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~beenawhile
In regards to the negligent duties of my new Servicer, deliberately sending me various copies of documents I have not requested, & sending them incomplete at that; with further negatiting my requests by NOT SENDING what I have requested.

I was digging around for some answers, that i have concerning my loan and the direction it will probably go, once I send them this next letter i have typed.

During my research, I came across this again (been a long time since I've seen it) and thought that some of the newer people here, Who are CURRENTLY facing F/C could use this information.

Click the link below and it will take you to the website where you can select your state, to Read about the F/C rules. It will also tell you if your state is Judicial, or Non-Judicial.


Foreclosure procedures by state

http://www.realtytrac.com/education/noframes/foreclosurePro.html


Each state has foreclosure laws that dictate the manner of foreclosure in that state. One of the most important distinctions in a foreclosure process is whether the foreclosure is conducted through the court system (judicial) or outside the court system (non-judicial). State law governs whether judicial or non-judicial foreclosure is used. Some states allow both types of foreclosure, but each state usually has one type that is more commonly used.

In states that allow both types of foreclosure, the document used to secure the mortgage loan usually determines whether judicial or non-judicial foreclosure is used. Typically, a deed of trust allows for non-judicial foreclosure while a mortgage allows for judicial foreclosures, although some mortgages include a clause allowing the lender to sell the property without going through the court system in the case of a default.

To start a judicial foreclosure, the lender files the appropriate court action against the owner in default. Usually this is in the form of a lis pendens (pending lawsuit) against the owner. If it rules against the owner, the court will order a public sale of the property.

The trustee named in the deed of trust has to record a public notice of default to initiate a non-judicial foreclosure. If the owner in default does not pay off the default within a certain time frame, the trustee can schedule a public sale of the property.

Below is an overview of which states allow judicial and non-judicial foreclosure, according to the latest information RealtyTrac has been able to obtain. You can also double check the foreclosure procedures in your area.

To view specific state foreclosure laws, simply click on the appropriate state name below.

http://www.realtytrac.com/education/noframes/foreclosurePro.html

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~beenawhile
Whoa~ wait a sec.

I just saw this, and am now confused.
can someone please explain this?

The trustee named in the deed of trust has to record a public notice of default to initiate a non-judicial foreclosure. If the owner in default does not pay off the default within a certain time frame, the trustee can schedule a public sale of the property.

 

1. Trustee would be the person holding my note right?

(simple yes or no will do.)

 

 

The words "has to record a public notice"

2.  A public notice would be what? A notice listed in the News paper Legal Sections?

 

or

 

3.  Would this mean some other type of Notice to the public?

 

Bear with me for a second here. The reason I ask, is because it seems there is a process that should be followed. and if reading this sentence correctly it says this:

 

A. The trustee has to record a public notice, of the default.

B. This initiates the foreclosure in the NON Judicial states.

C. Then, the owner is given a certain time frame to "pay off" the entire debt.

AND IF THE DEBT IS NOT PAID BY THE OWNER, "THEN" (key word being "then") & only "THEN"

D. The trustee can schedule a public sale of the property to, FORECLOSE.

 

"Can schedule" would mean that another step is to be taken, to "SCHEDULE" the Foreclosure, and the next step would be.......

E. The scheduling of the date that the home is sold on court house steps.

 

RIGHT?

 

There are steps being omitted, or conjoined together to serve as one step, by our NON Judicial system here.

 

There are as follows.

A. The trustee named in the deed of trust has to record a public notice of default (in the news paper legal section)to initiate a non-judicial foreclosure.

 

B. If the owner in default does not pay off the default within a certain time frame, the trustee can schedule a public sale of the property.

 

 

 

Now can someone tell me, if this paragraph might be incorrect.

 

Maybe, I'm reading this paragraph the wrong way?

 

or Does it appear true that STEPS are being omitted?

 

Rephrased a different way below.

What is happening here in Ga, is

Public record is recorded in the news paper legal sections "claiming" the borrower is in default, and the news paper is telling the borrowers they have a CURE date, and its usually less than a 30 day period (btw), and if the debt is not CURED in full by the First Tuesday of the next month, the House is Foreclosed on, ON THAT DAY.

 

Alright, I just found the information I needed, here it is

Process Period
(Days)
Sale Publication 
(Days)
Redemption Period
(Days)
3732None

 

The list of processing days, and sale publication days, does tell me, that boundaries are being crossed, and that the trustees are not following proper protocol's for the days "ALLOWED" to cure the debt.

What are some of your views on this?
And WHY IS THIS HAPPENING?
and WHAT CAN BE DONE TO STOP THESE PRECOCIOUS Foreclosures?

A few last questions.........
Why does NON JUDICIAL Exist?
Who makes a state Judicial or Non Judicial?
And how can Ga be changed from a NON Jud. to JUDICIAL for all Foreclosures?
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Quote:
Originally posted by ~beenawhile

1. Trustee would be the person holding my note right?

(simple yes or no will do.)



No.

Quote:
Originally posted by ~beenawhile

The words "has to record a public notice"

2.  A public notice would be what? A notice listed in the News paper Legal Sections?



The legal requisites vary from state to state and you need to look to the state laws of YOUR jurisdiction to ascertain the requisite public notice.  You also need to bear in mind that there may be some DUE PROCESS issues associated with the notice and some state statutes relating to notice might or might not actually conform to the minimum due process requirements of the United States Constitution.  However, also bear in mind that states VARY as to the respect they accord CONTRACTS and the extent to which they allow provate parties to WAIVE RIGHTS including due process right BY CONTRACT.

Examples of notices would INCLUDE notices posted in a Court House, notices posted on the subject property, recorded notices (recorded with the Clerk or Recorder Deeds or of Public Records or a similar official), Published notice (in a newspaper), etc.

Bear in mind that notices of foreclosure serve three very distinct purposes and the form and sufficiency of the notice therefore also generally needs to necessarily conform and be responsive to these purposes.

First, the Mortgagor (borrower) needs to be notified so that the borrower can cure the default and avoid foreclosure.  This notice also affords the borrower an opportunity to arrange for someone else to bid on the subject property on the borrower's behalf OR to work improve the sales price of the foreclosure sale by making more bidders aware of the sale.

Second, the notice needs to advice others with competing junior and/or senior interests in the subject property of the pendency of foreclosure.  For example, suppose there is a junior lien on the property and sufficient value in the property to well cover the first mortgage lien.  If there is only ONE bidder at the sale, the senior lien holder may buy the property for the outstanding first mortgage amount.  The junior lien holder MIGHT best protect its interest by appearing at the auction and either PURCHASING the property or bidding up the property to an amount in excess of first plus second mortgage (presuming that sufficient actual value is there).  If the junior lien holder doesn't have notice, that lienholder's interest would be extinguished unfairly.

Third, the notice makes members of the public AWARE of the upcoming sale and, at least theoretically, makes it possible for others to attend and bid.  However, we must recognize that for a variety of reasons, there tend to be very few bidders at such auctions.  One key reason is asymmetries as to INFORMATION.  A property sold at foreclosure is rarely exposed to the public for inspection as to CONDITION.  Most often the owner or a tenant is still occupying the property and access is therefore not available.  In some jurisdictions, the mortgagor has some limited right of restitution, which constitutes an implicit CALL OPTION on the property during the restitution period.  This CALL OPTION restricts the purchaser's freedom to occupy and improve the property during the restitution period, limiting the value of the property.  Probably most important is the unavailability of ready mortgage financing to buy properties in a distress situation such as a foreclosure sale.  Moregage finanancing requires an appraisal and a purchase and sale agreement.  With neither, the auction is limited to CASH BUYERS of which there are FEW.

*

The BEST NOTICE as to the Mortgagor and other lienholders is ACTUAL NOTICE by personal service.  When the mortgagee or trustee in a foreclosure can show that notice was properly served upon the mortgagor and the other lienholders or persons interested in the property, that will tend to satisfy the notice requirements in MOST states, as to the first two notice constitutencies mentioned above.

