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The Rise of Non-Bank Mortgage Servicing Companies – Part I

There has been an explosive rise in the number of mortgages serviced in the United States by non-bank mortgage servicing companies. Mortgage servicing companies don’t offer checking accounts or savings accounts. They are simply hired by financial institutions to process payments and perform various administrative banking tasks that are commonly referred to as “servicing”. These non-bank institutions in the year 2014 are servicing a larger and larger portion of all mortgage loans in the United States. Non-bank mortgage servicing companies operate under a different regulatory scheme than banks. They are subject to considerably less scrutiny with regard to their practices.

Alarm About Non-Bank Servicing Companies

A number of homeowner complaints concerning large non-bank servicing companies are growing at a significant rate. The largest non-bank mortgage servicing companies are Ocwen Financial Corporation and NationStar Mortgage. These two mortgage servicing companies, pursuant to the Consumer Financial Protection Bureau, accounted for 4,658 complaints from consumers in the year 2014. This was a dramatic increase in the number of consumer complaints from previous years.

Benjamin Lawsky, Superintendent of New York’s Department of Financial Services, recently stated that behind every troubled mortgage loan is “a family, a person, and it’s usually someone struggling to make ends meet”. Long Island is a great example of that. We have lots of homes under water and people who need loan modifications.

Transferring of Mortgages

The servicing of mortgages is not a simple business model. Each and every time the mortgage gets transferred from one bank to another or one servicing agency to another, there is potential for mistakes and errors which can result in putting the homeowner into financial turmoil. There have been numerous cases of individuals whose mortgages have been transferred from one servicer to another that have had their lives turned upside down by the mistakes made by these agencies.New York foreclosure defense attorney

Defense to Foreclosure Lawsuit: The Mortgage Company Made a Mistake – Part II

help for homeowners facing foreclosureFinding Errors By The Bank’s Servicing Organization

You should maintain organized records with regard to all transactions concerning financial institutions who hold your mortgage and their servicing organizations. There is a federal statute called the Real Estate Settlement Procedures Act. It is commonly referred to as “RESPA”. This provides you with a manner in which you can challenge many of the types of errors and improper practices engaged in by banks and their servicing organizations. It also gives you an ability to obtain the information necessary to make challenges.

To obtain the information under the RESPA law you should send the servicing organization by certified mail, a written request identifying you as the homeowner who entered into the loan and the account and information regarding the loan. The servicer has a legal obligation under the RESPA statute to notify you within 5 business days of their receipt of your qualified written request acknowledging your request was received by them. Thereafter they have 30 business days to provide you the information you requested be produced or explain to you in writing why it cannot be produced. If it cannot be produced they must provide you with the name and contact information of an individual with whom you can follow up to obtain this information. It should be noted the 30 business days to comply with your request can be extended by 15 business days if the servicing organization gives you written notification within the 30 day period of their request for an extension and the reasons why they are requesting this extension. Once you have made this request and the servicer is working on a response, they cannot report to a credit bureau information regarding alleged overdue payments that relate to the information contained in your request. If you should request this information after the foreclosure lawsuit has been initiated it will continue during the term that the request is being processed. In the event the servicing organization you requested the information from is no longer the servicing organization and there is another servicing organization which has replaced this servicing organization your written request must be sent not more than one year after the transfer to the new servicing organization.

Statutory Damages

Should the servicer fail to comply with your request, you can take legal action against the bank and you are entitled to $2,000 in statutory damages plus reimbursements for all of your attorney’s fees and in addition you are entitled to be compensated for any other losses or damages you might have. Unfortunately, due to the lobbying efforts of banks, this remedy will not cause the foreclosure action to stop or have any impact on the foreclosure lawsuit.New York foreclosure defense attorney

Underwater Homes

foreclosure defense lawyer in New YorkThe term “underwater homes” means the home is worth less than the amount owed on its mortgage. Another way of referring to a home that has a mortgage greater than its value is “negative equity”. Most people who are in underwater homes are unable to sell their home or refinance it. At the height of the real estate crisis in America in 2012, approximately one-third of all homes in the United States were underwater. Today, approximately 15% of homes in the United States are underwater. This represents about 12% of all homeowners in the country, or approximately 950,000 homeowners have homes which are underwater. In many instances, homeowners’ homes are so far underwater that the mortgage is twice the value of their home.

Real estate values have been going up recently. However, many homes in America are so far underwater these homes will never reach a point of having equity in them.

