Love's Real Stories

Answering all the real estate questions you never knew you had.

Category: Foreclosure

May 23, 2013

Rubber Check Time

Here’s a man who says he lost his home to foreclosure, though he never failed to make a single payment to his bank.

“I was working overseas,” said Allen Coltin, “and to my surprise, my bank sent me foreclosure letters. I called them. I screamed. I had an attorney scream and write letters. They foreclosed and made me hit the road.”

Colton has been waiting for a promised settlement. “I can sue them, but these guys are playing with monopoly money.” He has not drawn the monopoly card that says “The bank has made a mistake in your favor.” More like: “Go directly to jail. Do not pass Go.”

In the meantime, the “Big Five” in the banking business (B of A, Wells Fargo, etc.) made a settlement with the Feds and the States to pay out billions of dollars to people who similar to Colton, were victims of “foreclosure abuse.” The payouts have begun, but sadly, and perhaps not surprisingly, some of the payout checks are bouncing like rubber balls.

The official word from the banks: “No comment.”

The official word from the consulting company hired by the Treasury Department to handle the payouts: “Our employees are not authorized to speak concerning this matter. Therefore, no further information is available through our office.”

The official word from the Treasury Department: “Take a hike,” (according to one of the rubber-check recipients).

Granted, this is a complicated business. After all, the settlement money is $3.6 billion; being paid out to 4.2 million people, in amounts ranging from $300.00 to $125,000.00. What’s the likelihood the right check will go the right person, bouncing or not?

Guess who got a check for $300.00? Allen Coltin. “And it bounced!” he screeched. “Mine was supposed to be $125,000.00! I lost my house! Gaaa!”

On the other hand, we find the lucky ones. Here’s a woman who pulled a good monopoly card: “I just got a check for $125,000.00,” she said. “I had no idea it would be that much. I knew I got jacked around by the bank, but this changes everything!”

Here’s a man who got a letter from his bank stating his entire home loan was forgiven because “Our institution has been made aware of errors in the transference of documentation regarding your mortgage.” The man remains nameless, and all he said is, “Shhh!” and very quietly, “Yeehaww.”

As for Allen Coltin, he’s still looking for that Get Out of Jail Free card.

Leave a comment
January 30, 2013

Foreclosure Rebate

Trickling down from the $25 billion National Mortgage Foreclosure Settlement, a number of Californians are in line to receive payment from the State Attorney General’s office for faulty foreclosure tactics by banks. So far, according to Attorney General Kamala D. Harris, 432,584 eligible people in California have been sent claim forms to qualify for the payment.

The National Mortgage Settlement is the bargain made last year by banks facing lawsuits as a result of their bungled and illegal foreclosure proceedings. The banks agreed to pay $25 billion to the federal government to be distributed among states who participated in the negotiations for the settlement. Attorney General Harris, representing California, walked out of the settlement negotiations at one point, unsatisfied with the amount of payment earmarked for the Golden State. Harris stuck to her guns, reminding settlement negotiators that California was the hardest hit state in the foreclosure crisis, and therefore deserved more money from the offending banks. California wound up receiving 18 of the 25 billion dollars.

Eligible people to receive payment are people who were foreclosed on between January 1, 2008 and December 31, 2011, whose loans were serviced by Bank of America, JP Morgan Chase, Wells Fargo, or Ally/GMAC.

The amount of settlement for each eligible person in California is estimated to be approximately $847.00, not a lot of money in the big picture, but nothing to sneeze at, nevertheless. Payments are scheduled to be mailed mid-year 2013.

Packets were mailed out to eligible people from the California Department of Justice. The Attorney General understands that people may no longer live at the addresses to which the packets were sent, so a website and phone line have been set up for people who think they might be eligible.

The web address is www.nationalmortgagesettlement.com, and the phone number to call for a “settlement administrator” is 866-430-8358.

Attorney General Harris states, “Eligible people do not need to prove financial harm to receive a payment, nor do they give up their rights to pursue a lawsuit against their mortgage servicer or to participate in the ‘Independent Foreclosure Review Process’ being conducted by federal bank regulators. More information about that program is available at www.independentforeclosurereview.com.”

If you think you got it coming, go for it.

Leave a comment
January 3, 2013

Forgive and Forget

The Real Estate world dodged a bullet when the “Fiscal Cliff” fiasco finally wrapped up, extending the Mortgage Forgiveness Debt Relief Act, but damage was done nonetheless.

The Mortgage Forgiveness Debt Relief Act expired the last day of last year, and the assurance of its renewal and extension- a footnote in the Congressional negotiations- was an unknown. That unknown made a lot of people nervous. Sellers of short sales weren’t sure if they would be able to walk away debt-free or not, so some sellers cancelled their sales when the expiration date of the Act loomed near.

