How to Stop a Foreclosure

Or Get a Cash Settlement Following Foreclosure

In 2014 most home foreclosures can be stopped, through a myriad of federal and state programs that have sprung up. Given that hundreds of thousands of families continue to lose their homes every month, it’s really sad how few Americans are aware of these programs. Clearly Wall Street banks and the corporate media don’t want struggling families to know about them.

Fix My Payment (www.fixmypayment.com) is a free website and advisory service for homeowners who have lost homes to foreclosure or who are currently struggling with mortgage payments.

Many of the mortgage relief programs listed on the Fix My Payment website stem from settlements the banking industry has made with the Department of Justice, the Federal Reserve, the Office of the Comptroller and various states following criminal indictment for predatory lending practices (i.e. banks sold subprime mortgages to low income borrowers they couldn’t possibly repay) and fraudulent so-called “robo-signing” foreclosures. Others are federal programs enacted in 2009 as part of the Obama administration’s recovery package.

Below are some specific programs:

1. Department of Justice Settlement with Ally/GMAC, Bank of America, Citigroup, JP Morgan Chase and Wells Fargo in predatory lending indictment

Homeowners (and foreclosed homeowners) with mortgages issued by any of the above banks are eligible for mortgage relief under the following conditions:

• Financial hardship ($17 billion available for principal reduction)
• Upside down mortgages in which the property is worth less than the mortgage loan ($3 billion in refinancing relief)
• Borrowers lost property to foreclosure between January 1, 2008 and December 31, 2011

2. Federal Reserve and Office of Comptroller settlement with Bank of America, Citigroup, Wells Fargo, JP Morgan Chase, Aurora Loan Services. MetLife Bank, PNC Financial Services Group, Sovereign Bank, SunTrust Banks and US Bancorp in wrongful “robo-signing” foreclosure indictment (i.e. banks foreclosed on homes without proof of legal title).

Borrowers with mortgages with the above banks are eligible for $3.3 billion in cash settlements if they have lost their home due to foreclosure and $5.2 billion in principal and/or interest reduction to existing mortgages (in cases of financial hardship).

3. Home Affordable Modification Program (HAMP)

Federal assistance the Obama administration enacted in 2009 providing financial incentives for banks and loan servicing companies to rewrite loan terms to help troubled borrowers (excludes mortgages owned or guaranteed by the government-sponsored enterprises Fannie Mae and Freddie Mac).

4. HAMP-VA, HAMP-FHA, HAMP-USDA

The above programs provide incentives for banks and loan servicing companies to write loan terms for mortgages guaranteed by the VA, the Federal Housing Administration or the US Department of Agriculture. (excludes mortgages owned or guaranteed by the government-sponsored enterprises Fannie Mae and Freddie Mac).

5. Housing Affordable Refinance Program (HARP)

Federal assistance the Obama administration enacted in 2009 providing financial incentives for banks and loan servicing companies to rewrite loan terms to help troubled borrowers with mortgages owned or guaranteed by the government-sponsored enterprises Fannie Mae and Freddie Mac.

6. Keep Your Home California (KYHC)

California residents are also eligible for four state programs:

• The Unemployment Mortgage Assistance Program – helps homeowners who are currently unemployed and receiving California EDD unemployment benefits.
• The Mortgage Reinstatement Assistance Program – helps homeowners who have fallen behind on their payments and need help in reinstating their loan.
• The Principal Reduction Program – helps homeowners who have experienced a financial hardship along with a drop in the home’s value.
• The Transition Assistance Program – provides relocation up to $5,000 in relocation funds to help eligible homeowners transition into a new housing situation after going through a deed-in-lieu or short sale.

Free Personal Assistance

In addition to the numerous options listed on their website, people can also phone (909) 937-2400  or visit a mortgage adviser (without charge) if they live in Los Angeles. In addition to recommending specific programs homeowerns can apply for, Fix My Payment customer service representatives seem to know exactly what documents to file to halt foreclosure proceedings.

