Keep Home Your Own : New York Real Estate Lawyers & Attorneys : Rubin & Licatesi Law Firm : NY Loan Modification, Foreclosure : New Jersey, Long Island

“If mortgage delinquencies are not yet clearly improving, it also appears they are not getting worse. However, a bad situation that is not getting worse is still bad” according to Jay Brinkmann, chief economist for the Mortgage Bankers Association. A Newsday article  by Emi Endo offers additional statistics as it reports that “nearly one in seven US homeowners fell behind on mortgages or were in foreclosure from January through March and roughly one in 10 borrowers nationwide, a record high, missed at least one payment in the first quarter of 2010.”

We are living in a homeowner’s house of cards. Our clients have no margin of error in their family’s financial planning. Some kitchen tables, essentially reserved for family gatherings and mealtime sharing for school reports, job talk and daily exchanges are now resting places for unpaid credit card statements, demand letters from creditors and other evidence of mistaken debts taken during times of plenty. Suffolk and Nassau counties sadly share rankings by the Federal Reserve Bank in the top 50 for distressed mortgage ratios.

Success stories amidst the statistics

Yet despite such seemingly oppressive and disturbing statistics, I witness success stories while working with clients who have received summons and complaints from their lenders seeking to foreclose upon their homes and families. These are not missteps of judgment made while blind to the risks and consequences of unforeseen dangers. These were purchases of homes made by fathers and mothers and people of all persuasion who committed to many of the American dreams and ideals that are almost inborn and inbred from coast to coast.

I like what I see and hear when a new client calls and relive their experience and hope. These clients are the people who listened to our political leaders, our Presidents and Governors and bought homes, bought appliances, bought new cars and created jobs, new schools and new neighborhoods. Our clients waited patiently until they could hardly wait another instant and entered the board of real estate. We have now learned that the foreclosure crisis has invaded not only the subprime market but reaches into the nonprime loans and conventional marketplace. In our law firm, we focus in discussing these issues, not as potential bankruptcy matters and insolvencies, but as a platform to advocate and represent our clients who have received notices of delinquencies and foreclosure summons. Our purpose is to save these homes and investments from foreclosure..

New legislation encouraging

Our legislature has adopted laws, and our courts have enforced these laws. These are effective avenues that encourage homeownership retention but require new commitments on the part of our clients. You can keep your home your own, even in the face of months and months of non-payment. Many solutions and settlements depend upon your new commitment to maintain the stability of your desire to keep your home. Our judges have much less tolerance for the one sided and heavy handed position of yesterday’s lender’s demands to auction off your home.

HAMP and Treasury Guidelines, with servicer agreements, favor so many homeowners who partner their wishes with well placed actions and monthly submissions of income, residency and hardship evidence. Foreclosure settlement parts provide a steady hand and experienced leadership to afford the homeowner the necessary confidence and increased support to keep their homes.

This hopeful message leads to the predictable conclusion that our clients’ closings, their dreams of backyard barbecues and gatherings were not errors of our past. The lending criteria were piled with errors of judgment made by financial giants, many of whom have faded away. But each client who visits with us is a reminder of the strength of our dream of American homeownership. Our homes, shopping areas and office buildings remain as a constant reminder that yesterday’s goals are not to be forgotten.

Our lending and borrowing patterns and programs over the past eight years have saddled our neighborhoods and communities with an enormous sea of debt. In the face of this crisis, new rules have emerged. It is much more than wishful thinking when we say that these new commitments which are offered to save your home can reveal solutions and opportunities to keep home your own.

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Two days ago, after tireless efforts to reach an amicable resolution to a homeowners’ mortgage default, the borrowers transferred title to their home to their lender in a process commonly referred to as a Deed In Lieu of Foreclosure. Many of our clients who have received default letters and correspondence from their servicers have read or have heard that this too, qualifies as a successful modification alternative.

Even a careless examination of this definition would lead many to share a similar conclusion with me that this is not a noble outcome. Were there other key issues to explore that went unanswered before entering into this settlement? We spent months and months discussing alternative options: submitting modification and financial statements, hardship letters, medical opinions concerning the clients, tax returns and pension statements. All this was intended to cause a program and allow this family to recover.

Although our best efforts may have been put forth, my clients gave up. We explored issues of short sale programs, the pros and cons of loan renegotiation, the tax consequences of this process because we were not yet in litigation with the bank. Notwithstanding, the end result was that the course of history was changed for this family, as well as dozens of families in the neighborhood as the stark reality of a deed in lieu of foreclosure challenges their property value when it is recorded.

