HOMEOWNERS ARE BEING ILLEGALLY FORECLOSED ON BY THEIR LENDERS

MFI-Miami, LLC is warning consumers facing foreclosure that the lender who is initiating the foreclosure action against them may not have the legal standing to do so. This also means the mortgage servicer may not be legally able to accept payments or negotiate a loan modification.

“It boils down to simple Real Estate 101,” explained MFI-Miami CEO Steve Dibert. “If you don’t own the note, you can’t sell it, modify it or enforce it.”

This is not just an isolated phenomenon. It is a nationwide plague that banks and lenders don’t want to talk about. Homeowners in subprime loans are most susceptible because most subprime lenders did not service the loans they originated.

“Of the nearly 100 foreclosure clients who have come to me for help, nearly 85% of the lenders cannot prove in a court of law that they have the legal standing to enforce the terms of the mortgage and the scary thing is, the lenders know it before they even begin the foreclosure action and they don’t care,” explained Steve Dibert.

This creates a number of serious problems for the homeowner because if a homeowner goes into foreclosure and works out a loan modification with who they think is the lender, the real owner of the note could still initiate a foreclosure six months or a year later. The homeowner is left with costly civil litigation as their only remedy to keep their home.

The problem was created by Wall Street firms who traded mortgage backed securities with each other. They would package mortgages in pools and sell them, repackage them and sell them again and again. Through this maze of trades and counter trades, the mortgage and the note are moved upstream but in no case are all of the transfers of ownership recorded in the local property records. Although a fund manager could offer a plethora of reasons as to why, the real reason is, fund managers wanted to save a few dollars by avoiding taxes and filing fees that would apply to each recording. Without recording these transfers in the public record, the right to enforce the mortgage and note is nullified because that recording is what proves ownership.

“Basically Wall Street traded mortgage portfolios like kids trading baseball cards,” explained Steve Dibert. “The only problem was, no one kept track of what mortgages were being sold to whom.”

MFI-Miami is working with two clients in particular, Nickie Struthers of Bradenton, Florida whose mortgage that was originated by Quicken Loans of Livonia, Michigan appears to have been sold by Quicken Loans to two different servicing entities. Quicken sold the loan to EMC Mortgage in February of 2007 and then sold it a second time to LaSalle Bank of Troy, Michigan in June of 2008. Quicken Loans and LaSalle Bank refused to cooperate with MFI-Miami’s investigation into this matter as did LaSalle Bank’s attorney, Marshall Watson and Associates of Ft. Lauderdale, Florida. Mr. Watson’s firm even attempted to block MFI-Miami and Ms. Struthers from having access to her file and now is attempting to launch a second foreclosure action against Ms. Struthers.

“If Quicken Loans, LaSalle Bank and their attorneys would co-operate with our investigation, it would avoid a lot of legal fees for all the parties involved because now Ms. Struthers has to retain legal counsel just to get access to documents that she has a right to have. These are copies Quicken Loans is legally mandated by federal law to give her when she signed her application and their refusal to co-operate just reinforces the impression they are hiding something.”

The second client is Cynthia King of Jamaica, New York whose lender, Deutsche Bank, began foreclosure proceedings against Ms. King and her husband in April of 2008. Deutsche Bank garnished her wages for her delinquent payments. The only problem was the mortgage Deutsche Bank was attempting to foreclose on and garnishing wages on was paid off in February of 2007.

“The crazy thing about this file was no one caught the fact the complaint had the wrong dollar amount, interest rate, or loan number,” said Steve Dibert. “The bank, their attorney and the judge all missed it. MFI-Miami was the only one who caught it and with the help of Gerard Sweet at Foreclosure Hotline USA in West Babylon, New York, we were able to save the house.”

MFI-Miami was mentioned in a major NY Real Estate Website

On Tuesday afternoon and yesterday morning, I began getting calls from Long Island and the 5 boroughs that make up New York City. People kept telling me that they saw MFI-Miami on the web which isn’t uncommon but usually I know something is up when I get repeated calls from one specific area. Now I know what it is.

MFI-Miami was mentioned in the The Real Deal, an online Real Estate publication which has a New York edition and another for South Florida. I must admit I had never heard of them until today when I was doing an internet search. Their 2 sites are filled with all kinds of industry news and are very impressive. I would highly recommend them for mortgage or real estate professionals.

