Posts Tagged loan modification
How Bad Is It Out there In the Housing Marketplace?
Posted by Chas W. Leeper, SRA in Uncategorized on November 6th, 2011
With all of the discussion of the foreclosure crisis within the media and on company networks, there might be some confusion as to how bad is the situation in the housing market. The media has an admitted big-government bias, so it truly is typically rather hard to separate truth from propaganda, specifically during times of financial crisis.
However, the issue of foreclosures is actually quite a bit more severe than even the media is making it out to be. They’re just focusing on the foreclosure crisis and how homeowners and lenders are being affected throughout the credit crunch, while ignoring many other, related troubles.
The housing market was pumped full of inflated money and simple credit for at least the decade from 1997 until 2007, and it began accelerating after the 2001-2002 “mini-recession.” A bubble was inflated in residential real estate to maintain the party going soon after the tech stock collapse, and now you’ll find no markets left to inflate.
The Federal Reserve has been lowering interest rates over the past six months, but this has not helped homeowners save money on their resetting Adjustable Rate Mortgages. Any money they “save” by getting lower-than expected mortgage payments, but higher than they originally paid with the teaser rate, just isn’t reflecting actual savings of income, but just an opportunity expense. If rates had been kept higher, they would need to pay a lot more, but the expiration of the teaser rate is causing them to pay more anyway, just “less more.”
In addition, lower interest rates mean that the dollar is getting devalued, and costs of imported goods (and anything created with imported goods as an input) will increase. Anything produced with oil has been going up, such as plastic goods and items that must be transported about the globe and throughout the country. Trucking businesses are feeling this pain specifically acutely, as the price of diesel has been over $4.00 a gallon for a while now, with gasoline following closely.
Homeowners are also seeing food costs increasing in America and worldwide, with riots and common shortages in some Third Globe countries already happening, and rice shortages becoming reported in the US. The dollar is becoming worth less, so producers of real goods like food raise their prices or create crops which are worth more as ethanol to feed SUVs than as food to feed families.
In this inflationary economic environment, homeowners using a mortgage payment that has increased by 50%, together with the price to feel their car up 30% in a year, plus the cost to feed their household growing at 20% in a year, may be running into some genuine problems. A total individual monetary collapse is in all probability one job loss or medical emergency away for households already living on the edge.
But even if homeowners fall behind on all of their bills in large numbers, the banks as well as the government won’t do anything to assist the people — in truth, quite the opposite has been happening. The Fed is bailing out banks with billions of newly printed dollars each and every week now, and this inflates the money even more, driving up costs even higher, pushing more homeowners into foreclosure as they struggle with rising food, power, and healthcare costs.
But together with the free money the banks are receiving, they’ve no incentive to work with homeowners to put together repayment plans, mortgage modifications, or other programs that can stop foreclosure on houses. The largest banks know they are able to sit back, do nothing, let the foreclosure approach take more than, and make up their loss with assist from the Federal Reserve, paid for courtesy of the people they’ve stolen a home from.
It really is bad out there in the housing marketplace, and will continue to be poor at least through the summer of 2009, if not far longer, when the resetting mortgages will mostly have adjusted by then. But by that time, how much will gas expense? Seven dollars a gallon? Just how much will food cost? Will there be adequate of it to feed everyone? And how will people have the ability to afford either transportation or food, when their mortgage payment has nearly doubled?
Defending a Foreclosure - Three Legs to Stand On
Posted by Chas W. Leeper, SRA in Uncategorized on September 23rd, 2011
When homeowners begin to consider working with an attorney to defend their foreclosure in court, they typically feel overwhelmed by the amount of nonsense and bureaucracy they are forced to cope with. But no matter whether they are defending a bank’s lawsuit against them, or initiating their own to stop an auction under a power of sale clause, you will discover three key types of defense that borrowers can take into consideration.
The first type of defense against a foreclosure by a mortgage business entails difficult the validity of the loan documents themselves. If the original mortgage or deed of trust was not drafted or executed legitimately, homeowners could possibly be able to have the whole transaction rescinded, based on the laws involved. In other circumstances, borrowers may well question regardless of whether the lender suing them truly owns the note — if not, there is no genuine valid contract in between the two parties. Also, if there is a defect within the paperwork or illegal clauses, the mortgage may possibly not be valid. Banks normally violate state and federal law when creating mortgage, and it might be worth the time for borrowers to consult with an attorney about these issues.
Second, homeowners fighting foreclosure in court might rely on defenses that raise the issue of misconduct by the mortgage lender. Misconduct and predatory lending don’t have concrete definitions, but a loan might be regarded as predatory based on various characteristics of it. If the borrowers had been approved with no income verification or had been given an interest rate that the bank knew the owners would not have the ability to pay, there may be a defense against foreclosure based on misconduct. Also, if the appraisal was inflated and the bank knowingly accepted the unreasonably high value, and gave the owners a loan based on the value of the dwelling rather of what they could in fact afford, it might be a case of predatory lending.
