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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

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

foreclosure defense attorney for homeownersBanks and their servicing companies make mistakes. Homeowners, at one time, blindly believed whatever a bank did and whatever documents they submitted were always correct. Since the mortgage crisis started in 2008, there have been dozens of publications of inappropriate actions, mistakes, issues involving robo-signing and bad practices by financial institutions. As a result of these disclosures, attorney generals in all 50 states as well as the United States Attorney General have brought lawsuits which have resulted in banks all over the country paying hundreds of billions of dollars in fines and penalties.

Katherine M. Porter, a law professor, conducted a study based on the filings of 1,300 Chapter 13 bankruptcy cases. Her study revealed, in a majority of these bankruptcies, documents submitted by the holders of the mortgage contained errors (Misbehavior and Mistake in Bankruptcy Mortgage Claims, Texas Law Review, 2008.)

What Type Of Mistakes To Look For

Mortgage servicing companies cannot always be counted on to give you credit for all of your mortgage payments. They may charge excessive fees in violation of state laws. They may fail to advise you that you can redeem your property by becoming current on your mortgage payments. In the event you seek to reinstate your mortgage, and you receive a statement from the mortgage servicing company with regard to what they claim is necessary to be paid to reinstate your mortgage, that reinstatement must have an accurate itemization of what they claim is due them. An example of a mortgage servicer mistake would be charging you for a reappraisal or home inspection on your home when the mortgage documents don’t make it an obligation of yours to pay these fees. The following are examples of common mortgage servicer mistakes:

  • the bank engaged in coercive improper collection practices concerning their mortgage
  • your mortgage payments get applied to someone else’s account
  • the bank receives your mortgage payment but doesn’t give you credit for it
  • the bank buys insurance on your property and charges you for it in spite of the fact you already had insurance on your property
  • the bank fails to pay your property taxes in a timely manner and a penalty is assessed or the bank fails to pay your property taxes altogether even though they have received the money in escrow for your property taxes
  • the bank charges you late fees and property expense fees even though your mortgage payments were made on a timely basisNew York foreclosure defense attorney

The Lack of Standing Defense in Foreclosure Lawsuits – Part II

loan modification lawyerPresenting the Lack of Standing Issue to the Court

To start with, the lack of standing must be plead as an affirmative defense in the homeowners’ Answer. The homeowner can thereafter during the discovery portion of the case demand documentation from the financial institution of the chain of assignments which led them to bring this lawsuit. If the bank cannot produce documentation of this chain of assignments the homeowner can make a motion to dismiss under New York Civil Practice Law and Rules section 3211. The homeowner, in their moving papers to dismiss the lawsuit, must make the argument the financial institution bringing the lawsuit is not a valid holder of the note and mortgage and/or there is an issue concerning one or more of the assignments in the chain of assignments.

Lack of Standing Arguments

Many homeowners who come into my office have researched on the internet and through other sources the issue of standing and seek to submit a lack of standing argument to the court. However, the technicalities of bringing a motion to dismiss under section 3211 of the New York Civil Practice Law and Rules and the manner in which the motion needs to be presented to the court generally requires an expertise which is beyond the ability of most homeowners. The best way to assert and/or prove a lack of standing argument for the purpose of getting a foreclosure case dismissed is to hire an experienced foreclosure defense lawyer to make these arguments for you.New York foreclosure defense attorney

The Lack of Standing Defense in Foreclosure Lawsuits – Part I

foreclosure help for homeownersWhen a financial institution brings a foreclosure lawsuit, they have a legal obligation to prove to the court they are the rightful holder of the mortgage and note they are suing on. Mortgages and notes are standardized documents. In most situations a variety of financial institutions and servicing organizations will handle the mortgage and note prior to the initiation of the foreclosure lawsuit. The financial institution who in the end brings the foreclosure lawsuit must show each of the assignments, starting with the financial institution who made the loan, was properly executed and the requisite documents were filed in the County Clerk’s office. Over and above that, the financial institution who brings the foreclosure lawsuit must have in its hands at the time the lawsuit is initiated, the original mortgage and note.

