Flagstar Bank fined by CFPB, and must help affected homeowners

Yesterday, September 29, 2014, the Consumer Financial Protection Bureau announced in a press release (click here) regulatory action taken against Flagstar Bank, FSB a federal savings bank. The announcement details a consent order between the CFPB and Flagstar. You can read the full consent order here: (click to view consent order).

In summary, Flagstar "took excessive time to process borrowers’ applications for foreclosure relief, failed to tell borrowers when their applications were incomplete, denied loan modifications to qualified borrowers, and illegally delayed finalizing permanent loan modifications." (Press Release linked above 9/29/2014.)

The consent order requires Flagstar to compensate affected homeowners in an amount up to $20 million. This means direct payments to homeowners who were harmed, estimated to be 6,700 distressed homeowners with residential loans serviced by Flagstar between 2011 and 2013. This includes up to 2,000 homeowners who's homes were foreclosed prior to September 4, 2014. The consent order specifies that Flagstar must pay $27.5 million to the CFPB, of which $20 million is to be used by the CFPB to compensate "foreclosed consumers."

In the course of our representation of homeowners going through foreclosure, we have heard many stories of this kind of treatment from major servicers. Unfortunately, until recently, there were no state or federal laws requiring loan servicers to treat borrower applications for assistance with anything more than mere lip service. There is also usually a lack of evidence since most of the communications between borrowers and servicers is verbal, and servicer employees tended to disappear ever time a borrower got close to finding out the truth.

In the past few years, there have been similar consent orders entered against Bank of America, Wells Fargo, Citibank, JP Morgan Chase, and some others. However, in my opinion and experience, the practical benefit to the homeowners where were most negatively affected has been minimal, because prior consent orders did not require the servicers to contact homeowners and alert them of the order. Also, homeowners with pending legal actions or foreclosures have not been able to use the consent orders as evidence of wrongdoing in their specific case.

The Flagstar consent order is very similar to prior servicer consent orders, but it does have some terms that leave me more hopeful. For example, the order makes specific findings of servicer errors involving violations of the 2014 CFPB servicing requirements for delinquent mortgages. Examples include improper denial of requests for modifications, and improper prolonging of trial modifications that should have been made permanent. These are two of the biggest common complaints we encounter every day with homeowners.

In light of prior ineffective consent orders and settlement agreements with various servicers, if you were foreclosed on by Flagstar bank in 2011 or after, or if your request for modification was denied, you may be eligible for a compensatory damage award. Prior consent order damage claims (for ex. Bank of America) have been between $300 - $1,200. You can apply directly to the CFPB, but we recommend contacting a qualified licensed attorney to make sure your claim is recognized, and to have a better chance of getting the relief you need. New federal regulations allow homeowners to bring private actions against Flagstar for damages, even if the CFPB pays you compensation.

If you are a homeowner in Oregon, contact the attorneys at Garland Griffiths Knaupp directly at (503) 846-0707 or visit our website for more information about legal representation.

CFPB Releases New Resources for Consumers

The Consumer Financial Protection Bureau (CFPB) recently released additional resources for consumers as part of its campaign to educate the public about the new protections provided by the CFPB’s new mortgage rules which went into effect on January 10, 2014.

The CFPB’s new mortgage rules protect consumers by requiring that mortgage lenders evaluate whether borrowers can afford to pay back the mortgage. The rules also establish new, strong protections for struggling homeowners, including those facing foreclosure, and ensure that borrowers are protected from costly surprises and delays by lenders.

The CFPB Bureau has released a number of educational materials to improve consumer understanding of the new rules and their protections. These materials include:

• Sample Letters: The CFPB has released sample letters that consumers can send to lenders when problems arise.

• Mortgage Tips: The CFPB provides a number of different tips on new rights under the new rules for homebuyers and homeowners at every stage of the mortgage process—from taking out a loan to paying it back. The tips also include recommendations for troubled borrowers facing foreclosure.

• Answers to Consumer Questions: The CFPB provides answers to mortgage-related questions through AskCFPB, an interactive online tool designed to answer consumers’ most frequently asked questions in plain language.

• Consumer Tools: The CFPB website offers a tool to help consumers find local housing counseling agencies to answer their questions or address their concerns. Consumers that have an issue with consumer financial products or services, such as a mortgage, can also submit a complaint.

• Fact sheets on the Rules: The CFPB offers a fact sheet with an overview of the new consumer protections in the CFPB’s mortgage rules. The CFPB also offers a summary of the new procedures to facilitate borrowers’ access to foreclosure avoidance options.

Print copies of the mortgage materials will be available in seven languages: Spanish, Tagalog, traditional Chinese, Haitian Creole, French, Korean, and Vietnamese. English language materials can be found at consumerfinance.gov/mortgage.

Over the next year, the CFPB will continue to produce materials to educate consumers about the new mortgage rules and we will keep you informed about these changes. Or if you have any questions, please feel free to contact Garland Griffiths Knaupp at (503) 846-0707  for a one-hour consultation.

CFPB Releases New Mortgage Rules Resources for Consumers

On January 10, 2014, the Consumer Financial Protection Bureau (CFPB) released new mortgage rules designed to provide homeowners and consumers with new rights and greater protections from many of the harmful lending practices that led to the recent mortgage crisis and attendant financial collapse.

Virtually every mortgage a lender makes must now be evaluated, first and foremost, on the borrower’s ability to repay the loan. This means that the borrower must be able to repay the loan for years, not just during the first few months when a “teaser” interest rate keeps monthly payments low.  These new mortgages will be referred to as “Qualified Mortgages” or “QMs.” QMs are designed to be safer and easier to understand than the loans that lead to the recent financial crisis. New CFPB rules also limit the points and fees lenders can charge for making a QM.

There are a number of other rules designed to safeguard consumers from predatory lending practices. These rules include, but are not limited to, the following:

• Mortgage lenders and servicers are required to send you a clear monthly statement so you can see how they are crediting your payments.

• Mortgage lenders and servicers are required to fix mistakes promptly.

• Mortgage lenders and servicers are required to credit payments the day they get them.

• Mortgage lenders and servicers are required to give you early notice if you have an adjustable rate mortgage and your interest rate is about to change.

• Mortgage lenders and servicers are required to call or contact borrowers by the time they are 36 days late on their mortgage.

• With limited exceptions, mortgage lenders and servicers cannot initiate a foreclosure until the borrower is more than 120 days delinquent.

• Mortgage lenders and servicers cannot start a foreclosure while they are also working with a homeowner who has submitted an application for a loan modification or other alternative for help.

• Mortgage lenders and servicers are required to advise borrowers who fall behind on their mortgages of all of the workout options available to them.

• Mortgage lenders and servicers are required to explain to a borrower why a mortgage modification was denied.

Taking out a mortgage is arguably one of the most important decisions a consumer will make. The new CFPB rules are designed to make sure that consumers have the knowledge and protections necessary in order to make sound decisions about their financial futures.

If you feel that your lender or servicer has violated any of these rules, please feel free to contact Garland Griffiths Knaupp at (503) 846-0707  for a one-hour consultation or visit the CFPB website at http://www.consumerfinance.gov for more information.

