Law Offices of David P. Leibowitz LLC
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If you filed bankruptcy through no fault of your own, or if you suffered a foreclosure for reasons beyond your control, it is now possible to get an FHA insured loan.
You can get a new mortgage one year after bankruptcy or foreclosure if you can show you had a big cut in pay, a big decline in your business income or became unemployed for no fault of your own. And as in the past, you can be eligible if you suffered a medical emergency or recently became a widow or widower.
You can’t get on this fast track to a new mortgage if you quit your job, or if you were fired for cause.
The new FHA policy is much more liberal than the harsh policies of Fannie Mae and Freddie Mac. These agencies require a waiting period of 3 years after completion of a foreclosure or discharge from bankruptcy if there are “extenuating circumstances” and up to a seven year waiting period otherwise.
There are many bogus sources for FHA financing. However, you can find many answers to your questions about FHA loans at http://portal.hud.gov/hudportal/HUD?src=/FHAFAQ. You can also find an FHA approved lender at http://www.hud.gov/ll/code/llslcrit.cfm
To qualify for a mortgage after bankruptcy or to qualify for a mortgage after foreclosure, it’s very important that a bankruptcy case or the foreclosure case to be completely closed. Lenders frequently fail to complete a foreclosure, especially for condominiums and homes with a home owner association because they don’t want to assume the costs of home-ownership. This leaves the owner stuck holding the bag. It also leave the owner ineligible to look for a new mortgage.
Lakelaw has developed innovative tools to force lenders to take action to conclude a foreclosure case and allowing borrowers to have a fresh start.
We at Lakelaw value our former clients and friends and hope you gain value from our periodic messages to you about developments in bankruptcy and foreclosure.
We especially appreciate your referrals of friends, family members and others you know who can benefit from our services. Thank you for your continued interest in and support of Lakelaw – your financial lifesaver ™ We continue to represent people and businesses in bankruptcy and foreclosure defense in Illinois and Wisconsin. We do so with care, kindness, courtesy, respect, professionalism and dedication. And we always will.
“After losing the standing argument in state court, it is beyond frivolous for the Debtors to file bankruptcy, reiterate the same losing arguments and now claim, not only that the Note is invalid, but that the foreclosing creditor and its attorneys are liable for RICO violations for filing the Note as an exhibit to the foreclosure complaint.”
- Rinaldi, et al. v. HSBC Bank USA, N.A., as Trustee, et al. (12-2412, Feb. 22, 2013, Hon. Susan V. Kelley)
As the Eastern District of Wisconsin has made clear over the last year, you cannot litigate and lose a state court foreclosure case, then turn around and relitigate the case in bankruptcy court. The Rooker-Feldman doctrine (as described here in this previous blog post) prevents this second bite at the apple.
This decision was quite thorough because in addition to standard objections to the proof of claim and standing arguments, the debtors/adversary plaintiffs also alleged common law fraud, RICO violations, and other claims against the original lender, the servicer/proof of claim filer, and numerous individuals and law firms. Thus, the judge was required to analyze the merits of each before ultimately dismissing each and every claim.
The moral here: If you believe you are the victim of foreclosure fraud, please contact us immediately. If you have a judgment of foreclosure entered in state court, it is extra important that this be discussed before you decide to challenge it in bankruptcy court. Contact a Lakelaw attorney for more information.
The Bankruptcy Court for the Eastern District of Wisconsin created the MMM (mortgage modification mediation) program about a year and a half ago to help make modifications in Chapter 13s easier. So far, it has had quite a few success stories, and the next step is making sure the program stays strong and allows mediation options for as many homeowners and servicers as possible.
Starting December 1, the fees for the program are increasing to allow mediators more recognition for their hard work. The fees for homeowners will now be $200 to the mediator and $25 to the portal used for document submission. Also, the portal is going to remain a preference, but servicers who don’t use the portal will see language allowing them, in some cases, to continue the mediation program while taking documents by e-mail or other means through their attorneys. The portal is effective and worth the extra cost, but some servicers still struggle to get approval to use it.
