Monday, January 31, 2011

Title Insurance and Foreclosures Defenses – Title Insurance Companies are Sticking Their Heads in the Sand

I was involved in a real estate transaction where my client was buying a foreclosure from a bank that purchased the property at auction as the high bidder. When the client came to me, she had already hired a title company to handle the closing and issue title insurance. I requested a copy of the title commitment from the title company and asked if they were going to review the foreclosure file for any issues, including fraudulent affidavits. The title company told me that it was not required to do so, that I could perform some due diligence if I wanted to.

I advised my client of the issue, informing her that she was buying a property that could have a potential title claim related to the former owner asking for their property back. I suggested that I review the file to let her know the likelihood of that happening. I explained to her that the underwriter stated that, "We review the dockets in REO (bank owned) properties. We do not review copies of service returns or affidavits of indebtedness in foreclosure files unless there is a question raised by the review of the docket, such as lack of service return or a Motion or Objection challenging the foreclosure. As for the Affidavit of Indebtedness, there is no way for the title examiner to determine whether an Affidavit of Indebtedness was proper or not, barring an Objection and/or court order regarding same. When you order your closing update, however, we also update the docket to make sure that no new challenge to the foreclosure proceeding has been filed in the court file."

That answer troubles me a bit in light of some recent court rulings. Additionally, I was taught to always review the foreclosure file before issuing a title insurance policy. If you have your lost your home or are buying a previously foreclosed upon home, I would suggest you contact an attorney for a free consultation to discuss your rights. It's the smart thing to do.

Monday, January 24, 2011

Facing Foreclosure? Bankruptcy Should Be a Last Resort

When faced with foreclosure, more and more homeowners that I speak with think bankruptcy is their only option to either extend the time they can stay in their home, or avoid a deficiency judgment. Unfortunately, they are mistaken. Bankruptcy, in most cases, should always be a last resort and any experienced bankruptcy attorney should tell you that.

I explain there are other options including short sale, mortgage modification, deed in lieu or setting aside the foreclosure judgment. Often times because they are in a panic to save their home a homeowner will file for bankruptcy protection without thinking of the consequences. A bankruptcy will stay on your credit report for seven years, significantly lower your credit score and place you in a negative credit light. In addition, there is still a stigma that is attached to bankruptcy. Some employers will hesitate to hire someone with a poor credit score or bankruptcy filing on their credit report.

We are bombarded with advertisements from bankruptcy attorneys touting bankruptcy as the end-all solution to financial problems. I suggest that you talk to a foreclosure defense lawyer to find out how they can help. Get a full run-down of your options, and you may find out that you can save your home and avoid bankruptcy at the same time. Most foreclosure defense attorneys offer a free initial consultation.

Wednesday, January 19, 2011

Mortgage Modification is No Guarantee to Preventing a Foreclosure Sale

I can't believe it is still happening. Just the other day, a new client came to us for help because his home was sold at a foreclosure sale, despite his mortgage company having told him that his loan modification had been approved. During the modification process, he asked bank representatives several times whether he should be concerned about the impending foreclosure sale. They told him that he would not have to worry about the sale because his loan modification was approved.

Weeks later, he discovered a notice on his front door explaining his rights about leaving the property. The property was sold at the foreclosure sale to the bank, which I think is truly unbelievable and unconscionable. Of course, we are preparing a motion to set aside the judgment based in part on an estoppel theory, meaning the bank should be prevented from having foreclosed because our client had relied on representations made by the bank.

You can't trust anyone these days, especially the banks. When it comes to safeguarding your home, you may not want to face the lender alone. Speak to an experienced foreclosure defense attorney and get everything in writing.

Friday, January 7, 2011

Massachusetts Ruling May Open The door to Voiding Florida Foreclosures

An important development happened today that could have far reaching implications on the foreclosure mess in Florida. The Massachusetts Supreme Judicial Court ruled today that, under Massachusetts law, any effort to foreclose a mortgage by a party lacking "authority" to carry out a foreclosure is void. The Court held that foreclosure plaintiffs, most of which were securitized trusts, could only foreclose and sell a homeowner's property if they were assignees of the mortgage at the time required under the law. In broad terms, since the banks didn't follow their own rules for transferring mortgages, a foreclose by a bank that owned or held a mortgage by way of a defective assignment is void.

Another way of saying that is if a mortgage is not properly assigned in Massachusetts, a bank/lender cannot foreclose. The issue of improper assignments and their enforceability is a defense that experienced Florida foreclosure defense attorneys have been raising for a while now.

In its opinion, the Massachusetts highest court cited a 1990 Florida appellate court case that held a foreclosure action could not be based on assignment of mortgage dated four months after commencement of the action. Additionally, the banks in the Massachusetts case conceded that assignments of mortgages in blank did not constitute a lawful assignment of the mortgages, which should help defense attorneys in those types of cases. Also, the Court discussed other issues which may be helpful to homeowners, including matters related to the concept of the mortgage following the note.

Basically, this was a win for homeowners. This ruling may open the door to invalidating some foreclosures and force loan originators to buy back mortgages wrongly transferred into loan pools. Stay tuned.