Filed this week in U.S. District Court for the Southern District of Florida, Ignacio Damian Figueroa vs. Merscorp, Inc., Law Offices of David J. Stern, PA, and David J. Stern, individually, is a class action suit on behalf of people who have lost their homes in mortgage foreclosures where MERS and Stern's office were involved. The Complaint is thoroughly researched and well written. It asks for triple damages, costs and attorney fees under the "Racketeer Influenced and Corrupt Organizations Act," also known as the RICO Act.
The suit says that Mortgage Electronic Registration System, Inc.,or "MERS," is a racketeering enterprise. It charges that Stern, along with his law firm and related companies conspired with MERSCORP to deprive homeowners of their property illegally through fraud. The homeowner's attorney in this case is Kenneth Eric Trent in Fort Lauderdale.
Many thanks to the folks at http://4closurefraud.org/ and Matt Weidner Blog for bringing this to our attention. The Irish have an old saying: "Is this a private fight or can anybody get in?" If the Court certifies this as a class action, and your home mortgage was involved with MERS and foreclosed by Stern's office, you will be offered an opportunity to get in this fight.
This morning the Palm Beach Post ran an article called “Weighing the Pros and Cons of Foreclosures vs. Short Sales.” There’s a lot of good information in the story. There are serious consequences to just walking away and letting the bank foreclose your mortgage. A short sale can be the best solution to your mortgage problems. But there are some things you should know that the Post didn’t mention.
1. IT CAN TAKE A LONG TIME TO GET A SHORT SALE APPROVED
This isn’t necessarily a bad thing. Lots of people want stay in their homes for as long as they can. It can take 9 months or longer to get bank approval and close the sale. That’s after you have a contract signed by a buyer. But if you just want to get it over with, there are faster foreclosure alternatives than short sale. Look into a deed-for-lease or a deed in lieu of foreclosure. A mortgage foreclosure defense lawyer or a HUD-certified housing counselor can explain these options to you.
2. THE BANK MAY NOT WAIVE ITS RIGHT TO THE DEFICIENCY
Yes, there are banks that sometimes agree to waive the deficiency, but there’s no guarantee that they will. To get a short sale approved, you have to give your bank the same information they want for a mortgage modification: tax returns, bank statements, pay stubs, an income-and-expense report, a list of your assets and liabilities, and even a hardship letter. If the lender decides that you could pay the deficiency with your future earnings or by selling some other things you own, you aren’t likely to get a waiver of the deficiency
3. THE BANK CAN JUST SAY NO
Mortgage companies have an absolute right to refuse a short sale. There is no law that requires them to approve it. There is nothing in your mortgage that says they have to agree. Short sale may be the most logical, reasonable solution for everybody involved, including the bank, but that doesn't mean they will agree to it. They can say no to the short sale or they can “stonewall” giving an answer to the approval request for such a long time that your contract expires and your buyer goes away.
4. EVERYBODY ELSE WITH A LIEN ON THE PROPERTY HAS TO BE INVOLVED IN THE SHORT SALE TOO
Besides your first mortgage, any other liens on your home have to be cleaned up before a new buyer can get good title. You may have a second mortgage or home equity line of credit. There could be homeowner or condo association liens, judgment liens, mechanics liens for work that was done on the house, or tax liens. Some of these things would be eliminated if the mortgage was foreclosed, It ought to be easy to get the people whose liens would get wiped out to agree to the sale but sometimes they’re stubborn. The associations have rights that survive foreclosure, and their claims have to be resolved. If you have other liens, you should have expert help with negotiating your short sale.
5. SHORT SALE MAY NOT STOP FORECLOSURE
Listing your house for short sale probably won’t stop your mortgage company from filing a lawsuit to foreclose your mortgage. Getting a short sale offer from a buyer who has the ability to pay the contract amount is no guarantee that the bank won’t sue you. You can send your lender all the paperwork that their “foreclosure prevention” department has asked for, and still have a process server show up at your door with a complaint and summons for foreclosure. And if you don’t defend yourself in court, you can lose your home even though you’ve been in daily contact with the bank about the short sale.
