Home > Mortgages > Keeping Banks Honest: Protect Yourself During Foreclosure

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For many people, the American dream of homeownership has turned into a nightmare. Nearly 1.3 million households were in foreclosure at the end of 2010, according to a federal report, and another 350,000 homes slid into foreclosure in just the last four months of the year.

Are you worried your house might be next? Maybe your house has already been foreclosed upon, and you’re looking for the best possible exit?

We have some tips for what to do. They come from Todd Allen, the Florida attorney who recently made national headlines by foreclosing on a Bank of America branch after the mega-bank illegally foreclosed on two of Allen’s clients.

[Related article: What it Takes to “Foreclose” on Your Bank]

But first, a disclaimer. A few judges in a handful of states, notably New York, Ohio and Massachusetts, have grown so outraged at lenders and mortgage servicers trying to foreclose on homeowners using fraudulent or missing paperwork that they now require attorneys for the companies to vouch for the documents’ legitimacy. In a small number of cases, judges got so angry they actually threw cases out of court, giving the homes to the borrowers free-and-clear.

Such cases are the exception, Allen says. And in rare instances, banks do get confused and foreclose on the wrong person. (In the case that made Allen famous, Bank of America foreclosed on a couple who never had a mortgage from the bank, and who in fact owned the house outright.) Most people facing foreclosure will not be able to keep their house. The best they can hope for is to delay the inevitable and make sure the case being presented by the bank is in good order, with all documents accounted for properly.

“At some time they’re going to fix their documentation and then they’re going to foreclose on you,” Allen says.

Delay might actually be a good policy, says Gerri Detweiler, Credit.com’s expert on credit and debt issues.

“A lot of times you can stay for several months, even as long as two years, and during that time you can save money for your next move,” says Detweiler.

[Related article: Huge Backlogs Still Delaying Foreclosure Actions]

Tips to help you protect yourself »

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  • MJ

    I questioned something about our mortgage (now serviced with Wells Fargo). One day, while looking for my note, I went to the town offices and found that we were listed as having our mortgage with the “original lender” Eagle National Bank in PA , not W.F… I recalled that when we refinanced with them (E.N.B), they claimed to be “a bank and not a broker” ..The implication at the time of the refi was that this “bank” would hold the note and it wouldn’t be sold. When we signed all the closing paperwork with a home visiting lawyer who showed up for a 7 p.m appointment at 10:30 pm … acting all exhausted from having done so many closings all over the map …We didn’t have time to read it all..Just signed in a great big hurry, so we could get to bed. Well, next day upon inspection I noted the paperwork did say that it could be sold and of course, it was.. I sent our first payment to the original bank, (Eagle) and they didn’t know what to do with it! It had to be re-routed to Wells Fargo from the first payment. My point? Sorry for getting off track.. It’s a couple of years later… around April of this year…When I took the trip to the town office and saw that Wells Fargo was not listed as the holder of our note .. I called W.F from the records office.. I posed the situation as if I were going to pay off the mortgage… We weren’t but it occured to me.. “What if we were”? The town clerks in the office were scratching their heads along with me..they had never seen this happen before…The mortgage was listed as being through the first bank we dealt with for the refi, Eagle National… Wells Fargo’s rep said that they were just the servicers of our note and that the transfer was in a computer system called “MERS”,,, “Not to worry”… she explained… They would also be able to produce the title for the property upon final payment. I questioned that.. and BTW I asked… “Who were the so called “investors” that had recently turned us down for a modification, anyway?… Who exactly owned the mortgage?..MERS? …A COMPUTER? !!! When I got upset enough, the answer was relayed that the investor was Ginny Mae or GMAE (something to that effect)…. Sounded governmental to me… I guessed that had something to do with the fact that our refi was done as an FHA loan. Is it possible at this time to make Wells Fargo produce all the transfer paperwork to prove that they are able to transfer the title, IF AND WHEN the day arrives that we actually did finish paying the mortgage? Prolly won’t live that long… but still, I would feel a whole lot better about writing that ver difficult check if I knew that all was properly set up. Do we have to be … “being foreclosed on”… to demand to see the proof of ownership of our mortgage? I want to be satisfied now that things were done correctly. I recall that just after the time of the closing..I caught the fact that they had charged us for Title Insurance..and that the Truth in Lending paperwork said we didn’t have to pay for that.. I ended up getting a refund check from the title insurance company after complaining.. Perhaps in retrospect, I wish I had paid the title insurance company…then I would have recourse with them. ??? With the bank paying it… I likely can’t deal with them. Or could I? Sad, sad situation this country is in. Thanks in advance for any advice.

