Foreclosure "Storm" Predicted To Hit US In 2009

In a frightening, (and sobering) article on today's (12/11/2008) Bloomberg.com, the prediction is for almost an unprecedented amount of foreclosures to occur in 2009.

The main reason for this prediction is the fact that; coupled with the current disastrous mortgage situation, the impending devastation about to occur to the US unemployment rate will create a "perfect storm" of foreclosures.

People keep saying that, that although there are some similarities to the Great Depression, our current situation is nowhere near as dire. There are no bread lines, and unemployment is nowhere near the record 25% unemployment rate during the Great Depression. I have news for those people, WAKE UP!

An objective view of the current situation reveals that we are quickly heading in that direction. 

With the recent massive layoffs at the financial institutions, and major corporations (in order to preserve their very livelihood), and the very real possibility of the elimination of the US automakers (even with the $15 B bailout), the scenario is rapidly setting up to recreate that 25% unemployment rate. I am not an alarmist, or a purveyor of doom, I am just objectively looking at the facts.

It is easy to try and blame one individual in government for today's situation, however there is plenty of blame to go around, including those who portrayed themselves as beneficent but were receiving kickbacks from the mass ponzi scheme that was known as the subprime mortgage shell game.

I wonder out loud, if those folks who were making over a million dollars a year, living in the lap of luxury for a few years, would now think twice before participating in this ghastly shell game. 

Those mortgage brokers, attorneys, and appraisers that have been dragged into the federal courtroom, what are their thoughts as they await potential double digit year sentences, and permanent loss of their professional licenses? Was it worth it?

Was it worth losing everything over? 

Was it worth dragging this country so far down, that our very existence may be called into question?

I have represented clients, some of who tell me stories I hardly can believe as to what was perpetrated upon them. 

One client I represented pro-bono through the Boston Volunteer Lawyer Program, and as part of Attorney Martha Coakley's Foreclosure Prevention Program, was approached to refinance her mortgage in 2006 by an unscrupulous broker. 

He fraudulently bilked this woman out of thousands of dollars in the transaction. Then came the ultimate act, the coup de gras, he pleaded with my client to give him a $25,000 loan out of her mortgage proceeds because she was receiving cash back at closing.  The mortgage brokers story was very compelling, and my client being a devout Christian always only saw the good in individuals. Little did she know she was offering herself up as a lamb for slaughter to this wolf.

Then to add insult to injury, this mortgage broker evaded service for suit on this collateral promissory note, only later to send my client a notice that he had gone bankrupt and discharged the debt owed.

This is only one very small example of what occurred during the "hey day" of the mortgage shell game, and I worry how this will all play out over the coming months.

I truly hope those in our government are actively reviewing what was successful during the Great Depression, a depression that lasted for over 10 years.

You might do well to read up on the Great Depression yourself, to see what people did to survive it. I am afraid many people today are spoiled from the lifestyle they lived over the past decade, and will find a rude awakening in store.

In the words of GEORGE SANTAYANA: 
 "Those who cannot learn from history are doomed to repeat it."

Happy Thanksgiving 2008

Hard to believe that 2008 is headed for a close, but unfortunately it has been one of the more eventful years in our lifetime.

The sudden and almost complete total collapse of the financial markets is eerily reminiscent of the Great Depression, and after over a year of decline and turmoil, we have yet to see the bottom.

This message is directed at those who had a beneficent idea, to provide home ownership to those who never would have had an opportunity, but truly never thought about the ramifications of such a plan. This message is also directed at those mortgage companies, who made billions of dollars circumventing banking rules and then playing both ends against the middle by pushing loans on those who had no way to repay, and then packaging these loans to investors leaving the lender free of any problems.

The message is you reap what you sow, and one only has to look at the carnage in the financial sector of our economy to see how terribly wrong the idea was to create a "ponzi scheme".

Even though on the surface movements to promote housing sponsored by organizations such as ACORN seem well meaning, these movements were either poorly thought out or more ominously put in place to further an agenda and line the pockets of those conducting the movement.

This truly is a time of unbelievable hardship, as it seems that either you or someone you know (indirectly or directly) is losing their job, or filing bankruptcy, or losing their home to foreclosure.

The message to those who are responsible for placing this country in the current situation it is in (on its knees), was it really worth it? 

• Was it worth those few short years of prosperity? 
  
  
• Was it worth losing your job, home, and financial well being?
  
  
• Was it worth bringing this country to it's knees?
  
  

Make no mistake America will rebound from this trying economic time and will return to good times, and in relatively short order.  However for the short term we will continue to pay the price for those greedy individuals and companies who manipulated that segment of America

who could least afford to be manipulated, and it has come home to roost.

Even though these are very trying times, there is much to be thankful for on Thanksgiving 2008.

• If you have a supportive family, be thankful, as many people don't.
  
