I was surfing last night on Broker’s Outpost [A forum for mortgage brokers.] and ran across a debate I thought Doomers would find interesting. The question is who’s bamboozling whom. Here’s the question asked by Atlloanlady: [I have done some light editing.]
Here’s the story. Lender sent a letter of notification for foreclosure scheduled 1/6/2009. The borrower called the lender and got a loss mitigation package. Fannie/Freddie suspended all of their foreclosures through 1/9/2009. The borrower called the servicer to inquire if she would qualify. (she has an FHA loan) The lender told her yes and confirmed that her 1/6/09 foreclosure was suspended until further notice to work out a repayment plan or modification.
The borrower goes on about her business and sends in the loss mitigation paperwork. She receives a letter of notice to vacate the premises due to the 1/6/2009 foreclosure sale. She calls the lender (TB&W) and the lender tells her the sale is final and she needs to call FHA to work something out. The lender did have notations of the November call from the borrower regarding the suspension, but told her that her loan did not qualify under the program. Basically, they took no responsibility for their error.
What can my borrower do? Anybody ever heard of this? This loan is in Georgia, and there is an opportunity to have the foreclosure rescinded within 30 days of the sale as long as the title has not transferred. My fear for her is that she is now totally at he lenders mercy and they don’t have to do anything. Please advise.
There were several responses to Atlloanlady’s question offering possible approaches for the borrower to take, but there were also other comments that sided with the lender. Here’s a few:
This family baboozled the lender. They either 1) could not afford the home or 2) were credit criminals that were deadbeats.
In either case they stopped paying the housing payment and the right thing happened. A mortgage is not a homeless shelter. You pay for your home or you get out. Same thing with a renter. I’m tired of this sense of entitlement from overextended home owners that are living beyond their means. I’m tired of it.
You can’t be "bamboozled" into defaulting on your obligations. These people had months to do something and they did nothing.
Instead of being "bamboozled" by someone and paying them for "foreclosure assistance" (that same someone who has to ask random people on a forum for help because they’re not an attorney and too inept to know that their involvement is detrimental to the whole situation) when they couldn’t assist them they need to pack their deadbeat bags and move on.
P.S I hope the lender gets these people evicted and is able to sell the house to someone worthy.
Atlloanlady does not appreciate these comments:
I really can’t believe how ugly and uncompassionate you people are being. Do you watch the news? Over 500,000 people have lost their jobs. Everybody who is in this situation is not a deadbeat, and I think it is really insensitive of you to say so. This woman lost her job after closing on her home…something that could happen to anyone on this forum. IT COULD BE YOU!!!
Most posters however did not agree with Atlloanlady, but there was this thought from a poster that did:
I am so sick of all this bs about it being the borrower’s fault. Don’t any of you claiming that realize that there are State and Federal Regulations requiring that lenders make a realistic determination of the ability of the borrower to repay the loan. IOW, no stated income for W-2 and many other borrowers.
What about OCC Guidance letters referring to the ability of the borrower to repay the loan?
What about lenders failing in their Fiduciary Duty to their investors?
While I am at it, did you know that brokers who did stated income loans could be liable under UDAP codes? With the lenders being liable for aiding and abetting?
What about the lies told to borrowers by loan officers? And realtors?
IMO, those of you who are laying the blame on the borrowers are simply trying to deny that you were probably some of those doing the stated income loans and deceiving borrowers.
The bottom line is that the past seven years, the entire industry acted illegally, and it is time to pay the piper.
If the facts were as they were presented, it seems to me that the borrower should have recourse. Maybe she should never have bought the house, but that doesn’t excuse the lender from actinig in good faith.
What say you Doomers?
This is what happens when good regulations (such as the Glass/Steagall Act of 1933) are deemed obsolete and eliminated. All parties are to blame.
Twist, can you post any articles pertaining to stats on such things as foreclosures, price drops, etc. All your posts are great, but I particular like your posts on stats.
Thanks
If the facts are correct that they had an FHA loan, then it is doubtful that they could be helped. Their original FHA loand would have been at a reasonable rate, so their is no subprime reset here blowing them up. HUD has specific guidelines on helping homeowner’s out of default. One of them is a job, and the ability to make payments. It may be that the lender lied. It may also be that the lender attempted to get an exception for their loan and failed. This sounds like an old fashioned default, and not something that was due to predatory lending.
The legal concept of promissory estoppel states that any action taken on the basis of a someone’s promise can generate an equitable remedy for damages suffered. Arguably, the lender offered to stop foreclosure proceedings if they filled out the loss mitigation forms, so there may be a cause of action.
There is a more disturbing note in the comments to this case. The lenders are getting bailed out by government to the tune of billions (if not trillions) of dollars basically saving them from their poor decisions of issuing (or buying) toxic mortgages. Why shouldn’t the borrowers get similar protection for their bad decisions? People should be marching in the streets instead of defending the %$%#$% banks.
P.S. I bought a foreclosed house in Vegas 33% below the peak. I am now underwater as the market has now declined almost 50%. Condos are now down more than 50% because banks are not lending without 75% owner occupancy. Where’s my bailout? Should I go into default to have my mortgage reduced?
“What about lenders failing in their Fiduciary Duty to their investors?”
Talking about mortgage Fiduciary Duty… Countrywide did a “settlement” with the AG’s and agreed to do mortgage “workouts” after the AGs came all over them for being predatory lenders.
Guess what? Instead of paying for the workouts from their own pockets… they decided to screw the bondholders instead. I guess even though Mozillo’s gone.. his legacy is still going strong there over at BoACountryWideMerrilLynch.
http://www.foxbusiness.com/video-search/m/21562452/investor-sues-countrywide.htm
It’s easy to see what went wrong here. The borrower called someone who told her to call someone else, and so on and so forth.
I think if you are not making payments that should give you time to save up for some other kind of living accomodations.
All those lies that were told were apparently, pefectly ok lies. Politicians lie, middle managers lie, salesmen lie, people need to realize. It’s ok to lie, it’s encouraged, and you can’t get in trouble for it unless your doing it in a court of law!