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Individuals who file for bankruptcy to seek relief from debt have the option of reaffirming certain debts. In the event that a debtor elects to reaffirm debt, the debtor will continue to be liable for the balance on the respective property. However, the debtor also maintains the right to the property. Debtors generally reaffirm debt in relation to automobiles or real property.

A debtor may file a reaffirmation agreement in the bankruptcy court that allows the debtor to "reaffirm" the debt obligation with a lender. Such an agreement is a legally enforceable contract, and it binds the debtor to the promise to repay all, or part of, the debt. Otherwise, the debt would be subject to a discharge through the bankruptcy proceedings. If a debtor fails to make timely monthly payments toward a mortgage debt, the debtor will once again be subject to foreclosure proceedings. A debtor could continue to make mortgage payments without reaffirming the debt. In this case, the debtor would continue to provide adequate protection for the lender, but there would not be a legally-binding contract between the parties.

The lenders are not under any obligation to compromise with debtors to reaffirm mortgage loans, allowing the debtors to keep their property. This is especially problematic when the lender refuses to send regular statements to debtors after the bankruptcy because the debtor does not know the current state of the mortgage. However, debtors may still be able to keep their property if they continue to make regular monthly payments towards their mortgage throughout bankruptcy. Generally, lenders are more inclined to reaffirm a mortgage and create a binding legal contract because, by doing so, they sustain the right to seek legal relief in the event that debtor fails to make mortgage payments. However, lenders may also be reluctant to reaffirm a mortgage loan with debtors.

For instance, in some jurisdictions, lenders cannot pursue a remaining balance on a property after foreclosure proceedings. Therefore, lenders in those jurisdictions do not want to take the time and resources to complete reaffirmation paperwork because this procedure does not adequately protect the lender's interests. Furthermore, lenders often maintain branches across the nation. In the event that a specific jurisdiction does allow a lender to pursue a balance on a property, it is still overly costly to staff and maintain legal offices across the country to complete reaffirmation paperwork for corresponding lending agreements. However, a debtor may maintain the right to refinance a mortgage in spite of bankruptcy proceedings. In general, lenders are stricter in their refinancing procedures, requiring debtors to show sufficient equity in the property, and a sufficient monthly income to support mortgage payments.

At the Law Offices of Salar Atrizadeh, we guide our clients in legal matters by using extensive knowledge and skills to create innovative solutions. Please contact us today to set up a confidential consultation.

In January 2013, the California Homeowner Bill of Rights will take effect, providing unparalleled protection for homeowners across the state. This Bill, which is the first of its kind, will reform the foreclosure process and provide unique protection for homeowners. The Attorney General of California, Kamala Harris pioneered the Bill in an effort to find a solution to the state's foreclosure crisis. Under this legislation, homeowners in this state will have the best protection against foreclosures and lender abuses in the nation.

The foreclosure rates in California are one of the highest in America. This law comes at a time when homeowners struggle with banks to keep their homes, a battle that banks win more often than not. Indeed, a recent audit of the foreclosures in San Francisco revealed that 99% of the underlying loans had some legal issues. In addition, 84% of those loans exhibited "clear violations of the law." However, after California passed the Bill, homeowners should be able to take on lenders more effectively in an effort to keep their homes.

A key provision in the Bill restricts "dual-track foreclosures." As a result, lenders will be barred from continuing foreclosure proceedings while they are in loan modification discussions with homeowners. The Bill also imposes civil liability against lenders for utilizing "robo-signing" to file foreclosure documents. Through robo-signing lenders' employees approve foreclosures without first reviewing the underlying mortgage documents. In order to help improve communications between lenders and homeowners, the Bill will also require that lenders present a single contact person for each customer. This will ensure that homeowners are able to facilitate sufficient communications with their lenders in order to efficiently reach a solution regarding their mortgages.

This piece of legislation also allows homeowners to sue lenders directly for violations of these rights. While this will certainly increase protections for homeowners, Beth Mills, a spokesperson for the California Bankers Association, explained that it may also increase litigation costs for lenders, who will in turn increase costs for future buyers. Rodney K. Brown, the president and CEO of the California Bankers Association, has responded to the Bill stating that the Association does not support this legislation because it "promotes meritless litigation" in a system that is already flooded with cases. Brown goes on to explain that he does not believe that the opportunity to sue lenders directly will improve the homeowner's financial conditions. Nonetheless, Mr. Brown did agree that homeowners are "entitled to an answer regarding their loan modification before" foreclosure proceedings and homeowners should have a single contact person with lenders to facilitate effective communication.

