President-Elect Trump’s selection of Steven Mnuchin to head the Department of Treasury has raised a troubling story about this nominee’s involvement with OneWest Bank, a national financial institution (which has since been acquired by CIT Bank). OneWest is reported to have foreclosed a 90-year-old-woman’s home for a $0.27 payment error. OneWest Bank has also been alleged to have made a mess out of reviewing borrowers for loan modifications and proceeding with foreclosure while loss mitigation options have been under review. All of these raise questions regarding President-Elect Trump and the Foreclosure Crisis, namely, how the new administration will assist struggling homeowners trying to avoid foreclosure.
The federal Home Affordable Modification Program (“HAMP”) is set to expire at the end of 2016, and the Trump Administration will need to decide whether to extend this program, or offer another federal program in its place. HAMP has done little to help the many homeowners in need of this assistance, and it will be interesting to see whether the new administration keeps the program, replaces it, or eliminates this type of assistance all together.
Another important policy matter for the Trump Administration will be whether the President-Elect keeps many of the Obama Administration’s consumer protection efforts, namely the Consumer Protection Financial Bureau (“CPFB”) and its regulations for banks and loan servicers. The CFPB has issued numerous regulations on how loan servicers are to review loan modification applications and deal with borrower’s concerns about their accounts. Regulations are issued by a president’s administration, unlike laws, which Congress must pass. Because of this, regulations are subject to change when a new president comes into office. Time will tell whether President-Elect Trump keeps in place many of these rules, or goes in a different direction than the previous administration. Stay tuned!
I had the honor of arguing before the Massachusetts Supreme Judicial Court (“SJC”) this week on a foreclosure appeal. The SJC is Massachusetts’s highest court and the final decision maker on Massachusetts law. The SJC often takes cases where the law in a particular area is uncertain. In recent years, the SJC has heard an increasing number of foreclosure cases, which shows that this area of law continues to evolve.
My appeal concerned whether G.L. c. 244, § 15A, a law requiring a mortgagee to inform a local municipality about a foreclosure sale thirty days after it happened, is a requirement of the foreclosure process. Different courts across Massachusetts have taken different positions on this, making this a matter that the SJC needs to resolve. Click here to watch the oral argument.
My experience before the SJC reminded me of the importance of having an attorney who knows and understands the process of pursuing an appeal. A appeal is a review of a case that was heard before a trial judge or jury; the appellate judges do not hear the testimony of witnesses or review evidence, and are limited to reviewing the entire record presented in the lower court. A foreclosure appeal is a particular challenge to bring: foreclosure law constantly changes, and a successful appeal requires knowing and understanding the most recent changes in the law. My appeal will likely be decided in the next three to four months, stay tuned!
I was deeply humbled by my appearance before the SJC. With the recent election forcing many Americans to look closely at our form of government, I had a chance to see Massachusetts’s highest court up close. I many not always agree with the SJC’s decisions, but I can’t doubt the Court’s sincerity and devotion to the “rule of law” in our state. I’m proud to be a Massachusetts attorney and look forward to continuing my practice in this great state.
If you are in need of an appellate attorney, contact me for a consultation. The importance of having an experienced appellate attorney on your side can be the difference between winning or losing your case.
Once foreclosure begins, can it be stopped? In Massachusetts, the answer is “yes.”
The start of the foreclosure process in Massachusetts begins with a series of notices sent to the homeowner, informing them of the foreclosure sale date. These notices are also published in a local newspaper. While this is the official beginning of the foreclosure process, the homeowner has usually been provided notice of the foreclosure well in advance of these notices, through letters from the bank informing them of the loan default and offering them an opportunity to cure the default. At this point, the sale is scheduled, but has not occurred. Here, there are several options that homeowners can do to stop a foreclosure.
If the homeowner has not applied for a loan modification, they can speak with the lender and see if the lender is willing to consider reviewing them for this loss mitigation assistance. If the homeowner applies far enough in advance of a foreclosure sale, the lender may be willing to do so and postpone the foreclosure. Generally, however, a lender will not postpone a foreclosure sale if a loan modification application is received after a scheduled sale date.
If the lender is unwilling to stop a foreclosure sale, a homeowner may be able to ask a court to stop the foreclosure, if there are grounds for challenging the foreclosure’s validity. A homeowner can request a temporary restraining order or preliminary injunction to stop a foreclosure. Obtaining the help of an attorney in doing this is highly, highly recommended.
A homeowner can also consider filing bankruptcy to stop foreclosure. A bankruptcy creates an automatic stay against all creditors, including a foreclosure sale. A homeowner, again, should consult with an attorney before taking this action.
