Having counseled approximately two hundred Oregon homeowners drowning in negative equity, I have discovered that many, if not most, believe that somehow their lenders can literally swoop down and take not only their home, but all of their bank accounts, savings, retirement funds, and/or daily wages.  In truth, the only real power most banks have over a borrower, is the ability to negatively impact their credit, and by extension, their future ability to borrow.  On the other hand, one’s credit is a composite of many different data points, not simply a single “black mark” from one distressed property event.  To that extent, a credit rating can be strengthened over time, and like a muscle, it builds up through consistent and prudent use over time.  In today’s rental marketplace (which is populated by many former homeowners coming out of a distressed property transaction), a credit score impacted by a single distressed housing event has little or no bearing on whether a landlord will rent a home or apartment to them.  In an effort to provide some peace of mind, listed below are certain “rights” that all home owners have under Oregon law. These rights cannot be taken away – they can only be voluntarily given away.

The following Bill of Rights assumes the following facts: (a) The home was used and occupied as a principal residence.  A “principal residence” or “primary residence” in my vernacular, is the residence you occupy most of the time, and hold out to the city, state and federal governments (e.g. the post office, DMV, utility companies, etc.) as your “home.”  A second home is not, by definition, a “primary residence.”  (b) There is only one loan on the property and all of the borrowed funds were used to acquire the home.  Second trust deeds can sometimes be problematic.  If you have a second trust deed as well as a first, all is not lost – it just requires a little more planning, and some smart negotiations with the bank.

Caveat: This summary is not meant to be legal advice, as each person’s factual situation is different. No attorney-client relationship is sought or created by this post.– PCQ

Continue reading “Distressed Homeowners’ Bill of Rights”

After several years of toil as a low paid toady for a high-powered foreclosure mill law firm, our intrepid young associate has finally won a case! [Note to the easily convinced: This post is pure satire. The case is real, the ruling is real, MERS is real, but the characters and law firm in the post are purely fictional.  If the husband and wife sound like friends of yours, the resemblance is purely coincidental. And why are you hanging around with them, anyway?  – PCQ]

Her: “Honey, is that you?  I didn’t hear you come in.  Usually the door slams, you stomp in, and are cursing under your breath.”

Him: “Come on now, I’m not that bad.  Let’s go out to dinner and celebrate!”

Her: “Celebrate what?  Did the Firm finally make you a partner?  Does this mean you’ll get to boss the newbie associates around, like the partners did to you?  Maybe you’ll start making some real money so I can afford to shop at Nordstrom’s instead of Filene’s Basement.” Continue reading “A Good Day At The Foreclosure Mill”

Introduction. Federal District Court Judge Michael W. Mosman ruled in favor of Bank of America and others in the recent foreclosure case of Jon Charles Beyer and Shelley Renee Beyer, Plaintiffs v Bank of America, et al., Defendants.It appears that he has bought into the argument that MERS can legally act as a beneficiary under the banks’ trust deeds.[1]

What does this all mean?  Well, first, it means that federal judges can disagree among themselves, which isn’t exactly late-breaking news.  As pointed out here, here, and here, there have been other recent foreclosure and bankruptcy cases that have come out squarely against the Big Banks on similar issues.

This judicial disagreement may ultimately be resolved once an Oregon appellate court rules on the matter.[2] But for the present time, the Mosman decision implies – in my opinion[3] – that there is continuing confusion about the role of MERS in Oregon’s non-judicial foreclosure process. Continue reading “The Beyer Decision – Judicial Sorcery”

 

“Oh what a tangled web we weave,
When first we practice to deceive!”

Sir Walter Scott, Marmion, Canto vi. Stanza 17.
Scottish author & novelist (1771 – 1832)

 

There are two new interesting developments on the foreclosure front in Oregon.  But first, here’s a recap of where we’ve been and where we are now:

Background.

  • The Big Banks tried and failed to conduct illegal non-judicial foreclosures in Oregon.  As pointed out in several earlier posts, here, here, and here, they have been routinely ignoring the mandatory recording requirement of ORS 86.735(1).
  • They got their wrists slapped by Federal Judges, Panner, Alley, and others.
  • They realized that even when they completed an illegal foreclosure, they likely couldn’t get title and couldn’t evict the homeowner.
  • As discussed here and here, their lobbyists went to the Oregon legislature, and tried to convince the politicians that real estate commerce would come to a halt, if they weren’t permitted to continue violating the law.  [Note to Big Banks: Commerce did come to a halt, but it was back in 2007+ after you’d gone on your securitization binge, lent money to borrowers you knew couldn’t qualify [or didn’t care if they couldn’t], immediately got paid by selling liar loans as securities to pension funds and others who relied upon the agencies you paid for bogus investment grade ratings, and then went through four years of “extend and pretend” modifications that accomplished absolutely nothing to resolve the foreclosure crisis. – PCQ]
  • The Big Banks next threatened that if they weren’t permitted to violate Oregon’s non-judicial foreclosure law any more, then By Golly, they would just start suing their delinquent borrowers in court, since the  mandatory recording requirement only applied to non-judicial foreclosures. Continue reading “Oregon Foreclosures – What Are The Big Banks Up to Now!?”

