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Foreclosure Abuse Victims May be Eligible to Receive up to $125,000 through the Independent Foreclosure Review Process

July 11th, 2012

If you were involved in a foreclosure process between January 1, 2009 and December 31, 2010, you may be eligible to receive up to $125,000 through the Independent Foreclosure Review process (“IFR”). The IFR was created by a number of federal agencies to provide borrowers with the opportunity to have their foreclosure process reviewed for errors or other problems that may have caused financial injury. Borrowers may be eligible to receive relief under both the IFR and the $26 Billion settlement reached by the States with various financial institutions. The deadline to apply for an independent review under the IFR is Sunday, September 30, 2012.

In order to qualify for the IFR, your mortgage must satisfy the following threshold criteria. First, your mortgage must have been serviced by one of the following 14 companies: America’s Servicing Co., Aurora Loan Services, BAC Home Loans Servicing, Bank of America, Beneficial, Chase, Citibank, CitiFinancial, CitiMortgage, Countrywide, EMC, EverBank/EverHome Mortgage Company, Financial Freedom, GMAC Mortgage, HFC, HSBC, IndyMac Mortgage Services, MetLife Bank, National City Mortgage, PNC Mortgage, Sovereign Bank, SunTrust Mortgage, U.S. Bank, Wachovia, Washington Mutual, Wells Fargo or Wilshire Credit Corporation. Second, the mortgage must have involved your primary residence. Third, your mortgage must have been in the foreclosure process between January 1, 2009 and December 31, 2010.

If you meet the initial criteria, the amount of money you may be entitled to will likely be influenced by the status of your foreclosure process, how the foreclosure process was resolved (if it is not on-going) and the financial injuries involved due to errors, misrepresentations or other deficiencies in the foreclosure process. In addition, special guidelines have been developed for: 1) servicemembers who lost their homes while on active duty; 2) borrowers who were foreclosed on without being in default or were in default as a result of the servicer’s errors; 3) borrowers who were improperly put into foreclosure during or after trial mortgage modifications; and 4) borrowers who faced foreclosure despite a loan modification application. Ultimately, borrowers should expect a wide range of potential relief depending on the facts surrounding their foreclosure process.

Borrowers should keep in mind that the IFR is just one of many federal, state and bank sponsored processes created to assist borrowers who were harmed by foreclosure abuses and/or struggling through the current housing crisis. While some of these programs are aimed at compensating borrowers for past, improper conduct, others are designed to help borrowers remain in their homes by creating more manageable mortgage payments. You should contact an attorney to discuss your eligibility and the requirements for recovery under the various programs. For more information, please contact an attorney in Fraser Trebilcock’s Real Estate Practice Group.

Borrowers: Foreclosed, Struggling or Underwater? You May be Eligible for Portion of $26 Billion Settlement

April 20th, 2012

In February 2012, 49 states, including Michigan, reached a $26 Billion settlement with five of the nation’s largest mortgage lenders over foreclosure practices previously utilized by these financial institutions. Earlier this month, the settlement was approved by a federal judge. The settlement is designed to provide restitution to borrowers who were improperly foreclosed on between 2008 and 2011. In addition, borrowers who are currently struggling with their mortgage payments or have homes that are underwater may be eligible to receive assistance from the settlement fund. Ultimately, the settlement may provide relief and assistance to countless borrowers struggling with our current housing crisis.

The settlement reached with the five financial institutions is incredibly complex and involves hundreds of pages of procedures, guidelines and policies. Below, the Real Estate Practice Group has summarized the main components of the settlement and the groups of borrowers who may be eligible to file a claim against the settlement fund.

Payments to Foreclosure Victims

A portion of the settlement fund has been earmarked to compensate borrowers who were improperly foreclosed on between January 1, 2008 and December 31, 2011. In order to qualify, your mortgage must have been with either: 1) Bank of America; 2) Citibank; 3) JPMorgan Chase; 4) Wells Fargo; or 5) Ally Financial (formally GMAC, Inc.). In addition to this threshold requirement, there are a number of other criteria that must be met. Mortgage giants Fannie Mae and Freddie Mac are not covered by this settlement. If you qualify, you will likely receive a letter from your lender advising you of your rights to submit a claim for payment from the settlement fund. Eligible borrowers are expected to receive a payment of approximately $2,000. However, this amount will depend on the number of claims that are filed. Borrowers who lost their homes to foreclosure during this time period are unlikely to get their homes back.

Relief for Struggling Homeowners

The settlement is also designed to assist borrowers who have the intent and ability to stay in their homes while making reasonable payments on their mortgage loans. Here, the settlement fund will be used to reduce the principal balance of home loans for borrowers who are in default or at risk of default on their loan payments to the applicable financial institutions. Principal reductions will likely yield lower payments and may give borrowers an opportunity to preserve their homes.

