CFPB Releases New Mortgage Rules Resources for Consumers
On January 10, 2014, the Consumer Financial Protection Bureau (CFPB) released new mortgage rules designed to provide homeowners and consumers with new rights and greater protections from many of the harmful lending practices that led to the recent mortgage crisis and attendant financial collapse.
Virtually every mortgage a lender makes must now be evaluated, first and foremost, on the borrower’s ability to repay the loan. This means that the borrower must be able to repay the loan for years, not just during the first few months when a “teaser” interest rate keeps monthly payments low. These new mortgages will be referred to as “Qualified Mortgages” or “QMs.” QMs are designed to be safer and easier to understand than the loans that lead to the recent financial crisis. New CFPB rules also limit the points and fees lenders can charge for making a QM.
The Price of Justice
Why do we do what we do?
Foreclosure defense is a challenging area of the law. We almost always find ourselves standing in opposition to large lenders with deep pockets who retain large law firms with deep pockets. Many of our clients, in turn, are individual homeowners of limited means. The task is often daunting; difficult.
So why do we do it?
We must make one thing perfectly clear. We are not on a crusade. This is not like Don Quixote tilting at windmills. We do what we do for one principal reason—we believe that the law should be evenly and fairly applied to all irrespective of size, wealth or status. We believe in justice, not “just-us.” Unfairness, inequity and unlawful conduct deserve redress. We give the little guy a chance, a voice, and a day in court.
Bankruptcy 101: The Difference Between Chapter 7 and Chapter 13
Hundreds of thousands of Americans file for bankruptcy each year. But filing for bankruptcy does not mean that your debts are simply wiped away in one easy step. You must first be eligible to file a bankruptcy, and the duration and outcome of your bankruptcy case will depend on the type of bankruptcy filing for which you qualify.
And so this is where we will begin.
The two most common types of bankruptcy filings for consumers (as opposed to bankruptcies for businesses which work a little differently) are a Chapter 7 and a Chapter 13 bankruptcy. Under Chapter 7, consumers may have some of their assets sold, but are able to escape liability for most of their debts. The process usually takes just a few months. Under Chapter 13, consumers pay part or all of their debts under a tightly controlled budget plan overseen by a court-appointed bankruptcy trustee. The Chapter 13 process, also called reorganization bankruptcy, generally takes three to five years.
Consumer Protection Financial Bureau Order Ocwen Financial Corporation to Provide $2 Billion in Relief to Homeowners for Servicing Violations
The Consumer Financial Protection Bureau (CFPB), together with authorities in 49 states and the District of Columbia recently reached a $2.1 billion settlement agreement with the country’s largest non-bank mortgage loan servicer, Ocwen Financial Corporation. The settlement is the result of the investigation of numerous complaints arising out of Ocwen’s alleged “significant and systemic” misconduct at every stage of the mortgage servicing process. Under the terms of the agreement, Ocwen must provide $2 billion in principal reduction to underwater borrowers. Ocwen must also refund $125 million to the nearly 185,000 borrowers serviced by Ocwen (or its subsidiaries Homeward Residential Holdings and Litton Loan Servicing) whose homes have already been foreclosed. Finally, Ocwen will be subject to greater regulatory scrutiny going forward.
Alternative exit strategies—Deed in Lieu of Foreclosure
In our prior two posts, (What documentation should I receive from my lender prior to a foreclosure mediation? and What documentation do I need to produce for a foreclosure mediation?) we addressed the documents that lenders and borrowers have to produce as a part of Oregon’s new mediation program. However, there is an old adage that “numbers never lie.” After collecting all of the required documents, it will sometimes become abundantly clear that the numbers simply do not add up and a loan modification is not likely. There can be a number of reasons—from significantly reduced property values to loss of income due to job loss—but sometimes the best strategy (if not the only strategy) is to consider an exit strategy.
What documentation should I receive from my lender prior to a foreclosure mediation?
Participation in Oregon’s new mediation program is required for lenders who initiated 175 or more foreclosure actions in the preceding calendar year. In our prior post (What documentation do I need to produce for a foreclosure mediation?), we itemized the documents that the homeowner must provide to the lender prior to a mediation. In this post, we address the documents that the lender must provide to the homeowner. After a homeowner has paid the required fee ($175.00 but a fee reduction waiver is available for households making 200% or less of the federal poverty level) and submitted the required documents (see prior post), a lender is required to provide the homeowner with the following documents:
What documentation do I need to produce for a foreclosure mediation?
