PROTECTING YOUR FAMILY:
Where Does Strategic Default Fit In?
TOM’S COMMENTARY:
We have never advised a client to stop paying their mortgage, nor do we expect to give that specific advice. What we DO tell our clients, on a nearly daily basis, is to protect themselves, and protect their families.
In recent weeks we have spoken to more and more homeowners who, six months to a year ago, suffered a death of a spouse, major health challenges, business failures due to the economy, or other events beyond their control that impacted their ability to pay their mortgages out of current income. Many of these families had savings, or perhaps retirement accounts that they could tap to make up the difference. Some of them lived off their credit cards, to be able to keep paying their mortgage.
Where are they today? More underwater than ever, and now completely unable to pay the mortgage, and in the same situation as a year ago, except THEY HAVE LOST THEIR SAFETY NET, having given it to their lender. It is heartbreaking to talk to such people, and it makes one truly question the morality of the choices involved. I remind people who are tempted to sacrifice their financial future that the lender will NOT fondly remember their sacrifice in the name of keeping the payments current, and give them any consideration at all when they are finally tapped out. The Lender simply won’t do that. Instead, they will put you down as swiftly as they can.
A huge number of the people we talk to are seeking loan modifications, or the blessing of the lender to sell their home at a loss (i.e., short sale). But they quickly find that the lender is NOT their ally in that effort. Rather, the lender will push a foreclosure through long before they will approve that short sale or modification being dangled before your eyes. What is that behavior, if not immoral?
Given the disarray in the lenders tracking of mortgages, in a great many cases they simply can’t demonstrate (with anything but forged documents) their right to sue you for foreclosure. But, if you don’t hire an attorney and fight them, you LOSE EVERYTHING.
All the most important things I know, I learned from my father. The first (and most important) thing is, you have to stand up and FIGHT for what you want. Lenders are depending on you not doing that.
Those who are among the 80 to 95% who don’t hire a lawyer and fight the lenders will find themselves among the first of the vanishing middle class to wake up one morning to discover that they (and their families) are on the wrong side of the Great American divide between the rich and the new poor.
Mortgage Foreclosure Terminology
Service of Process is the act of a process server, often a deputy sheriff, locating the defendant in a lawsuit, and personally presenting him or her with process papers, that is, a Summons and Complaint.
The Summons is a command from the Court to appear and answer the accusations in the Complaint, usually within 20 days in Florida.
The Complaint is the basic document which starts every lawsuit. It is a recitation of the facts (that is, the Plaintiff’s version of the facts), arranged in numbered paragraphs, which the Defendants, usually through their attorney, must admit or deny.
MERS is the abbreviation for Mortgage Electronic Registration System. MERS is an entity set up by the lending industry to facilitate the process of securitization, that is, turning your and my home mortgage into a security that can be bought and sold on the financial markets. More than anything else, securitization has crippled our economy and put millions of Americans in danger of losing their homes. Using MERS, the mortgage industry sought to avoid the cost of recording assignments of mortgages in the public records, and destroyed transparency in the relationship between borrowers and lenders. If your mortgage is a MERS mortgage, there may be defenses to foreclosure based on that fact alone.
RESPA is a federal consumer protection statute, the Real Estate Settlement Procedures Act. It required the use of the HUD-1 Settlement Statement in residential transactions, and certain procedures in the process of closing residential real estate transactions to protect you, the consumer.
TILA is another, even more important federal consumer protection statute, the Federal Truth in Lending Act, which requires certain disclosures to borrowers. While many of its require- ments are very technical, it is often critically important to protecting the interests of borrowers who find themselves in the mortgage foreclosure system.
FDCPA is a federal consumer protection statute, the Federal Debt Collection Practices Act which restricts the behavior of debt collectors.
