The Foreclosure Scam

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superboyac:
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? :tellme:
-40hz (April 23, 2011, 03:54 PM)
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This is not uncommon in any financial transactions going on now. A couple of things are happening:
1) The reason why these policies and procedures don't make any sense is because the people don't want it to make sense. Think of it this way: they have the needle and they know they have the needle, so what they do is throw a bunch of hay around the needle. So the rest of the people have to find the needle in the haystack. But the financial experts already know where the needle is, and they use this advantage to make the others run around in circles while they use the needle to make endless amounts of money.

We're all just running around the haystack. And I'm starting to feel like, "let them have it". I don't want to be involved.

Stoic Joker:
Indeed, a very passive response for a country where everybody and their grandmother appear to have guns... :P
-Shades (August 15, 2011, 10:17 PM)
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That's what you're led to believe from TV and news. Most Americans can't afford guns! And unless you have a use for one (hunting, target shooting, killing someone/yourself), they're not much use. They usually lead to far more (legal) trouble than people bargained for when they are used (kids finding them, shooting themselves or a friend).
-zridling (August 16, 2011, 08:33 AM)
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You obviously don't live in the south.

Down here you either have a gun in your truck...or people look at you funny. They're also a fairly solid investment if treated (stored/maintained) properly.

Last I heard on the news 1 in 9 people here have a license to carry. And if you spent the $300 to get licensed, you're not going to be planning to whip out a sharp stick.

Kids mishandling firearms (does happen here every few years) is an issue of education & access, not ownership.

CWuestefeld:
Let me throw in a balanced view [1]:

Don't go for the "keeping up with the Joneses" crap, periodically upsizing your home to a new one with granite countertops etc. Consider what you need, and how much you *know* you can afford without risk. Don't think that you "need" a bigger, fancier house just because the people you know are buying them. If you buy into a price range that has a risk that you'll run into payment problems, then these things can happen.

My wife and I bought a house 16 years ago, and have lived there ever since. We've watched friends and coworkers "upgrade", and we've seen them struggle to make payments even as the market price of the houses tumbled. Meanwhile, by being more practical and staying with what we had, my wife and I have no worries about this at all.

[1] Yes, the actions described above are deplorable. I won't defend their morality, but that doesn't mean you shouldn't try to keep out of trouble. Just like you wouldn't leave your wallet sitting out on the front seat of your car, don't court trouble here.

wraith808:
Indeed, a very passive response for a country where everybody and their grandmother appear to have guns... :P
-Shades (August 15, 2011, 10:17 PM)
--- End quote ---
That's what you're led to believe from TV and news. Most Americans can't afford guns! And unless you have a use for one (hunting, target shooting, killing someone/yourself), they're not much use. They usually lead to far more (legal) trouble than people bargained for when they are used (kids finding them, shooting themselves or a friend).
-zridling (August 16, 2011, 08:33 AM)
--- End quote ---

You obviously don't live in the south.
-Stoic Joker (August 16, 2011, 11:33 AM)
--- End quote ---

But that's not a majority of the country, and neither is it universal. I lived in the South for all of my life prior to moving away, and I have never owned a gun. Blades, explosives, and pyro, yes. But guns, no...

... what? Why are you looking at me funny?

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