The right punishment turned out to be the implementation of a standardized form which MUST be used by Countrywide/BOA in every proof of claim filed by Countrywide in Ohio.  The form discloses (and must be accurate disclosure) all monies received and spent by the mortgage company on behalf of the loan.   The judge hopes to prevent future misconduct by forcing the use of this form. 

One might say:  “What’s the big deal?”   Weren’t they in trouble for a form anyway?   Well, the difference here is the “teeth” in the judge’s order:

For each new proof of claim filed by Countrywide, its successors or assigns before this Court, a copy of the

completed Worksheet shall be attached to the proof of claim at the time of filing. In addition, within 75 days from the

date of this Order, Countrywide, its successors and assigns are ordered to complete the Worksheet for all

previously filed proofs of claim in cases currently pending on this Court’s docket and file a copy of

the completed Worksheet as a supplement to the previously filed proof of claim. If Countrywide,

its successors and assigns fail to use and properly complete the Worksheet in support of their claims,

the Court will award monetary sanctions against Countrywide, its successors and/or assigns

including, but not limited to, a minimum of $300 for attorney’s fees incurred by the debtor or trustee

in contesting the claims of Countrywide, its successors and/or assigns, as well as any other

compensatory damages that the debtor might prove.

      Counsel who seek sanctions against Countrywide, its successors and/or assigns as the result

of the failure to use and properly complete the Worksheet should file a motion with the Court and

serve the motion on Countrywide, its successors and/or assigns, the Debtor, the Trustee and Dean

Wyman of the UST’s office for Region 9.

Therefore, Countrywide must amend every proof of claim, file the form, make sure the form is right, or pay at least $300 for every wrong proof  of claim.   Considering how many proofs of claim are filed each year by Countrywide, this could get interesting…..

thanks to Bob Lawless at www.creditslips.org for alerting me to this wonderful solution/opinion.

Justice Schack has thrown out 46 of 102 foreclosure motions for errors and has been praised at national judicial conferences for the rulings from his bench.    Interestingly enough, the bank attorneys are not praising Justice Schack as he stands inbetween them and the homeowners . 

A foreclosure can be judicial or non-judicial (a court gets involved in judicial foreclosures; a non-judicial foreclosure means that no court is involved–the property is sold at a trustee’s sale).   State law usually determines how the foreclosure process unfolds.   (For example, in Florida, foreclosures are judicial; in Oregon, foreclosures can be either judicial or non-judicial, depending on the mortgage company’s choice).     In Conneticutt, consumer attorney Gene Melchionne has explained that “strict foreclosure“ has been adopted.    Jed Berliner, a Massachusetts consumer attorney, has provided a list of arguments that may be possible when a homeowner is faced with foreclosure on this site.   He has also kindly provided a set of possible defenses to foreclosure on this site.  

There are only a few experienced attorneys fighting foreclosure in each state; it is worthwhile to consult with such an experienced attorney to determine whether any defenses are possible in your state.

This complex issue, of little interest to anyone other than lawyers and bankers, puts a serious crimp in efforts to modify mortgages. The investors often are unknown, difficult to contact, and hard to get to approve modifications.

Here’s a list to stop a foreclosure.  Much depends on your particular state’s law, of course.  It’s an incomplete work in progress, because new theories are being developed and tested every day.  So much is being newly argued that the courts are not uniform on their rulings, whether for liability or for remedies.

1.  Was the Annual Percentage Rate in the Truth In Lending disclosure properly calculated?

2.  If this is a second or refinanced mortgage, were there a sufficient number of notices of your right to cancel?

3.  Were the mortgage terms unfair or deceptive, such as a teaser rate?

4.  Was a list of HUD-approved counselors given within 45 days after the first missed payment?

5.  Did the lender hold the original mortgage note document at all times required for the foreclosure process, or is the reason for its absence justifiable?

6.  Did the lender hold the mortgage at all times required for the foreclosure process?

7.  Were all mortgage assignments timely and valid under your state’s laws, having correct notarizations and authorized signatures?

8.  Were all mortgage assignments made to the correct entities under the requirements of any securitized trust?

9.  If the lender received TARP funds or has signed up for HAMP, do you have a mortgage loan modification application pending?

10. Was there fraud, perhaps from reckless use of an inflated appraisal, or tampering with a mortgage application, or falsely promising that the mortgage would be refinanced again?

See my earlier post for more information.

It is my personal opinion the servicers are just trying to stick it to the consumer!  Answering a debtor’s questions about his mortgage loan is not a violation of the Discharge Injunction.  After all, if the consumer/debtor wants to keep his home after receiving a Chapter 7 Discharge, he must continue making the payments or else face foreclosure.  Not that this will help, but if you are a Debtor and having this problem, please contact your senator and/or representative and let them know you are having this problem.  Maybe it will prompt some new legislation.

The recent case of Agin v MERS (In re Giroux)  2009 WL 1458173 (Bkrtcy.D.Mass. May 21, 2009) made this point quite clear, when it ruled that a mortgage was not enforceable against a Chapter 7 trustee if the borrower’s name was left blank in the acknowledgment.  The trustee took over the mortgage under operation of bankruptcy law, and the mortgagee was left with an unsecured claim no different from that of a credit card issuer.

This decision was based on Massachusetts statutes, and it noted that other states’ laws might lead to a different ruling.  However, there may well be other statutes in your own state which give rise to rights not available in Massachusetts.  Look hard, and then look again.

The requirement is found in the Homeownership Counseling Act.  Here are the pertinent pages from the FDIC Compliance Handbook.

There is no stated consequence for a lender’s failure to provide the required list.  However, at least one Florida court denied a right to foreclose for this reason.