Recently, we were approached by George, who has struggled with his mortgage since 2004. George fell behind at that time because his wife had medical problems, with corresponding exorbitant medical expenses. With no other option to be able to save his home at that time, George and his wife filed a Chapter 13 bankruptcy, allowing them time to pay the arrearage on their mortgage which had built up as they were paying medical bills. During the five year term of the Chapter 13, George was religious in making all his payments on time, believing at the end, with good reason, that he finally crossed the finish line.
What George didn’t realize however, was that because it is profitable to foreclose, his bank had no intention of letting him succeed on his mortgage. Thus, even though he was behind less than $2,000 on his mortgage coming out of bankruptcy, his bank claimed it was much more, and put him in foreclosure only two months later. In doing so, the bank violated George’s rights in several respects. First, it never gave George a chance to qualify for a loan modification under the federal program known as HAMP. Second, it never sent him notice of his right to reinstate his loan. The requirement that such a notice be sent thirty days prior to foreclosure is contained in most mortgages, and courts have held that this is a necessary precondition to foreclosure. Finally, the amount the bank claimed George owed was highly inflated. It is common practice for banks to falsify the amount owed, tightening its grip around the homeowner’s throat.
So, even though George was less than $2,000 behind on his mortgage, he felt compelled to sign a loan “modification”, adding $22,000 to the balance, and requiring a $77,000 balloon payment to the end of the loan. In all then, George’s bank added almost $100,000 in unjustified charges to his loan. That’s what you call ensuring success; in this case, that means George’s banks success in taking away his home. However, lest you think that nothing can resist the unstoppable force of a trillion dollar bank bent on taking your home away through foreclosure, you are wrong! There is always the “elephant in the room”, which describes a force more powerful than all the greed and power held by the Wall Street Banks. That force is fear. Fear is the only thing that can turn the tide in the homeowner’s favor in his quest to save his home.
Keep in mind that by definition securitized mortgages are those bundled with thousands of others in a loan pool or trust. Normally the total face value of those loans is around $1 billion. Because of this, the banks are always mindful (and fearful) that one adverse court decision regarding a single loan in the pool could set the wheels in motion whereby all of those loans are vulnerable to attack. Thus the unspoken consideration (“the elephant in the room”), at play in the minds of the bank and it’s lawyer in every foreclosure case involving a securitized loan (which nearly all are), is whether the fraud or illegal conduct of the bank may be exposed and, if so, whether that fact will render not only the loan at issue in the case uncollectible, but the other billion dollars worth of loans in the pool as well. Needless to say, if you can find and unleash the elephant in the room, you can go a long way to achieving a favorable outcome in your case.
Note from the author: If you have questions or comments regarding this or any Foreclosure Story article, please visit www.mcgookeylaw.com.
Next week: The story of Lisa, which serves as yet another example of what seems to be a commonplace practice of banks – inflating the loan balance, thus overcharging the homeowner.
Copyright 2012 Daniel L. McGookey