At the Law Offices of Salar Atrizadeh, we guide our clients in matters related to real estate transactions and litigation by using legal knowledge and skills to create solutions for our clients. Please contact us today to set up a confidential consultation.

In California, homeowners who are faced with possible foreclosure have several options. Sometimes, where a property has lost significant value and a homeowner is unable or has no incentive to continue making mortgage payments, a bank will accept a short sale. This means the bank agrees to accept less than the borrower owes for the property in order to keep from having to foreclose on it. A distressed homeowner may also be able to negotiate a loan modification or loan refinance with the mortgage lender. A loan modification is exactly what it sounds like. The terms of the mortgage are modified based on an agreement between the mortgage lender and the borrower. Refinancing means an entirely new loan will be created with different terms. Sometimes, entering into bankruptcy may be the best option available to a borrower.

Deed in Lieu of Foreclosure

If a homeowner expects to default on a home loan, the homeowner might be able to avoid the fees and costs of foreclosure by surrendering the property title directly to the bank instead of allowing a foreclosure to take place. When a property is surrendered in lieu of foreclosure, a mortgagee simply turns over his or her title in the property to the lender. Although not all lenders will accept a surrender of title in lieu of foreclosure, the subject may be negotiable. While a surrender of title in lieu of foreclosure will not preserve a homeowner's credit rating, it may demonstrate to future creditors a willingness to tackle problems as they arise.

It is not a good idea for anyone simply to ignore unpaid debts, as costs and problems will generally mount. If a homeowner defaults on a mortgage without pursuing other options, or simply walks away from a loan, a lender has the option to engage in foreclosure proceedings against the property. This means the lender can take a homeowner's title in the property and sell it through a private sale or judicial proceeding. Before choosing foreclosure, however, a borrower should consider whether he or she will wish to qualify for another mortgage loan in the future. Normally, allowing a home loan to go into foreclosure will severely limit a borrower's ability to obtain a subsequent mortgage.

Government Legislation and Programs

Depending upon when a mortgage was written, federal housing legislation may affect a homeowner's ability to refinance or modify a distressed loan. Government sponsored loan modifications may also be available to mortgage borrowers facing tough times. If you are a distressed homeowner facing possible foreclosure and think you may be a candidate for a loan modification, short sale, refinance, or surrender of title in lieu of foreclosure, it is a good idea to contact an experienced real estate attorney for assistance.

Continue reading "Homeowners Facing Foreclosure in California Have Options" »

Steven J. Baum, P.C. was dropped by Fannie Mae and Freddie Mac, the mortgage-finance companies operating under U.S. conservatorship, from their list of law firms eligible to handle foreclosures.

Fannie Mae said that, "After Nov. 15, 2011, servicers may not refer any new Fannie Mae foreclosure or bankruptcy cases in New York to Steven J. Baum PC..."

On November 10, 2011, Freddie Mac announced its ban. So, both companies said the Baum firm would continue to work on matters referred before the effective dates. Neither said why the firm was being suspended.

Last month, Steven J. Baum PC, one of the largest foreclosure law firms in New York state, agreed to pay the United States approximately $2 million so to resolve a probe of its foreclosure filings. The agreement concluded an investigation into whether the firm filed misleading pleadings, affidavits and mortgage assignments in courts, according to a statement by U.S. Attorney Preet Bharara in Manhattan. The settlement didn't constitute a finding of wrongdoing.

It seems that such non-compliances truly burden the homeowners the most because they are the ones that have to ultimately face eviction. The lenders will recover losses from the TARP funds or mortgage insurance if applicable.

Click here to read on how to avoid foreclosure.

It seems that more homes in the United States are facing foreclosure but it is taking lenders more time to sell or repossess the properties due to the high volume. Recent statistics provided by RealtyTrac, Inc. shows that the number of homes which received a first-time notice of default during the third quarter (July-September) increased approximately 14% when compared to the second quarter of this year.

