Alabama Consumer Law Blog

The mortgage companies want it to be. Right now Florida, unlike Alabama, is a judicial foreclosure state which means the mortgage companies and banks that want to foreclose have to prove their case in court. They don't like to do this. Because they usually can't. Here's what a friend of ours in Florida, Chip Parker, says in a scathing blog post about efforts in Florida to turn the foreclosure process into a non judicial one:

As a Florida foreclosure defense attorney with over 500 actively defended foreclosure cases, I believe the banks have “thrown in the towel” in the cases I’m defending. I cannot recall the last time the plaintiff in a foreclosure case came to a court hearing with an intelligent argument that resulted in a ruling against the homeowner.

Since the plaintiffs rely on fraud in almost every foreclosure case, good defense lawyers are always frequency-tuned to find the lies, and now that Circuit Court judges have been exposed to the stench of foreclosure mill pleadings, more judges are looking at each foreclosure with more skepticism.

We in Alabama who face foreclosures that quickly proceed through the Three Stages Of Foreclosure often look at Florida with some envy since the courts at least get to review the foreclosures. We did not expect that to change but it seems the mortgage companies want to change the rules since they are not winning under the current rules.

If you live in Florida and are reading this - let your representatives know you oppose this non sense.

If you live in Alabama and are facing foreclosure, make sure you stand up for your rights and fight back against wrongful foreclosure. We don't have judicial review unless you take your case to court to stop wrongful foreclosures.

Our tele seminar on Wrongful Foreclosure In Alabama happened last month and if you live in Alabama and would like the audio let us know. We are getting a transcript but don't have it typed up yet.

Also if you have already been foreclosed and are facing an Ejectment Action in Alabama, on Tuesday February 9, 2010 we are offering an hour long tele seminar on the Five Critical Mistakes Often Made When Sued For Ejectment In Alabama. This is free and you can contact us to let us know you want to be on the call.

You can also sign up for our free email newsletter sent out every Thursday morning - we cover topics such as the one in this post. We would love to include you! Just fill out the form below:

Feel free to contact us through our website or you can call us at 205-879-2447.

The CL&P Blog has posted an article about a study that links medical issues to a large number of foreclosures. The numbers of foreclosures have been on the rise in the past few years; roughly one in every ninety-two households face it. This is partly due to "typical" reasons we often associate with foreclosure such as rising interest rates, irresponsible borrowers, loose lenders and a bad real estate market.

However, the study found that foreclosures due to medical issues make up a very large, and previously unaccounted for, percentage.

Half of all respondents (49%) indicated that their foreclosure was caused in part by a medical problem, including illness or injuries (32%), unmanageable medical bills (23%), lost work due to a medical problem (27%), or caring for sick family members (14%). We also examined objective indicia of medical disruptions in the previous two years, including those respondents paying more than $2,000 of medical bills out of pocket (37%), those losing two or more weeks of work because of injury or illness (30%), those currently disabled and unable to work (8%), and those who used their home equity to pay medical bills (13%). Altogether, seven in ten respondents (69%) reported at least one of these factors.

If you are facing foreclosure in Alabama and would like more information, please read our articles The Three Stages of Foreclosure in Alabama and Wrongful Foreclosure in Alabama.

Feel free to contact us through our website or by calling 205-879-2447.

Also remember you are invited to our free tele seminar on Alabama Wrongful Foreclosures set for January 19, 2010, at 4 pm CST.

You can also sign up for our free email newsletter sent out every Thursday morning - we cover topics such as the one in this post. We would love to include you! Just fill out the form below:

The Birmingham Business Journal has posted an article about the decline of Birmingham-area home sales in 2009.

In 2009, nearly 10,600 homes were sold as opposed to the 12,454 homes sold in 2008. Foreclosures accounted for 31% of December home sales. The 31% is up from 25% in October and 30% in November .

Averages prices also fell 8% to $173,065 and median price dropped 5% to $146,300.

In December, the association said sales dropped 4 percent to 765 from 798 in the same month a year ago, while average price increased 7 percent to $187,689 and median rose 8 percent to $150,500.

If you are facing foreclosure in Alabama and have questions, you might want to read our articles about The Three Stages of Foreclosure in Alabama and Wrongful Foreclosures in Alabama.

Feel free to contact us through our website or by calling 205-879-2447.

Also remember you are invited to our free tele seminar on Alabama Wrongful Foreclosures set for January 19, 2010, at 4 pm CST.

You can also sign up for our free email newsletter sent out every Thursday morning - we cover topics such as the one in this post. We would love to include you! Just fill out the form below:

Craig D. Robbins writes an interesting article on his blog entitled "Judges Have Had It with Foreclosing Mortgage Companies Who Skirt the Rules" which we strongly suggest you read.

We won't quote from his blog post as I really want you to read it - good stuff and the related posts are excellent as well.

