Deutsche Bank and Select Portfolio do tactical retreat

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May 1, 2014
THE STORY OF THE BAKERS
 
The Baker’s story is one of the longest, drawn out mortgage battles we’ve seen, lasting over a decade. It all began in 2001, when they took out their $74,500 mortgage loan. Not long after that that their mortgage problems began, as Mrs. Baker developed physical and mental health issues. Marital strife ensued, in turn leading to financial distress, and missed house payments. Eventually, a foreclosure was filed by Deutsche Bank, the Trustee of the loan pool in which the Baker’s loan was placed. Desperate to save their home and not knowing where to turn, the Baker’s contacted a bankruptcy attorney who 
put them in a five year long Chapter 13 Plan, whereby they would resume making current monthly payments of $850 on their 9% interest rate loan, along with an additional $250 per month toward their arrearage balance. 
 
Thus, the Bakers set out on a five year journey to save their home. Despite the fact that their interest rate was excessive to begin with, with an adjustable rate feature, their payments actually increased from $1100 to as high as $1600 per month during the term of their bankruptcy Plan. Nonetheless, the Bakers soldiered on, making every payment on time as required under the Plan, a total of $70,000 in all. Certainly, coming out of the Plan in September, 2009 the Bakers had every right to believe their mortgage problems were a thing of the past. Unfortunately, it was not to be. Only three weeks later, they received their second foreclosure complaint courtesy of Deutsche Bank. Not being able to afford counsel, they represented themselves in that case; eventually resolving it by entering into a Loan Modification Agreement, after being told by a court mediator that they would likely lose their home if they didn’t do so. 
 
The Modification Agreement led to the second foreclosure being dismissed in 2011. However, the terms of that Agreement were horrible: the Baker’s excessive monthly payment stayed approximately the same and they were required to make a balloon payment of $80,000 at the end of the remaining 20 year maturity date of the loan. In other words, after paying hundreds of thousands of dollars over 30 years on their $74,500 loan, they were required to make a final payment which was considerably higher than the amount they borrowed. Given that Mr. Baker’s income was less than $3,000 monthly, with that being their sole source of income; the monthly payments were eating the Bakers alive. Again, the Bakers fell behind, and again, Deutsche Bank was standing right there waiting with a foreclosure complaint. It was then that the Bakers came to see us. 
 
Deutsche, and its new loan servicer, Select Portfolio Servicing (SPS) were no more cooperative in trying to work things out with us on the Bakers behalf than they were with the Bakers. Just last week, the trial in their third foreclosure case was set to begin. As of 3 PM the day before trial, the last and final offer from Deutsche and SPS was for the Bakers to pay $835 per month for the remaining 16 years left on their loan, culminating with a $36,000 balloon payment. By this time, the value of the Baker’s home had fallen to $60,000, meaning that the offer made no economic sense for the Bakers, and they therefore rejected it. As I got up the next morning and started my final preparation for trial, I happened to glance at my email inbox, only to find an email from Deutsche’s counsel indicating that he was dismissing the case! Who’s to say why Deutsche and SPS would do such a retreat in the decade long drive to take the Bakers home away? We can only surmise that they didn’t want their treatment of the Bakers exposed to the light of day, as a trial would do. Whatever their reasoning was, it is safe to say that the Bakers will be safely in their home for years to come.
 
 
 
 
Note from the author: If you have questions or comments- regarding this or any Foreclosure Story article or should you like to have a “free mortgage analysis”, please visit www.mcgookeylaw.com, 
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Kate Eyster and Lauren McGookey contributed to this article. 
 
Copyright 2014 Daniel L. McGookey