SUBSTITUTED SERVICE by POSTING or PUBLICATION would in most cases be considered INFERIOR service of the first two constituencies.  Whether it is ADEQUATE or not depends upon the law of the jurisdiction and the wording of the power of sale provision under which the sale is being made.

I think that we could all agree that service by posting or publication MIGHT be an acceptable alternative to personal service in situations where a person has fled a jurisdiction and is actually HIDING from service.  Why should a foreclosure be forstalled by a person going into hiding?  Similarly, where a person's whereabouts are generally UNKNOWN and the person cannot be readily found or where a person's identity is UNKNOWN (as in an instance of a foreclosure involving property owned by a decedent with UNKNOWN HEIRS), service by posting and/or publication may be the best that can be expected.  

But where a person is KNOW and can be readily found, notice by posting or publication is rarely satisfactory in a JUDICIAL foreclosure setting.  See for example the very recent U.S. Supreme Court case of Jones v. Flowers, No. 04-1477, SUPREME COURT OF THE UNITED STATES, 547 U.S. 220; 126 S. Ct. 1708; 164 L. Ed. 2d 415; 2006 U.S. LEXIS 3451; 74 U.S.L.W. 4200; 19 Fla. L. Weekly Fed. S 158, January 17, 2006, Argued , April 26, 2006, Decided.

But one must also bear in mind that what passes for due process under a private power of sale might or might not meet due process standards when the courts are involved.  In many states, the courts will permit a LESSER standard if agreed to by conteact between the parties (the deed of trust).

Overall, I would characterize it as VERY DANGEROUS to GENERALIZE about the notice requirements under either judicial or non-judicial foreclosures.  The laws of EACH state need to be individually consulted with respect to the facts of the case.  And those laws also need to be assessed within the context of newer court rulings, such as the Jones v. Flowers decision.

A web site summarizing state forecosure laws should NOT be relied upon as authoritative.  Instead, it should be viewed only as a point of departure for a more thorough investigation.  Unless you are a VERY SKILLED RESEARCHER, you need to obtain the assistance of a lawyer specializing in the are of the law you are investigating!
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~beenawhile
Mr. WAR,

Thank you very much for the insight upon the proper protocols, of notification. Though, I have had to read some of your para's 2-3 times, it is now comprehended, the extent to which you are speaking.


I can see that "notice" can be a complicated issue, as to which is legal & acceptable, and which is not acceptable, nor legal, but not rightfully pursued in this area.

This would pertain to the the "Processing Period" the "Sale Publication" and the steps that would appear are being "missed, or over stepped" by jumping directly into the Foreclosure in less time than the "Processing Period" &"Sale Publication" are allowed, (or mandated.)


Onto a different topic of Foreclosure:

I have been to a few Foreclosure sales, not as an investor, but rather out of curiosity, as an onlooker, and observer.

What I have seen appears to be, and in my mind is completely illegal.


They are as follows:
Given that I do not know what the title of the person Auctioning the Properties would be titled, I would have to assume that they are referred to as the Auctioneer?

The Auctioneer, is NOT a person Representing the Court House, the Law, or any other entity of Law. While this may be acceptable, in my mind......It is not.

The person who is Holding the Auctions in our area is that of a Corporation known as Mers, and is a representative of such. (Please bear in mind, I have no specific proof, of such, it is my personal belief, as to seeing this same individual in the records office, searching public records (deeds, warranties, titles, & the like) & after looking through the newspapers of the homes to be Foreclosed, and represented by MERS in the Foreclosures.) This specific individual is also the one, who Auctions off the properties, that have been sent to the Legal section as showing to be a Foreclosure action by MERS) in the newspapers. So yes it is safe to say, and assume that this Auctioneer? is a representative of MERS, in some sort of affiliation.


Again, in my mind this seems as if it is illegal for someone OTHER THAN, a member of the Courthouse, or governmental entity to be the Performer, or Auctioneer of Foreclosures. What are the perspectives on this? And do any of you know if this is "ACCEPTABLE"?



Now, something else that I have also seen that really seems to be a very illegal practice.

This Auctioneer, has sold properties to a Company, (and yes I know this company's name, and no I will not share it) with this COMPANY ONLY GIVE THEM CASHIERS CHECKS IN THE AMOUNT OF $1,000.00 AT THE TIME OF THE SALE. I have also heard their conversation:
THAT THE COMPANY BUYING THE F/C AT THE F/C WILL give the funds to the Auctioneer LATER, after they get back to the office, and Let the Boss know the extent of the amount of homes they bought that day at the Auction.

How many Homes did this company buy in this "one" particular instance, I'm referring to?

SIX of them!!!!!!!!!

This means that 6 checks were issued to the Auctioneer, as a "Hold" or "Down payment" to secure the FORECLOSURES to their company.
I know these checks were a $1,000.00 each because I saw them all, as this company was laying them on the ground on top of each stack of papers (each stack represent a home) I wish to God, I had had a video recorder with me, as this entire routine seemed outrageously, illegal, and as if many, boundaries, and laws had been broken.

So I then, (after realizing that she was getting ready to give the Auctioneer the checks) moved closer to the Auctioneer, and listened to the conversation they had concerning the checks, the properties, and the BOSS issuing the Checks in full at a later date.

Now can someone please tell me, isn't this illegal?

Isn't a public auction of a Foreclosed home, on the Courthouse steps supposed to only except Payment in full at the time of the Auction, and not at a time later in date?

In my mind, when an Auction Occurs on the Courthouse steps, PAYMENT IN FULL OF PURCHASE PRICE IS TO BE ISSUED AT THAT VERY MOMENT IN TIME.
CORRECT?


I have further questions but will wait for answers from you all.
Thanks for all the help and info MR. WAR and all.
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Nope...Wouldn't be illegal BAW. And depending on the terms of the auction is probably SOP. Auctions usually have a minimum buy-in - at least the ones that I'm aware of. Sometimes it's $1000. Sometimes it's $5-10k. All depends on the individual auction. Regardless of the buy-in amount the terms are usually that the remainder of the purchase price must be handed over within 30 days.

Something else that you, and everyone else facing a foreclosure, may want to take a look at is the relationship between the foreclosure mill handling the legal end of the FC and the auction house handling the sale of the property. There is a chance that The two entities may be involved with each other or have common ties. Start at your Secretary of State's Corporate Division website and see if you can access info on line. If not, make a few phone calls whenever you can.
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Quote:
Originally posted by ~beenawhile
Why does NON JUDICIAL Exist?

Non-judicial foreclosure exists to afford parties a means BY CONTRACT to resolve a default through the sale of the collateral pursuant to the contractual terms of a "private power of sale" provision in the mortgage or deed of trust.  Presumably, the parties are freely and willingly entering into such an agreement and the state is recognizing the right of the parties to specify the procedure for resolution of contractual breaches by contract.

This is not per se nearly as outrageous as you seem to believe.  It is not at all uncommon for contracts to specify the specific rights and remedies of the respective parties upon breach, including the specification of "liquidated damages", and to afford one or both of the parties varies self-help remedies when a contract is breached.  For example, depository financial institutions typically have a right of offset against deposit accounts.

Similarly, other extrajudicial means of dispute resolution, such as required binding arbitration, have become MORE common rather than less common over the last several decades.

There ARE some good public policy arguments favoring extrajudicial remedies.  If parties FREELY AGREE to a particular determination of disputes without involving the Courts, doesn't this promote judicial economy and keep unnecessary disputes out of our Courts reducing the burden on taxpayers?

Unfortunately, this argument breaks down where where monopolistic or oligopolistic market power is concerntrated in a few entities which dictate that loans be written on OPPRESSIVE terms.  And this is precisely what has emerged in the area of wholesale mortgage market operations.  FNMA and FHLMC purchase or guarantee the the vast majority of all loans and both of these entities REQUIRE the use of their standardized instruments for each state.  In those states where a deed of trust with a power of sale is ALLOWED, use of these instruments is REQUIRED by FNMA and FHLMC, as well as other secondary mortgage market investors.

Thus the consumer is faced with the choice of taking a loan on these terms with a private power of sale or not getting a mortgage at all. 

Quote:
Originally posted by ~beenawhile
Who makes a state Judicial or Non Judicial?


