Detroit Bankruptcy Lawyer Kurt O'Keefeforeclosure | MIchigan Bankruptcy Blog

Homeowner Help? Or Government Sellout?

Kurt O'Keefe — Thu, 26 Jan 2012 06:40:57 +0000

The long awaited on again, off again, multi-state settlement between the Attorneys General of our various states and the mortgage company rapists, uh, crooks, is apparently on again.

Unless this is your first trip to this blog, let me end the suspense: the proposed settlement is:

image credit: dreamstime

Sorry to ruin the ending.

What the heck am I talking about?

Many of the various mortgage crimes perpetrated on American homeowners by mortgage companies and mortgage servicers, the other companies the mortgage companies to which the mortgage companies outsourced the collection and allocation of your payments, are to be absolved, beause,

GET THIS!

The mortgage companies promised not to do it any more! Wow! I bet our various representatives, in Michigan, as in many states, the Attorney General is an elected position, really had to go to the mat to get that concession. I’ll wager there was blood on the floor!

Gag me with a spoon.

image credit: dreamstime

It is bad enough to let the mortgage mafia off the hook; but to pretend that you got something out of them when you are letting them off the hook adds insult to injury.

Gretchen Morgensten has the best account of the vast crimes wrought by the mortgage industry, in her book Reckles$ Endangerment.

The normally consumer oriented, big government will protect the little guy, Center for Responsible Lending, actually endorsed the terms of the attorney general settlement.

The bastards mis-allocate your payments, put you in default with their defective bookkeeping, which, just incidentally, increases the mortgage servicer bottom line, and, now, they promise to stop!

Fan-frickin’-tastic.

No more robo-signing.

This is akin to letting a bank robber off without jail time because he promises not to rob banks anymore.

There is much more, but how sick do you want to get?

This time around, it says homeowners can still sue on their own, and that it “would not shield banks from prosecution related to criminal activities” (from the Center for Responsible Lending site linked to above).

Whaddya mean: “prosecution related to criminal activities”?

What the hell else can you anyone be prosecuted for?

They have not been prosecuted yet; Obama just appointed a commission to whitewash the crimes at the federal level, and now the State AGs will run home and campaign on how they socked it to the bad guys. They are not going to try to take them on.

Good luck getting any law enforcement agency interested in your case.

Bankruptcy Still Offers Mortgage Debt Relief

Kurt O'Keefe — Thu, 19 Jan 2012 06:59:57 +0000

I talk to so many people trying to keep their homes, or, even rental properties, who

are unaware that bankruptcy law still offers some remedies for Michigan foreclosure issues.

image credit: dreamstime

Say you bought a house with a friend or relative when you were younger, then moved

into a bigger residence when you got married, whatever, and kept the old one to rent

out for some side income.

Great idea, right? Home values only go up, so if you break even on the rent, you make

money on the investment.

Until the bubble bursts, the music stops playing, the rental house is worth less than

you owe on it, and, no tenant!

Before you give up, consult an expert, bankruptcy law allows the cram down of that

mortgage to the value of the home, and the court can re-write the terms, including

interest rate and how long to pay it back.

This is true if the home is NOT your principal residence.

BUT THERE IS MORTGAGE RELIEF FOR HOMEOWNERS TOO!

image credit: dreamstime

If you have a second mortgage on your Michigan home, odds are, the home is worth

less than what is owed on the first mortgage.

MERS Says No Mas! To Michigan Foreclosures

Kurt O'Keefe — Thu, 04 Aug 2011 06:09:46 +0000

No mas!

MERS is folding up its tent as far as foreclosing in its own name, or filing pleadings in bankruptcy court in its own name, as it told is clients they have to get an assignment from MERS, and then file stuff in their own name.

No more MERS foreclosures in Michigan.

Our Michigan court of appeals probably influenced its decision, holding that MERS could not foreclose in Michigan by publication.

Even this is not good enough for Abigail Field of the Foreclosure Fraud site, who wants MERS outlawed.

I yield to no one in anti-MERS sentiment, but am philosophically opposed to just outlawing stuff I think, even know, is bad.

Not good precedent.

I believe there are enough laws on the books against fraud, civil and criminal. They just need to be enforced.

The government runs all criminal prosecutions, so all we can do there is harp on our elected officials.

At least the Michigan attorney general is investigating at mortgage fraud issues.

MERS Assignments Valid?

But this does not end the issue of the validity of foreclosures with MERS in the chain of title.

If MERS cannot foreclose in Michigan (by publication), how can the company it assigns its rights to foreclose?

