More Loan Modifications?

On February 10, 2011, in Foreclosure, by Robbie L. Vaughn, Esq.

This year, much to our delight, several of our foreclosure defense clients have received acceptable loan modification offers from their respective lenders. What’s most pleasing is that these clients had been rejected, on several occasions for some,  or they were previously offered an unacceptable, unaffordable loan modification.

Last year, we found loan modifications hard to come by. In one case, we found serious problems with a major lender’s foreclosure paperwork. We requested a loan modification or dismissal of the foreclosure action with prejudice. However, rather than give our client a loan modification, the lender chose to discontinue their foreclosure action against him. Not a bad result at all, but our client really wanted a loan modification.  As of today, the lender has not restarted the foreclosure action and a loan modification is being considered.

As always, The Law Firm of VAUGHN & WEBER, PLLC is here to assist you.  We are conveniently located in the heart of Nassau County, Long Island, at 217 Willis Avenue in Mineola, NY 11501. Contact us at (516) 858-2620 to arrange a consultation.

Please visit our Foreclosure category to learn more about foreclosure issues.

Stop paying my second mortgage?

On December 13, 2010, in Foreclosure, by Robbie L. Vaughn, Esq.

Can you stop paying your second mortgage?

Sure.

Should you stop paying your second mortgage?

Maybe not.

The prevailing theory is that if your home is worth less than what you owe on your 1st mortgage it is highly unlikely that the holder of your 2nd mortgage will bring a foreclosure action against you.

Well, although it may be rare, we did have a homeowner come into our office this year whose 2nd mortgage was being foreclosed although his home’s value was less than the amount owed on the 1st mortgage.  Additionally, lenders can, and some will,  “sue on the note” (bring an action against you to recover the money you promised to repay them) rather than bring a mortgage foreclosure action.

On the brighter side, we have seen 2nd mortgage payments reduced by as much as 80% a month.  Also, some lenders are willing to accept as little as 10% of what is owed on the 2nd mortgage as full payment. Additionally, if bankruptcy is an option, you might be able to “strip off” a totally unsecured second mortgage by filing a chapter 13 bankruptcy (see filing bankruptcy to save home from foreclosure).

We are often asked about paying and not paying second mortgages. Our answer: We can not advise you without knowing your specific situation and considering the particular options available to you.  So, make sure you are fully informed before making a final decision.

As always, The Law Firm of VAUGHN & WEBER, PLLC is here to assist you.  We are conveniently located in Mineola, NY.  You can Contact us at (516) 858-2620 to speak with an attorney.


A partner at our firm, Robbie L. Vaughn, is quoted in this article from The New York Law Journal:  Check it out below!  As always we are here to answer any questions concerning this new court ruling at (516) 858-2620!

New Court Rule Says Attorneys Must Verify Foreclosure Papers

Andrew Keshner

New York Law Journal

October 21, 2010

“We feel we have an obligation to make sure the attorneys do their due diligence and come to us with credible papers because the consequences [of wrongful foreclosures] are so great,” Chief Judge Jonathan Lippman said in an interview, adding that the new filing requirement is the first in the nation.

See a sample of the affirmation attorneys will be required to provide.

Attorneys must now certify, “under the penalties of perjury,” that they have communicated with a representative of the plaintiff bank or lender and that they have personally reviewed all documents and records related to the case.

After making this review and “other diligent inquiry,” they must attest that “to the best of my knowledge information and belief, the Summons and Complaint and all other documents filed in support of this action for foreclosure are complete and accurate in all relevant respects.”

The court system’s affirmation form notes that foreclosure filings in various courts around the nation have been subject to a variety of defects, including the failure of counsel to review documents and establish standings, bogus notarized affidavits and the “robosignature” of piles of documents by parties and their counsel.

“The wrongful filing and prosecution of foreclosure proceedings which are discovered to suffer from these defects may be cause for disciplinary and other sanctions upon participating counsel,” the court system warns.

“I think this makes clear to everybody the court system’s absolute commitment that we are not going to allow anything to interfere with the integrity of the court process,” said Judge Lippman.

Attorneys general in all 50 states and the District of Columbia are jointly investigating whether mortgage companies have violated state laws. In Maryland, an emergency measure approved this week by the state’s highest court outlines how state judges can review foreclosures and stop them if documents are invalid.

In New York, attorneys already have an obligation to ensure that the documents they present to the court are valid. For example, Rule 3.3 of the Rules of Professional Conduct states that lawyers should not knowingly “make a false statement of fact or law to a tribunal or fail to correct a false statement of material fact or law previously made to the lawyer.”