This is a somewhat MORE complex question.  And there are several elements to the answer.

First, it should be observed thta where non-judicial foreclosure by private power of sale prevails, this is usually IN ADDITION TO judicial foreclosure.  That is judicial foreclosure is AVAILABLE as a remedy in most of these jurisdictions but has fallen into disuse and has been DISPLACED by non-judicial foreclosure.

Non-judicial foreclosure is usually available as a consequence of (a) a particular state's reverence for contracts and allowing parties to decide for themselves how to resolve various matters by contract, (b) enabling legislation that recognizes the parties rights to contract for a private power of sale and (c) the absence of statutory prohibitions as to non-judicial foreclosure.

The reverence for contracts is very often Constitutional (appearing inthe State Constitution).

The enabling legislation may be either explicit (authorizing such contracts) or implicit (setting out some restrictions as to the remedy, while thereby implicitly recognizing it).

This is an area of the law where entrenched special interests -- banks and other depository financial institutions, mortgage companies, mortgage investors, title insurers and foreclosure attorneys -- have a strong vested interest and the average consumer has very little knowledge and interest.  Perhaps if you feel passionately about this subject, you can persuade your legislator to sponsor legislation altering these laws in YOUR state.

This is actually a classic area which is probably ripe for reform by INITIATIVE in those states where laws can be proposed and inacted by direct referendum! 
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When discussing sales of property on the courthouse steps one needs to distinguish between a variety of different kinds of sales that might be taking place, even in non-judicial foreclosure states. 

First, there are sales pursuant to a mortgage foreclosure either by judicial order (judicial foreclosure) or private power of sale.

Second, there are tax sales of properties for which ad valorem taxes have not been paid.

Third, there are sales by judicial order in an estate setting to realize cash to pay estate claims.

Fourth, there are sales by a trustee in bankrupty to pay the claims of a bankrupt estate.  These tend to be RARE, because most property is likely to be encumbered by moretgage or deed of trust and the creditor / claimant will seek a release of the subject property from the automatic stay put in place by the bankruptcy and will sell the property under the first described circumstances.

Fifth, there are sales by judicial order in a partition action when an equitable division of a jointly owned property seems impractical or impossible. 

*

In a non-judicial foreclosure by private sale, the sale is typically done by a trustee or substitute trustee acting at the direction of the owner and/or holder of the mortgage.

*

Your mention of MERS in the context of non-judicial foreclosures is an interesting additional element affording an enormous amount of additional complexity to the situation.  MERS is NEVER the OWNER of the promissory note.  Neither is it typically the HOLDER of the promissory note.  To the contrary, the holder is typically a custodian institution selected by the mortgage investor.

MERS NEVER has ANY PECUNIARY INTEREST in either the promissory note OR the mortgage, deed of trust or other mortgage security instrument.

But MERS DOES routinely seek to ENFORCE the private power of sale provisions in a deed of trust.

There is much litigation nationally and much discussion and many POSTS within this message board regarding MERS' standing and capacity to foreclose in judicial foreclosure states.

Less discussed and less litigated is MERS' right to direct non-judicial foreclosures under the private power of sale.  MERS seems to be VERY confident of their right to do this.  In MY VIEW, they just haven't come up against a really sharp lawyer!

One of the PROBLEMS related to litigating MERS' right to foreclose in a non-judicial setting is that the SALE is accomplished NON-JUDICIALLY and is usually followed by an EJECTMENT action by the purchaser.  Unless the borrower had gotten IN FRONT of the sale by seeking a restraining order and injunction, the EJECTMENT action would be the borrowers first opportunity to argue before a court that MERS' involvement was impermissible.  Another opportunity might be afforded by bringing an action to quiet title against the PURCHASER taking title by right of the trustee's deed.

Moreover, even if a court set aside the foreclosure, except in very unusual circumstances, the court would EXPECT the borrower to repay the loan.

This is a VERY COMPLEX area of the law.  And there are enormous asymmetries of resources and information.  MERS is allied with the mortgage industry and these entities will spend enormous sums of money to prevail.  These entities have also demonstrated that they will engage in various forms of misconduct and discovery abuse to gain advantage.

The average borrower does NOT want to be unnecessarily litigating either pro se or with counsel and no one is going to generally find it economic to litigate these questions EXCEPT where eggregiously FALSE averments and FABRICATED evidence yield at least some faint hope of actually recovering the subject property and damages while extinguishing the alleged mortgage indebtedness.

Borrowers are in a much stronger position in MERS litigation in judicial foreclosure states.  In my view, a pro-active and aggressive attorney OUGHT to be able to forestall and possibly defeat an MERS judicial foreclsoure in any state in the country.  But to WIN, one needs (a) thorough understanding of the mortgage industry and MERS' rolse, (b) intimate familiarity with other MERS cases, (c) strong thorough discovery, and (d) a good expert witness who can help explain MERS' unque role and WHY MERS is NEVER entitled to foreclose.  Those unrepresented by counsel, represented by ineffective or ill-informed counsel or obtaining counsel only on the eve of a foreclosure trial are probably going to LOSE.

*

Finally, as to a trustee accepting less than the full consideration for a sale, I believe that you both misunderstand the procedure and are finding unnecessary fault with it.  As to FAIRNESS, the key issue is WHETHER the trustee is accepting a winning bid on the SAME basis as other bidders.

In MANY or MOST instances, there will be a SINGLE bidder at the foreclosure sale, usually the mortgage investor or the mortgage investor's agent or shill.  The BORROWER could send an agent or shill to bid as well.  ANd other members of the public are WELCOME to also bid on a property.

Since at ANY auction the ultimate sales price is UNKNOWN, the ONLY way a bidder could bring full consideration to the auction would be in cash.  Given the prices at which properties are exchanged, this is impractical and even DANGEROUS.  Do you really think that the trustee should be counting out a couple of hundred thousand per property on the courthouse steps on a windy or rainy day??

There are several public policy considerations to be weighed.  First, requiring all cash creates a safety and security nightmare.  Second, banking regulations enacted to DISCOURAGE money-laundering and terrorism REQUIRE the reporting of cash transactions over a certain threashold.

In practice, an HONEST trustee or trustee wanting to create the appearance of an honest sale would record not only the names of the primary bidder, but also of the 2nd and third highest bidder, if there is more than one bid.  THe trustee would then accept a standard earnest money amount from the highest bidder and would then require the highest bidder to furnish the balance of the consideration in a very short time frame (e.g. within ten days).  If the winning bidder FAILED to fully fund the purchase, the trustee would then KEEP the earnest money and offer to sell the property to the next highest bidder at that bidders price.

But since MOST OFTEN it is the mortgage investor's shill bidding at the auction, or another confederate of the trustee, and they are bidding with the full knowledge that the property is worth in excess of the mortgage amount, it is VERY UNUSUAL for there to be funding failures after the bidding.

Putting this another way, I would tender to you, what is the HARM you see in allowing the bidder to tender a nominal earnest money consideration withthe balance to follow later after say ten days??  Who do you see this HURTING if the SAME earnest money arrangement is available to ALL?  What is the immoralty of illegality you perceive in this arrangement?

NOTE:  I am NOT an attorney and am NOT giving you legal advice!  I am explaining my LAY understanding of these matters.  You should discuss YOUR SITUATION with an attorney!
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~beenawhile
MR. WAR,


William A. Roper, Jr. wrote:

NOTE:  I am NOT an attorney and am NOT giving you legal advice!  I am explaining my LAY understanding of these matters.  You should discuss YOUR SITUATION with an attorney!

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~beenawhile
~beenawhile wrote:
MR. WAR
I do not know what happened with the above post.
William A. Roper, Jr. wrote:

NOTE:  I am NOT an attorney and am NOT giving you legal advice!  I am explaining my LAY understanding of these matters.  You should discuss YOUR SITUATION with an attorney!


This thread was made with one purpose in mind, and that was to; Possibly help those who have already suffered a Foreclosure, those who are currently in the process of; and those who could soon be faced with such actions brought against them.