  
• If everyone you know is relatively healthy, be thankful,  as many people do not have that luxury.
  
  
• If you have friends and family that love you, be thankful.
  
  
• If you have a roof over your head, and food to eat, be thankful, as many people do not have that luxury.

When your financial situation seems dire and you think there's no way out, remember most times things like this are very temporary. 

The important things in life transcend money. If you truly have a loving family and supportive friends who genuinely care about you, these are the things that are truly important in life.

There is much to give thanks for, if you really think about it. On your death bed, you probably won't be thinking about the money you have,  you will be thinking about those people in your life that meant the most to you.

I hope everyone has a safe and Happy Thanksgiving.

www.foreclosuresinmass.com 

When couples split, the home is a hot potato

Apologies for the seriously long delay from posting, as unfortunately the phone calls and emails to my offiice went from busy to "ballistic", due to the financial sector being on the verge of a total collapse.

There is a very interesting article in today's (11/21/2008) Miami Herald about how the current mortgage crisis is having an impact on the typically largest asset of marital property to be divided in divorce, the former marital home.

During the real estate boom, couples battled to end up with the house, either buying the other spouse out of their share in the hopes of just staying in the home (especially if there were children involved), or many times with an eye on cashing in on a rapidly appreciating asset.

My how times have changed. Today instead of seeking sole possession of the home, couples are now viewing the former marital residence as a toxic waste dump and want no part of it. To date this has not been a common occurrence here in Massachusetts, however that trend may not continue.

To date the foreclosure crisis has been most acute in Florida, California, Arizona, and Las Vegas. However, the trend is that many other states are rapidly seeing their foreclosure rates skyrocket, and as a result the Northeast probably will begin seeing many of the same issues surrounding foreclosures as the states currently most impacted.

Over the next few years, I can see this issue becoming very important in the wording of a marital separation agreement, and it could become one of the more highly litigated issues in divorce.

The story can be found here: When couples split, the home is a hot potato

A tip of the cap to The Home Equity Theft Reporter, Cases & Articles blog for spreading the word about this story

Will the Autumn Leaves Be A Prelude To The Fall?

I have noticed with greater frequency the appearance of "Foreclosure Mitigation Services" Companies.

1) They are not attorneys, therefore are limited in what they could possibly do to forestall a foreclosure outside of obtaining a loan workout and,

2) Deceptively hide the required disclaimer explaining this fact way down below the viewble part of the page.

It is an extremely sad comment on today's society that people such as these type companies prey on people who are desperately looking for answers to their problems. While the concept of these companies appears benevolent, and in some cases may benefit the homeowner, the majority of times these companies provide people with false hope, and only take their money.

This is especially an important point to consider in light of the fact that projections by organizations such as ForeclosuresMass have predicted that the current lull in foreclosures is only a temporary effect of recently enacted Massachusets law that mandated extension before lenders can take foreclosure action in Massachusetts Land Court.

The article goes on to state :

" We are in the midst of a foreclosure tsunami here in Massachusetts, and this storm is not going away any time soon," Sheila Farragher-Gemma, cofounder of ForeclosuresMass.com, said in a statement. "The new filing requirements have created a situation similar to the eye of a hurricane. It may seem calm now, but the storm will come raging back with even more force in the days ahead. The fact is that nothing has changed in the Massachusetts real estate market. More homeowners than ever before are defaulting on their loans, and we expect that we will return to historic foreclosure filing levels within weeks.”

Projections are that this lull will be coming to an end, once September rolls around, so we are literally on the cusp of the tsunami.

Homowners that have taken advantage of Massachusetts newly enacted law, as well as those who are starting to see that making the monthly payment is getting more difficult as the months go by, need to be proactive by preparing for this maelstrom.

If you are behind on your mortgage payments, or have a feeling that you may have difficulty making these payments in the near future, you should contact your lender immediately.

Unfortunately many times the people answering the phones are not inured to the intracies of negotiating a loan workout and the predicted response can be "you're behind, pay us what you owe, and there won't be a problem."

The best approach is to be firm in your conviction, and ask to speak to a supervisor. If you get nowhere, you should seek out the services of an advocate on your behalf.

Due to the mortgage frenzy of the past few yesrs, lender carelessness, greed, and out right fraud in some cases, provides many defenses to a lenders foreclosure action. The sad fact is that 80-85% of these cases go uncontested, and the lender prevails in cases where the client actually had a legitimate defense to the foreclosure action.

So, as the autumnal leaves turn a magnificent shade of gold magenta, and orange, in any foreclosure action of your home, be proactive and contest the claim brought by the lender!

