What Happens When You Fall Behind On Your Mortgage?
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Elliot Schlissel is a foreclosure defense lawyer helping homeowners stay in their homes throughout the Metropolitan New York area. He and his associates can be reached for consultation at 516-561-6645 or 718-350-2802 or send an email to schlissel.law@att.net.
Bank Sanctioned For Failure to Negotiate a Mortgage Modification In Good Faith
A foreclosure action was referred to Justice Genine Edwards who sits in Kings County. The lawsuit had been referred to her for a bad faith and standing hearing after more than 25 foreclosure conferences had been held regarding the case during a period of more than 36 months. After numerous attempts to reach an agreement between the homeowner and the bank, a hearing was conducted by Justice Genine Edwards.
Foreclosure Court Conferences
The foreclosure court conferences had taken place before a referee. The referee had written a report which stated the defendant, Diakite had qualified for a HAMP trial mortgage modification. In addition, Diakite had made three monthly payments under the HAMP temporary mortgage modification. After the three payments were made, the bank refused to accept any further payments from Diakite.
Three Mortgage Payments Made Under The Temporary Mortgage Modification
The first three mortgage trial modification payments were accepted by Aurora Loan Services. Aurora rejected the final modification. They claimed Diakite needed to restart the process all over again since Aurora did not receive the executed mortgage modification agreement from Diakite. Diakite indicated the reason she didn’t send it to Aurora was that she had never received it in the first place. Nationstar Mortgage thereafter informed Diakite the servicing on the loan was being transferred to them from Aurora. Nationstar thereafter denied Diakite’s HAMP application. They claimed Diakite did not provide necessary documentation.
The Judge’s Decision
Justice Edwards took into consideration that while she had directed the bank to produce a copy of the mortgage and the note and any assignments which indicated proof of ownership of both instruments, the bank had failed to produce any documentation whatsoever. She concluded the record supported the referee’s report. The plaintiff had failed to negotiate in good faith pursuant to New York Civil Practice Law and Rules section 3408. Justice Edwards therefore confirmed the referee’s report and stayed all interests, costs, and attorneys fees due and owing to the bank from March 1, 2010 until October 27, 2014, the date the hearing took place before her.
Conclusion
More and more banks are being sanctioned for failure to negotiate in good faith at mortgage modification conferences. Making homeowners provide documents over and over again, not taking responsibility for misplacing the documents, or losing the documents is simply unfair. In addition, it is unfair to grant a homeowner a mortgage modification, have them pay the required amount pursuant to the modification for between three and six months and thereafter have the bank say, no we are not going to make the modification permanent.
Homeowner Sues Bank For Breach of Contract Regarding Temporary Mortgage Modification
Homeowner 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!
The Foreclosure Settlement Conference – Part II
Pressuring Banks to Grant Mortgage Modifications
The negotiations that take place in the foreclosure settlement conference courtrooms, put pressure on the lending institutions to grant mortgage modifications to homeowners. At the first conference meeting, the attorneys for each of the parties introduce themselves and the court referee or magistrate handling the conferences take into consideration each of the parties’ desires to work out non-foreclosure alternatives through negotiations.
After the first foreclosure court conference takes place, the matter is usually adjourned for several months to allow the homeowners to submit a new mortgage modification package. At the adjourned date, the referee looks into whether all the requirements of the mortgage modification submission have been met and/or whether the financial institution seeks more information. This will usually require a second adjournment for several months. These settlement court conference appearances add a significant amount of time to the foreclosure process. Cases can be in the foreclosure conference part for as long as four months to a year.
If the foreclosure conferences do not result in a mortgage modification or other resolution of the underlying issues in the foreclosure case, the court will refer the case out to a regular court part where the litigation will continue.
Conclusion
Foreclosure court conferences give a homeowner another chance to obtain a mortgage modification. It also slows the court procedures down and allows the families who are not going to get mortgage modifications to remain in their homes for longer periods of time.
HAMP Mortgage Modifications
To watch today’s video blog, please click on the link below:
Elliot S. Schlissel is a foreclosure defense attorney. He and his associates have been representing homeowners and keeping families in their homes for more than 45 years. Elliot defends foreclosure litigation and helps his clients obtain mortgage modifications. He can be reached for consultation at 516-561-6645, 718-350-2802 or by email to schlissel.law@att.net.
Appellate Court Approves Remedy for Lender’s Bad Faith
The Appellate Division of the Second Department, an appeals court, has recently rendered a decision establishing remedies for homeowners when their lenders fail to act in good faith during the course of mandatory foreclosure settlement conferences. The appellate court in the case of US Bank National Association v. Williams upheld the lower court decision which cancelled interest from accruing and also prevented the bank from charging the debtor with their legal fees during the foreclosure conference period.
Homeowners’ Remedies
This case gave homeowners remedies to use against banks when they act in bad faith during foreclosure conference negotiations.