In common parlance today, a “default” denotes either nonperformance – or inadequate performance – that falls short of a written rule, guideline, or criterion.  It is not something that, by itself, can be judged or evaluated absent the presence of a measuring stick. While a breach of contract is an objective characterization of someone’s failure to perform according to the terms of a legally binding agreement, a breach of ethics, is a subjective characterization of someone’s failure to perform according to the terms of the holder’s belief system.

However, what the lending industry has successfully done is to mix the objective nature of “default,” say under the terms of one’s mortgage, with the subjective inference that the breach is equivalent to a moral failing.  Hence, the term “strategic default,” used by Big Banks to stigmatize the folks who don’t perform in accordance with the terms of the note and mortgage or trust deed they signed.  [Admittedly, there are those who have no affiliation with the lending industry who are also guilty of this pejorative characterization.  Yet, I can forgive most of them, since they’ve never “walked a mile in the other persons’ shoes.”  Accordingly, their opinion is the result of unconscious ignorance – not conscious conflation. – PCQ]

So, the purpose of this post is to put the term “default” back where it belongs. In other words, to remove the judgmental conclusion that defaulting under one’s mortgage or trust deed is a morally reprehensible act. Continue reading “In Defense of Borrower Default”

The risk of ***strategic default is rising among loans that have “always performed,” according to the credit analysts at Moody’s Analytics.  They say as home prices have fallen over the past year, the loan-to-value ratios (LTVs) of so-called always-performing loans – or those that have remained current – have begun to approach, and in many cases surpass, average LTVs for loans that have defaulted. This dynamic, Moody’s says, raises the likelihood of a renewed increase in strategic defaults.  [DSNews.com, July 18, 2011]

I bristle every time I hear some so-called “authority” comment on the increase in “strategic defaults.”  This pejorative term is a creation of the lending industry to place certain borrowers in a special “Rogues Gallery” category all their own.  Depending upon the expert, a “strategic defaulter” is one who is in arrears on their mortgage for X or more months, although they ostensibly have the financial capability of making their payments.  The press picks up these reports and dutifully circulates them as news.

What is remarkable is that not one of these so-called “authorities” has ever asked “Why do homeowners who might otherwise be able to pay their mortgage  stop doing so?”  Since no one has sought to explain this phenomenon, I will do so.  What follows is not an epiphany. The answer requires no special insight.  It has been in plain view for years.  But the lending and credit industries have never chosen to address it – or more correctly, to admit it. Continue reading ““Strategically Default” – What Lenders Tell Borrowers To Do”

In a recent post on mortgage insurance (“MI”), I addressed what I saw as a problem, but didn’t yet fully understand the depth of it, so just issued a cautionary warning to Realtors® and sellers that they should find out, in advance, if MI was obtained on the underlying loan.  The reason for this warning was due to reports I was receiving that MI companies were requiring the payment of money or a promissory note from sellers, in order to give consent to a short sale.  Why consent was even necessary from the MI company has mystified me.

After reading some MI master policies for these carriers, and doing a little research on the Web, together with a well-placed threat to one MI carrier, I think I’m getting closer to understanding what’s going on.  Here’s a summary of what I know so far: Continue reading “Short Sale Trap: Mortgage Insurance [Part Two]”

Arthur M. Schack is a no-nonsense New York judge.  Especially when it comes to foreclosure mill attorneys (FMAs) who don’t take him seriously.  Here is a recent example:

HSBC Bank USA, N.A., AS INDENTURE TRUSTEE FOR THE REGISTERED NOTEHOLDERS OF RENAISSANCE HOME EQUITY LOAN TRUST 2007-2, Plaintiff, Index No. 9320/09  vs. Ellen N. Taher, et. al., Defendants. (July 1, 2011) The facts of this particular foreclosure case do not need to be summarized in detail.  They are all too familiar.

However, by way of background, as we know, the New York courts, like Florida – both judicial foreclosure states – have been inundated with foreclosure filings.  But following the robo-signing scandals, including false signatures, false notarizations, and false designations of official capacity that have been detailed throughout the country, the New York courts instituted a rule requiring that FMAs submit a written affirmation certifying that they had taken reasonable steps – including inquiry to their banking and servicing clients – to verify the accuracy of documents filed in support of their residential foreclosures.  [See, New York Rules of Professional Conduct (22 NYCRR Part 1200) and 22 NYCRR Part 130.] Oregon has no such certification requirement specifically for foreclosure cases, but it should.

Here are a few factual snippets from the case that so irritated Justice Schack: Continue reading “The Lender Lawyers’ Nightmare – Schack Attack!”