How can it assign greater rights than it holds?

Put another way, if you do not own a car, you cannot sell it to me.

Now, if you transfer your interest in the car to Joe Blow, how can Joe Blow sell me the car? He does not own it either.

So MERS new policy is not dispositive of the underlying issue: what interest does/did MERS hold in a home being foreclosed?

And title to homes in which MERS already foreclosed is still clouded, as we say in the legal biz.

Many of those homes are going through the foreclosure process AGAIN, just to make the title companies happy.

image credit: bleacher report.com

Michigan Bankruptcy Mortgage Options (Part Two)

Kurt O'Keefe — Tue, 02 Aug 2011 05:13:54 +0000

This is the conclusion of a two part series, part one on bankruptcy mortgage options can be found here.

Now, you cannot force the mortgage company to foreclose, or take your house back.

They might agree to a short sale, but, as with a modification, you cannot force it on them.

They might accept a deed in lieu of foreclosure, in lieu is French for instead of, because it saves them a lot of time and money versus the foreclosure process, but, again, you cannot force it on them.

If you do this, make sure the paperwork states the mortgage balance equals the value of the home.

And if you have a second mortgage, forget about a deed in lieu, and they will also have to sign off on a short sale.

If they foreclose on your mortgage, great, save your money for the next house.

But, first, get your monthly budget together, and consult a bankruptcy attorney.

For a second mortgage to foreclose, they have to pay off the first. Ain’t gonna happen.

If the first mortgage holder forecloses, you still owe the balance on the second, and whatever other debts you have.

In Michigan, if the first mortgage forecloses by publication, there is an auction, and if they bid what you owe them, after the 6 month redemption period, they get the house, and you owe them nothing.

So if you can handle your other debts, and have no second mortgage, no need for a bankruptcy, at least until the foreclosure sale.

FORECLOSURE SALE PRICE

You will have to check the sale price after the auction, nobody tells you. Your county sheriff runs the sale, so their office will have a record of the sale price.

It you owe $200,000, and they bid $100,000, and that is a commercially reasonable price, you still owe the difference even after they take your house.

It does not matter what they get when they sell the house later. Your potential liability is fixed by the foreclosure sale auction price.

My advice, as always, get the facts.

What can you sell your house for, right now, as is, no painting or fix-up?

How much do you owe?

What is your realistic monthly budget, income and living expenses?

Assume home values will continue to go down, that the cost of other living expenses, food, fuel, et cetera, will go up, and, your income, will stay the same or go down.

Can you afford to stay in your house?

Does it make economic sense to do so?

Image credit: Dreamstime

Michigan Bankruptcy Mortgage Options

Kurt O'Keefe — Thu, 28 Jul 2011 06:02:04 +0000

MICHIGAN BANKRUPTCY MORTGAGE OPTIONS Part One

You owe more on your mortgage than your house is worth, you want to leave, what are your options?

You Cannot Afford The Payments

If you cannot afford the payments, you will not be able to keep your house, unless you get a modification from the mortgage company.

You have probably tried that already; so you know you are at their mercy. They lose you papers, it takes forever to get through, when you do, someone different has your file.

A. More Than One Mortgage On Your Home, And You Want To Keep It

Under current law, there is no way to force the mortgage company to change the terms on the first mortgage on your principal residence. If it is a vacation home, you can. If it is a home you are renting to someone else, you can. If you live there, you can’t.

But, If you have a second, or a second and a third, and the home is worth less than you owe on the first, in a Chapter 13 bankruptcy, you can strip off, or get rid of, those second and third liens.

But, you have to be able to make the payment on the first mortgage.

Many of my clients can afford a Chapter 13 payment, because it works out to less than the second mortgage payment.

You could be behind on a second mortgage of $300 per month, but you may be able to file a Chapter 13 plan and afford a $200 per month payment.

At the end of your three, or five, year plan, you are discharged of your personal liability on all unsecured debt, including those second and third mortgages, and, the lien on those mortgages is gone, discharged.

B. I Give Up! Take My Home, Please!

You are fed up with the mortgage companies, to hell with them, how do I get out of this mess?

If you cannot make the payments out of your income, STOP!.

Please don’t take 401k or IRA money that creditors cannot get and use it for house payments, while you wait for things to turn around.

TO BE CONTINUED

image credit: Dreamstime

Michigan Foreclosure: The Big Picture

Kurt O'Keefe — Tue, 05 Jul 2011 05:44:32 +0000

What do the statistics tell us about the big picture for our economy now?