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    The banksters are putting homes to foreclose in certain piles and in order of priority. First to foreclose are homes with high equity and clear paper trails. Next are homes with high equity with unclear paper trail. Next are homes with negative equity (underwater) and clear paper trail. And lastly are homes underwater and unclear paper trail. So the timeline for you to be foreclosed by the banksters are dependent upon which pile you fit into.

    Many Countrywide and other mortgages were bundled into securities and sold to The Bank of New York then resold by Wall Street all over the world. So the actual holder of the note is is split into many investors. Bank of America (BOA) bought Countrywide and claims they are note holder of your mortgage that is actually a fraudulent claim. Thusly, the term “pretend lenders.” If BOA claims the original note is lost, destroyed or missing they have to prove that they had the note in their possession before missing and prove they are rightful owners though proper assignments (transfer of note ownership). “Show me the note” defense needs to include “show me the assignments.” Technically, money you paid to a bank, that has no claim to the note should be returned.

    It’s just like you financing a car from someone who doesn’t own the car and them suing you to take car back because you stopped making payments. Sounds like blatant fraud to me. How much money has BOA collected for notes they don’t own or never paid for?

  • http://www.PADNHC.com V

    Shallow thinking on deep subjects. Ever wonder WHY they have to recreate the document trail? It’s because it doesn’t exist. They are making it all up.

    Here is the FACT.

    It’s about your title, you haven’t got one.

    And here is the punchline.

    It’s about your title insurance, you haven’t got any.

    You report some facts and then dissemble. Think it through ladies and gentlemen. If they have no standing to foreclose, they have no standing to deliver title at sale, they have no standing to deliver title at the end of your mortgage commitment.

    And if you don’t own it, why are you paying taxes on it?

    It’s about your title, you don’t have one.

  • lies all of it

    so you are reporting if wells fargo TELLS me to stop paying before i can apply for a hamp loan then moves my file out of review and then loses my back up fed ex file they deserve to foreclose on ME \?????? i think not. please do another story on martgager servicer fraud and what wells fargo and its cohorts have done to run us out of these homes? and the number ONE 1 million question please…………………………is the person/entity whom actually loaned us the money actually on the loan documnets?? if not all loan docs are null and void. wells fargo did loan me the money they are the servicer. docs should read wells fargo NA/ ;;;;trust company (homeevrer loaned it)\). my docs read just wells fargo NA. so all of us are getting foreclosed illegally. please get your story straight its not about who didnt pay the mortgage its about whom funded these loans. think about i am still in my home because i have skin in this game i invested in my home longterm my retirement money 20% down,. i am fighting vs someone withi noskin 3-5% down and no money down those people walk away. hence the 95% folks walk 5% of us fighting. now lets use the banks as an example to. if they loaned us the money for 30 years wouldnt they make sure all the appraisals were correct any comps that skwed the property value up or down owuld be dicarded right? in normal times you say? well back track to umm 2006 property values at the peak if a bank had skin they would hire people to check out appraisals right if they had no skin in the game any appraisal will do right. well thats what happened folks our appraisals were never reviewed and we were funded the loan by an entity that had no skin in the game. comps that added 50k to property value in 2 months, comps that added 20k to property value in only 51 days both comps that needed to be x’ed from my appraisal and was not ., so appraisal fraud plays a large role in this mess

    and what did the author of ther above story write that we will all be foreclosed on we just get to stay there alittle long to save money for our next move

    please write about how the ponxi scheme and how they are ones trying to get the free house. not the otherway around thank you from florida HOME OF FRAUDCLOSUREVILLE usa

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