Staggering Statistics
The trend in our neighboring communities of foreclosures and defaults increases despite reported Federal and State programs allegedly initiated to protect against the loss of our homes. Long island alone witnessed an increase of 3.5% in repossessions by the banks and a double digit increase from the March statistics. Experts can argue whether the servicers and lenders are loosening the requirements, but the numbers  remain staggering and even more urgent when considered in light of the current depressing job opportunities and lay-offs.

Under the Home Affordable Unemployment Program  effective July, 2010, the Treasury Department has enacted an entirely new payment relief program for homeowners who have lost their jobs. Under this program, an eligible homeowner can request a forbearance plan to temporarily suspend their monthly mortgage payments for a minimum of 3 months. These borrowers must meet the HAMP eligibility criteria, have lost their job, receive unemployment benefits and request this forbearance plan before they miss 3 monthly mortgage payments. The publications emphasize the non eligibility factors apply to those in a permanent HAMP modification and it similarly does not apply to FNMA, FreddieMac or FHA serviced loans.

An outraged judge acts

The warm sounding initials of this new Federal effort may soon become another largely ineffective tool that will produce little impact on an ever increasing, struggling American family destined to face the hardships of mortgage default. Our New York State Laws offer considerable protection for these families and friends who have received a foreclosure summons and complaint. In the recently reported opinion by the Hon. Jeffrey Arlen Spinner in a case entitled Emigrant v Corcione,
the Court squarely denied summary judgment to the bank and rejected its request to appoint a Referee to sell the home and awarded $100,000 in damages to the homeowners. Problem solved?? Hardly! We will be unable to entertain the decisions which will be reached in the underwriting offices of our mortgage lenders after debating the outcome of such a decision.

Nevertheless, we are certain that as more and more homeowners become aware of the potential to keep their homes, even when faced with mortgage arrears, loss of jobs and other hardships, and as the protections afforded in our Courts become more widely accepted in the mandatory foreclosure settlement parts, we can make our mark and take aim at the rising tide of foreclosure sales and repossessions which are destroying our American dream. We can turn the negative into a positive despite the service of a foreclosure summons and complaint. We can witness the constantly changing environment which allows for good faith discussions to settle monthly mortgage arrears. On your calls to our office, we can emphasize that the broad possibilities of this complex problem are truly containable and we can work through this ordeal together.
 

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In  the course of many client conversations, new phrases and areas of pointed discussion focus on the grim topics at hand for family life. Many face great struggles and contemplate their survival after the early dawn and late evening arrivals of strange faces delivering thick booklets with colored construction papers. These publications appear to be offering a seemingly transparent hint at a glimpse of “Help for the Homeowner,” only to be found concealing their true object and intention: to take away your house.

Their circumstances are much like those of many others. The mortgage has not been paid this month, nor the last month. More than likely, the mortgage has not been paid in months and months. Hundreds of agonizing days, thousands of hours spent worrying about finances, mounting credit card bills, job security (or more precisely, insecurity) and otherwise few bright spots in our economic forecasts. The Federal Reserve Bank of New York published recent statistics papers  showing nearly 40% of the sub prime loans in our communities are in some form of default, with thousands more on the brink. Many more are yet to be included in these records as our property values receive mixed views of stability and equity during these challenged times.

The Treasury Department’s HAMP makinghomeaffordable.gov/  rescue plan has apparently failed, leaving millions of American families without a solution, and leaving us with the latest program, referred to as HAFA, the Home Affordable Foreclosure Alternative Program. Clutching at thick files of loan closing documents and more often, only scattered pieces that might have represented a mortgage application, clients and those in trouble call and visit in our offices asking “Where do we go from here? My spouse or partner doesn’t know about the summons; must we take our children out of their schools soon; how much time do we have left in our house and what can we do to keep our home our own?”

Many read last week that the semi-governmental agencies, Freddie Mac and Fannie Mae, reported some of the worst mortgage losses in their histories of operation. Delinquencies in the sub-prime and conventional loan markets reach into the trillions of dollars with little hope that this gushing well of adversity is readily capable of a lid to cap the substantial woes we face.

Our clients, in their phone calls and files, are the heart and soul of these statistics. These folks are in foreclosure actions and have taken action to keep their homes. The focus and notions of initiating legal defense to the receipt of a court summons are much more than fascinating ideas in scholastic circles. They are real live people, in all works of life who have no room for academic debate. Our clients are bus drivers, office workers, lawyers, doctors, wall street financiers, all of whom have decided to engage the courtrooms, judges and personnel in New York State Supreme Courts, and request enforcement of their rights to keep their homes their own.