It is very important to contact an attorney as early in the process as possible to protect your rights as a consumer.  If you think you have been harmed, you may have as little as 1 year from the harm to file suit to enforce the rules in court.

The Price of Justice

Why do we do what we do?

Foreclosure defense is a challenging area of the law. We almost always find ourselves standing in opposition to large lenders with deep pockets who retain large law firms with deep pockets. Many of our clients, in turn, are individual homeowners of limited means. The task is often daunting; difficult.

So why do we do it?

We must make one thing perfectly clear. We are not on a crusade. This is not like Don Quixote tilting at windmills. We do what we do for one principal reason—we believe that the law should be evenly and fairly applied to all irrespective of size, wealth or status. We believe in justice, not “just-us.” Unfairness, inequity and unlawful conduct deserve redress. We give the little guy a chance, a voice, and a day in court.

Consider for a moment the recent settlement agreement reached by the Consumer Financial Protection Bureau against the country’s largest non-bank mortgage loan servicer, Ocwen Financial Corporation. Ocwen was found to have engaged in “significant and systemic” misconduct at every stage of the mortgage servicing process. Under the terms of the agreement, Ocwen must provide $2 billion in principal reduction to underwater borrowers. Ocwen must also refund $125 million to the nearly 185,000 borrowers serviced by Ocwen or its subsidiaries whose homes have already been foreclosed. Finally, Ocwen will be subject to greater regulatory scrutiny going forward.

Sounds great, right? Justice was served, right?

We’re not so sure.

Let’s recap for a moment.

Over the past 3 years, a number of banks including Citibank, Chase, and Bank of America were found to have engaged in a systemic pattern of mortgage servicing abuse which resulted in millions of homeowners being unfairly treated. During the financial crash that began in 2008, most of these banks were supported with economic stimulus funds through the TARP program. Even those who didn’t receive direct TARP funds were supported with easy credit from the federal reserve system.  The least they could do is work in good faith with struggling homeowners (the taxpayers) on reasonable loan modifications. But did the big banks do even that? In many cases, no. They took the money, regrouped financially and are now swimming in profits while many homeowners were left to twist in the wind waiting on loan modification programs.

So let’s move on to Chapter 2.  The same banks that agreed to a $25 Billion National Mortgage Settlement as a result of serial and systemic mortgage servicing abuses are now trying to pass the buck.  Recently we have observed several of the largest banks divesting themselves of much of their mortgage servicing portfolios to companies like Ocwen.  So what does Ocwen do? As explained in Part I of this entry, the same thing that the big banks were accused of doing!

Ocwen was found to have charged unauthorized fees, forced homeowners to buy unnecessary insurance policies; lied in response to borrower complaints about excessive and unauthorized fees; lied about loan modification services when borrowers requested them; misplaced documents, ignored loan modification applications and illegally denied eligible borrowers a loan modification.  Here’s the proof.

Pretty wicked stuff. And caught in the middle? The real victim? You. The consumer. And traditional notions of justice.

As a part of the Ocwen settlement, (which looks good on paper), Ocwen was not required to admit any wrongdoing—thereby insulating Ocwen and Ocwen executives from legal exposure. The settlement calls for payments of $125 Million as compensation for approximately 185,000 borrowers who were affected by the misconduct; some of whom have already lost their homes. How much is the loss of your home worth?

Far more than they are being asked to pay.

As young law students we are taught that justice is blind. No....we are not crusaders, but we do believe in the law. Laws have been broken. The aggrieved deserve their day in court.

That is why we do what we do.

Because it is the right thing to do.

But time is of the essence, and you should contact us immediately before your legal claims are barred by time.  The law that limits your right to bring a legal action is called the statute of limitations, and there are many different limitations statutes with different time limits.  The most common legal claims that we litigate in foreclosure and loan servicing problems are breach of contract, trespass, negligence, bad faith, fraud, and unfair trade practices.  Breach of contract and trespass actions have a 6 year statute of limitations.  Negligence, fraud, and bad faith have a 2 year statute of limitations, and unfair trade practices have a 1 year statute of limitations.

Determining when the statute of limitations begins ticking down on your claims is not easy to do, even for experienced attorneys, so do not delay.  Please call one of our attorneys at (503) 846-0707 for a consultation. The help you need, and deserve, is just a telephone call away.

Bankruptcy 101: The Difference Between Chapter 7 and Chapter 13

Hundreds of thousands of Americans file for bankruptcy each year. But filing for bankruptcy does not mean that your debts are simply wiped away in one easy step. You must first be eligible to file a bankruptcy, and the duration and outcome of your bankruptcy case will depend on the type of bankruptcy filing for which you qualify.

And so this is where we will begin.

The two most common types of bankruptcy filings for consumers (as opposed to bankruptcies for businesses which work a little differently) are a Chapter 7 and a Chapter 13 bankruptcy. Under Chapter 7, consumers may have some of their assets sold, but are able to escape liability for most of their debts. The process usually takes just a few months. Under Chapter 13, consumers pay part or all of their debts under a tightly controlled budget plan overseen by a court-appointed bankruptcy trustee. The Chapter 13 process, also called reorganization bankruptcy, generally takes three to five years.

If you're considering filing for bankruptcy, your first step is to attend a credit counseling session run by a government-approved organization. Then you'll receive a certification confirming that you completed the course and then can file your case. During the session you'll be asked about your financial situation -- income, expenses, assets, debts and goals, and the counselor will help you figure out how to proceed.

If you make more than the median income for your state, you must complete a means test, which compares your monthly income and expenses to certain baseline costs set by a formula. If the means test shows that you have enough money left at the end of the month to pay at least part of your unsecured debts, such as credit cards, you must generally file under Chapter 13.

Many clients, at least initially, would prefer to file a Chapter 7 because they do not want to be in bankruptcy for years. That is understandable. However, there are some distinct advantages to a Chapter 13. First and foremost, Chapter 13 only requires you to pay back as much as you can afford.  It gives you a chance to stop any foreclosure proceedings, catch up on your mortgage payments, and possibly strip off unsecured second and third mortgages.

If you are considering a bankruptcy and have questions about how to proceed, please call our new associate attorney James Edmunds, at Garland Griffiths Knaupp, Attorneys, (503) 846-0707.

The help you need, and deserve, might be a telephone call away.

CONSUMER FINANCIAL PROTECTION BUREAU ORDERS OCWEN FINANCIAL CORPORATION TO PROVIDE $2 BILLION IN RELIEF TO HOMEOWNERS FOR SERVICING VIOLATIONS

The Consumer Financial Protection Bureau (CFPB), together with authorities in 49 states and the District of Columbia recently reached a $2.1 billion settlement agreement with the country’s largest non-bank mortgage loan servicer, Ocwen Financial Corporation.  The settlement is the result of the investigation of numerous complaints arising out of Ocwen’s alleged “significant and systemic” misconduct at every stage of the mortgage servicing process. Under the terms of the agreement, Ocwen must provide $2 billion in principal reduction to underwater borrowers. Ocwen must also refund $125 million to the nearly 185,000 borrowers serviced by Ocwen (or its subsidiaries Homeward Residential Holdings and Litton Loan Servicing) whose homes have already been foreclosed. Finally, Ocwen will be subject to greater regulatory scrutiny going forward.