If you are facing foreclosure issues in Alabama, you may want to read our detailed discussion of Wrongful Foreclosures In Alabama and our overview of the Three Stages Of Foreclosure In Alabama.

Feel free to contact us through our website or you can call us at 205-879-2447.

You can also sign up for our free email newsletter sent out every Thursday morning - we cover topics such as the one in this post. We would love to include you! Just fill out the form below:

Also remember you are invited to our free tele seminar on Alabama Wrongful Foreclosures set for January 19, 2010, at 4 pm CST.

Business and banks and mortgage companies are quick to condemn Americans who decide that they are so upside down (owe more than the house is worth) that they will just walk away from the house and allow the mortgage company to foreclose.

This raises two issues.

First, is it right to walk away?

Second, are mortgage companies and banks being hypocritical for condemning homeowners who do this but not themselves when they do it?

On the first issue the answer is there is nothing morally wrong with walking away. That was contemplated in the contract - if the homeowner does not pay the mortgage company gets to foreclose. Consequences flow from this - credit report damage, perhaps being sued for any deficiency, etc. But a choice can be made and it is not unexpected given that lenders made outrageous loans to people who are so upside down it may take decades to get back to even.

On the second issue - the hypocrisy is amazing and disturbing. A recent article in the New York Times by Robert Lowenstein explores this issue. Read the whole article but here are a few fascinating quotes from the article:

Businesses — in particular Wall Street banks — make such calculations routinely. Morgan Stanley recently decided to stop making payments on five San Francisco office buildings. A Morgan Stanley fund purchased the buildings at the height of the boom, and their value has plunged. Nobody has said Morgan Stanley is immoral — perhaps because no one assumed it was moral to begin with. But the average American, as if sprung from some Franklinesque mythology, is supposed to honor his debts, or so says the mortgage industry as well as government officials. Former Treasury Secretary Henry M. Paulson Jr. declared that “any homeowner who can afford his mortgage payment but chooses to walk away from an underwater property is simply a speculator — and one who is not honoring his obligation.” (Paulson presumably was not so censorious of speculation during his 32-year career at Goldman Sachs.)

Think of private-equity firms that close a factory — essentially deciding that the company is worth more dead than alive. Or the New York Yankees and their World Series M.V.P. Hideki Matsui, who parted company as soon as the cheering stopped. Or money-losing hedge-fund managers: rather than try to earn back their investors’ lost capital, they start new funds so they can rake in fresh incentives. Sam Zell, a billionaire, let the Tribune Company, which he had previously acquired, file for bankruptcy. Indeed, the owners of any company that defaults on bonds and chooses to let the company fail rather than invest more capital in it are practicing “strategic default.” Banks signal their complicity with this ethos when they send new credit cards to people who failed to stay current on old ones.

Foreclosures are proceeding at a brisk pace in Alabama and throughout the country. I have not yet met a client that voluntarily allowed the three stages of foreclosure to occur but it is hard to fault someone if they do and certainly we don't need the hypocrisy of Wall Street banks who say "Do as we say, not as we do"......

If you have questions about wrongful foreclosures in Alabama, feel free to contact us through our website or you can call us at 205-879-2447.

You can also sign up for our free email newsletter sent out every Thursday morning - we cover topics such as the one in this post. We would love to include you! Just fill out the form below:

Also remember you are invited to our free tele seminar on Alabama Wrongful Foreclosures set for January 19, 2010, at 4 pm CST.

We are often asked questions such as "Why are you guys consumer protection lawyers" or "what is a consumer protection attorney" and we wrote an article on our website to help answer these types of questions. We hope it is helpful to you and let us know if you have any questions - either contact us through our website or call us at 205-879-2447.

You can also sign up for our free email newsletter sent out every Thursday morning - we cover topics such as the one in this post. We would love to include you! Just fill out the form below:

Also remember you are invited to our free tele seminar on Alabama Wrongful Foreclosures set for January 19, 2010, at 4 pm CST.

We are holding a tele-seminar on Tuesday January 19th at 4pm CST to discuss issues related to Alabama foreclosures. We will cover the three stages of foreclosures in Alabama and we will go indepth into the issues we laid out in our article on Wrongful Foreclosures In Alabama.

We previously held several in person seminars but we have decided to do it by phone to make it more convenient as you can attend from the privacy of your own home or office or car (stay warm!).

This is designed to give you insight into what your options are if you are facing foreclosure or have already been foreclosed upon by your mortgage company. Very often you have a valid lawsuit or counterclaim against the mortgage company, trustee, or servicer and this tele-seminar will give you some ideas and will help you to take the necessary action to protect your home.

We will also discuss bankruptcy as an option (sometimes it is a good option but often it is better to sue) to stop a wrongful foreclosure.

While you don't have to live in Alabama to attend this seminar, it is focused on Alabama law and will be most helpful to folks living in Alabama.