To many, the process has worked, and they will eventually have witnessed and signed settlement and modification documents. We have challenged “sewer service” and asked our Judges to support these families in their quest to remain homeowners. Time after time, our judiciary has taken the lead and adamantly refused to allow foreclosure sales. Foreclosure Settlement Parts now preclude the auctions and mandate and require good faith attempts to utilize the HAMP and HAFA programs.

Servicers and investors cannot maintain a veil of secrecy as we look to uncover the true identities and discover who, what and where their alleged right to take away your homes are based. The loss of a home is not a certainty. Friends, family members and partnerships, all working together are able to engage the seemingly conflicted paths with their lenders and develop real changes in the foreclosure activity. Confidence in the defense of a foreclosure action is a family affair. A daily shift can be seen in the phone calls received in our office for once you make the decision to take action and save your home. Things can only get better. It’s a family affair.

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More than 3 million friends, neighbors and families currently share similar messages among their intimate groups of friends, neighbors and family members.  Their common thread is one of homeownership fears, mortgage arrears and home equity loss.  These are the phone calls, e mails and texts we see in a regularly increasing tide of new clients calling our law firm.

Foreclosure worries and an apparent and readily foreseeable fallout most certainly blizzards our radar screen.   For many of the past several years, those on the sidelines watched with great interest and listened as they sat somewhat tucked away from the chaos and crisis.   Never having doubted the American struggle to keep home your own, the monthly payments were not just an “old fashioned” commitment.  

Now, many of these bench warmers are fully engaged after suffering a job loss, hardship or unseen economic downturn.   Process servers and bankruptcy petitions are leading edge indicators when business in those sectors are booming.  This is not a moral crisis faced during a short slump in family earning power. Essentially, many families are forced to recognize that their entire mortgage debt and repayment abilities need an overhaul. 

While most of the analysts continue to debate the reasons for the paucity of progress in loan modifications, a Suffolk County Supreme Court decision scrutinizes the lending practices of the past and sets the barrier in favor of a homeowner who seeks to keep home their own.  Justice Jeffrey Arlen Spinner was assigned an action entitled Emigrant Mortgage v Corcione and on April 16, 2010 published his findings in the foreclosure action. 

The facts are probably not much different for many of you who have visited our office or for those who are in the throes of a foreclosure action.   Perhaps it was a mortgage loan taken within the past several years with hope that shortly after, another refinance would be undertaken to bail out of a loan which had a high interest rate or adjusted or had other terms most unfavorable for long term borrowing.   Shortly thereafter, unexpected hardship, reduced income and real estate downturns create new and unfamiliar landscapes of non payment and credit score failings.   Visits and phone calls produced little, if any realistic hope of a restructure of homeownership debt. The loan modification process fails after scores and scores of faxes, e mails and submissions to your servicer. 

The homeowners in this action sought legal counsel and found refuge in the New York State Supreme Court.   Justice Spinner’s decision unfolds the process, revealing that the bank delayed modification to collect pre-action late charges, tax and escrow advances, lender legal fees and other foreclosure related fees from the defendants.  In a far reaching decision, projecting previously unfound protection for the homeowner, the Court ruled that these homeowners no longer are to be judged by the moral dilemmas attached to a foreclosure action.   Mortgage foreclosure actions are now litigated matters and procedural or substantive federal and state laws will be engaged to protect the rights of the homeowner. 

Our citizens in New York State have been provided with mandatory settlement conferences in foreclosure actions, and these very same laws “mandate that the parties to such an action act and negotiate in good faith……….In short, the conduct of Plaintiff in this matter has been over-reaching, shocking, willful and unconscionable, is wholly devoid of even so much as a scintilla of good faith and cannot be countenanced by this Court.”  

Justice Spinner’s “moral compass” found bad faith conduct on the part of the lender and awarded damages in favor of the homeowners to “serve as an appropriate deterrent to any future outrageous, improper and wrongful activities.”   This decision permeates the air in every foreclosure settlement part that I have attended. Lawyers, hearing officers and court personnel openly debate the long term reliance upon such a decision as the appeal process may ultimately determine the final outcome in this action.   However, the spin and the stir of this decision may have adjusted the compass to point to a plan of recovery. 

 As a result, homeowners and clients who now visit with our law firm or others focused on the protections of the home against foreclosure are encouraged that the failings of the loan modification process do not represent the end of the road.   The compass points to new ingredients of judicial enforcement and social change emanating from the Courtroom of Justice Spinner.   The emphasis on failing and foreclosure is no longer an option for those who choose to seek to keep home your own.