“Deceptions and shortcuts in mortgage servicing will not be tolerated,” said CFPB Director Richard Cordray. “Ocwen took advantage of borrowers at every stage of the process. Today’s action sends a clear message that we will be vigilant about making sure that consumers are treated with the respect, dignity, and fairness they deserve.”

What does this settlement mean for you?

If you had or have a loan serviced by Ocwen, Homeward Residential Holdings (formerly American Home Mortgage Servicing) or Litton Servicing, you may be entitled to a refund or other legal action which could include a lawsuit against these servicers for wrongful foreclose. Garland Griffiths Knaupp Attorneys have represented clients in successful actions against American Home Mortgage (now Homeward Residential) in the past two years. We would like to help you if you suffered the loss of your home due to these predatory lending practices.

But time is of the essence, and you should contact us immediately before your legal claims are barred by law.  The body of laws which puts a time limit on your right to bring a legal action is called the statute of limitations, and there are many different limitations statutes with different time limits.  The most common legal claims that we litigate in foreclosure and loan servicing problems are breach of contract, trespass, negligence, bad faith, fraud, and unfair trade practices.  Breach of contract and trespass actions have a 6 year statute of limitations.  Negligence, fraud, and bad faith have a 2 year statute of limitations, and unfair trade practices have a 1 year statute of limitations.

Determining when a statute of limitations starts and other exceptions is not easy to do, even for experienced attorneys, so do not delay.  Please call one of our attorneys at (503) 846-0707 for a consultation. The help you need, and deserve, is just a telephone call away.

Alternative Exit Strategies—Deed in Lieu of Foreclosure

In our prior two posts, (What documentation should I receive from my lender prior to a foreclosure mediation? and What documentation do I need to produce for a foreclosure mediation?) we addressed the documents that lenders and borrowers have to produce as a part of Oregon’s new mediation program. However, there is an old adage that “numbers never lie.”  After collecting all of the required documents, it will sometimes become abundantly clear that the numbers simply do not add up and a loan modification is not likely. There can be a number of reasons—from significantly reduced property values to loss of income due to job loss—but sometimes the best strategy (if not the only strategy) is to consider an exit strategy.

We have all heard about people who just “walked away” from their mortgage. Just to be very clear, walking away from your mortgage is NOT an exit strategy. The fact that you have walked away from your home does not mean you have walked away from the legal liability for your home. Quite the contrary. What you might have done by walking away is walk right into a very large money judgment. To draw an analogy, walking away from your home is just like refusing to pay that annoying parking ticket. Just because you ripped it up and threw it in the trash (don’t ever do that by the way), does not mean that the fine is not still out there waiting...waiting...waiting....

Just.

For.

You.

So what is a viable exit strategy? Two of the most commonly used exit strategies are short sales and deeds in lieu of foreclosure. In this blog, we will explain what a “deed in lieu of foreclosure” is, how it works, and whether or not this is a strategy you should consider.  

Simply put, a deed in lieu of foreclosure is a transaction where a homeowner voluntarily transfers title (the deed) to the property to the lender in exchange for a release from the mortgage obligation. Before accepting a deed in lieu of foreclosure, lenders usually require that homeowners try to sell the home first. If the home sells for the mortgage amount (or more), then problem solved. If not, then a deed in lieu of foreclosure might provide a quick, relatively straightforward resolution that avoids the time and expense associated with a foreclose action.

If your lender agrees accepts a deed in lieu of foreclosure, there are legal documents that the parties will have to execute. These documents generally include: (1)  a deed that will transfer legal ownership of the property to the lender and (2) an affidavit that memorializes the terms of the parties agreement. This agreement should explicitly include language that the deed in lieu of foreclosure fully satisfies the debt and the lender has no right to seek a deficiency judgment against the homeowner. The “deficiency” in this case is the difference between the current fair market value of the home and the total debt.

Once this process is completed, the homeowner can then walk away from the home with no further legal liability to the lender. (There may be tax ramifications however, so you should also seek the advise of a tax advisor before finalizing any documents). One case where this might be the best option is if your home value is hopelessly upside down. But that is just one such scenario. If you have questions about whether or not a deed in lieu of foreclosure is the right option for you, please call Garland Griffiths Knaupp at (503) 846-0707.

We’re here to help.

What documentation should I receive from my lender prior to a foreclosure mediation?

Participation in Oregon’s new mediation program is required for lenders who initiated 175 or more foreclosure actions in the preceding calendar year. In our prior post (What documentation do I need to produce for a foreclosure mediation?), we itemized the documents that the homeowner must provide to the lender prior to a mediation. In this post, we address the documents that the lender must provide to the homeowner.

After a homeowner has paid the required fee ($175.00 but a fee reduction waiver is available for households making 200% or less of the federal poverty level) and submitted the required documents (see prior post), a lender is required to provide the homeowner with the following documents:

•      Copies of the residential trust deed and the promissory note that is evidence of the obligation that the trust deed secures;

•      The name and address of the person who owns the obligation secured by the trust deed;

•      A record of your payment history for the preceding 12 months or since you were last current on your loan obligation;

•      The amount you currently owe on the loan and the amount due to cure the default;

•      Input and output values for each Net Present Value model that your lender uses;

•      The most recent appraisal or price opinion your lender used to determine the value of your property;

•      The pooling or servicing agreement your lender entered into with another agency;

•      A description of any additional documents your lender needs to evaluate your eligibility for a foreclosure avoidance measure.

The documents the parties provide should provide both lender and borrower with a pretty good idea of whether or not a modification is likely under the circumstances. In some cases, it will be fairly clear that a modification is appropriate. In other cases, less so. In some cases, it will become fairly obvious that a modification is not likely (usually due to financial or affordability reasons). If this is the case, we would encourage homeowners to discuss possible exit strategies prior to mediation and to make sure that the lender will have someone present or available during the mediation that has actual authority to agree to an exit plan. If that person is not there, the parties may be required to come back for another resolution conference.

If you have any questions about the mediation process, whether you think you qualify for a mediation, or possible alternative exit strategies, please do not hesitate to contact Garland Griffiths Knaupp at (503) 846-0707.

We’re here to help.

What documentation do I need to produce for a foreclosure mediation?

In our last blog post (Foreclosure Actions Down—Way Down—As Oregon’s New Foreclosure Mediation Program Ramps Up—Way Up), we talked about the success that Oregon’s new mediation program is having in bringing borrowers and lenders to the mediation table. There are already more mediations scheduled in November and December of this year than total mediations that occurred under the old mediation program last year. As we discussed, mediation was only required under the old program if the lender filed a non-judicial foreclosure. This turned out to be a loophole the size of Mount Hood because lenders simply stopped filing non-judicial foreclosures and started filing judicial foreclosures instead. Now in fairness to the good people of the Oregon legislature, for the past 50 years or so, almost all foreclosure in Oregon were non-judicial foreclosures. The legislature certainly did not expect lenders to completely abandon the long-established practice of foreclosing non-judicially. But hindsight, as they say, is 20/20. Large lenders did just that—virtually stopped all non-judicial foreclosures—so the Oregon legislature had to step in once again to amend the law.