Lack of Funds and Bad Credit

This can result in the homeowner trying to rent a home when they don’t have sufficient funds to pay the security and one month’s rent on a rental apartment or rental home. They also will most likely have a low credit score because they are behind on their mortgage payments. Landlords do not like to rent homes to families that have bad credit.

What Should Homeowners With Underwater Homes Do?

The best recommendation would be to consult with a foreclosure defense attorney. What homeowners of underwater homes should not do is move out and abandon their homes. The fact their home is underwater and they are behind on their mortgage, does not mean they are in imminent threat of losing their home and being forced out of it. In most situations, it is in the homeowner’s best interest to continue to live in their home. Many homeowners do not understand the full implications of simply moving out of their home, abandoning it and not paying their mortgage.

Conclusion

Don’t move out of your home solely if you are behind on your mortgage payments. Try to obtain a mortgage modification. Seek out an experienced foreclosure lawyer and review your options with him or her.New York foreclosure defense lawyer

Zombie Homes

mortgage modification attorneyA “zombie home” is a home which is no longer under the control of the owners, but the foreclosure case is still pending and therefore the bank does not have legal title or possession of the home.

Foreclosed Abandoned Homes

There are communities which have numerous foreclosed homes within them. Sometimes the homeowners abandon these homes. This has a negative effect on the tax base. The other homes in the area have their taxes go up as a result of this action. The abandoned homes fall into disrepair causing the homes surrounding them to lose value. When people drive through an area with abandoned homes, it creates a blight on the neighborhood. Zombie homes are a problem in many neighborhoods throughout the United States. It is estimated that as many as 20% of the homes in foreclosure are vacant.

Proposed New York Program

In States such as New York, where the foreclosure process is long, the issue of zombie homes becomes a larger problem. Attorney General Schneiderman in the State of New York is currently backing an idea of letting communities create land banks for the purpose of buying, refurbishing, and reselling abandoned homes. Attorney General Schneiderman has proposed legislation which would force lenders to maintain a property which has been abandoned after the start of the foreclosure lawsuit.

Maintenance Problems of Abandoned Homes

Homes that are abandoned often have significant maintenance problems. Pipes burst. The wood rots. The lawns sprout weeds. These homes create eyesores and create a blighted effect on the neighborhood.

Syracuse Land Bank Program

Katelyn Wright, the Executive Director of the Greater Syracuse Land Bank, recently stated “studies have shown that they [abandoned homes] have a dramatic negative impact on the property values for the homes in the surrounding vicinity, but also less dramatic but still notable for homes in a several block radius.” Katelyn Wright, as Director of the Greater Syracuse Land Bank, has been involved in dealing with abandoned homes in the Syracuse area. Syracuse experiences as many as 50 new abandoned homes each month. The Land Bank buys many of these homes for a very modest price using State, City and County funding. The homes are then either rehabilitated and put back on the market or, if they are not able to be rehabilitated, they are demolished. This is an example of how one community is dealing with zombie homes.

foreclosure defense lawyer in New YorkElliot Schlissel is a foreclosure attorney who represents homeowners whose homes have been foreclosed on. He helps keep his clients in their homes and advises his clients not to abandon their homes.

Foreclosure Defense Facts: Keeping Your Home When Facing Foreclosure – Part II

foreclosure defense attorneys for homeownersDo I Need A Lawyer To Help Me Litigate The Foreclosure Case?

The answer to this question is yes. In theory you can submit an Answer and represent yourself. However the law firm representing the bank usually brings hundreds of lawsuits against consumers. They usually have an expertise in foreclosing on homes and having the homes sold at auction on the courthouse steps. If you do not hire a lawyer, you will find yourself in an extremely disadvantaged situation. You will not understand the laws, the court rules, and the procedures involved in fighting a foreclosure case. Retaining a law firm who has fought hundreds of cases and has a successful record such as our law firm puts you in the best situation to keep your home, obtain a mortgage modification, and/or get the foreclosure lawsuit dismissed.

You Can Obtain A Mortgage Modification

You will have the opportunity to modify your mortgage under the auspices of the mandatory mortgage modification conference. New York requires, in all foreclosure lawsuits, a mandatory settlement conference on residential mortgage foreclosure cases. At the foreclosure settlement conference you will have an opportunity to apply for a mortgage modification. Even if you have already been turned down, you can apply for another mortgage modification under the supervision of the referees in the mandatory foreclosure settlement conference part in the courthouse.helping homeowners stay in their homes

Tips to Avoid Foreclosure

Please click on the link below to watch today’s video blog:

http://youtu.be/VEakIsUsJfk

Elliot Schlissel is a foreclosure defense lawyer.  He has been helping homeowners stay in their homes for more than 20 years.  He can be reached for consultation at 516-561-6645, 718-350-2802 or by email to schlissel.law@att.net.