We look forward to having you on the call - fill out this form below and we will send you the details such as the call in number and password to use to join the call.

If you would rather call us instead of filling out this form that is fine - please call us at 205-879-2447.

We hear a lot of discussion about "foreclosures in Alabama" but this can mean different things to different people. Part of the reason is that when someone is "facing foreclosure" this can mean that the mortgage company or servicing company is threatening foreclosure, or has already foreclosed, or has sued the consumer to evict them from their home.

So we decided to write an article on these three stages of foreclosure in Alabama on our main website.

We hope it is helpful to you, along with our detailed discussion of wrongful foreclosures in Alabama.

Please contact us through our website or by calling us at 205-879-2447 if you have any questions about your situation in Alabama regardless of which stage you are in.

You can also sign up for our free email newsletter sent out every Thursday morning - we cover topics such as the one in this post. We would love to include you! Just fill out the form below:

Also remember you are invited to our free tele seminar on Alabama Wrongful Foreclosures set for January 19, 2010, at 4 pm CST.

On our main website Alabamaconsumer.com we have a new article that will give you what we trust is a helpful detailed discussion of the law on wrongful foreclosures in Alabama.

Here are some of the topic headings from the article:

I'M NOT SURE I UNDERSTAND ALL OF THE TERMS USED IN FORECLOSURES - CAN YOU DEFINE SOME OF THE WORDS FOR ME?

WHAT ARE THE CONSEQUENCES OF A FORECLOSURE?

IS ALABAMA A JUDICIAL OR NON-JUDICIAL FORECLOSURE STATE AND WHAT IS THE DIFFERENCE?

HOW DOES A NON-JUDICIAL FORECLOSURE HAPPEN IN ALABAMA?

WHAT IS A MORTGAGE SERVICER?

SO A "TRUST" NORMALLY OWNS MY LOAN?

WHAT IS SECURITIZATION AND WHAT DOES IT MEAN FOR ME FACING FORECLOSURE?

I HAVE HEARD OF THE "SHOW ME THE NOTE" OR "LOST NOTE" APPROACH - WHAT IS THAT AND CAN IT HELP ME?

WHAT IS "MERS" AND DOES THIS GIVE ME ANY HELP IN FIGHTING BACK AGAINST A FORECLOSURE?

WHAT ABOUT FORECLOSURE RESCUE COMPANIES THAT I HAVE RECEIVED LETTERS ON OR I SEE ON SIGNS ON TELEPHONE POLES OR ON THE INTERNET?

OK I UNDERSTAND ALL OF THIS - BUT TALK TO ME ABOUT SOME EXAMPLES OF HOW THE FORECLOSURE PROCESS ITSELF CAN BE FLAWED SO THAT I CAN FIGHT BACK.

I'VE HEARD ABOUT ILLEGAL CHARGES THAT CAN GIVE ME OPTIONS IN FIGHTING A WRONGFUL FORECLOSURE - TALK TO ME ABOUT THESE

WHAT ARE SOME EXAMPLES OF FRAUD THAT YOU HAVE SUED COMPANIES FOR?

WHEN CAN I RESCIND A LOAN FOR VIOLATIONS OF FEDERAL LAW?

WHAT IS THE COST TO MEET WITH YOU?

IF I WANT TO HIRE YOU WHAT TYPE OF FEE WILL I BE PAYING?

We hope you find this article helpful - please let us know any questions or suggestions that you might have. If you live in Alabama and want to meet or consult with us, feel free to call us at 205-879-2447 or contact us through our website. We look forward to hearing from you....

We also have new article on the three stages of foreclosure in Alabama that we hope will be helpful to you.

Also remember you are invited to our free tele seminar on Alabama Wrongful Foreclosures set for January 19, 2010, at 4 pm CST.

You can also sign up for our free email newsletter sent out every Thursday morning - we cover topics such as the one in this post. We would love to include you! Just fill out the form below:

We want to let you know about some of the recent cases we have been involved in, particularly where we have filed lawsuits against companies for abusing consumers in Alabama.

Let us know if you have any questions - you can call us at 205-879-2447 or fill out our contact form on our website.

We filed a wrongful foreclosure case for our client who was sued for ejectment by a trustee. In this case the mortgage company foreclosed on our client and then sued him to kick him out of his house. Since the foreclosure, we believe, was improper, we countersued against Deutsche Bank National Trust Company, which is the trustee of this securitized loan. We also believe that the loan was never properly transferred into the trust which claims that it owns the loan - if this is true then the company foreclosing had no more right to foreclose on our client than you or I would. It will be interesting to see what develops in this case where we have alleged fraud (related to a loan modification) and wrongful foreclosure against Deutsche Bank National Trust and the servicer American Home Mortgage Servicing, Inc.

[Also remember you are invited to our free tele seminar on Alabama Wrongful Foreclosures set for January 19, 2010, at 4 pm CST.]

