2425 Porter Street, Suite 10
Soquel, CA 95073
Phone: (831) 464-6884
Fax: (831) 464-6886
Got Mortgage Troubles?
Here’s Your List of “Don’ts”
Today just about everyone knows someone who’s experiencing problems with one or more of their mortgages. At Simmons & Purdy we’ve counseled thousands of borrowers in the last 5 years. As a result, we’ve identified a series of recurrent themes that lend themselves to a list. They are in no particular order as all of them come up quite frequently. So here they are with no further ado:
1. The bank needs to show me my note
Forget about this one. Typically you’ll need to pay about $20,000 in attorney’s fees just to get the bank into court. In most cases in California the attorneys for the bank will eventually show up and produce a note. It may not be much of a note, but they’ll find one. Or make one. Whatever they do produce, regardless of its condition or legal sufficiency, California courts have shown themselves to be slavishly attendant to every whim of the lending industry. Nobody gets a free house. You’ll lose. It doesn’t matter what the banks and servicers did with your note, or to it. It just doesn’t matter.
2. My Loan’s Got RESPA Violations
You’d be better off with a partridge in a pear tree, or a lovely bunch of coconuts. In fact, Truth in Lending (TILA) violations would be much better. However these days, even TILA violations have been so severely hobbled by the fawning, obsequious, toadies in the federal and state courts, that even TILA violations are almost impossible to assert and enforce in California. RESPA or the Real Estate Settlement Procedures Act sounds like a formidable weapon a homeowner can use against lenders. It isn’t. The few private rights of action afforded by RESPA allow the besieged property owner to collect what amount to paltry penalties. RESPA violations even if proven, will NOT stop foreclosure in California especially where the lender is using the non-judicial foreclosure route, and they almost always do. Forget about RESPA if you are trying to stop a foreclosure. RESPA is a tiny adhesive bandage handed out by the government with great ceremony, for borrowers who’ve been gut-shot with an assault weapon.
3. I Paid My Loan Mod Specialist
Just fill in the blank with whatever you forked out up front. Chances are right around 100% you’ve been defrauded. Your “specialist” is requesting the information from you, and sending it to the lender, if you are lucky. You are paying thousands for this service, simple as that. For the record, no attorney can get you a loan modification. He or she cannot waive an imperious hand and force the banks into cowering, whimpering, docile cooperation. Neither can anyone else. The elected officials in the federal government literally gave away 7.2 trillion taxpayer dollars to private companies in the financial industry. The banks were not required to give out a single loan modification return. Not one. Fraud by the banks is rampant in this area. They are immune to criminal or civil prosecution for what they have done to American homeowners and continue to do. Your elected officials have seen to that. You have no right to a loan modification whatsoever. Consult a HUD certified specialist nonprofit organization. The real good ones don’t charge a cent. Surepath Financial comes to mind: (800) 540-2227.
4. I Need to Do a Short Sale to Save My Credit Rating
What a load of hooey. This might be true on certain occasions under specific circumstances. People with security clearances and those in law enforcement and fire departments come to mind. Their credit rating problems can cost then their top secret clearance or even their job. Since most lenders and servicers fraudulently inform borrowers trying to get loan mods or obtain short sale approval that they must stop paying on their loans to even be considered, many borrowers have already had their credit pillaged by the lender by the time the short sale closes. Short sales have their place and it’s an important one for some borrowers, especially now in California with the advent of the enhanced CCP 580(e) last year. Improved CCP 580(e) prohibits all lenders, (not just the first mortgage holder) who accept money at the short sale, from later seeking deficiencies. Short sales are not a universal panacea for credit woes. We’re seeing borrowers who did short sales about 2 ½ years ago buying new homes now and that’s a hopeful sign.
5. Use Your Retirement Account or Credit Card To Pay Your Mortgage
NO! NO! NO! A thousand times NO! If you are “borrowing” money from your retirement accounts to pay a mortgage, this is perhaps the number one red flag that you need to rethink owning the property in question. Generally most kinds of retirement account money is exempt in bankruptcy or very nearly so. Banks are only too happy to have you drain your savings and retirement accounts to zero. They do this on the pretext that you need to do so to get a loan modification. The banks then take the borrower on a fraudulent loan modification review that ends up with no loan mod, no retirement money, and no savings but with the added bonus that you still lose the property.
6. After Foreclosure, or Short Sale It’s All Good
Ugggghhhhhhhhhh! If you decide to let your house go in foreclosure, or short sale, or if you actually get a loan modification with significant principal reduction, (I’ve only seen 5 of these in 5 years’ time.) then you need to adjust your withholding or estimated tax payments. Remember you used to have a sizeable mortgage interest deduction you no longer have. If you don’t make adjustments for this when you no longer have the deductions, you may “crash” into April 15th with inadequate tax paid, and thus a larger than expected tax bill with of course, no money.
7. Let Your Property Go Without Checking the Tax Consequences (There’s an Exemption for Everything Until the End of 2012)
I hear this one all the time. Children think like this. Adults should not. There is no magic exemption from tax that covers everything just as there was no back door at the Battle of Thermopylae, the Alamo or Custer’s Last Stand. So any time you dispose of any real property no matter how you do it, there are two fundamental income questions that must be investigated and determined. First, will there be gain or loss on the disposition of the property. Second, will there be taxable debt relief and if so, is there an exclusion, exemption or reduction that will wipe out this tax or at least reduce it. YOU CANNOT GET AROUND ADDRESSING THESE TWO QUESTIONS AND THEY ARE SEPARATE TAX QUESTIONS. Always do these examinations well before you dispose of the property. Always assume that anyone who tells you not to worry because there is a complete exemption for any debt relief is actually a complete idiot. Without going into detail about all the possible ways to reduce or avoid the taxation of debt relief, the specific exemption for Qualified Principal Residence Indebtedness, currently scheduled to expire December 31, 2012 applies only to debt used to buy, build or substantially improve one’s principal residence, and to refinance debt only to the extent the refinanced debt pays off prior debt principal used to buy, build, or substantially improve your principal residence! Debt used to pay credit cards, buy cars, buy other rental property, pay medical bills, or live off of, because you’ve lost your job DOES NOT QUALIFY!
8. Assume You Get a Loan Modification Because Your Tax Dollars Saved the Banks
Let me be clear. You have no right to a loan modification, period and end of story. The rank betrayal of the American voter and taxpayer by their elected representatives cannot be adequately described here. Congress was concerned with one and one thing only: Saving the financial industry regardless of the hundreds of thousands of years of criminal mail, fraud wire fraud, conspiracy, forgery, perjury, subornation of perjury, obstruction of justice and RICO violations committed by high level executives. There is absolutely no legal protection or vindication for borrowers with respect to the rampant criminal fraud committed by the banks prior to 2006, nor is there currently while the banks ostensibly “review” your loan for modification. Whatever the banks have done, whatever they do now, the FBI, the US Justice Department, and the California Attorney General, will not take any criminal enforcement action. Not ever. These “law enforcement” organizations do not believe banks and their employees commit crimes. It is their abiding belief that the banks are the United States. This phenomenon is known as Elite Financial Fraud. The term was coined by William “Bill” Black, associate professor of economics and law at the University of Missouri-Kansas City. Black’s review of the phenomenon is unflinching and dead accurate. The result is absolutely clear. There are now two official classes of laws. One for the extremely powerful and influential, and then there’s what the rest of us can expect. Don’t expect to get a loan modification just because you desperately need one. Do expect you’ll go to prison for at least 20 years if you engage in even one of the activities common among high level financial executives prior to the mortgage crash.