This increase shows that lenders are becoming more aggressive against borrowers who are behind on their mortgages. This means that U.S. homeowners could now face the drastic measures of eviction or filing for bankruptcy to keep some of their properties and obtain a discharge if certain qualifications are met. Still, the banks need to clear backlogs due to certain industrywide foreclosure processing problems (e.g., sloppy mortgage paperwork comprising several shortcuts known collectively as "robo-signing").

Several of our country's largest banks took measures to temporarily ceasing all foreclosures, re-filing previously filed foreclosure cases and revisiting pending cases to prevent errors.

The foreclosure process takes a long time. Notwithstanding the fact that some lenders seem more willing to begin the foreclosure process on borrowers, they still have not put a dent in the overall length of the foreclosure process. For example, in the third quarter it took an average of 336 days, or 11.2 months, for a U.S. home to go from receiving an initial notice of default to being foreclosed by a lender.

In other states, the process took even longer. For example, in New York it took an average of 986 days (almost 3 years) for the foreclosure process to finalize in the third quarter, which is the longest stretch of any state.

Our readers should realize that they may have options to stop or prevent foreclosures under certain conditions. For an assessment of your situation, please contact us to setup an appointment.

The United States government recently filed suit against 17 financial companies, including, but not limited to, the largest domestic banks, for selling Fannie Mae and Freddie Mac mortgage-backed securities worth billions of dollars that turned bad when the housing market collapsed.

Bank of America Corp., Citigroup Inc., JP Morgan Chase & Co., and Goldman Sachs Group Inc. were some of the financial firms which were targeted by the lawsuits. Also, European banks including the Royal Bank of Scotland, Barclays Bank, and Credit Suisse were also included in the recent lawsuit.

These complaints were filed by the Federal Housing Finance Agency. This agency oversees Fannie and Freddie which purchase mortgage loans and securities issued by lenders. The total price of the mortgage-backed securities sold to Fannie and Freddie equals $196 billion.

At this time, the federal government has not disclosed the amount of damages it is seeking against the aforesaid entities. However, it is speculated that it seeks to cancel the securities sales and to be compensated for the lost principal, interest payments, and the associated legal fees. It is generally expected that the parties settle legal disputes in the near future and before reaching the trial.

This epic battle between the federal government and banks is a by-product of the lack of regulation in the mortgage industry which has caused significant distress to the public. As we all know, many Americans faced or are facing foreclosure of their homes. This matter begs the question as to what happened to capitalism and the American dream? Is this the end or just the beginning of our financial crisis?

Please stay tuned for more news and analysis of this important topic on future blog posts.

The federal government is suing Deutsche Bank, accusing the bank of committing fraud by repeatedly lying to the government and for reckless lending practices in underwriting thousands of federally insured mortgages that ultimately cost taxpayers hundreds of millions of dollars.

U.S. Attorney Preet Bharara said the bank "repeatedly and brazenly" took part in shoddy lending practices for mortgages "that were really ticking time bombs." Bharara says sometimes the bank even failed to verify that a mortgage applicant even was employed. "In fact, they often seemed to treat red flags as if they were green lights. ... While the homes the defendants issued loans for may have been built on solid ground, the defendants' lending practices were built on quicksand."

To read more go to http://www.realtor.org/RMODaily.nsf/pages/News2011050402?OpenDocument

Quick Facts

- Judicial Foreclosure Available: Yes

- Non-Judicial Foreclosure Available: Yes

- Primary Security Instruments: Deed of Trust, Mortgage

- Timeline: Typically 120 days

- Right of Redemption: Varies

- Deficiency Judgments Allowed: Varies

In California, lenders may foreclose on deeds of trusts or mortgages in default using either a judicial or non-judicial foreclosure process.

Judicial Foreclosure

The judicial process of foreclosure, which involves filing a lawsuit to obtain a court order to foreclose, is used when no power of sale is present in the mortgage or deed of trust. Generally, after the court declares a foreclosure, your home will be auctioned off to the highest bidder.

Using this type of foreclosure process, lenders may seek a deficiency judgment and under certain circumstances, the borrower may have up to one (1) year to redeem the property.