Deciding to cancel a short sale is no small decision to make, for two reasons: One- when a short sale is cancelled, the mountain of paperwork required by the bank is generally tossed out, and the laborious process must begin anew. Two- when the short sale is cancelled, the bank might go ahead and foreclose, leaving the seller and the buyer out in the cold.

Jake and Cindy Blackeren made the call to cancel their short sale on Christmas Eve. “We blew it,” said Jake. “Now we’ll probably lose the place in foreclosure. The bank is playing hardball. The short sale negotiator we were working with won’t take our calls, and the foreclosure department is moving ahead.” The Blackerens have another buyer, and their realtor has sent the contract to the bank, but to no avail. “They told our realtor the short sale negotiator sent our package to the foreclosure side,” said Cindy. “If we’re foreclosed on, our credit is worse, and it will be longer before we can qualify to buy again.”

The Mortgage Forgiveness Debt Relief Act has been extended one more year- through the end of 2013. The Act was created to cancel any taxes a homeseller would owe on the amount of the loan forgiven by the bank in a short sale. Without the Act, federal law counts forgiven debt as income, taxed accordingly.

“We simply couldn’t afford to take the chance of facing a tax hit this year. We’re struggling to keep up with our bills as it is,” said Cindy.

Short sale sellers are back in the saddle for now. It’s a rough ride, though, and watch out for those cliffs.

Leave a comment
August 8, 2012

Irresponsible Foreclosure

Some people are not happy with the trend toward protecting the victims of foreclosure. They see the trend as pandering to the irresponsible.

“I disagree with the term ‘victim of foreclosure’,” said one caller.”Most of these people bit off more than they could chew, and now they want somebody else to fix their problem.” She said she was sympathetic with people who lost jobs and had other legitimate reasons for foreclosure, but they were in the minority. “People give up too easily these days,” she said. “They won’t work their way out of their problems.”

More than one person emailed me blaming the collapse of the U.S. economy on irresponsible foreclosure. Their theory is home prices were driven too high by people buying more than they could afford, and then too low when those people lost their homes. “They shouldn’t have owned those homes in the first place,” said one. “Yes, loans were easy and banks were loose, but people should know better than to buy more than they can afford.

Didn’t their parents teach them not to take candy from strangers?”

One man mapped out the foreclosures in his neighborhood: “My next door neighbor refinanced his place to the hilt, took the money and ran,” he said. The house was abandoned for months before the bank foreclosed, and was a mess when it finally sold. “It sold for half what it would have in good condition. That affects the value of my house,” he said.

The house across the street from him was a “strategic default.” He said the family bought another home, and then let this one go back to the bank. “They just wanted to move and take advantage of low interest rates. They owed more on it than it was worth, so they just walked.” It’s been vacant for months, an eyesore, and selling low as a distressed property.

“The government keeps making new laws so the banks can’t foreclose fast enough and people get off free. Hey, my financial situation sucks, but I’m not going back on the deal I made.

It’s people like me that should be rewarded!”

Leave a comment
June 12, 2012

Sharks and Pirates

Anyone adrift in a sea of mortgage debt, beware the siren call of “foreclosure consultants” and “loan modification experts.” Some are pirates, luring you toward an island of safety and refuge, but it’s a trick. They are intent on crashing you on the rocks and plundering your ship.

If you are “underwater,” in your house, watch out for circling loan sharks. If they smell blood they will attack, and drag you down.

The sharks and pirates we’re talking about here are crooks and plunderers promising loan modifications and foreclosure relief for struggling homeowners. They take money as “fees” for “service” and leave people broke and homeless.

These no-goods are chumming email inboxes, hard mailboxes, and voicemail boxes with sweet-smelling offerings for people who are stressed with loan debt and foreclosure.

Example: Three California attorneys were busted on 19 felony counts of grand theft, conspiracy, and false advertising. These predators advertised loan modification services, claiming to possess “extra leverage” with banks. They described one of their services as a “mortgage violation audit,” in which they would review a victim’s loan documents and claim to find violations by the bank. They claimed to then have the leverage to force the bank to grant a loan modification. The attorneys took up-front fees for their “service,” never did a thing, and left people to sink further underwater.

Other victims were told to reject the loan modification offered by their bank. The attorneys-gone-bad claimed they could secure a better interest rate, a lower payment, and a principal reduction. In one case, a man was also told his second mortgage would be eliminated. Four months later, the man lost his home to foreclosure.

“Homeowners facing foreclosure are being targeted by predators, including those who use their law licenses to gain credibility and scam innocent Californians,” said California Attorney General Kamala D. Harris.

Harris is out to nail the scammers. “My office’s Mortgage Fraud Strike Force is dedicated full-time to cracking down on these deceptive practices,” she said.

Harris wants everybody to remember one thing: “Taking up-front fees for foreclosure consulting is illegal.”

Beware the sharks and pirates.

Leave a comment
Design a site like this with WordPress.com
Get started