The 90-day foreclosure prevention program could expire on July 5^th, but one Senator is trying to extend it.

Sen. Mike Green is trying to pass legislation that would extend the foreclosure prevention program by two years.  He says it “encourages cooperation between lenders and homeowners. It helps people remain in their homes while benefiting lenders by getting mortgages current again.”

Sen. Green states that under this program, mortgage lenders have to provide a notice before the foreclosure process begins that provides homeowners with a list of counselors available.  Once a homeowner has the help of a counselor, he/she can then negotiate with the lender, and take steps to avoid foreclosure.

The bill has been referred to the Senate Committee on Banking and Financial Institutions for consideration.

Read more here

WHEN Zella Mae Green of Georgia filed for bankruptcy to save her home from foreclosure in 2004, she and her lawyer wanted to know two things: Did she actually owe any back payments on her mortgage? And, if so, to whom?

It didn’t seem like a lot to ask. But until last week, those questions had been unanswered for seven years.

Mortgages are complicated to begin with, of course. But when homeowners fall behind on their payments, the situation becomes far more complicated. Recurring fees and charges muddle the accounting. That banks routinely transfer the notes underlying a property can make things cloudier still.

But how Ms. Green’s case became her personal version of Jarndyce and Jarndyce, the endless lawsuit at the center of the Charles Dickens novel “Bleak House,” is a story for our times. The conflicting claims made over the years by employees and representatives ofWells Fargo, which says it holds the note on her property, are enough to make your head spin.

Wells Fargo and Ms. Green didn’t exactly agree on how much she owes on her mortgage. Ms. Green took out a $40,250 mortgage in 1988, never refinanced and figured she is four payments behind. Wells Fargo contended that she owes 113 back payments, totaling more than $48,000.

Ms. Green said she would have given up years ago if it weren’t for her lawyer. She would have forfeited her two-bedroom home in Decatur to one of the three institutions that have claimed — at the same time, mind you — to hold title to it. “It’s been a big mess for a long time,” she said in a recent interview.

Howard Rothbloom, a foreclosure defense lawyer in Marietta, Ga., represents Ms. Green. “The point of this whole case is that inaccurate, incomplete and conflicting information has been provided to Ms. Green over the course of seven years,” he said. “Determining the balance due on her loan should not have to be so difficult.”

THE whole episode makes you wonder, yet again, how many of the millions of foreclosures in recent years might have been based on questionable accounting or improper practices by loan servicers.

Years ago, Ms. Green, a widowed seamstress, ran into trouble on her mortgage several times. In the early to mid-1990s, after she was laid off and had to undergo an expensive emergency medical treatment, she filed for bankruptcy four times to hold on to her house. Georgia is a nonjudicial foreclosure state, and filing for bankruptcy lets borrowers keep their homes and work out a payment program overseen by a judge.

Read more here

Senate Majority Leader Harry Reid (D-Nev.) joined the growing chorus of elected officials demanding a moratorium on foreclosures this week in response to mounting furor over revelations that banks have used bogus affidavits to take people’s homes away.

“I write to request that your mortgage-servicing division suspend foreclosures on Nevada home owners until systems are in place to ensure Nevadans are not being improperly directed into foreclosure proceedings,” said Reid in an Oct. 3 letter to Ally Financial, Bank of America, Wells Fargo, Citigroup, and JPMorgan Chase.

Several of the nation’s largest banks have already halted foreclosures in the 23 states where a court’s approval is required to foreclose. Ally (formerly known as GMAC), Bank of America, and JPMorgan have paused foreclosures after employees admitted in sworn depositions they didn’t verify information in thousands upon thousands of affidavits they signed.

Nevada is not a “judicial foreclosure” state, but, Reid wrote, “suspending foreclosures on Nevadans is also justified because the reports of shoddy and defective affidavit preparation suggest that servicers might not be reviewing a home owner’s loan documents with the requisite care.”

Read more here: http://www.huffingtonpost.com/2010/10/07/calls-mount-for-foreclosu_n_754588.html?ir=Business

“JPMorgan CHASE is in the foreclosure business, not the modification business’.”  That, according to Jerad Bausch, who until quite recently was an employee of CHASE’s mortgage servicing division working in the foreclosure department in Rancho Bernardo, California.

I was recently introduced to Jerad and he agreed to an interview.  (Christmas came early this year.)  His answers to my questions provided me with a window into how servicers think and operate.  And some of the things he said confirmed my fears about mortgage servicers… their interests and ours are anything but aligned.

Today, Jerad Bausch is 25 years old, but with a wife and two young children, he communicates like someone ten years older.  He had been selling cars for about three and a half years and was just 22 years old when he applied for a job at JPMorgan CHASE.  He ended up working in the mega-bank’s mortgage servicing area… the foreclosure department, to be precise.  He had absolutely no prior experience with mortgages or in real estate, but then… why would that be important?

