2009 Round-Up: What We Know, How to Go, and What's Next

Dec 27, 2009

It’s time to consider the year 2009 and to plan 2010. At the beginning of this year most homeowners, lawyers, judges and legislators were still blaming the borrowers for their excessive borrowing. Our mission of reaching out to more people has been more successful than we planned. Caught by surprise, we were challenged by excessive demand for services and a very shallow pool of resources to draw on. This continues to be a problem but, as you will see below, we are working on it.

Nearly everyone still agreed that a debt is a debt and it must be paid without uncertainty floating into the marketplace because of “technical defects.” Foreclosures continued at a brisk pace, properties were seized (many times before the foreclosure or before the writ of possession was issued) and the pretender lenders were considered real banks, real lenders, who had lost money because of these “bad bets.” Foreclosures continue to move briskly but there is a growing resistance amongst members of the judiciary to letting them go through without any scrutiny.

Now we know differently as we discover scant evidence that any of the investors who put up money to fund mortgages ever received the proceeds of a foreclosure sale. That of course is because the party who foreclosed had nothing to do with either the investor or the borrower. But the power of myth lives on and most homeowners confronted with the threat of foreclosure drop their keys on the kitchen counter, or take some bogus cash for keys deal, and leave their homestead forever, unaware they still own it, still have a right to occupy it and that the people doing the threatening are at best unauthorized interlopers and at worst, simple thieves.

The possibility that the note, the mortgage, and the obligation may have each or all been extinguished by multiple payments that are undisclosed to investors and homeowners alike is just dawning now upon the judiciary, and is just now getting some attention from mainstream media. The Bankruptcy Bar is awakening to a new world where even the apparently smallest bankruptcy estate might be worth hundreds of thousands of dollars arising from UNSECURED debt and an unencumbered valuable asset (i.e., the home) which has probably been paid by third parties who are not making any claims. Gretchen Morgenstern deserves special honorable mention. As a reporter for the New York Times, she has systematically dug deeper and deeper into the mortgage mess, taking nothing at face value and requiring proof and corroboration of everything. A breath of fresh air.

Yet Homeowners face the continuing problem of navigating through the maze of regulation, compliance issues and securities issues that could help them because the legal profession, as a whole, has not caught on to the main points. Even the list published on this blog yields mediocre results and inconsistently satisfying relationships, despite attendance at our seminars. We are constantly plagued by demands that outpace our ability to provide service because lack of time, lack of staff, lack of money or a combination. The “donation” model implemented a year ago has yielded….well, let’s just say <$100/month. So we are are looking at new models of how to help you (and us) through this process. Brad likes to say “feedback is the breakfast of champions,” so we want yours.

The first one, which I want you to give feedback on, is where we provide you with the direct telephone help on filling out the intake forms, collecting the right documents, and creating a folder that a forensic reviewer (or compliance auditor) or attorney can use to make sense out of your case. This would establish whether your loan is securitized and whether you may have compliance issues. You will also have an opportunity to purchase the video presentation of the homeowner’s seminar, the homeowner’s workbook currently in revision , the video presentation of the lawyer’s seminar, and the lawyer’s workbook, currently in revision. I have been in touch with a group of people who are able and willing to perform these tasks and give you a live, responsive voice in getting your “act” together. The idea here is not to guide you into some agenda of “loan mod” or “short-sale” or whatever, but to give you an opportunity to present an unvarnished view of your mortgage situation and some potential options that are available to you. TELL ME WHAT YOU THINK OF THIS!

Second, we could encourage you to go to one of the hundreds of forensic reviewers (“auditors”) who perform varying degrees of compliance audits or reviews, prepare qualified written requests, prepare debt validation letters, and who might even negotiate a modification or short-sale for you if it is possible to actually get one done. A new model is emerging that is interesting to me which is a direct relationship or even employment of attorney(s) by the forensic review or auditing company, which would hopefully bypass the frustration of getting lawyers all too eager to take a retainer but confused by the process of saving your home. TELL ME WHAT YOU THINK OF THIS!

Third, it might come back to us, and we would have one a select group of a few lawyers, accountants or other qualified experts act as expert witnesses to sign a declaration or affidavit that can be used in or out of court, creating issues of fact about the status of the loan, the parties in the securitization process, the information that is still required from the pretender lenders etc. This would provide support for your demands for answers in discovery or under Federal Law. The signatory of the affidavit or another expert could testify with respect to the content of the expert declaration and defend it under cross examination at deposition. This would alleviate the need for the lawyer or the homeowner to master the basics of securitization, UCC, negotiable instruments, recording, etc. TELL ME WHAT YOU THINK OF THIS!

And fourth, we would encourage you to go to competent licensed legal counsel familiar with local law applicable to your property. This has been a troublesome part of the equation so in addition to encouraging forensic review (“audit”) firms to enter into semi-permanent relationships with lawyers, we will publish a list of lawyers and rate them according to your feedback. We’ll do the same thing with the forensic reviewers or auditors. Perhaps that will enable you to avoid the nagging problem of disappointing relationships. TELL ME WHAT YOU THINK OF THIS!

As for the resumes and emails we have received, from potential auditors and reviewers, we are testing out some models that will enable professionals to obtain direct referrals from our sites. You will all soon receive an invitation to attend a conference call so we can discuss the logistics.