Practice Pointers: Create a Paper Trail When Applying for a Loan Modification

With foreclosures on the rise in Massachusetts, struggling homeowners will likely continue to apply for loan modifications in record numbers.  Loan modifications are a good option for mortgagors who have steady income and need help in obtaining an affordable mortgage loan payment.  However, despite federal and state laws created to promote loan modifications, the application process for loan modifications is, often times, anything but a breeze.

Too often, I hear from homeowners who have applied for modifications in good faith, and have been told by their loan servicers repeatedly that their applications have been lost and paperwork is missing.  Errors like these have been the subject of frequent litigation against banks and servicers.

In these unfortunate situations, a foreclosure defense attorney can help you fight a loan modification.  However, as I have often seen, a homeowner is in a much, much better position in fighting a modification if they have proof that they have been applying for a modification.  In other words, without documentation, it is only a homeowner’s word against the bank or loan servicer in claiming the loan modifications were not properly considered, which makes for a MUCH tougher case.

With this in mind, anyone applying for a loan modification should create a paper trail of their application process.  Hopefully this paper trial will never have to be used, but if a homeowner finds themselves having to go to a lawyer, this information will be a huge help in preparing your case.  Applicants for loan modifications should always do the following:

  • Make a copy of everything you submit to your bank or loan servicer.  An inexpensive scanner can be a huge help in organizing these files electronically.
  • Use some means of confirming that your bank or servicer received your application.  If you are mailing your application, send it by certified mail, which is proof that the recipient actually got what you sent them.  If you are sending it by fax, get a confirmation that your application was actually received.
  • Keep a log of all of your communications with your bank or servicer.  Note the date, time, who you were speaking with, and the status of your file.

Hopefully, your loan modification application will not end up in court.  But if you do find yourself in litigation, these steps will put you in a much, much stronger position in helping you get the relief you deserve.

 

Breaking News: Massachusetts Sues Fannie Mae/Freddie Mac Over Non-Compliance with State Foreclosure Law

Massachusetts sued Fannie Mae and Freddie Mac in Superior Court this week for these entity’s failure to comply with Massachusetts foreclosure law.  Last year, Massachusetts passed a new anti-foreclosure law that includes a “non-profit buyback provision.”  This law prevents an owner of a foreclosed property from refusing to sell the property to a non-profit organization solely because the property will, in turn, be sold back to the previous owner.  This part of the law is intended to support non-profit organization, such as Boston Community Capital, who are helping homeowners save their homes by purchasing these properties from foreclosing entities and selling then back to homeowners at the property’s market value.

Fannie Mae/Freddie Mac appear to be fighting this law because they are concerned that such buy-back programs encourage homeowners to default on their loans.  I can understand this argument from a private lender’s standpoint, but not from public government-sponsored enterprises such as Fannie Mae/Freddie Mac, who have been supported with taxpayer dollars and government bailouts and have been rightfully blamed for their role in the ongoing foreclosure crisis.  Moreover, with these buy-back programs, Fannie Mae/Freddie Mac are getting fair market value for their foreclosed properties; not a bad deal when you consider the high numbers of vacant, foreclosed properties around the country.  Fannie Mae/Freddie Mac have a long way to go in rebuilding their credibility with the American public, and fighting Massachusetts’s common sense law is not going to work in their favor.

Housing Court 101

Anyone involved in foreclosure defense needs to understand Massachusetts’s Housing Court and how this specialized forum works for these types of cases.

Housing Court was originally created as a court for housing matters in the City of Boston.  Later, its jurisdiction was expanded to cover others parts of the state.  Currently, there are five divisions of Housing Court in Massachusetts:

  1. Boston Housing Court
  2. Northeast Housing Court
  3. Southeast Housing Court
  4. Worcester Housing Court
  5. Western Housing Court
It is important to note that Housing Court does not cover all parts of Massachusetts.  The cities of Malden, Chelsea, and Revere, for example, are not part of a Housing Court’s jurisdiction (a list of the towns/cities that Housing Court covers can be found here).  A recent proposal by the Judicial Branch would expand Housing Court to all of Massachusetts; a recommendation I fully support.

Housing Court handles most types of housing matters.  For foreclosure defense, the typical cases that come before Housing Court are summary process (eviction) cases, where the foreclosing entity (most often the bank) is seeking possession of the home on the basis of a lawful foreclosure, and the homeowner is permitted to defend against the eviction by challenging the validity of the foreclosure.  Housing Court, like District and Superior Court, has jurisdiction over summary process cases.

