Tag Archives: sub prime mortgages

The Second Wave of Bankruptcies

Mark J. Bamberger, Esq., Principal

The Mark Bamberger Co., LLC

Those with adjustable rate mortgages (“ARMs”) who made it through what seems to have been the worst part of the recent Recession are taking a deep breath in thanks of maintaining their homes from foreclosure either within or without Bankruptcy.  It is good news, to be sure.  But before uncorking that champagne, bear this in mind.  Many economic experts who study these things forecast that a second wave of foreclosures and bankruptcies on the near horizon.

The reason for this pessimistic prediction has to do with the structure of many housing loans.  Many of the ARMS still out there are about to hit a second “adjustment” phase, in which, like the first one, the rates will shoot for the sky.  This could raise some ARMs from 6% to perhaps more than 10%, meaning hundreds of dollars more in monthly mortgage payments for the average household and further financial peril.  This wave is predicted to begin washing up on our shores later in 2010 and into 2011 and 2012.  And no, this has nothing to do with the Mayan calendar!

As before, the important thing to do is avoid panic.  Just as the federal programs for home retention, for example President Obama’s Home Affordable Program, helped so many through the first wave, many who know this stuff say a second mortgage assistance program is on its way.  Also, mortgage brokers are now accustomed to dealing with attorneys representing economically challenged and desperate clients.  My mantra is this: “As wonderful as your house is, in this market the bank does not want it!  It is in their best interest to keep you as a paying customer as long as they can”.  In other words, they are on your side – well as much as a monolithic, cold, heartless creditor can be.

And on the subject of mortgage broker empathy, more often now I see more clients in my offices concerned about the pace of their loan modification under federal or state home retention programs.  They also complain about the mortgage brokers repeatedly losing paperwork and nagging them for “updated financials” to process their modification applications.  Although I join many others in assuming an insidious and nasty motive from mortgage brokers, some of this just makes sense.  As I advise my clients, mortgage creditors are so overwhelmed with modification applications that it can literally take four months or more for them to review a client file and render an offer on modification.  The lost paperwork and need for them to update that client’s financial information is more an artifact of the backlog than anything insidious.  Alternatively, if a client has evidence of nasty motives, I am more than happy to take their civil case against that mortgage broker.

Foreclosure Defense

Many homeowners, especially those who were enticed to sign sub-prime mortgages, can no longer afford their mortgage payments, even if the mortgage is current. That makes a Chapter 13 bankruptcy impossible. Even if you are behind on your payments, and cannot afford the current monthly payment for your home, you should definitely contact The Mark Bamberger Law Co. LLC to fight the foreclosure.

While you are litigating the foreclosure case, you are not required to make your normal monthly mortgage payments. The legal process will afford you time to reinstate the mortgage, sell your home, file a bankruptcy or move out. You may be able to force the lender to completely rewrite the terms of your note and mortgage, enabling you to actually keep your home.

This may sound too good to be true, but you may actually have valuable defenses and counterclaims against your mortgage company that could actually prevent foreclosure and even require your lender to pay you damages. All across the US, judges are harshly punishing mortgage companies for incomplete record keeping and for violations of the Truth In Lending Act. You may be able to allege valid defenses including fraud and Truth In Lending Act violations.

Are you aware that your mortgage company is probably not the same company that actually loaned you the money to buy or refinance your home? How do you know if the mortgage company suing you has been properly assigned your note and mortgage? Your mortgage company may have failed to properly assign the note and mortgage before initiating the foreclosure. Does your foreclosure complaint even have copies of the note, mortgage and purported assignment attached?

Most likely, these documents are not attached, and may not even be in the possession of your mortgage company. Your mortgage company may be attempting to substitute your original note and/or mortgage with a purported copy. This is called a “Count to Establish Lost Documents.” There are strict legal requirements to establish a lost note or mortgage, and your mortgage company may be unable to meet the requirements if challenged.

If your current mortgage company is not your original lender, it probably has never read your mortgage. Your mortgage may require that the plaintiff accelerate (i.e. demand) the entire balance of the note. Your mortgage company probably failed to do that, which may entitle you the opportunity to cure the mortgage by paying the reinstatement amount. It is also very common for mortgage companies to inflate the balance due on the mortgage by charging homeowners junk fees, such as Broker Price Opinions (BPO), property inspections and other “property preservation expenses.” We know how to ferret out these tactics and hold your mortgage company accountable.

Essentially, your mortgage company may have filed an improper foreclosure lawsuit, but your time to contest this is limited. You have or will be served with a copy of the foreclosure complaint by a process server. You typically have only 20 days to respond to the mortgage company’s complaint, so you need to see an attorney immediately if you wish to defend against the foreclosure. If you are beyond the twenty days, there are still defenses that can be raised.

Please don’t wait. Contact The Mark Bamberger Law Co. LLC right away so we can begin to defend your rights!