So in stating this I will say that your end disclaimer is here to represent those, who may, be a newcomer to the site; as I am already familiar with the board politics, and know that any advice, advertisements, ideas, suggestions, or otherwise, are in no way deemed as legal advice whatsoever.


It seems that I may have brought upon some irritation, with my story and one of the auctions, I attended. Please know Mr. WAR, it was not my intention to bring irritations to you on the subject, of watching how the Foreclosure actions took place.

I was not there as a spy, or even as someone who would bring suit against any of the participants of such.

I was there to educate myself further in the Foreclosure proceedings.

What I witnessed, was directly out in the open laid at my feet, while the buyer was trying to organize their files, I did not stoop to the ground to get a closer view, or even rummage through the papers.

You asked a question that seems to appear as somewhat belittling in my opinion, here it is:
William A. Roper, Jr. wrote:

Since at ANY auction the ultimate sales price is UNKNOWN, the ONLY way a bidder could bring full consideration to the auction would be in cash.  Given the prices at which properties are exchanged, this is impractical and even DANGEROUS.  Do you really think that the trustee should be counting out a couple of hundred thousand per property on the courthouse steps on a windy or rainy day??


NO!! Mr WAR, I do not. However let me point out, that I have seen in the newspaper along with some of these Foreclosures that payment is EXPECTED IN FULL AT THE TIME OF THE SALE, "FOR ANYONE" WISHING TO BID ON SAID PROPERTY OR PROPERTIES.

I know full well, that others here have read, or seen the same paragraph in their newspapers as well.

Mr WAR, given your stature, you know as well as I do, that payment in full could be the simple means of a cashiers check. The individual bidding on the properties for the Company, had many cashier's checks in here possession, and they were in an assortment of amounts, $250.00 $500.00 and others, along with the basic $1,000. checks that she used to "hold" the properties.

The assumptions in assuming, that I "personally" expected for these to be paid in cash on a windy, rainy, or perfectly sunny day was by all means an incorrect assessment, of my level of comprehension.

And does appear to be a belittling statement. If i am wrong forgive me, if i am not then know that none of us here come to this board to receive such unwarranted tactics, or behaviors.

I stand by my FAIR IS FAIR statement, because there are other factors that you were not aware of that I shall further explain.

There was a gentleman at the Foreclosure, who appeared to be a newcomer to the auctions as well, he did not come prepared with folders, and notes as the other bidders did, but he was there to bid on TWO properties.

The representative from the CO, that I will not name over bid him by $1,000.00 he bid again, raising 1K, as did the Co. rep. so the property was sold, to the Co. Rep.--------home sold for 3k more than the paper stated the mortgage was worth. No big deal here, Except that he was bidder # 2 and NO HIS NAME WAS NOT TAKEN, OR WRITTEN DOWN, AS A 2ND BIDDER.
See your comment below:
William A. Roper, Jr. wrote:

In practice, an HONEST trustee or trustee wanting to create the appearance of an honest sale would record not only the names of the primary bidder, but also of the 2nd and third highest bidder, if there is more than one bid.

THIS DID NOT HAPPEN!!, Again, I say FAIR is FAIR.

Onto the next sale........
The gentleman, "newcomer" bid on a 2nd property, without competition, and happily was the winning bidder of such property.

He was done buying properties, and was no longer interested in any of the others, so he waited, until the end of the sale, and came up-to the steps where all three of us were standing, I had already heard, the MERS representative, and the Co. Rep. discussing the rest of the funds to be paid to this MERS rep, for the homes. 

This MERS rep. turns to the guy and asks him what property he bought, and then says, YOU'LL NEED TO HAVE PAYMENT IN FULL.

Now like I have said fair is fair.............. BUT THIS WAS NOT.
I stood there in dismay, and could not believe what I had just heard. I wasn't sure at the time, if this was legal, or acceptable, but after much though of this during several discussions with others what happened seems to be purely, Illegal, and either discriminatory in nature as the fact was that he was not with a REAL ESTATE RELATED COMPANY.
For all I know, this man could have been the savior of an Innocent foreclosure victims home. Was it right that he was told the HE had to pay in full at the time of the sale? NO IT WAS NOT RIGHT.

I'm sure others here will agree, that all of the actions that have transpired just on the attendance of this ONE, Foreclosure, stepped over the boundaries, of many areas, if not including legal boundaries that were violated.

One doesn't need to research your Name Mr. William A. War Jr., to know that I am not on the same thinking level, or ability as you. Though, I try my best to comprehend some things, sometimes those things just don't sink in. Some times I temporarily give up, & try to learn about them later, one thing is for sure, and that is I will continue to learn as much as I can about this fraud, to fight it for the others who need the assistance, of this little brain, until they can figure it out for themselves.

So please know Mr. WAR that this was not intended to anger, or irritate you in any way, as a possible investor, of such Foreclosure sales, or anything of the sort. 

Fair is Fair and nothing on this particular day at the Courthouse for these particular Foreclosure sales was fair, and truthfully did not appear LEGAL in my mind.

As a victim and fighter of this fraud, I would like to suggest to everyone here that if you have not attended a Foreclosure sale, you might want to set aside for the next one, which should be coming up soon. There are elements to be learned, that you might find helpful, or in someway benefit from one. If you learn nothing from attending one, go to another one the next month. This is a must do, if you can possibly find the time.

Thank you for the information on legislature, and referendums to laws that are quite outdated. Non-Judicial is certainly in need of many improvements.
Your thoughts are taken into deep consideration and thought, thank you for the time you spent to post all of your replies, Mr. William A. Roper Jr.
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~beenawhile
correction, ......
One doesn't need to research your Name Mr. William A. War Jr.,

One doesn't need to research your Name Mr. William A. ROPER Jr.,
I apologize for the error.
Thank you.
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~beenawhile:

I am NOT irritated, angry, aggravated or unhappy in any way.  And I apologize to any extent that my prior post came across as short, impatient, belittling or condescending.  This was NOT intentional.

It is NOT at all unusual in an auction process for the parties conducting the auction to require bidders to PRE-QUALIFY in some way.  This could be done by demonstrating a certain requisite liquidity or might take the form of a commerical letter of credit by a bank.  But a juducial sale does NOT typically involve a prequalification process.

That having been said, the simple fact of the matter is that when a sale on the courthouse steps is being conducted WITHOUT ANY OBSERVATION, the trustee and the sole bidder are the ONLY ONES who can bear witness to what happened.

And there is probably a previously UNDISCUSSED lesson here for everybody.  That would be that there is some merit in at least sending one or more persons to WITNESS the actual sale.  Otherwise, if a bidder offering a higher price is frightened off, the borrower may never know this.

It certainly IS true that if the auction is NOT conducted in conformity with the law or with the contractual provisions of the deed of trust, it is possible that irregularities in the sale may be a basis for setting the auction aside.

But I also want to ADD HERE that once the auction is actually HAPPENING, the borrower has already pretty much LOST.  Even under circumstances where defects might be seized upon to set the foreclosure or private sale aside, this is usually only going to DELAY rathe than PREVENT the foreclosure and those in this desparate situation very often lack qualified, capable legal representation!

I would generally AGREE with you that the situation you describe includes some irregularities.  But also bear in mind that I framed my initial response based solely on the information you had previously related.  And I do NOT find anything inherently unfair or prejudicial in asking bidders to prequalify in some way or pay less than the full consideration on the courthouse steps.

Failure to take the information of the next highest bidder seems to me less eggregious where the winning bidder is the mortgage investor and therefore the entire consideration is esentially CIRCULAR.  The mortgage investor is ASSURED to be able to afford the full consideration as the investor is essentially paying the money to itself!

The HARM in failing to ontain the information of the next highest bidder would be realized only upon transactional failure.

The trustee OUGHT TO make bidders aware of any bidder prequalification requirements or of the expectations as to earnest money and time to settle.  Prospective buyers should probably attend PREPARED to settle in cash (e.g. a combination of cashiers checks of varoius denominations and some cash as to the balance).

I think that you have done a very nice service for this message board in describing the process which you witnessed!  To this I would add, that I have NEVER actually attended a mortgage foreclosure sale myself and therefore have NO ACTUAL EXPERIENCE upon which to base my repsonses.

