Financial Freedom & Fairness Law

Does proposed Michigan foreclosure law kick owners out too quickly? | MLive.com photo credit: MattC..

My answer on this one should be kind of obvious, but let’s look at some of the details.  For starters, this measure is being tacked onto the provision to extend Michigan’s nearly worthless pre-foreclosure negotiation law by one year.  So there is a trade off, right?  Homeowners get this pre-foreclosure negotiation and banks get shorter redemptions.

Wrong.

Homeowners only get the benefit of pre-foreclosure negotiation if they respond exactly as they must within a ridiculously short time period -14 days from the date of the letter.  Technically, that is the date the letter was written not the date it was sent.  But, even counting from the date it was sent, the postal service might get it to the homeowner the next day or 10 days later. 

Next, the letter is sent registered.  If you are not there to sign for it, you don’t get it until you can go pick it up.  If you are like most people and work Monday through Friday during the day, you cannot pick it up until the next Saturday at the earliest – unless you take time off work to pick up a letter that may or may not be important.  So this could add another 5 days. 

The letter almost always instructs you to contact the bank’s law firm.  They are not open on weekends.  2 more days. 

Now what happens if you are already talking to someone in the bank’s loss mitigation department before the letter is even sent?  Does that count as contacting them?  No, it doesn’t.  So many homeowners let the deadline pass without contacting the right person to secure the 90 days to negotiate. 

The bottom line is that this provision is woefully under used.  To suggest that everyone should lose half of the time they have to figure out what, if anything, can be done to save their home and then find a new place to live if necessary, because a very small number of home owners will get the letter quickly enough to respond to the right person and enter into loan modification talks suggests that these legislators have no idea how this process actually works.

To make matters worse, the reduction in redemption period is permanent.  The extension of the negotiation period is for one year.

Kind of makes you wonder if this bill’s sponsors are your representatives or the banks’, doesn’t it.

Photo by justmakeitDid you recently get a certified letter from your mortgage lender?  You’re at work all day and those little cards the mail carrier leaves to tell you about the letter can be easy to forget about.  But, make picking up that letter a very high priority.  If you are behind on your mortgage, it may “just” be your bank offering to help you figure out a way to save your house. 

The letters tend to be pretty softly written.  But, buried in them somewhere is usually a reference to HAMP.  The HAMP program is actually not very effective.  But, it is one of the few options we have to save homes at this point. 

If you ignore the letter offering HAMP consideration, your bank can foreclose and will have complied with HAMP because they offered to consider you and you did not accept. 

But, in Michigan there is another very specific certified letter your lender must send before foreclosing.  This letter will tell you that you have 14 days from the date of the letter – and this means the date they wrote it, not the day you receive it, which is why you must pick up certified letters from your bank immediately – to request a meeting to discuss loan modification under Michigan law. 

There is a specific formula that must be considered if you properly request  this meeting.  If you request the meeting and provide the necessary information, your bank cannot foreclose by advertisement unless they can prove that they applied the formula to you and you do not qualify for modification.

And even if you do not end up qualifying, making the request forces a negotiation period of at least 90 days.  Only when that period expires can the bank proceed with publishing the sherif’s sale. 

So do not ignore certified letters from your bank, even if you are not behind on your mortgage – they have been known to make mistakes.  Pick up  the letter.  Read it.  If you don’t understand it, call an attorney or one of the non-profit housing counselor’s on the list that must be included with the letter if it is one of the mandatory 14-day Michigan “mediation” letters. 

Actually, even if you understand the letter, you are better off getting professional help anyway because there may be options you are not familiar with that could save your home or at least help you move on with minimal damage.

Cash-Paying Vultures Pick Bones of U.S. Housing Market as Mortgages Dry Up – Bloomberg

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I will give them credit, at least they know they are vultures.  In fact, one of the companies I have dealt with on behalf of a client has a name that is pronounced as “condor”, vultures from California. 

In this article, one of the vultures tries to justify his existence by saying, “If there weren’t vultures out there, you would have a city of dead carcasses.”

If they were buying houses on the open market, I would agree and would not have a problem with them.  But, in Michigan, that is not how they are doing it.  Time and again I get clients who find their mortgages sold to these investment companies before the foreclosure.  When that happens, the company will stop all loss mitigation efforts (loan modification) and move to foreclose as fast as possible. 

The truth is that modifying the loan would defeat their business model, which relies on flipping houses, not servicing mortgages. 

An important self-defense tip if you are behind on your mortgage is to carefully watch for notices that your mortgage has been sold.  The Truth in Lending Act requires notice to borrowers when mortgages are sold.  When you get one of these notices, google the new owner of the mortgage. 

If you find a company that identifies itself as a “buyer of scratch and dent mortgages” (an actual quote from the business profile of one such company I have dealt with) or something similar, immediately contact an attorney if you hope to stay in the house.  If they can foreclose, they will. 

There are a few defenses available, but some are only available if you act very early in the foreclosure process.  It is a good idea to contact an attorney as early as possible when you are facing foreclosure anyway.  But, if you are dealing with one of these vultures, you have no other choice.  They will not work with you in any way.  Their business model is to circle your home until they can land and pick clean the bones of your family’s finances.

And they are proud of this . . .

Big Banks Save Billions As Homeowners Suffer, Internal Federal Report By CFPB Finds.

The Consumer Financial Protection Bureau is not officially launched yet and already they are exposing continuing abuses of borrowers by banks that promised to pursue loan modifications after the tax payers gave them billions of dollars to bail them out.  The most disturbing thing to me about this business model is that they will just keep going, without hesitation, until they are forced to stop.  But, on a daily basis I have to explain to a client that they are not a bad person because they are facing a foreclosure or trying to eliminate a debt owed to one of these banks.  So, the people getting taken advantage of feel guilty about not paying more and the banks that sold loans that could never really be repaid, then took tax dollars to stay in business, then promised to modify loans – but really haven’t, keep going with business as usually. 

Now let’s see what Elizabeth Warren can do once she is really on the job.

I found this great little tip on another bankruptcy blog and wanted to make sure to pass it on.  The only thing I would add is that even though you can probably ignore the letter, you should absolutely save it.  It the bank does try to foreclose and the note becomes an issue, you have evidence that they lost the note and anything they produce was probably fabricated.

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Recently, a colleague of mine was given a letter from a client. She had received it from a law firm, and it said:

Dear Borrower:

We are your mortgage company’s lawyers. We are attempting to reproduce certain loan documents that are now missing from your loan file. Enclosed you will find a Loan Security Agreement. Please sign it in the presence of a Notary Public and return it to us in the enclosed prepaid envelope.

Sincerely,

The client said that she was afraid that this meant she was in some sort of trouble with her mortgage, and asked my colleague for advise.

The advise was to ignore the letter. Why? Because it really means that the lender can’t find the Mortgage Note, and is trying to “fix” things by having her sign a brand new one.

Signing a new mortgage note generally isn’t a good idea. It may create liability and make it easier for the lender to foreclose against your property. If there were violations of the federal statutes in connection with the loan, it may prevent you from suing for relief. It will restart the running of any statutes of limitations related to payments under the mortgage. And it results in there being no consequences for the le

via Beware the “Missing Loan Documents” Letter.