The last category of legal defense against foreclosure entails instances where the lender does not follow the required procedures just before the sheriff sale. Each and every state and county has distinctive rules that the bank’s attorneys or the trustee should follow so as to foreclose on a house and have it sold at a public auction. Courts take for granted that the bank meets all of these requirements adequately, but homeowners may raise as a defense the failure to follow all the guidelines. In reality, lenders routinely violate the nearby laws and regulations, along with the attorneys do not care to follow them simply because they know the banks own the courts anyway, for essentially the most part. But procedural violations could be raised as a defense against foreclosure.
By focusing on these three kinds of legal defenses, homeowners might be able to drill down further and really specify the issues that affect their mortgage. Even if they just raise the defenses to force the bank to negotiate a loan modification or give them more time to sell or move out, education about lending laws is by no means a waste. As well, homeowners may perhaps decide to mount a full defense or hire a knowledgeable lawyer to help them.
Court Cases Based on HUD and FHA Insured Home Loans and Foreclosure
Posted by Chas W. Leeper, SRA in Uncategorized on July 7th, 2011
Whenever a mortgage is insured or guaranteed by the Federal Housing Administration (FHA), an agency overseen by the Department of Housing and Urban Development (HUD), servicing providers ought to follow HUD servicing guidelines. Some of these regulations involve the foreclosure procedure on a such a property, and failure to follow the guidelines may well be used by homeowners to defend their foreclosure in court.
The following can be a list and brief description of a number of the court cases that have involved HUD and FHA loans that had been improperly serviced, ones that were decided in favor of homeowners, and ones by which borrowers facing foreclosure were denied claims. Understanding some of the background of these cases may perhaps help homeowners choose if their loan is being properly serviced, or if it is worth their time to make application for an FHA loan.
One of the requirements to foreclose on a HUD loan is that the servicer ought to attempt to hold a face-to-face meeting with the homeowners before three payments happen to be missed. In Banker’s Life v. Denton, homeowners raised the failure to hold the meeting as a defense against foreclosure. Also, the servicer didn’t send the request for the meeting via certified mail or try to check out the borrowers at the property. The court found for the owners in this case.
Notices of default ought to also be sent to delinquent borrowers in accordance with the HUD regulations. In Federal National Mortgage Ass’n v. Moore, homeowners raised the argument that the lender had not sent out a notice of default that was in compliance with HUD’s regulations. The notice sent, according to the borrowers, was not valid due to the fact it was on a form that was not “approved by the Secretary” of HUD and was not sent in a timely manner as the regulations demand.
Due to the fact these two instances had been decided, HUD’s regulations have changed, but the language of the preforeclosure servicing, including notice requirements and evaluation guidelines, have remained the very same. Actually, yet another court case, Mellon Mortgage Co. v. Larios, decided that the requirements are the identical now as they had been just before the statue was revised. Lenders failing to comply with these tips can nevertheless be utilized as a defense against foreclosure.
The face-to-face meeting with homeowners is also an significant aspect of foreclosing on a mortgage backed by HUD. The minimum requirement to comply with this regulation is visiting the borrowers at property and sending at the least one letter via certified mail. The problem came up in Washington Mutual Bank v. Mahaffey, and also the lender was denied summary judgment since it had not sent the letter, even though an individual had been sent to the property to visit the homeowners.
Naturally, this isn’t to imply that every single homeowner will win a case and effectively defend against foreclosure. Courts have also ruled against borrowers who raised issues concerning servicing. In Miller v. G.E. Capital Mortgage Servs., Inc., the court ruled that private citizens have no right to sue for violations of HUD’s loss mitigation provisions. The law, according to the court, is meant to concentrate on regulation of lenders — not creating rights for borrowers facing foreclosure.
Also, courts have found that the language included in deeds of trust insured by the FHA aren’t negotiated contractual terms. Rather, they’re imposed by the FHA on both the borrowers and lenders, plus the borrowers may not raise defenses in relation to breach of contract if lenders fail to follow the FHA guidelines. This case was decided in Wells Fargo Home Mortgage, Inc. v. Neal. If the homeowners and mortgage company can not bargain for that aspect of the contract, there can be no breach of the contract.
Homeowners, their loss mitigation experts, and their foreclosure attorneys ought to develop into aware of a few of the issues involved with HUD loans if they’ve a mortgage insured by the FHA or are taking into consideration taking advantage of the new government programs. Though some protections may possibly be provided to borrowers, others seem to be taken away by the courts if there’s a question about a foreclosure. Realizing the issues through previously-decided court situations can assist educate borrowers.