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.

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.

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.

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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.