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We often are asked by clients facing foreclosure if a loan modification is worth the time and effort. Our answer is simple: if you want to keep your home, then absolutely yes.
Loan modifications can be drawn up to affect a variety of aspects of your mortgage:

LOWERING YOUR INTEREST RATE
Getting a more reasonable rate than those offered during the predatory days of mortgage lending can often be enough to reduce payments to affordable levels.

AGREEING TO MAKE THE MORTGAGE CURRENT
Absolving past missed payments and starting fresh is a simple fix which homeowners who faced a one-time hardship (temporary loss of a job, for example) may find helpful.

ALLOW INTEREST-ONLY PAYMENTS
A period in which borrowers are required to pay only interest is helpful to troubled homeowners and also means the bank will eventually get its money back.

REDUCING HOW MUCH YOU OWE
Lowering the balance of a mortgage is like a cash gift from your lender, but be careful. The IRS may construe it as income and tax you on the amount reduced.

FIXING AN ADUSTABLE RATE
Eliminating a balloon date and fixing the interest rate can help those stung by high adjustables.

DEFERRING PAYMENTS
Sometimes, all a borrower needs is a little time to resolve a temporary hardship.

EXTENDING THE TERM OF YOUR MORTGAGE
Adding ten years to the life of the loan can greatly reduce the amount of monthly payments and means the bank gets all its money back.

ELIMINATING BANK FEES
If you’ve racked up a load of late fees and penalties, having them absolved can often help.

In the larger picture, of course is the fact that modification’s entire purpose is to prevent foreclosure and allow homeowners to keep their house. This takes convincing the bank that with the modification, the borrower will be able to continue to make payments, albeit adjusted ones.

A lender looks at a modification as a way for them to get at least a portion of the money owed them, and decides what kind of modification terms will accomplish just that.
Therefore, it is very important to understand how to state your case and present your financial situation to the lender. Loans that appear likely to be repaid because of the changes in terms of the mortgage are going to be most attractive to lenders.
 

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Could 30 million Americans, completely unnerved and destabilized from the ravages of their home mortgage foreclosures, benefit from a decades old and time proven theory of recovery -  compulsory integration?   Is there anyone who can argue successfully that our country is in troubled economic times and that the present day recovery system is working?  Certainly not says the Rev. Patrick H. O’Connor of the First Presbyterian Church in Jamaica.  Jim Dwyer’s Sunday New York Times article, which reinvents the sub-prime mortgage chaos into the food chain in his “When Pizza Becomes Predatory” front page headlines and announces the pastor’s news and analysis of a slice of pizza.  “You have a $2.50 slice of pizza bought with a debit card, and if the person is over the limit, the card is not rejected.  Instead, you have a $35 fee.  So the slice of pizza is $37.50”.

The cancellation of the purchase may not have proven of immediate benefit to the pizza parlor nor the consumer, but in the weeks to come, little would have resulted if the purchase had been declined.   Except of course, to state the obvious, our friend would not have ended up having to see a bill for $37.50 for a slice of pizza. 

Magnified millions of times over, the declination of each request for modification also leads to long standing and potentially permanent chaos in our struggle for a return to stable neighborhoods, job optimism and highly respected middle class values of credit scores and financial responsibility.  It is a given that so many families have taken on mortgage loans which far exceed their ability to repay or no longer bear any relationship to the value of their homes.   Our return to real estate homeownership is not going to be geared towards statistics of whether our local quarterly reports indicate a decrease in homes foreclosed from last year’s figures.  

The stated facts are that the volume of foreclosure activity and bank-seized properties does not benefit from subtle increases or decreases in statistical timelines.   Foreclosures in our communities litter the weekly and local community newspapers, no longer advertising simple sub-prime defaults.  This year we are set to watch out for the defaults for all of our friends who have lost jobs and income. This collapse is most certain to occur, and we witness the margins dip on their spread between rainy day accounts and bill paying.  The refusal of our Federal Government to intercede in mandatory regulation will turn back the recovery process for decades to come. 

Every several months, newly touted solutions grab the attention of the real estate community.  The Home Affordable Foreclosure Alternatives  (HAFA) have received much attention in the past several weeks, serving those whose goal is to achieve a short sale.  The Treasury Department, in partnership with the major servicers, specify a thirty day window after which we are told whether a short sale may be approved.  What follows are lines and lines of procedures, caps on real estate commissions and time limits to re-sell and avenues to obtain broker price opinions.  The losers in this process will far outnumber those who prosper. 

 During the past several years, TARP,HAMP,HAFA and scores of freshly minted initialed entities entered our daily conversations.  Quietly, we have asked for recognition in our negotiations with lenders and foreclosure conferences in court, to establish well defined reviews of our financial statements and accountable methods for assignments with bank representatives who can discuss our loan modification requests from the “international” and far flung offices of our lenders and servicers.