Here’s the blurb that appeared on December 23rd.

http://ny.therealdeal.com/articles/auditing-firm-warns-against-illegal-foreclosures-MonDec2218260105002008/print

Nevada has now surpassed Florida with number of Foreclosure filings

South Florida Business Journal reports today foreclosure activity in Florida fell by nearly 10 percent in November, but it was still high enough to hold the No. 2 spot in the nation, according to a report released Thursday by RealtyTrac.

Three Florida cities were in the top ten list of cities. Cape Coral-Ft. Myers claimed the No. 1 spot in foreclosure activity among the top 100 metropolitan areas. Fort Lauderdale was seventh and Port Lucie-Fort Pierce was eighth in foreclosure activity.

Despite a decrease of 9.45 percent in foreclosure activity from October, it was 68 percent higher than November 2007 activity.

Only Nevada which recorded 49,190 foreclosure filings beat out Florida, according to RealtyTrac, an Irvine, Calif.-based online marketplace that tracks foreclosure activity. Following Florida was Arizona, California, Michigan, Georgia, Ohio, Colorado, Utah and Idaho.

FHA In the 4.5% World

If you are considering using the Federal Housing Administration Program to purchase a home, you may be hesitating due to news reports of new, low rates of 4.5% becoming available soon. Rates for a 30 year loan at 4.5% certainly grabs the attention of just about anyone considering a major purchase. Of course, if there is a huge demand at those rates for an extended period of time, it could result in higher home prices and an equalized payment. It would also put a strain on servicers such as appraisers and attorneys. Not to mention the now more limited number of mortgage loan originators. Whether or not FHA rates will be around this level remains to be seen. A key thing that you can do now is to get pre-approved for your purchase. If you find a property you like now, then purchasing it now makes sense. In two or three months, that home might not be available, or if it is, it might not be available at the same price.

One of the most challenging parts of any financial services position is dealing with misinformation that abounds which emanate from advertisements, news reports, rumors and wishful thinking. The mortgage business is no different. One thing to remember is this: If the Federal Government is involved, it won’t be quick, and it won’t be the same as what we were led to believe. And the reports trickling out regarding mortgage rates going to 4.5% fall into this category.

History of government announcements regarding the mortgage industry in the recent past that did not result in what was promised include the FHA Secure program to help people in subprime mortgages. Not many people qualified and not many people were refinanced despite all of the fanfare. The Hope for Homeowners program has had little success, either. We all know about the TARP or bailout where just about zero dollars have gone to the intended purpose of purchasing troubled assets out of some $330,000,000,000 spent. And even though US Treasury Yields have plummeted to less than 3% for the 10 year term, Mortgage Backed Securities have not followed suit.

One of the parts of this 4.5% rumor that you may NOT have heard is that it may apply to purchase money mortgages only. And there still could be pricing adjustments based on credit scores, loan-to-value and whether or not PMI is required. So, not everyone would qualify for this rate should it become available. There is a lot of distrust on Capitol Hill for the Treasury Department and how they have spent funds entrusted to them. So, none of this may come to pass until the new administration is installed in late January.

Many people with FHA or VA loans, meanwhile, are waiting on the sidelines. The streamline refinance programs available for both are great for reducing monthly payments without needing a full blown refinancing application processed. They are geared toward benefit to the consumer [lower rate and lower payment], and credit history [the mortgage payments have been made on time]. Closing costs are less for this type of loan and most of them can be included in the new mortgage. No new appraisal is required, nor is re-qualifying for the loan with income and debt analysis. The logic is this: If the consumer is making the payments on time now, making it easier with lower payments decreases the risk of default.

Paul Chandler, Certified Mortgage Professional, is the Newport Branch Manager for Universal Mortgage Corporation. He graduated from the University of Maine’s business school in 1979 and has been in the financial services industry ever since. Since 1991, he has exclusively been involved in mortgage lending, moving to the Newport area in 1993. He also authors a blog at http://www.misterva.typepad.com. He also has been a contributor to Mortgage Originator Magazine. If you have a mortgage related question, please call 802-334-1999.

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