Bank Assignments

Sometimes mortgages have traveled through many different banks and servicers’ hands before a foreclosure lawsuit is brought against the homeowners. The proof of the ownership by the financial institution who brings the lawsuit revolves around the chain of assignments from one previous owner to the next. Sometimes the actual paperwork on the assignments are never completed or are not correctly done. The documentation of the assignments may only exist within the computers of the financial institutions. That is insufficient. The party bringing the foreclosure lawsuit must have the original note and mortgage and be able to show that every step of the way, between the original bank and the bank bringing the foreclosure, involved a proper assignment which was properly filed and executed by the appropriate parties.

Homeowners have been successful in dozens of lawsuits in the Metropolitan New York area in showing the financial institution bringing the foreclosure lawsuit was not a proper party due to a defect in the assignments. This causes the lawsuit to be dismissed! The theory behind the assignments is the party bringing the lawsuit has standing to sue under the terms of a contract (the mortgage and note are contracts). The initiating party in the lawsuit must have a documented ownership interest in the contract. In addition, the party having the ownership interest in the contract must have suffered some damages (the non-payment of the mortgage).New York foreclosure defense attorney

The Response To Being Served With A Summons And Complaint: The “Answer” – Part I

foreclosure defense lawyerWhen homeowners are served with a Summons and Complaint they must file a response to that Summons and Complaint. The response is referred to as an “ANSWER“. There are very specific and detailed requirements as to what should be contained in the Answer submitted by the homeowners.

To start with, the Answer should include a response to each and every numbered paragraph and claim made by the financial institution in its Complaint. The paragraphs in the homeowners’ Answer should be numbered. The numbered paragraphs in the homeowners’ Answer should respond to the numbered paragraphs in the financial institution’s Complaint. The homeowner can either admit the allegations, deny the allegations, or deny knowledge or information sufficient to either admit or deny the allegation contained in the numbered paragraph of the financial institution’s Complaint.

The attorneys for the financial institution must prove all of the allegations in their Complaint which are either denied or which the homeowner denies knowledge or information sufficient to form a belief as to the truthfulness of the allegation contained in that paragraph. The paragraphs which are either admitted or not denied by the Answer of the homeowner are deemed admitted and the bank will not have to prove the truthfulness of those allegations at the time of trial.

Affirmative Defenses

In addition to either admitting, denying, or denying knowledge or information about the allegations in the specific paragraphs of plaintiff’s Complaint, the homeowners can assert affirmative defenses in their Answer with regard to the foreclosure lawsuit. An affirmative defense is basically a legal argument as to why the bank should not be allowed to be successful in prosecuting the lawsuit. Examples of affirmative defenses can deal with the fact the mortgage is actually current, and not overdo; that documents were signed by robo-signers; the homeowner was fraudulently induced into taking the loan; the financial institution violated Federal Truth in Lending Laws, New York State banking laws or Federal banking laws, the Fair Debt Collection Practices Act; predatory lending issues; bad assignments; lack of standing to bring the lawsuit; failure to serve a 90 day notice; failure to adhere to all types of procedural foreclosure requirements and many, many other affirmative defenses.

The Answer to the bank’s Complaint must be sworn to by the homeowners and acknowledged before a Notary Public. Thereafter a copy of it must be served on the attorney for the bank. The homeowners must file a copy of the Answer with the court and the bank’s lawyers. The Answer must have attached to it an Affidavit of Service of the Answer on the bank’s attorneys.New York foreclosure defense attorney

Foreclosure Lawsuits Time Barred by the Statute of Limitations

foreclosure attorneys for homeownerThe statute of limitations for bringing a foreclosure lawsuit in the State of New York is six years from the time the mortgage is accelerated by the bank (called due) or from the initiation of the foreclosure legal action, whichever occurs first.

The real estate crisis in America started many years ago. Foreclosure defense attorneys are now coming across cases initiated by banks where the statute of limitations defense bars the banks from moving forward with their foreclosure case. It should be noted the statute of limitations is a defense to the foreclosure lawsuit. However, it does not remove the bank’s lien from the property. What you end up with in a case where the statute of limitations defense is effectively plead, a bank is unable to collect on their mortgage but their mortgage still remains a lien on the property preventing it from being sold without it being repaid.