Continually, we often find deaf ears or untraceable extensions as we seek to communicate with bank representatives.  This has also unfairly resulted in our lenders shouldering an intolerable burden of unpaid debt, with the new law in the state of New York. This law requires that the lenders now must maintain the properties which they have seized in foreclosure actions.  Our lenders backlash against this law and the unfair consequences which may continue to restrict future lending has also missed the mark.  

The argument to punish the lender is as unfair as it is to destroy our neighbors and friends. This spiraling trend of inefficient and costly failures in the loan modification programs also leads to taxable issues for discussion and balance sheet reviews.   When our home loans reach default stage and arrears mount and short sale approaches are looked at by buyers and lenders and sellers, the Internal Revenue Service also looks at this cancellation of debt issues. 

The insanity of failed loan modifications and denial of responsible requests to restructure our monthly debts is a recurring invitation to participate in the destabilization of America.  The humbling realization after working with hundreds of families is that we have the process to recover and we have the alternatives available to prevent forced seizures of our homes. 

Poor results and statistical failures have resulted from the lack of compulsory integration of the HAMP solutions into our requests for responsible loan modifications and foreclosure defenses.   Our courts are now witnessing challenges by homeowners to enforce the present HAMP regulations.   HAMP must become an obsession and dominate the discussions. 

We are short changing both our lenders and our homeowners by permitting anything less than rigid adherence to those stated goals of recovery.  HAMP is not a bargain nor is it a bailout.  It can be an effective method for mandated and compulsory integration.   We have seen the challenges and downfalls in our history for turning our backs to social injustice.  

Years and years of waste and family destruction can be avoided by re-integrating the past successes of mandatory integration of these vital economic recovery programs.   Failure is not an option and cannot be tolerated.   When you are faced with mortgage arrears or the service of a summons and complaint, we must be certain that exercising the right to recover and save your home, be heard in the offices of our lenders and throughout the courts of our state. 

The attorneys who serve the lenders in their quest to foreclose, must refrain from any conversation or discussion with the very homeowners they sue, unless it is to direct these families to private counsel, not for profit agencies or Bar Associations.  These are dangerous lawsuits and any attempt to diminish the severity of the foreclosure action by either the actions of the lender or their attorneys must be viewed with harsh consequences. We cannot measure the cost of failure, for it will linger for generations:   a child evicted from his room, a senior now out on the streets, uncles and aunts now living in new states or unknown shelters.  We hear about divorces, separations – “Addressee Unknown” when we receive Christmas cards back from friends no longer living in their homes.  

Our recent history recognizes us as a strong people, solving this madness. We too can use the strength of our Nation to cure our present day economic ills.  We are not a nation of invertebrates.  We are a people of backbone and when pressed we will rise, conquer and with the ability to listen to all sides, frame mandated and compulsory procedures to solve the foreclosure crisis.

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In my efforts to remain current on all private and government trends and currents, I have come across some interesting, if not required, reading. The United States Department of Treasury, under Help for America’s Homeowners, Making Home Affordable Program, published on March 29, 2010, Home Affordable Foreclosure Alternatives - Short Sale and Deed in Lieu of Foreclosure Update says regarding short sales: “The options help preserve the condition and value of the property by minimizing the time a property is vacant and subject to vandalism and deterioration. In addition, these options generally provide a substantially better outcome than a foreclosure sale for borrowers, investors and communities.”

Another interesting quote comes for the NY Times Sunday Opinion, April 11, 2010, but this time we read the published statements from a former Secretary of the Treasury and former director of Citigroup…”We all bear responsibility for not recognizing this (financial crisis), and I deeply regret that….” And his colleague, Charles O. Prince III, former chairman and chief executive officer, Citigroup…”I’m sorry that the financial crisis has had such a devastating impact on our country. I’m sorry for the millions of people, average Americans, who have lost their homes. And I’m sorry that our management team, starting with me, like so many others, could not see the unprecedented market collapse that lay before us.”

Apologies, short sales and lost homes, now we are literally “Home Free”. Circumstances being what they were, millions of Americans entered into the housing market during the years of the Bush Administration, with mortgage bankers creating “home free” opportunities- no income, no assets needed or required; no need to consider repayment or the consequences if the market collapsed. No need to pay heed to the model makers in the financial marketplace whose responsibility to oversee and render opinions would have laid bare the recklessness of the mortgage products being sold to our American families.