After a foreclosure sale occurs, a homeowner still has a right to challenge the foreclosure’s validity. A homeowner can seek a declaratory judgment or another type of court order requesting that the foreclosure be rescinded. While it is possible to stop a foreclosure after a sale has occurred, it is much harder than fighting a foreclosure before a sale has happened. It is, however, not impossible.
If you find yourself facing a foreclosure, contact me for a consultation to see if I can be of help.
For homeowners trying to avoid foreclosure, getting a loan modification (where the lender agrees to adjust the monthly payments to an affordable amount for the borrower) would seem to be the solution for beating foreclosure. Believe it or not, however, some lenders don’t follow through with these plans: the breaking a loan modification by a loan servicer is an unfortunate reality for many homeowners.
I’ve seen this occur in different ways. In the first scenario, the homeowner receives a trial payment plan (“TPP”), where the homeowner is approved for a modification and is required to make three payments under the new modified loan amount. The homeowner signs the required paperwork, makes the three payments, and expects to get the permanent modification. The loan servicer, however, refuses to give them the permanent modification, despite the homeowner doing everything that was required of them.
In the second scenario, the servicer “forgets” about the loan modification months, and sometimes even years, after the modification has begun. Believe it or not, some servicers simply refuse to outright honor a modification, despite the homeowner having been approved for this loss mitigation assistance.
Fortunately, the law is often on the side of homeowners in these matters. Many courts have held that breaking a loan modification is a breach of contract: a violation of a legally binding agreement that entitles the homeowner to relief in court. Homeowners in these cases can sue for damages, and ask for both monetary damages and the remedy of specific performance, which asks the court to reinstate the parties’ loan modification agreement. In one of my successful cases on such a matter, I was able to negotiate a reinstatement of a loan modification where the loan was brought current to the date of the settlement, as if the homeowner had been making payments all along.
Homeowners who are in one of these situations should contact a foreclosure defense attorney as soon as possible.
The final deadline for HAMP (“Home Affordable Modification Program”) is rapidly approaching: applications for this federal program are due December 30, 2016.
HAMP is a federal program aimed at helping struggling homeowners avoid foreclosure. Eligible homeowners can obtain a loan modification through a combination of an interest rate reduction, term extension, and principle forbearance. Applying for HAMP requires proof of income, a variety of tax and financial documents, and a hardship affidavit (showing a reason why the homeowner cannot make their normal loan payments).
HAMP, to say the least, has been a nightmare: servicers routinely lose paperwork, delay reviewing modifications, and deny applications for false and ambiguous reasons. Despite its shortfalls, HAMP remains one of the best options for homeowners trying to avoid foreclosure. With this in mind, homeowners in need of loss mitigation assistance should make a note of the deadline for HAMP and submit an application as quickly as possible.
The deadline for HAMP has been extended in the past and I wouldn’t be surprised if that happens again. However, homeowners should assume that it won’t be extended, and get prepared to submit an application well before the December 30, 2016 deadline. Don’t procrastinate! A HAMP application requires an enormous amount of time and collection of documents. You do not want a loan servicer to deny your application on the grounds that your application was not submitted in time (a reason for denial that, unfortunately, I see occurring for many homeowners who will apply at the end of the year).
When applying for HAMP (or any other loan modification program), be sure to keep a paper trail of your application process. If you find yourself not getting the results you need, contact a foreclosure defense attorney for assistance.
I recently saw a Airbnb TV commercial that attempts to promote the many benefits of this room sharing service for local communities. Airbnb claims that its service has helped many homeowners avoid foreclosure, a topic that I want to discuss here. Can Airbnb help avoid foreclosure? As with all legal questions: it depends.
Airbnb is a peer sharing service for renting rooms, apartments, and even entire houses. An interested renter enters their desired location and travel dates and gets a list of available options, with rates and information of the rental property. Airbnb follows the trend of similar “sharing economy” services like Uber and Lyft, allowing individuals to conduct business on their own terms. Not surprisingly, these services are under attack by state and local governments: here in Massachusetts, there is talk of regulating Airbnb, over concern that this service takes business away from local hotels and other short term rental options.
I, personally, am a huge fan of the “shared economy.” I see no reason why a homeowner or car owner should not be permitted to use their personal property for profit (while providing an important service for the general public). Inevitably, however, there is push back from the commercial businesses who normally provide these services. As local and state businesses continue to determine how to deal with Airbnb, the question on whether Airbnb can help avoid foreclosure is an important topic to consider.