As has been our practice for quite some time, the law firm representing the Chapter 13 debtors will pay the fees and the work by the mediator will start only when the fees are in. We ask for the mediation fees from our clients in advance to start the process.
The MMM program can be a huge step to getting through the impossible hurdles some servicers have to get mortgages modified in a reasonable fashion. We hope to keep promoting and improvingthe program as time continues.
Suppose you own your home or a rental property and don’t pay the real estate taxes on time. If they build up and you don’t pay for 2 years or more, you may be facing a “tax foreclosure”.
Tax foreclosure is different than a standard foreclosure in Illinois or Wisconsin, because a regular foreclosure goes through the court system. The lender has to sue the homeowner and any other lienholders, get a judgment, allow for a redemption period, sell the property at auction, and decide whether to collect on any remaining balance.
In tax foreclosure, the property goes through an administrative process and gets turned over to the taxing party (say, the City of Milwaukee) after a notice period. There is no auction, but rather a transfer for the amount of unpaid taxes.
Recently, courts in New York and Wisconsin have ruled that these transfers can be considered “fraudulent conveyances” in Chapter 13 Bankruptcy. What does that mean?
What is means is that this is no different than a homeowner deeding his $100,000 house to his Aunt Sally for $3,000. It is a transfer within 2 years of filing bankruptcy for less than fair value. There is no exception for a transfer to a City or taxing party in the code.
The debtors in a few Chapter 13 cases (grouped together by the court for ruling on the law) each sued the City of Milwaukee in their Chapter 13 bankruptcies. They sought to get the house back and try to redeem the homes by paying the back taxes through their Chapter 13 Plans. The City was furious, because they had followed the process set forth in the Wisconsin Statutes. They believed that the debtors were looking to essentially make the law toothless.
The Court took this in to consideration but ruled that in the rare case of a bankruptcy filing in the 2 years after a tax foreclosure, the actions were in fact fraudulent conveyances. The law didn’t say the City of Milwaukee must sell the homes at auction, but they surely couldn’t say with a straight face that a $100,000 home’s fair value was $8,000 due to that amount being owed in taxes. They didn’t hold a public auction as lenders in foreclosure do. That part of the process made the transfer fraudulent, because they couldn’t establish fair value.
If you have had a home lost to tax foreclosure in the last year or so and think you might be able to afford a Chapter 13 payment plan, contact us at Lakelaw. We might be able to use this decision to your advantage and recover a lost property.
If you live in Kenosha, Racine, or Milwaukee County, you may see more of these signs. According to the Milwaukee Journal-Sentinel, May foreclosures were up significantly over May 2011 filings. Although the biggest servicers are under agreements with the states to reform their practices and provide money for principal reduction, it won’t solve the main problems spurring foreclosure issues: slow turnaround on modification reviews, a lack of jobs to provide for affordable mortgages, and depressed real estate prices from the prior glut of foreclosed homes.
Milwaukee, and its collar counties of Waukesha, Ozaukee, and Washington, continue with the depressing news. While most areas of the country are seeing slow upticks of housing prices, Metro Milwaukee’s are falling.
The foreclosure settlements have not played any significant role in stopping the foreclosure tidal wives, and judging by the recent numbers of filings, there are still thousands of active and pending foreclosures to go before the housing market hits rock bottom and can start again.
We’re not surprised at these figures, but it is disheartening to see so many filings. Despite the attorneys who have given their pro bono and paid time to try to fight the more suspicious foreclosure filings, it is clear that more leadership, and perhaps money, needs to be passed along to the homeowners, rather than to the banks.
Not content to rest on its laurels, the Eastern District of Wisconsin’s Mortgage Modification Mediation (MMM) Program has continued to inspire and innovate, becoming one of the leading bankruptcy courts in pushing for mortgage modifications during Chapter 13 Bankruptcies.