We now witness the results. Another reading requirement is to view the reports of the Financial Crisis Inquiry Commission. This commission has as one of its duties a direction of its process to enable the government to assist the reform and correction in our financial marketplace. Aside from these apologies, commission duties and recent supplemental directives to move forward with short sales and lost homes and titles, we must return to the solution.

For the past two years, we have made great strides to struggle against the banks’ foreclosure activities and have received tremendous benefits in our New York Courts. Our judges, court clerks and attorneys participate in daily foreclosure settlement parts, implementing the progressive HAMP programs which are evolving into solutions for many homeowners who have chosen to exercise their rights and remain in their homes. Those eligible borrowers have seen a slow and steady up-tick in the number of families destined to survive the unannounced visit by a process server with a foreclosure summons and complaint.

Foreclosure actions are now met with a rising tide of suspicion and investigation in our courts. These lawsuits are now required to proceed with a due recognition that our homeowners and families have a set of rights that cannot be routinely and cavalierly trampled upon by nameless and unaccountable lenders. Those families who entered the front door “home free” and have suffered the indignities and break ups caused by the errant judgment of lenders and financial leaders, now see that these dreams of homeownership will not make them “home free”.

These newly published regulations are not in any way a set of solutions for our homeowners. It is a return to the past failures of our government, by allowing and encouraging another lost home. Washington tested the waters and compiled a series of rules and regulations for mortgage lenders and eligible borrowers to follow which have ultimately allowed hundreds and thousands of families to remain in their homes, communities, schools and neighborhoods. With these latest procedures, it has created a diversion for implementing the solution which is so very vital to the success of the HAMP program.

We are well aware of the current and ongoing tidal wave of defaults and foreclosures, and we are also well educated now to see that the current recovery allows for much optimism. By utilizing the efforts and programs now in place and defending against an unopposed foreclosure action, the current movement towards foreclosure and short sales can be avoided. We must keep your home your own and we can do so. Your visit to our office can provide the opportunities and solutions for success. You can finally be “home free”.

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In a March 2010 publication from the Office of the Comptroller of the Currency, (Office of Thrift Supervision, Washington D.C., fourth quarter 2009) performance data confirms “the increase in seriously delinquent mortgages was most pronounced among prime borrowers, where the number of seriously delinquent mortgages increased by 16.5 percent.” More reading gives little hope for success with the manner in which loan modification and loss mitigation programs are handled when it is stated that “servicers reported that they expect new foreclosure actions to increase in the upcoming quarters as many of the mortgages that are seriously delinquent may eventually result in foreclosure as alternatives that prevent foreclosure are exhausted.”

Those who have seen limited success in trial payment modifications have not received permanent help. “Short sales continued to grow as an alternative to foreclosure... more than doubling from the same quarter a year ago.” We are not surprised. Neil Barofsky, the special inspector general for the Troubled Asset Relief Program(TARP) was quoted in the Associated Press article by Alan Zibel that the “lack of planning, has resulted in constant changes that have bewildered the more than 100 participating mortgage companies”.
 

Standing back and looking over our shoulders at these comments and summaries clearly evidences a series of salvage plans, almost doomed to failure from their inception. Millions of families, trillions of dollars, banks, servicers, homeowners and Obama Administration officials are taking aim at the mortgage and foreclosure crisis without any commitment to succeed. This week, many have seen new headlines, with new life boats launched to underwater mortgages and families struggling against the wave of foreclosure actions. The Federal Government publishes eligibility requirements for unemployed borrowers who have not missed more than three payments, are receiving unemployment insurance benefits, all with a mortgage loan of less than $729,750 and provides initiatives for a loan modification to these previously unattended folks.

Without spending much time on that program (are there really unemployed families in such categories??) we have yet another plan for homeowners whose principal residence has suffered the ravages of economic decline. Servicers now are charged with creating solutions which envision the write off of a portion of the borrower’s loan until it reaches a level where statistically, payment can be accomplished and rewards are provided to those who participate and complete three years of timely payments.

Other voices concur. David Streitfeld, writing in Saturday’s NY Times asks, "Will it work this time? Howard Glaser, a housing consultant says, “The housing market is the Vietnam War of the American financial system. The federal government is in so deep, they have to keep ramping up to find a way out.”

We have watched hree years of initialed programs, HAMP, HAFA,TARP,  during three years of Treasury Department. We have listened to FDIC officials and Administrators of National Banks. We have read three years of Mortgage Metric Reports, These all come from extremely educated and experienced federal officials, with well placed initials and highly valued post graduate degrees, all collaborating to provide and originate home retention programs, looking for eligible borrowers to participate in loan modification programs. Yet, the power, speed and intelligence of these plans is tantamount to placing bets on which witch has the fastest broomstick. There is no window at Aqueduct or Belmont or the jai-alai or dog tracks engaging in such wagers. The portfolio of salvage plans are not reaching the servicers and the lenders and the mortgage backed security trustees.

