Sherwin Law Firm Succeeds in Bringing Lawsuit Over a Denial of a Loan Modification

I’m pleased to announced that I prevailed today in bringing a lawsuit against a national lender for the denial of a loan modification.  The court rejected the lender’s argument that the lawsuit should be dismissed, allowing the lawsuit to go forward as planned.  In this lawsuit, I am seeking damages against a lender whose two year refusal to properly review my client’s loan modification application forced him into foreclosure.

What is a Loan Modification?

A loan modification is the restructuring of a mortgage loan to make the payments more affordable.  This generally consists of a combination of a lowered interest rate, term extension, and principle forbearance.  To apply for a loan modification, a borrower must generally prove they have sufficient income to afford a modified loan payment.  Lenders generally want borrowers to provide bank account statements, tax returns, and a variety of other documents about the need for this assistance.

Problems in Applying for Loan Modifications

Despite loan modifications being intended to help homeowners, the process of applying for this assistance is often a mess.  It is not uncommon for lenders to “loose” paperwork and required the repeated submission of the same documents over and over again.  Mortgage lenders have been known to deny loan modifications for reasons that do not make the slightest bit of sense.

What Can Be Done After a Denial of a Loan Modification?

In Massachusetts, like most of the country, a lender is not required to offer a homeowner a loan modification.  As such, a homeowner generally does not have a viable claim against a lender merely because their modification application has been denied.

Massachusetts courts, however, do allow lawsuits to be brought under the Consumer Protection Law under certain circumstances involving the denial of a loan modification.  The Consumer Protection Law, commonly known as Chapter 93A, prohibits “unfair and deceptive business practices.”  Massachusetts courts have taken the positions that repeated instances of misconduct by a lender in the denial of a loan modification can constitute a Consumer Protection Law claim.  This is the key, however: the borrower must alleged more than simply that their application was denied.  Rather, the borrower must show, as one court puts it, a “pattern or course of conduct involving misrepresentations, delay, and evasiveness” in reviewing a loan modification application.

The Consumer Protection Law can be a powerful weapon for consumers facing the denial of a loan modification.  This law, in certain circumstances, can allow for attorney fees, treble damages, and costs if the court find in the borrower’s favor.  In addition to money, the law also provides for equitable relief, which is a remedy other than money, such as a court order rescinding a foreclosure sale.

If your find yourself struggling with the denial of a loan modification, contact me to see if you have a similarly viable lawsuit against your lender.

What Happens After a Foreclosure Sale?

Homeowners who have gone through a foreclosure often ask me what happens after a foreclosure sale.  More specifically, these homeowners often ask if they need to leave their home right away after a foreclosure auction sale.  The answer is no.  Even after a foreclosure sale, the new owner is required to perform an eviction of the occupants remaining in the foreclosed property.

Overview of a Massachusetts Foreclosure

Massachusetts is a non-judicial foreclosure state.  This means that a bank does not need to go to court to get permission to foreclose (unlike states like New York and Florida).  A Massachusetts foreclosure requires sending a number of required notices, publishing a foreclosure sale notice, and holding a foreclosure auction.  If done correctly, the bank (or third-party buyer) becomes the record owner of the property.  While ownership of the home changes after a foreclosure sale, possession does not.  The new record owner is required to bring an eviction case against the former homeowner(s) residing in the foreclosed home.

Post-Foreclosure Eviction

What happens after a foreclosure sale?  The bank (or third-party buyer) must file an eviction against any persons who remain in the property.  This eviction, known as a summary process action, is generally filed in a District Court or Housing Court.  In these cases, the homeowner has the opportunity to defend against the new owner’s claim to possession by alleging that the foreclosure was not performed correctly.

An important point to note for homeowners in such a case: you do not need to leave the home until the court orders you to do so.  The new owner must obtain a judgment from the court allowing them possession of the home.  Until this is done, the new owner cannot forced you out of the property under any circumstances.

What Should You Do After a Foreclosure Sale?

If you have gone through a foreclosure of your home, contact a foreclosure defense attorney for a consultation, regardless of your intentions for the home.  In other words, even if you plan to leave the home, it is still worth speaking to an attorney.  An attorney can help determine if you have a defense against the foreclosure.  Even if you plan to leave the home, a foreclosure defense attorney can assist you with resolving any liability you may have against the new owner and possibly get you relocation assistance.

Returning a Security Deposit

 

Rule number one for Massachusetts landlords: never, never take a security deposit.  As I have written before, the risks just aren’t worth it.  The Massachusetts Security Deposit Law is one of the most complex and detailed laws on the books, with numerous traps for the unwary.  Failing to follow one of the law’s requirements can result in treble damages, attorney fees, and costs against the landlord.  As such, a $1,000 security deposit can easily result in $4,000-$5,000 in damages against a landlord if the security deposit law is not strictly followed.