However, Judge Lippman told the Associated Press that forcing lawyers to sign something to certify that all papers have gotten a proper review will hold them accountable like never before.

“We want to make sure that everyone is focusing like a laser on these particular types of proceedings,” he said. “It puts them on notice. That’s what this is all about. We all have to make doubly sure that we are doing what we should be doing in the first place.”

Some New York judges have complained loudly about rampant errors of varying severity in legal filings by banks seeking to foreclose on record numbers of homeowners (NYLJ, Oct. 14).

Brooklyn Supreme Court Justice Arthur M. Schack, one of the judges who have pressed lenders to submit accurate paperwork, said the new Lippman rules are a “great idea,” which he hopes will allow defendants and judges to “get to the bottom of this mess.”

He said some lawyers appearing before him have admitted to signing documents at a rate of “hundreds a week and thousands a month, and the notary wasn’t even in the room.” The new rule may reduce inaccuracies, he said.

“I don’t know if it is unfair,” Justice Schack said. “You want to use the court system for relief, you have the burden of trying to have accurate paperwork and, based on your diligent inquiry, that it is true.”

Chief Administrative Judge Ann Pfau said she had judges with cases in which they refused to sign foreclosure orders without more documentation.

“There are particular issues in the foreclosure process that require us to be particularly diligent,” she said.

Judge Lippman said in a press release that “we cannot allow the courts in New York State to stand by idly and be party to what we now know is a deeply flawed process.”

The New York State Bar Association welcomed the new requirement. Its president, Stephen P. Younger, said in a statement that “the chief judge has taken swift steps to address a nationwide problem in foreclosure actions. The New York State Bar Association applauds any effort to preserve and maintain the integrity of the foreclosure process.”

Mr. Younger said the affirmation form would be printed on the state bar’s Web site at www.nysba.org/foreclosureaffirmation.

Robbie L. Vaughn of Vaughn & Weber in Mineola, who represents homeowners in foreclosure matters, said that “anything that would help the veracity of the paperwork would help. We find so many problems, it’s a shame.”

Gale D. Berg is a solo practitioner who is also the director of Pro Bono Attorney Activities for the Nassau County Bar Association, which runs a monthly foreclosure clinic. Speaking personally, she said the new requirement could prove difficult for some attorneys hired by the banks. Such counsel sometimes are hired on a per diem basis and first learn of the specific cases they are to handle only on the day they are to appear.

Anthony A. Capetola, a Williston Park-based attorney, has been court referee in Nassau and Suffolk County foreclosure matters for about 35 years. He noted that many homeowners facing foreclosure cannot afford to hire a lawyer. Without someone to advocate for the homeowner, the new requirement was the court’s effort to “try to put somebody’s neck on the line,” he said.

“The merits of this rule are going to be in the details,” said Joshua Stein, a Manhattan commercial real estate attorney who watches the residential market. Mr. Stein said it might make sense to ask a lawyer to make reasonable efforts to assess the facts, but attorneys could not be expected to become a “guarantor” of those facts.

“Is this imposing some higher standard and if it does, what will the unintended consequences be?” said Mr. Stein, who is the chair of the education committee for the state Mortgage Bankers Association but was speaking for himself. He added that slowing down the foreclosure process was not a good idea. “It’s a slow enough process already,” he said.

Michael P. Smith, the president of the state bankers’ group, said his members have long worked with court administrators to bring a “fair and timely resolution to foreclosure proceedings.”

“While we have not yet analyzed the new rules, we reaffirm our support for efforts to provide further clarity to a process which already is subject to stringent state laws,” Mr. Smith said in a statement.

New York is one of 23 states that requires judicial approval of foreclosures. JPMorgan Chase has estimated that its average foreclosure takes 792 days, one of the longest rates in the nation.

JPMorgan was one of a few major banks that froze all foreclosures nationwide while they reviewed their filings for problems. Two of the biggest, Bank of America and GMAC Mortgage, resumed proceedings this week.

The rule requiring a signed affirmation applies to both new cases and the 78,000 foreclosure actions already under way in New York courts. (See Foreclosure Figures for New York State: 2010 Year-to-Date Foreclosures Filed and Pending by County, 2009 Foreclosures Filed and Pending by County and Number of Filings by County 2005-2009.)

Lawyers handling pending foreclosure actions will probably need to go back to their clients and verify that all proper steps were followed, Judge Lippman said. The form created by the court requires the lawyers to give the name of the bank employee who affirmed that the records were accurate and the date the conversation took place.

Because the process is so lengthy and there are so many pending foreclosures, attorneys will be allowed to submit their affirmations at one of several points in the process.