In addition to lowering eligible borrowers’ mortgage payments, the settlement will be used to support a number of important programs. These programs include: relocation assistance for homeowners facing foreclosure, waiving of deficiency balances, funding for remediation of blighted properties, facilitation of short sales, unemployed payment forbearance and benefits for servicemembers. If you believe that you qualify for one or more of these programs, you should contact an attorney to discuss your eligibility and the requirements to receive assistance.

Refinancing of Underwater Homes

The settlement fund will also be used to assist borrowers who are not delinquent on their payments but cannot refinance to lower interest rates because of negative equity problems. If you are upside-down on your mortgage with one of the covered financial institutions, you may be eligible to refinance your home. At a minimum, a borrower must be current on his or her mortgage payments, have a loan to value ratio in excess of 100% and must have a current interest rate in excess of 5.25% to be eligible to participate in the refinancing program. However, there are a number of types of loans that are excluded from the refinancing program, and there are additional requirements that must be satisfied to be eligible. According to the settlement, a borrower’s refinanced interest rate must reduce monthly mortgage payments by at least $100.

Release of Claims

Under the settlement, the states will not pursue civil charges against the settling financial institutions related to mortgage abuses. However, state and federal authorities can pursue criminal charges. In addition, borrowers and victims of improper foreclosures are not required to release any claims against the financial institutions and are free to seek additional relief in civil courts. The states’ release of claims does not apply to third parties who may have provided default or foreclosure services for the financial institutions.

Payments to the States

Michigan and the other states participating in this settlement will each receive a portion of the settlement fund. These funds are designed to be used by the states to avoid preventable foreclosures, ameliorate the effects of the foreclosure crisis, enhance law enforcement efforts to prevent and prosecute financial fraud, deceptive acts or practices, and compensate the states for costs resulting from the conduct of the covered financial institutions. Ultimately, each state will be responsible for developing its own programs and procedures to effectively use these funds to assist its citizens with the current housing crisis.

Conclusion

The settlement reached with Bank of America, Citibank, JPMorgan Chase, Wells Fargo and Ally Financial (formally GMAC, Inc.) will likely provide relief and assistance to countless borrowers throughout the country. If you have been foreclosed on, struggling with your current mortgage payments or underwater on your existing mortgage, you may be eligible to receive a portion of the settlement fund. You should contact an attorney to discuss your eligibility and the requirements for recovery under the various programs. For more information, please contact an attorney in Fraser Trebilcock’s Real Estate Practice Group.

Beware — Getting a mortgage, have a mortgage READ THIS!

August 2nd, 2011

The Michigan Court of Appeals has issued a decision that will affect thousands of Michigan properties. In the consolidated case of Residential Funding Co, LLC v Suaman, April 21, 2011 (NO. 290248 and 291443), the Court of Appeals examined the question of whether foreclosures instituted by Mortgage Electronic Registration System (“MERS”) could properly be foreclosed under Michigan’s foreclosure by advertisement statute. MERS was developed as system allowing mortgage lenders to more quickly buy and sell mortgage debt in the marketplace. Many of the larger banks utilize MERS as their agent for mortgages. MERS has instituted a large percentage of the foreclosures by advertisement currently underway in Michigan.

The Court of Appeals ruled that MERS could not properly foreclose a mortgage by advertisement but would rather have to institute a judicial foreclosure. The court did not address how its ruling might affect foreclosures that already have been completed but where the banks have not taken steps to evict the former homeowner.

A judicial foreclosure takes significantly more time to complete and is more expensive to undertake. With thousands of foreclosures by advertisement taking place, banning MERS’s ability to utilize the process will have a profound impact on publishing companies and sheriff’s departments that post the advertisements, not to mention the flood of judicial foreclosures that may be filed in courtrooms across Michigan. The case is likely to be appealed to the Michigan Supreme Court who will have to decide whether to hear the case and, if heard, whether the Court of Appeals was correct in their ruling, a process that will likely take at least a year. Another possible solution would be for the Legislature to amend the statute if the Court of Appeals’ interpretation of the statute is not what the Legislature intended the statute to mean.

This ruling will have a significant impact on a bank’s ability to foreclose in Michigan if they utilize MERS. For example, any homeowner has had their home foreclosed by advertisement where the mortgage was held by MERS may have an opportunity to either stop the foreclosure or perhaps even take back their home. Title insurance companies will also have to carefully examine issuing any foreclosure policies to make sure they can adequately insure title. If any of these situations apply to you, please give us a call to see if there may be something we can do to assist you. For more information, contact Fraser Trebilcock attorney J.J. Burchman at 1-800-748-0436 or jburchman@fraserlawfirm.com.