An important part of this law concerns returning a security deposit.  Returning a security deposit would seemingly be an easy task, with the landlord simply taking the required amount of damages from the deposit and returning the balance to the tenant.  The security deposit law, however, has detailed requirements for how this must be done.  Failing to comply with even the most minor requirements of this law can result in enormous damages to the landlord.

How should a landlord handle returning a security deposit?  Contact a landlord/tenant attorney.  An attorney can help ensure that each of these requirements are complied with and save time, money, and heartache down the road.  While it may seem “overkill” to hire an attorney for such a seemingly small matter, doing so can avoid an even bigger problem resulting for a violation of this law.

Tenants who are having problems with getting their security deposits back should also speak to a landlord/tenant attorney.  The aim of the Massachusetts Security Deposit Law is to avoid having tenants lose their security deposits without cause, and provides relief for violations of this law.

Text Messages as Evidence – Lessons from the Massachusetts Texting Suicide Case

If you followed the news today, you know about the guilty verdict in the texting suicide case taking place in the Massachusetts Juvenile Court.   In a well reasoned oral decision, Judge Lawrence Moniz  found the defendant, Michelle Carter, guilty of involuntary manslaughter through her numerous text messages urging her boyfriend to kill himself.  This case earned national attention as it concerned sensitive topics of teen bullying, suicide, and electronic communications.  Here, I want to focus on another important aspect of this case: the growing use of text messages as evidence.

Text messages, like most areas of technology, have changed a great deal over the past decade.  I remember when text messages were more of a novelty than an accepted means of communication.  Now, it is completely acceptable to use text messages to share important information.  This is quite a change from years ago, when many of us relied more on email and phone conversations to communicate.

The texting suicide case shows an important implication of text messages as a means of communication: these messages last forever.  Unlike a phone call, which is rarely recorded, text messages often remain in a cell phone or in “the cloud” permanently.  This has enormous implications, as the defendant in this criminal case learned the hard way.  If this defendant had urged her boyfriend to kill himself over a phone call, it is doubtful the Commonwealth of Massachusetts could ever have obtained the evidence needed to convict her.  This is an important lesson from this case: text messages as evidence have powerful consequences in legal matters.

A simple lesson should always apply to using text messages: if you text a message, be prepared for it being presented as evidence if a legal matter ever arises.  This is not the first (and certainly will not be the last) time that text messages are the basis of a legal matter.  Last year, the Massachusetts Land Court ruled that text messages could constitute a legally binding real estate contract, emphasizing how courts are adopting to electronic communications in civil and criminal cases.

In my practice, I take advantage of text messages as evidence.  Such messages are extremely credible and persuasive in presenting facts to a judge or jury.  However, text messages are worthless if these communications are not preserved and, most importantly, in a form available to present to a court.  You would be surprised at how many people are prepared to simply hold up their cell phone to show a text message to a judge or jury!  That approach doesn’t work; a court requires such evidence to be presented in a manner that can be part of a permanent record.

As an evolving area of the law, it is not completely clear on the best way to present text messages as evidence.  Most smartphones have apps that allow a user to turn text messages into PDF files, which can be printed and introduced as evidence.  This approach appears to be generally allowed by courts in accepting such messages into evidence.  For anyone with a text message that may be relevant to a legal matter, I recommend using such an app, as well as keeping the original text message on your phone and making a backup copy.  Like any piece of evidence, if it is lost, it isn’t much help to you.

 

Avoid Foreclosure

Potential clients often ask me for advice on how to avoid foreclosure.  Here are a few important tips I recommend.

Obtain and Document Income

Contrary to free “advice” available on some Internet websites, foreclosure defense is not about getting a free home.  While there are ways of delaying or stalling foreclosure, that is only what can be done: delay the inevitable.  The only sure means to avoid foreclosure is paying the mortgage loan for the property.  To do so, a homeowner needs income.  For purposes of obtaining a loan modification, a lender will generally consider any documented source of income.  This is an important qualification for showing a lender that you qualify for a modification: you must be able to account for where the money comes from.   This advice is usually most relevant to self-employment and rental income.  Lenders generally want to see such income deposited in a bank account.  Without such deposits, a homeowner faces a difficult time trying to prove they really earned the alleged source of income.

An important side note: homeowners facing foreclosure who do not have the required income to obtain a loan modification should still contact an attorney for assistance with their case.  An attorney can help a homeowner review their options and decide with them their best course of action.