Non-Judicial Foreclosure

The non-judicial process of foreclosure is used when a power of sale clause exists in a mortgage or deed of trust. A "power of sale" clause is the clause in a deed of trust or mortgage, in which the borrower pre-authorizes the sale of property to pay off the balance on a loan in the event of the their default. In deeds of trust or mortgages where a power of sale exists, the power given to the lender to sell the property may be executed by the lender or their representative, typically referred to as the trustee. Regulations for this type of foreclosure process are outlined below in the "Power of Sale Foreclosure Guidelines".

Power of Sale Foreclosure Guidelines

If the deed of trust or mortgage contains a power of sale clause and specifies the time, place and terms of sale, then the specified procedure must be followed. Otherwise, the non-judicial power of sale foreclosure is carried out as follows:

A notice of sale must be: 1) recorded in the county where the property is located at least fourteen (14) days prior to the sale; 2) mailed by certified, return receipt requested, to the borrower at least twenty (20) days before the sale; 3) posted on the property itself at least twenty (20) days before the sale; and 4) posted in one (1) public place in the county where the property is to be sold.

The notice of sale must contain the time and location of the foreclosure sale, as well as the property address, the trustee's name, address and phone number and a statement that the property will be sold at auction.

The borrower has up until five days before the foreclosure sale to cure the default and stop the process.

The sale may be held on any business day between the hours of 9:00 am and 5:00 pm and must take place at the location specified in the notice of sale. The trustee may require proof of the bidders ability to pay their full bid amount. Anyone may bid at the sale, which must be made at public auction to the highest bidder. If necessary, the sale may be postponed by announcement at the time and location of the original foreclosure sale.

Lenders may not seek a deficiency judgment after a non-judicial foreclosure sale and the borrower has no rights of redemption.

See http://www.foreclosurelaw.org/California_Foreclosure_Law.htm

OCC Consumer Tips for Avoiding

Mortgage Modification Scams and Foreclosure Rescue Scams

Scams that promise to "rescue" you from foreclosure are popping up at an alarming rate nationwide, and you need to protect yourself and your home.

If you're falling behind on your mortgage, others may know it, too ,— including con artists and scam artists. They know that people in these situations are vulnerable and often desperate. Potential victims are easy to find: mortgage lenders publish notices before foreclosing on homes. Private firms frequently compile and sell lists of these foreclosed properties and distressed borrowers. After reading these notices, con artists approach their targets in person, by mail, over the telephone, or by e-mail. They often advertise their services on television, radio, or the Web, and in newspapers, describing themselves as "foreclosure consultants" or "mortgage consultants," offering "foreclosure prevention" or "foreclosure rescue" services. And they are only too happy to take advantage of homeowners who want to save their homes.

If someone offers to negotiate a loan modification for you or to stop or delay foreclosure for a fee, carefully check his or her credentials, reputation, and experience, watch out for warning signs of a scam, and always maintain personal contact with your lender and mortgage servicer. Your mortgage lender can help you find real options to avoid foreclosure. It is important to contact your mortgage lender early to preserve all your options. There are legitimate consumer financial counseling agencies that can help you work with your lender.

This Consumer Advisory, issued by the Office of the Comptroller of the Currency (OCC), describes common scams, suggests ways to protect yourself, provides information on U.S. government loan programs and counseling resources, and lists 10 warning signs of a mortgage modification scam.

Common Types of Scams

Here are some examples of scams related to mortgage modification and foreclosure avoidance.

Foreclosure "rescue" and refinance fraud. The scam artist offers to act as an intermediary between you and your lender to negotiate a repayment plan or loan modification and may even "guarantee" to save your home from foreclosure. You may be told to make mortgage payments to the scammer directly ,— along with significant, up-front fees ,— and be told that the scammer will forward the payments to your lender. In reality, the scammer may pocket your money and leave you in worse shape on your loan. The scam artist also may tell you to stop making payments or stop communicating with your lender. Don't follow that advice.

Remember that your mortgage lender should be the starting point for finding options to avoid foreclosure. You also should consider contacting qualified and approved credit counselors.

Fake "government" modification programs. Unscrupulous people may claim to be affiliated with, or approved by, the government or may ask you to pay high up-front fees to qualify for government mortgage modification programs. While government-supported mortgage modification and refinancing initiatives are legitimate, the scam artists' claims are not. Keep in mind that you do not have to pay to benefit from these government programs. All you need to do is contact your lender or loan servicer.