Enter the new foreclosure mediation program.

Mediation is now required in cases that involve judicial and non-judicial foreclosures.

Loophole closed. Mediation numbers skyrocket. And that is a good thing.

It is too early to tell whether these face-to-face meetings will actually result in more loan modifications. Despite ongoing pressure from the Federal government, and not one but two major settlements involving improper foreclosure servicing practices, loan modifications are still not easy to come by for some homeowners. And the promise of a mediation should not be confused with the promise of a loan modification. For a modification to occur, a borrower still must qualify and a great deal of supporting documentation is required. The process is not terribly enjoyable for homeowners. But if you want a modification, it is a process that you will have to go through.

So if you have a mediation scheduled, or you think you might qualify for a mediation, here are the documents that you will generally have to produce and provide to the lender. For homeowners who have already received a mediation notice, these documents must be provided within 25 days after receipt of the notice. So advance preparation is critical.

First, you will be required to complete a Universal Intake Form. This form is available on the foreclosure mediation website. This form details information about you, your lender, and your current financial situation.

You will also be required to provide the following:

Any additional information about your current income, expenses, debts, and other obligations;

• A description of your financial hardship, if any;

• Documents that verify your income and expenses, including:

• Pay stubs confirming your income for the most recent full two months

• If self-employed, a profit and loss statement

• Bank statements from the most recent two full months

• If relying on social security, disability, unemployment, or other non-wage benefits, a benefits statement from the benefit provider showing the amount, frequency, and duration of the benefit

• A divorce decree judgment or separation agreement if you are relying on child

• Your most recent electric, heat, gas, or other utility bill

• Your most recent property tax statement or appraisal

• Your tax returns from the two most recent years

Providing accurate and complete information will greatly improve your chances of reaching an agreement with your lender during a mediation. This is a valuable opportunity that should not be wasted. Yes, accumulating all these documents takes time and involves no small amount of effort. But this effort may be well worth it if a mediation results in an agreement which will save your home.

So don’t delay. Time is of the essence. Start preparing now.

If you have any questions, please feel free to contact us at (503) 846-0707 or visit our foreclosure defense website garlandgriffiths.com.





Next: What documentation should I receive from my lender prior to a foreclosure mediation?

Foreclosure Actions Down—Way Down—As Oregon’s New Foreclosure Mediation Program Ramps Up—Way Up

There is good news on the often gloomy foreclosure defense front.

Oregon’s new foreclosure mediation program is only a few months old, but lenders (yes, lenders!) have referred over 1,700 new cases to the Mediation Case Manager, the agency responsible for running the program for the state. Of that, more than 1300 cases were just received in the last few weeks.

Chase Bank is the largest bank participating so far with more than 600 requests. The four banks with the most mediation requests are Chase, Nationstar, Green Tree Servicing and US Bank. Bank of America and Wells Fargo—the state’s largest mortgage lender—have yet to submit mediation requests. However, B of A and Well Fargo are (purportedly) preparing to submit a large volume of cases “soon.”

If true, that is really, really good news.

The new mediation program requires the state’s large mortgage lenders to offer a meeting with homeowners before they can foreclose. Lenders must submit mediation requests to the Mediation Case Manager and homeowners are then contacted by a Mediation Case Manager representative notifying them of the request. Homeowner’s must then pay a fee—$50 or $175 depending on household income—to participate in the program and work with a HUD-approved housing counselor. Housing counselors will work with homeowners throughout the process and help homeowners obtain and complete the required documents and upload these documents to the mediation program online portal. Housing counselors will also be available to review the lender's documents once they are available in the online system. In some cases, housing counselors may attend the mediation conference with homeowners and serve as an advocate and aid in the discussion on foreclosure avoidance options.

At present, there are currently 100+ mediations scheduled for November and December.

Unsurprisingly, the success of the new mediation program has had a direct impact on the number of new foreclosure actions throughout the state. New foreclosure cases have virtually ground to a halt while the first wave of mediations make their way through the program. According to numbers compiled by Gorilla Capital, a Eugene company that buys and resells distressed properties, foreclosures in the state’s largest seven counties have fallen by 42 percent from a year ago and 80 percent from a month earlier month. While this might be a temporary reprieve, the opportunity for a struggling homeowner to have a face-to-face meeting with a lender is meaningful and should not be ignored. Our hope is that a large percentage of these mediations will result in some sort of agreement—whether that agreement is for a loan modification, a short sale or a deed-in-lieu of foreclosure.

Time will tell.

If you have any questions about the new mediation program, please visit the Oregon Foreclosure Avoidance Program website or call Garland, Griffiths Knaupp at (503) 846-0707. We’re here to help.

3 Things You Can Do To Help Yourself WIN a Foreclosure Defense Case

Thinking about hiring a lawyer to pursue a wrongful foreclosure or unfair trade practices lawsuit against your lender?

Well here's an important little tidbit. 

Despite what you might think, or what you might see on those clever legal dramas on prime time television, or what that high-priced lawyer in downtown Portland might tell you... 

Lawyers do not win cases.

That's right, we said it. 

We'll say it again.

Lawyers. Do. NOT. Win. Cases.

Facts win cases.

Strike that.

Facts supported by EVIDENCE win cases.

Ever played poker? It's just like that. After all the preening and puffing and posturing, at some point you have to put up or shut up. You have to show your cards.  Winning a case in a court of law is really no different. 

You claim, for example:

Judge....the bank TOLD me if I stopped paying my mortgage, I would get a loan modification. I just did what the bank told me to do! Then they screwed me and filed a foreclosure anyway!

That, good people, is a factual assertion. 

The judge then says:

I understand what you're saying, sir. I understand that you feel you've been wronged, sir.

You smile and think: Justice at last! That big evil bank is going down! 

But the judge doesn't stop there. The judge slowly leans over oh-so-slightly, lowers his or her reading glasses, looks you squarely in the eyes and says....

Now prove it.

Silence. 

The judge is looking at you.

Your lawyer looks at you. 

You look at your lawyer and think: You're the one with a law degree! Do something! Say something! 

Guess what?  There is no pixie dust we can waive over the court's eyes to make everything alright. There is no magic bullet. No eloquent, eleventh hour speech we can make that will seize the day. What we need, what every lawyer needs—and this is where you can help you help yourself—is evidence.

Evidence, good people, is the magic pixie dust that wins cases.

**********

Have you been mislead by a lender or loan servicer?

Do you believe your foreclosure is wrongful?

Were you mislead into believing you would get a loan modification?