Illegal voicemail cases are very common because it is probably the most common form of violation of federal law.

We sued Leading Edge Recovery Solutions, LLC. Our client has alleged that Leading Edge Recovery Solutions, LLC violated the Telephone Consumer Protection Act (TCPA) by making illegal calls to our client's cell phone with pre-recorded messages. These are the messages that are left by a computer rather than a live human being. Normally these calls are made by an "auto dialer" which is a computer or telephone system that automatically places the calls. This is when you get a call and the voice says "Please hold for the next operator" - a sure sign that a computer has called and now it is searching for the next operator who is free to transfer your call to. In this suit our client has alleged that Leading Edge Recovery, Solutions, LLC also made an illegal third party disclosure to the client's father.

Another illegal voicemail case involves Enhanced Recovery Corporation out of Florida. Our client alleged that this debt collector violated the Fair Debt Collection Practices Act (FDCPA) by refusing to give the proper disclosures when leaving voicemails, including failing to leave the Mini-Miranda ("this is an attempt to collect a debt" and "we are a debt collector").

In a case filed against The Brachfeld (a/k/a Brachfield) Law Group d/b/a Brachfeld & Associates, PC, a California lawfirm and collection agency, our client alleged that this debt collector violated the TCPA by making a large number of harassing illegal calls to our client's cell phone. The calls, as is common among debt collectors, used pre-recorded messages and were most likely made with the use of an autodialer or predictive dialer.

We filed an additional lawsuit against Brachfeld Law Group (Brachfeld & Associates, PC) for repeated calls without permission to the consumer's cell phone using an autodialer and pre-recorded messages. This alleged conduct would violate the TCPA and state law on harassment and invasion of privacy.

A second case against Leading Edge Recovery Solutions, LLC, out of Illinois, was filed by a client alleging, again, that this debt collector illegally used prerecorded messages and/or predictive/autodialers when calling the client's cell phone. The allegations include that this violates the TCPA.

Harvard Collection Services, Inc., a collection agency out of Illinois, was sued by a client for alleged violations of the FDCPA and the TCPA in the multiple calls to the client's cell phone looking for someone other than the client. It violates the FDCPA to call a "third party" (anyone other than the consumer who allegedly owes the money) after the third party has said they will not or cannot provide location information to the collector. The complaint alleges that the bill collector used pre-recorded messages and/or autodialer calls against the cell phone of the client.

ARS National Services, Inc, a collection agency out of California, was sued by a client claiming that this debt collector violated the FDCPA by refusing to make the proper disclosures when leaving voicemail messages. It is critical that debt collectors comply with this portion of the law - making disclosures - in whatever form they choose to attempt to collect the debt. They do run the risk, however, of violating the prohibition against third party disclosures when they leave voicemails. While the debt collection industry wrings it hands over this "tough situation" of which law to violate (disclosure laws or third party laws) the courts have provided a simple and elegant solution - don't leave voicemails. Collect debts without leaving voicemails - there is no God given right to leave a voicemail despite what many collectors would argue....

A Florida collection agency known as Omni Credit Services of Florida, Inc., was sued by a client for violating the FDCPA in the voicemails left which did not contain the proper disclosures, including the Mini Miranda.

J.C. Christensen & Associates, Inc., a Minnesota collection agency, was sued by a client alleging that illegal voicemails were left which violated the FDCPA. The voicemails did not contain the Mini Miranda or other required disclosures according to the lawsuit filed against J.C. Christensen & Associates, Inc.

A client also sued a company that we have sued a number of times - a debt collector from New York known as Creditors Interchange Receivable Management, LLC. This company allegedly called our clients numerous times on the consumer's cell phone using an autodialer and pre-recorded messages. The consumer alleges he never gave Creditors Interchange or the original creditor the cell phone number and therefore the calls were illegal under the TCPA.

Third party disclosure cases reveal common violations by debt collectors. They love to contact people other than the consumer (or consumer's spouse) because having your boss or parent or neighbor or ex-mother in law call you after being contacted by a debt collector is very intimidating.

Our client sued Viking Collection Service, Inc., a collection agency out of Minnesota, for allegedly repeatedly calling our client's parent even after the parent told the collector the consumer did not live there. In our opinion this type of misconduct violates the FDCPA and Alabama law on privacy - this is known as an "Invasion of Privacy" claim in Alabama.

The Pennsylvania debt collector Academy Collection Service, Inc., was sued by a client for its collection activities. The client alleges that Academy Collection Service, Inc. made third party disclosures to someone other than the client in violation of the FDCPA and Alabama state law.

Fair Credit Reporting Act cases deal with the important subject of our credit reports and inaccuracies that either the credit reporting agencies (Equifax, Experian, Innovis, and Trans Union) or furnishers (such as Bank of America, Discover Card, Capital One, etc) refuse to correct.