Simply stated, whatever is being done seeps through in mysterious and unaccountable manners and platforms. Calls to our lenders are overwhelmingly met with little success. Recent client visits to our offices have witnessed foreclosure actions that went unanswered for the past several years, with referees and foreclosure auctions on the horizon. Foreclosure defense litigation for these families is a current focus and feels uncomfortable at first.

But for these underwater homeowners, jumping into shark infested waters and hoping to stop the judicial sale of their homes is the only means of survival at this point. Judges, foreclosure settlement court appointed referees and attorneys and court clerks are now called upon to enter this new world of foreclosure defense litigation. It is possible that an imminent sale can be postponed and that your home can be saved.The only guarantee is that if you do nothing, nothing will happen to stop the foreclosure sale. This portfolio of broomsticks, some might argue, is perhaps our best hope in a system where modification files are handled by faceless and nameless, sometimes even foreign, servicer and bank representatives.

However, with the mandated New York State laws and foreclosure settlement conferences, and with committed court personnel, delays can be allowed and foreclosure sales can be halted, even if only on a temporary basis. This allows time for the banks to review our submissions and consider evidence of ability to repay. The fears and paralysis of a visit from a process server and delivery of the foreclosure summons and complaint are genuine, but ultimately can be tempered by a strong commitment for negotiation and investor review. Many mortgage holders have reacted to the federal programs and contracted to participate in reviewing eligibility for success. These plans and blueprints can be modeled to “Keep Home Your Own”.

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“Huge sums forge their own anchor, and our future advantage, if any, will be a small fraction of our historical edge”. Graham Bowley, in his Sunday NY Times article, quotes Warren Buffett and provides his readers with keen insight into Mr Buffett’s strategies and formulas in the face of the economic hardships during the past several years. Buffett invests much like the J.P. Morgans and Vanderbilts of the early 20th century – stocking up on capital during the good times and investing when hard times bring prices down. Says Buffett, “We’ve put a lot of money to work during the chaos of the last two years. It’s been an ideal period for investors: A climate of fear is their best friend”.

Granted that few of us can draw personal parallels or easy comparisons to a gentleman with a company whose net income is in the billions and a share of his stock in the thousands. On the other hand, when it comes to dealing with collapsing family and personal incomes and mortgage loan payments, the underlying similarities give great hope when faced with a foreclosure or default on your home loan.

Homeowners’ crisis begins with banking excess
The beginning of this century saw unheralded dissatisfaction for the frustrated many who watched as real estate brought huge profits and lifestyle advantages to others who jumped into the market. Financial institutions literally opened the flood gates and developed a mortgage loan product for just about anyone who asked. We now move forward in this cycle, realizing the damages these financial decisions have passed on to homeowners. Mortgage loan arrears, defaults, over-valued homes and lost jobs are daily concerns in our law firm.

Even so, there are a number of touch points which allow for a process of recovery in so many cases. Our fundamental challenge is to avoid the foreclosure sale of your home. The front-line professionals, both lenders and borrowers attorneys, as well as housing representatives, all agree that the banks would much prefer working out a series of steps designed to defer the foreclosure sale. Homeowners should begin this process by meeting with an attorney or with one of the many organizations counseling homeowners in these situations. Loan modification discussions, court foreclosure settlement conferences and trial work-out or forbearance plans are good news solutions to the many clients who so courageously take plans of action.

What does it take to avoid foreclosure?
Lenders often times will take on these added tasks and forego an immediate foreclosure sale if homeowners can provide them with details of hardship, potential income, and prospective job offers. Gathering the paperwork and putting together the often daunting package of required materials can be laborious and frustrating. However, this work will often pay huge dividends. Many observers to this process foresee a huge increase in successful outcomes.

There are no “smoke and mirror” tricks to this process. It requires vast amounts of time, effort and patience, all of which are necessary as the numbers of submitted pleas for assistance to our mortgage lenders and servicers grow each day in unthinkable numbers.

What to do when the process server comes
While loan modifications are an option for many in early stage default, there are increasing numbers of homeowners who are served with a summons and complaint, requiring the intervention of a Judge and court action. Most experts agree that meeting with an attorney as soon as you are served with these court papers and presenting an answer and attendance in the court process also allows for loan workouts.