If it makes you feel any better (and it probably won't), there are lots of people out there just like you. You have been wronged. You deserve your day in court. But the critical difference between winning and losing a lawsuit, should it come to that, is having what lawyers refer to as an evidentiary trail. So before you call an attorney, here are 3 things you can do to help yourself WIN that foreclosure defense case:

1.  Record your conversations.

Whenever we suggest recording your conversations with a lender, especially when you're talking about something meaningful or especially important, the almost immediate push back is: "Is that legal?" 

The answer is yes.

Federal law and Oregon law prohibit recording any telephone conversation where you are not a party. (In other words, you can't record someone else's conversation). However, it is perfectly legal here in Oregon to record a telephone conversation as long as one party consents to the recording (see ORS §§165.535, 165.540). What this means is that unless you object to recording yourself, then it is not illegal to record your conversation with another party and then use that conversation as evidence in a court of law. 

Some states, such as Washington, require that both parties consent to the recording of a telephone call. This means that before the conversation can be recorded, the party doing the recording must let the other party know the conversation will be recorded and that party must then consent to the recording. So if you live in Oregon but you're calling Washington, follow Washington law and notify the lender about the recording. If you're calling somewhere else (New York for example), find out if only one party or both parties must be notified. The safest choice, if you're unsure about what to do, is to notify the other party that you intend to record the conversation. 

2.  Get it in writing.

Lenders will tell you a great many things. We have heard horror story after horror story about customer service representatives or loss mitigation mangers telling clients something, but there is no record, anywhere, of what was said, when it was said, or who said it. So whenever possible, if you reach any sort of an agreement with a lender, ask the person on the line to confirm the agreement in an email. You don't need a full blown contract or anything fancy, just a simple email confirming whatever it is you talked about will do. Emails are particularly useful because they are date and time stamped and the sender is clearly identified.

3.  If you can't get it in writing , then confirm it in writing yourself.

In order to be admissible as evidence in court, your don't have to have something in writing from your lender. While this is generally better, many lenders are loathe to confirm anything they say in writing. Or your lender will tell you that they have no problem sending you an email or letter, but you never actually get anything.

So be proactive.

When you conclude a conversation, ask for the person's name, title, address and email address. Then immediately write an email (if the bank will accept an email; if not, write an actual letter) to the person you spoke to confirming the conversation. Something like this will suffice: "Dear Mr. Smith, I enjoyed speaking to you on the telephone today. This email simply confirms our discussion and the agreement we reached during our conversation to [fill in the blank]. The court doesn't require anything fancy. You don't have to write like a lawyer. Just confirm what you discussed and send it via regular mail or email to that person. The existence of an a writing confirming a conversation is evidence you can introduce in court about that conversation. Why? Because the law presumes that if you send someone a writing containing factual assertions, but those assertions are not true, then you will receive a writing of some sort in response denying those assertions. Confirming writing from you + no response from bank = good evidence in court.

And evidence good people, not just facts, is the magic pixie dust you need. 

So help you help yourself and remember these three simple things: (1) record your conversations, (2) get it in writing and/or (3) confirm it in writing. These simple steps could be the critical difference between winning and losing your foreclosure defense case.

And if you have any questions at all, please do not hesitate to contact us at (503) 846-0707 or visit our website at garlandgriffiths.com. 

"Enormous Increase" in Foreclosure Meditation Requests

The new Oregon Foreclosure Avoidance Program has received over 450 mediation requests since its inception on August 4, 2013. What is most compelling about this number is that the vast majority of mediation requests have come from lenders. In the first 13 months of the prior Oregon mediation program, only 286 cases were referred to mediation. However, the prior program was overhauled by Senate Bill 558, which came into law last spring. Under Senate Bill 558, both non-judicial and judicial foreclosures are now subject to the mediation requirement. Under the prior program, only non-judicial foreclosures required mediation. As a consequence, many lenders simply stopped using nonjudicial foreclosures and moved to judicial foreclosures instead. This unintended loophole virtually gutted the "mediation requirement" under the old mediation program. 

Under the new program, a lender who intends to foreclose (whether the vehicle is a judicial or nonjudicial foreclosure) must first request a meeting with the homeowner. A representative from the Oregon Foreclosure Administration Program--the agency responsible for administrating the mediation program--will notify the homeowner of the request. The homeowner has 25 days to respond and must pay a fee -- $50 or $200 depending on income -- and provide some financial information to the lender. The lender must provide payment history and a copy of the loan documents to the homeowner. 

According to Oregon Attorney General Ellen Rosenblum, indications are that hundreds of additional cases could be referred to the new program in the upcoming weeks.

“No one’s happy about impending foreclosures, but we’re delighted with these numbers because, unlike the earlier program, it means this one is working the way it’s supposed to,” said Rosenblum. “We worked hard to close the loophole that allowed banks to avoid face-to-face meetings with borrowers. We remain hopeful that getting lenders and borrowers together at the same table will help prevent foreclosures and keep Oregonians in their homes.”

The mediation requirement will not end the foreclosure problem. Almost 29,000 Oregonians still remain more than 90 days in arrears on their mortgages. Many embattled homeowners have moved and cannot be located. Others lack the resources to pay even a modified mortgage. However, the recent change to the mediation law will result in a significant upswing in the number of face-to-face meetings between homeowners and lenders and that is certainly a step in the right direction.

If a foreclosure action has been initiated against you after August 4, 2013 and you are uncertain about whether or not your lender has complied with the requirements of the new mediation program, we would encourage you to contact us immediately. Alternatively, visit the Oregon Foreclosure Avoidance Program website for more information about the new mediation program. 

Know Your Rights: No More "Dual Tracking"

What is "dual tracking?"

Dual tracking is an ugly, insidious (and therefore unsurprisingly commonplace) practice where Big Bank X (insert name here) is actively negotiating a loan modification with a homeowner while pursuing a foreclosure against that same homeowner...at the same time.  The glaring inequity to this practice has long been a topic of vociferous objection among foreclosure defense attorneys and consumer rights advocates. Thankfully, corrective legislative protections are on the horizon.

Created by the Dodd-Frank Wall Street Reform and Consumer Protect Act of 2010, the Consumer Financial Protection Bureau (or CFPB for short) will have broad--some say unparalleled--regulatory authority to create rules and enforce consumer protection laws that restrict unfair, deceptive or abusive acts and practices (commonly known as UDAAPs). One UDAAP that the CFPB is seeking to forever eliminate is the practice of dual tracking. Consequently, beginning in January of 2014, new CFPB rules will:

• Require a lender or servicer to establish "live contact" with a delinquent borrower within 5 weeks of delinquency and inform the borrower in writing about available loan modification and other loss mitigation options by the 45th day following delinquency.
• Prevent a lender or servicer from filing for foreclosure unless the borrower is more than 4 months delinquent.  
• Prevent a lender or servicer from beginning a foreclosure once a delinquent homeowner submits a loan modification until after a written denial is sent to the homeowner and a 14-day appeal period has run or an appeal has been denied.  The new rules also require the lender or loan servicer “exercise reasonable diligence in obtaining documents and information to complete a loss mitigation" and for the lender/servicer to give the specific reasons for a denial in the denial notice.
• Allow the homeowner to submit an application for a loan modification or other loss mitigation option at any time after the foreclosure process has commenced up to the 37th day before a scheduled foreclosure sale. Once the application is submitted, the servicer may not go through with a foreclosure sale until: (1) the servicer has notified the homeowner that he, she or they are not eligible for loss mitigation (and any appeal or appeal time has been exhausted); (2) the homeowner has rejected all proposals or offers of loss mitigation; or (3) the homeowner has violated or failed to comply with terms of a loss mitigation option such as making required payments under a trial modification plan.