“The car business is great in terms of bring home a good size paycheck, but to make the money you have to work all the time, 60-70 hours a week.  When our second child arrived, that schedule just wasn’t going to work.  I thought CHASE would be kind of a cushy office job that would offer some stability,” Jerad explained.

That didn’t exactly turn out to be the case.  Eighteen months after CHASE hired Jared, with numerous investors having filed for bankruptcy protection as a result of the housing meltdown, he was laid off.  The “investors” in this case are the entities that own the loans that Chase services.  When an investor files bankruptcy the loan files go to CHASE’S bankruptcy department, presumably to be liquidated by the trustee in order to satisfy the claims of creditors.

The interview process included a “panel” of CHASE executives asking Jared a variety of questions primarily in two areas.  They asked if he was the type of person that could handle working with people that were emotional and in foreclosure, and if his computer skills were up to snuff.  They asked him nothing about real estate or mortgages, or car sales for that matter.

The training program at CHASE turned out to be almost exclusively about the critical importance of documenting the files that he would be pushing through the foreclosure process and ultimately to the REO department, where they would be put back on the market and hopefully sold.  Documenting the files with everything that transpired was the single most important aspect of Jared’s job at CHASE, in fact, it was what his bonus was based on, along with the pace at which the foreclosures he processed were completed.

“A perfect foreclosure was supposed to take 120 days,” Jared explains, “and the closer you came to that benchmark, the better your numbers looked and higher your bonus would be.”

CHASE started Jared at an annual salary of $30,000, but he very quickly became a “Tier One” employee, so he earned a monthly bonus of $1,000 because he documented everything accurately and because he always processed foreclosures at as close to a “perfect” pace as possible.

“Bonuses were based on accurate and complete documentation, and on how quickly you were able to foreclosure on someone,” Jerad says.  “They rate you as Tier One, Two or Three… and if you’re Tier One, which is the top tier, then you’d get a thousand dollars a month bonus.  So, from $30,000 you went to $42,000.  Of course, if your documentation was off, or you took too long to foreclose, you wouldn’t get the bonus.”

Day-to-day, Jerad’s job was primarily to contact paralegals at the law firms used by CHASE to file foreclosures, publish sale dates, and myriad other tasks required to effectuate a foreclosure in a given state.

“It was our responsibility to stay on top of and when necessary push the lawyers to make sure things done in a timely fashion, so that foreclosures would move along in compliance with Fannie’s guidelines,” Jerad explained.  “And we documented what went on with each file so that if the investor came in to audit the files, everything would be accurate in terms of what had transpired and in what time frame.  It was all about being able to show that foreclosures were being processed as efficiently as possible.”

When a homeowner applies for a loan modification, Jerad would receive an email from the modification team telling him to put a file on hold awaiting decision on modification.  This wouldn’t count against his bonus, because Fannie Mae guidelines allow for modifications to be considered, but investors would see what was done as related to the modification, so everything had to be thoroughly documented.

“Seemed like more than 95% of the time, the instruction came back ‘proceed with foreclosure,’ according to Jerad.  “Files would be on hold pending modification, but still accruing fees and interest.  Any time a servicer does anything to a file, they’re charging people for it,” Jerad says.

Read more here: http://mandelman.ml-implode.com/2010/09/inside-chase-and-the-perfect-foreclosure/

Hope was beginning to fade last week that Michele McBeth could save her Bayview home from foreclosure.

The Norfolk elementary school teacher had been working for weeks with a foreclosure-prevention counselor, and spent hours going through financial documents, filling out paperwork and pleading with her mortgage company to cancel the auction.

But Wells Fargo Home Mortgage offered no help, and the Aug. 27 sale date loomed.

McBeth, whose story was highlighted in an Aug. 16 article in The Virginian-Pilot, called her lender more than a year ago to try to find a way to bring down her monthly mortgage payment. The company placed her on the U.S. Treasury Department’s Making Home Affordable loan modification program.

But instead of helping her, the process brought McBeth, 42, to the brink of foreclosure.

In the days following the article, numerous individuals who read her story reached out to help.

“Their generosity was overwhelming,” she said. “I was so grateful.”

But McBeth wanted to exhaust all options with her lender. By last week, she and her counselor at The Up Center had hit a brick wall.

“They didn’t even offer anything,” said John Allen, who is in charge of the foreclosure-prevention services at The Up Center. “I found that to be very unusual, especially when a person has proven they have the means to make a legitimate payment arrangement.”

Read more here: http://hamptonroads.com.nyud.net/2010/09/norfolk-homeowner-narrowly-averts-foreclosure

Massachusetts homeowners facing foreclosure and tenants in foreclosed apartment buildings will get extra protections under a bill signed into law Saturday by Gov. Deval Patrick.

Patrick signed the law at a single family home in Brockton that was foreclosed on but then rehabilitated by a local affordable housing agency and placed on the market.

“Even as Massachusetts continues its economic recovery, thousands of families are still dealing with the effects of foreclosure and they need immediate assistance,” Patrick said in a press release. “Combined with the 2007 comprehensive foreclosure law, we are redoubling our efforts to address the foreclosure crisis.”

