WSC Slaps Quality as Trustee

Thursday, a decision by the State Supreme Court held that Quality Loan Services failed to use its own best judgment in an impartial manner toward both the beneficiary (read Big Bank) and the borrower (read You).  Consequently, the Trustee breached its duty of good faith and violated Washington State consumer protection laws.  You can read that last sentence as "Trustee, you will pay the homeower's attorney's fees." If that is isn't a slap in the face, then I don't know what one is.

In litigation with numerous servicers and trustees over the last three years, I was told by the Trustee on more than one occasion, "we do what the bank tells us to do."  That, according to the State Supreme Court is a direct violation of the consumer protection act and actionable.  Trustees will significantly review the communications between its staff and the public (and public's attorneys) and make some changes.  I do not think there will be drastic changes, but the spector now looms.

One thing that I do worry about is that overzealous attorneys, quick to obtain attorney's fees, will force what we are seeing out of California, judicial foreclosure.  Be thoughtful in what you bring to court.

EXTENDED: Mortgage Forgiveness Debt Relief

Finally, there is some news worth blogging about for many of my clients, the Mortgage Forgiveness Debt Relief Act of 2007, which was set to sunset this morning, has been extended for one more year.  Many clients going through short sales and foreclosure have been anxious about this provision.

Section 202 of the Fiscal Cliff deal which was passed early this morning, contained the extension.  This does not make the provision permanent but does provide some relief to those working through the process de-leveraging personal debts.

It is this blogger's opinion that this issue will come up again as part of the remaining debt ceiling talks that must be finished before March this year.  The housing market it still tenuous despite recent increases in market pricing.  The banks have yet to significantly deal with the back log of homes being held in shadow inventory, and there has been a significant increase in the number of foreclosure filings in Washington State in the last three months.  If that trend continues through the new year, then it is likely that this provision may need extension for a few more years.

For more information on this act and how it impacts your home, see the IRS at this link or call my offices.

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.