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.

Lessons of the MA “Peeping Tom” Case for Foreclosure Defense

 

Last week, the Supreme Judicial Court issues its decision in the “Peeping Tom” case and held that state law did not cover “upskirt” photos taken by cell phones and other recording devices.  The Court’s decision, and the Legislature’s prompt passage of a bill to prohibit these practices, has important lessons for foreclosure defense.

Unsurprisingly, the reaction to the Court’s decision was negative, with some believing that the Supreme Judicial Court supported the right of perverts to take lewd pictures.  Not quite.  The job of the SJC, like any Court, is to interpret the law and here, Massachusetts law didn’t include these acts as crimes under the law.  This, of course, is not the outcome that many would have wanted, but as as a government of laws and not men, we are bound by only what is included in the law.

So what’s this have to do with foreclosure defense?  As stated by the SJC, foreclosure law comes primarily from written law.  As such, the rules on what can and can’t be done are mostly found in statutes; most of which are in Chapter 244 of the General Laws of Massachusetts.  These laws are the starting point for any foreclosure defense case.

As I frequently say, Massachusetts has the best legal community around.  The same, however, can’t be said about its laws.  I find many Massachusetts statutes to be complex and confusing and in need of a rewrite.  Nonetheless, until this happens, we are stuck with them and need to do our best in understanding what they mean, and what they do not mean.  In the area of foreclosure defense, which comes primarily from statutory authority, the importance of reading and understanding these laws cannot be overstated.

Declaratory Judgments 101

Homeowners have the option of challenging the validity of their foreclosures in a civil action case.  A common cause of action that foreclosure attorneys bring in these case are declaratory judgments.

A declaratory judgment, simply put, asks the court to make a legal determination that resolves legal uncertainty for the parties.  Under Massachusetts law, the power to make a declaratory judgment is broad and covers a broad array of matters.  For pre-foreclosure defense cases, I often ask for a declaratory judgment that the foreclosing entity is not entitled to perform a foreclosure of my client’s home and in post-foreclosure cases, a declaratory judgment that the foreclosure is void because the foreclosing entity did not comply with the terms of the mortgage and/or applicable foreclosure statutes.

An important requirement for requesting a declaratory judgment is that all parties “who have or claim any interest which would be affected by the declaration” need to be a party of the lawsuit.  For foreclosure cases, this often means that all parties to the mortgage and all entities involved in the foreclosure need to be included in the lawsuit.  For post-foreclosure cases where my clients have tenants, I include them as well, as the validity of the foreclosure would affect the tenants’ landlord/tenant relationship.

The purpose of a declaratory judgment is “to remove, and to afford relief from, uncertainty and insecurity with respect to rights, duties, status and other legal relations . . .”  A court issues a declaratory judgment through a simple court order stating its legal determination on the disputed issues.  In foreclosure cases, a declaratory judgment holding that a foreclosure was void can be recorded in the Registry of Deeds and has the effect of restoring the homeowner’s title to the property.

Declaratory judgments can be raised in Superior Court, Land Court, and Federal Court.  I find declaratory judgments to be useful in foreclosure defense cases because they provide resolution to matters of law that do not always fit in with other kinds of causes of action.

A Foreclosure Defense Attorney is Not a Financial Adviser

A foreclosure defense attorney may be able to do many things for you, such as fighting a foreclosure, preparing a loan modification application, or negotiating a leave from your home.  However, a foreclosure defense attorney is not—and should not—be your financial adviser.

Homeowners facing foreclosure need to make tough decisions on what to do with their homes.  For some, fighting a foreclosure and trying for a loan modification is the best way to go.  For others, walking away and going for a fresh start may make more sense.  A lawyer can advise you of your legal options and what to expect in your case, but advice on the financial implications of your situation is best left to a financial adviser, and not a lawyer.

Now, of course there are many lawyers with financial backgrounds; some who are even financial advisers themselves.  Even so, clients should always get a second opinion on their cases.  Even under the best circumstances, fighting a foreclosure is difficult and you should be certain you are fighting for the right outcome.

Fighting a HAMP Loan Modification Denial

Loan modifications are an essential tool in foreclosure defense. The goal is almost all of my cases is to get the homeowner a monthly mortgage payment they can afford. Unfortunately, a federal program aimed at helping homeowners has become a source of its own problems.

In 2009, in an effort to assist struggling homeowners, the federal government created the Home Affordable Modification Program (“HAMP”). The goal of HAMP is to offer a loan modification for qualifying borrowers with a monthly mortgage payment of 31% of the borrower’s income. Lenders and servicers are suppose to use a “waterfall” approach to create affordable monthly payments through 1) capitalization of the outstanding debt 2) interest rate reduction or 3) term extension.

Simple enough? Not quite. HAMP has fallen well below expectations and has helped far fewer homeowners than was expected. I’ll give you my reason for these dismal numbers:  lenders and servicers aren’t playing by the HAMP guidelines. I’ve heard horror stories of borrowers who have spent years submitting applications and constantly being told their paperwork is missing or being denied for reasons that make not the slightest bit of sense.

It gets worse: in a ongoing class action lawsuit here in Boston, several Bank of America employees have given sworn testimony that their employer rewarded employees for denying HAMP modification applications.

With this in mind, anyone applying for a HAMP modification should keep detailed records on the application process and–most importantly–have proof that they submitted all of the paperwork.

If you’ve been denied a HAMP modification, seek an attorney immediately. While courts differ in their approaches to allowing HAMP lawsuits, Massachusetts has a strong consumer protection law that can often be used in these cases.

I’ve help many homeowners with HAMP denials.  Contact me for a consultation.