The scam artist's name or Web site may be very similar to those of government agencies. The scam artist may use such terms as "federal," "TARP," or other words or acronyms related to official U.S. government programs. These tactics are designed to fool you into thinking the scam artist is somehow approved by, or affiliated with, the government. The government is taking actions to stop this fraud, but you also need to protect yourself. So be wary of claims offering "government-approved" or "official government" loan modifications. Your lender will be able to tell you whether you qualify for any government initiatives to prevent foreclosure. You do not have to pay anyone to benefit from them.

Leaseback/rent-to-buy schemes. In this type of scam, you are asked to transfer the title to your home to the scammer, who will, supposedly, obtain new and better financing and/or allow you to remain in the home as a renter and eventually buy it back. If you do not comply with the terms of the rent-to-buy agreement, you will lose your money and face eviction. The agreement may be very hard to comply with, because it may require, for instance, high up-front and monthly payments that you may not be able to afford. In fact, the scammers may have no intention of ever selling the home back to you. They simply want your home and your money.

Remember that transferring your title does not change your payment obligations ,— you will still owe your mortgage debt. The difference will be that you will no longer own your home. If payments are not made on the mortgage, your lender has the right to foreclose, and the foreclosure and any other problems will appear on your credit report.

Bankruptcy scams. You may have heard that filing bankruptcy will stop a foreclosure. This is true ,— but only temporarily. Filing bankruptcy brings an "automatic stay" into effect that stops any collection and foreclosure while the bankruptcy court administers the case. Eventually, you must start paying your mortgage lender, or the lender will be able to foreclose. Bankruptcy is rarely, if ever, a permanent solution to prevent foreclosure. In addition, bankruptcy will negatively impact your credit score and will remain on your credit report for 10 years.

Debt-elimination schemes. Scammers may claim to be able to "eliminate" your debt by making illegitimate legal arguments that you are not obligated to pay back your mortgage. These scammers will provide you with inaccurate claims about applicable laws and finance, such as that "secret laws" can be used to eliminate debt or that banks do not have the authority to lend money. Do not stop making payments on your mortgage based on their claims.

How to Protect Yourself from Mortgage Modification and Foreclosure Avoidance Scams

Always proceed with caution when dealing with anyone offering to help you modify your mortgage or avoid foreclosure. Remember that you do not need a third party to work with your lender ,— any such party should make the process easier, not harder and more expensive.

Contact your lender or mortgage servicer first. Speak with someone in the loss mitigation department for mortgage modification options and other alternatives to foreclosure.

Make all mortgage payments directly to your lender or to the mortgage servicer. Do not trust anyone to make mortgage payments for you, and do not stop making your payments.

Avoid paying up-front fees. While some legitimate housing counselors will charge small fees for their services, do not pay fees to anyone before receiving any services. Make sure you are dealing with a legitimate organization.

Know what you are signing. Read and understand every document you sign. Do not rely on an oral explanation of a document you are signing ,— make sure that you read and understand what the document actually says. Otherwise, a document may obligate you to terms you don't want or may even convey ownership of your home to someone else. Never sign documents with blank spaces that can be filled in later. Never sign a document that contains errors or false statements, even if someone promises to correct them. If a document is too complex to understand, seek advice from a lawyer you trust or a legitimate, trusted financial counselor.

Do not sign over your deed without consulting a lawyer you select. Foreclosure scams often involve transfer of ownership of your home to a con artist or another third party. Never agree to this without getting the advice of your own lawyer, financial advisor, credit counselor, or other independent person you know you can trust. By signing over your deed, you lose the rights to your home and any equity built up in the home ,— and you are still obligated to pay the mortgage.

Get promises in writing. Oral promises and agreements relating to your home are usually not legally binding. Protect your rights with a written document or contract signed by the person making the promise. Keep copies of all contracts that you sign. Again, never sign anything you don't understand.

Report suspicious activity to relevant federal agencies, such as the Federal Trade Commission, and to your state and local consumer protection agencies. Reporting con artists and suspicious schemes helps prevent others from becoming victims. If your complaint or question involves a national bank and you cannot resolve it directly with the bank, contact the OCC's Customer Assistance Group by calling (800) 613-6743, by sending an e-mail to customer.assistance@occ.treas.gov, or by visiting www.HelpWithMyBank.gov.