That there will be more bankruptcies in Detroit, and everywhere else in Michigan, and the U.S.

The foreclosure crisis continues, if you want chapter and verse, read “Reckless Endangerment.”

Foreclosure sales are declining, but in judicial foreclosure states, which Michigan is not, and one third of the homes in foreclosure in those states are more than two YEARS behind in payments.

And foreclosures in the judicial foreclosure states have increased twice as fast as the non-judicial states in the last year.

The scariest sentence in the story on mortgage servicer LPS statistics:

“Overall, when compared to historical norms, delinquencies are almost double, and foreclosures are eight times higher.”

More foreclosures, more homes for sale, depressing prices further, more homes underwater, more foreclosures, the vicious circle continues, leading to more bankruptcies.

Although, if your home is worth less than what is owed on the first mortgage, you can file Chapter 13 bankruptcy and get rid of that second mortgage, which is good for homeowners.

Those stuck with the securities stuffed with bad mortgages are starting to sue for, of course, fraud, and getting some recoveries.

Regions Financial investors lost $1.5 billion in five mutual funds it sold, some as investment grade debt, but filled with crap mortgages.

They settled the mortgage fraud claims for $210 million.

Sounds like $1.3 billion still missing.

Business Week has a story on debt collectors chasing people who already filed bankruptcy, and had the debt discharged.

If this happens to you, I can help if you cannot get your bankruptcy lawyer to handle it.

What happens is, bottom feeding debt buying companies buy bad debts by the thousands.

No paperwork, just a computer screen, stating how much you owe and maybe a couple other things.

They could “scrub” the accounts, checking for bankruptcy filings, but, hey, that cost money.

Of course, debts discharged in bankruptcy do not exist and should not have been bought and sold to begin with.

The Truth About Mortgage Company Records

Kurt O'Keefe — Tue, 24 May 2011 10:26:53 +0000

Its later than you think.

What the economists call the “macro” factors are bad.

Leading the way? Our friends, the banks!

Mortgage companies continue to lie about their books and records.

And won’t show them to the government without being forced.

Some of these issues have come up in the MERS

and robo-signing scandals.

Photo Credit They never have told the truth about their SIVs, special investment vehicles, that the regulators let them use to shelter mortgages and securities based on them.

That way, the regulators, not to mention the stockholders, never knew what the actual financial exposure of the banks was to the toxic mortgage market they created.

They continue to get bailed out by the politicians; they were savvy enough to buy both political parties.

And the government continues to try to prop up the housing market, preventing it from hitting a bottom so we could start a real recovery.

In the bankruptcy courts across the country, the U. S. Trustee has been trying to examine the books and records of the mortgage companies, in cases filed by consumers.

The U. S. Trustee is finding that many claims filed by the banks are way off in the amount they claim is owed by the consumer who filed the case.

And, that inappropriate charges are being added by mortgage servicers.

Shocked, I am shocked, to find that gambling is going on in this place.

No way these mistakes are only happening in bankruptcy court; the same mistakes are pushing people into foreclosure who are not really in default, or telling homeowners the wrong amount needed to catch up on their payments.

Of course, the wrong number is never lower than the correct amount.

Did the mortgage companies willingly provide this information, to the U. S. Trustee, a branch of the Department of Justice?

Uh, no.

Clifford White, executive director of the U. S. Trustee office, as quoted in the N. Y. Times article:

“We have faced consistent opposition by all of the major servicers,” Mr. White said. “We are currently facing 200 motions to quash our discovery requests. We also are facing upwards of 20 appeals either in district courts or in circuit courts.”

The MERS Decision Story

Kurt O'Keefe — Fri, 29 Apr 2011 16:10:01 +0000

Fallout from the Michigan Court of Appeals decision tossing out two foreclosures by MERS is sweeping the state of Michigan.

Had a call yesterday from someone whose closing was canceled at the last minute, because, MERS had done the foreclosure and quit claimed the property to the bank, which had agreed to sell the home to the caller.

My realtor wife advised me title companies across Michigan are backing out of deals and canceling closings.

Because, if a MERS foreclosure is in the chain of title, it is, as they say in the title business, “clouded.”

In my caller’s case, MERS foreclosed, the homeowners left and bought a new house, the redemption period expired, the

bank sold the house.

But, under the Michigan Court of Appeals decision, the former homeowner could sue to get the foreclosure sale set aside, putting the home back into his name.

And he would win.

