After a bit of searching, I believe the link below links to the brochure that lenders must send to FHA borrowers before foreclosure, per 24 C.F.R. 203.602 and HUD Mortgagee Letter 00-05: Loss Mitigation Program – Comprehensive Clarifications of Policy and Notice of Procedural Changes at page 5. (This is a conditions precedent to foreclosure.) Here is the link:
http://www.hud.gov/offices/adm/hudclips/forms/files/pa426h.pdf
It is HUD Item number 4344, HUD-PA-426-H
https://ecf.wawb.uscourts.gov/cgi-bin/show_opinion_doc?48,467960
In re: Jacobson, No. 08-45120, (W.D. Washington, Mar. 6, 2009)(Brandt, J.)
“The only evidence UBS AG has submitted is the declaration of one of its bankruptcy specialists. The initial paragraph of the declaration reads:
I am employed as a Bankruptcy Specialist by UBS AG, as servicing agent for ACT Properties LLC, its successors and/or assigns (“Movant”). In this capacity, I am one of the custodians of the books, records, files and banking records of Movant, as those books, records, files and banking records pertain to the loans and extensions of credit by Movant to Peter A. Jacobson and Maria E. Jacobson (“Debtors”). I have personally worked on said books, records, files and banking records and, as to the following facts, I know them to be true of my own knowledge or I have gained knowledge of them from the Movant’s business records, which were made at or about the time of the events which were recorded, and which are maintained in the ordinary course of Movant’s business.
Declaration in Support . . . (docket no. 32). One hopes the declarant is not as unsure of his own identity as this imprecision suggests: is he employed as a bankruptcy specialist by UBS AG only in its capacity as servicing agent for ACT Properties? Or for a successor or assignee of ACT? Or is he a bankruptcy specialist for UBS AG and its successors and/or assigns? Is he one of the custodians of “the books, records, files and banking records” of all of these entities? And since the motion must be brought in the name of the real party in interest; i.e., the present holder of Debtors’ note, what is the relevance of a possible future successor or assignee? Or if the antecedent of “successors and/or assigns” is UBS AG, how does declarant know he will be employed by whomever it is, or have access to its records?
Setting aside for the moment that no business records are actually proffered — the declarant recounts his conclusions, from whatever records he consulted, and we are told that he is one of the custodians, that he works on those records, that they were made at or about the time of the events recorded, and that they are maintained in the ordinary course of Movant’s business. While that formulaic recitation attempts to satisfy FRE 901(a), it would not withstand an objection to admissibility: there is nothing meaningful regarding the declarant’s qualifications to authenticate business records, or the reliability of those records in this instance.
That reliability is questionable, given obvious errors, such as the date the Debtors executed the deed of trust and the assertion of a loan or extension of credit “by Movant” to the Jacobsons — the lender (and the payee of their note) was Castle Point Mortgage, Inc., not included in either of the compositions of “Movant” set forth in UBS AG’s papers. And which of the matters he recounts are things he knows to be true of his own knowledge, and which did he gain from someone’s business records? More fundamentally, ACT Properties was assigned the deed of trust just days before the motion was filed. Why should credence be given to UBS AG’s records “as servicing agent for ACT Properties” respecting anything before that assignment? But even if all of the deficiencies were overlooked or resolved in Movant’s favor, one emerges from the syntactical fog into an impassable swamp. The declaration of someone in California, apparently based on business records, and perhaps predating his employer becoming servicing agent, is that Debtor’s note secured by the deed of trust is in “the possession”12 of a separate entity in Minnesota. Assuming the exhibits to the motion are authentic and are the same as those intended to have been attached to the declaration, the note is indorsed in blank. Without more, that and possession (rather than mere custody) suggests that Wells Fargo is the holder of the note. RCW 62A.3-20113 and 3-30114. Nothing in the record establishes on whose behalf (if other than its own) Wells Fargo Document Custody possesses the note; that (and verification of current possession and present ability to produce the original, if required) would have to come from Wells Fargo. Nor does anything in the record establish UBS AG’s authority to enforce the Debtors’ note, for whomever holds it; and thus to foreclose the deed of trust. The declaration states that UBS AG is “servicing agent,” a term with no uniform meaning, and no definition cited. At a minimum, there must be an unambiguous representation or declaration setting forth the servicer’s authority from the present holder of the note to collect on the note and enforce the deed of trust. If questioned, the servicer must be able to produce and authenticate that authority. UBS AG has not shown that it has standing to bring the motion for relief from stay or authority to act for whomever does.
