The Downfall of MERS in WA?

Thursday marked an important date in the fight for homeowner rights and the fight against illegal foreclosures in the state of Washington.  At 9:00 am, the State Supreme Court heard arguments in the Bain v. MERS case.  If you would like, you may watch the proceedings here.




The Court is being asked to decide if MERS, when it never had possession of the promissory note, could move forward with foreclosure and in greater breadth, whether a servicer which does not have the note may move forward with a foreclosure.

A group of like minded attorneys, including myself, representing victims of foreclosure submitted additional supporting breif (amicus brief) to the court to further flesh out our position that the MERS regime as constituted harms Washington homeowners and that the process used by this company and its member banks violates Washington State real property law.

You may find an analysis of the proceeding here from the Seattle Times, but it is my opinion that the case is clouded.  States with similar deed of trust acts have fallen on both sides of the debate.  The Justices asked compelling questions that I believe make it to the heart of the issue but as most justices, they have poker faces that would be the envy of many Las Vegas natives.  I am hopeful that the analysis will fall on the side of homeowners and really the public.  Our counties have lost untold millions in revenues from the use of the MERS system which has jeopardized our schools, roads, and other public interests dependent upon the recording fees that were avoided.  Our friends and neighbors have been evicted from their homes by those that had questionable rights to the property and if the Justices find for the homeowners, then those rights are not only questionable, but down right forfeit. 

The Sky if Falling, nope just house prices...or your principal balance?

Happy New Year!  I just wanted to start off by stating that I was right and it sucks for most of my clients.  Last year I claimed that our market would see an average decline of about 1% per month.  In yesterday's Seattle Times, the   amount was 13.5% for the King County area or about 1.125% per month.  The article explained that even though the volume in home sales is up, the median price is dropping because the banks are increasing the number of foreclosures.  There is glut of bank owned and pre-foreclosure short sale properties causing the housing prices to drop.

This is not news.  If you followed this blog, you know I have been beating this drum for a while now and I am afraid you are going to tune me out.  I probably deserve it, but what if it weren't the sky, I mean your house price dropping, but your principal balance?  That would be news.

Last year, Gov. Gregoire signed the foreclosure fairness act under HB 1362.  This bill gives homeowners the right to force the bank to come to the table to mediate the differences that the homeowners have with the banks.  We aren't really trying to pick a fight, but if you want one, its as good a place as any to have it out with your bank.

It has finally been proven that the banks can be beat in the mediations.  The sticks are myriad to use, but there is a possibility of getting a principal reduction in the mediation.  I am not to the point that I believe this is the norm, but something that is feasible.

My offices have been presenting referrals to mediation for homeowners since the law came to fruit on July 22nd of last year and we have a track record of getting concessions for homeowners.  If you are in the Snohomish area and would like a chance to chat, give me a call, but if you are simply seeking guidance, I would recommend you sit down with an attorney and discuss your options.  You have a limited time window, 30 days in which to gain the most effect from the law. 

Just know, that despite the fall in housing prices, there is a possibility that you could make it fall in tandem with your principal balance, or at least have a forum to give the bank a piece of your mind and they have to sit there and take it.

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.

Foreclosures: Drugs, Sex, and dead bodies?

When Jim Morrison was singing about taking it higher, his followers were toking out in woods and buses, but today's stoners have a new venue for getting high, your foreclosed home.  In a very interesting link from Progress Illinois, there are claims, by the coalition that is trying to take back chicago, although I am not exactly sure from whom they are taking, that foreclosed homes are havens for crime.  I don't think it is far fetched that a vacant home makes for a good hide out.  I remember as a kid, my buddies and I planned a night where we were all staying at each other's house, like mom would never find out.  A storm came up and an abandoned house became our refuge until the police escorted us home.

With the significant deleveraging that is occurring in the housing markets and has occurred for the last three years, there is a dearth of vacant homes.  Many cities have passed ordinances that require homeowners to mow the lawn, take out the trash, and maintain the property, mine included.  Some though, have stepped up the regulation to specify foreclosed homes that must meet this standard or else.  Banks like Bank of America, CITI, Chase, and even smaller lenders like Aurora FSB, fka Aurora Loan Services, LLC and Nationstar have properties that are blighting our communities by having over grown lawns and such.

The homes have become places for drug dealers and users to congregate.  The homes have become places where teenagers gather to drink and commit debauchery.  There have even been those that have committed crimes such as rape and murder that find these foreclosed homes to be safe havens because the banks aren't maintaining the properties.

It makes sense to this blogger that the banks should be required to do more than simply foreclose and sit on the immense shadow inventory of homes that it has.  If you are unfamiliar with shadow inventory, it is the supply of homes held by banks but not being marketed for resale, check this article out for more information.  This shadow inventory is not creating any wealth, it has no utility, no value, and in fact it is dragging down home values and promoting crime.  Cities should pass ordinances requiring maintenance, and if the maintenance does not occur, fines should be issued.  If Bank of America didn't like losing 50% of its value over the last 10 months, it would hate this even more because it won't be taken any higher. 

Foreclosure Mediation being Hijacked by Law Firm

A law firm with offices in Bellevue has seen fit to hijack the foreclosure mediation process for about 75% of clients being funneled through the Volunteers of America and other mediation centers based on the advice that it will not sign a mediation agreement. Amazing, since the mediation is predicated by a law and is the right of the homeowner and not the right of the bank. I will refrain from naming the law firm, Routh Crabtree and Olsen, at this time because of what appears to be a defenseless and cowardly move. It would be unfair to give the description of the "mill" like company that continues to pump out bilge in its documents and arguments.

Suffice it to say, that if the unmentioned law firm, RCO, is representing your banking institution, it may be a while before you get the benefit granted to you under the law known as Foreclosure Fairness.

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.

Miraculous Transfer of Wealth from Banks to Borrowers

Here is a well presented reason why the economics of foreclosure are beneficial to the overall economy.  Jim Cramer goes into some incredible comparisons between Bank of America and Capital One in regard to defaulters.  There is also interesting information on the economic buying power of defaulting homeowners.



My Law offices have been discussing the benefits of this strategy for a while and you can look back here on Why Strategic Default is Good for the Economy!

Cramer made the comment that strategic default creates a "miraculous transfer of wealth from banks to borrowers."  Credit card companies like Capital One and retailers like Costco are seeing the benefit of homeowners eliminating the largest single payment in their monthly budget and re-purposing that money to service other debts and make smart purchases.

The use of this freed up cash allows the homeowners to make economic choices that have more utility than being simply forced to feed the big banks.  This is why the banking sector as a whole is down 5% in trading but you see certain lenders like Capital One, which facilitates purchases with credit cards rather than mortgages has done well.  Homeowners want to be economic players, they like choice, the down turn seemed to take that choice away.  But now, the miraculous transfer is putting choice back in the homeowner's favor.

At the end of the piece, Cramer went on to put it simply, "You got to be nuts to pay your mortgage if its underwater, you got the government on your side."  I don't know that I agree the government is on your side, but we do see more politicians working on the homeowner's side as evidenced by the Foreclosure Fairness Act. The choice seems and if you clear away the emotional baggage, really is simple.  The transfer of that monthly mortgage payment, for whatever period of time you stay in your home is hard to overlook.