Contact a legitimate housing or financial counselor to help you work through your problems.

To find a counselor, contact the U.S. Department of Housing and Urban Development (HUD) at (800) 569-4287 or (877) 483-1515, or go to www.hud.gov/offices/hsg/sfh/hcc/hccprof14.cfm.

Call (888) 995-HOPE, the Homeowner's HOPE Hotline to reach a nonprofit, HUD-approved counselor through HOPE NOW, a cooperative effort of mortgage counselors and lenders to assist homeowners.

Visit NeighborWorks America's Web site at www.nw.org/network/home.asp.

Visit the following Web sites for further information:

The OCC's consumer information site for banking-related questions:

www.helpwithmybank.gov.

OCC Customer Assistance Group and consumer assistance site:

www.occ.gov/customer.htm.

Federal Trade Commission:

www.ftc.gov/bcp/edu/pubs/consumer/homes/rea04.shtm.

Federal Reserve Board:

http://www.federalreserve.gov/pubs/foreclosurescamtips/default.htm.

NeighborWorks America:

www.nw.org.

HOPE NOW:

www.hopenow.com.

Apply for a government-sponsored loan modification or refinancing. The U.S. government has developed a major loan modification and refinancing program to help homeowners find affordable loans and to save their homes.

Go to this Web site for information on these federal mortgage modification and refinancing programs: www.makinghomeaffordable.gov.

Ten Warning Signs of a Mortgage Modification Scam

"Pay us $1,000, and we'll save your home." Some legitimate housing counselors may charge small fees, but fees that amount to thousands of dollars are likely a sign of potential fraud ,— especially if they are charged up-front, before the "counselor" has done any work for you. Be wary of companies that require you to provide a cashier's check or wire transfer before they take any action on your behalf.

"I guarantee I will save your home ,— trust me." Beware of guarantees that a person or company can stop foreclosure and allow you to remain in your house. Unrealistic promises are a sign that the person making them will not consider your particular circumstances and is unlikely to provide services that will actually help you.

"Sign over your home, and we'll let you stay in it." Be very suspicious if someone offers to pay your mortgage and rent your home back to you in exchange for transferring title to your home. Signing over the deed to another person gives that person the power to evict you, raise your rent, or sell the house. Although you will no longer own your home, you still will be legally responsible for paying the mortgage on it.

"Stop paying your mortgage." Do not trust anyone who tells you to stop making payments to your lender and servicer, even if that person says it will be done for you.

"If your lender calls, don't talk to them." Your lender should be your first point of contact for negotiating a repayment plan, modification, or short sale. It is vital to your interests to stay in close communication with your lender and servicer, so they understand your circumstances.

"Your lender never had the legal authority to make a loan." Do not listen to anyone who claims that "secret laws" or "secret information" will be used to eliminate your debt and have your mortgage contract declared invalid. These scammers use sham legal arguments to claim that you are not obligated to pay your mortgage. These arguments don't work.

"Just sign this now; we'll fill in the blanks later." Take the time to read and understand anything you sign. Never let anyone else fill out paperwork for you. Don't let anyone pressure you into signing anything that you don't agree with or understand.

"Call 1-800-Fed-Loan." This may be a scam. Some companies trick borrowers into believing that they are affiliated with or are approved by the government or tell you that you must pay them high fees to qualify for government loan modification programs. Keep in mind that you do not have to pay to participate in legitimate government programs. All you need to do is contact your lender to find out if you qualify.

"File for bankruptcy and keep your home." Filing bankruptcy only temporarily stops foreclosure. If your mortgage payments are not made, the bankruptcy court will eventually allow your lender to foreclose on your home. Be aware that some scammers will file bankruptcy in your name, without your knowledge, to temporarily stop foreclosure and make it seem as though they have negotiated a new payment agreement with your lender.

"Why haven't you replied to our offer? Do you want to live on the streets?" High-pressure tactics signal trouble. If someone continually contacts you and pressures you to work with them to stop foreclosure, do not work with that person. Legitimate housing counselors do not conduct business that way.

For more information go to: http://www.occ.treas.gov/ftp/ADVISORY/2008-1.html

Also visit http://portal.hud.gov/portal/page/portal/HUD/topics/avoiding_foreclosure for information on the Department of Housing and Urban Development.