Perhaps one third of the people I counsel who want to save their home
from foreclosure are fighting an uphill, and oftentimes losing
battle. When they want to fight. I help, but try to temper their
expectations, and have them prepare for and accept the eventuality of
relocation.
Then, there are situations in which I have a reasonable expectation
the homeowner can Fight Foreclosure! and keep the home.
Recently, I spoke with a woman, a casual acquaintance whose home is
in the early stages of foreclosure. I asked her to bring whatever
documents she had pertaining to the loan's origination and mortgage
foreclosure.
Tearfully claiming she doesn't want to lose her home, she confessed
a "friend/confidant" has convinced her saving the home is impossible
and her friend (who happens to own a short sale company) is very
close to negotiating a preforeclosure short sale....
"What choice do I have?" she asked, visibly upset and choking back
tears..
If the deal is approved, this woman will have to vacate the property
and find alternative/affordable housing. In my state, the
foreclosure process can take about a year or more. If she did
nothing, she would still have 8 or 9 months in the house before
having to leave.
For all I know, there will soon be a national or state moratorium on
residential foreclosure adding months to the process.
"Where will you go?" I asked her.
"I don't know."
"Doesn't it make sense to try to Fight Foreclosure! and try to keep
the house?" (I run a non profit housing preservation advocacy, and
in 2008 authored Fight Foreclosure! How to Cope with a mortgage you
can't pay, Negotiate with your bank, and Save your home)
"He said he tried but the lender refuses to modify my loan... I don't
have the money to bring the loan current. The house isn't worth
what I owe. I screwed up." she stated.
"Have you talked to an attorney?"
"No."
"What have you done?"
"I gave the papers to my friend (who happens to own a short sale
company and deals with people in foreclosure for a living) who is
helping me."
MY 20+ YEAR ADVOCACY INCLUDED INVESTIGATING ALLEGATIONS OF PREDATORY
LENDING PRACTICES, UNTOWARD REALTY TRANSACTIONS, AND MORTGAGE LOAN
SERVICING ABUSE FOR THE MORTGAGE BANKERS ASSOCIATION OF AMERICA'S
CUSTOMER SERVICE DEPARTMENT.
A cursory review of her loan documents indicated predatory
characteristics, and I suggested we investigate the loan for
compliance to Truth in Lending (TILA), RESPA, HOEPA, etc. If the
loan were determined to be predatory, or made in violation to
applicable state or federal lending law it would give her some
leverage in seeking a loan modification... She agreed to ask her
lender to provide her loan origination file to me.
Based upon my experience, I concluded she had a chance at keeping her
home via a cramdown loan modification. A chance.
Missing from the folder she brought were the basic transaction
documents needed for the "short sale" of her home: a listing
agreement, contract of sale, buyer's prequalification, and the
preliminary HUD1.
"I don't recall signing a contract of sale..." she said, "But "he"
has all the paperwork." I'll have him FAX the paperwork to you.
Instead, I got a call from her "friend and confidant" who told me her
situation was hopeless, and he was very close to getting a short sale
approval.... and didn't want me to screw things up....
"What's the rush?" I asked him.
"She is in foreclosure. The lender has refused a loan mod. This is
her only option."
"Well, I think the loan may be predatory, and as such, she has a
chance to keep her home."
"Nonsense. Her loan is from an excellent mortgage company!"
"Well, I looked at the settlement statement, and I disagree. The
loan, in my opinion, was unconscionable. Furthermore, as you must
know, a loan in the early stages of foreclosure won't get the same
attention and workout consideration from the lender as will a loan
closer to Sheriffs' Sale which in this case is at least 8 or 9 months
away... maybe more."
"I think you screwed things up. I hope you didn't screw things up."
he told me.
--- (OH, BY THE WAY. I ALSO WROTE, AN ETHICAL APPROACH TO SHORT
SALES IN 2006).
I ask for, and he promised to FAX to me the listing agreement,
contract of sale, PHUD1, etc. He didn't.
Instead, I got a polite email from the woman who asked me to "back-
off" because her friend would "ask again" for the lender to modify
the loan.
I wasn't afforded the opportunity to review the nuts and bolts of
this transaction, in fact, I was denied the opportunity which raised
suspicions. I have nothing invested except a little bit of time,
and my compassion for anyone who is at risk of losing their home to
foreclosure...
But I do have some unanswered questions. Primarily, Why the rush? I
also question the likely predatory nature of the mortgage in
foreclosure, and who originated the questionable mortgage loan.
Is there a connection between the predatory loan's origination and
the convenient, accelerated short sale transaction?
I have only my suspicions based on experience and instinct. I may be
wrong. I hope I'm wrong.
I feel as if I am watching a person starve to death with a turkey
sandwich within reach.
"Hey! There's a turkey sandwich over there. Eat it!"
"Oh, no. My friend says that its not a turkey sandwich, and even if
it is, it's not for me."
www.spoch.org
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