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.

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.

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.
 

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: 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.