A client sued GEMB (GE Money Bank - this bank is behind many store and gas cards), Equifax Information Services, Inc., Trans Union, LLC, and Innovis Data Solutions, Inc. for refusing to correct the client's credit reports. An account that was opened four years before the client was born was reported as the client's individual account! The allegations include that the client disputed the account directly to the credit reporting agencies (Equifax, Innovis, and TransUnion) and after they investigated it and notified GEMB so it could investigate the dispute, all of the defendants decided to keep this account on the consumer's credit reports. The allegations include that the defendants violated the FCRA and Alabama state law.

We will keep you posted on new suits that we file and will continue to look back at some of the suits we filed in 2009 to give you an idea of what your options may be and what to look out for when dealing with these types of consumer issues.

Feel free to visit our other sites - Illegal Voicemails and Sued By A Debt Collector.

You can also sign up for our free email newsletter sent out every Thursday morning - we cover topics such as the one in this post. We would love to include you! Just fill out the form below:

Attorney Benny Kass has an interesting article in the Washington Post about defenses to foreclosures that we recommend you read.

Read the entire article (where he answers a question about foreclosure defenses) but here are some of the highlights:

-- Active military duty. If you are on active duty, you have the right to have the foreclosure determined by a court instead of losing your home through a non-judicial sale at an auctioneer's office. The judge must postpone the process for up to nine months if you formally request that. Discuss your rights with your commander and with the judge advocate general where you are stationed.

-- Fair Debt Collection Practices Act. Typically, the lender's attorney will start the process by sending you a notice of foreclosure. That notice must contain language advising you that it is an attempt to collect a debt. If, within 30 days of receiving that letter, you question the amount claimed to be owed, the attorney is legally obligated to provide you more details as to how the amount was calculated.

-- Errors. Once you have received the verification, review it carefully. Lenders and their computers do make mistakes. Have all your payments been credited? Are the late fees consistent with the terms in your promissory note?

-- Force-placed insurance. Lenders properly require that you carry adequate homeowners insurance. In case of a fire or other damage to your house, the lender needs to know there will be insurance coverage either to repair the property or to pay down the outstanding mortgage loan. If your insurance is canceled, lenders will obtain a policy for you, and this is called "force-placed" coverage. Typically, the cost of this insurance is astronomical. Review the loan verification documents you receive from the attorney. Is there a charge for this insurance, and is it valid? If your lender has been escrowing for taxes and insurance, the lender was required to pay the annual insurance premium. Accordingly, you should not be charged for any additional insurance.

-- Escrow for taxes. We all have heard horror stories about lenders that did not pay the real estate tax, despite the fact that they were escrowing money monthly, or that paid the tax late and the borrower was charged the penalty and additional interest. Again, check to see whether this happened to you.

-- Truth in Lending Act. The lending law requires lenders to make certain disclosures to you before you sign the mortgage documents. Under certain conditions, you have the right to completely rescind the transaction. You should have received all of the documents you signed when you went to settlement. If not, ask the settlement lawyer or title company to immediately send you a complete copy of your settlement file. Review it carefully, though this is a technical law and your attorney should be consulted for advice.

Thanks to the Washington Post and Benny Kass for writing this very timely and important article.

If you live in Alabama and have questions about foreclosure issues, feel free to call us at 205-879-2447 or contact us through our website.

You can also sign up for our free email newsletter sent out every Thursday morning - we cover topics such as the one in this post. We would love to include you! Just fill out the form below:

Donna St. George of the Washington Post has a tragic story (with a slight happy ending) about a woman who made $15,000 a year being given a loan for a $700,000 house with over $5000 a month payments.

The story contains: foreclosure, fraud, ignoring warnings, promises, dreams of wealth, hitting rock bottom, and more.

I don't want to say any more about it - just read this story. The writing is excellent - the story is compelling - and you will get a taste for what the real estate boom (aided by or caused by fraud) did and is doing to real people.

You can also sign up for our free email newsletter sent out every Thursday morning - we cover topics such as the one in this post. We would love to include you! Just fill out the form below:

The New York Times discusses a trend that is helpful to individual consumers but perhaps not so helpful to the rest of us: Debt buyers buy up blocks of defaulted mortgages, offer to reduce the amount owed by individual consumers, and then get the government to back the loans.

As millions of Americans struggle to hold on to their homes, Wall Street has found a way to make money from the mortgage mess.

Investment funds are buying billions of dollars’ worth of home loans, discounted from the loans’ original value. Then, in what might seem an act of charity, the funds are helping homeowners by reducing the size of the loans.

But as part of these deals, the mortgages are being refinanced through lenders that work with government agencies like the Federal Housing Administration. This enables the funds to pocket sizable profits by reselling new, government-insured loans to other federal agencies, which then bundle the mortgages into securities for sale to investors.

While homeowners save money, the arrangement shifts nearly all the risk for the loans to the federal government — and, ultimately, taxpayers — at a time when Americans are falling behind on their mortgage payments in record numbers.