New Freddie Mac Incentives to Avoid Foreclosure

Yesterday, Mortgage giant Freddie Mac rolled out a Loan Workout Incentive Plan for mortgage servicing companies to help borrowers that have delinquent loans, stay in their home. Freddie Mac is now essentially doubling the money paid to mortgage servicing companies if they arrange a loan "workout", and keep the borrower in their home.

Freddie Mac, also has updated it's website to inform borrowers with Freddie Mac loans, how they can avoid foreclosure

The key thing to take from this is that Freddie Mac wants to AVOID foreclosures at all costs, evidenced by the fact that they are doubling payouts to mortgage servicing companies if they can arrange a loan workout. Therefore if you have a loan that was taken out from Freddie Mac, you have a great chance to avoid foreclosure.

If you are currently having problems making payments on a Freddie Mac loan, contact your mortgage servicer or Freddie Mac IMMEDIATELY for information on obtaining a loan workout.
Many times the main reason people lose their home to foreclosure is the fact that they FAILED TO ACT! Don't let this happen to you, and if you have a loan taken out from Freddie Mac, you have even more to lose by not contacting your mortgage servicer about your situation.


If you live in Massachusetts or Connecticut, and I can help you in this regard, please do not hesitate to contact me by email at russ45esq@gmail.com

Potential foreclosure defenses

Well, here it is the last day of July 2008, and we are still in the midst of a tsunami of forclosures nationwide.

Concentrating on the Massachusetts area, what I personally have seen is the same scenario over and over again: the homeowner never questions the mortgagee's (Bank) claim, and foreclosures are fast tracked and end up being Bank REO's (Real Estate Owned - taken back by the bank), as the bank is most times the "high bidder."

There are a number of potential defenses a homeowner can raise, if done immediately.

• Examine the initial mortgage paperwork for errors, and non-compliance with the Truth In Lending Act (TILA). TILA is a powerful tool that can be used by mortgagor's (borrowers). TILA is basically a disclosure statute, that is your lender had to make certain disclosures relating to the type of loan you purchased, as well as its interest rate, and most importantly your right to cancel the contract within 3 - days. If not done correctly this 3 day right of rescission can be extended up to 3 years.
  
  During the height of the mortgage boom over the past few years, mortgagee's (mortgagee- lenders) became very sloppy with their paperwork, and you may have a legitimate defense based on TILA.
  
• Make the mortgagee (lender) prove it owns your mortgage. The really complicated thing that happened with home mortgages is the fact that they became "securitized". What this means is that after you purchased your mortgage, your lender turned around and sold it to a brokerage house (like Bear Stearns), who then packaged your loan along with many others as an "investment" to accounts like teachers and firefighters pension plans. So many times if challenged the entity foreclosing does not have it's name on the title, and cannot proceed.
  
  Pension plans and trusts are always looking for ways to maximize their shareholder's return on their money (no doubt to justify the fees they charge for managing money), and with these sub-prime mortgages, the monthly mortgage payments were providing a fantastic rate of return, until the inevitable point where the mortgagor (borrower) no longer could afford the rapidly escalating payment amount, due to the fact that property values were no longer rising.
  
  The insidious part about this whole concept is the fact that mortgage companies KNEW that housing prices COULD NOT continue to escalate EVERY year, and there would come a time where housing price appreciation would fail to keep pace with the mortgage payment increase, therefore this was a house of cards that was set up to fail.
  
  Many times mortgage servicer (not the mortgagee - lender) tries to bring a foreclosure action. This can be challenged if the mortgage note is not titled in the servicer's name, and if not, this can potentially be unauthorized practice of law by the servicer. Or another scenario involves the mortgagee (lender) bringing a foreclosure action, when the note has been purchased and is in the name of a trust or pension plan.
  
  This defense can prove useful to buy time to work out an alternate agreement, but normally alone will not keep someone in their home permanently.
  
• In Massachusetts a foreclosure is conducted through the power of sale clause in your mortgage, if the foreclosure process was not conducted exactly as the clause is worded you may have a defense.
  
• In the next week or two, I will be selecting a family to document what happens from the initial contact from the mortgagee in a foreclosure action, up to final resolution (either auction or workout).

Remember you have the right to challenge foreclosure of your home!

While you may think to yourself, that there is nothing you can do because you haven't kept up with the mortgage payments, when in reality your situation may have been caused by a mortgagee (lender) who intentionally, or unintentionally failed to follow the law in selling your mortgage to you.

Ask Questions, it is your right!

Inaugural Post

The goal of this blog is to inform the public, real estate professionals, and the legal community about the foreclosure process, and what is currently playing out in local communities.



I will present facts and individual cases to illustrate the problems we are having as a nation with regard to foreclosures. As part of this presentation, I will talk about the law as it applies to foreclosures. Given the fact that the foreclosure process is dictated by state law, you should discuss your individual situation with an attorney licensed in your particular state. The information posted here is not intended as legal advice, it is only provided for educational purposes.