Despite having served as the president of a mortgage company for two years, we sold our production serving released to larger corresponding institutions.  Accordingly, we wouldn't have been involved in foreclosures at all.  Even so, I can say with some confidence that I am unaware of a single instance of a foreclosure of a loan we made.  We had a very clean book of business and made only prime loans at very competitive terms.  We underwrote the hell out of the loans.  Most of our loans were also re-finances which brought rates down substantially.  So in most cases, we were taking a customer that had qualified at a HIGHER rate and refinancing at a much lower rate, cutting their payment significantly.  Most of the properties we reinanced also had appreciated significantly since the date of the original loan assuring that the borrower had a solid net borrower equity and we had a great loan-to-value (LTV) ratio.

Accordingly, what I know of foreclosure is primarily textbook or theoretical.  I have done a LOT of legal research in support of some litigation in which I am involved relating to a property subject to foreclosure in a probabte setting.  My PRIOR mortgage experience and knowledge of finance and the mortgage marketplace put me in a psition to quickly see THROUGH false representations being made in that litigation!

I realize that there are MANY participants and contributors to this message board who have lost thier homes or are facing serious adversity as a consequence of a foreclosure.  I have the luxury NOT to be one of these.  To the contrary, it is the alleged mortgage investor that faces adversity litigating with ME.  I EXPECT to press a disciplinary complaint against at least one lawyer at the conclusion of the litigation.

Again, thanks for your contribution to the discussion!!   
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~beenawhile
Mr. WAR,
Good morning, and thank you for your reply

William A. Roper, Jr. wrote:
~beenawhile:
I am glad I had not stepped on your toes, thank you for letting me know this.
I am NOT irritated, angry, aggravated or unhappy in any way.  And I apologize to any extent that my prior post came across as short, impatient, belittling or condescending.  This was NOT intentional.  It is quite alright, and now that you have shared your thoughts with me on this I would like to extend the same apology to you for giving, even the smallest thought of such.

It is NOT at all unusual in an auction process for the parties conducting the auction to require bidders to PRE-QUALIFY in some way.  This could be done by demonstrating a certain requisite liquidity or might take the form of a commerical letter of credit by a bank.  But a juducial sale does NOT typically involve a prequalification process.   To provide you with further detail, I had not seen anyone provide letters of credit from their bank. I do know that the gentleman did not give a letter of credit but rather one of two cashiers checks he was holding, i did not see the amount of the checks he was holding but i do know that one of them was accepted as payment in full. However, it is quite possible, that the representative from the company provided letters of credit along with her cashiers checks. If she had them, I did not see them, but she was still rummaging through her files again, while the MERS rep. was dealing with the Gentlman. I left shortly there after, and did not watch the entirity of the Co. rep. and MERS rep completing their paperwork.
 
I have been to acutions where prequal. was necessary, this is not done for the F/C's here. Unless it is done on another day, at a differnt location prior to the sale. It is interesting what you have stated thus far, and appreciate your thoughts as I've now been able to comprehend a little more.

That having been said, the simple fact of the matter is that when a sale on the courthouse steps is being conducted WITHOUT ANY OBSERVATION, the trustee and the sole bidder are the ONLY ONES who can bear witness to what happened. 

And there is probably a previously UNDISCUSSED lesson here for everybody.  That would be that there is some merit in at least sending one or more persons to WITNESS the actual sale.  Otherwise, if a bidder offering a higher price is frightened off, the borrower may never know this. I couldn't agree with you more. It is very important for individuals that are losing their homes to keep track of the amounts the SERVICER is collecting on their home.
1.   From the sales price listed in the newspaper, to
2.   The acutal price the home sold for at the Courthouse
3.   Whether the house was sold back to the lender, and if it was
      is it on the REAL ESTATE market, and if so
4.   HOW MUCH is the Selling price?
There is an incredible amount of money that the borrower stands to lose, and the SERVICER Ultimatley gain.
(I know you know this MR WAR, this is for others who may not)
From:
A. Equity stripping by listing the home at the Original Mortg loan amount.
rather than, selling the home for the balance currently owed on the loan.
 
B. A possible chance of selling the home for more than the amount listed in the paper.
 
C. The profit they well make from the courthouse steps, to the sale of the home by a Real Estate Agent, and how much more of a profit the home sold for.
 
D. And any deficiency judgement they fine upon the borrowers, claiming that the home did not sell enough at the F/C sale for as much as the value of the home.
 
SO IT IS VERY, IMPORTANT FOR ANYONE IN F/C TO ATTEND YOUR OWN FORECLOSURE, AND KEEP TRACK OF THE HOME.
 
Mr. WAR please read (A.) above and tell me...... Does each Mortg. Loan contract allow for a provision for the home to be sold at the Orig. Mortg. Loan amount? Or is this variable depending upon the Mortg. Co, and the way their contracts are drawn?


It certainly IS true that if the auction is NOT conducted in conformity with the law or with the contractual provisions of the deed of trust, it is possible that irregularities in the sale may be a basis for setting the auction aside.
They have gone as far as delving into the Covenants, to Foreclose on properties that are not in correlation with a subdiciosion Covenancy. This means is done by land surveyors being hired by the Serivers to actually survey the land, and the home...... If there is a covenancy restriction that states that the home must be 200 ft from the road, and it is not. Then the SERVICER might move into for F/C, since the home does not meet the required convenancy guidelines.


But I also want to ADD HERE that once the auction is actually HAPPENING, the borrower has already pretty much LOST.  Even under circumstances where defects might be seized upon to set the foreclosure or private sale aside, this is usually only going to DELAY rathe than PREVENT the foreclosure and those in this desparate situation very often lack qualified, capable legal representation!  Agreed, and it is very hard for us to find adequate representation, since the Attorneys who do know anything about F/C, and Real Estate laws, are usually the Attorneys who have at one point represented A SERVICER, or your SERVICER in a previous F/C action. However an honest one can be found, and you will know it when you find them

I would generally AGREE with you that the situation you describe includes some irregularities.  But also bear in mind that I framed my initial response based solely on the information you had previously related.  And I do NOT find anything inherently unfair or prejudicial in asking bidders to prequalify in some way or pay less than the full consideration on the courthouse steps.  You are correct, and I apologize for not realizing that your comments were based upon, the lack of information I had provided.

Failure to take the information of the next highest bidder seems to me less eggregious where the winning bidder is the mortgage investor and therefore the entire consideration is esentially CIRCULAR.  The mortgage investor is ASSURED to be able to afford the full consideration as the investor is essentially paying the money to itself!  I understand more in depth what you are referring to, and what the thoughts are. Thank you. 

The HARM in failing to ontain the information of the next highest bidder would be realized only upon transactional failure.

The trustee OUGHT TO make bidders aware of any bidder prequalification requirements or of the expectations as to earnest money and time to settle.  Prospective buyers should probably attend PREPARED to settle in cash (e.g. a combination of cashiers checks of varoius denominations and some cash as to the balance).  The next time I attend one I might ask if there is a prequalifiction necessary, and if not what their procedures are both as an individual, and as a Real Estate Co.

I think that you have done a very nice service for this message board in describing the process which you witnessed!  To this I would add, that I have NEVER actually attended a mortgage foreclosure sale myself and therefore have NO ACTUAL EXPERIENCE upon which to base my repsonses. Thank you! It is interesting, and can be very heartbreaking if you are watching attendees, who are watching their dreams, end on this day. But if you are a poster of this board, it is highly recommend that every one attend at least one.

Despite having served as the president of a mortgage company for two years, we sold our production serving released to larger corresponding institutions.  Accordingly, we wouldn't have been involved in foreclosures at all.  Even so, I can say with some confidence that I am unaware of a single instance of a foreclosure of a loan we made.  We had a very clean book of business and made only prime loans at very competitive terms.  We underwrote the hell out of the loans.  Most of our loans were also re-finances which brought rates down substantially.  So in most cases, we were taking a customer that had qualified at a HIGHER rate and refinancing at a much lower rate, cutting their payment significantly.  Most of the properties we reinanced also had appreciated significantly since the date of the original loan assuring that the borrower had a solid net borrower equity and we had a great loan-to-value (LTV) ratio. It is a shame that the Mortg. industry is nothing like it was 20 years ago, and it is sad that honest people such as yourself are not still a part of it in any way.

