Northern California Mortgage Mods

As the spotlight widens on the mortgage servicing/foreclosure documents story, the banks’ retort is essentially:  maybe our paper wasn’t accurate, but the resulting foreclosure was correct.

“We don’t believe the procedural errors in these affidavits led to inappropriate foreclosures,” Gina Proia, a spokeswoman for Ally, says. “We believe the accuracy of the factual loan information contained in the affidavits was not affected by whether or not the signer had personal knowledge of the precise details,” JPMorgan says in a statement.  quoted on MSNBC

Whoa!  I’m interested in the integrity of the process.  Isn’t that the essence of the 5th Amendment to our constitution?   No property shall be taken without due process.

It’s a step down a slippery slope to say, yeah, we swore falsely to facilitate foreclosing on this house but it doesn’t matter.  To whom doesn’t it matter?   And that assumes that the lender’s underlying proposition is correct, that despite not having the note, or verifying what the internal processes report, we are entitled to take your house.

In my bankruptcy practice, I see the junior version of the robo-signing phenomenon, where sworn declarations are filed with the court seeking relief from the automatic stay.  It is clear to me that the person signing them has no personal knowledge of the facts in the declaration:  not only no personal knowledge, but not even a once over familiarity with what’s being signed.  More importantly, a fair number of these sworn declarations are wrong about the payments made, or not made, on the mortgage.

Which brings me to The Big Picture which is soliciting examples of foreclosure errors:

• wrong house,
• wrong loan,
• wrong bank, or
• wrong person.

If you have a personal story to contribute, let’s get it out there and debunk the idea that accuracy and process aren’t important.

The Conyers/Turner/Lofgren amendment to allow modification of home mortgages in bankruptcy will reach the floor of the House perhaps as early as today.

You can use NACBA’s toll free phone number to find your Congressman and be automatically connected with the office.

Here’s how:

1. Phone toll free at: 877.354.4958

2. Put in your zip code

3. When you reach the receptionist:

• State your name
• Say that you are a constituent
• Ask the Representative to vote FOR the Conyers-Turner-Lofgren amendment (#201) to the Financial Services Reform bill.
• This amendment will cost taxpayers NOTHING and will save millions of homes from foreclosure

We need an alternative to the farsical voluntary mortgage modification programs.  Speak up, today, for a meaningful alternative.

Legislation to allow bankruptcy judges to rewrite the terms of mortgages is being considered again in Washington.  Senate House Financial Services Chairman, Barney Frank (D., Mass.), is planning on attached such a bill to a financial regulatory overhaul scheduled to be introduced later this year or early in 2010.  Such legislation passed the House last spring, but was shut down in the Senate.

Such legislation will mean that a homeowner, seriously behind in her house payments, could seek refuge in a Chapter 13 bankruptcy and apply to the judge to have her mortgage “re-written.”  This could, depending on the specifics of each case, allow a reduction in principal to be paid, lower the interest rate on the loan and extend the term of repayment.

Curiously enough, Mr. Frank notes that the best chance to have new bankruptcy legislation passed is because the mortgage servicers are doing such a lousy job of the voluntary mortgage modification programs.

We need this legislation.  The voluntary modification programs have helped some, but not nearly enough, home-owners.   And then, only after many months of frustration.  Having an unbiased Bankruptcy Judge to mediate the process and structure a new home loan to help the home-owner will save thousands, if not tens of thousands, of homes from foreclosure!

The flurry of advertisements on the TV promoting people who promise loan modifications suggests that modifications are available if you just know how to do it right.

My experiences suggest that it isn’t so.  If there is a theme I hear in talking with clients who’ve sought loan modifications is that they can never get through on the phone and that paperwork submitted to lenders seems to be sucked into a black hole.  Again and again, they are told they haven’t provided the requested information or that what they’ve provided isn’t right.

Meanwhile, all kinds of folks offer to help homeowners with the process, for money up front.  Given the apparent success rate of getting modifications, they’d better get their money up front, because they are unlikely to produce a result deserving of compensation.

Word from Capitol Hill is that judicially supervised loan modification may reappear in the financial services bill to be introduced this fall.  Let’s hope that Congress can learn that voluntarism, in the context of mortgage modification, isn’t doing the job.

One of my clients actually was offered a loan modification, or rather a trial period in which he could send the lender money, after which they would consider offering him a modification.

I was to fax it to the lender after we had discussed the risks and rewards.  The offer, now signed by the client, had the fax number for the return of the agreement and a deadline of August 1.

I tried twice July 31 to fax it, and the fax machine on the lender’s end did not respond.  I tried twice on August 1:  same story;  I tried again on August 3rd, clearly now within business hours on the East Coast. No response.

My paraglegal had to call and get an alternative number to even get the client’s acceptance in the hands of the lender.  It doesn’t raise my confidence level about what’s going on at the lender’s end of this deal.