Time we all go Federal

LISTEN UP. ITS TIME TO STOP USING STATE COURTS WITH THIS MORTGAGE ABUSE FROM THE BIG BANKS AND PRIVATE HEDGE FUNDS. THESE CASES NEED TO HEAD TO FEDERAL COURTS, WHERE THE JUDGES KNOW THE LAW. THIS WILL ALSO STOP THE ABUSE OF STATE COURTS ILLEGALLY GIVING HOMES AWAY AND BANKS FROM ABUSING THE SYSTEMS.

Ruling may ease loan modification runaround for homeowners facing foreclosure

After falling behind on mortgage payments in 2008, Joyce McNair reached an agreement with Bank of America to modify her loan and made 14 payments under a trial payment plan, but now is threatened with foreclosure again. A recent court ruling may help homeowners like McNair hold lenders to such agreements. 

Joyce McNair thought she'd made a breakthrough when Bank of America agreed to try modifying her mortgage to help her avoid losing her Beaverton home in foreclosure.
After six months on a plan that would make her payments a little more affordable, the bank said, it would make the modification permanent. So McNair, whose own mortgage company had failed during the housing crash, made all six payments -- then eight more while waiting for paperwork to show up finalizing the arrangement.
Instead, she received notices that her loan had been transferred and that her new loan servicer would foreclose unless she paid $231,000 in back payments and fees by the following month.
Trial payments that go on endlessly or that squeeze a few thousand dollars more from the homeowner before the lender forecloses anyway were a common complaint among struggling homeowners trying to save their homes and get back on their feet during the recession with the help of the federal Home Affordable Modification Program, or HAMP. Consumer advocates and regulators say problems converting trial modifications continue today.
Banks have argued that the trial payment plans aren't a binding contract and that completing the trial was never intended to offer a guarantee about permanent modification.
A new federal court ruling upends that argument.
The 9th Circuit Court of Appeals in San Francisco ruled this month that lenders are required under HAMP to make a loan modification permanent upon completion of a set of trial payments. Consumer attorneys and advocates say the decision is a big win for homeowners in the 9th Circuit, which includes Oregon and Washington.

Far-reaching effects

The decision in Corvello v. Wells Fargo is binding for lower federal courts in 9th Circuit states. It's not binding for state courts, but consumer attorneys say it's likely to be taken into consideration by courts that had routinely rejected modification cases in the past. "Corvello is a very important decision and should put lenders in the 9th Circuit on notice that they can't play bait and switch with borrowers anymore," said Kelly Harpster, a foreclosure defense attorney in Lake Oswego.
In the case, plaintiffs Phillip Corvello and Karen and Jeffrey Lucia, whose two cases were consolidated before the appellate court, each said Wells Fargo offered them a trial-payment plan. They said they made the required payments but were never offered the permanent modifications they had been told would be forthcoming.
"It allowed banks to avoid their obligations to borrowers merely by choosing not to send a signed modification agreement, even though the borrowers made both accurate representations and the required payments," the court ruled.
The court called the idea that Wells Fargo could be allowed to keep the trial payments unfair and an "injustice" that would be averted by its ruling.

Bank's reaction

In a statement, Wells Fargo downplayed the significance of the decision: "The 9th Circuit did not rule on the merits of the underlying cases and found only that the District Court should consider the arguments put forth by the plaintiffs. Wells Fargo has strong defenses to those arguments and is prepared to present its case in the district court." The decision follows a similar ruling by the 7th Circuit Court of Appeals in Chicago.
According to government reports on HAMP, 88 percent of completed trial modifications are successfully converted to permanent modifications after an average of three or four months of trial payments.
For the rest, a lot can go wrong.
The Consumer Financial Protection Bureau, a federal agency created in 2011 to oversee the nation's largest banks and financial firms, said this month that its reviews of mortgage servicers have uncovered disorganized and missing files for foreclosure mitigation programs, including loan modifications.
And without naming specific institutions, it faulted lenders for sloppy handling of documents when mortgage servicing is transferred, including "lack of controls" regarding the handling of documents, including modification paperwork.

