Matt Weidner – Fighting For The American People

Posts Tagged ‘homeowner’

1. Misrepresenting tax consequences.

Although it’s true that the federal government passed a law in 2007 directing the IRS not to count mortgage debt forgiven by a lender as income, the provision is limited. It applies only to purchase money; it doesn’t apply to debt on a cash-out refinancing, and it doesn’t apply to second homes. There’s also a dollar limitation, albeit a generous one ($1 million for married couples filing separately, twice that for joint filers). “A lot of associates are telling people there are no tax consequences,” says Lance Churchill, a short sales specialist and trainer who operates in Boise, Idaho, and San Diego. “But it’s a limited law and you just need to be accurate about it.”

2. Misrepresenting how secondary debt is treated.

Practitioners might mistakenly tell sellers that all the house debt is forgiven once the primary lender approves a short sale. But that might not be the case, Churchill says. Holders of second deeds of trust don’t typically forgive the debt. More commonly, they accept a partial payment, like $2,000; and rather than write off the balance, they sell the balance to a collection agency for another few thousand dollars. In many states, these second loans are recourse, so sellers can be caught by surprise when the collection agency contacts them a year later seeking payment of the debt.

3. Acting on inappropriate lender requests for seller contributions.

It’s not uncommon for lenders to go after money that the sellers have in the bank or in a retirement account before they approve a short sale request. They’ll sometimes seek to put the onus on the real estate practitioner to get sellers to sign over a note for the amount they have in the bank as a condition of sale. But in states where mortgage debt is nonrecourse, lenders have no right to the money, and associates that suggest otherwise to the sellers might be later sued for negligence.

4. Breaching fiduciary duty.

Investors are increasingly executing what’s known as a “double close and flip,” a type of short-sale transaction that can leave practitioners exposed to irate sellers who say they got a raw deal. Here’s what typically happens: Investors insist on handling short-sale negotiations with the lender, freeing up their real estate practitioner to concentrate on finding a buyer. During the negotiations, the investors—often without the practitioner’s knowledge—talk the sellers into turning over the deed. Once the practitioner finds a buyer, the investors do a double closing, buying it themselves at a deep discount and then flipping it to the buyer at the listed price, making money on the spread. “The seller might feel he got less than he would have had the associate done his job and not handed over negotiations to the investor,” says Churchill.

5. Providing poor oversight of a loss mitigation company.

Companies that specialize in managing short sales promise to focus on the complicated details of the short sale, freeing up practitioners’ time to find buyers. But if you take a hands-off approach, you can be charged with negligence if a deal falls apart. “A lot of these companies are fly-by-night or have one person who’s overworked,” Churchill says. “Practitioners are coming back a month later to find no one’s even opened the file.”

6. Lacking the required license to undertake loss mitigation.

It often makes sense for practitioners to take a two-pronged approach with clients facing a difficult time paying their mortgage—first trying to help them accomplish a loan modification (for a fee), and then finding a buyer if a modification doesn’t work. But watch out. Depending on your state, you could need a specific license, sometimes called a credit repair license, to earn a fee for helping owners modify mortgage terms. Without having the right credentials, taking a fee for loan modification assistance could be a criminal offense.

7. Facilitating transactions not listed on the HUD-1 form.

It’s not uncommon for investors to offer incentives to sellers to move a deal forward, but lenders typically frown upon sellers who walk away with money when they’re supposedly taking a loss. Investors sometimes work around this limitation by offering to buy something from the sellers at an attractive price, such as a couch for $5,000. Associates who communicate these offers to sellers can get tied into charges of lender fraud because the deals may be deceptive.

In an appelate court case that was released on August 5, 2009, the Fourth District Court of Appeals for Florida found that language in a mortgage which states that the lender must provide notice of default and an opportunity to cure and an allegation from the borrower that the lender did not provide this notice was enough to prevent the lender from succeeding in its summary judgment motion.  The Case, SHERRY A. FROST and JERRY FROST, Appellants, v.REGIONS BANK, successor by merger to UNION PLANTERS BANK, N.A., successor by merger with UNION PLANTERS MORTGAGE, INC., Appellee. No. 4D08-3168, represents a fantastic decision for all borrowers facing foreclosure because in the vast majority of cases, lenders fail to provide proper notice to borrowers before filing foreclosure.