V. CONCLUSION
As the motion was not brought in the name of the real party in interest, nor has standing to bring it been established, it will be DENIED.
A bi-weekly mortgage plan is a program designed to lower the total amount of interest you must pay on your mortgage during the duration of the mortgage. A bi-weekly servicer drafts half of your mortgage payment from a checking/savings account every two weeks, and forwards the mortgage payment to the lender on the payments’ due date. The bi-weekly mortgage plan is designed to “lower” your interest rate, but does it?
The bi-weekly mortgage program does effectively lower your interest rate, but not because the payments are comming out of your account twice a month - rather from you making an extra payment each year. Your effective interest rate is lower because you pay the principle balance down faster, resulting in less total interest paid on the loan.
Here is how a bi-weekly mortgage plan works: you pay a “half” payment literally every two weeks, and there are 52 weeks in a year (26 “1/2″ payments). You make 26 half payments versus paying monthly, which is 12 payments (or only 24 “1/2″ payments). With the bi-weekly mortgage plan, you are making an extra two “1/2″ payments each year, which is applied to the principle loan balance.
These two half payments mean you are making a net extra payment every year, which is applied to principle. This principle reduction means you are not paying interest on as big of a balance. Over time, the balance of the loan decreases, which means less total interest is paid (as compared to the original loan documents). For example, on your Truth-In-Lending “TILA” statement (with your closing documents), you may see your total interest due over 30 years as $100,000. However, because you are making an extra payment, your total interest due will be only, say, $80,000.
The bi-weekly mortgage servicer has a fancy formula to equate this $20,000 savings into an interest rate “reduction”. But, in actuality, your interest rate doesn’t change - just the amount of total interest you pay. So, the bi-weekly mortgage servicer may say this $20,000 savings causes your interest rate to be 3% lower than what you have been paying, but that isn’t true….it reflects only the fact that you have a lower outstanding balance, thus less interest to pay (at your normal rate). They use these extra payments as a mechanism to show consumers their net savings in terms they understand (interest rates), without getting into the nit-n-gritty behind how these programs really work. They reduce total interest paid by “helping” you make an extra payment each year, and thus saving you money. Your total interest paid is lower, not your actual interest rate.
The program does save consumers money, and is great if you get paid every other week. I do recommend the program because of the total savings it offers. However, if you are paid twice a month (ie, 1st and 15th), then two months of the year be prepared for an extra “1/2″ payment to be deducted from your account.
As to the mechanism of posting dates used by bi-weekly mortgage plan servicers: You will see a “1/2″ payment deducted from your checking/savings account every two weeks, but generally, the money will not be posted to your mortgage account until the due date. It is taken out during the month, held by the bi-weekly servicer, then applied to your mortgage payment as usual. There isn’t really any interest benefit for you if they made the payment immediately, or if they wait until the due date (your savings is nominal). As stated above, your interest savings comes from making one net extra payment per year, not from them posting the payment early.
So, while there really isn’t any benefit to you when the bi-weekly mortgage plan servicer waits to make the payment, there is a huge benefit to the bi-weekly mortgage servicer in waiting until the due date: interest. Some bi-weekly mortgage servicers will hold your money in an interest bearing account (for their benefit) until the due date. This was a very sticky point several years ago (2005ish), and I am unsure if all the bi-weekly servicers have voluntarily stopped holding this money in an interest bearing account.
Cost: You can expect to pay between $95 - $295 to enroll in the program, and a program fee of about $2.95 per deduction. If you go through a mortgage broker, anything above $95 to enroll is their profit. I wouldn’t recommend paying over $295, and this can be negotiated. The program fee is usually set by the bi-weekly servicer and is not negotiable (if this fee is too high for your comfort, find another bi-weekly servicer to do it).