Keep a Record Of All Contact With Your Lender

One of the single, most important pieces of advice I can give homeowners to avoid foreclosure is to keep a record of all contact with your lender.  If you find yourself in a situation where legal action may be necessary, having a record is a huge help in advancing your case.  Even homeowners with the best memories are often unable to remember specific details occurring years ago.  Keeping a paper trail of your communications with a mortgage lender can be one of the best things you do to avoid foreclosure.

Seek The Help of a Foreclosure Defense Lawyer Sooner Than Later

Most importantly, seek the help of a foreclosure defense lawyer sooner than later if you find yourself facing foreclosure.  Stopping a foreclosure becomes increasingly difficult as a foreclosure date is scheduled (but still not impossible; homeowners in any stage of the foreclosure process should talk to a attorney if foreclosure defense is needed).  The sooner you speak to an attorney, the better luck an attorney will have in helping you resolve the problem.

If you need help to avoid foreclosure, contact me for a consultation.

Levying An Execution

Levying an execution in a Massachusetts eviction case is the process by which a landlord, if they are successful in the eviction, is permitted to remove the tenant’s belongings from the rental property.

An execution for possession is a legal document that a court issues if it determines that a landlord is entitled to possession of the rental property.  This occurs if the tenant defaults in the case (does not show up to court) or if the landlord prevails at trial.  Following the court’s judgment, the tenant has ten days to appeal the decision.  If the tenant appeals, the execution will not issue, pending the appeal’s resolution.  If the tenant does not appeal, the clerk’s office will issue the execution.

After the execution is issued, the landlord must levy it.  Levying an execution must be done by a Massachusetts sheriff or constable; a landlord cannot remove a tenant’s possessions on their own (doing so will get the landlord into serious trouble).  A sheriff or constable is required to provide the tenant with 48 hours notice prior to levying the execution.  Moreover, the landlord is responsible for making arrangements to store the tenant’s property after the execution has been levied.  Needless to say, the costs of levying an execution can be significant: it is not unusual for this process to cost thousands of dollars.

A tenant facing the levying of an execution has the option of requesting that the court stay the execution.  Under certain circumstances, the court will permit a tenant to stay beyond the time otherwise allowed.

Landlords should always be cognizant of the reality that levying an execution is time consuming and expensive.  Whenever possible, landlords should attempt to work out resolutions with tenants that avoid this burdensome process.

What to Look For In Hiring An Attorney

Hiring an attorney can be an intimidating process.  You’re putting your complete trust in an unknown stranger, who is often making important decisions on your behalf.  Choosing an attorney is an important decision, and there is much advice on what to look for in hiring an attorney.  Here, I’m going to focus on something you may not think of: does the attorney know how to use technology?  It may not sound too important, but take my word that it is an important consideration in selecting a lawyer.

Permit me an example.  Several months ago, I gave a closing argument in an adverse possession case in Massachusetts Land Court.  Cases like these are highly fact specific, which required extensive citations to the exhibits before the file.  This trial, like most trials in Land Court, had a full transcript from a court reporter, allowing both parties to cite to specific portions of the record.  Following my opposition’s argument, I had the opportunity to offer a rebuttal.  In my rebuttal, I argued that the other side had missed a key fact, and I gave the court the specific page of the transcript where this was found.  I did so through the help of my Microsoft Surface, a hybrid laptop/tablet that allows me to bring my case files to court.  I can access any document I need in seconds, which prevents me from bringing massive paper files to court.  Not only did my Surface help me get the information I needed for my closing argument, it saved my clients money: I did not need to print out a full copy of the trial transcript or other relevant papers for the case.

I use technology on a regular basis in the practice.  One of my other, favorite devices is my high speed scanner, which helps to make PDF copies of all of my documents.  This saves me (and my clients) without having to spend unnecessary money of a large office space and storage, and also lets me transit important documents to my clients by email, right away.  I’ve written about the importance of using technology in a law practice and I believe strongly that technology is as much to my clients’ benefit as it is to mine.

So, in considering what to look for in hiring an attorney, I suggest asking a potential lawyer how they use technology to run their practice.  A lawyer who keeps on top of the newest tools for practicing law will be the lawyer who get give you the best outcome…at the lowest price to you.

 

SJC Extends Paragraph 22 Defense

The Supreme Judicial Court issued an important ruling last weekend extending the “paragraph 22 defense” to other homeowners facing foreclosure.  In Federal National Mortgage Association v. Marroquin, the Court extended the benefit of the prior Pinti v. Emigrant Mortgage decision to those homeowners who similarly challenged a foreclosure based on non-compliance with paragraph 22 of the standard mortgage (a full copy of the decision is included below).  This is alot of information to take in at once, so read on for a “non-lawyer” explanation!