Acceleration of the Mortgage

A mortgage requires that a homeowner make payments over a period of time. The usual length of mortgages are 15 or 30 years. During the period the homeowner is making payments, all they owe each month is the amount of their payment. The acceleration of the loan involves the bank usually sending a letter to the homeowner saying it is calling the entire balance of the mortgage due and owing. This means, if the homeowner sends a payment in the correct monthly amount to the bank they will usually reject it claiming they want the entire mortgage paid in a lump sum payment. It should be noted however, if the homeowner is several months behind and pays all the arrears, the bank will usually reinstate the mortgage.

After the bank sends the acceleration letter or initiates a foreclosure lawsuit, if the homeowner takes action to acknowledge the debt, it can start the statute of limitations running all over again.

Conclusion

If there is any possibility the bank can be barred by moving forward with a foreclosure, it is extremely important the statute of limitations be plead as an affirmative defense in the homeowners’ Answer to the Summons and Complaint.New York foreclosure defense lawyer

Foreclosure Lawsuit Dismissed a Second Time!

foreclosure defense lawyer for homeownersThe Federal National Mortgage Association (FNMA) brought an application in a foreclosure case for summary judgment in the year 2010. The summary judgment motion was denied because there were defects in the foreclosure lawsuit. FNMA in 2014 brought a second foreclosure lawsuit. In this lawsuit they made a similar motion for summary judgment seeking the same relief they had sought in their prior motion. The court denied the motion again.

Justice Alice Schlesinger, sitting in a Foreclosure Supreme Court Part in New York County, dismissed the lawsuit a second time. Her decision stated there were numerous deficiencies in the papers submitted by the attorneys for FNMA. FNMA’s attorneys claimed none of the defects in their papers were significant. Justice Schlesinger found they had four years to correct the problems which existed in the original lawsuit and they still hadn’t dealt with these issues. Justice Schlesinger was “troubled” by the ambiguous role the Mortgage Electronic Registration Systems, Inc. (“MERS”) had in the assignment process with regard to this mortgage. She also noted in her decision there were a number of scriveners errors in the Complaint submitted by the bank. Her decision stated these errors dealt with significant issues. Her decision stated there was an issue concerning who had possession of the note at the time the foreclosure lawsuit was initiated. Justice Schlesinger found that FNMA sought to amend their Complaint five years after initiating the original proceeding. The court declined FNMA’s leave to amend and dismissed the foreclosure lawsuit.

Conclusion

Experienced foreclosure defense lawyers who carefully review the facts of a case can come up with winning strategies to have these cases dismissed.New York foreclosure defense attorney

Foreclosure And Your Credit Score

New York foreclosure and bankruptcy attorneyThe initiation of a foreclosure lawsuit by a financial institution against you will have a negative impact on your credit score. For most families, their home is their most significant asset and investment. When the family gets served with a Summons and Complaint in a foreclosure lawsuit, not only are they facing the potential loss of their home, but in addition, their credit worthiness is also being negatively impacted. Foreclosure lawsuits generally cause individual’s credit scores to be reduced by between 150 and 300 points. The foreclosure action can remain on your credit report for between 7 and 10 years.

Reduced Credit Scores

The reduction in your credit score may make it more difficult for you to rent an apartment should you decide to leave your home, do a short sale, or give the bank a deed in lieu of foreclosure. In addition, a reduced credit score will make it more difficult to obtain car loans, personal loans and credit cards. Some employers also look into an individual’s credit scores as part of their employment process. A low credit score may lead a potential employer to a negative conclusion regarding an individual’s level of responsibility or character.

Maintaining Your Credit Score During Foreclosure Litigation

Do not despair! Action can be taken to maintain your credit score even during the course of foreclosure litigation. If you have credit cards you should use 2 or 3 credit cards each and every month. It is important you make timely payments on these credit cards even if the payments are only minimum payments. Each time you use your credit cards it will give you positive points on your credit score. In addition, if you have car loans, personal loans, or other debt you should make your payments in a timely manner on these debts. Your continued use of credit cards, paying loans such as car loans, over time will completely rebuild your credit score. My office has represented individuals who while in foreclosure maintained credit scores of over 700 points.