“When a note is split from a deed of trust ‘the note becomes, as a practical matter, unsecured.’ *** Additionally, if the deed of trust was assigned without the note, then the assignee, ‘having no interest in the underlying debt or obligation, has a worthless piece of paper.’” [In re Veal – United States Bankruptcy Appellate Panel of the Ninth Circuit (June 10, 2011)]

Introduction. This case is significant for two reasons: First, it was heard and decided by a three-judge Bankruptcy Appellate Panel for the Ninth Circuit, which includes Oregon.  Second, it represents the next battleground in the continuing foreclosure wars between Big Banks and Bantam Borrowers: The effect of the Uniform Commercial Code (UCC”) on the transferability of the Promissory Note (or “Note”).

Remember, the Trust Deed follows the Note.  If a lender is the owner of a Trust Deed, but cannot produce the actual Note which it secures, the Trust Deed is useless, since the lender is unable to prove it is owed the debt.  Conversely, if the lender owns the Note, but not the Trust Deed, it cannot foreclose the secured property. [For a poetic perspective on the peripatetic lives of a Note and Trust Deed, connect here. – PCQ]

By now, most observers are aware that Oregon’s mandatory recording statute, ORS 86.735(1), has been a major impediment to lenders and servicers seeking trying to foreclose borrowers.  Two major Oregon cases, the first in federal bankruptcy court, In re McCoy, and the other, in federal district trial court, Hooker v. Bank of America, et. al, based their decisions to halt the banks’ foreclosures, squarely on the lenders’ failure to record all Trust Deed Assignments.  To date, however, scant mention has been made in these cases about ownership of the Promissory Note. [Presumably, this is because a clear violation of the Oregon’s recording statute is much easier to pitch to a judge, than having to explain the nuances – and there are many – of Articles 3 and 9 of the UCC.  – PCQ] Continue reading “The Meat of the Matter – In Re: Veal Analyzed”

Have Big Banks Become Deer in the Headlights?

“…any assignments of the beneficial interest must be recorded in order for a non-judicial foreclosure to comply with the Oregon Trust Deed Act.  The defendant [borrower] presented evidence in Exhibit 104 that by December 4, 2009, and apparently through December 11, 2010, Freddie Mac was the owner of the mortgage and therefore the holder of the beneficial interest in the property.  No evidence that this transfer of the beneficial interest was ever recorded was presented by plaintiff [bank], so I am concluding that the recording never occurred.”  Honorable Jenefer Stenzel Grant, Circuit Court Judge, Columbia County, Oregon. [Memorandum Opinion, June 23, 2011. Parentheticals mine. PCQ]

Once again, the best and brightest minds in the banking, servicing, and title industries are on yet another conference call, as they continue to hear the distant drumbeat of defeat.  In addition, we are joined by Belial’s version of cub reporter Jimmy Olson, honest but naïve, legal intern, Les Guile. The title industry is represented by Liz Pendens, whose has had previous contentious exchanges with Dee Faulting, the feisty representative of the default servicing industry.  Damian Faust, Belial’s lead counsel and hatchet man, and its chief schemer and PR man, Kenneth Y. Slick III (aka “K.Y.”) have joined the conversation, as well. Lucy Furr, B.L. Zebub’s loyal secretary, has dutifully transcribed the conversation, presumably scrubbing it for any admissions that might result in a perp walk like Lee Farkas.  Regretfully, I cannot reveal how this purloined post has fallen into my hands. – PCQ

B.L. Zebub:  “Well gang, it’s certainly been an eventful few months, hasn’t it?  Visitors 10, Home Team, zip.  I’ve hastily called this phone conference to see if we can’t figure out what’s happening to our industry, and how we can turn things around.  I want solid contributions from each of you. No handwringing Liz, and no bickering, Dee.  I’m tired of the blame game.  Les, if you have a question or two, go ahead and ask.  We want to make sure your internship is a memorable one.  KY, let’s start with you – and by the way, I enjoyed that “confidential” interview you gave that ended up on the Internet, with not one single redaction.  You sounded pretty full of yourself – what were you thinking when you let yourself be interviewed without first having that reporter take a TSA-style enhanced body search by our security team?  That hidden tape recorder was your undoing.”

K.Y. Slick: “B.L., believe me, that will never happen again.  That “reporter” was the most gorgeous gal I’ve ever seen.  She was a perfect ‘10’.  I took her at her word when she whispered that I was the most fascinating and mysterious banking exec she’d ever met.  Of course, it didn’t help that we’d had a couple of shots of Devil’s Springs Vodka at Lucifer’s Lounge before the interview.  Anyway, back to business.  My take on this mess, B.L., is that we’re getting pilloried by the press.  It seems that whenever there’s a win for the little guy, the press picks it up and splashes it across the front page; but when we are successful in kicking another family out of their home, no one seems to notice.  I just don’t get it.  My thought is that we should jump-start our PR machine; get them out into the street.  Have them follow the U-Haul trailers around town to see if another family has lost their home to a successful foreclosure.  Hang out at the courthouses and talk to some of the foreclosure mill attorneys.  Find out which cases look promising, and then stand ready near the courtroom when the judge evicts the borrowers from their home.  These are human interest stories too – just the other side of the mirror. The press is sure to pick them up. And remember, “Any ink is good ink.” Continue reading “Triage Time At Belial Bank – U.S. Bank vs. Flynn”