We’ve had several cases recently where our client/homeowner’s bank essentially disappeared from the radar screen in terms of trying to collect payments on the mortgage. This has happened both in a case following a long foreclosure battle and in situations where no foreclosure was ever filed, despite the fact a payment was not for years. The end result of these matters was that the bank, for whatever its reason, essentially decided to walk away from its mortgage and accept an amount, which was only a small fraction of the loan balance as payment in full.
Greg first came into our office years ago with a foreclosure complaint in hand. After a year or so of fighting the foreclosure, the court eventually granted the bank judgment. We then appealed, arguing that Greg’s bank had failed to prove that it was the right party to be suing. The Court of Appeals agreed, reversed the judgment, sending the matter back to the trial court for further proceedings. What happened next was truly amazing. Rather than continuing the battle, the bank offered to accept as a full payoff a sum essentially amounting to what it would have cost Greg to continue to fight the foreclosure.
Bill’s journey was different than Greg’s, but the end result no doubt will be the same. Before coming to see us, Bill experienced problems with his mortgage, and started missing payments. Several years of nonpayment went by, but surprisingly Bill’s bank never sought foreclosure. Tired of being kept in limbo, Bill authorized us to reach out to his bank in order to get the matter concluded. After all, even though he was not paying on his mortgage, it still was recorded with the county recorder, a fact which prevented him from doing anything with the real estate. Right out of the box, Bill’s bank offered a substantial discount as a full payoff, which would result in a cancellation of the recorded mortgage. Though we are still in the process of negotiation, it appears certain that we will reach a deal, and Bill’s mortgage will disappear.
The lesson in these stories is that in this day and age of loan securitization, a process where mortgages are bundled, sold and resold, you never know when the bank claiming to own the mortgage may throw its hands up in the air in exasperation and admit defeat in terms of trying to collect. If you are a homeowner who hasn’t made a payment for months, and yet your bank hasn’t filed foreclosure, you are not completely in the clear because you still have a recorded mortgage against your home. On the other hand, the fact your bank has gone AWOL may very well signal a huge opportunity to rid yourself of the mortgage, you safely in your home for good.
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Kate Eyster and Lauren McGookey contributed to this article.
Copyright 2013 Daniel L. McGookey