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News & Updates

TRO granted in Fairfax County staying eviction after foreclosure sale based on homeowner's right to cure the default
August 2010

Update: the TRO has now been converted to a preliminary injunction, meaning the homeowners cannot be evicted at least until the case is over.

Homeowner was in the process of modifying his loan, when the bank foreclosed on him anyway.  Servicer Central Mortgage Co. appointed a Substitute Trustee to act on its behalf.  But the sale, which went to the "noteholder," resulted in a transfer of the property to HSBC Bank, not the entity on whose behalf the Sub Trustee was acting (Central).

Homeowner challenged the sale and made two arguments: first, the sale is fraudulent and otherwise improper because HSBC did not appoint the Substitute Trustee and because there was no evidence (even by recitation) of HSBC's ownership of the note.  Second, Homeowner alleged violations of his right to cure the default and interference of his right to cure in the form of the bank inducing him to do nothing but wait for a loan mod decision.

The judge did not reach the technical defense of HSBC's standing/right-to-enforce the obligation, but did see a problem with the bank's actions with respect to Homeowner's right to cure. 

If your bank or mortgage servicer tells you they will not foreclose during loan modification negotiations, but do foreclose anyway behind your back, you may have a cause of action against them for violations of your right to cure the default, including your right to obtain a decision on your loan modification application before your home can be sold in foreclosure.


June 2010

In 2005, Debtor executed and delivered to “Synergy One” a fixed-rate promissory note in the principal sum of about $290K secured by a Deed of Trust on real property located in Manassas, VA. The Deed of Trust listed Synergy-One as the “Lender,” and Mortgage Electronic Registration Systems, Inc. (“MERS”) as “the beneficiary” of the Deed of Trust “solely as nominee for Lender and Lender’s successors and assigns.”

During the pendency of a non-judicial foreclosure commenced by SunTrust Mortgage, Debtor filed for Chapter 7 bankruptcy, and then retained us as counsel. After checking with Fannie Mae and Freddie Mac, our office ascertained that the loan was (at least at some point) owned by Fannie. Suntrust then moved for lift-stay relief in the bankruptcy court to continue with its (bogus) foreclosure. Debtor, through counsel, opposed the motion on the grounds that SunTrust’s motion contained no evidence that SunTrust had the right to enforce the lien, that SunTrust was not the “real party in interest” as required by the federal rules of procedure, and that the debt was “unenforceable against the debtor and property of the debtor, under any agreement or applicable law.” Additionally, Debtor’s counsel introduced into evidence a copy of the note that appeared different than the copy submitted by SunTrust and its attorneys (it contained an extra blank endorsement). After a hearing on May 5, 2010, the judge ruled from the bench and agreed with Debtor that SunTrust had not established it was the “real party in interest.” The judge, however, gave SunTrust a chance to establish itself as a “lender” by setting a trial for June 2, 2010, whereby SunTrust would have a chance to produce the original note and bring in other witnesses, including “documents custodian.”

On May 26, 2010, our office filed its list of witnesses indicating that we would put on the stand SunTrust’s and Synergy-One officials whose signatures appeared on purported endorsements on the copies of the Note. On May 27, 2010, after seeing Debtor’s list of witnesses, SunTrust withdrew its lift-stay motion! So the stay remained in place and SunTrust can’t foreclose. What’s more, we have now turned the pending non-judicial foreclosure into a judicial one by filing an adversary proceeding (a complaint challenging the pending foreclosure) in the bankruptcy court.

Another Recent "Standing/Capacity" Victory in Virginia
June 2010 

Homeowner filed for Chapter 7 in the U.S. Bankruptcy Court for the Eastern District of Virginia. A pretender lender (Chase) filed a motion to lift stay to be able to proceed with its bogus foreclosure. Debtor then filed an answer and an opposition to the motion, asserting about 10 defenses and arguing that Chase did not have the right to enforce the subject obligation.

Chase in response filed an affidavit by an FDIC official alleging that Chase got the subject loan by operation of law. The problem was, the affidavit did not establish that the official had any personal knowledge of the events he was testifying to. Debtor challenged the affidavit on evidentiary grounds.

On the day of the hearing, Chase's attorney said "your honor, we are not prepared to address Debtor's objections; we request a continuance." The case was continued beyond the date the automatic stay would normally last (60 days), so the continuance was tantamount to a denial of Chase's motion.

In Nonjudicial States, Use Bankruptcy To Stop Foreclosure

If you are about to lose your home to some unknown entity (such as a securitization trust or a "Some Bank as Trustee"), whith which you never signed any contract or loan documents, and you are in a nonjudicial foreclosure state, such as Virginia, where the pretender-lender need not prove in court their right  to enforce the underlying obligation, use bankruptcy if your situation allows.  In bankruptcy, THEY will have to come to court and ask the judge to allow them to foreclose. That's when you can just sit back and poke holes in their case, asserting your defenses and demonstrating to the judge that they cannot prove their puported right to foreclose.

HERE IS WHY IT IS OFTEN IMPOSSIBLE TO GET A LOAN MOD: Government gives our money to banks, prividing incentives to foreclose/short-sell instead of modify loans.


WELCOME TO COMMUNISM:  While some financial mills took unjustified risks and others flat-out duped the public into buying toxic loans designed to fail and make the banks money (Goldman Sachs, anyone?), taxpayers are now picking up the tab.  The mistakes and ploys of some are now being dumped on the entire nation.  If that is not communism, I don't know what is.  If courts do not stop this (by not letting the banks have yet another windfall of foreclosed properties), no one will.


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News Updates
06/2010 - First Foreclosure Defense Victories in VA:

Homeowners stave off bank's lift-stay motions in bankruptcy.  more>

Great Article: Banks use our 401k's to fund our loans and then refuse modifications and forclose on our homes! 

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