STOPPING FORECLOSURE!

If you are or soon will be having trouble paying your mortgage, you may want to find out if you are legally obligated to pay it!

A recent article entitled “Technicality saves some homes from foreclosure - Lenders can't always prove they own debt” appeared in papers around the country a few weekends ago. The story, written by Bob Ivry of Bloomberg News, illustrates that many lenders can not prove that they hold the notes they are collecting on. This means that many people will have the law on their side if they decide that they will simply stop paying the mortgage but want to keep their house.

As the banking system of this country comes under scrutiny, there is an opportunity here for the homeowner in that, for once, they may have an ally in the federal courts. But this window may close just as fast as it opened.

The first step to take advantage of this opportunity is to get the closing documents together. The documents you will need are:

• Settlement Statement
• Truth in Lending
• Truth in Lending Disclosure
• Mortgage Note
• Adjustable Rate Note (if applicable)
• Adjustable Rate Note Rider (if applicable)
• Option Arm Note (if applicable)
• Interest Only Rider (if applicable)
• Good Faith Estimate
• Loan Application

If you are missing any of these documents, call the lender and ask them to mail them to you. If they give you a hard time or make excuses, don’t be afraid to get tough with them. They are required by law to produce to you the documentation that they have. If they don’t, you may assume that they don’t have it. If they don’t have the documentation, they also can’t prove that you owe them any money. So, at that point quit paying them until they prove that they own the note.

The second step is to send copies of these documents to a mortgage auditing company for a free preliminary audit. They will then look for violations in the truth in lending laws. They will send you a letter listing any violations they find after a cursory analysis. Should the preliminary audit indicate that major violations have occurred, you should hire them to conduct a full audit. This will not be cheap but may be worth it if the violations prove to be severe enough.

If the full audit show that major violations on the part of the lender, an attorney should be hired to notify the lender, in writing, of the violations and ask for a response. The lender is then obligated to respond within 60 days. It is the experience of one group of attorneys, I know of, that the lenders NEVER RESPOND.

At this point, your attorney will file a “stay of mortgage payments” in federal court. This stay means, in effect, you do not have to pay your mortgage until it is lifted – usually 18 to 36 months – if it is lifted at all. In fact, during this stay, you are not responsible for the taxes or the insurance, either. The lender is responsible because it is their asset.

Violations having been found in the full audit, you don’t have to worry that you’ll owe all this money to the bank at the end of the process. Remember, you are now on offense, they are on defense. The most they can hope for is a resumption of payments after the court battle.

More likely, though, is they will try to settle before it ever gets to court. This is the good part. In order for them to keep this out of court, the lender will probably offer to lower the balance – in many cases to 1/3 of the original balance. Why? It’ll be much cheaper for them to do so.
Contact me at 615-971-0489 if you want to talk to someone about how this works in more detail