For new cases, the affirmation would have to be included for the file to be complete. For pending cases—which can be at any point between the initial filing and the final ruling—the new affirmation is required before the judge’s final signature on the decision.

Once an order is signed, the affirmation would be required before an auction sale of the property is held.

@|Andrew Keshner can be contacted at akeshner@alm.com. The Associated Press and Law Journal reporter Joel Stashenko contributed to this report.

News: BOA to Resume Foreclosures

On October 18, 2010, in Foreclosure, Message/News Board, by Robbie L. Vaughn, Esq.

It appears, based on the following article, that BOA will be resuming foreclosure proceedings in NY and 22 other states. As we stated earlier, we doubt that foreclosures were ever really halted in NY (see our earlier post on NY foreclosures).

Alan Zibel, AP Real Estate Writer
WASHINGTON (AP) — The pace of U.S. home foreclosures may not slow much after all.

Bank of America said Monday that it plans to resume seizing more than 100,000 homes in 23 states next week. It said it has a legal right to foreclose despite accusations that documents used in the process were flawed.

Other major lenders have yet to say whether they will follow suit and resume foreclosures in the 23 states that require a judge’s approval. But analysts said they expect the move by the nation’s biggest bank will mean other lenders will proceed with a wave of foreclosures that have depressed the housing market.

Banking analyst Nancy Bush of NAB Research said other lenders are likely to follow because foreclosure practices were similar from bank to bank.

“We’ll be back to square one by the end of the year,” she said.

The bank’s move could mean that the costs of the foreclosure-document mess will wind up being less than some investors had feared just days ago. Bank shares sank last week after JPMorgan Chase & Co. said it set aside $1.3 billion in the third quarter to cover legal expenses that include the foreclosure document problems.

Shares of Charlotte, N.C.-based Bank of America had been flat earlier Monday but jumped on the news. They rose 36 cents, or 3 percent, to close at $12.34.

Bank of America Corp. said it’s confident of its foreclosure decisions. The bank is still delaying foreclosures in the 27 states that don’t require a judge’s approval. It said it’s still reviewing its cases in those states.

The bank’s move comes two weeks after it began halting foreclosures nationwide amid allegations that bank employees signed but didn’t read documents that may have contained errors. These employees have earned the nickname “robo-signers.”

The company said it plans to resubmit documents with new signatures in the 23 states that require judicial authorization to restart the foreclosure process. It will delay fewer than 30,000 foreclosures.

“The basis for our foreclosure decisions is accurate,” Dan Frahm, a Bank of America spokesman, said in announcing the bank’s new approach.

Bank of America had been the only lender to halt foreclosures in all 50 states. Other companies, including Ally Financial Inc.’s GMAC Mortgage unit, PNC Financial Services Inc. and JPMorgan, have halted tens of thousands of foreclosures after similar practices became public.

Analysts at FBR Capital Markets said in a note to clients that the bank’s announcement demonstrates that the foreclosure document issue may be “overblown.”

Still, more problems surfaced Monday that suggest the controversy may be far from over.

A deposition released by the Florida attorney general’s office revealed that the office manager at a Florida law firm under investigation for fabricating foreclosure documents signed 1,000 files a day without reviewing them. The manager also would allow paralegals to sign her name for her when she got tired, the deposition said.

Cheryl Salmons, office manager at the Law Offices of David Stern, would sign 500 files in the morning and another 500 files in the afternoon without reviewing them and with no witnesses, former assistant Kelly Scott said in a deposition released by the Florida attorney general’s office.

Jeffrey Tew, an attorney for Stern’s firm, didn’t immediately return a phone call.

Government-controlled mortgage buyers Fannie Mae and Freddie Mac have stopped referring foreclosures to Stern’s firm while they review the firm’s filings.

In some states, lenders can foreclose quickly on delinquent mortgage borrowers. By contrast, the 23 states in which Bank of America is restarting foreclosures use a lengthy court process. They require documents to verify information on the mortgage, including who owns it.

Those states are:

Connecticut, Delaware, Florida, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Nebraska, New Jersey, New Mexico, New York, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, South Dakota, Vermont and Wisconsin.

Associated Press Writer Mike Schneider contributed reporting from Orlando, Fla.

As always, The Foreclosure Defense Law Firm of VAUGHN & WEBER, PLLC is here to assist you. We are conveniently located in the heart of Nassau County, Long Island, at 217 Willis Avenue in Mineola, NY 11501. Contact us at (516) 858-2620 to arrange a consultation with a foreclosure defense lawyer.

Please visit our Foreclosure category to learn more about foreclosure issues.

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