Foreclosure Stories: Perseverance pays for homeowners

Jun 21, 2012



This is a weekly column by Sandusky attorney Dan McGookey, devoted to telling true stories of homeowners who have been victimized by a lending system that makes it profitable to foreclose. The names used have been changed for privacy purposes. This is the Hallers' Tale.

In April, 1998, the Hallers refinanced the mortgage on their country home with Clyda Savings Bank. After making payments on the loan for almost a decade, the Hallers learned that their bank (actually the servicer of their loan) changed to PHF. Despite this change, the Hallers continued to make payments at Clyda, which they assumed were forwarded to PHF. Unfortunately, however, PHF was not giving the Hallers credit for their payments, as in March, 2008, it filed foreclosure. Even after the Complaint was filed, the Hallers stayed the course, and kept making their monthly payments to Clyda, and Clyda continued to accept them without hesitation. During this time, the Hallers unfortunately “let their guard down” by not filing an answer to the Complaint in court. they did not do so as they were repeatedly assured the situation would be straightened out. That turned out to be a big mistake, as in May, 2008, PHF filed a Motion for Default Judgment, which was subsequently granted by the court.

Not knowing what to do next, the Hallers filed bankruptcy. After doing so, they continued to try to work things out on their mortgage, but to no avail. Because foreclosure pays, PHF was driven to foreclose rather than work with the Hallers to allow them to save their home. Cruelly ironic, the bank took this approach even though the Hallers committed no wrong in the first place. Thus, the Hallers soon found themselves right back in the same position as before – in the foreclosure court, staring at the prospect of having their home sold by the county Sheriff. Again, not knowing what to do, the Hallers filed bankruptcy a second time, and again, PHF’s response was the same – a total unwillingness to seek a resolution permitting the Hallers to stay in their home, thus leading to being right back in the foreclosure court a third time.

It was then that the Hallers came in to McGookey Law Offices. Upon their first visit, we determined by an online search that their loan was owned almost from the beginning by Fannie Mae, a government entity established for the purpose of promoting home ownership. Consistent with its mission, Fannie Mae has hundreds of rules called “Servicing Guidelines”, which are supposed to govern the conduct of loan servicers such as PHF, all of which are geared toward keeping families in their homes, if at all possible. One of the tragic truths of the process of loan securitization, as evidenced by the Hallers’ story, is that these rules are routinely ignored by the servicer and by Fannie Mae itself.

We immediately filed a Motion for Relief from the Judgment granted in 2008. Recently a hearing was conducted by the court to consider that Motion. At that hearing the judge asked for additional supporting evidence, which, when produced, will most likely lead to a reversal of fortune for the Hallers after five nightmarish years. The lesson in the Hallers story is that perseverance pays off for homeowners facing or in foreclosure. The court system, as with the rest of us, is beginning to wake up to the fact that most foreclosures these days are fraught with fraud. Keeping in mind that, at its essence, every foreclosure is an action for “equitable” relief, meaning that the bank must demonstrate that it acted fairly and legally in order to get its desired foreclosure order. Has your bank done so?

Foreclosure Stories Update: In a case not previously reported on, Bank of America decided to simply drop its foreclosure case against our clients rather than simply provide information  we sought through the discover process. I believe this may be due to the ever-increasing public awareness of the fraudulent foreclosure practices regularly used for years by the banks. This point was highlighted in the $25 billion settlement the five largest home loan servicers reached with the government in April of this year. The terms of this settlement and how it can benefit millions of American homeowners facing or in foreclosure will be the subject of “Foreclosure Stories” articles to come.

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Next week: The story of the Pavliks, who approached us within the last two weeks with a foreclosure judgment against them, and a sale date of their home set. Presently the sale has been cancelled while we work with them to apply for Hardest Hit Funds and pursue other avenues of relief.

Copyright 2012 Daniel L. McGookey