After a lengthy investigation and analysis by “independent, highly qualified experts” turned up multiple instances of Ocwen’s alleged failure to perform, including use of trust funds to pay borrower relief obligations through modifications on trust-owned mortgages; conflicts of interest with affiliate companies; failure to maintain adequate records and communications with borrowers; and “[e]ngaging in imprudent and wholly improper loan modification, advancing, and advance recovery practices;” among others. The investors believe the trusts lost more than $1 billion as a result.

Ocwen countered by blasting the investors’ law firm for writing its accusation “in an inflammatory tone, with misleading content, and coordinated with media release so as to create wildy false impressions.” Ocwen called the investors’ effort to stop loan modifications and push foreclosures on homeowners “ill-conceived” and state that “(w)hile knee-jerk foreclosures may redound to the special economic interests of your clients, they are not in the best interests of the trusts as a whole, not consistent with industry practice, and therefore prohibited under the servicing agreements.”

What this high level war of the words between the financial titans will mean to homeowners is far from certain. Borrowers in default continue to struggle with unmanageable mortgages for loans made before or just after the recession hit in 2008, and home values have not rebounded sufficiently to support these troubled loans. If the major investors who are pushing back against their servicers for making loan modifications too easy get their way, then we can expect a very big wave of foreclosures in the months and years ahead.

The post Is the US heading for a new wave of foreclosures? appeared first on Baltimore Bankruptcy Lawyer.

For many, the loan modification process is getting out of hand. Javier Hernandez lost his job, his father was deported and the value of the home he bought for his mother seven years ago plummeted. Despite all this grief, however, Javier appeared to still be current on his payments, according to this article in the Dissident Voice. Things started going wrong when “at the recommendation of the bank, he stopped making payments in order to receive a loan modification…”

The Dissident Voice hails itself as “a radical newsletter in the struggle for peace and social justice” and certainly the story it tells of Javier Hernandez and his family feels colored by a homeowner’s bias. Nevertheless, so many of the details contained in this account ring true and force the bankruptcy and foreclosure community to continue to assess whether the loan modification process has done any good for the homeowners in our country.

Like so many other homeowners who are struggling to pay the mortgage, Javier strategically defaulted so that he can better qualify for the loan modification. Also like so many others, he is repeatedly denied. The denials lead to a modern form of civil resistance:

The Hernandez family built a barricade across the front of the property announcing “Government By, Of and For the People.” They decorated their roof in Christmas lights proclaiming “Evict Banks” with members of Occupy San Fernando Valley, Occupy the Hood, and the Los Angeles Anti-Eviction Campaign. For 123 days, they staved off the Bank of New York-Mellon with the support of grassroots groups across Los Angeles.

The anti-eviction campaign came to an end on December 29, 2013 when police and the sheriff stormed the house at 4:30 a.m. (Unlike some sheriffs, who suspended foreclosure sales before the holidays.) No one was hurt in the incident, but the Hernandez family was finally forced from their home.

Homeowners sign contracts in exchange for receiving money, yet the belief that families must not lose their homes has eclipsed this fundamental basis of our system of laws. The story of the Hernandez family’s resistance, and its eventual fall, makes for a compelling saga of race/class struggle, but there is a larger question: has our country begun to feel entitled to receive loan modifications? If so, is this feeling a fundamental change, or simply a response to the housing crisis?

Please let me know what you think. Leave a comment, or share on Facebook, Twitter or Google+.

The post Occupy the Hood Foreclosure Resistance Crumbles on New Year’s Eve appeared first on Baltimore Bankruptcy Lawyer.

• About 600,000 people who are 50 years or older are in foreclosure.

• About 625,000 in the same age group are at least three months behind on their mortgages.

• About 3.5 million — 16 percent of older homeowners — are underwater, meaning their home values have gone down and they now owe more than their homes are worth.

AARP said that over the past five years, the proportion of loans held by older Americans that are seriously delinquent jumped by more than 450 percent.

Of course older people have fewer years left in their lives to recover from this economy and those in retirement have fixed incomes: relying on social security and pensions to maintain mortgages for homes that are underwater becomes a greater challenge when food, gas and prescription drugs get more expensive each year. The real culprit for this crisis is politics: loan modifications under federal programs remain mainly illusory and Congress, under pressure from the mortgage industry, still refuses to allow Chapter 7 lien stripping or Chapter 13 modifications of home mortgages.

The federal government created the revolutionary social security system during the Great Depression yet remains deaf to the struggles of its oldest citizens during the Great Recession. The time is long past for Congress to amend the Bankruptcy Code to allow genuine relief to the millions of struggling homeowners, many of them elderly, who are faced with foreclosure and homelessness.

The post Betrayed by Politics: Millions of Seniors Facing Foreclosure appeared first on Baltimore Bankruptcy Lawyer.

On the other hand, many states like Nevada and California are taking significant steps to make it harder for banks to foreclose. Nevada’s passage of Assembly Bill 284 in 2011 is seen as the reason for a severe decline in that state’s foreclosure rate. Certainly California’s elimination of “dual track” foreclosures – where lenders negotiate loan modifications while foreclosure proceedings continue – makes logical sense. How is a homeowner to reasonably plan for the future when the lender is communicating inconsistent messages at the same time? California’s new law, just signed by Governor Brown, also makes the smart move of requiring lenders to assign just one processor to a loan modification request. The frustrating runarounds Lisa Fiorilli reports are commonplace for most homeowners looking to modify their loans.

While loan modification programs seem inadequate at best, the efforts of state legislatures to slow down foreclosures don’t appear to be much better. According to a recent report from Reuters, anti-foreclosure laws may cause more harm than good: “A recent U.S. Federal Reserve study found that in states requiring a judicial review for foreclosure, delays associated with the process had no measurable long-term benefits and often prolonged the problems with the housing market.”

For its part, Congress has refused to amend the bankruptcy laws to allow the courts to modify home loans without a lender’s consent, an option that is unavailable to homeowners under present law. This refusal has certainly hurt our national recovery, preventing  bankruptcy courts – the one place where troubled homeowners are most likely to seek relief – from accomplishing real good in this part of our economy.

For now, in Philadelphia, Baltimore and around the country, neither banks, consumers nor Congress are willing to take “the stronger medicine that some have urged and lenders have fought, such as pushing banks to write down the principal on underwater loans. “ Until we come to grips with the twin truths that (1) banks cannot be relied upon to provide real relief to troubled loans and (2) stalling foreclosures through well-intentioned legislation simply delays the inevitable, a real national economic recovery is still very far away.

The post Loan Modifications, Foreclosures and Strong Medicine appeared first on Baltimore Bankruptcy Lawyer.

Like any struggling business or family, municipalities need to tighten their belts when faced with sharp declines of income. As the baby boomers continue to age, pension contribution obligations and retiree healthcare costs are beginning to spiral out of control.  We may well be heading into an age where the security of a lifetime pension following a career in municipal service no longer exists.  If cities, counties and states can no longer entice workers with this kind of financial security and the private sector becomes saturated with job applicants who have nowhere else to turn, we may all start to think of pensions, subsidized public transportation, and even reliable emergency services like police and firefighting as fond memories.  The 20th Century may begin to take on the hazy glow of a golden age of innocence, as all of us begin to adjust to a very different role that government will play in our lives.

The post San Bernardino Bankruptcy: The End of Innocence? appeared first on Baltimore Bankruptcy Lawyer.

• No “Dual Tracking”  The California law is designed to help homeowners enjoy real relief from loan modifications, not just anxiety and frustration. Lenders will not be able to rush through a foreclosure process at the same time they ask for endless packages of tax returns, paystubs, bank statements, utility bills and the like. The loan modification process will need to be completed before the lender can foreclose.
• No robo-signing This practice of lenders’ auto-signing foreclosure documents without any review before a foreclosure sale scandalized the mortgage world and was a key motivator for the attorney general settlement. Private homeowners would have the right to sue lenders if they were damaged by robo-signing.
• No processor runarounds Lenders will have to assign a single person to any loan modification file, who will be the homeowners’ point of contact. This rule alone may help reduce the considerable loan modification stress.

The law is only applicable to owner-occupied first mortgages.

Loan modifications are certainly a mixed bag. A recent TransUnion study showed that six out of 10 homeowners who received a loan modification stopped paying their mortgage again after 18 months. This study did not include statistics to address the many more homeowners who did not qualify for loan modifications. The question is: do loan modifications provide any real relief to borrowers? Perhaps the California law will finally force the mortgage industry to give meaningful focus on this process. The rest of the country will be watching.

The post California Dreaming: 3 Reasons Why Their New Foreclosure Law May Spread Across The Country appeared first on Baltimore Bankruptcy Lawyer.

Recently a North Carolina bankruptcy court helped a lender strike back against a debtor who had played every trick in the book to avoid a commercial foreclosure, and then found a few tricks not in the book. As detailed in this Forbes article, Nick Stratas said he wouldn’t interfere with his bank’s foreclosure sale and then did interfere. His claim? The auctioneer mumbled too much during the sale, so Stratas couldn’t compete with his lender by making phony bids to drive up the price of the sale.

Perhaps before BAPCPA the bankruptcy judge would have slapped him on the wrist with harsh words and a reprimand, but not now: the judge threw Stratas in jail until the lender could complete the sale and Nick paid the bank $10,000 for their trouble.

This judge got it right. Honest debtors are entitled to a fresh start and protection from their creditors. That’s what the bankruptcy laws are all about. They’re not to provide a playground for con artists trying to wing their way through on court delays and legal technicalities.

The post A Jail Cell For A Debtor Who Went Too Far appeared first on Baltimore Bankruptcy Lawyer.