In addition to talk about expanding the program to the Western District of Wisconsin Bankruptcy Court, the program is planning a move to use the DMM Portal to upload documents and do the unheard of – actually encourage open lines of communication between servicers and debtor attorneys. Through the work of Judge Susan Kelley and the attorneys, mediators, volunteers, and court staff who have nurtured the program, the MMM should be the envy of the courts for a long time to come.
If you want to know more about the MMM program and how it can help cut through the bog of modification applications toward an answer, please contact us at Lakelaw. As attorneys who have been active with the program since its inception, we can maneuver clients through the program, work on the applications and its paperwork, and prepare homeowners to work within its guidelines to achieve positive outcomes.
Politicians, economists, and consumer advocates have been hoping for months that the housing market would improve. This, it is said, would help the economy pick up again. People can access the equity in their homes, move freely to take jobs elsewhere, and invest in home repair, among other economic drivers.
A recent report in the Milwaukee Journal-Sentinel discusses April home sales, which did rise across the state – in price and in volume. That’s generally good news. However, buried further in the article, is a discussion on Southeastern Wisconsin, including the 4-county Metro Milwaukee area.
“The median price fell 1.6% in the southeastern region, but lost 4.4% in the four-country metro Milwaukee area, where most of the state’s foreclosed properties are concentrated.”
Well that’s not good. It means thousands of homeowners are still struggling with foreclosure, entire blocks in Milwaukee proper and its suburbs are being foreclosed upon, and there are still depressed areas where no improvement is being seen. When Metro Milwaukee sees figures more like Northeast and North Wisconsin, with positive trends in home sales and in sales prices, we will see the economy pick up further.
What do you think? Are you seeing fewer foreclosed homes in your neighborhood and more “Sold!” signs? Is anything different in Chicagoland? According to a recent Chicago Tribune story, over half of March sales in Chicago ended up with a loss on the home. Some of the suburbs saw a 70% loss rate.
Something we have seen a lot lately at Lakelaw is a failure of banks and their attorneys to follow the rules during foreclosure lawsuits. A typical purchase of property requires that you sign a Mortgage instrument and Promissory Note with your bank. The Mortgage is a basic security agreement that says if you don’t pay, the bank can come get your house; it uses the home and possibly other property as collateral. The Note is an agreement to pay until the borrowed money is repaid in full. After the Mortgage and Note are signed, most people keep a copy of each in their records but don’t look at them again until they have problems paying.
The mortgage holders must follow some simple rules to properly “negotiate” or transfer a Note. The first rule says there must be an “endorsement” to a person or company and delivery of the Note, or an endorsement “in blank” so whoever holds the Note can enforce it. The endorsement can either be on the Note itself or on a page “affixed” to the Note called an Allonge. This might sound complicated, but these are similar rules for paying someone by a personal check - if you write a check payable to Lakelaw, Lakelaw can stamp or sign the back of the check and deposit it or it can endorse it to another party by writing “Pay to the order of [Name of Party]“.
While these rules seem simple, we are seeing some major issues in our Foreclosure Defense practice. One mistake we see is that the company foreclosing on a homeowner does not have a properly endorsed Note, and the bank or servicer is not the original lender. If the Note was not endorsed, how did the foreclosing bank get the Note? Another strange thing we see is when the foreclosing bank starts with a Note that is not endorsed, endorsements appear on the Note or a page with endorsement later appears. How did these endorsements get there? It seems unlikely the bank has two copies of a Note, one unendorsed and the other endorsed. It’s a question that may prevent a judge from granting a judgment to the plaintiff if it’s addressed properly and in a timely fashion.
The disturbing trend of banks not following proper procedure when trying to take away people’s homes should cause a pause and hopefully bring about reforms that will cause lenders and servicers to reevaluate how they do business. It also should encourage anyone with questions about their mortgage documents in a foreclosure lawsuit to speak to a lawyer immediately to see what defenses and claims they might have.