In sum, these new CFPB rules are designed to ensure that lenders and servicers negotiate in good faith and in a timely manner before commencing a foreclosure action. Will these rules stop foreclosures? No. Will these rules have a positive impact on the number of foreclosures? One would hope so.

If nothing else, these new CFPB rules are certainly a step in the right direction.

For more information, please visit the CFPB website at consumerfinance.gov or visit our dedicated foreclosure defense website at garlandgriffiths.com.
 

Foreclosure 101: The good, the bad and the ugly—understanding foreclosures under the Oregon Trust Deed Act

When you borrow money to purchase a home in Oregon, the loan is usually memorialized in a written promissory note that contains your unconditional promise to pay a certain sum on a certain date by a certain time.  Borrower and lender also generally enter into a separately-memorialized security agreement at the same time the promissory note is executed. This “security agreement” does exactly what it sounds like—it secures your promise to repay the loan. Traditionally, the security agreement of choice in Oregon was a mortgage. If you defaulted on your mortgage, your lender could then exercise its right to sell your property to satisfy the obligation, but it could only do so by bringing a judicial action against you in court. This is what is known as a "judicial foreclosure" because judicial involvement is required in order to foreclose on a home.  However, as any lawyer worth his or her salt will tell you, lawsuits in any forum for any reason can be slow, expensive and uncertain. Lenders wanted a faster, easier, more streamlined process.


Enter the Oregon Trust Deed Act (commonly known as the OTDA).
 

The OTDA was enacted in 1959 to provide a nonjudicial alternative to the long-standing judicial foreclosure process. This nonjudicial alternative would be available if the parties first used a trust deed instead of a mortgage to secure their loan.  What is a trust deed? A trust deed works much like a mortgage, except that instead of two parties to the security agreement (the borrower/mortgagor and the lender/mortgagee), there are three parties: (1) the "grantor" of the trust (the borrower), (2) the "beneficiary" of the trust (the lender), and an independent "trustee" of the trust who has the power to sell the property without court approval in the event that the borrower defaults on the note. This process—when a trustee appointed under a trust deed sells a piece of property without court involvement after a borrower default—is known as a "nonjudicial foreclosure."
 

Nonjudicial foreclosures under the OTDA were much faster, much easier and much cheaper than traditional judicial foreclosures. The result? Lenders in Oregon stopped using mortgages as the security instrument of choice (real shock here) and started using trust deeds instead. So if you are a homeowner with a “mortgage,”, it is almost certainly the case that you do not actually have “a mortgage" (even though your lender and everybody else might refer to it as a mortgage), but have a trust deed securing your loan instead. (For more information, read our blog What Do You Mean I Don't Have a Mortgage?").

So here’s a brief recap in a nutshell.

OTDA created in 1959.

If lender uses trust deeds, lenders  have right to use the nonjudicial foreclosure process under the OTDA.

Nonjudicial foreclosure = trustee sale (a means of foreclosing on a piece of property without having to go to court.
 


But there are rules.

 

If a lender wants to use the faster, nonjudicial process available under the OTDA, there are explicit conditions that the lender must follow. Substantial compliance is not enough. These conditions must be followed to the letter. These conditions include:

• Recording the trust deed, and any assignments of the trust deed, in the county where the property is located (much more on this "recording" requirement later)
• An actual default on the obligation, "the performance of which is secured by the trust deed;"
• Recording a notice of default containing the trustee's or beneficiary's election to sell the property to satisfy the obligation; and
• The absence of any other pending or completed litigation for recovery of the debt (with limited exceptions).

 In addition to those conditions, the OTDA prescribes the notice requirements that protect trust deed grantors (you) from unauthorized nonjudicial foreclosures and sales of your property. Among other things, a trustee is required to provide you at least 120 days advance notice of the trustee's sale. This 120-day advance notice period is designed to give you time to seek judicial intervention if need be. You also have the right to “cure” your default at any time up to five (5) days before the date last set for the sale (more on “curing” a default below).

  


Here are a few more important facts.
 

One of the biggest differences between a judicial and nonjudicial foreclosure involves what is referred to as the "statutory right of redemption." In a judicial foreclosure action, the borrower has the right to redeem (i.e., buy back) the property for up to six months after the foreclosure for the amount that the property was sold for at the sheriff's sale. No such right exists if the property is sold at a nonjudicial trustee's sale. Seems kind of unfair on its face, right? That lenders can use a much faster nonjudicial foreclosure process AND the borrower has no statutory right of redemption?
 

Well...yes and no. In the law, there are always trade-offs. The trade off here is in how a borrower can “cure” a default in a judicial versus nonjudicial action.
 

In a judicial foreclosure, in order to cure a default and stop a foreclosure action, the borrower must, in most instances, pay the full amount of the loan plus costs. As you can well imagine, this is an almost impossible burden for most homeowners in default to meet. However, in a nonjudicial action, the borrower can cure the default by simply paying all amounts past due (meaning the arrearage), plus costs. This obligation is much more manageable. So while the timelines are much shorter with the nonjudicial foreclosure process, the burden for curing the default is much lower.
 

That is a good thing.

**********

In the aftermath of the OTDA, the foreclosure process here in Oregon looked much the same. Judicial foreclosures were extremely rare. A “foreclosure on my mortgage” really meant a nonjudicial trustee’s sale pursuant to the rights given to a trustee under a trust deed. These nonjudicial foreclosures went largely unchallenged for decades.

Then everything changed.

In 2012, the State of Oregon Court of Appeals dropped the legal equivalent of a megaton bomb on the nonjudicial foreclosure process in the case of Niday v. GMAC.  Niday exposed fundamental flaws in what had become standard operating procedure in the nonjudicial foreclosure process and the erroneous assumptions of large commercial loan servicers. As a result, lawyers for Oregon banks were forced to go back to the old practice of judicial foreclosures for most Oregon home loans.

So stay tuned. Coming up next....
 

Next post: To record or not to record—The fate of nonjudicial foreclosures after Niday.