Conclusion

Even though a foreclosure will have a negative impact on your credit score it is possible to maintain your credit score during the course of foreclosure litigation.

New York foreclosure defense attorney IslandElliot S. Schlissel is a foreclosure attorney who is familiar with the multitude of problems caused by the sub-prime mortgage crisis in America. He represents homeowners in foreclosure cases throughout the Metropolitan New York area and takes legal action to preserve their home ownership rights and help them obtain mortgage modifications.

Various Fraudulent Mortgage Transaction Issues – Part II

legal help for homeownersFraudulent Mortgage Assignments

There are a variety of types of fraud which banks engage in related to the assignment of mortgages. Sometimes the assignment contains signatures of individuals claiming to be corporate officers of the bank and/or mortgage company when in fact they were never employed by these institutions. On other occasions, mortgage assignments are signed by individuals who claim to be corporate officers of financial institutions which went out of business or filed bankruptcy many years earlier. There are also many examples of assignments of mortgages which are notarized by notaries who were actually in a different state at the time of the transaction. These notaries never witnessed the signatures of the individuals they notarized.

Ownership of the Note and Mortgage

There is a United States Supreme Court Case which stands for the proposition the foreclosing institution must own the note and mortgage at the time of the initiation of the foreclosure lawsuit. The case is Carpenter v. Longan, 83 U.S. 271. In this case, the United States Supreme Court stated “plaintiff failed to show that it owned the mortgage at the time the complaint was filed.” As a result the court ruled the plaintiff financial institution did not have standing in the foreclosure case. The financial institution must not only be the holder and owner of the original note, but also must be the holder and owner of the mortgage as well. In Carpenter v. Longan, the United States Supreme Court held the plaintiff lacked standing to initiate and prosecute the foreclosure case and therefore the case was dismissed.

New York foreclosure defense attorney IslandElliot S. Schlissel, Esq., is a foreclosure lawyer representing homeowners throughout the Metropolitan New York area. He defends homeowners whose homes are subject to being foreclosed upon. He also helps homeowners obtain mortgage modifications.

Homeowner Sues Bank For Breach of Contract Regarding Temporary Mortgage Modification

mortgage modification attorneysHomeowner Lyo brought a breach of contract proceeding against Bank of America. Lyo had attempted to obtain a mortgage loan modification from Bank of America. She had contacted Bank of America. Bank of America sent her an application for a loan modification. Thereafter Bank of America accepted and mailed Lyo an agreement for a trial modification mortgage plan.

Payments Made Under Trial Mortgage Modification

Lyo made all necessary payments under the trial program. She continued to make payments which were accepted by Bank of America even after the trial program finished. However, Bank of America never sent her a permanent mortgage loan modification. Bank of America notified Lyo she did not meet the eligibility requirements for a modified loan. They claimed this was due to the present value of her home.

23 Payments Accepted, 24th Payment Rejected

Bank of America had accepted payments from Lyo for 23 consecutive months after she had agreed to the trial period mortgage modification plan. Bank of America rejected her 24th payment. Supreme Court Justice Judith McMahon sitting in the Supreme Court Part in Richmond County ruled Lyo’s temporary mortgage modification plan could be considered an enforceable agreement. This agreement granted Lyo a loan modification as described within the terms of the agreement. She found the language in the temporary mortgage modification plan unequivocally provided, if Lyo complied with all the conditions, Bank of America was obligated to grant her a permanent loan modification. Bank of America’s application to dismiss Lyo’s breach of contract lawsuit against it was therefore denied.

Conclusion

Numerous homeowners come to my office each and every month with a story of woe concerning temporary mortgage modifications. The story goes as follows, the bank offered them a temporary mortgage modification and they accepted it. They thereafter made payments for a period of time, usually six months, under the temporary mortgage modification plan. Thereafter the bank comes up with some type of reason to turn them down for a permanent loan modification. Sometimes the reasons are very spurious. Homeowners who fulfill their obligations under temporary mortgage modification plans should always be given a permanent mortgage modification under the same terms!foreclosure defense lawyer on Long Island and New York City

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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