"Breach of contract"

When McNair's paperwork finally did arrive in March 2013, the documents had expired even before they were sent via FedEx. She contacted the bank and was assured new documents were on the way, she says, but those never arrived. Instead, she received a notice that her loan servicing had been transferred to Nationstar Mortgage's portfolio. Rather than picking up where Bank of America left off, the new servicer threatened foreclosure unless she paid off her default within a month.
Bank of America did not return phone calls seeking comment. Nationstar declined to comment specifically on McNair's loan.
"If there's a valid modification in place when (a loan) comes to us, then we would honor that," Nationstar spokesman John Hoffman said.
Whether the trial payment plan constitutes a contract has been a point of contention virtually since the HAMP program launched, but courts rarely sided with homeowners, said Terry Scannell, a Portland foreclosure defense attorney.
"Before, judges were chucking these cases out," Scannell said. "To get one to trial on any theory was a win."
Now, Scannell says, homeowners can bring a contract claim in federal court against mortgage servicers who fail to offer a modification once the homeowner has met the terms of a trial-payment plan.
"And the statute of limitations on a contract in Oregon is six years," Scannell said. "If this happened to them and they were foreclosed on, I think they've got a breach of contract claim."
McNair has retained an attorney and set aside the amount she'd be making in payments in the meantime.
And for the former mortgage professional, the lapses seem like double the betrayal.
"I did good mortgage loans. There was no greater joy than seeing people get into their new house," she said. "Right now I feel like I couldn't put someone in a loan in good conscience."
-- Elliot Njus

Finally the truth starts to come out

BOA, Urban Lending Sued for Rackateering on Fraudulent “Modification” Program

In a case that may have far-reaching consequences, a lawsuit was filed in federal court in Colorado accusing Bank of America of racketeering, which is what borrowers have been screaming about for years. It was a game to the bank. They intentionally lured people into what they thought was a good faith modification program, encouraged people to get deeper and deeper into "debt", and then foreclosed when they were sure that the person could not reinstate nor exercise a right of redemption. A key player in this scheme was Urban Lending Solutions.

In a case that I am currently litigating, Bank of America at first denied any knowledge of Urban Lending Solutions. When confronted with correspondence issued from urban lending solutions under the letterhead of Bank of America, they finally conceded that they knew who who the company was.  In a Massachusetts case depositions were taken and it is quite clear that this affiliate of Bank of America had their employees working off of Scripts and that anyone who went off the reservation would be disciplined or fired. Going off the reservation merely meant that they actually tried to help a borrower achieve a modification.

There are at least six whistleblowers who have executed sworn affidavits stating that the modification program was a sham. I think we might be getting closer to the point where whistleblowers tell us that the origination of the loan was a sham and that the so-called sales of loans were also sham transactions. Those employees of Bank of America or their affiliates who were successful in throwing homeowners into foreclosure were rewarded with $500 gift certificates to Target and other stores.

The claims against Bank of America are using laws that were designed to target organized crime. For seven years experts and laymen have been claiming that the banks were engaged in organized crime in the  the sale of mortgage mines, origination of loans, the assignment of loans, the recording of unperfected mortgage liens, wrongful foreclosures, illegal foreclosure sales in which the property was sold without any cash being paid, interference  in the right of the borrower to reinstate, modify, or redeem.

We are just around the corner from the key question, to wit: why would the banks engage in organized crime to create foreclosures when it is painfully obvious to homeowners and local government officials across the country that the banks have no interest in acquiring the property but only causing the sale of the property at a foreclosure auction?  Why would the banks delay the prosecution of their cases for years? Why would the banks argue against expediting discovery against them and against the borrower? Why would the banks argue for less money in foreclosure rather than more money in modification?

The answer to all of those questions is simply that there is more money in this scheme than has been divulged.  In the coming weeks and months the revelations about the true nature of these transactions will shock the conscience of the country and cause voters and politicians to rethink their position regarding the ability of regulators and courts to clawback illegally obtained proceeds that started with the transactions originated with the money of investors and somehow ended up with the banks growing by 30% despite a failing economy and a diving housing market.

We are now at the point where filing RICO charges against the banks is likely to gain traction whereas in prior years it was considered overkill for what appeared to be negligence in paperwork caused by the volume of mortgages and foreclosures. Volume had nothing to do with it. The banks made a ton of money selling those mortgage bonds.  But the money they made selling the mortgage bonds was dwarfed by the amount they made when they received insurance, credit default swap proceeds, and taxpayer money on investments owned by the investors and not by the banks. So far more than 5 million foreclosures have proceeded illegally which means that 5 million families have been disrupted in some cases beyond repair. Recent estimates suggest that another 5 million foreclosures will be added to the list unless the banks are required to conform with their regulations and the laws of the federal and state government.

BOA and Urban Lending Sued on Racketeering Charges