The Non-Existent Recovery

Economists predict no end in sight to the present foreclosure crisis. Despite manipulation of the “official” unemployment rate by the Obama administration and the corporate media, the percentage of employed Americans of working age has flat lined. According to the Department of Labor’s own statistics, the percentage of American families in which no one has a job stands at 20%. The percentage of unemployed working age adults stands at 41%. Prior to the 2008 economic downturn, this figure had been stable at 35-37% for nearly a decade.

With the recent news that the US economy shrank by 2.9% in first quarter 2014, the potential for new job creation looks extremely bleak. The technical term for a shrinking economy is deflation. Deflation leads to a downward spiral. A shrinking economy means less money in circulation. Low demand forces retailers to reduce their prices, while consumers postpone purchases in anticipation prices will drop further. As sales continue to decline, companies lay off more workers, which makes finding new jobs even more difficult.

photo credit: JefferyTurner via photopin cc

Squatting 101

(Another post based on my research for A Rebel Comes of Age – with specific advice on how to stop your bank from foreclosing on you. A new ruling in US bankruptcy court means that roughly half the foreclosures which have occurred since 2008 are illegal.)

Squatting is becoming increasingly common with the worsening recession and continuing foreclosures and evictions. The foreclosure crisis has many US cities with whole blocks and neighborhoods of abandoned homes (which are quickly stripped of their plumbing and electrical fixtures). The problem turns out to be extremely expensive, both due to plummeting property values and tax take and higher crime rates and demand for (police and fire) services (see). Thus it’s no surprise that the city of San Diego recently sued Bank of America to stop foreclosures in their city. Prior to their recent bankruptcy proceedings, Detroit was paying people to move into abandoned homes.

The simplest form of squatting is remaining in your home when the bank or mortgage company tries to foreclose on your property. Owing to the recent scandal over illegal foreclosures, mortgagees who miss payments now have a range of legal options they can pursue (see * below).

Grassroots Remedies

Take Back the Land is a Miami-based social justice groups formed in 2006 with local action groups in New York, Boston, Chicago, Madison, Toledo, Portland, Rochester, Washington DC, Atlanta and other cities. Where they can use legal means, these local groups often organize “live-ins,” moving dozens of community activists into foreclosed homes to block evictions. In several cities, Take Back the Land activists work to rehouse homeless families in abandoned foreclosed homes. Volunteers break into the houses, clean, paint, make repairs and change the locks. Then they help move homeless families into them. More often than not, getting off the streets enables homeless parents to keep and find jobs, making it possible to pay rent and move into their own place.

Hands-Off Approach by Police and Banks

For the most part neither city police nor the banks that own the homes interfere. In Miami, for example, the city takes the position that it’s the responsibility of the bank to initiate eviction proceedings. The banks who own the homes seem even less keen to eject squatter than the police. In most states, this requires initiation of formal eviction proceedings in court. Moreover banks know full well that perpetually vacant homes eventually become worthless, due to vandalism, and have to be demolished (at additional cost to the owner).

Meanwhile neighbors concerned about their property values are ecstatic to see foreclosed homes occupied and fixed up (even by squatters), as abandoned property is a magnet  for vandalism, prostitution, drug and gang activity and fires (see and)

In addition to the good work of Take Back the Land and affiliate groups, in many places homeless families are occupying foreclosed properties on their own.

The Law of Adverse Position

Things get really interesting when homeless families occupy abandoned property for five years or more (longer in some states) and attempt to claim title (ownership) under Adverse Possession laws claim title (ownership) under Adverse Possession laws. It has also opened up a lucrative market for ambitious entrepreneurs who fix up abandoned properties and rent them out to tenants. In December 2010 Mark Guerette, the owner of Saving Florida Homes, Inc pleaded no contest second degree fraud for renting out 100 foreclosed properties.