Adjustable Rate Mortgages: The bi-weekly servicer should keep in contact with your mortgage company to ensure the changes take hold. Read the fine print of your bi-weekly contract to find out the mechanisms in place to ensure this is done correctly. Also, ask for a print-out of your payments/interest calculations from the bi-weekly servicer each year. I have heard many people say these calculations can be incorrect, so you should double-check.
Alternatives: If you online bank, set up a reoccuring “half” mortgage payment to be transmitted to your mortgage lender every two weeks. This is usually free, and forces you to make those extra payments each year. Contact your mortgage lender BEFORE setting up your own payment plan to ensure your extra payments will be applied to principle and not interest. The purpose of the plan is to reduce your principle balance as fast as possible (causing less interest to accumulate), not to pay off interest!
http://www.foreclosure-fight.com
The following is taken from the FTC’s website, as proposed after a meeting on changing the FDCPA.
“Following the workshop, representatives of creditors, debt buyers, and debt collectors have commenced discussions as to how to enhance the information flow in the debt collection process. These discussions are critical in weighing carefully the costs and benefits of collecting, maintaining, and transferring information. Although such discussions hold promise, the FTC nevertheless believes it is important to change the law now to require that collectors have and convey to consumers more information in validation notices. To address this concern, the FTC recommends that Section 809(a) of the FDCPA be amended to require that debt collectors obtain and provide in the “validation notices” they send to consumers: (1) the name of the original creditor; and (2) an itemization of (a) the principal, (b) the total of all interest, and (c) the total of all fees and other charges that make up the debt.
“A related information problem is that the limited information debt collectors obtain in verifying debts is unlikely to dissuade them from continuing their attempts to collect from the wrong consumer or the wrong amount. If a consumer disputes a debt, the collector is required to obtain verification of the debt and provide it to the consumer before renewing its collection efforts. Many collectors currently do little more to verify debts than confirm that their information accurately reflects what they received from the creditor. This is not likely to reveal whether collectors are trying to collect from the wrong consumer or collect the wrong amount. The FTC therefore concludes that collectors need to do more to increase the likelihood that the information they acquire during the verification process will correct errors. Specifically, the Commission recommends that Section 809(b) of the FDCPA be amended to require that, if a consumer disputes a debt, the debt collector must undertake a “reasonable” investigation that is responsive to the specific dispute the consumer has raised.
The second major problem with the current flow of information in the debt collection system is that collectors generally do not provide adequate information to consumers explaining their rights under the FDCPA. This makes it more difficult for consumers to exercise these rights. The Commission therefore recommends that Section 809(a) of the FDCPA be amended to require that debt collectors inform consumers in validation notices that (1) if they send a timely written dispute or request for verification, the debt collector must suspend collection efforts until it has provided the verification in writing; and (2) if they request in writing that the debt collector cease contacting them, the collector must comply.”
See http://www.ftc.gov/bcp/workshops/debtcollection/dcwr.pdf
The provisions that enable people to lower their debt to income (DTI) ratios to around the 31% marker will do the greatest good, in my opinion. I am all for bankruptcy judges having the ability to do this. However, 31% might be too low, meaning people could pay 38% or 40% and probably still do fine. There is data out there that could pinpoint the best ratio that would mean the best save rate for foreclosures, but there haven’t been any studies done on it (that I know of).
The DTI is the amount of money people pay to their mortgage as compared to how much they gross each month. Thus, if I make $10,000 per month and my mortgage payment is $4,000 per month, my DTI is 40%. The lower the DTI, the easier it is for me to make my mortgage payment each month. To lower my DTI, my income either needs to increase or the mortgage payment needs to decrease.
The administration’s plan seems to include a provision that would enable people to lower their mortgage payment to a DTI level in the low 30’s. This is a great way to ensure people stay in their homes, but I have a feeling that it might be a little too low. Most people can easily manage DTI’s in the high 30’s and low 40’s (compared to the loans being done that put people into homes at DTI ratios in the 50’s or 60’s). Having a little higher DTI would save taxpayers money, because less would need to be given away to make the payments manageable.