In this case, the bank continually asked the borrower for further documentation during the course of the foreclosure settlement conferences. However, it turned out even though the bank was asking for more and more documentation during the 13 month period, they had a ban which would have prevented them from granting a mortgage loan modification.
The Appellate Court’s Decision
The appellate court stated in its decision, “under these circumstances, the Supreme Court providently exercised its discretion in finding that US Bank was not entitled to collect interest accrued as a result of its wrongful conduct.” Under Civil Practice Law and Rules section 3408(a)(f), “both the plaintiff and defendant shall negotiate in good faith to reach a mutually agreeable resolution, including a loan modification, if possible.”
The court stated in its decision, attorneys representing mortgage holders have been complaining that in many cases financial institutions refuse to offer mortgage loan modifications but still come to the mandatory foreclosure court conferences and demand the homeowners provide them with detailed documentation to underwrite mortgage modifications. During these periods of time, the interest and the attorneys fees is accruing on the homeowner’s mortgage. Foreclosure defense lawyers have been continually asking courts for sanctions against financial institutions when they act in bad faith concerning these mandatory mortgage modification court conferences.
Conclusion
There exists remedies for homeowners when they are dealing with banks who refuse to negotiate mortgage modifications in good faith.
Bank Had No Obligation to Grant a Mortgage Modification
To watch today’s video blog, please click on the link below:
Elliot S. Schlissel is a foreclosure attorney. He has more than 45 years experience representing clients in all types of real estate matters. He strives to keep his clients in their homes. He can be reached at 516-561-6645, 718-350-2802, 1-800-344-6431 or by email to schlissel.law@att.net.
Bank Delays Tolls Interest in Foreclosure Lawsuit
A homeowner by the name of Lucic brought an application before Supreme Court Justice Peter Moulton who sits in New York County. The motion in the foreclosure case was to stop the mortgage payments from accruing in the foreclosure lawsuit that had been brought against him concerning his condominium apartment. Justice Moulton took the position the 6.5% interest rate on the mortgage held by Bank of America was a bit high taking into consideration the current interest rate payments.
HAMP Application
Bank of America opposed the motion. They claimed they had reviewed the HAMP application submitted by Lucic and they denied it pursuant to the Freddie Mac HAMP guidelines. Justice Peter Moulton found the argument submitted by Mr. Lucic, that Bank of America violated New York Civil Practice Law section 3408. The bank had failed to timely and properly process his mortgage application for a loan modification. They also continually made demands for the same documents which had previously been submitted to the financial institution. The court took the position Bank of America had engaged in a “two year run around”. The court took into consideration Lucic had diligently and faithfully provided Bank of America with the information they requested on many occasions. The court therefore took action and tolled (stopped) interest from accruing on this foreclosure from April 1, 2010 through April 30, 2012.
Conclusion
Each and every week homeowners come into my office and they tell me the same thing. They submitted a mortgage modification application and the bank they were dealing with continually asked they resubmit the same information over and over again. Sometimes these submissions took place over a period of years. The reason why the mortgage modification process doesn’t work is the banks have refused to properly fund this program. By under staffing the program, and not setting up internal guidelines, they have frustrated individuals who apply for mortgage modifications. For the large majority of home owners seeking help, HAMP instead of helping them, frustrates them.
Foreclosure Truths and Falsehoods – Part I
Foreclosure Summons and Complaint
1. If you are served with a summons and complaint in a foreclosure case, all you have to do is later show up at court at the mandatory arbitration court conference. This is not true!
If you are served with a summons and complaint in a foreclosure lawsuit, you have 30 days to submit a written answer to opposing counsel and the court, if served by any other means than by personal service. If the summons and complaint is personally put in your hand, you have 20 days to submit a written answer. If you do not answer it, you are considered to have defaulted. In the event you default, the financial institution’s lawyers, can move forward with the foreclosure case without you participating in it.
Under the law that exists in New York today, you would still be eligible to appear in court at a mandatory foreclosure mediation conference. However, you shouldn’t get your hopes up real high of it being successful and obtaining a mortgage modification. 4 out of 5 people who apply for mortgage modifications are turned down. Even those who are accepted for temporary mortgage modifications should not start celebrating. More than half of the time after the temporary modification period is over, the banks reject entering into a permanent mortgage modification.
You Will Be Thrown Out Of Your House
2. If your house is foreclosed on, you will most likely be thrown out of it in the near future. This is not true!
The foreclosure process can be a long and arduous process. If a foreclosure proceeding is brought against you, you can fight the lawsuit. There are numerous federal and state statutes which protect consumers in foreclosure lawsuits. There are issues involving robo-signers, bad assignments, failure to serve appropriate documents, and failure to effectively plead the case, which can be used as defenses against banks. Banks can also be countersued in the foreclosure proceeding for their violating state and federal laws and for the failure to act appropriately. If served with a foreclosure lawsuit do not vacate your home! You can continue to live in your home. There are remedies available to you!