Accordingly, what I know of foreclosure is primarily textbook or theoretical.  I have done a LOT of legal research in support of some litigation in which I am involved relating to a property subject to foreclosure in a probabte setting.  My PRIOR mortgage experience and knowledge of finance and the mortgage marketplace put me in a psition to quickly see THROUGH false representations being made in that litigation! It is excellet, that you have prior knowledge, as this is a great help I'm sure.
Got a question for ya'
Did the Attorneys in the complaint against the property have any idea as to your extent of knowledge to the Mortgage Industry?
I'll bet you along side attorney make them work very hard for their money
I realize that there are MANY participants and contributors to this message board who have lost thier homes or are facing serious adversity as a consequence of a foreclosure.  I have the luxury NOT to be one of these.  To the contrary, it is the alleged mortgage investor that faces adversity litigating with ME.  I EXPECT to press a disciplinary complaint against at least one lawyer at the conclusion of the litigation. I wish you well with this, and hope that you will provide us with the story once your case has been finalized. You're a wonderful part of the board, and I know we all wish you a postive outcome. Much Good Luck to you.

Again, thanks for your contribution to the discussion!!   You're welcome, and Thank You!!!

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Quote:
Originally posted by ~beenawhile
It is NOT at all unusual in an auction process for the parties conducting the auction to require bidders to PRE-QUALIFY in some way.  This could be done by demonstrating a certain requisite liquidity or might take the form of a commerical letter of credit by a bank.  But a juducial sale does NOT typically involve a prequalification process.   To provide you with further detail, I had not seen anyone provide letters of credit from their bank. I do know that the gentleman did not give a letter of credit but rather one of two cashiers checks he was holding, i did not see the amount of the checks he was holding but i do know that one of them was accepted as payment in full. However, it is quite possible, that the representative from the company provided letters of credit along with her cashiers checks. If she had them, I did not see them, but she was still rummaging through her files again, while the MERS rep. was dealing with the Gentlman. I left shortly there after, and did not watch the entirity of the Co. rep. and MERS rep completing their paperwork.


I would CLARIFY that in mentioning "pre-qualification" I was speaking of the auction process in the abstract.  In a non-judicial foreclosure by private power of sale, it seems to me that a trustee is getting on thin ice in selling for OTHER THAN all cash (or cashier's check equivalent).  IF there was only ONE bidder and the buyer made an earnest money payment and quickly settled in cash within ten days, it seems unlikely to me that a court is going to set aside or otherwise disturb the sale UNLESS one showed the court a variety of OTHER defects in the foreclosure and the court was LOOKING FOR A REASON to set the sale aside.

But when the buyer fails to attend the foreclosure auction or to send a representative, there is also a PROOF PROBLEM.  Only the trustee's deed is going to get recorded and the records showing the actual method of delivery of the consideration are not going to be readily available to the defaulting borrower EXCEPT through the initiation of a law suit and discovery.

I believe that this UNDERSCORES the importance of having someone OBSERVE the sale!

Quote:
Originally posted by ~beenawhile
Mr. WAR please read (A.) above and tell me...... Does each Mortg. Loan contract allow for a provision for the home to be sold at the Orig. Mortg. Loan amount? Or is this variable depending upon the Mortg. Co, and the way their contracts are drawn?


The actual amount bid by the mortgage investor at the auction is subject to some competing considerations and will be highly dependent upon the law of the individual state as to these considerations.

In many states, a borrower is entitled to any EXCESS of the auction sales price OVER the amount of the outstanding mortgage balance plus attorneys fees and foreclosure costs.  As you will see from many other posts on this message board dishonest and unscrupulous servicers and their attorneys are going to be "padding" the legal expenses and expenses of sale.  So there RARELY would be ANY excess.  But the fact that the excesss might go to the borrower, will tend to cause the mortgage investor to want to BID LOW.

UNLESS there is a state law that precludes the investor from bidding LESS than the mortgage balance, the only real FLOOR to what is bid is set by the second COMPETING consideration.  That is that one basis for OVERTURNING a foreclosure sale of either a judicial or non-judicial foreclosure is "gross inadequacy of the sales price".

In the limiting case, suppose that the trustee sold the property for $1.  I think that we could all agree that this would be a price that would shock the conscience (UNLESS there was some enormous liability associated with the property, as if it had for example hazardous waste dumped there imposing upon the owner a duty to clean up which EXCEEDED the value of the property).  Bidding TOO LOW therefore CAN put the foreclosure sale in jeopardy.

Moreover, bidding LOWER than the mortgage amount is really of NO ADVANTAGE to a mortgage investor EXCEPT where getting a deficiency judgment is both possible and economic.  Let me put this another way.  If the mortgage investor bid $1 at the end of the sale the $1 is tendered by the investor to the trustee and then paid back to the investor.  The investor STILL HAS hs $1 and now also owns the property.  The SAME is true if teh investor bids $500 or $1,000.  Whatever is bid is tendered to the trustee and then given BACK to the mortgage investor.

It is only when the mortgage investor bids MORE than the outstanding balance, plus attorneys fees and foreclosure costs that money tendered to the trustee LEAVES this closed system.

So the amount bid is IRRELEVANT until it EXCEEDS this value EXCEPT as it respects a possible deficiency judgment.

In assessing deficiency judgments there are two major considerations.  First is the law of the state where the property is located.  A number of states have what are termed "anti-deficiency judgment" statutes.  Foremost of these is (or WAS, I haven't check in YEARS) California.  Texas has a similar procedure when the foreclosure occurs in a PROBATE SETTING.

Basically, in states with an anti-deficiency judgment statute, the foreclosing lender is presented with an irrevokable election.  The lender (mortgage investor) can either pursue the security through the mortgage or deed of trust OR sue under the promissory note, but NOT both!

The foreclosing lender is therefore BARRED from seeking a deficiency judgment under the promissory note when the proceeds of a foreclosure sale fail to cover the mortgage balance.  The lender will RARELY seek to go after the borrower.  It is almost always more economic to go after the property.  Exceptions would be when someone like Bill GATES has defaulted on a loan secured by a toxic waste site!

There is a marvelous Texas appellate case under the probate code involving the Texas probate equivalent of the anti-deficiency judgment statute.  Though NOT a mortgage case at all, I mention it for the amusement of those reading these postings.  It seems that a person purchased and financed an airplane, which subsequently CRASHED, killing the borrower.  The finacne company which financed the airplane, then filed a CLAIM under the Texas Probate Code.  The claims procedure REQUIRES that secured creditors make an election as to whether the creditor is seeking payment from the sale of teh secured property ONLY or if the borrower prefers to WAIVE their security interest inthe property and make a claim against the general assets of the estate.  The finance company failed to make this election.  In a provision generally quite FRIENDLY to creditors, the Probate Code goes on to provide that when a lender FAILS to make a timely election that the creditor shall have elected to pursue ONLY the secured property.  Thus, the finance company found that it had secured only its interest in the wreckage of the plane (in South America, I believe) and had NO OTHER CLAIM against the estate!  

I have drifted from mortgage finance.  My POINT is that where anti-deficiency judgments are PROHIBITED, BIDDING LOW at the foreclosure sale will produce no ADVANTAGES for the mortgage investor.  There are two disadvantages.  First, IF others are bidding at the auction, the investor might LOSE the auction.  Second, if the final price is TOO LOW, it might be found to be "grossly inadequate consideration" affording the borrower an opportunity to have the sale set aside.

Similarly, even in states WITHOUT anti-deficiency judgment statutes, foreclosure is highly correlated with borrower financial distress.  And financially distressed borrowers sometimes seek protection from bankruptcy courts.  So a deficiency judgment is very often UNCOLLECTABLE anyway.