This is a good summary of this intriguing practice:

It is too early to know how the new loans will work.

David H. Stevens, the new commissioner of the F.H.A., said he was monitoring F.H.A. lenders but did not have thorough information about which ones work with distressed investors. So far he has not seen a problem from loans coming from hedge funds.

“They’re helping to protect people in their homes and they’re refinancing people from a distressed situation,” he said.

But he acknowledged that funds have an incentive to aggressively push homeowners into federally guaranteed loans, since the investors get their money back as soon as they complete the refinancing.

If you are presented with this opportunity, or any opportunity to modify your loan, its always a good idea to make sure that whatever the modification is you can live with it or otherwise you are just delaying the inevitable.

We'll keep you posted on this new approach that debt buyers are using.

If you live in Alabama and would like to discuss your experience with mortgage companies or debt buyers or if you are or have faced foreclosure, feel free to let us know and we'll be glad to meet with you to discuss your legal options. Foreclosure is a frightening process but having information can help take some of the fear away as you learn more about your options.

You can also sign up for our free email newsletter sent out every Thursday morning - we cover topics such as the one in this post. We would love to include you! Just fill out the form below:

A question that is starting to be asked in the mortgage context (and one that has been often asked in the credit card arena) is whether a debt buyer who buys a mortgage loan from a defunct mortgage company can collect the entire amount of the loan or is the debt buyer limited to the amount paid.

The general answer is if it is a legitimate purchase and the new "owner" can prove it owns the debt, then the new owner is entitled to the full amount. There are serious questions about many mortgage loans and who owns them but we'll address that at another time.

Here are some excerpts from an interesting article discussing this issue of how much the debt buyer can collect:

The purchaser "steps into the shoes of the original lender and is entitled to enforce all of the lender's rights and borrower's obligations under the loan," Marsh explains. "The amount paid by the purchaser is irrelevant" in this process. The issue has reemerged with force in Marsh's home state of Georgia, where a slew of bank failures has occurred, putting FDIC back in the business of selling off assets at a discount. Marsh has represented some of the buyers.

"Most longtime loan buyers have had this type of windfall and are in business to continue to do so," says Patrick Blount, president of Benewolf, a loan management firm based in Guthrie, Okla. "This is the primary reason for buying loans."

So if a new company has bought your loan then they have the right to collect on it but as we have seen with credit card debt purchases, the new company must prove that not only do you owe the debt but that it owns the debt.....

If you live in Alabama and would like to discuss your experience with mortgage companies or if you are or have faced foreclosure, feel free to let us know and we'll be glad to meet with you to discuss your legal options.

You can also sign up for our free email newsletter sent out every Thursday morning - we cover topics such as the one in this post. We would love to include you! Just fill out the form below:

Here's a great quote from the Federal Reserve that sums it all up:

“The rules by which servicers are reimbursed for expenses may provide a perverse incentive to foreclose rather than modify,” concluded a recent paper published by the Federal Reserve Bank of Boston.

A New York Times article lays out more details:

Mortgage companies, some of which are affiliated with the nation’s largest banks, are paid to manage pools of loans owned by investors. The companies typically collect a percentage of the value of the loans they service. They extract their share regardless of whether borrowers are current on their payments. Indeed, their percentage often increases on delinquent loans.

Legal experts say the opportunities for additional revenue in delinquency are considerable, confronting mortgage companies with a conflict between their own financial interest in collecting fees and their responsibility to recoup money for investors who own most mortgages.

Of course, the banks deny they would ever do anything improper. Recent conduct proves this point - or does it disprove it? We'll leave it to the kind reader to determine this yourself. Here is the claim by the banks:

Bank of America disputed that characterization. “To think that somehow or other we would jeopardize investor relationships and customer relationships for the very small incremental income we would receive by delaying seems ludicrous,” said Robert V. James, the bank’s senior vice president for mortgage operations and insurance. “It’s not the right thing to do.”

Great to see that Bank of America is guided by "the right thing to do" - this will be comforting to many people.....

This helps answer that question of why do mortgage companies not care if my home goes into foreclosure and is sold for less than the loan - because the mortgage companies generally don't own the debt so they don't care - all they care about are their junk fees and bogus expenses they can charge.

If you live in Alabama and would like to discuss your experience with mortgage companies or if you are or have faced foreclosure, feel free to let us know and we'll be glad to meet with you to discuss your legal options.

You can also sign up for our free email newsletter sent out every Thursday morning - we cover topics such as the one in this post. We would love to include you! Just fill out the form below:

Here is a fascinating story about an outraged judge who sanctioned a mortgage company by destroying the note and ruling that the homeowners do not owe any more money.

[Judge] Spinner excoriated OneWest for repeatedly refusing to work out a deal, for misleading him about the dollar amounts at stake in the case, and for its treatment of the couple over months of hearings.