Paragraph 22 of the standard mortgage is a provision in a typical mortgage agreement that requires a foreclosing entity to provide a default notice to borrowers prior to foreclosure.  This notice requires specific disclosures that need to be given to the borrower.  In the wake of the recent foreclosure crisis, many of these notices have had errors, and have not included all of the required disclosures.  A paragraph 22 defense is a challenge to a foreclosure based on non-compliance with this mortgage requirement.

In Pinti v. Emigrant Mortgage, the Supreme Judicial Court determined that the failure to strictly comply with this mortgage requirement made the foreclosure void.  Pinti, importantly, required “strict compliance” for this part of the mortgage: a borrower does not need to show any harm from such a defect to challenge the foreclosure.  The Court’s decision in Pinti was “prospective”: it would only apply to the homeowners in Pinti and future foreclosure challenges based on non-compliance with paragraph 22.  In Aurora Loan Services v. Murphy, the Appeals Court extended the Pinti ruling to other cases on appeal at the time of the Pinti decision.

In Federal National Mortgage Association v. Marroquin, the Supreme Judicial Court needed to decide whether a paragraph 22 defense could be raised by a homeowner who had a trial court case pending at the time of Pinti.  This would include post-foreclosure eviction cases and Superior and Land Court challenges to foreclosure.  In  Marroquin, the Supreme Judicial Court extended Pinti to these cases as well.  If a homeowner had raised a paragraph 22 defense in one of these cases at the time of Pinti, “strict compliance” would apply.

Marroquin will likely apply to only a small range of cases.  The Supreme Judicial Court did not suggest that the prospective ruling of Pinti has changed.  In other words, a homeowner who did not properly preserve a paragraph 22 defense will not be helped by Marroquin.  As this decision comes over 1.5 years after Pinti, there are likely many homeowners who had such viable defenses, but failed to preserve them, on the belief that Pinti’s  prospective ruling would not let this defense apply to their case.

This is my main complaint with Marroquin and the Supreme Judicial Court’s other decisions on paragraph 22.  The Court in Pinti knew that the issue of the paragraph 22 defense would come before the Court again.  Why the Court could not have addressed this matter in the first place, making these later decisions unnecessary, is beyond me.  Nonetheless,  Marroquin fully resolves the scope of this defense for homeowners with a paragraph 22 defect.

If you find yourself in need of assistance with foreclosure, contact me for a consultation.

Federal National Mortgage Association v. Marroquin

Sherwin Law Firm Succeeds in Rescission of Contract Case

I’m pleased to announce that I prevailed last month in a rescission of contract case in Essex Superior Court.  The case involved many important issues involving real estate contracts and the relief that a party to such a contract can obtain from a court if the agreement runs into problems.

Overview of Case

This case involved an oral agreement between two parties for the purchase of a residential home.  The deal involved the payment of cash and a promise by one of the parties to assume the mortgage loan.  This required the buyer to apply for the mortgage loan to be put in his name, so that the seller was no longer responsible for the debt.  This deal was done by a “handshake”-the parties never put the terms of the agreement in writing.

Several years after this deal was made, the seller believed that the buyer had not fulfilled the terms of the deal, and brought a lawsuit seeking a rescission of the contract.  A rescission of contract is an action seeking to “undo” a contract.  This asks the court to unmake the agreement and put the parties back in the position they were in before the deal was made.

What is a Rescission of Contract?

A rescission of contract is not readily allowed by courts; only certain circumstances will justify this relief.  Rescission is generally only allowed in cases of fraud or when a party has committed a material breach of contract: one that defeats its purpose.  Here, the seller in this case was alleging this latter reason for seeking a rescission of contract, by arguing that the buyer (my client) failed to comply with important terms of the deal.

Outcome of Case

My strategy in this case was to convince the court that my client had done what was required of him per this agreement.  Because this was an oral agreement, this required me to attack the other side’s credibility and build a case that the seller’s story was not believable.  In the end, the Court agreed with my client, finding that he had done his end of the deal.

Such a case required an enormous amount of preparation and research.  As it came down to a decision by the court on who was more believable, it was essential that my client correctly told his story, and for me to highlight the inconsistencies in the other side’s version of the facts.

Conclusion 

This case highlights an essential lesson in entering into a contract (especially one involving real estate): put the deal in writing, and get the assistance of an attorney.  If the deal “goes bad”, as this one did, having a written agreement can spar you enormous time and money if a problem arises later on.   If you find yourself in a dispute over a real estate contract, contact me for a consultation.  Having an experienced attorney on your side is essential in a matter like this.

On a side note, one of the benefits of this case was having the opportunity to do a trial in the Newburyport branch of the Essex Superior Court.  This building, hands down, is the most beautiful courthouse in Massachusetts, and is setup in the style of a New England town meeting hall.  The picture above was taken by me with my drone, across the pond where the courthouse sits.