Fannie Mae Easing Mortgage Rules

mortgage modification attorneysFannie Mae is the largest mortgage government entity in the United States. In an attempt to bring more people into the housing market, it is in the process of taking action to expand the availability of mortgages with low down payment requirements. The new program by Fannie Mae will require mortgage insurance from private organizations on top of the down payment made by the purchaser.

Fannie Mae is a government backed entity which guarantees mortgages. It is regulated by the Federal Housing Finance Agency. Since the onset of the financial crisis in the year 2008, more than 3/4 of all mortgages in the United States have had some type of government backed guarantee behind it. Fannie Mae’s current requirements only allow borrowers to borrow up to 80% of the purchase price of the home. Under the new proposed program, Fannie Mae will back programs with down payments as low as 3% of the value of the home. However, all of these loans will require private mortgage insurance with regard to the portion of the 20% of the cost of the home that is not made as a down payment. The purpose of this new program is to bring more borrowers who have not accumulated significant amounts of savings back into the housing market.

Raising The Risk of Future Foreclosure

Studies have shown prospective home purchasers who make down payments of less than 20% have significantly higher default rates. When these homeowners default, their homes go into foreclosure. Low down payment loans were part of the problem which caused the huge mortgage crisis in 2008, which is still playing out today.

Conclusion

Helping prospective homeowners come into the housing market with smaller down payments gives more and more Americans access to the American dream, the ownership of a single family home. However, this program must be careful not to create a new mortgage bubble which may cause a deluge of foreclosures in the future.

foreclosure advocate for homeownersElliot Schlissel is a foreclosure lawyer. He fights foreclosure lawsuits and helps keep homeowners in their homes.

The Effect of the New Mortgage Rules on the Housing Industry

To watch today’s video blog, please click on the link below:

http://youtu.be/VHNfaksmnWE

Elliot S. Schlissel is a foreclosure defense attorney.  He can be reached for consultation at 516-561-6645 or 718-350-2802.

The Impact of Foreclosures on the Rental Market

Please click on the link below to watch today’s video blog:

http://youtu.be/9qalW-q5bB0

Elliot S. Schlissel is a foreclosure lawyer.  He can be reached by telephone at 516-561-6645, or 718-350-2802 or by email to schlissel.law@att.net.

Default Interest Rate in Foreclosure 24%

foreclosure defense attorney on Long IslandIn a case before Magistrate Judge Lois Bloom in the Eastern District of New York (a Federal Court) a borrower named McLaughlin had borrowed $184,000 and provided a note and mortgage to the financial institution regarding the mortgage. The financial institution brought an application for summary judgment claiming there were no issues of fact.

In the summary judgment motion, the attorneys for the financial institution cited a portion of the promissory note which said “in the event of default of the note specified that a 24% per annum ‘default rate’ should remain in effect until such time as all events regarding default were cured.”

Statutory Interest Rate in New York 9%

McLaughlin argued to the court the bank’s calculation of interest at the rate of 24% was improper. He claimed when judgment was granted on the summary judgment motion to the financial institution, they should have used the default rate of interest under New York statutory law of 9%.

Magistrate Bloom considered McLaughlin’s arguments. However, she found the 24% default rate of interest in the note would apply in this situation. She rejected McLaughlin’s argument the New York rate of interest of 9% on judgments was appropriate. She took this position because the contract clearly stated the interest would accrue at the rate of 24% per annum in the event of default until such time as the entire amount of the note was fully paid. She found even after a judgment was entered in the bank’s favor, they would continue to be entitled to an interest rate of 24%.

Conclusion

I find a 24% interest rate of a mortgage is outrageous. Most people do not carefully read mortgage notes when they enter into them. Often, attorneys who represent clients at closings on real estate transactions don’t go into detailed explanations concerning the potential for an interest rate raising from a reasonable rate to 24%. I disagree with this court’s decision. However, Judge Bloom’s decision is now the law of this case.

assistance for homeownersElliot Schlissel is a foreclosure lawyer. His office has represented scores of New Yorkers successfully in bank foreclosure proceedings. Elliot strives to keep his clients in their homes!

Foreclosure Defense in Valley Stream, Lynbrook, Baldwin, Malverne, Freeport, Oceanside, Long Beach, Elmont, Lakeview, West Hempstead, Hempstead, Merrick and Bellmore, New York

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