Bruce & Under Cover: Please read the following:
Not sure if this is the right place or not.... 01/06/08 at 02:03 AM
William A. Roper, Jr:
“You should count yourself as fortunate and blessed that you have discovered this message board EARLIER in your distress and in the foreclosure process. The precise strategy which best serves YOUR interests is dependent upon a number of additional factors which you have NOT posted, nor SHOULD YOU POST on this message board.
While you have been very precise and thorough in posting information related to your situation, frankly you have already posted TOO MUCH detail (see my related post on this topic elsewhere on this message baord). Happily, the mortgage servicers and their lawyers are actually both LAZY and VERY BUSY right now, so I wouldn't lose sleep over this. But you need to take any other specifics of your situation PRIVATE and only with those whose persistent posts on this message board leave you completely comfortable that they might have helpful information for you!
Bear in mind that your communications with almost ANYONE other than an attorney are NOT privileged, so be VERY GUARDED as to what you reveal or express in such messages. Basically, the standard you need to use is whether the message if compromised and discovered would undermine your case. Everything in your messages to anyone other than your attorney ought to SUPPORT or be generally useful to your case, if exposed.
The very FIRST thing that you need to ascertain is whether there is equity in the house that is SALVAGABLE. By this I mean not only did you make a substantial downpayment and did you get a good price for the house, but also is the CURRENT MARKET VALUE of the property well in excess of the OUTSTANDING MORTGAGE BALANCE.
Or, alternatively, did you OVERPAY for the house or has it DROPPED significantly in value leaving you in a situation where the mortgage amount EXCEEDS the value.
In making this assessment, you need to bear in mind (a) housing prices are generally FALLING nationally, (b) in a distress situation where you must sell the property in a short period under duress, you may need to DISCOUNT the property BELOW market value to sell it quickly, (c) you will probably have to pay a 6% real estate brokerage commission, and (d) if you have a subprime mortgage, it is VERY LIKELY that you also face a PREPAYMENT PENALTY of something approximating 6 months interest (~ 4% to 6% of the mortgage amount).
When you do this math, you will find that between the falling prices, necessity of discounting, brokerage fee and prepayment penalty, a 20% downpayment may have ALREADY BEEN TOTALLY extinguished. If your house was NEW CONSTRUCTION or if you OVERPAID for it, you may be in even WORSE shape. If you put down 10% or less, it is VERY LIKELY that you have NEGATIVE EQUITY.
The KEY thing to bear in mind is that IF there is salvagable equity, immediately putting the house on the market may be your very BEST strategy. If there is NEGATIVE equity in the property, a variety of other alternative strategies may be superior.
You DO probably have a little TIME. I would particularly call your attention to the message thread in this Forum with subject "What is the timeline/process of a foreclosure?". My post therein of 12/18/07 at 08:36 PM shows the Freddie Mac foreclsoure time standards for all states. While these are probably NOT binding upon YOUR mortgage investor, these time standards reflect the legal realities of alternative jurisdictions. At 300 days from institution of foreclosure, New Jersey is at the LONGER END of this time scale.
This has TWO IMPLICATIONS. First, you have a bit more time than many to find a basis for workout. Second, the LENGTH of the foreclosure process in NJ makes some sort of loan workout or modification MORE ATTRACTIVE to the Lender than in places where a foreclosure can be more QUICKLY and LESS EXPENSIVELY accomplished. Compare, by contrast, the time standard in Virginia, where the time to foreclose is shown to be 60 days. Bear in mind that the times in the column to the right reflect the time from institution of foreclosure. You will see that the total time from date of delinquency is MUCH LONGER.
There was a recent story in the WSJ about the twelve years that RIchard DAVET has spent in foreclosure litigation. Those who FIGHT and FIGHT EFFECTIVELY can forestall or avert a foreclosure for much longer periods of time. I am NOT encouraging you to do this. WHETHER you should fight depends upon a variety of things, including the validity of your possible defenses and counterclaims for origination and/or servicing fraud, your circumstances, your resources and your ability to manage your own litigation with or without an attorney.
While you have already approached the mortgage servicer seeking a workout, you need to understand that the servicer and mortgage investor probably NEVER INTENDED to even CONSIDER modifying your loan in any way. By holding out this prospect and having you APPLY, the mortgage servicer has RENEWED its information about YOUR EMPLOYMENT, YOUR FINANCIAL CIRCUMSTANCES, ETC. This information will now be used AGAINST YOU both in the foreclosure and in any subsequent actions to recover a deficiency! Information you furnished honestly seeking a workout may constitute PROOF against you as to your delinquencya and default!
You need to immediately SWITCH GEARS. You OUGHT NOT be TELLING the servicer ANYTHING. You should be SEEKING INFORMATION and seeking this information IN WRITING.
