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 Pavliks' Tale.
The Pavliks ended up in foreclosure in September, 2011, after their bank refused to work with them in any meaningful way to offer relief. Well into the foreclosure process, as we were preparing to take the deposition of the bank’s witness, without explanation, the bank totally retreated an dismissed the case. The reason it did so, I firmly believe, is grounded in the Consent Judgment entered into between the five largest bank loan servicers and the government which is the subject of the Special Report below. I invite you to read it, as it may very well affect you along with millions of American homeowners.
Foreclosure Stories Special Report: Attorney Generals’ Settlement Provides Huge Opportunities For Distressed Homeowners To Save Their Homes
Practically everyone has heard of the $25 billion settlement reached in February between 49 state attorney generals (including Ohio), and five of the largest bank mortgage loan servicers, Bank of American, JP Morgan Chase, Wells Fargo, CitiGroup and Ally Financial, formerly known as GMAC. This agreement was formalized in a Consent Judgment Entry filed in Federal Court in April of this year. Now that the agreement is official it is of critical importance for every homeowner -- even those whose loan does not involve any of these five banks -- to know about the terms of the settlement, as its implications are far-reaching. As the Consent Entry is quite long and complicated (over 300 pages in length), it will take time to fully analyze it, and digest its impact on virtually every American homeowner. This article is the first in a series meant to inform readers as to how this settlement may affect them and how they may benefit from it.
First, it must be realized that the settlement itself was an offshoot of the “robo signing” crisis which came to light in October, 2010. Robo signing is the practice of causing key documents needed to prosecute foreclosures to be fraudulently produced en masse in order to speed along the foreclosure process. No one can say for sure how many homeowners lost their homes based upon such fraudulent documents, but I believe it is fair to say it is in the tens of millions. A portion of the settlement amount has been set aside to partially reimburse those homeowners.
More importantly, however, the settlement could easily help millions of homeowners whose homes have not yet been sold, even those who may have a judgment against them, to save their homes. This is so since the settlement requires these banks to go back and review all foreclosures, even those which may be years old, to see if fraudulent documents were used. Just as importantly, the settlement also requires the banks to also review the loan modification process employed to see if it comported with all federal regulations, such as HAMP, FHA, Fannie Mae and Freddie Mac servicing guidelines. It has been my experience that these regulations are routinely ignored, given the profits to be made by banks through foreclosure.
In short, information and education are key. No law is worth the paper it’s written on unless there are those who know of it and are informed to the point they can enforce it. It goes without saying that the banks who flagrantly violated the law in the first place cannot now be trusted to do the right thing, Even the government, which was complicit in the massive fraud by looking the other way while it was occurring, cannot be trusted in this regard. That leaves you, the homeowner, to fend for yourself, and the only way you can do this is to understand the basics of the settlement, and how to make it work for you.
Note from the author: If you have questions or comments regarding this or any Foreclosure Story article, please visit www.mcgookeylaw.com.
Next week: Part II of the Foreclosure Stories Special Report.
Coming soon: Town Hall Mortgage Meetings.