OneWest's conduct was "inequitable, unconscionable, vexatious and opprobrious," Spinner wrote.

He canceled the debt because the bank "must be appropriately sanctioned so as to deter it from imposing further mortifying abuse against [the couple]."

The bank is involved in a similar case in California, where it's trying to foreclose on an 89-year-old woman, despite two court orders telling it to stop.

We expect more rulings along these lines to come down as the spotlight is directly on these mortgage companies that took government money and then use unfair means to try and take homes away from families.

We'll keep you posted.

If you live in Alabama and are facing foreclosure or fraudulent conduct by a mortgage company, please feel free to contact us for more information on your rights.

You can also sign up for our free email newsletter sent out every Thursday morning - we cover topics such as the one in this post. We would love to include you! Just fill out the form below:

Max Garnder, III, has an excellent article on some of the abuses that servicers inflict upon consumers who are in a Chapter 13 bankruptcy that we suggest you carefully read.

This is an entertaining and informative article by Max and you can get a taste of it from the first paragraph:

Wayne Gretzky once said that his success was due to the fact that he focused on where the puck was going to be, not where it was. For most consumer debtors who have home mortgage loans and are involved in Chapter 13 bankruptcy cases, this Gretzkyism is somewhat of a double entendre. The fact of the matter is that most of these debtors have no idea who really owns their home mortgage loan and they most assuredly do not know why the balance owed keeps going up. Or, as Yogi Berra might say, these “guys have been double-pucked!”

Read this article if you are interested in securitization and what it means for consumers in a Chapter 13 bankruptcy....and even if you are not in a bankruptcy, you will find useful nuggets as well....

If you live in Alabama and would like to talk with us about this issue, or foreclosures, or any other issue, please feel free to call us at 205-879-2447 or fill out our inquiry form on our website.

You can also sign up for our free email newsletter sent out every Thursday morning - we cover topics such as the one in this post. We would love to include you! Just fill out the form below:

One issue that comes up in almost all Alabama foreclosures is whether the loan (the note) has been held by the original bank or mortgage company or instead if it has entered the somewhat mysterious world of mortgage back securitization?

We begin a series on this issue today and will add original posts and also newsworthy items to this "category" on our blog.

So, what in the world is "securitization" and what does it mean to me? In this post we will start to answer the first part of this question - what is it - and in future posts we will get to the personal part which is what does it mean to me....

Here is a basic definition that will work for us.

Securitization is when a large number of assets (for examples home loans) are bundled or "pooled" together into a separate legal entity which then sells investments (or securities) to investors who put money into this separate legal entity.

So here's an example to start to put all of this in context.

A local bank could loan you the money to buy a house. You would sign a "note" which lays out the terms of the loan (30 years, 6 % interest, $150,000, etc) and the bank would keep that note. Every month you made your payment the bank would make its return on the loan - the interest payments.

But if you missed a payment, the local bank would miss that money coming in that month. If you went into foreclosure the bank would own the house instead of getting its payments.

If the bank asked Joe Blow to invest in this loan, he would have the same risks and limitations that the bank had. That is, long term (30 years) with the possibility that the loan would not be paid off. Not a very liquid investment.

So, here is where securitization comes into play. An investor does not invest directly into the loans but instead into the separate legal entity which is normally a trust established under New York law.

OK, what difference does this make? Here's the deal. The trust will have hundreds or thousands of residential loans. The trust will also make different investment options available. Maybe you want a higher rate of return and are willing to take on a higher risk? You can invest that way. Maybe you want a short term investment - that's available. Maybe you want to be very safe in your investment - supposedly the trust will allow you do this. All of these options are available even though the trust is full of 30 year - fixed 6% - $150,000 loans.

So going back to the original loan - that loan is normally immediately sold to the trust so the bank that you borrowed the money from does not own the loan. The trust does. Or supposedly it does.

We will pick up on some of the implications of securitization in future posts but for now we wanted for all of us to be on the same page as to what it means to have a loan that is involved in the securitization process.

If you live in Alabama and would like to talk with us about this issue or any other issue, please feel free to call us at 205-879-2447 or fill out our inquiry form on our website.

You can also sign up for our free email newsletter sent out every Thursday morning - we cover topics such as the one in this post. We would love to include you! Just fill out the form below:

We wanted to give Alabama consumers who are facing foreclosure some examples of typical fraud in the context of foreclosures and loan modifications.

We'll start with loan modifications. A loan modification is typically defined as a permanent change to your note - normally the interest rate, length of the loan, the movement of arrearage (missed payments) to the end of the loan, etc.

Normally the mortgage servicers will talk with you about a loan modification once you start falling behind on your payments. They will also be threatening foreclosure. You need to think of these as two independent trains - whichever reaches the station first wins.

