law.”