Strategic Default Monitor – How To Strategically Default

Monday, November 25, 2013

Latest Foreclosure News 11-25-2013

Both the Fair Housing Act and Civil Rights Act were designed to protect consumers and homeowners from being trampled in the way they have been repeatedly… if you were told you did not qualify to apply, should not apply, or otherwise discouraged from applying for a loan or modification for any reason it could be a Fair Housing violation; if you believe you are qualified for loans you can repay to keep you in your home but believe you have been improperly denied a loan or modification it could be a Fair Housing violation; if during the course of the loan, from beginning to now you believe you were discriminated against, treated differently, or harmed by your Servicer or Lender it could be a violation of the Fair Housing Act. Read More at The Huffington Post

With home prices on the rise and foreclosures down nearly 30 percent from this time last year, the major issue distressed homeowners face today is the lack of laws that mortgage servicers are forced to abide by… During the housing crisis, the sloppy and unscrupulous collection practices were exposed as millions of homeowners could no longer afford to pay their mortgage. Because of this, various laws came into play and the CFPB has established a new set of rules servicers must follow – beginning January 1, 2014. Read More at LoanSafe

The Massachusetts Division of Banks has adopted amendments to its debt collection and loan servicing rules that prevent third-party mortgage servicers, including banks, from foreclosing on mortgaged property if an application for a loan modification is in process. The amended rules, which became effective on October 11, are meant to complement the recently adopted foreclosure prevention rules that require home mortgage lenders and servicers to modify certain mortgage loans if the cost of modification is less than the cost of foreclosure, according to the Division… Under the amended debt collection and loan servicing rules, third-party mortgage servicers are required to consider options to avoid foreclosure and third-party mortgage servicers are prohibited from initiating a foreclosure when an application for a loan modification is in process, a practice also known as “dual tracking.” Read More at Lexology

Wednesday, July 31, 2013

Latest News 7-31-2013

New law tightens foreclosure rules in Minnesota 7-31-2013
Minnesotans who have struggled to make their mortgage payments will get new leverage for saving their homes beginning Aug. 1 under a law that tightens foreclosure rules in the state. The new law doesn’t necessarily spare homeowners from losing their properties… it seeks to ensure that eligible borrowers have fair and clear access to every available option to avert foreclosure. The law also bans so-called “dual tracking” of foreclosures… [Where] a lender and/or mortgage servicer can’t move to sell a home until the borrower has had a fair chance to seek a loan modification. Read More at MINNPOST

Boca Raton homeowner wins multi-million dollar foreclosure suit after legal misstep 7-26-2013
A Boca Raton homeowner whose waterfront mansion has been in foreclosure since 2008 had her case voluntarily dismissed by her lender Thursday in Palm Beach County court after a legal misstep during trial. Homeowner Valerie Kaan bought the 13,000-square-foot home in 2003 for $8.4 million. The outstanding balance as of Thursday was up to about $10 million… “Maybe this will send a message to banks that when people come to the table in good faith with a reasonable offer, they should more seriously consider it,” said homeowner attorney Roy Oppenheim. Read More at The Palm Beach Post

Lenders seek court actions against homeowners years after foreclosure 6-15-2013
Lenders are filing new motions in old foreclosure lawsuits and hiring debt collectors to pursue leftover debt, plus court fees, attorneys’ fees and tens of thousands in interest that had been accruing for years. It’s all part of a legal process known as a “deficiency judgment,” which is allowed in the District and 40 of 50 states, including Maryland and Virginia. Freddie Mac spokesman Brad German said Freddie Mac is targeting “strategic defaulters,” which the agency defines as “someone who had the means but chose to go into default, that there were no extenuating circumstances that affected their ability to pay…” Read More at The Washington Post

Monday, January 14, 2013

Strategic Default Monitor Alert: Zombie Foreclosures - When Banks Walk Away

It appears that banks have decided to strategically default by walking away from a property. Homeowners need to understand the potential risks when a bank decides to abandon foreclosure proceedings against a property.

We routinely discuss the primary risks of a strategic default. The primary risks of a strategic default are:
  1. Deficiency debt can lead to a deficiency judgment. 
  2. A property can be lost in a foreclosure action. 
  3. Lower credit score. 
  4. Exposure to aggressive debt collection tactics. 
  5. Personal liability for unpaid taxes, utilities, or other property related expenses. 
  6. Government action against homeowners that strategically default. For example Fannie Mae may not allow home loans to individuals who strategically default. Recently it was reported that the Federal Housing Finance Agency ("FHFA") intends to aggressively go after individuals who strategically default on a government insured home loan. However a FHFA official released a statement claiming that it will not be the policy to seek out people who strategically default. The bottom line: The government has its eye out on strategic defaulters.