This post was co-authored by Lakelaw associate Nicholas D. Strom
It’s hard enough communicating with one mortgage servicer. Anyone who has ever tried to get a loan modification, get approval for a short sale, or even deed the property back in exchange for avoiding foreclosure.
Can you imagine having two mortgages, with the same lender, and not being able to get the departments to agree on how to proceed?
Unfortunately, many homeowners across the country face that exact ridiculous situation right now. And it comes to its absurd conclusion in foreclosure filings. You see, when a lender forecloses, they need to obtain a clear right to take the property that trumps anybody else imaginable. So very often you see a case caption that reads:
Huge National Bank v. Joe Homeowner, unknown spouse of Joe Homeowner, a/k/a Jane Homeowner, unknown tenants, XYZ Condo Association, Credit Card Judgment Company, and Huge National Bank
What does that all mean? Well, Huge National Bank has a first mortgage on this property, let’s say for $200,000. They have to sue Joe Homeowner, since he’s on title to the property, he’s the owner on the deed recorded with his county. They may have to sue his wife, if he has one, because some states give spouses a 1/2 interest in their spouse’s property. They would have to sue a Condo or Homeowner’s Association that has an interest in the property. They need to notify any creditor that obtained a judgment for a debt (a credit card judgment, a judgment for an unpaid medical bill, a personal injury). And of course, the holder of any junior mortgage.
So why is Huge National Bank suing itself? Because it probably has a second mortgage for $50,000 that was either taken out at the same time as the first mortgage (usually referred to as an “80-20 loan” – 80% of the purchase was for the first mortgage, 20% for the second) or it bought the mortgage later from another lender.
The problem is that each department has different interests. The first lender wants to foreclose if you can’t pay, because that way they can get clear title and move forward with another buyer. They want to recover as much as possible on the loan. The second lender wants to do the same thing. They may have a higher rate of interest on the mortgage since second mortgages bear much more risk. They might even hire their own law firm to defend themselves against….themselves.
It sounds like a headache and a special case of the law turning common sense into logic games. You may be correct. But knowing this can help you determine how you want to proceed with both mortgages. If you have two mortgages fighting between themselves and refusing to help you, please contact us to discuss your options.
Well, to start, anyone can sue anyone. That doesn’t mean you’ll win or collect. But a new case from the 7th Circuit Court of Appeals (covering Wisconsin, Indiana and Illiinois) suggests that you may be able to.
In this case, coming from the Northern District of Illinois, Ms. Wigod was working with her servicer, Wells Fargo Home Mortgage, and had entered into a Trial Period under the government’s Home Affordable Modification Program.
As anyone who has entered one of these trial periods knows, the process is frustrating and often offers false hope.
Sometimes, homeowners fail to make payments during the trial period. Other times they fail to get the signed documents back by a set time. In other cases, homeowners make the payments AND send in the documents, but the servicers make math errors, miss or misprocess payments, or extend the trial payments at the end of the 3 months.
In Ms. Wigod’s case, Wells Fargo submitted a letter to her after her trial period was done informing her that regretfully they could not offer her a permanent modification due to investor guidelines. This appeared to contradict what the HAMP trial offer letter stated, so she sued Wells Fargo. She sued in District Court to try to create a big class action lawsuit against everyone who faced similar problems with Wells Fargo or Wachovia.
Two years after her suit, the Seventh Circuit Court of Appeals allowed part of her case to continue. So she’ll be back in trial court to try to establish her own individual lawsuit, but also the class action. Based on this, we predict more people will try to raise identical claims in both state and federal courts in Wisconsin, Illinois and Wisconsin.
While she hasn’t been awarded anything yet, Ms. Wigod was able to confirm from the court what most of us knew deep down to be true already: As part of these programs, the servicers and lenders made promises to homeowners. If they fail to live up to those promises, the homeowners can sue and seek their damages. If you feel you were in a similar situation and want to speak with an attorney from our offices in Illinois or Wisconsin, please contact us today.