As you approach your problem, you also need to bear in mind that now that you have fallen into DEFAULT, that the Lender is going to continue to assess various TRASH FEES to your outstanding balance. The amount you owe will be EVER INCREASING. Any amounts you give them will now be applied to additional invented penalties of ALL MANOR and NATURE.
Consequently, even if your goal is to EXTRACT your equity, you very well may find it to your advantage to STOP PAYING ALTOGETHER. I am NOT advocating that you do this. Rather, I am suggesting that you need to carefully assess your circumstances and situation. Any money that you DO pay ought to be in consideration of an EXPRESS AGREEMENT as to the amount owed and HOW THESE AMOUNTS are to be applied.
To the extent that there was FRAUD in the origination or the closing, you may have a right of rescission under RESPA. You may WAIVE that right in any workout. You may WAIVE your opportunity to plead and prove this fraud by SELLING rather than litigating, but in general it is BETTER to avoid litigating.
Intuition would seem to suggest that those with the best circumstances and best prospects of overcoming their financial distress would be the best candidates for workouts. Actually this is NOT the case!
If there is plenty of equity in the house, the mortgage servicer and mortgage investor will RUSH to foreclosure. They are going to get their money IN FULL including ALL of their INVENTED fees from the distressed homeowner with substantial equity.
It is in the circumstance that there is significant NEGATIVE equity that the mortgage investor has the greatest incentive to find some accomodation. In that circumstance, a foreclosure means the REALIZATION of losses that might be minimized or avoided by reaching some loan workout agreement. If the mortgage servicer and investor cannot get the full market value out of the house and cannot quickly SELL IT (housing prices are DROPPING and marketing times are lengthening), allowing you to STAY in the house longer, paying them SOMETHING is more attractive than a sooner foreclosure. But do NOT be deceived that this is a means of KEEPING the house. UNLESS you have a written forebearance or loan modification agreement, the scam is to ALLOW YOU to stay and PAY and then just to foreclose LATER when the market seems BETTER to THEM. So do NOT be deceived into thinking that you might be able to CATCH UP or to CURE. Most likely, they will take EVERYTHING you can and will pay and MORE and then ultimately foreclose anyway!
So get any ideas OUT OF YOUR HEAD that if you just make a few good faith payments which reflect you ABILITY that the mortgage investor and mortgage servicer are going to take some charity on you. If you are looking for CHARITY, go to CHURCH. The mortgage servicer and investor are going to pursue the strategy that they deem to be in their best interest and maximize their cash flow and PROFIT.
The mortgage servicer and its employees and officers are NOT your friends! If you need a friend, get a DOG! If you need to discuss your distressed financial curcumstances with a PERSON, see a therapist. If you want meaningful help with your foreclosure issues, you are at the RIGHT PLACE.
If this all sounds pretty BLEAK, it IS. But there are good, viable defensive strategies, especially in those states that are judicial foreclosure versus non-judicial foreclosure states. You should take some time to deliberately SCROLL THROUGH and READ the other posts on this Forum and also to take a look at some of the various other links and documents posted at this site.
You need to very carefully ASSESS the VALUE of your house, look at the specific terms of your alleged promissory note and alleged mortgage, and carefully review your financial circumstanes and position. There are some strategies that are HELPFUL for persons in serious fianancial distress (e.g. bankruptcy) that are NOT viable for other people of more substantial means and resources. Even bankrptcy is NOT a very good solution. It is often just a SPEED BUMP.
AVOID borrowing against revolving credit to satisfy insatiable demands for mortgage payments. You can take your financial distress and turn it into a financial DISASTER by compounding other debt when you simply CANNOT EVER AFFORD YOUR HOUSE.
AVOID offers of fee-based services to help you with a workout. These are almost ALL scams.
HAVE AN EXIT STRATEGY! This means that you need to have some cash set aside how alternative rented housing at the END of your nightmare. Paying ALL of your money and then some in hopes of redeeming an irredeemable situation is a rather certain path to homelessness and despair. KNOW WHEN TO CUT YOUR LOSSES.
There is no shame in being BROKE! The REAL SHAME is in being DISHONEST.
There are a number of folks at this site who give remarkably SOUND counsel. Amongst these: Nye LAVELLE, Moose, Mike DILLON, Ed CAGE, Joe B, and Bishop. This is just a quick list off the top of my head. I have no doubt left out a number of very valuable contributors. Generally, you will KNOW the good advice from the bad when you READ IT and, particularly when it rates a consensus endorsement by some or all of the above.
You will find occasions when we DISAGREE as to how to approach a particular problem. But you will find a variety of very good answers to a variety of problems developed by discussion, debate and consensus. When you see compelling arguments made and several of these identified folks coming together in agreement, you probably have a pretty good answer! There is some very good teamwork to be found here!”