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Use Foreclosure Law -- Keep Your Home
"Those who do not learn from history are doomed to repeat it.
The Rule of Law is at the center of all economies. Application of the Rule of Law allows families threatened with imminent foreclosure, and those severely underwater, to use legal leverage when dealing with lenders. All around the nation average American families are obtaining justice if their real estate contracts are based in fraud. It seems astonishing, yet, most loan documents contain elements of fraud.
For homeowners, the best hope for a legitimate loan modification, making the loan affordable, is a cramdown reduction in principal. This reduces the total amount actually owed to current market value, minus 10% (allowance for oncoming reductions in market value).
The Obama/Geithner loan modifications come up short because the Senate has blocked the cramdown provision for principal reduction. Even worse is that fact that if the Senate did allow the cramdown provision, homeowners would only qualify if they file for bankruptcy.
The path to cramdown Principal Reduction is through legal leverage utilizing Predatory Lending and Securities Law violations and issues, only discoverable through a Forensic Loan Audit.
What is a Forensic Loan Audit?
A Forensic Mortgage Audit is the comprehensive examination of all loan documents including legal documents, and other evidence important to the mortgage loan. A forensic mortgage audit identifies anything done illegally by the lender, broker, appraiser or other parties involved with the mortgage. During the Audit process we review all documents received from the date of application to the funding date.
Loan Audits May Find
Violations of Federal, State or Local Laws
You Must Do Your Own Cramdown.
Conventional Loan Modifications Do Not Work -- For You.
Yet, the powers that be soldier on. They kick the can down the road, instead of taking actions to fix the economy sooner, by letting actual market forces drive down values to true and historical Income to Debt ratios. Laws of economics dictate that this market will continue to reset lower, a reversion to the mean, regardless of temporary band aids.
Obligation To Family
Debt Default. From Wikipedia.
Debt Repudiation. From Merriam-Webster: reÂ·puÂ·diÂ·ate:
a. to reject as having no binding force <repudiate a contract>
b. to reject as untrue or unjust <repudiate a charge>
c. to refuse to pay <repudiate a debt>
Here, by utilizing the Rule of Law to repudiate fraud-based debt, family objectives can be achieved by confronting a lender, utilizing an experienced attorney after obtaining a Forensic Loan Audit. The family objective may be either to Use Foreclosure Law to Keep Their Home, or, if fraud is significant, to walk away with monetary damages in hand under the family's terms of settlement.
The Long Con.
A housing bubble came to exist because unregulated Investment Banks were able to leverage(borrow and create money), which they in turn invested by making money available to mortgage lenders such as Countrywide, who used ethically challenged mortgage brokers to enable almost anyone who could fog a mirror to buy a home. The lenders knew all the way to the top (Investment Banks) that millions of homeowners would not be able to keep their home once payments reset on subprime and Option ARM. They literally created a historic Mania. "Housing always goes up." Until it doesn't.
On the brighter side, understand that judges throughout the nation are granting relief to borrowers under quiet title actions brought by their attorneys. The homeowner may receive the title to the home, free and clear, if the violations, the fraud, is manifest and shows in the loan origination documents. This is obviously the home run. Literally.
The (Current) Short Con -- New Loan Modifications
Mod-in-a-box is the term commonly used in the industry to describe Loan Modifications offered since December by Fannie/Freddie, Sheila Barr's FDIC, and several major banks. We argue that such modifications are based on fraudulent intent. These modifications merely offer a reduced interest rate for 4-5 years, and stack the interest not paid during that time on the top of the amount owed, increasing the total amount owed. The problems are clear:
No Principal Reduction to current market value leaves the borrower underwater for years to come. Unable to sell without taking a significant loss, they become indentured servants. They are trapped for years as renters in their own home. In Japan it took 16 years, from the 1990 top of their real estate market to 2006 for home values to return to 1990 values. Our downturn may not last that long, but we see no bottom for housing for at least four years. The data that substantiates this theory or prediction is offered below.
Indemnification clauses are included in these new modifications. This means that in order to get a lower rate for a couple of years, the borrower is unwittingly giving up the legal right to sue the lender when Predatory Lending and Securities Law violations are contained in their existing loan documents In our opinion there lays the fraud in that the lender possess superior information regarding the fraudulent loan.
Most borrowers are not aware of such violations, which is why we wrote this. Clearly if this new type of Loan Modification becomes Public Policy, we need to legally challenge such policy. We are not attorneys and do not offer legal advice.
What Is A Forensic Loan Audit
When the law and the facts are on your side and well pled by an experienced and knowlegible attorney, lenders will participate in settlements in order to avoid extensive, thus expensive (for them) litigation. If the violations are significant lenders will settle because they do not wish to be found out publicly. At the same time, by settling they avoid creating legal precedent regarding acts of fraud.
The path to a cramdown Principal Reduction is through legal leverage utilizing Predatory Lending & Securities Law issues and violations, discovered through a Forensic Loan Audit.
Are You In Foreclosure Or Underwater?