Against this backdrop, with some knowledge and appreciation of the laws of the jurisdiction, the value of the property and the borrower's circumstances, the mortgage investor will decide on its initial bid and the HIGHEST BID that it authorizes to be made onits behalf.  (That is if some person or entity wants to bid the property UP, there IS a point beyond which the mortgage investor will NOT continue bidding.)

You will note from this discussion that the intial face amount of the promissory note is NO WHERE WITHIN THIS DISCUSSION.  There MIGHT be some state laws that reference this amount, but if so this is unknown to me.

Quote:
Originally posted by ~beenawhile

I think that you have done a very nice service for this message board in describing the process which you witnessed!  To this I would add, that I have NEVER actually attended a mortgage foreclosure sale myself and therefore have NO ACTUAL EXPERIENCE upon which to base my repsonses. Thank you! It is interesting, and can be very heartbreaking if you are watching attendees, who are watching their dreams, end on this day. But if you are a poster of this board, it is highly recommend that every one attend at least one.



It occurs to me that I really ought to educate myself by attending one or more foreclosure auctions.  I WILL add this to my "To Do" List!

Quote:
Originally posted by ~beenawhile

Did the Attorneys in the complaint against the property have any idea as to your extent of knowledge to the Mortgage Industry?



The attorneys in my case ALL thought that I was an off the wall pro se litigant and were VERY dismissive and condescending at first.  They UNDERESTIMATED my knowledge of either the mortgage industry OR Texas Law.  They uniformly shot from the hip and failed to do ANY effective or meaningful legal research.

I am inclined to believe that the local counsel for the mortgage investor actually BELIEVED the representations originally made by a very unscrupulous Dallas mortgage foreclosure mill and the representations of the mortgage investor.  And I beleive that local counsel is now deeply EMBARASSED that he has made false representations to the Court based upon the information he was told.

I believe that ALL of the attorneys now involved realize that I am the most effective pro se litigant that they have ever been up against.  And I also think that even if they WON the case at the trial level (which seems very doubtful) that they cannot afford to allow my case to proceed to appeal, where they would SURELY LOSE and create some very adverse case law contrary to their interests.  This creates the interesting situation that it is MORE economic for them to LOSE the case than WIN IT at trial and LOSE on appeal!

Before anyone starts rejoicing, I would ADD that my case is a VERY PECULIAR Texas judicial foreclosure in a probate setting and has very little general application to others who are involved in foreclosure litigation.  The principal way OTHERS can benefit is from my newfound knowledge of the EXTENT of lender and servicer dishonesty and MISCONDUCT in foreclosure!  This is, of course, a theme that Nye Lavelle and others at this message board have been sounding for a very long time!  But until personally EXPERIENCED and UNLESS one is euipped to UNDERSTAND the deceit and deception one cannot fully appreciate!

Quote:
Originally posted by ~beenawhile

I'll bet you along side attorney make them work very hard for their money. 


My case is also UNIQUE in that the alleged mortgage investor will NOT be getting ANY MONEY AT ALL.  The Texas mortgage foreclsoure mills are SO ACCUSTOMED to non-judicial foreclosure, that they have FORGOTTEN HOW to do a judicial foreclosure.  And, like the airplane finance company described in the case above, they IGNORED some of the nuances of the Texas Probate Code.

In Texas Probate, creditors, including secured creditors, are REQUIRED to submit a claim to the administrator or deposit claims with the Clerk.  The administrator then chooses to either ALLOW or REJECT a claim.  If the administrator FAILS TO ACT, the claim is REJECTED by operation of law after thirty days.  When a claim is REJECTED, the claimant has ninety days to establish the claim by filing suit.  If the claimant fails to SUE onthe rejected claim, the claim is FOREVER BARRED.  In essence, the statutory probate cheme displaces the traditional statute of limitations on promissory notes.

In this case, a claim was presented to the administrator in January 2006.  Nothing happened.  The claim was therefore REJECTED by operation of law.  The claimant failed to SUE.  Another claim was presented in June 2006.  Nothing happened.  The Claim was again rejected by operation of law.  The claimant again failed to sue.  In October 2006, the SAME ATTORNEY representing the original claimant drafted a third claim, presenting this new third claim to both the administrator and the Clerk.  A DIFFERENT claimant represented that it was the owner and hodler of the promissory note.  The third claim was implicitly rejected by the inaction of the administrator.  The original claimant then SUED on the SECOND claimant's claim, alleging in ITS suit that it was the owner and holder.

I have conducted extensive discovery in this case (though both claimants have unlawfully RESISTED discovery).  The second claimant now maintains that the suit on the claim brought by the first claimant was NOT brought on its behalf.  This was stated in open court in June 2007.

Texas appellate courts have already ruled that indebtedness is extinguished based upon rejection and failure to sue upon the FIRST CLAIM.  The second and third claim were therefore nullities anyway.  And Texas appellate courts have also persistently held that when the alleged indebtedness stands discharged that this EXTINGUISHES the mortgage security instrument and/or deed of trust as well!

I do NOT expect them to get ANY MONEY.  And I am becoming reasonably optimistic that I will be able to show a pattern of fraud and deceit by these entities that merits sanctions! 
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A Possible Procedure For An Aggressive Borrower To Use When Investors Are NOT Tendering FULL Consideration At Auction.

~beenawhile has shared with us some observations regarding the actual non-judicial foreclosure sales procedures in HER jursiction.  One of the things ~beenawhile has apparently observed it trustees accepting LESS than the FULL consideration from the winning bidder, presumably an agent or nominee of the mortgage investor.

Outlined below is a possible procedure that a distressed borrower with SOME ACCESS TO CAPITAL might consider using to recover the property OR establish a basis for a subsequent UPSET of the sale.  Everyone should bear in mind that this is a WHIMISCAL idea that is based SOLELY upon the circumstances described by ~beenawhile.  Anyone considering employing this strategy should (a) try to VERIFY the actual local custom and practice involving non-judicial foreclosures, preferrably by ACTUALLY OBSERVING such a sale and (b) SHOULD CONSULT A TRUSTWORTHY LAWYER FAMILIAR WITH THE LAWS OF YOUR JURISDICTION.

The proposed procedure would involve multiple participants each with a precise scripted role.  Please CONSULT A LAWYER to determine WHETHER any of the suggestions might run afoul of any state laws, etc.

I would suggest the following ROLES for various participants in this well rehearsed and well staged procedure:

The LOW BIDDER
The HIGH BIDDER
The LATE BIDDER
The RECORDER
Additional Witnesses

The LOW BIDDER would ideally be the trustee of a TRUST set up for the benefit of the borrower.  Ideally, this trust would be FUNDED WITH CASH independent of the borrower's resources.  And the trust would contain a spendthrift clause putting the trust corpus OUT OF REACH of creditors.

The HIGH BIDDER would be any individual readily able to follow instructions and equipped with an earnest money amount roughly comparable to the amount KNOWN to be routinely tendered by agents of a mortgage investor.

The LATE BIDDER would have similar credentials and resources to the HIGH BIDDER.

It MIGHT be BETTER if the HIGH BIDDER were UNFAMILIAR to the other participants and from OUT OF AREA.  It also might be better is ALL bids were submitted by ENTITIES rather than individuals.

The RECORDER would bring along a video camera to RECORD the auction procedure.  Ideally the RECORDER would also videotape OTHER sales to REDUCE the focus of the video recording onthe particular transaction of singular interest.

Witnesses would be available to OBSERVE the auction transaction.  Again, there is some value in these witnesses showing a more general interest in several auctions.  Witnesses other than the borrowers would be preferable.

*

These roles having been identified, the procedure would be this:

The LOW BIDDER and the HIGH BIDDER would ATTEND the auction, with the RECORDER videotaping the same.  The Additional Witnesses would also seek to observe the auction from good vantage points without overly calling attention to their interest in this particular auction (if possible).  [The RECORDER should make sure to INCLUDE within the video the presence of these other Additional Witnesses.]

At the outset of the auction the LOW BIDDER would tender a VERY LOW BID for the property being auctioned.  The BID AMOUNT should be well in excess of the routine earnest money amount brought to auction by agent on behalf of the mortgage investor, but WELL LESS than the full mortgage amount.