A important feature of Housing Court is the ability of any party to transfer a case into Housing Court from another court.  This can be done anytime before the day of trial.  Removing a case to Housing Court is a straightforward matter that merely requires a litigant to file a notice of transfer form with the District (or Superior) Court and the Housing Court department the case is being transferred to.If you are involved in a post-foreclosure summary process case, should you transfer to Housing Court?  My advice: in almost all cases, yes.  Here’s why:

  1. Housing Court has been responsible for many, many favorable decisions for homeowners in post-foreclosure cases.  Housing Court is seen by many to be a pro-homeowner, pro-tenant court.
  2. Housing Court judges are familiar with post-foreclosure summary process cases because they preside over so many of them.  Plus, the odds are really good that the same judge will hear the case from beginning to end, compared to District Court, where the presiding judge may change on a weekly basis.
  3. Housing Court often requires parties to go to mediation.  If you are representing yourself, mediation can be helpful in reaching a settlement (bear in mind, however, that a mediator is not a lawyer and will not provide legal advice.  If you intend to fight your case to the end, you are better off speaking to an attorney).

Overall, the best advantage of Housing Court is knowing who your judge is.  Because the issues in post-foreclosure summary process cases tend not to vary a great deal, there is an excellent chance the judge you will be before has heard the issues in your case before.  That gives you the advantage of knowing how the judge will approach your case, and allows you to proceed accordingly.

Practice Pointers: Know Your Statute of Limitations

The statute of limitations is an incredibly important topic in law, not just for foreclosure defense, but for any type of civil litigation. Foreclosure defense attorneys and pro se litigants alike need to keep the statute of limitations in mind anytime they deal with a legal matter.

The statute of limitations set a deadline on which claimants can bring certain types of suits.  The purpose of this is fairness; potential defendants should not be subject to legal claims that happened a long time ago.  The statute of limitations requires claimants to pursue these claims before the end of these deadlines, or forever be barred from bringing them.

In Massachusetts, the statute of limitations is found in G.L. c. 260. Some of the important ones, for foreclosure defense, are:

  • Consumer Protection Actions:  4 years
  • Breach of Contract Claims: 6 years
  • Torts: 3 years

Generally, the statute of limitation begins when the cause of action arises.  While this can sometimes be uncertain, the important thing to remember is that one should not wait in pursuing a legal claim. The picture above says it best: missing the statute of limitations can mean that you are SOL in bringing your case.

Foreclosure Law….Coming to a Bar Exam Near You!

No, I’m not making this up.  The Supreme Judicial Court has added a new section to the Massachusetts bar examination called “Access to Justice.” Beginning in 2016, the exam will now require test takers to know topics of law on a variety of public interest law areas, including landlord/tenant law, consumer matters, and foreclosures.

While I appreciate the SJC helping to create traffic for this blog, I do wish the Board of Bar Examiners had considered other means of promoting access to justice for future lawyers.  Having passed three separate bar exams of my own, I don’t believe any bar exam suffers from a lack of subject matters to be tested.  And, I’m not as critical of the bar exam as other lawyers I know; the exam does test important areas of law, and by forcing future lawyers to study for it, prepares them to know the basics for practicing law.  This is one reason why I support civil procedure being added to the multistate portion of the exam.

But, as any attorney will tell you, you learn to be an attorney by actually being an attorney (one reason why it’s called practicing law!).  A much better way to promote access to justice would have been a reasonable pro bono requirement prior to bar admission, mandating that future lawyers spend time assisting with public interest cases.  Such a requirement would teach future lawyers the law better than any bar exam could, as well as provide assistance to many clients who could really use this help.

 

Foreclosure Crisis in MA Continues

 

While the foreclosure crisis in Massachusetts has gotten better, a recent report shows that foreclosures are continuing to occur throughout the state in high numbers.

My theory on this has less to do with the economy and more to do with the failure of large financial institutions to properly consider struggling homeowners for loan modifications and other alternatives to foreclosure.

I am finding that homeowners who act quickly to avoid a foreclosure have the best odds of saving their home.  If you find yourself in this situation, contact me for a consultation.

Boston Strong!

Yesterday marked the one year anniversary of the Boston Marathon bombing; an event that shook up our city but brought our community together stronger than ever.  Boston has been my home for the past four years and not a day goes by where I’m not grateful to call this place my home.

