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Mortgage Lenders’ Mistakes Create Opportunities for Distressed Homeowners

Dec. 27, 2010

During the last few months, the local and national news has been full of stories about mistakes made by mortgage lenders that have helped millions of homeowners at least buy some time to live in their homes threatened by foreclosure. Some of these homeowners have done better than buy time: they’ve leveraged these creditor mistakes into better terms on their mortgages.

What is all this excitement about? What kinds of mistakes did these mortgage lenders make, and how can you gain from them?

Let’s start with robo-signers. Who are THEY?! A few months ago, some homeowners in different parts of the country tried to stop their foreclosures in court. As part of this process, their attorneys deposed some of the mortgage lenders’ employees (that is, asked them questions under oath). These employees, who had signed some of the foreclosure documents filed at court by the mortgage lenders, admitted that much of what these documents said was false. They had signed thousands of affidavits (statements under oath) saying that they had personally reviewed the mortgage documents and the accounting on the loan, to show that a foreclosure was legally justified. But they had actually done none of this. The lenders hired these inexperienced people essentially to do little more than sign these affidavits hour after hour, hence the name: robo-signers. Since the entire foreclosure system is based on the truthfulness of such affidavits, this revelation caught the attention of judges across the country. They did not take kindly to the lenders systematically lying to them in court documents. Once judges started ruling against the creditors, many of the major lenders voluntarily stopped processing millions of foreclosures temporarily, to try to fix these problems.

This attention has opened the door to uncovering a bunch of other problems–not only with foreclosure processing procedures but also with issues that challenge the validity of the mortgages themselves. These deeper problems include things like the mortgage lender not being able to find the original promissory note or trust deed to show they had a right to foreclose or even that they are owed any money! Some judges have started ruling in favor of homeowners in some of these areas as well, but there is a great deal of uncertainty about what will or will not eventually be successful.

All these irregularities and the confusion they’re causing should be no big surprise: the same mortgage lenders and servicers who were so sloppy and greedy with approving and “re-packaging” mortgages in the first place, were also sloppy and greedy in transferring these mortgages from one lender to another, and then in trying to foreclose on them.

Portland Bankruptcy Law Group has the experience and knowledge to handle your case. Our bankruptcy lawyers are extremely familiar with and are well versed in all aspects of bankruptcy law. Contact us today!