This case joins a growing line of foreclosure cases where the courts are siding with borrowers in foreclosure disputes and preventing lenders from obtaining foreclosure.  In my experience, judges have become very frustrated with lenders and their attorneys for a wide range of practices that are either subtly unfair or grossly abusive.  The resulting frustration is increasingly being reflected in unreported circuit court cases where judges carefully scrutinize the lender’s claims and now in circuit court appeals cases where appelate judges are affirming the decisions of the lower court judges.

Bottom line is there are real defenses out there if you find yourself in foreclosure and you owe it to yourself to hire an experienced foreclosure defense attorney to protect your interests!  For more information, visit my website at www.mattweidnerlaw.com.

In nearly every foreclosure case filed in Florida, the lawfirms include a count in the lawsuit to “re-establish a lost note”.  In order to prevail in a foreclosure case, the lender must present to the court the original promissory note singed by the borrower at closing.  Because these note are often lost, a techincal legal procedure was developed which allows the plaintiff to present to the court a copy of that note and ask the court to rule that the copy presented is just as good as the original note.

In many cases, the Plaintiffs will be able to produce a copy of the note that was “lost”, at some point in time in the proceedings.  In this case, the lost note count is dropped and the foreclosure case moves forward without this techincal problem.  In some cases however, the Plaintiff either cannot even produce a copy of the promissory note or the promissory note signed by the borrower does not fit the precise legal definition of a “negotiable instrument” that is subject to the techincal reestablishment procedures.

In either of these cases, the Plaintiff is going to have a very hard time proceeding with their forecloure case and they have very few easy options which would allow them to prevail in their foreclosure case…confronting this reality should encourage the lender to enter into very favorable mortgage modifcation discussions with the borrower, but more often than not it seems the attorneys just abandon the case leaving the homeowner in a home with noone to make a mortgage payment to and nonone calling or making any attempts to get them to pay.

The lost note issue is complicated and technical, but an experienced foreclosure defense attorney may be able to use this to great benefit for a homeowner–if you are served with foreclosure and you have a lost note count…contact an attorney immediately.

While the country is sitting smack dab in the middle of a long term recession and while you may personally be experiencing foreclosure, job loss and other economic pain, it may be difficult to focus on the bright side and the potentially life changing up side to this short term financial crunch.  I’m here to tell you that there is a potential bright side to all this turmoil that could dramatically affect your quality of life forever.

Over the last several years, we were all living far beyond our means. We were accumulating far too many things and were spending way too much money as a percentage of income.  Cars were always new, houses were bigger and constantly being upgraded and we were constantly treating ourselves to way too many luxuries.  Because income growth didn’t increase over this period to pay for the dramatic increase in spending, all this spending was financed with debt.  Borrowing and use of all types of credit surged, but the largest source of funding for the out of control spending orgy Americans engaged in was refinancing their homes.

The sales pitches from mortgage brokers and lenders was compelling, “consolidate your high interest credit cards into one manageable payment”.  The moment those high interest credit cards were paid off, the credit card backed spending started all over again (no need to worry though, we’ll just refinance this new round of debt away).  Now the music in this massive game of refinancing musical chairs has stopped and Americans find themselves stuck in a home burdened with far too much debt relative to the value of the home.

The end result for many homeowners will be foreclosure and for some bankruptcy.  Where’s the silver lining and what  is the potential good news?  The reality is that most lenders are either unable or unwilling to aggressively pursue foreclosure cases against homeowners.  If a foreclosure case is properly responded to by an experienced foreclosure defense attorney a homeowner can find themselves living in a home for a year or more after the case is filed.

While there are a significant number of long term negative consequences from foreclosure, most homeowners are relieved to find out they can be walk away from their mortgage obligations and get out from under the massive debt they’ve been laboring to pay for years.  The end result will be a far more enjoyable life uncomplicated by the stress and anxiety caused by trying to pay the debt service on a lifestyle that was unrealistic from the outset.