Understand that lenders knew full well that they were putting people into loans that they knew they would not be able to afford over time. This is a violation of the law. They did it anyway to gain fees and then passed the risk up to the next player in a chain that extended through Rating Agencies to Wall Street Investment Banks who packaged together and sold borrower loans as Securities to Institutional Investors such as Pension Funds and Insurance companies, such as AIG.
One other factor is that they believed that when the loans defaulted, they could quickly recover the houses in foreclosure and still make a profit on the deal. That has changed. Now, if you act in your family best interest by forcing a cramdown you can come out ahead.
Beyond the subprime debacle (and as employment continues to crash around the nation), homeowners with every type of mortgage:
are more and more in danger of losing their homes. Tragic is the fact that over the last 30 months a million or more families might not have lost their homes to foreclosure had they known that their lenders violated state and federal fraud laws when the loan was originated.
Some Critical Data.
During the time of the housing bubble expansion, mortgage originations became different, and at the top of the bubble the growth of new originations were in ALT-A loans (good credit rating, but low or no requirement to document income). Also, and more significant, were Option-ARMs (initial very low teaser rates, with no required payments on principal (Negative Amortization).
No Market Correction Until 2012.
The First American CoreLogic Negative Equity Report for December 2008 is available on line.
"Approximately 17 million households will have negative equity by the end of 2010 under the baseline scenario (in the CoreLogic database), and
"Approximately 23 million households will have negative equity by the end of 2010 under the more severe scenario.
Some Mortgage Brokers.
After writing the original illegal loans (some Forensic Loan Auditors claim 80 - 95% of all loans since 2003 contain illegal Predatory Lending violations), the MBs are now coming back to the well for an upfront fee to write modifications-in-a-box that aren't helpful, will not contain Principal Reduction to current market price, and much worse, sweeps the illegal violations under the rug, beyond appropriate litigation.
Indemnification Clauses Again.
In other words if there are actionable Predatory Lending or Securities Law violations in the original loan docs, they are swept under the rug and the borrower is agreeing to never use said violations to litigate in the future against the lender even if the loan is filled with fraud. You waive your rights for a temporary band-aid. Don't do it!!!
This blanket indemnification protects: assignees (Investment Banks), successors, servicers, lenders, appraisers, and you may have guessed it, Mortgage Brokers. At the heart of Predatory Lending is the fact that generally borrowers paid more for their loan than what they actually qualified for. Excess fees were tacked on by the MB which benefited the lender, who kicked back Yield Service Premiums to the Mortgage Broker as a bonus for charging the borrower excessive fees. In short that's the basis, the bottom of their dirty game.
It's deeper and wider of course, but that was the shake-down at the closing table. Borrowers did not know better and their Mortgage Broker who had a fiduciary obligation (based in Agency law) to them sold them down the river. Now the MBs are back for another taste. It makes one angry just to write this out. Particularly one who also holds a real estate license, and highly honors ethical practice grounded in legal fiduciary obligations to clients.
Beyond Predatory Lending.
This in turn creates chain-of-title issues (often called a clouded title) and Federal & State Uniform Commercial Code (UCC) violations, some sounding in fraud due to: inadequate disclosures; unconscionability, lack of good faith and fair dealing, etc. These violations have only been recently asserted, on behalf of borrowers. Usury law and a host of other issues are now being aggressively pursued. Including what entity has the legal right to bring a foreclosure action.
Borrowers have now begun to successfully challenge lenders and loan servicers on the grounds that because they do not possess the note, the physical loan document, they have no right under State and Federal law to commence a foreclosure action.
The actual owner of the note, the loan, is often not the party that starts the foreclosure process. Tragically, most of these illegal foreclosures proceeded through the courts, resulting in foreclosure because the borrower did not, does not know they can bring a simple action to stop such illegal foreclosures. These were uncharted waters. People did not know. Now we know.
With smart attorneys educating judges to these facts, the judge often quite willingly dismisses the foreclosure action. They lender or servicer may attempt again, but, this gives borrowers and their attorneys the necessary time to challenge the loan origination process itself, and when fraud is found through a Forensic Loan Audit, the borrower is able to obtain a settlement, ideally resulting in a legitimate loan modification.
Yet, there was often no time (or money) to consult with an attorney before the closing table. Always implicit was the fact that the borrower really wanted the home. Borrowers trusted their Mortgage Broker.
One of the top national litigators against foreclosure fraud is April Charney, a consumer lawyer with Jacksonville , Florida Area Legal Aid since 2004. She conducts attorney workshops around the country to teach other attorneys how to defend borrowers. Charney recently said, "It is common to prove that transfers and endorsements of notes were not properly made, and the real note holders are impossible to identify. The securitization process has failed, and the lenders cannot live up to the claims and contracts outlined in their 10 and 8K Securities and Exchange Commission filings."
If fraud violations are very significant you may be entitled to receive attorney fees, compensatory AND punitive damages under RICO law. (Federal and State racketeering charges.) Obviously this is one of several best case outcomes. We can not and do not make predictions as to how any case will work out. Outcomes are based on the results of the Audit. And, each situation is literally different.
You and your family need not be another casualty of the housing crisis. Become a Member and we will stand with you to defend your home and your family's future.
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