If people’s payments were more manageable, it would remove some of the incentive to walk away from underwater mortgages, lower foreclosure rates, and curb the house value slide.
On the other hand, the provisions in the proposed plan that give money to servicers is wasteful. Those servicers that are already writing down mortgages are going to continue to do so, irrespective of the bonus they will get under the plan. Those that don’t write down mortgage balances are not going to start taking $30,000+ losses on loans just to generate $1,500 in government bonus money. This part of the plan should not be enacted, especially because any DTI writedown probably will be underwritten by the government, not the servicers that negotiate the modification. Giving extra incentive money to the servicers when they modify loans doesn’t make sense.
Of course, the administration is talking about these plans primarily applying to those loans Fannie and Freddie hold, so it will be interesting to see the impact on people with sub-prime loans (which are not held/guaranteed by these entities).
Very interesting article on the bottom-line effects of Bankruptcy reform
“The data suggests that although bankruptcies and credit card company losses decreased, and credit card companies achieved record profits, the cost to consumers of credit card debt actually increased. In other words the 2005 bankruptcy reforms profited credit card companies at consumers’ expense.”
http://www.facebook.com/ext/share.php?sid=58851614496&h=gTiV4&u=xHYvO
Columbus, O.H. (December 4, 2008) Troy Doucet, author of 23 Legal Defenses to Foreclosure, cautions homeowners against a new foreclosure scam that requires a transfer of ownership in the home as part of the scam. Transferring ownership can end significant legal defenses the homeowner could have otherwise raised in foreclosure, like those available under the Truth in Lending Act.
The Scam
The scam centers around a foreclosure “specialist” offering to defend a homeowner’s foreclosure action in court, in return for ownership of the property. The specialist tells the homeowner that he will retain an attorney to prosecute the legal defenses and prevent ultimate foreclosure, and that the homeowner can walk away from the mortgage without obligation - and without any negative credit report repercussions.
The key to this scam is that the specialist requires, in order to defend the foreclosure in court, that the homeowner transfers ownership of the property to him. The specialist does not take ownership of the mortgage as part of the scam, he just takes an ownership interest in the home. The specialist explains that transfer of the home (but not the mortgage) is necessary to create legal “standing” so the specialist can sue on behalf of the homeowner. The scammer relies on powerful federal mortgage laws, like the Truth in Lending Act, to defend the foreclosure and potentially win a refund of all money paid on the loan through rescission. Being owner of the property, he hopes to benefit to the tune of tens of thousands of dollars.
The Truth in Lending Act (TILA)
Congress enacted the Truth in Lending Act (TILA) to standardize credit disclosure to consumers, like disclosing a loan’s Annual Percentage Rate (APR) and finance charges. The penalties for non-compliance can be stiff, including rescission of the loan transaction. Rescission means the entire mortgage transaction is unwound – all fees, payments, closing costs, and down payment for the home are refunded to the homeowner.
Here, the scammer anticipates using TILA as part of his legal defense to defeat any foreclosure action against the homeowner, secure rescission for himself, and obtain a windfall refund of all the money paid on the loan. In some instances, this can equal $100,000 or more.
The Problem
The primary problem with this scam is that a homeowner’s right to rescind the loan under TILA ends upon transfer of all of the consumer’s interest in the property. Not only will TILA prohibit the scammer from securing rescission under TILA, but by transferring the property, the homeowner also loses her ability to use TILA in her own foreclosure defense.
The scam is a no obligation proposition for the scammer because he thinks he either wins the foreclosure lawsuit under TILA, keeping the property, or loses the foreclosure and sticks the homeowner with the loan obligation. In reality, the scammer destroys the homeowner’s ability to benefit from a powerful legal safeguard - the Truth in Lending Act.
An alternative unhappy ending to this scam occurs if there happens to be equity in the property. In that case, the scammer simply arranges to sell the home himself, pay off the mortgage, and keep the excess proceeds for himself.
To learn more about foreclosure law, visit http://www.foreclosure-fight.com. Troy Doucet is the author of 23 Legal Defenses to Foreclosure, also available by visiting http://www.foreclosure-fight.com.