For homeowners facing a temporary loss of income (ex. layoff from job or reduced working hours), Airbnb can be an option for avoiding foreclosure. Short-term rental income can help provide the resources necessary to pay a mortgage loan and avoid default. This is a much, much better option than letting a loan go unpaid.
I am a little more skeptical of using Airbnb as a means of producing income for purposes of obtaining a loan modification. On paper, income from Airbnb should be adequate for getting a modification. However, the unpredictability of this income can make it difficult to verify for a loan modification. When applying for a modification, a lender wants to see definite, documented income. I can see many lenders being reluctant to accept this income, out of concern that this income may not be consistent.
So, can Airbnb help avoid foreclosure? If the homeowner can use Airbnb to stay current on a loan (or get caught up in missed payments), then I think it is an effective foreclosure defense strategy. Airbnb is also a fantastic option for generating extra income for homeowners with a tight budget, thereby providing savings in the event that other income becomes scarce.
For homeowners with a significant loan default, who are in need of a loan modification, I wouldn’t rely 100% on Airbnb to produce the income necessary to qualify for this loss mitigation assistance. Go ahead and use Airbnb, but also try to establish income that is more certain and definitive. If you have space in your home to rent, consider finding a permanent tenant or roommate, which may be more effective in showing your lender that you have the income necessary for a modification.
If you find yourself facing foreclosure and need help, contact me for a consultation.
A recent Massachusetts Supreme Judicial Court decision illustrates the importance of properly appealing a foreclosure case. The Court’s decision reaffirms that a homeowner has one–and only one–opportunity to appeal an unfavorable court decision.
In Eresian v. Merill Lynch Credit Corporation, the Supreme Judicial Court upheld the denial of a homeowner’s attempt to overturn a decision in a foreclosure case from the 1990s (a copy of the full decision is below). The homeowner attempted to file an appeal of this decision in 2015, years after the 1993 foreclosure case. The Appeals Court rejected this appeal, and stated that the case was closed. The homeowner then attempted to petition the Supreme Judicial Court for a subsequent order to review her prior decision. Here, the Supreme Judicial Court rejected this requested relief, noting that the homeowner had already obtained an appeal of her decision, and there was no reason for the Court to allow her the opportunity for another review of the case.
The Court’s decision in this case reaffirms an important lesson for homeowners fighting foreclosure: there are few, if any, “do overs” in matters of law. If a homeowner loses their foreclosure case and wishes to appeal, they get one–and only one–chance at appeal. Rarely will a homeowner ever be able to come back later for a second shot.
With this in mind, homeowners should strongly consider consulting an experienced foreclosure defense attorney in appealing a foreclosure case. The risks of not doing the job right the first time just aren’t worth it.
My blog post today isn’t directly on point with the legal topics I generally blog about, but I think it’s a post that has important relevance to the work I do and clients I serve. Let me tell you about why we need to bring e-filing to Massachusetts.
Permit me a story, that I will call “a tale of two cases.” Both cases were complex matters, requiring extensive research, writing, and preparation. In the end, though, one was far easier to get filed with the court than the other, saving my client money (and freeing my time for other important matters). What was the difference? One case was in federal court, which permits e-filing, and the other was in Massachusetts state court, which does not.
“E-filing” lets an attorney file papers with a court online. The attorney merely needs to turn his papers into a PDF (which almost all word programs allow a user to do today), upload them on the federal court website, and submit. No need to send the other side a copy of what you filed; the other attorneys and court get an automatic notification when something is filed. Same when the court issues an order or decision.
Massachusetts state courts, in contrast, still require paper filing. A lawyer needs to print a copy of what they want to file and mail or hand deliver it to the court and other side. For large lawsuits and motions, the process requires enormous amounts of paper and clerical work to get done.
E-filing is of equal benefit to all attorneys, but is especially needed for solo and small firms like myself. I don’t rely on clerical staff for my administrative needs and the extra time I spend filing papers with the court takes away valuable time from my clients. It makes legal services more expensive than they need to be. Moreover, as a proud alumnus of the nation’s top environmental law school, paper filing consumes enormous amounts of paper. The picture above is from a recent appeal I did. The required filing of seven copies of my brief and transcript amounted to several hundred printed pages and hundreds of dollars in printing costs.
E-filing has other advantages as well: it provides attorneys the convenience of working remotely and the ability to view the filings in a case without a trip to the courthouse. Research is also easier: a lawyer interested in learning about a case can do so from their computer, and not in a busy clerk’s office.
E-filing has worked wonders in federal court, and its time to bring e-filing to Massachusetts. There are several pilot projects underway on this important endeavor and here’s hoping that e-filing becomes a permanent part of the Massachusetts state court system.