New roadmap for fighting foreclosure and getting your loan balance reduced
An excellent article in today’s Wall Street Journal spells out some of the growing tools that homeowners have to fight foreclosure and apply pressure to the people who actually own their sliced-and-diced loan to reduce their loan balance.
LOXAHATCHEE, Fla.—Israel Machado’s foreclosure started out as a routine affair. In the summer of 2008, as the economy began to soften, Mr. Machado’s pool-cleaning business suffered and like millions of other Americans, he fell behind on his $400,000 mortgage.
But Mr. Machado’s response was unlike most other Americans’. Instead of handing his home over to the lender, IndyMac Bank FSB, he hired Ice Legal LP in nearby Royal Palm Beach to fight the foreclosure. The law firm researched the history of Mr. Machado’s loan and found two interesting facts.
First, the affidavits IndyMac used to file the foreclosure were signed by a so-called robo-signer named Erica A. Johnson-Seck, who routinely signed 6,000 documents a week related to foreclosures and bankruptcy. That volume, the court decided, meant Ms. Johnson-Seck couldn’t possibly have thoroughly reviewed the facts of Mr. Machado’s case, as required by law.
Secondly, IndyMac (now called OneWest Bank) no longer owned the loan—a group of investors in a securitized trust managed by Deutsche Bank did. Determining that IndyMac didn’t really have standing to foreclose, a judge threw out the case and ordered IndyMac to pay Mr. Machado’s $30,000 legal bill.
First, if banks are no longer allowed to use robo-signers and actually have to review documents, they may avoid foreclosure as an option. Second, they may not actually have the authority to foreclose, as evidenced by this story. In any event, it is worth pursuing actually making the bank prove that it has done the proper research and has the right to foreclose.
Mr. Machado and his lawyer, Tom Ice, say they now want to convince the owners of the mortgage to cut Mr. Machado’s loan balance to between $150,000 and $200,000—the current selling price for comparable homes in his community near West Palm Beach. “The whole intent was to get them to come to the negotiating table, to get me in a fixed-rate mortgage that worked,” Mr. Machado said.
If it proves difficult for the bank to foreclose, reducing the loan balance so they at least get some payment may be their best choice, and having proved you aren’t going to let them foreclose without having done everything precisely right, they may simply give in.
Good luck!
Foreclosure, Loan modification | admin October 4, 2010