The Federal Reserve Bank of Philadelphia recently published a report titled Working Paper 08-14, Homeownership Experience of Households in Bankruptcy that contains some serious problems with respect to the conclusions it draws. Specifically, the paper indicates people entering bankruptcy were likely to lose their homes under any circumstances, even if new legislation was enacted giving bankruptcy judges power to modify loans. However, the data contained in the report conflicts with this.
The conflicting data indicates when the homeowner pays less in monthly mortgage payments (as a percentage of income), then the rate of ultimate default decreases. If this is the case, legislation enabling judges to modify loans to manageable payment ratios would also decrease the number of people ultimately ending up in foreclosure.
This data appears to be contrary to the conclusion of the paper, which states legislation would NOT help in curbing the number of people ultimately in foreclosure. I was curious as to this position, so I emailed the author over at the fed. She was extremely pleasant, I enjoyed our email exchange, and she agreed to review her findings further. Her explanation of the paper’s conclusion is as follows (published here because a FOIA request would enable anyone to obtain it anyway):
“The reason we reached our qualified conclusion is that when compared with those homeowners who went straight through foreclosure without filing for bankruptcy, the foreclosure rates were very similar. Given that the current bankruptcy law has already provided quite a bit of protection to existing homeowners (automatic stay, let debtors prioritize their debt payments, repay arrearage over 3 to 5 year period), we do not think that additional protection of mortgages under bankruptcy at a normal time would have much effect in terms of keeping borrowers at their homes.”
I can appreciate this position in the sense that the data shows people in bankruptcy ultimately lose their home to foreclosure at the same rates of those not in banktupcy. However, this misses an extremely important kernal of information within their data set. Because their data includes payment/income ratios for each of the observations in their study, they could easily run a linear regression and determine what ratios specifically equal the ability of people to remain in their homes, and which (higher) ratios generally lead to ultimate foreclosure.
Based on the limited data tables provided in the study, it appears this is exactly what the data shows: higher payments as a percentage of income equal higher rates of ultimate default. With this in mind, judges could easily modify mortgage loans for those at very high ratios that would lower the payment and lower the risk of ultimate default. Thus, legislation could directly and unequivocally decrease the number of people ultimately losing their home to foreclosure, exactly contrary to the conclusion of this study.
The 900 point climb was a very dangerous sign for the stock market because it creates an atmosphere where 700-900 point moves become “normal.” Where we used to think of a 200 point move as irregular, now the market is normalizing much larger moves, meaning the market can shift either up or down by enormous amounts. This means that a 1,000+ point move in one day could materialize soon - and that move could very well be down instead of up.
A few years ago I researched the 1929 crash by going to the library and pulling out old newspapers with stock data in them. I pulled every trading day for about a month before and after the ‘29 crash and plotted several stock’s movements. I recall AT&T as being one of them. It was trading at about $225 per share (like many stocks trading around $200+ per share) before the crash and about $180 after the crash. (Leverage wiped people out.) However, the October 29, 1929 only comprised a part of the stock’s movement, as the total loss was spread over a couple of weeks. Also telling was a “dead cat bounce” (even dead cats bounce when they hit the floor) right after the 29th that dwindled off as the stock then continued to move downward. If memory serves, what we are seeing now is just like in 1929.
The big difference for us is that people are not leveraged 10:1 the way they were in 1929, so a $10 movement today doesn’t wipe people out. However, if we were to have imposed last week over 1929, I imagine it would be a very similar week. The 700 and 900 point moves recently don’t calm my concerns that there is further loss on the way.
According to news reports, FHA approved 125% more mortgage applications this fiscal year than last, or about 1.2 million applications. However, under 4,000 of the approved applications are from people currently delinquent on their mortgage. FHA’s goal was to approve 5,000.
This means that the changes to the federal lending laws in July, 2008 have done little to help those people who need it most. The law was designed to provide assistance to people facing foreclosure - to get them into loans they could afford and that could be guaranteed by the federal government. Considering the 1.2 million foreclosures during 2007 (and even more projected this year), helping 4,000 families hardly seems to make a dent in the problem.
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