Know Your Rights: Federal Appeals Court Rules That Lender Contractually Obligated to Offer Permanent Modification to Homeowner After Homeowner Fully Complied With Terms of Trial Peroid Plan

In a recent decision that could potentially impact every Oregon homeowner that is currently in or negotiating for a trial period loan modification (also known as a trial period plan or "TPP"), the 9th Circuit Federal Court of Appeals recently ruled that Wells Fargo was contractually obligated to offer a permanent loan modification to a homeowner after the homeowner fully complied with the terms of their HAMP trial period plan. In Corvello v. Wells Fargo Bank, the Ninth Circuit reversed a California district court’s dismissal of the plaintiff's breach of contract claims arising out of Wells Fargo's refusal to offer the plaintiff a permanent loan modification after the plaintiff made all of the required payments under the TPP. Wells Fargo (unsurprisingly) argued that the TPP was not a biding contract. However, the court rejected this argument and looked instead to the approach of the 7th Circuit Court of Appeals in Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547 (7th Cir.2012). In Wigod, the court held that banks were “required to offer permanent modifications to borrowers who completed their obligations under the TPPs, unless the banks timely notified those borrowers that they did not qualify for a HAMP modification.”  Citing Wigod, the 9th Circuit reasoned that the bank’s assertion that a TPP was not a contract would allow it to “turn an otherwise straightforward offer into an illusion." In other words, big banks can't treat loan modifications like a carrot on a stick. They can't offer you a loan modification conditioned on a promise that you pay a certain amount of money over a certain period of time, then proceed to take your money, then refuse to offer you a permanent loan modification because, well, they just don't want to do it.

The law simply does not work that way. 

In her concurring opinion, Judge Noonan seemed to echo this sentiment and wrote:

Wells Fargo drafted this document, and Wells Fargo must be held responsible for it. The document promises a substantial benefit to Corvello if he meets its terms. The document then makes these benefits illusory because they depend entirely on the will of Wells Fargo. To say, “I give $100 for your watch but I will decide whether I pay you $100” is not to make a contract but to engage in a flim-flam or, in plain words, to work a fraud. You promise so that the other will perform. You reserve your promise so that the promise is empty while you have gotten what you wanted from the promisee. 

No purpose was served by the document Wells Fargo prepared except the fraudulent purpose of inducing Corvello to make the payments while the bank retained the option of modifying the loan or stiffing him. “Heads I win, tails you lose” is a fraudulent coin toss. Wells Fargo did no better.” 

Wow. Thank you Judge Noonan.

Folks...this is a really big deal. For years, big banks have offered struggling homeowners trial period plans only to pull the plug on a permanent modification for a litany of reasons. Courts are finally calling big banks to the carpet on this practice by adopting the same line of reasoning that foreclosure defense law firms like ours have been asserting for some time....a contract is a contract. If a bank offers you a TPP and promises that you will get a permanent modification if you comply with the perms of a trial plan, then that is a binding promise. 

Bottom line?

If you have been denied a permanent modification after successfully completing a TPP, you should contact us at (503) 846-0707 or visit our dedicated foreclosure defense website. The help you need might be just a telephone call away.

Foreclosure 101: What do you mean I don't have a mortgage?

Understanding the foreclosure process in Oregon begins with understanding one very basic fact.

A basic fact that a surprisingly high percentage of homeowners do not realize until faced with foreclosure.

That basic fact is this:

If you bought property here in the great State of Oregon, it is almost certainly the case that...

You do not have a mortgage.

Surprised?

Then you are not alone.

************ 

When you close on a piece of residential property, there seem to be a staggering number of documents to sign. If you are reading this blog, you have probably been there, done that. You are directed to an enormous pile of official looking documents, handed a pen and asked to sign here, and here, and here, and here and here. This goes on for about an hour until you’re sitting there with writer’s cramp and a glazed look on your face completely befuddled about what you’re signing, why you’re signing it, and why it takes as stack of paper the size of a Volkswagen Beetle to buy something that doesn’t move.

We get it.  The process can be mind-numbing.

But at the end of day, all of these papers really boil down to two key documents.

A promissory note.

And a deed of trust.

 ************

A promissory note, in the simplest terms, is a glorified IOU. You (the borrower) promise to pay Big Evil Bank (the lender) the sum of X at an interest rate of Y in monthly payments of Z. That’s it. Pretty straight-forward.

But what happens if you don’t pay?

That’s where the second document comes in....a security instrument. A security instrument, in the simplest terms, is a document that “secures” your payment obligation under a promissory note by doing one of two things: (1) actually transferring title to the property to someone else until the promissory note is paid-in-full (known in the law as the “title theory” because title actually changes hands until the underlying obligation is satisfied) or (2) by creating a “lien” or “security interest” in the property until the promissory note is paid-in-full (known in the law as the “lien theory” because the borrower actually keeps title to the property subject to the borrower’s lien). Oregon is what is referred to a “lien-theory” state.” So when you purchase a home here in Oregon, you receive title to the property but then you immediately transfer a “security interest” (a lien) in the property to another party until the promissory note has been paid.

Understood? Very good.

Now here are the two $24 million questions. First, who holds this “security interest” while you’re paying off your loan? Second, and most importantly, what does holding a “security interest” in a piece of property lawfully allow you to do? Let’s address the first question.

Traditionally, the person (or entity) holding the “security interest” was the lender and the typical security instrument was a mortgage. A mortgage involved two parties. The mortgagee (the lender) held a security interest (a lien) in the property until the loan was fully paid by the borrower (the mortgagor). Upon full payment of the obligation, the lien was released and the homeowner would own the property free and clear.

In 1959, the Oregon legislature passed the Oregon Trust Deed Act (OTDA). Unlike a mortgage, which involves a mortgagor (borrower) and a mortgagee (lender), a trust deed involves three parties: the “grantor” of the trust (the borrower), the “beneficiary” of the trust (the lender) and an independent trustee. When a borrower purchases a piece of property in Oregon using a trust deed as opposed to a mortgage, the borrower (1) receives title to the property but then concurrently executes a deed of trust which transfers a security interest to a trustee who then holds—”owns” if you will—this security interest for the benefit of the lender until the loan is fully paid or goes into default.

Since 1959, the security instrument of choice in Oregon has been the deed of trust, not a mortgage. Which brings us to the second question. What does holding a security interest in a piece of property lawfully allow the trustee of a trust deed to do in the event of a default?

The answer to this question lies in understanding the difference between a “judicial foreclosure” and a “non-judicial foreclosure” and how the OTDA dramatically changed the foreclosure process.

Next: The good, the bad and the ugly: Understanding foreclosures under the Oregon Trust Deed Act

Foreclosure 101: Inform yourself

Welcome to the Garland Griffiths Knaupp Foreclosure Defense 101 series.

Our series is designed to accomplish two important tasks.

Our first and most important goal is to provide timely and accurate information to homeowners facing foreclosure. Why is this so important? Because in the relatively new and constantly evolving field of “foreclosure defense” or “wrongful foreclosure” (phrases that were rarely if ever used in the law as recently as five years ago) information is key. Can there be anything more frightening than the specter of losing a home? Emotions run high; fueled typically (and understandably) by confusion, fear and uncertainty. Having a clear understanding of the foreclosure process—and of your rights and remedies under the law—is an important first step.

The second function of this series is to provide an easy-to-understand analysis of the law. Why is this necessary? Because what “the law” is in the area of foreclosure defense is constantly changing. Judges and lawyers alike throughout our state are grappling with the complex and varied legal issues presented by an unprecedented housing crisis. No one can predict with absolute certainty what to expect. In just the past month, several state and federal court decisions (all of which will be analyzed in upcoming blogs) have greatly impacted the rights and remedies available to homeowners facing foreclosure. Our job is to break these decisions down and explain in plain and simple  terms what these decisions mean for struggling homeowners. This area of law is simply too important for public confusion. We will take the complex and make it clear.

