Merry Christmas... Mr. Grinch!

This marks the 12 month anniversary of Distressed and Taxed.  This blog has had over 12,000 page views this year including some of one of my first posts about Christmas and Freddie Mac, Well, its Christmas time again and the elves at Freddie and Fannie, who can't seem to foreclose that solo cup, have decided not foreclose on your home this Holiday Season.  What must be remembered though, is that just because the house isn't selling in foreclosure, does not mean that mechanical minds of our lending institutions are not working to seize your house.

One of my favorite Christmas movies is How the Grinch Stole Christmas with Jim Carrey.  My wife doesn't like it, but we have decided we don't have like the same things and its okay.  In the show, Grinch burns the Who's Christmas tree and then retires to his home in Mt. Crumpit while the Who's continue to celebrate.  He starts to concoct a devious plan to steal Christmas.  Well, the banks are Grinching away at your home and have started their way back down the mountain.

Though actual foreclosure sales were down in November as compared to last year, the number of filings for nonjudicial foreclosures was 56% over last year in Washington state. See this article in Yahoo!  Considering that last year was a record year for foreclosures and the postings for foreclosures starting in January are up more than half, means that 2012 will be a quite the ride for both the housing market and the homeowner's trapped in their underwater homes.

Unlike the Grinch, I would not expect the many bank institutions to have a change of heart and grow from two sizes too small.  The simple fact is that banks are heartless, anaerobic, constructs which neither feel nor care about your plight.  The only question that can be asked is the questions asked by the shareholders, which is, "did you make me any money today?"  Not foreclosing does not make money.  Grinch!

If you would like to see some heartwarming trends, the Foreclosure Fairness Act and the mediations it is producing are providing some surprising results.  Not as consistent as I would like, but surprising none the less.  So to avoid being grinched by the increased foreclosure activity hit us up at NicFisherLaw.com.

Restraint of Sale and Foreclosure Fairness

So I am not the best blogger in the world. I will admit that, but in spite of that fact, I have an excuse. In fact I have a good excuse, I have been at war with the banks. So please forgive me while I was in the trenches, but I am back with some real world information, some that you want to hear, some that you don't, but here it goes.
First Point: The banks have been prematurely sent out their notices of default. Here is what is happening, my clients are receiving the notice of default, I will assume the Pre-Foreclosure Options letter prior to the appointment of the Trustee that is sending out the letter. This is problematic because the Trustee is not authorized to do anything until such time as it is appointed. Small problem with the statute and deed of trust that the banks and trustees seem to have with figuring out what "vesting" means.
Second Point: The banks must produce the note. The question is when. The lawyers for the banks have vehemently denied that there is any authority for the production of a note, but the judges, even the very conservative judges in Snohomish County, have been willing to require the banks to produce the notes. This is something that will not happen with a simple letter of request from the borrower to the bank or whatever entity is holding your note. However, if you are in litigation, and you have the right complaint, then the judge can require production of the actual note for inspection. I recommend that you hire a forensic auditor to look it over with you. Have him bring his microscope and split some hairs.
Third Point: You have to have more than a contracts claim to win in court. If you are upset with your HAMP modification (or lack thereof), then you will still need to find a better reason to sue the bank than that. The TPP agreements, if not made permanent, then it has no teeth and will not get you through the door. I recommend some fraud mixed with some misrepresentation, and a dash of conspiracy for good measure.
Fourth Point: The foreclosure Fairness act and its Foreclosure Mediation is here. My offices are doing the letters for $150 and a full representation, including being at the mediation for $900. This process will produce positive results for you if the home is your primary residence. Don’t hesitate, you need to put your request in within 30 days of receipt of your Pre-Foreclosure Options letter.
Last Point: Keep fighting. I had a good friend who was a third degree black belt in judo and a state wresting champ out of Spokane tell me that most of his opponents weren’t willing to push for more than 8 seconds and if he pushed a little longer he would win the fight. That is true in this arena. The opponent is big, and has resources to push for a long time, but its lackadaisical in its approach and lets up at times. That is when you have to push hard and put it on its back.

Money may derail Foreclosure Mediation in Washington

I don't know about you, but I used ride trains everywhere.  Of course, not in the US because our mass transit sucks, but in Japan.  Trains are cool, they are powerful, can transport enormous amounts of people and goods, and if you have a Japanese conductor, they are efficient.  The only problem is that they ride on a rail, permanently attached to the ground and if the train ever leaves that rail, well, buckle-up buttercup, cause you will be needing a personal injury attorney.

Yesterday, I attended the House and Senate hearings on the new legislation which is termed Foreclosure Mediation.  The previous posts went into detail on the legal ramifications of the bills (HB 1362 and SB 5275) and I continue to support them.  However, yesterday's Senate Hearing which was Chaired by Senator Steve Hobbs chimed an unfortunate reality, money.

Senator Hobbs pointed out that the fiscal note (link here) that this bill would cost WA taxpayers $3.3 million to implement.  Well, that said, there are some enormous issues with that number, and there is alternative financing that should make the impact to the general budget a net of zero. First of all, the fiscal note assumes that WA will see 40,000 foreclosures next year.  The number is likely accurate, or accurate enough for an estimate as the baseline that the industry experts were throwing out yesterday was somewhere in the vicinity of 30,000 and a recent Realty Track estimate had it at 50,000.  Both numbers are skewed by faulty data because they look at different measures such as the number of notices of default that are filed.  Well, in my practice I have forced one bank to file three notices of default on my one client because the bank is an abject screw up.

The second issue with the foreclosure number is that it includes all foreclosures.  Foreclosure impacts every type of property, whether it is bare land, commercial, industrial, investment, or residential owner-occupied.  The bill only targets the properties that are owner occupied.  So there will only be a percentage of the foreclosures that even qualify for the the program. Since only a percentage qualifies, the expenditures should be quite a bit lower because the government will not be looking at the entire cost for 40,000 foreclosures.

The last issue is that there is a funding mechanism of a $30 surcharge being attached to each notice of default filed with the state.  This fee alone should pay for the project, but that is not all.  Each mediation will cost $400, to be split by the parties.  To enhance the overall effectiveness, a lobby from coalition of 20 mediation clinics in the state said that they were already equipped to handle the mediation and have alternate funding sources already accounted for in the State budgets.  Thus no additional cost.

There was some testimony that County Auditors believe that this $30 fee is not a recording fee, but in actuality a tax which is not properly apportioned, can anyone say Health Care Reform?  This is a valid point which will likely be litigated at some point, but I believe the fee is limited in scope and in actuality is a fee.  I am sure that some Big Law lackey will take up the put-upon bank's sob story and dog and pony show it in front of the court but I believe it is a losing argument.

So the action item from this post, is let Senator Hobbs know that the budget office got it wrong, that the bill is right and good, and don't let tactical delay from the big banks derail good legislation.