The laws in New York State provide a well defined extension to the hostile foreclosure sale. It is not uncommon to see these resources used in ways that encourage, through diligent and dedicated effort, a loan workout. Failure to answer the summons promptly can erase the many legal rights that homeowners have been granted and these rights can be exercised with great dignity and respect. There is no stigma attached to appearance in the foreclosure settlement conferences and the court staff and personnel are well sensitized and understanding in these parts.

The difficulty is greatly enhanced when dealing with client’s who have lost jobs and wages. From the lender’s standpoint, the homeowner may have decided that it is a lost cause and there is little hope. This is, without a doubt, the most difficult situation in which to create a pathway for positive solutions. Nevertheless, if properly managed and guided, and the rights of the homeowner are protected by caring counsel, this temporary income loss is frequently reversed. Experienced attorneys can present the new information and adapt to the lender’s review programs even at late stages of the foreclosure process.

The best first step: Having a one-on-one with your lawyer
Recognizing the new levels of tolerance towards mortgage loan defaults, neighbors and friends who have rarely if ever called upon the services of attorneys and housing professionals must now address the “what to do’s” when served with a summons and recognize that this is not an incurable problem.

I often get calls from homeowners I’ve never met who ask my opinion or want suggestions over the phone. I am totally without the benefit of knowing them, or their background. While I am sure there are cases in which opinions can be freely given after a brief conversation, more often than not, a one-on-one meeting is in order. In many cases, a slight pause and the wait until an office appointment can be convened is probably one of the best opinions I can offer.

When facing foreclosure on his home, a homeowner needs to realize that there are tips, benchmarks and strategies that can be discussed to save his home or soften the financial blow of hard times. Looking for courageous options and solutions often turns our conversation from a chaotic pulse of doom and gloom to a rallying point that, as Buffett says, is also an opportunity in this financial crisis.

Your home, your anchor
The huge housing debt taken on several years past, during a time of rising optimism and real estate fever, is not to be ignored. Our homes are our anchors and the loan problems we now face, if evaluated and addressed, are human problems and will be sorted out and solved by the people in government, banks, courts and neighborhoods. There is no confusion; there are no blind corners and there are no painful debates when you are faced with the possible loss of your home, commercial property or investment parcel. The property is your anchor, and if secured properly, will permit you to hold fast and face the storm of uncertainties until you can implement an effective strategy for paused consideration, unique alternatives and loan workout solutions.
 

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With families, friends, neighbors and business colleagues enduring painful decisions on who to pay and how much to pay, our challenged budgets now look at one of the most time honored American debts as another minefield to cross.  It is reported that despite the rising stock market indexes, the economic recovery is steeped in rising unemployment on a monthly basis.  Some statistics now report that nationwide we may be looking at a 10% unemployment rate.  Washington experts, the same faces, people and opinions who so openly rallied around the Obama plan of home loan modifications, must now face squarely the singular dismissal of any notion that we are witnessing success on that front. 

Roger Lowenstein's article in this Sunday's NY Times Magazine section, entitled "Just Walk Away" clearly and vividly engages the morality issues which plague our neighbors who may have to consider such situations.  Says Lowenstein, "Such voluntary defaults are a new phenomenon.  Time was, Americans would do anything to pay their mortgage-forego a new car or a vacation, even put a younger family member to work.  But the housing collapse left 10.7 million families owing more than their homes are worth.  So some of them are making a calculated decision to hang onto their money and let their homes go. Is this irresponsible?"  

Mr. Lowenstein brilliantly places the default decision under a microscope and continues to soothe his readers who experience these crippling bottoms in his comparison to our business leaders who have made such choices without hesitation.  "Morgan Stanley recently decided to stop making payments of five San Francisco office buildings.” Says Lowenstein. “Nobody has said Morgan Stanley is immoral.” 

But our biggest financial houses and national institutions may not be entitled to this same "pass" that family and friends may so rightfully deserve under the loan modification and Treasury Department guidelines.   Federal and State mandates, regulations and guidelines have been enacted to govern the conduct of mortgage lenders and servicers when faced with a defaulted principal residence homeowner.   It is obvious from the many cases which I have participated in, and the hundreds, if not thousands, of phone calls and conversations in our office, this default was not planned. 

Nobody talks about their planning their default, and how things worked out just as they anticipated.  No one has come in and said that several years ago they decided to "speculate" on a home which they knew was overvalued at the time and then pay for a few years with the strategy to watch their equity and hopes evaporate.  

On the contrary.   The story is quite similar, time after time, that our clients, customers and friends in fact did not speculate on their homes, but rather, bought at a time when the economy was in strong, upward growth and their businesses were solid and their income was wonderful.  These are the stories I see. For the people I come into contact with, their intention was never to walk away from their homes.

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