Short Sales and Deed-In-Lieu of foreclosure agreements are growing in popularity in California, as lenders and servicers become more aggressive in creating permanent solutions for troubled mortgages in the Golden State. Many are crediting the Homeowners Bill of Rights with the success, as lenders and servicers seem to be avoiding the scrutiny of the new foreclosure process. The Bill allows for stiff penalties for any foreclosures which violate a homeowner’s rights, as proscribed by the new bill. Such offenses include the dual-track foreclosure process, and “verification of documents”, which may be the most pivotal element of the bill.
By now, most people are aware of the robo-signing scandal and the MERS issue. During the mortgage flurry and subsequent sale of mortgages and bundling into Mortgage Backed Securities, some lenders counted on the validity of the MERS system to support a proper chain of title. Well, some courts did not see it that way and many of the documents necessary to foreclose had been disposed of or otherwise lost. Frankly, no one thought they would ever be necessary. Well, when some courts ruled that these documents would be necessary to foreclosure, the banks decided to spend billions of dollars on fraudulently fabricating documents to replace the “missing ” documents. The practice and subsequent scandal was highlighted in a 60 minutes expose on CBS.
The important part to remember is simply that many lenders and servicers do not have “verifiable documents” for many of the mortgages they hold. “This is a big reason that homeowners should have an attorney representing them in negotiations with their lender”, said managing attorney Steve Loizzi, Esq., of Loizzi & Associates, PC. “In many cases, homeowners’ rights have been trampled on. This gives the homeowner leverage that they may not be aware of in negotiations with their lender. If a client has been mistreated during the loan origination process or during the foreclosure process, banks can now face stiff penalties and we know what to look for. In addition, many portfolios will have difficulties getting through the California foreclosure process because they are notorious for missing the proper paperwork and our experience gives us an edge in identifying these portfolios.”
The Homeowner’s Bill of Rights was the brainchild of CA Attorney General Kamala Harris and has been in effect since January 1 of 2013. Harris was also instrumental in the $26 Billion National Mortgage Settlement before working on the Bill for homeowners in her own state. As of March, we are seeing other states follow suit with similar legislation, which will further protect the rights and interests of homeowners across the country. Proponents are hopeful that the sharp decline in foreclosures in California will carry across to other states, as lenders find further incentives to resolve troubled mortgages outside of the costly foreclosure process and expedite the overall recovery of the U.S housing market.
If you are a California homeowner, there has never been a better time to get help with your troubled mortgage. The best way to get the best results is to simply hire a law firm that has extensive experience in mortgage mitigation. Reputable firms offer free consultations and will not take your case unless they think they can really help you.