For example, suppose as in ~beenawhile's posts investors are routinely using $1,000 checks as an earnest money HOLD on a property.  Have the LOW BIDDER bring a cashier's check or CASH totalling $5,000 or $10,000.  The LOW BIDDER should try to OPEN the bidding by bidding say, for example $5,000 for the property. 

Presumably, the mortgage investor is prepared to bid roughly the mortgage amount and does NOT want the sale disturbed due to gross inadequacy of the sales price, so the mortgage investor bids the mortgage balance plus say $5,000 (for attorneys fees and foreclosure costs).

The LOW BIDDER HOLDS FIRM on the low bid.  The HIGH BIDDER bids somewhat MORE than the mortgage investor ON BEHALF OF an entity such as a trust or thinly capitalized corporation.

One of two things is going to happen.  Either the mortgage investor STOPS BIDDING and lets the high bidder WIN the auction OR the mortgage investor BIDS THE PROPERTY UP.

If the property gets bid up ENOUGH, the participants might be sufficieciently content to satisfy themselfs of having gotten the sales price UP and thereby recovering some of the equity.  But in general, the GOAL would be for the HIGH BIDDER to WIN the auction.

Let us suppose for a moment that the outstanding mortgage balance is $100,000 and the property was actually thought to be worth $150,000.  The HIGH BIDDER might WIN the auction with a winning bid of $110,000 after the mortgage investor STOPS bidding.

When the Trustee DECLARES that the AUCTION IS OVER, this is a CUE for the LATE BIDDER to appear and to demand to be ALLOWED TO BID!  Now this puts the Trustee in a bit of a bind.  He has already DECLARED that the auction is over and that the HIGH BIDDER has WON.  But settlement hasn't taken place yet.  The Trustee probably OUGHT TO REFUSE to allow the LATE BIDDER to bid.

Upon the REFUSAL to ACCEPT the LATE BIDDER's bid, the LATE BIDDER should probably quickly DEPART, possibly WITHOUT even identifying himself.

This leaves the Trustee to CLOSE the SALE.  The HIGH BIDDER will then attempt to tender the PARTIAL consideration, earnest money he has brought with him.  The PURPOSE of this is to INDUCE the Trustee's REFUSAL to accept anything other than FULL PAYMENT.  The HIGH BIDDER would then ARGUE that his bid should be accepted and that he be given say thirty days to settle the balance.  Let the Trustee argue OTHERWISE.

This creates an interesting tension!  The representative of the mortgage investor is standing there witha check for only $1,000!  Only the LOW BIDDER has the FULL CONSIDERATION BID.

To the extent that the auction is ADVERTISED to be a CASH AUCTION with FULL SETTLEMENT at auction completion, the LOW BIDDER would SEEM to be entitled to the property at the modest price of $5,000 or $10,000!

It would be rather DIFFICULT to EXPLAIN why the HIGH BIDDER's bid was being rejected in favor of ANOTHER BID which also involved the tender of less than the FULL CONSIDERATION.

Now, it seems to me that this breaks down IF the mortgage investor has OTHER LIQUID RESOURCES immediately available to fully fund the purchase AT the full purchase price.  This INCLUDES an ability to run quickly to the bank and withdraw an additional $100,000.

To this end, it would be BETTER to get the auction SCHEDULED LAST AFTER all other auctions have taken place.  The precise delaying tactics, possibly to include calls from one or more possible bidders ASKING that the auction be delayed until their arrival or a call from the borrower ASKING for a delay, I will leave as an exercise for the director of this scripted play (preferably a LAWYER).

Getting the auction scheduled later in the day achieves a couple of objectives.  First, the envelope full of $1,000 earnest money cashiers checks gets USED BEFORE the auction of interest (for the OTHER AUCTIONS being conducted by the same players).  Second, many states have restrictions as to the HOURS of the auction.  Getting the auction pushed up against this deadline would appear to me to press the deadline to SETTLE as well as BID.  Third, push the auction PAST the bank's regular closing time.  Even sophisticated financial entities would have difficulty getting a $100,000 cashier's check on a few minutes's notice.

The NET EFFECT of this procedure is to use the trustee / mortgage investor's casual earnest money procedure AGAINST them!  Only the LOW BIDDER would have the CASH to actually settle.  Get it ALL on videotape!  Have witnesses!

If the Trustee REFUSES to SELL to the LOW BIDDER, the LOW BIDDER may have a valid cause of action against the Trustee!

The greatest trouble probably arises where the Trustee AGREES to sell to the HIGH BIDDER and to accept the smaller earnest money deposit.  The LOW BIDDER should OBJECT TO THIS, but ONLY AFTER the Trustee's UNEQUIVICAL declaration that the AUCTION IS OVER.

The LATE BIDDER'S ROLE is to INDUCE the unequivcal declaration of auction END.  Auction END would seem to me to MEAN AUCTION END.  No one should be allowed to ALTER, CHANGE or WITHDRAW their bids after that!  And if the OFFICIAL TERMS are ALL CASH, then the ONLY ALL CASH BID would seem to be the WINNING BID.

The BORROWER might want for ONE of the witnesses to be the borrower's attorney, who will ASK for a delay so that the borrower can repay or BID.  This affords and ADDTIONAL opportunity to INDUCE the Trustee to declare that the AUCTION IS OVER and that redemption or BIDDING is no longer possible.

This is just a little skit to stimulate EVERYONE's thinking.  I think that it presents (a) an opportunity to redeem the property at a fraction of the mortgage amount, (b) an opportunity to create a valid cause of action against the trustee and mortgage investor for collusion in the auction and refusing to accept the only all cash bid, (c) a means to subsequently UPSET the sale by showing demonsterable IRREGULARITIES in the sales procedure.

As always, I would add the usual disclaimer that you NEED to consult an attorney and familiarize yourself with the laws of YOUR jursidiction before undertakng this skit!  And you need to carefully consider the second and third order effects of going forward with this procedure.  Generally it would be MORE viable in states with good anti-deficieny judgment statutes.  And, of course, it requires a level of liquidity that is probably well beyond the means of MOST financially distressed borrowers.

IF this procedure WORKS AT ALL, it would probably only work a dozen or two times before mortgage investors circle the wagons, tighten up thier procedures and start showing up at auction with the requisite FULL CONSIDERATION.

Overall, this is just a whimsical look at HOW one might EXPLOIT HOLES in the mortgage foreclosure mills' defenses in consideration of the reports by ~beenawhile that LESS than full consideration is being tendered!
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~beenawhile
Mr. WAR,
I read post #13 earlier today, there is much info, & at this time, am not able to respond to any of it, except to say Thank You.
----My brain---- has decided it is finished learning for the day
I was getting confused in the thoughts and will have to attempt another read of the post later.


About the skit, you constructed.....
It is quite interesting.

I would suggest however If someone knew that they were headed in the direction of Foreclosure, that they attempt this as a trial run, with their entourage. Of course this would be done without the cashiers checks, and what not.
 
the purpose of a trial run would be to familiarize yourself & your party members with the routine of the Foreclosure auction.
 
This would also be done, to allow the Auctioneer to see, you recognize you, and not know, what your purpose is for being there.
 
Though the Auctioneer might be a little puzzled as to why there was a camera there, they would certainly feel more comfortable the 2nd time you showed up, with a camera and might continue with their routine as normal.
 
Because if, you were planning a sting operation, you would want everyone in the F/C's to act, behave, and conduct business, as they normally would.

Seeing a camera there the 1st time might cause everyone to "play" the game a little more professionally, or ethically.....

Seeing a camera there a 2nd time, well they'd probably be comfortable and get back to their normal routine.

WAR, I would have never thought of something of this nature, and I'm not exactly how this information could be used, if you were to catch their improper "public outcry" business on film.


This actually sounds like an excellent idea for everyone that is facing F/C to do, but what would you do with a tape, if you've caught them, performing their duties unethically, or possibly even unlawfully?

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Sam

This is an interesting old thread.  I wonder if anyone ever used the described approach to either get the price up or to smoke out mischief at a foreclosure auction.

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