If you are facing a lawsuit in regards to your home or want to file a lawsuit against your mortgage company, please seek out a credible and experienced attorney that has experience in real estate and/or mortgage law.  A good tip is to go to the District Court Clerk in your county (or go online) and look for suits in which mortgage companies are being sued.  See which attorneys (or law firms) are representing homeowners in your area.  You don’t want to be the practice case for a lawyer unversed in the subject matter.

Thanks to Jeff Barnes for writing the piece below.

–  The Bank Slayer

DON’T TRY THIS AT HOME III: MORE HORROR STORIES OF PRO SE FORECLOSURE DEFENSE DISASTERS

Some years ago, there was a tv commercial where a couple had a leaky kitchen sink. The husband, obviously not a plumber, told his wife “Don’t worry honey, I can handle this; it’s simple”. Needless to say, after many hours and a flooded kitchen floor with the pipes shooting water like a fountain, they called a plumber who remedied the problem in minutes, but only after having to spend quite a bit of time remediating the damage done by the husband.

In the last 2 days, we have received more than 8 horror stories from pro se borrowers who have tried to defend their own foreclosure cases, both in judicial and non-judicial states. Despite all of their efforts using concepts either gained from internet surfing or talking to other non-lawyers, the bottom line was the same:

“Help! My case is screwed up!”

“The Judge dismissed my lawsuit!”

“The Judge will not compel the original note!”

“The other side is trying to get attorneys fees against me!”

“My home has been sold even through I sued!”

We have repeatedly cautioned non-lawyers from trying to engage in the practice of law especially in this ever-evolving field of law where many states do not even have case law on the problems with MERS assignments, the necessity for proof of chain of title in order to foreclose, the elements of legal standing, etc., and where many of the Judges, through no fault of their own, have just not been presented with these issues yet. Although many of the legal concepts in proper foreclosure defense have been around for decades, they have not been applied to the complicated securitization sceanarios attendant to the generation of millions of mortgage loans from 2001 through 2007.

Two other problems which invariably result from “do-it-yourselfers” are, first, that once they get backed into a corner by the Judge or the opposing attorney and then try to retain an attorney, the attorney’s job has been rendered more difficult because the attorney has to first attempt to undo the damage caused by the pro se’s mistakes before even getting a chance to try to advance legitimate issues and defenses. As such, the attorney has to spend more time on the case than he or she would have if they had been given the case from the getgo, which means higher retainers and more fees. The second problem is that the pro se has probably angered the Judge and the opposing attorney to the point where the new attorney is facing a lion’s den going in. We have had to cope with this situation many, many times over the last couple of years.

For those who insist on proceeding by themselves, there are several “theories” which have been uniformly rejected although they continue to be bandied around the internet, to wit:

(a)  “Claims in Admiralty”. Admiralty jurisdiction is exclusive Federal jurisdiction for claims which occur on “navigable waters”, which is a legal term essentially meaning that the waterway is one on which a boat can be piloted using maritime navigational maps. Thus, unless you live on a houseboat on a active waterway which has been mapped and platted, “Admiralty” does not apply.

(b)  “Presentment bonds”. These have been universally rejected. A bond is collateralized by either full cash or other tangible property (e.g. gems, real estate, etc.) so that if a claim is made on the bond, the collateral satisfies the payment. “Presentment bonds” do not quality.

(c)  “The bank did not lend me money”. This is practically frivilous. Whatever the “bank” did, it permitted the borrower to either pay off the existing mortgage (on a refi), allowed the borrower to obtain cash out (on a HELOC or cash-out refi); or obtain a home (on a purchase-money first mortgage). Attempting to advance this theory to defend a foreclosure is like walking through a dynamite factory smoking a cigarette: you are going to cause everyone to explode, including the Judge and opposing counsel.

Yes, litigation is expensive. Yes, attorneys are not cheap. However, someone who tried to play attorney and then gets hammered is going to either (a) lose their house, or (b) wind up paying an attorney double or triple to TRY to fix the damage caused by the do-it-yourselfer, assuming it can even be fixed and assuming the Judge is not already thinking negatively about the case because of the nonsense advanced by the pro se who has, in the Judge’s opinion (and rightfully so), wasted the court’s time.

Jeff Barnes, Esq.

Why? Quite simply it doesn’t help you one bit.

I will make a fearless promise…ready…no one in the State of Texas will be foreclosed upon from now until January 5^th! I’m going to give everyone in Texas an extra day past their December 21, 2009 through January 3, 2009 moratorium.  Look how easily I one upped these big banks.

How?  No foreclosures can take place except on the first Tuesday of each month.  So the next possible date is…drum roll…January 5^th!   I know it is a shocker but some of these big banks issue positive looking press releases and commitments even when the promises are hollow.