It turns out that Gurette notified all the banks who owned the vacant the homes that he was claiming them under adverse possession – and only received a response from two of them. Owing to the banks’ disinterest, the state of Florida couldn’t really charge him with trespassing. They could only charge him with fraud by finding tenants willing to testify that he had misled them. All his rental agreements included an addendum explaining that he was occupying the property via “adverse possession.” So he ended up with a slap on the wrist – two years probation and a court order not to file any “adverse possession” claims for two years.

The 1862 Homestead Act

The legal principle of “adverse possession” – the origin of the expression “possession is nine tenths of the law” – is recognized in most cultures. In the US, its basis in law dates back to the Homestead Act Abraham Lincoln signed into law in May 1862. The Act stipulated that anyone “improving” unoccupied land could fill out an application and file for a deed of title after five years. The law was abolished in 1976, except in Alaska which continued a state version of the Homestead Act until 1986.

Nevertheless common law and most states provide for a person to obtain land through use. For example, your neighbor puts a driveway between your homes to enable him to get to the rear of his property. In doing so he takes a strip of your property six feet wide. If you do nothing, your neighbor could end up owning that part of your property. In failing to challenge your neighbor with a lawsuit, you technically abandon the rights to your property. This is the foundation of adverse possession. One feature that makes squatting on foreclosure home so attractive is that it falls under civil law, rather than criminal, law. Unless you break in or damage the property in some way, the police can’t file criminal charges. Moreover the rightful homeowner has to go through a formal eviction, which can be very expensive, to get rid of squatters.

In Florida, Take Back the Land and individual squatters are utilizing an 1869 statute that says if a person takes a property (and pays property tax) and the owner does not claim the property for seven years, the squatter gets to keep the property. With the damage done to vacant homes by vandals, improving the property usually means fixing the fences, cutting the grass and repairing broken windows and doors. Requirements differ in other states, although all require you to occupy the property openly and make improvements to it. California, Nevada and Iowa are the most favorable states for squatting as they only require you to occupy property (and pay property tax) for five years before applying for a deed of title.

* Legal remedies against foreclosure:

1. MERS foreclosures

A US bankruptcy court and many states have ruled that roughly half of US mortgages are illegal and that tens of thousands of foreclosures have been fraudulently executed by Wells Fargo, J P Morgan Chase, Bank of America (and other banks), Fannie Mae.

Prior to the 2008 meltdown, mortgages were traded and changed hands so frequently that banks simply registered them with the Mortgage Electronic Recording Service (MERS), rather than executing a title transfer. State lending laws specify that only that actual owner of a mortgage can initiate foreclosure action. In many cases banks are filing fraudulent court documents alleging that they own the loans, when they are merely servicing them on behalf of the lender.

Home owners threatened with foreclosure need to immediately do a Securitization Audit to determine who actually owns the mortgage and deed (and is legally entitled to foreclose).

2. Predatory mortgage loans

Mortgagees victimized by predatory mortgage loans (tricked into accepting mortgages they can’t possibly repay) can request Forensic Loan Document Review. There are federal laws that protect against predatory lending, which you can use to force the bank to negotiate.

3. Fraudulent mortgage charges

Also Bank of America was caught in a related scam in which they were adding backdated insurance charges to mortgage payments to push mortgagees who missed payments into foreclosure. This means it’s essential to check your mortgage statement for unexplained charges.

4. Chapter 13 bankruptcy

Families may be able to save their homes from foreclosure by filing for Chapter 13 bankruptcy.

photo credit: gruntzooki via photopin cc

***

In A Rebel Comes of Age, seventeen-year-old Angela Jones and four other homeless teenagers occupy a vacant commercial building owned by Bank of America. The adventure turns deadly serious when the bank obtains a court order evicting them. Ange faces the most serious crisis of her life when the other residents decide to use firearms against the police SWAT team.

$3.99 ebook available (in all formats) from Smashwords:

https://www.smashwords.com/books/view/361351