So what can you expect from this series?

In sum, information and analysis.

The twin poles—the yin and yang if you will—of an informed and empowered public.

**********

Foreclosure 101 is designed to be a resource. However, please do not confuse a resource with legal advice. If you are a homeowner facing foreclosure, time is of the essence. Far too many people facing foreclosure respond by doing nothing. Fear and despair lead to inertia and inaction because desperate homeowners feel there is nothing they can do. But that is absolutely not the case.

There is something you can do.

You can call a lawyer.

We offer a one-hour foreclosure defense consultation for only $169.00. Because every case is fact specific, this consultation provides an invaluable opportunity for homeowners facing foreclosure to discuss the specific circumstances of their case with an attorney skilled in the area of foreclosure defense and to review the available range of options.

This is, in sum, an opportunity to inform yourself.

Thank you for visiting our blog. We hope you find our Foreclosure 101 series helpful.

Know Your Rights: Oregon's New Foreclosure Mediation Program Goes Live

The new Oregon Foreclosure Avoidance Program (OFAP) officially launched on August 5, 2013. The OFAP is the creation of Senate Bill 558, which overhauled the existing Foreclosure Avoidance Mediation Program (FAMP) in effect since July of 2012. Prior to the enactment of Senate Bill 558, mediation was not required if a lender filed a judicial foreclosure, a gaping loophole that effectively rendered the program meaningless. Why? Because lenders simply stopped using nonjudicial foreclosures (the most common and preferred method of foreclosing on property in Oregon for the past 50+ years) and simply resorted to judicial foreclosures instead.  As a result, less than two dozen mediations convened in the past year; hardly the intent that the Oregon legislature intended. Senate Bill 558 changes all this by eliminating the judicial foreclosure loophole and greatly streamlining the mediation process.

Under the new mediation program, before a lender can foreclose on a home – whether through a judicial (circuit court action) or nonjudicial (trustee sale) process – it must first offer a face-to-face meeting (resolution conference) with the homeowner in an attempt to avoid foreclosure when the instrument securing the loan is a residential trust deed. Homeowners at risk of foreclosure may also request a meeting. Homeowners are at risk when they are more than 30 days in default on their loan payment or when a government-approved housing counselor believes the homeowners have a qualifying financial hardship.

This new program will give most homeowners an opportunity to meet face-to-face with an agent of the lender who will have complete authority to negotiate and commit to a foreclosure avoidance measure. (Lenders who filed less than 175 foreclosures in the past year are exempt from the program). To initiate the process, homeowners must first meet with an approved housing counselor. Housing counselors will not only help homeowners initiate the process, they will also help homeowners evaluate their options and put together the best possible proposal for a foreclosure avoidance measure. There is no charge to the homeowner for working with an approved housing counselor. The homeowners must then pay a $175.00 fee (a fee reduction waiver is available for households making 200% or less of the federal poverty level), submit the documents required by the lender and personally attend the resolution conference.

The resolution conference will be an informal meeting conducted by a mediator, who is a neutral person trained in basic foreclosure issues. The homeowner can bring an attorney, a housing counselor, or both to the meeting. The lender must send an agent in person. If that person does not have complete authority, the lender must have a person with authority available by telephone. If the parties reach an agreement, the agreement will be reduced to writing and signed by both parties before the conference concludes.

For more information about the new mediation program, visit the official program website at www.foreclosuremediationor.org or our dedicated foreclosure defense website at garlandgriffiths.com.

For a list of approved housing counselors, visit www.oregonhomeownersupport.gov

Federal Foreclosure Settlement Payments Now Available

The Office of the Comptroller of the Currency (OCC) and the Federal Reserve Board (the Fed) reached a new agreement this year with several lenders that provides for aid to flow directly to homeowners. Mortgage loans that were serviced by Aurora, Bank of America, Citibank, Goldman Sachs, HSBC, JPMorgan Chase, MetLife Bank, Morgan Stanley, PNC, Sovereign, SunTrust, US Bank, Wells Fargo, or any of the affiliates or subsidiaries of theses lenders are eligible for payments if a foreclosure was in process during 2009 or 2010.

How much are the payments? Payments between $300 and $125,000 have been authorized under the agreement. Many homeowners have already been contacted by RUST Consulting, the company responsible for distributing payments, informing them that they are eligible. Payment amounts are determined by a formula that takes into account the various types of improper foreclosure tactics borrowers may have been subjected to.

Homeowners that we represent have already begun receiving checks from the Independent Foreclosure Review Payment Agreement. Checks our clients have received have ranged in amount from $300 to $6,000.

What if my loan was serviced by someone else? EverBank/EverHome Mortgage Company, Financial Freedom (One West), GMAC Mortgage, and IndyMac Mortgage Services (One West) are still being reviewed. They are expected to begin making similar restitution distributions in the near future.  If your loan was not serviced by any of the above listed servicers, the federal settlement does not apply to your servicer, and your only recourse is to bring a private legal action, or file a complaint with regulatory agencies.

What do I need to know? RUST Consulting and the checks they are distribute are NOT a scam. You are entitled to the payments they send you and can cash the check. Also, you should be aware that by cashing a check from RUST Consulting you are NOT giving up your right to sue you lender for the damages they caused you during the foreclosure process. If you believe you have been subject to an illegal foreclosure or unfair trade practices you should contact us to discuss whether we can help you.

For further information please contact me or visit my website. If you live in Beaverton, Hillsboro, or Portland Oregon, give me a call with your questions or comments, or post a comment to this blog.

Tax Masters Fined $195 Million for Defrauding Clients

(c) 2012 Benjamin D. Knaupp
Attorney at Law
Admitted in Oregon since 1997

Finally, justice is served on Tax Masters! In an article today on Fox News, it was reported that Tax Masters, a well-known firm claiming to fix people's tax debts for pennies on the dollar, has been ordered to pay more than $195 million in penalties for defrauding its clients. The firm was shown to have lied to clients, misleading them as to work performed on their cases and had committed over 110,000 violations of Texas’ Deceptive Trade Practices Act.

As a tax attorney, I’ve spoken with several taxpayers who have paid good money to firms like Tax Masters for help with their tax problems, and had terrible experiences. While there may be some decent firms out there, taxpayers get much better service hiring a local tax attorney who is licensed right here in Oregon. I represent taxpayers in IRS audits, appeals of audits, and tax court cases.

I also represent taxpayers who have tax debts, and for most taxpayers with tax debts, there is no “silver bullet” that will allow me to reduce their tax debts. The opportunity to settle with the IRS for “pennies on the dollar” is very rare. Firms like Tax Masters have been misleading taxpayers with these promises for years, and its about time they be held accountable.

For further information please contact me or visit my website. You can also check out my article Why You Need A Licensed Tax Attorney to represent you. If you live in Beaverton, Hillsboro, or Portland Oregon, give me a call with your questions or comments, or post a comment to this blog.