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What to do When You Cannot Make Your Mortgage Payment |
Posted at Keepin' it real by George Mantor
Nov. 30, 2009
If you or someone you know has fallen behind on their mortgage, take heart; there is hope. Not from the government though; you’ll have to fight this one on your own, but you are not alone. And soon, your numbers could grow into a powerful army as more and more borrowers find out the truth and learn the reason why lenders of securitized mortgages are having difficulty foreclosing.
In the last few weeks, I have written a number of articles on various aspects of securitized mortgages, foreclosures, loan modifications and short sales, and I am being flooded by requests for more information on what to do when you cannot get a modification and how to fight foreclosure.
I’m sorry I have not been able to respond to all. Almost all of the questions, searches for information, background, judicial opinions and requests for help are addressed in detail here on my blog, http://www.realtown.com/gwmantor/blog
According to Aldo Svaldi, in an article in the business section of Sunday’s Denver Post regarding the limited success in modifying these loans, “The program's way of dealing with consumers and handling paperwork is definitely outdated and a source of frustration, housing counselors and consumer advocates say.”
But, what if there were a way that you could get your loan reduced to zero? Is that something you’d be interested in hearing more about?
Up to now, most borrowers have been approaching their lenders with their hats in hand, sending tons of documentation and, both literally and figuratively, begging for a trial modification that in all likelihood will never result in a permanent modification.
By everyone’s admission, that isn’t working. The lender has all the power. But, if you are one of approximately fifty to sixty million borrowers whose loan was securitized, the balance of power reverts to you.
I’ve seen a lot of self serving advice columns aimed at people who cannot pay their mortgages, and most of it is bad.
Take for example, “when you realize that you might not be able to make your payment, call your lender immediately.”
Why? In all likelihood they are not even legally allowed to modify your loan, so no modification is permanent, nor are they intended to be.
Oh, you’ll be in touch alright, when you serve papers on them. Do not alert the enemy before you attack.
And who exactly are you supposed to call?
The originator is probably out of business, the funder got their money back, and the investor was insured. And, tax payers bailed out the insurers. That leaves the collector of the payments.
More than likely the servicing rights to your loan were probably sold to a collection agency that collects and distributes the payments for a small percentage of the payment. But, they also have the right to keep 100% of all late fees, forbearance programs, and any other monies they can squeeze out of fearful, mislead, misinformed homeowners. This has lead to numerous instances of conflict of interest.
Who is in a better position to exploit a defaulting borrower than a person posing as someone who wants to help? And, it’s all part of a scam planned well in advance.
Companies that are actually collection agencies are acquiring the servicing rights to mortgage loans, not to process checks, but to put the borrower over a barrel and then offer more and more expensive “solutions”. True, they don’t want your house and would not be the ones entitled to the proceeds of the auction. They do want every spare dime you can fork over. They don’t care one way or the other what happens to your home; they’re just a collection agency.
Servicing companies have gone from passive collectors and distributors of other people’s money to active, predatory, hard-money lenders targeting sub-prime borrowers.
They might not even wait for you to get into trouble, but simply insist you are late.
Calling the servicing company is the equivalent of placing a sign in your front yard advising to burglars that you will be away for a while. The longer you stay under their radar the better.
Your first objective is to buy time—time to find another job, time to save some money, time to find another place to live.
The next step is to analyze your situation and set a strategy.
Do you want to keep your home or just prolong the foreclosure? Set aside for the minute that you may be underwater and answer the underlying question, do you want to keep your home?
If so, the next thing you want to discover is if your loan was sold as part of a securitized pool of mortgage backed investments. There are two types of entities who package and sell loans. Government agencies such as Fannie Mae and Freddie Mac have been doing it for years.
But, private label players began entering the market in the early nineties coining the phrase sub-prime and finding an enormous market for loans outside the Fannie/Freddie guidelines, including non-conforming loan amounts, alt-A, sub-prime, non-residential property, and other debt packages such as student loans, car loans, and credit card debt.
It now appears that some of that activity has created a legal roadblock to foreclosing on many of the securitized loans.
If you want to keep your home and you live in a state that does not require the foreclosing entity to take you to court, a non-judicial foreclosure state, you’ll need to sue them. Many people counter that they do not have the money, but if you have the facts on your side, the law on your side, and a fair judge, you could wind up owning your home without a mortgage. That is definitely worth the money.
For those who are facing foreclosure, you have real skin in the game, and you need to assess your situation to determine if you have grounds to challenge and win. For those who have already lost their homes, many of you have standing to get them back.
Do you have a MERS loan?
If the word MERS appears on your trust deed, it is almost certain to have been securitized. This will require a visit to your County Recorders Office to see if MERS is recorded on your deed. Depending on where you live, this information may be available on line. If your loan has been assigned through MERS, they may have separated the note and the trust deed, or not be able to produce the note at all.
In a judicial foreclosure state, such as Florida or Illinois, they will be suing you. During the discovery process, you will demand to see the original note, not a copy. Your purpose in identifying the current note holder is to seek additional discovery regarding TILA and RESPA violations in your loan.
In a non judicial foreclosure state, like California, you will have to sue to stop the foreclosure. Either way, I strongly suggest that you retain counsel to assist you in determining your legal position and establishing a strategy. This is going to be a fight. They will have their lawyer and, if past cases are any indication, they may attempt a fraud upon the court and manufacture evidence.
Are there RESPA and/or TILA violations in your loan documents?
In a non judicial foreclosure state, this is the heart of your case. This is what will bring the major issues into focus for the Judge. The different levels of fraud are the basis for probable cause. Loan paperwork is pretty sloppy and banks are greedy. In all likelihood, your loan will contain one or more violations of the Real Estate Settlement Procedures Act or Truth in Lending Act.
You will need a legitimate Forensic Loan Audit to determine the existence of these violations and their potential legal remedies which may include rescission of the contract and damages. This should range from $350 to $1500
Armed with that analysis, your lawyer will know how to craft your pleading. Be very cautious of modification scams and unqualified loan audits. See my blog, do your homework, know your rights, and then go and slay a dragon. Good luck.
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1. RE: What to do When You Cannot Make Your Mortgage Payment
Back in Oct. of 08, an agent (Kirkland Holdings) of United Law Group offered me to have my home loan modified for $3,000.
They assured me that they will have my principal mortgage amount amount reduced by an amount reflective of the current
price of the property. All required documents including the original mortgage papers(which were never returned) along with hardship letter etc. were sent to United Law Group in Irvine,
CA. They kept me hanging in the balance for a year but nothing as done and refused to return money paid. Frustated with the whole thing I started phoning my lender, countrywide after months of wait they eventually changed to a lower interest rate
but adding back the missed payments at the back end. Though
I have a solid job as a Registered Nurse with the State Of Nevada hospital here in Las Vegas but due to reduced hours
I find it hard to cope up with the even reduced mortgage payment. While my principal amount of mortgage was increased to $280,650 and the market value of the house is
$120,000 and I am paying someting like $1,800/PM. I put a downpayment of about $80,000 which has vanished. It is hard for me to keep a house which has no equity left in it. I took a $50,000 second on the house and upgraded the property but now I can not even get $130,000 because of no buyers. I feel like running away from the property and rent for half the amount I am paying for the mortgage. Please advise, I need help.
Thank you,
Savita Opal, Mrs.
opalsusa@cox.net