(OP-ED) — The author of this post is a consultant to foreclosure defense attorneys and does not offer the following as legal advice but rather as that of the author’s own views based on past experience in paralegal and consulting work. The post, with the related case example, is for educational purposes only.
THE “DILEMMA” ONLY GETS BIGGER
I have seen countless cases where a foreclosure defense was mounted against a bank’s attempt to foreclose when there are obvious “glitches” with the bank’s case. It is in this instance where I offer the following case for your perusal:
The one thing you’ll notice right up front is that at the time of this author’s post, this case was almost 10 years old by the time it got to Maine’s highest court. I believe I can use any case from any state to exemplify what constitutes a “do-over” after 10 years of throwing money away on attorney’s fees. I would venture a guess that the property was worth almost what the homeowner (Manning) shelled out in attorney’s fees. He would not be the first party (as a defendant in a foreclosure case) to spend exorbitant sums trying to stay in his home, all because he thinks he’s “right”.
I would have posted this earlier but due to the corona-crisis and the resulting issues that followed our first recognition of it as a pandemic, I’m now just getting around to this. My point here is that foreclosure defense means putting whatever remaining resources you have at risk.
Let me explain in ten (10) easy points …
- Fighting any case where a REMIC trust is involved means that it’s highly likely bogus documents were created by the servicer’s employees at the direction of either the servicer or the foreclosure mill law firm prosecuting the foreclosure. That in itself is a minimum of an 18-month delay if the court indulges declaratory relief.
- Fighting a foreclosure case when you’re unemployed with limited resources is futile, especially if you’re faced with draining a retirement account, like a 401(k), which by the way, the bank won’t ever get access to via judgment; however, you’d be surprised at how many cases I have gone through where the homeowners did just that in order to pay attorney’s fees.
- Fighting a foreclosure case when you’re simply holding the property as an investor is also risky given the courts’ propensity (as in this case) to give the bank a “d0-over”, even if the investor was “right” all along. Those attorney’s fees are risked capital that could be put somewhere else if the market value and economic condition of the property won’t support it.
- As a follow-up to the last paragraph, many homeowners don’t actually make an honest effort to get their property evaluated, whether through an appraisal or a comparable market analysis (CMA) by a real estate agent, to see what the “gamble” is worth compared to risk. Their fight is driven by emotion and not common sense. If the property is economically challenged, meaning it’s going to need thousands of dollars in repairs and upgrades to make it marketable, it’s not worth spending the money while fighting a foreclosure just because you don’t like the idea of moving to new digs.
- On the other side of this equation, I could imply that I’ve spent the last 12 years of my life helping homeowners fight to stay in their homes, only to see the bank win after the homeowners have spent thousands, many of whom got stuck paying the other side’s attorney’s fees because they lost … plus, they had to pay their own foreclosure defense attorney’s fees. Talk about a great case for neurosis. I feel guilty sometimes because I’ve given the bank’s attorneys an income, because the banks will pay to get a “win” in their favor. That is counterproductive in my book, when the homeowner could have cut and run and moved into something more affordable and put it into a trust before things got “dicey”.
- Fighting standing issues is the most common thing and judges are keenly aware of that modus operandi. Every attorney will tell you that you should claim the other side lacks standing because it’s a great catch-all if all else fails; however, claiming anything comes with a price.
- Because many foreclosure defense tactics are emotionally driven, this has created a “cha-ching, cha-ching” scenario for attorneys who see a real monthly annuity staring them in the face every time a disgruntled homeowner thinks they’re “right”. It creates impetus that has fueled the business model that many law firms and sole practitioner’s rely on to “stay in their game” even if you lose in the end.
- In Manning’s case, this 10-year stretch compares to other cases I’ve looked at, where homeowners have sold businesses to pay lawyer’s fees, knowing that the chain of title documents were trash to begin with, yet a lot of these types of attacks fall on deaf ears with the courts. Without proper case planning as to how the court will react, it’s throwing good money after bad. What homeowners end up doing is “kitchen sink” pleadings … and these types of pleadings are what racks up attorney’s fees … on both sides of the equation. This is the primary reason why foreclosure mill law firms don’t come after me (if they happen to find out I’m involved in a case) because they’re getting attorney’s fees too … and then some. How does it feel knowing that this kind of risk exists, even though you’re trying to do the right thing?
- I was given a specific sum certain of over $100,000 spent in fighting a foreclosure for 10 years … and the homeowners lost anyway. What I could have bought with that $100,000 over time (a duplex, where I live in one side and rent out the other side to make my mortgage payments; an apartment building, maybe a 4-plex, where I live in one of the apartments and rent out the other three) instead of giving an attorney an opportunity to create a thriving law practice at my expense.
- In this case, the economics of “the game” don’t make sense. With all of the moves and countermoves in this case, which parallel many other complex cases I’ve looked at, giving a bank a “do-over” (dismissing a case without prejudice), means the bank gets to hit your “reset button” and you get to start all over again defending another foreclosure. My point on this last comment is, “What’s it worth to your health?”
Given the corona-crisis, with over 15-million claims for unemployment benefits being applied for (many of them mortgagors), you can bet when the moratorium on foreclosures has expired (whenever that may be), there may be some mortgage loan servicers that are going to “take it on the chin” in advance payments so much so, they’ll look for the first opportunity to come after your house. You can bet if they haven’t filed documents in the land records to “support their claim”, it’s highly likely they will either during or shortly after this crisis ends.
My bottom line (while trying not to be verbose here) … foreclosure defense costs money. Delay tactics cost money. Playing the game costs money. It is a “game” to the banks because they play by the numbers while you’re playing with your hard-earned money and equity. They have the clear advantage because they’re the mortgagees. They have a contract that you signed. The deck is already stacked ahead of your decision-making processes. Understand that whatever claims you bring should be supported by a Plan B. This is part of foreclosure defense too. What happens if what you’re trying to do doesn’t work? This is why I wrote Clouded Titles.
THE CORONA-CRISIS HAS MULTIPLE “SIDE EFFECTS” …
The corona-crisis is going to produce more than just statistical death tolls. We have been victimized by both the World Health Organization (who is part of the United Nations), who failed to give us the information before the virus spread to America and the Chinese Communist Party (who created the synthesized product in the Wuhan Level 4 lab in the first place … then covered it up with a lame “wet seafood market” story), which is going to create more than a viral pandemic in terms of loss of life. We’re talking an economic twist of the tail that is going to set off another serious wave of foreclosure filings across the country due to the servicers’ struggle to make advance payments to REMIC investors.
Loan modifications are going to be rare after this is over. Forbearances … well, if you’re lucky. You may be emotional now … but just remember what kind of financial position you were in before the corona-crisis hit. This doesn’t stop foreclosures already in progress. On top of that, you’ve had a financial “hit” just trying to stay alive during the “lockdown” period and the neuroses this has caused … you also have to look at the emotion and health issues (fueled by stress) which weaken your body’s immune system because of what’s coming. You will be looking to the government for answers … and the answers won’t be there. The courts will be backlogged. Your judicial foreclosures will cost more as the courts clear the pipeline of cases. Non-judicial foreclosures will proceed at lightning speed because the servicers have had plenty of time to crank out paperwork (default notices, notices of trustee’s sales, suspect assignments, etc.) during the crisis while the moratoriums existed. They know this crisis has hit everyone in the pocketbooks, including the mortgage loan servicers themselves.
Now’s the time to come up with a Plan B.