In our last blog post (Foreclosure Actions Down—Way Down—As Oregon’s New Foreclosure Mediation Program Ramps Up—Way Up), we talked about the success that Oregon’s new mediation program is having in bringing borrowers and lenders to the mediation table. There are already more mediations scheduled in November and December of this year than total mediations that occurred under the old mediation program last year. As we discussed, mediation was only required under the old program if the lender filed a non-judicial foreclosure. This turned out to be a loophole the size of Mount Hood because lenders simply stopped filing non-judicial foreclosures and started filing judicial foreclosures instead. Now in fairness to the good people of the Oregon legislature, for the past 50 years or so, almost all foreclosure in Oregon were non-judicial foreclosures. The legislature certainly did not expect lenders to completely abandon the long-established practice of foreclosing non-judicially. But hindsight, as they say, is 20/20. Large lenders did just that—virtually stopped all non-judicial foreclosures—so the Oregon legislature had to step in once again to amend the law.
3 Things You Can Do to Help Yourself WIN a Foreclosure Defense Case
Thinking about hiring a lawyer to pursue a wrongful foreclosure or unfair trade practices lawsuit against your lender?
Well here's an important little tidbit.
Despite what you might think, or what you might see on those clever legal dramas on prime time television, or what that high-priced lawyer in downtown Portland might tell you...
Lawyers do not win cases.
That's right, we said it.
We'll say it again.
Lawyers. Do. NOT. Win. Cases.
Facts win cases.
Facts supported by EVIDENCE win cases.
Ever played poker? It's just like that. After all the preening and puffing and posturing, at some point you have to put up or shut up. You have to show your cards. Winning a case in a court of law is really no different.
Understanding Your Rights: Oregon's New Foreclosure Mediation Program Goes Live
The new Oregon Foreclosure Avoidance Program (OFAP) officially launched on August 5, 2013. The OFAP is the creation of Senate Bill 558, which overhauled the existing Foreclosure Avoidance Mediation Program (FAMP) in effect since July of 2012. FAMP did not apply to judicial foreclosures, a gaping loophole that effectively rendered the program moot because lenders simply stopped using nonjudicial foreclosures and simply resorted to judicial foreclosures instead. As a result, less than two dozen mediations convened in the past year. Senate Bill 558 changes all this and eliminates the judicial foreclosure loophole.
Federal Court Rules That Lender Contractually Obligated to Offer Permanent Modification If Borrower Complied With Trial Peroid Plan
In a recent decision that could potentially impact every Oregon homeowner currently in or negotiating for a trial period loan modification, the 9th Circuit Federal Court of Appeals recently ruled that Wells Fargo was contractually obligated to offer a permanent modification to a homeowner after the homeowner fully complied with the terms of their HAMP trial period plan. In Corvello v. Wells Fargo Bank, the Ninth Circuit reversed a California district court’s dismissal of the plaintiff's breach of contract claims arising out of Wells Fargo's refusal to offer the plaintiff a permanent loan modification after the plaintiff made all of the required payments under the TPP. Wells Fargo (unsurprisingly) argued that the TPP was not a binding contract. However, the court rejected this argument and looked instead to the approach of the 7th Circuit in Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547 (7th Cir.2012). In Wigod, the court held that banks were “required to offer permanent modifications to borrowers who completed their obligations under the TPPs, unless the banks timely notified those borrowers that they did not qualify for a HAMP modification.”
Know Your Rights: No More "Dual Tracking"
What is "dual tracking?"
Dual tracking is an ugly, insidious (and therefore unsurprisingly commonplace) practice where Big Bank X (insert name here) is actively negotiating a loan modification with a homeowner while pursuing a foreclosure against that same homeowner...at the same time. The glaring inequity to this practice has long been a topic of vociferous objection among foreclosure defense attorneys and consumer rights advocates. Thankfully, corrective legislative protections are on the horizon.
"Enormous Increase" in Foreclosure Mediation Requests
The new Oregon Foreclosure Avoidance Program has received over 450 mediation requests since its inception on August 4, 2013. What is most compelling about this number is that the vast majority of mediation requests have come from lenders. In the first 13 months of the prior Oregon mediation program, only 286 cases were referred to mediation. However, the prior program was overhauled by Senate Bill 558, which came into law last spring.