If you or someone you know is facing a foreclosure situation, don’t count on these guys giving you the extra time you need to get your ducks in a row.  Act now!!

-          The Bank Slayer

As reported by Stephanie Armour in USA Today, the next wave is poised to roll in, potentially undermining housing recovery efforts as more homes add to the glut of inventory and drive down prices.

These homes largely represent loans that are delinquent but have not yet resulted in foreclosure sales.

About 7 million properties are destined to go into foreclosure, according to a September study by Amherst Securities Group, compared with 1.27 million properties in early 2005.

“There is a lot of foreclosed property in the pipeline that will hit the market and depress prices,” says Mark Zandi at Moody’s Economy.com. Foreclosed homes often sell at prices below those on the market and can therefore drag down overall home values.

Jumana Bauwens, a spokeswoman at Bank of America, says the bank is projecting an increase in foreclosures in part because customers will not be qualifying for existing loan-modification programs.

There is often a long lag time between a borrower going delinquent and the bank taking the home. Here’s why:

•Moratoriums. New state laws imposing short-term moratoriums have slowed the timeline from delinquency to foreclosure.

•Overwhelmed lenders. Banks dealing with a surge in refinancing, mortgage modifications and defaults are overwhelmed with demand, so it can take longer to initiate a foreclosure sale.

•Modifications. Many loans now are first examined to see if they might qualify for a modification. This drags out the timeline and means it is taking longer for homes to go into foreclosure.

•Asset write-downs. Banks may in part be waiting to liquidate homes through foreclosure because they don’t want to write down the value of the asset. Lenders can keep homes on the books at a higher value until they are sold at foreclosure.

If you are looking to short sell your home make sure:

1. Your REALTOR and/or Loss Mitigation Company knows exactly how to “sell” your short sale to the bank using: BPOs, appraisals, insurance repair  estimates, letters of declining value, mortgage audits and REO comp matrixes.
2. You leverage State or Federal laws to back your lender/bank into a corner to force their hand and tell you exactly what they will take for your house.
3. If necessary, put your lender/bank over a barrel with a with highly focused lawsuit.

- The Bank Slayer

When: The first Tuesday of every month.

Where: Usually at County Courthouse.

When: Auction typically starts at either 10am or 1pm

Primary Instruments: Promissory Note & Deed of Trust

Type of Foreclosure: Both Non-Judicial & Judicial

Timeline: Typically 60 days.  As fast as 21 days.

Right of Redemption: No, unless tax only foreclosure

Deficiency Judgments: Yes

In Texas, lenders may foreclose on a Note in default through the powers granted in the Deed of Trust (different from your Warranty Deed).  This can be either a judicial or non-judicial foreclosure process.

What’s the difference?

Judicial Foreclosure
The judicial process of foreclosure, involves the lender filing a lawsuit against you and trying to obtain a court order to foreclose.  This is used mainly for Home Equity loans and Cash out refinances.  Generally, after the Judge grants the lender permission to foreclosure, your property will be auctioned off to the highest bidder the same way as a non-judicial process.   These types of foreclosure can be stopped dead in their tracks if attacked early.

Non-Judicial Foreclosure
The non-judicial process of foreclosure is the default process for purchase loans as well as refinances that did not involve cash out; usually called rate and term refinances (you just wanted a better deal not cash out).    In the deed of trust, you pre-authorized the sale of your property in the event of a default.  The power given to the lender to sell the property will be executed by a Trustee.  This is typically the lawyer’s office sending letters informing you that you are in default the time and place they will sell the property.  These are tough to stop without the right kind of help or you paying them the monies they claim you owe.

What happens?

Prior to proceeding with a foreclosure, Texas laws state that the lender must mail the borrower a letter of demand, informing the buyer he has twenty (20) days to pay the delinquent payments or foreclosure proceedings will begin.

At some point after the borrowers twenty (20) days have expired, but at least twenty one (21) days before the foreclosure sale, a foreclosure notice must be: 1) filed with the county clerk; 2) mailed to the borrower at their last known address; and 3) posted on the county courthouse door.

The foreclosure sale will take place on the first Tuesday of any month, even if said Tuesday falls on a legal holiday.  The sale is by auction to the highest bidder for cash.  Anyone may bid, including the lender.  After the sale, the Trustee records a Deed conveying your property to the buyer even if it is your lender.  If you are still in the house, they will remove you.

The lender may then seek a judgment against you for any remaining balance owed on the Note.  The fact that they “took back” the house doesn’t necessarily relieve you of the money they claim you owe.  If they sell the house for less than you owe, they may track you down and make your life miserable by trying to extract it from you.