The new law bars bankers and lenders from issuing wholesale eviction notices to tenants in foreclosed buildings. Under the law, tenants can only be evicted for just cause, like not paying their rent on time or other violations of their lease.

For homeowners, the new law temporarily extends an existing 90-day cooling off period designed to give property owners and their lenders time to negotiate new terms to a mortgage to help avoid a foreclosure. The new law extends the period to 150 days.

The cooling off period can be reduced back to 90 days if the lender makes a good-faith effort to work out a reasonable alternative to foreclosure.

In an effort to protect older homeowners, the new law requires those who want to obtain a reverse mortgage on their home to meet with a counselor approved by the Executive Office of Elder Affairs. It also criminalizes residential mortgage fraud.

Read here: http://www.boston.com/news/local/massachusetts/articles/2010/08/07/new_mass_law_toughens_foreclosure_safeguards/?utm_source=twitterfeed&utm_medium=twitter

Officials at an organization representing homeowners battling their mortgage lenders say hundreds more people in the tri-county area will join additional lawsuits.

Officials at Michigan Loan Compliance Advisory Group Inc. in Troy said they plan to file lawsuits including up to another 1,000 plaintiffs against financial institutions for deceptive lending, excessive fees and other wrongdoing in granting subprime mortgages.

That’s on top of the 88 plaintiffs representing 78 mortgages in Oakland and Macomb counties who through Michigan Loan Compliance sued more than two dozen banks for awarding inflated mortgages to borrowers.

“We’re not stopping,” said May Brikho, senior consultant at Michigan Loan Compliance.

“We’re trying to convince judges there is fraud, there is a scam. The banks are not the victims. They never lost anything.

“We are getting a lot of new plaintiffs who are out of a job and they do not qualify for loan modification. People are telling other people and they are contacting us.”

The pending cases in Oakland, Macomb and a third in Wayne County were filed in state circuit court, but have since been moved to U.S. District Court in Detroit.

However, Loan Compliance attorney Ziyad Kased has asked federal Judge Arthur Tarnow to return the Oakland case to Judge Colleen O’Brien in the Oakland court in Pontiac and said he believes federal Judge Nancy Edmunds on her own may return the Macomb case back to circuit Judge John Foster in Mount Clemens.

Kased said the Oakland case should remain in state court because all of the defendants and plaintiffs do not have different state residences, which is a requirement to get the case moved.

He said that Ocwen and Saxon must gain “concurrence” of the other defendants to warrant permanent transfer and that all of the defendants must be located outside the state.

Attorney Chantelle Neumann, representing Ocwen Loan Servicing LLC, named in the Macomb case, and Saxon Mortgage Co., named in the Oakland case, gained “removal” to federal court for the time being. Neumann said the defendants did not have to gain concurrence from other defendants because the plaintiffs improperly got together.

“Plaintiffs have aggregated their grievances into one mass action in an effort to evade federal jurisdiction,” said Neumann, a Rochester Hills-based lawyer also representing Saxon, in a legal brief.

Kased says the plaintiffs have similar claims.

Read more here: http://www.dailytribune.com/articles/2010/07/24/news/doc4c4b7505adc56153603509.txt

When Frank Knight fell behind on his house payments in 2008 and the mortgage lender began a foreclosure case, a process server said he handed Mr. Knight the court papers at his bungalow on Chicago’s Northwest Side.

But public records show that at the time the server said Mr. Knight was being served, Mr. Knight was at a job site on the West Side, more than seven miles from his brick home in the Jefferson Park neighborhood.

“He lied on his affidavit,” Mr. Knight said this week. “I just feel like they were trying to foreclose upon me and my family as fast as possible. Why? So the bank could get their hands on this property, so they could turn it around.”

The man responsible for hand-delivering the foreclosure papers to Mr. Knight’s home is a special process server, an employee of a private detective agency. In the summer of 2007, with the housing bubble bursting and the number of foreclosure cases soaring, a Cook County judge issued an order making it easier for mortgage-foreclosure lawyers to hire special process servers to do what otherwise would be carried out by Cook County sheriff’s deputies, according to records reviewed by the Chicago News Cooperative and the Better Government Association.

The process server in Mr. Knight’s case was Timothy McWard, who said he did not recall the case. But Mr. McWard said he has served more than 20,000 legal documents in the past five years and the papers are “always given to somebody,” he said. “They will say whatever they can to save their house.”

A lawsuit filed last week in federal court in Chicago is challenging the practice, saying it is a violation of state and federal law for the judge to allow freer use of special process servers. The lawyer for David L. Washington, the foreclosed property owner who is the plaintiff in the suit, said he hoped to convert the case into a class-action suit that would void tens of thousands of foreclosure cases handled by special process servers in recent years.

Read more here: http://www.nytimes.com/2010/07/23/us/23cncforeclosure.html?_r=2&pagewanted=all