Don’t believe anybody who tells you that you don’t have to respond to a foreclosure lawsuit. That’s absolutely not true. Negotiating with the bank for a short sale, a mortgage modification, or any other “foreclosure alternative” won’t even slow down a home mortgage foreclosure if the court doesn’t know about it. If you get sued for foreclosure and you don’t answer the complaint, you can lose by default. Talk to a mortgage foreclosure defense lawyer to find out what you really need to do.
The point of all this is not to talk you out of listing your home for short sale. Depending on your circumstances, short sale could be your best choice. Just get all the information you need before you make that choice.
On Wednesday, a New Jersey judge ordered a mortgage company president and one of his salespeople to pay over $75,000 in punitive damages to a homeowner for conning her into unknowingly selling her home. The judge also referred the case to the Bergen County Prosecutor's Office and the state attorney general's office to determine whether Charles Kohout, president of Salvation Home Buyers LLC of Bergenfield, N.J., and Linton Gentles, a salesman, committed any criminal acts.
Marva Coleman of Teaneck, N.J., a home health aide, fell behind on her mortgage payments. Gentles told Coleman that for a fee, Salvation would fix her credit so she could get a better mortgage rate. He said Salvation would arrange a mortgage in the name of someone with good credit and that Coleman could live in the house rent-free for six months until her credit was repaired. After that, Gentles said, the other person's name would be removed from the mortgage and the house would still be Coleman's.
On Oct. 9, 2007, Coleman was admitted to a hospital where she was kept on oxygen and medication for a week. The day after she was hospitalized, Gentles visited her with a package of documents prepared by Salvation. Coleman signed them from her hospital bed. She wasn’t given copies and later didn’t recall signing any documents.
In fact, Coleman signed a deed conveying her house to a woman named Maria Capo for $422,000. Another document Colman unknowingly signed was a “letter of gratitude” to the people who were cheating her out of her home. Of the $422,000, Salvation got $104,000, and its employees got another $40,000. Capo got a mortgage from IndyMac Bank in a closing that took place later that day.
Capo didn’t make the payments, and IndyMac filed a mortgage foreclosure. Coleman, who was sued in the case because she was tenant, brought a third-party complaint against Salvation, Kohout and Gentles.
Judge Ellen Koblitz found that Coleman was a victim of common-law fraud. She ruled that the deed conveying Coleman's house to Capo and the mortgage that Capo took out on the house were void.
The judge said Coleman and IndyMac’s successor One West Bank were innocent victims. One West was awarded an equitable mortgage from Coleman for $268,000, the amount she benefited because of payments made out of the original loan. Capo, who got $15,000 in “rent” when she got Coleman’s home, deeded the house back to Coleman as part of an agreement.
Judge Koblitz ordered Kohout and Gentles to pay Coleman over $75,000 in punitive damages for their fraudulent foreclosure prevention scam. They also have to pay her attorney’s fees.
Do you think the folks at Salvation repent their wicked ways? Not according to their lawyer, who described the judge as a bleeding heart liberal and called Coleman “a piece of garbage.”
1. Don't ignore phone calls and letters from your mortgage company or loan servicer. Answering those letters is your best bet for keeping your home.
2. Don’t work with any foreclosure prevention consultants until you check with the government agency that regulates them to make sure they are licensed or certified. The Chamber of Commerce and the Better Business Bureau are NOT government agencies.
3. Don't pay up-front fees to a foreclosure consultant. It’s against the law for them to collect money before they perform services.
4. Don't pay your mortgage payments to anyone except your lender or loan servicer. Phony mortgage consultants often keep the money for themselves.
5. Don't transfer the title of your home to a "foreclosure rescuer." A promise that you will be allowed to stay in your home as a renter or that you will be part of a bankruptcy that will get rid of your mortgage debt is a scam. You can end up homeless faster than if you went through mortgage foreclosure.
6. Don’t ever sign any documents without reading them first. Better yet, get a lawyer to read them for you and tell you what signing them will do.
The more you know about what your rights are and about who you are dealing with, the better off you are. When it comes to preventing mortgage foreclosure, knowledge is power.
If thinking about mortgage foreclosures and foreclosure rescue scams isn't enough to keep your blood pressure from sinking down to normal, consider the following item, first published in 2009.
Since the beginning of 2008 . . . the 20 U.S. banks that have received the most bailout dollars have laid off 160,000 workers. The 100 top executives at these 20 banks, in 2008 alone, collected a combined $791.5 million in personal compensation.