Stephanie was sued for foreclosure on her $47,000 mortgage after missing three payments in 2004. As generally is true with banks these days, Stephanie’s bank showed her no forgiveness when she fell behind. This was so even though she had been making payments from 1989 until her default in 2004, a total of $83,000 in all, or almost twice the amount of the original mortgage amount. On the advice of her then-attorney, Stephanie proceeded to file a Chapter 13 bankruptcy, religiously making payments on her mortgage over the next five years.
Coming out of that bankruptcy in 2009, Stephanie had been paying on her mortgage for 20 years, yet her bank claimed she still owed $31,000. It did so despite the fact that she had made an additional $38,000 in payments during the bankruptcy, for a total of $121,000 over the life of the mortgage. At that time, since it was a different bank seeking payments from her, Stephanie’s lawyer demanded proof that it was rightfully entitled to collect, and instructed her to stop making payments. As a result of her non-payment, the bank resurrected the old foreclosure case in 2010, which is when Stephanie contacted us.
From the time of our initial involvement until just last week, we attempted to work out a good faith resolution to the case with the bank through its’ attorney. In cooperation with Stephanie, we balanced the strengths we saw in defending the case, which were the bank’s questionable ability to prove it was entitled to collect, along with its ability to prove the amount it claimed was owed, against the risk that Stephanie could lose her home. However, despite our best efforts, Stephanie’s bank was bent on driving the foreclosure case forward, filing a motion seeking judgment, arguing there was no need for a trial, a motion the court rejected.
Then on the eve of trial, without explanation her bank suddenly dismissed the case, abandoning its 9-year-long effort. Why, after all that time and expense, would the bank get cold feet and reverse course? We will never know for sure, but a good guess is that it didn’t want its evidence exposed to the scrutiny a trial would bring. Keep in mind, that chances are that like Stephanie’s, your mortgage is in a trust bundled with thousands of other loans, and the bank may not want to risk putting all its loans into play should it lose one case.
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Next week: Foreclosure work-out results in two mortgages modified.
Copyright 2013 Daniel L. McGookey