Of course, you knew that I would tie this post to law somehow and here it goes:  aside from being a great city to live, Boston is, hands down, the best place possible to practice law. We have an amazing legal community filled with with talented, courteous attorneys, bright judges, and an abundance of legal resources, including the fantastic Boston Bar Association and MA Trial Court Law Libraries.  Boston is one the few places where fellow attorneys will not hesitate to drop everything and help a fellow attorney or pro se party with a legal question; a favor I am always willing to return for anyone in need of my help.  And, is it coincidence that some of the best legal movies took place in Boston?  I think not!

Best of luck to the participants in this Mondays’ 2014 Boston Marathon.  For anyone interested in making a donation to support victims of last year’s Boston Marathon bombing, please visit One Fund Boston.

Talk to a Foreclosure Defense Attorney Before Becoming a "Warrior"

Last week, I took a break from my busy schedule and watched a movie that was highly recommend to me:  Warrior.  Warrior, simply put, is one of the best movies I’ve seen in a long time; think Rocky meets The Fighter.  It may look like an action flick at first, but take my word that it is a gripping, powerful movie.  Highly recommended.

The premise of the movie is two brothers fighting in a martial arts tournament; one of whom is a high school physics teacher competing for prize money to save his family home from foreclosure.  A great story line for a movie, but something I hope no one has to do in real life.

Homeowners facing foreclosure do not need to become a “Warrior” or take such drastic steps when facing financial troubles.  Here, the teacher in this movie had a steady, paying job and was months ahead of foreclosure.  If he came to me, I would have recommend he try for a loan modification or, in the alternative, I would have reviewed his title history to see if the bank could lawfully foreclose.

That’s not to say that I, or any other attorney, can ever stop a foreclosure for certain.  But, the point is, speaking with a foreclosure defense attorney should always be a homeowner’s first step in trying to save a home.

Breaking News: Supreme Judicial Court Issues U.S. Bank v. Schumacher; Finds that Right-to-Cure Notice is Not a Power of Sale Statute

I confess that this news may not qualify as still being “breaking” because it came out several weeks ago, but my crazy schedule kept me from blogging sooner.  However, as this is a major foreclosure decision, I am going to stick with calling it breaking news.  🙂

The Supreme Judicial Court issued the long-anticipated U.S. Bank v. Schumacher decision and held that the required right-to-cure notice was not a power of sale requirement.

The right to cure statute, found in G.L. c. 244 Section 35A, requires mortgagees to provide homeowners with a right to cure their mortgage loan debt prior to foreclosure.  Unlike other states, such as Maine, Massachusetts’s law has specific requirements about what these notices must include, including the name of the mortgagee, mortgage loan broker/originator, and amount needed to cure the default.

These specific requirements of these notices became a problem for foreclosing entities, who would often send these notices loaded with defects and mistakes.  A growing number of trial courts in Massachusetts held that any defect in these notices invalidated the underling foreclosure; a interpretation based on the “strict compliance” standard required for foreclosures.

The Supreme Judicial Court held otherwise, and decided that these right-to-cure notices were not part of the applicable statues for foreclosure.  As such, strict compliance is not required for these notices and a defect in one of these letters alone is not enough to invalidate a foreclosure.

The Court did hold that a foreclosure may be challenged against one of these notices as a matter of equity, if the homeowner can show that as a matter of fairness, the defective notice is enough to justify stopping a foreclosure.

So, what are the take home lessons of Schumacher?

  • Earlier is better than later for fighting a foreclosure.  While post-foreclosure cases can sometimes be won, there are many claims available to homeowners that are much more effective if brought as early as possible in the process.  However, with that said . . .
  • Schumacher reaffirmed strict compliance for the power of sale statutes: G.L. c. 244 Sections 11-17C.  From my reading of Schumacher, foreclosures not strictly complying with one of these statutes are void.  This leaves some defenses available for homeowners fighting a foreclosure after it occurred.

 

 

New Proposal to Expand Housing Court All Over MA

The Judicial Branch’s recent Housing Court recommendation is a great step in the right direction for ensuring a proper forum for foreclosure defense and landlord/tenant cases in Massachusetts.

The Judicial Branch last week submitted a proposal to the Legislature recommending that Housing Court be expanded to all of Massachusetts by 2015.  Currently, only a select number of towns/cities in Massachusetts are within the jurisdiction of a Housing Court.  Malden, for example, a city where many of my clients reside, is not covered by a Housing Court and requires summary process and other housing cases to be heard in the local District Court or Superior Court.

I support this new proposal because, as anyone who has sat in a summary process session has learned, foreclosure cases (and many landlord/tenant cases) have become really, really complicated matters.  Having a court with some specialized knowledge of these cases could go a long way towards having these matters promptly and effectively resolved.