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Borrowers and Judges Increasingly Demand to See Title Before Allowing Foreclosures

November 2, 2009

As Corona loan modification lawyers, we have long believed that the deck is stacked against homeowners when it comes to foreclosure proceedings. That's why we were pleased to read that some judges and borrowers are starting to crack down. The New York Times reported Oct. 24 that in at least a handful of recent cases, judges have refused outright to enforce debts or allow foreclosures when the lender cannot produce the title. This is a marked contrast to the typical procedure before the housing downturn, when judges were likely to rubber-stamp foreclosures and debts. The article suggested reasons including the greater volume of foreclosures, the lax lending standards behind many foreclosures and the trend toward securitizing mortgages, which can make paperwork hard to find and ownership hard to establish.

The article called out a consumer bankruptcy case involving a homeowner from White Plains, NY. The unnamed woman bought her home in 2001 and refinanced 4 1/2 years later, but then had trouble making her payments. Her attorney filed for bankruptcy on her behalf, hoping to convince lender PHH Mortgage to allow a loan modification. PHH was not the original lender for the purchase or refinance, but filed a claim with the bankruptcy court for debt the woman allegedly owed. The attorney said PHH was dragging its feet on the case, so he asked the court to force PHH to prove it owned the debt. The ensuing paperwork not only did not prove ownership, but exposed PHH for overcharging the homeowner for foreclosure fees and interest. In response, the bankruptcy judge simply canceled all of the woman's mortgage debt, saying he had serious doubts about who owned it.

This is not the first "show me the title" case our Covina loan modification attorneys have encountered, but it's pleasing to know that judges are willing to crack down on sloppy paperwork when the circumstances require it. Foreclosures and bankruptcies are about more than just getting paperwork in order; they affect the lives of the people behind them in real and lasting ways. When someone is at risk of losing her home or being tied down for years by hundreds of thousands in debt, she deserves to have the creditor held to higher standards. And as the article notes, mortgage lenders and other institutions have, to some extent, invited this kind of trouble by failing to verify whether borrowers could reasonably pay their loans, then habitually failing to properly track and document ownership of securitized mortgages.

At Howard Law LLP, we have an active loan modification practice serving homeowners throughout the hardest-hit areas of California. We routinely hear from clients who are on the verge of default or foreclosure despite months of fruitless attempts to modify their loans on their own. Even when this is the case, our Fountain Valley loan modification lawyers can frequently get the lender's attention right away by filing a lawsuit over any predatory lending or legal violations we find. If appropriate, we can also help clients stave off a foreclosure by filing for Chapter 13 bankruptcy protection, which allows them to pay off debt at a slower, more reasonable pace while potentially having other debts forgiven. We never make litigation a goal in itself, but if necessary to protect our clients' homes, investments and financial health, we are not afraid to take major mortgage servicers and lenders to court.

If you're struggling with your mortgage payment -- or your lender -- and you know you need help, you should call Howard Law as soon as possible. For a free, confidential evaluation of your case, please contact us through the Internet or call us toll-free at 1-800-872-5925.