One thing about loan modifications - either by design or otherwise - the mortgage servicer will normally keep you in the dark about the status and will say they don't control the foreclosure people. So you have no way of knowing if the foreclosure is going to be stopped because the foreclosure people will say they don't know anything about a loan modification.

But often towards the end the loan modification people (and remember all of these folks work at the same company) will say "Congratulations, you are approved for your loan modification!" But, what about the foreclosure? "Don't worry about that - it has been stopped and we will send you a new payment book in a couple of weeks."

What a sense of relief! You cancel the meeting with the bankruptcy attorney or with the mortgage broker who said she could save your home, etc.

None of that is necessary because you are not going into foreclosure. Your home is safe. You made it.

Until you get a letter from the foreclosure lawyer informing you that you must leave your house within ten days or you lose your right of redemption because your home was foreclosed yesterday.

Then, a couple of days after the foreclosure letter you will get a letter saying "You have been rejected for a loan modification."

What does all of this mean? Our position is that this is fraud. The servicer, who is the only one who knows if the foreclosure will be stopped and the modification granted, tells you the good news. Who else would know? You believe this good news and rely upon it. Then your home is foreclosed and lost.

The servicer never approved you for a loan modification but yet it said that it had approved you. Classic fraud and this is happening with amazing frequency. The servicers take the position that judges will give them a license to lie and will not hold them accountable. We think otherwise.....

Another example of fraud related to foreclosure. We have seen Alabama consumers who are facing foreclosure contact the mortgage servicer to find out what they need to do to save their home. They are told to pay "three months" payments and that will bring the home out of foreclosure.

Desperate to save their home, and wanting to avoid bankruptcy, the homeowner gathers up the money and does not see a bankruptcy attorney. The three payments are made and the servicer accepts the money and deposits it.

All is well. The home is saved. Or is it?

As in the example above, the Alabama consumer gets a letter informing her that her home has been foreclosed and she must immediately leave or she will be sued. (Remember in Alabama foreclosure is typically "non-judicial" and therefore the court is not involved in the foreclosure and only becomes involved in the lawsuit to "eject" the homeowner from their home.)

What happened? Again, it appears to be fraud. The servicer is the only entity in the world that knows what it will take to end the foreclosure. The servicer says "pay three months payments" and the foreclosure will not occur.

The homeowner believes this and pays it. The servicer accepts it. So why did the foreclosure occur?

Several possibilities. Most common is the servicer wanted the money and wanted to foreclose. Or the servicer will argue that it is just so big and has too many loans to service that it can't possibly be expected to keep up with payments and promises. Or perhaps the servicer applied the payments in the wrong order - instead of applying payments to the interest and principal for each monthly payment first, and then escrow and then late fees and charges (which is how most notes require payments to be applied), many servicers will reverse the order which means you really didn't pay three months. So the servicer will say since it applied the payments wrong, you broke the agreement and therefore it didn't lie! What kind of twisted logic is this?!

Remember there are all sorts of laws that can be used if you are facing a servicer that has lied to you. Federal laws and Alabama state law. Learn about your options and your rights and then take action. This is the only way to protect yourself from abusive mortgage servicers that use fraud to steal your home.

If you are an Alabama consumer and have any questions, call us at 205-879-2447 or fill out our inquiry form on our website. We look forward to hearing from you.

You can also sign up for our free email newsletter sent out every Thursday morning - we cover topics such as the one in this post. We would love to include you! Just fill out the form below:

My friend Denise Richardson has a heartbreaking story on her website about a woman named Tammy who is dealing with the realities of common place mortgage servicer abuses.

Read the entire article but here is a taste:

EMC Mortgage Servicing placed an escrow account on our non-escrowed mortgage. Not once - twice! Not only do I have one of their representatives on a recorded conversation with me stating that this foreclosure was in no way our fault, they also sent me the documentation that they had showing them that we did indeed have insurance. Yet, EMC chose to pay our insurance and charge us for their mistake. I noticed, the second time, right away. I immediately called EMC to get this taken care of, and every few weeks after that. It took them 11 months to figure out how they made the mistake. But, they didn't figure it out until I spent over 3 hours on the phone with their insurance department AFTER they served us with foreclosure papers. I tried for 11 months to have this escrow situation looked into. They did NOTHING!!! Except hand us foreclosure papers just a few days prior to Christmas. Not to mention that for those 11 months, I would make my regular monthly payments and explain to them that the payments were to be applied our mortgage payments, NOT the escrow account. Guess what. They applied the payments where ever they wanted. So, they actually started foreclosure proceedings on us when we weren't in default.

Mortgage Servicing Companies serve a helpful role - if they follow the law. That "IF" is often not present and they can absolutely wreck a family by destroying a family's home. If you are dealing with this type of nonsense and you live in Alabama, feel free to contact us to learn more about your options.

You can also sign up for our free email newsletter sent out every Thursday morning - we cover topics such as the one in this post. We would love to include you! Just fill out the form below: