October 2, 2011

The evil business surrounding mortgage deficiency balances

By Timothy Stull (http://www.fresh-start.co)

I have written about this topic in prior posts.  However, I feel compelled to bring up this ugly topic again.  Ugly is a actually an understatement for the nature of the “mortgage deficiency” business.  I want to be clear on the definition of a mortgage deficiency ~ it is a bad debt that you owe the bank on a mortgage note.  First mortgages, second mortgages, HELOC’s ect….all can carry deficiency balances if the loan defaults.  Most banks will seek judgement immediately for the balance due.  In some cases, these balances can be 100k+.  There is no difference between this debt or any other debt owed….debt is debt is debt.  Period.  Just because it stems from a mortgage….just because Obama said everything would be OK….just because your neighbors did not pay their mortgage….it makes no difference.  The money is owed…deficiency balances are legal in 41 states…9 states carry limited liability.  Understand that banks are now bundling these bad debts and selling them off to investors…for 1 cent to 2 cents on the dollar.  There is a huge appetite for this debt in the open market…it has been labeled the new big game in the in the financial trading arena.  Sound familiar?  It should.  The sames guys that are playing this game, are the players from the sub prime mortgage game….before it died 5 years ago.  Hedge funds are fueling the market with money….they love they low risk + high profit variable.  It will be the next booming financial business….all at the debtors expense.  So many people state ~ who cares?  I don’t have the money.  Can’t get blood from a turnip.  Maybe so, but the turnip is subject to post judgement collection activity for up to 20 years.  20 years is a long time to battle wage garnishments, bank levies & writs of execution.  The post judgement collection game is an evil game.  I worked within it ~ for two very large law firms ~ in Chicago.  I was a true bad ass in that game….now I have switched those same bad ass aggressive traits towards defending my clients.  It is a tough “gladiator style” end of the industry….there is nothing nice about.  There are legal options to defending yourself in a a post judgment deficiency balance case ~ countersuit is an option & so is bankruptcy.  The best defense though is being smart about your current mortgage….don’t stategically default and don’t walk away!!  By no means, don’t squat in the house and skip payments.  If you are facing foreclosure, HIRE A LAWYER….work it out now.  You will be glad that you did id so in the future.  The Fresh Start Legal Network can help you find the right attorney to defend yourself from forclosure.  Please call us at 877.297.7011 or visit www.FRSLN.com

Be Sociable, Share!

One Response to “The evil business surrounding mortgage deficiency balances”

  1. Randi Erickson Says:

    Our bank failed and was assumed by a bank that qualified for the 80% shared-loss program; the assuming bank acted as though they were very willing to finance us to save our cabin which was the guarantee on a business loan for $200,000 which my husband’s business partner quit making the payments on without telling us. As soon as we realized this we went in and paid up the $4,300 ourselves and offered to include the business loan in the refinancing of my office condo since the mortgage had ballooned. Before we were able to sign the written agreement Central Bank took over and refused to honor this agreement. So I took out a 1 year mortgage on the office condo in order to use the equity to pay up the business loan. Then, we realized that this business partner committed fraud against us again and the loan was in default. We went in to pay it up, but the assuming bank refused saying, “It’s too late for that”. We belived him, unfortunately and it was NOT too late to pay up the deficit and assume responsibility for the loan. The assuming bank did act as though they would work with us because of our significant equity in our cabin, our home and our office condo. Since we didn’t have the paperwork done and the sheriff’s sale of our cabin was approaching, we asked to delay the sheriff’s sale, but the lender said, “We have plenty of time to do that … in MN we have a whole months to reinstate the loan.” Again, we unfortunately believed him and the day after the sheriff’s sale the lender smuggly told us, “We’re not going to refinance you!” and once we were in foreclosure, neither would any other bank because of their policies not to finance loans when the borrowers are in or have been in foreclosure. Since this time, the assuming bank, greedy for their shared-loss calculated and recalculated reimbursement has foreclosed on our cabin, on our house because of a $75,000 line of credit which we had borrowed from our original bank before it failed with the intention of refinancing our home to include it. The new bank refused to refinance our home or to finance this line of credit – which we have already paid over $28,000 on in interest only. The lender also quit taking the payments out of our account for the office condo when it matured, even though it was current and being paid at 10% – he didn’t even contact us or send the notice to us personally. All of our loans, cabin, home, line of credit and office condo were current when they were either called due in full or foreclosed on just so the bank could collect the shared loss reimbursement. We hadover @250,000 in equity on our home; well over $100,000 on our cabin which is now gone even though the notice was posted illegally; and $100,000 in equity on our office condo; with $28,000 paid in interest on our line of credit which counts for nothing. We are still current on our house payments even though it is in foreclosure. What can we do? At the ages of 63 and 65 we are both on disability even though we continue to supervise our counseling business (as long as we have the office condo anyway). No judges seem to be at all knowledgable about the shared-loss program. The assuming bank even lied to their attorney, saying “don’t show us any offers, we have an arangement with the FDIC NOT to rewrite or finance any loans which are in foreclosure that qualify for the loss share reimbursement”. The FDIC ombudsman told us specifically this is completely agains the policies of the shared-loss program agreement. Questions: 1. Can a bank that qualified for the shared-loss agreement with the FDIC call a loan to be due in full when it matures, even though payments are current? 2. Can a bank lie to a borrower by saying it’s too late to pay up a loan which is in default and assume responsibility for the loan? 3. Can a bank that qualifies for the loss share reimbursement program REFUSE to offer any mitigation options? We have never been offered one even though we have asked and have been told by the WESTCAP Forexclosure Counselors that based on the initial calculation, we should qualify for HAMP Tier II for investment property or second home; and for a residential modified mortgage. 4. Can a lender refuse to accept, review, and/or sponsor a HAMP Tier II or any kind of modified mortgage to a borrower? We have completed the forms but have no where to send them, since the foreclosure counselors insist the application HAS to go to the lender and the lender say they absolutely refuse to consider this. Any help would be appreciated. We’re working on a Appeal to the MN Supreme Court, but we’re both so burned out and depressed I don’t know if we can get it in in time – we really don’t have the resources to pay a huge retainer for an attorney so we’re doing this all as pro se litigators. Thanks for your help and free answer – we really need it.
    Randi and Lee Erickson 715-549-5543

Leave a Reply