I know somebody currently wallowing in the foreclosure quagmire.
Problem they're running into is they can't get their current mortgage holder to negotiate revised terms. That's because the note is held by (one of an growing number of) foreclosure consortiums who have no
intention or interest in negotiating. In my friend's case, it's a group of private individuals (about 20) who have gotten together to "get in on the golden opportunities in real-estate foreclosures."
One of their members is an attorney who has demonstrated a talent for twisting existing laws around to force a default so they can foreclose.
These investors are not interested in getting a mortgage paid back. They want to make quick cash on a turnaround. So all they want is the property itself.
In the case of my friends, they're probably gonna lose their house. But not because they can't pay the original mortgage.
They can. The temporary cash flow problem which got them into this mess has since been fixed.
It's because the note holder
has taken them to court and is now refusing to accept any payments
pending the court's ruling on their request for immediate foreclosure, because...wait for it..my friends haven't been paying anything on their mortgage!
I'm not sure how or why such a logical absurdity is tolerated by law. But somehow, they can actually make this BS argument stick under certain circumstances. In this case it has something to do with the structure of the group holding the note. All group members have to agree to any renegotiated terms. They get around being accused of refusing to negotiate "in good faith" by sitting down to go through the motions of 'negotiating' a provisional agreement. But once the borrower signs this agreement for their part, one member
of the investment group refuses to accept the new terms. At which point the investment group claims "negotiations have irreparably broken down" and move for foreclosure.
According to my friend's attorney, she's seen this same 'play' run on several other mortgage holders. And each time, one or two (and never the same) members of the investment group refuses to accept the renegotiated terms. Next they refuse to accept any payments until they have a signed agreement in place. (They also give the borrower 'off the record' assurances not to worry since they're sure they can work something out with the holdout member.) Then they wait a few months for the note to reach default. After which they move to foreclose for non-payment of the original
mortgage - which is still in effect
because a new agreement was never reached. Cute!
It makes for a lovely choreographed performance. And supposedly, it's all perfectly legal.
My friend's attorney told them this particular 'investment' group has this legal gambit down to a science. Unless they get a sympathetic judge when it comes final decree time, my friends are screwed royally. (And this investment group has been fairly adept at getting their filings heard before judges who tend to be unsympathetic towards borrowers.)
This is American Justice at work folks! Lovely, huh?