So, title companies, who issue insurance guaranteeing to the buyer, and the buyer’s mortgage company, that the seller does indeed have good title to the property.

No title policy, no mortgage; no mortgage, no sale.

No telling how far back this can go, what if MERS foreclosed 3, 5, even ten years ago?

Not sure off the top of my head how long they have been around.

I have been blogging about MERS for years.

As filing fees for real estate documents increased, the mortgage companies decided to skip paying those annoying fees every time they bought a mortgage.

They had to pay to have it recorded with the county register of deeds, to put the world on notice that there was a lien on the property.

So, the initial mortgage was recorded in the name of MERS, as “nominee,” whatever that is, for the actual mortgage company.

Then, every time the mortgage was sold or assigned, nothing else was recorded with the county, just on MERS records.

So, MERS had no actual interest in the mortgages, could not collect any money due on them, and, that is why the court threw out the foreclosures last week.

The MERS Decision Story

The Truth About Michigan Foreclosure Law Changes

Kurt O'Keefe — Wed, 27 Apr 2011 20:38:38 +0000

Less than two years ago, Michigan foreclosure law was changed in the face of the greatest foreclosure crisis since the Great Depression.

Mortgage companies were required to send an initial foreclosure notice that gave the homeowner the opportunity to request a modification.

If he did so, the house went off the foreclosure track for 90 days, time for the mortgage company to review documents and decide whether to grant a modification, and on what terms.

It did not change the redemption period, which is six months from the foreclosure sale date for most residences.

New bills have been introduced to change that law, reducing the redemption time from 6 months to 3 months.

During the redemption period, the homeowner has the right to pay off the foreclosure sale price, with interest, and keep the home.

In the old days before the real estate bubble burst, this was usually done by selling the home.

That was when homes had equity in them, enough to pay off the mortgage debt and still put something in the owner’s pocket.

Not so much any more.

Most homes cannot be redeemed or re-financed by the homeowner.

Obviously, if you shorten that 6 month time period to 3, even fewer homes will be redeemed.

The banks say hey, we added a 3 month delay before the foreclosure sale, so lets take 3 months off the back end, comes out the same!

Except that the lowering from 6 to 3 months would be permanent, and the up front 3 month POTENTIAL delay expires under these bills.

Most homeowners do NOT request the modification after getting the first notice, so they never got the extra 3 months anyway.

The politicians say most states do not even have redemption periods.

Well, I have not researched that, but many states require judicial foreclosure, that is, they make the mortgage company sue you to prove their case.

Let’s drop the redemption period altogether, and throw out foreclosure by publication, and make the banks take you to court.

The Truth About Michigan Foreclosure Law Changes

The Truth About The Foreclosure Crisis

Kurt O'Keefe — Wed, 13 Apr 2011 19:39:20 +0000

An essential part of the real estate bubble was mortgage securitization, the process by which mortgage loans were sold into investment trusts from which bonds were sold.

It was mortgage fraud from A to Z, from the selling of mortgage backed securities trusts, before the trusts were full of mortgages.

From the ratings agencies, assuming in their ratings that home prices would NEVER go down, that the historical default rate of 30 year fixed rate mortgages that were 80% loan-to-value was applicable to the new market of 125% loan to value, interest only, ARMs, 80-20 mortgages, and so on.

That was the big picture.

The micro was, mortgage companies evolved to only warehouse money.

They outsourced the vetting of home buyers to mortgage brokers, who got paid at closing, whether the loan was ever paid or instantly defaulted.

More often than not, they sold the mortgage within a month.

The brokers managed to find appraisers who always appraised the house at the value needed for the mortgage, or mortgages, to go through.

Investment advisers told people, you need to borrow more money, and buy more house, you are missing the boat, you can’t lose!

Lending standards disappeared with “no-doc” loans.

I have clients who sent in tax returns and pay stubs, but the broker ran it through the mortgage company as a no-doc loan, because he knew they would NOT qualify for a conventional mortgage.

People were encouraged to buy with nothing down, an artificially low teaser rate on an ARM (adjustable rate mortgage).

Then, the two things happened that all the assumptions presumed would not: interest rates crept up, and home prices went down.

The government played an essential role, with Fannie and Freddie, buying or guaranteeing most mortgages in the USA.

When the government makes anything cheaper, demand goes up.

(see student loans)

The artificial demand bid housing prices up.

Then, when ARMs adjusted up, as the teaser rates expired, couples could no longer re-finance into another teaser rate ARM, and could not sell their house for enough to cover the mortgage balances.

The Truth About The Foreclosure Crisis