The Good Guys win one!

A couple that lost their home to a PHIFA foreclosure rescue scam has been awarded $700,000 in damages against the fraudsters. Kudos to my friend Phil Robinson, at Public Justice, for shooting these fish in their barrel. The real issue in these cases is not proving the cause of action, it is getting paid.

But for the title professional, the key element of this Baltimore Sun article is its description of the 2007 lawsuit, where the homeowners regained title to their house, and an "new" mortgage in their name. This is describing the "bona fide" lender that retained a lien on the real property to the extent it paid off the homeowner's existing loan secured by the property.

Now, Phil, go get paid!

Foreclosure avoidance success story, an oxymoron?

The Baltimore Sun, and its real estate blog, seeks "foreclosure avoidance success stories." Two days after the posting, not a single post.....As a lawyer, the only success stories I have experienced were the product of one thing--litigation!

Backdating documents in litigation is just wrong.

Some of our lender/servicer clients buck when we request "proof" of assignments into the current lender or owner of the note and beneficial interest in a trust. But a quick read of this ABA Journal article informs of the importance of this simple inquiry.

In the posted story, well known institutions were found to have misrepresented the authenticity of assignments into the named plaintiff. The court found that the plaintiff did not own the mortgage it was suing upon, at the time the complaint was filed.

The Florida court went on to suggest that the law firm employees involved should be deposed to examine their possible complicity.

Due diligence is everything.

A bit of Due Process stripped out of tax sale foreclosures by Baltimore City

The Gov. signed SB373, which alters the notice and timing provisions of tax sale foreclosure actions against the right of redemption WHEN the tax sale certificate is held by Baltimore City AND the action is against a vacant lot or improved property that is cited as "vacant and unfit for habitation" by formal violation notice. The complaint to foreclose the equity of redemption can now be filed at "any time after the date of sale," and certain notices are excused.

This will modify, slightly, how we review tax sale files in connection with claims for intervening liens and interest. The City has less Due Process to adhere to when foreclosing equities of redemption than a private citizen.

Mediation during foreclosure closer to reality, but what does it change?

On Saturday, our Legislature continued to rearrange the Titanic's deck chairs, tinkering with a Bill that would permit borrowers to demand mediation with their lender while in the midst of a foreclosure. The lender would be compelled to pay $300 toward the mediation, and the borrower would pay $50. Sen. Frosh says "anything the parties want to negotiate, they can negotiate." And most of the time, that will be nothing!

(and if you are interested in reading the Bill, it is HB 472, not HB475, as cited in the Daily Record article)

I hate to sound jaded, but borrowers who couldn't afford the home in the first instance, and can't afford it during the foreclosure process, bring little to the table. Add to that the mess of relationships that define the "loan-servicer-clearinghouse-mortgage trust-investor" holding the note and beneficial interest in the deed of trust, and you have a process that is poised to do absolutely nothing. Now, the Bill would require disclosure of the entity authorized to modify the loan when the notice for foreclose is filed, but I wouldn't expect the notifications to be complete and accurate, merely pro forma.

Even when you represent a "lender," it can take weeks or even months to get a clear answer on exactly who the "client" is in a particular case.

The Bill does add a whole new layer of litigation to the foreclosure process. If the borrower demands mediation, the lender may petition the court to dismiss the petition, alleging various listed factors. The Bill is not clear whether the borrower and/or the lender will be entitled to any pre-hearing discovery on the issues.

I can't wait to play in the sandbox with this new toy!

The purchaser out of foreclosure is not hogtied by an appeal by the borrower if no bond posted.

The new appellate decisions are a treasure trove of obvious answers to frequently asked questions. Among them is Mirjafari v. Cohn, reported February 16, 2010, No. 38. It confirms that a purchaser out of foreclosure, if bona fide at the time of the sale, is free to devise the foreclosued property if the borrowers take an appeal but fail to obtain an order staying the effect of the judgment overruling the borrower's exceptions.

This question has come to me three times over the last month, by three different insurance adjusters. It's nice to finally have a black letter case declaring the obvious proposition. My partner and I refer to this as a "the sky is blue" propositions-- the legal maxim is obvious, but there doesn't seem to be a reported decision on the issue.

Of course, if the court holds the foreclosure purchaser is not bona fide, he takes title subject to the outcome of the appeal. It is the finding of bona fide status that is key.