Sumpin' Smells Funny; Must be the Money!

Why on earth would the New York Police Department's union threaten to sue Occupy Wallstreet protesters? Does the average officer really believe she or he is aligned with the 1 percent? Or does the average officer remember the hard battle fought because, in recent history, starting wages could be as low as $21,000?

The answer, it turns out, is that attorney James Lysaght knows who butters his bread. And the wielder of all forms of fatty deliciousness to be spread across Lysaght's toast is: the financial industry.

It is a story as old as time. Lawyer meets corrupt official. Corrupt official is removed. Corrupt official transfers business to lawyer's wife (also a lawyer).

Firm gets in legal trouble. Firm closes. Lawyer begins new firm. New firm serves two masters: the union (Patrolmen's Benevolent Association) and corporate America.

Or, to be blunt, firm represents corporate America. Firm lashes out against working people who funded (voluntarily or not, through the misuse of their union dues) lawyer's rise to power.

Former cop, James Lysaght, is a loyal type. He has kept close ties to his former roommate, Richard Hartman. Hartman used union funds for gambling binges. Lysaghts firm was hired to replace Hartman, but then hired him as a "consultant" to sell life insurance policies to the Patrolmen's Benevelent Association.

Then, Lysaght was, in 1997, indicted on racketeering charges for taking kickbacks for $3 million in legal business. (So that's how you get those big clients--I slept through class that day in law school!)

Not one to be kept down, Lysaght, with his wife, started a new firm. And who would hire a lawyer after such an indictment? Why, the financial services industry!

Mr. Lysaght serves a master. And that master is not the average police officer patroling New York City's streets. Mr. Lysaght's sole interest is to protect and defend those who destroy the economy.

A Modest Proposal

It has come to my attention that there is concern for judicial economy in the foreclosure process. Particularly, some feel that making lenders who wish to foreclose prove that they own the right to foreclose is unduly burdensome. It imposes too much paperwork upon lenders, and it causes court dockets to be crowded as cases are not concluded due to the inability of lenders to prove they own the right to foreclose.

There is also concern that the lenders will not lend if they are not given an unfettered right to take any home they choose away from the homeowner without regard to due process. Since governmental gifts did not inspire the banks to lend to working people, many conclude that nothing short of waiving ages-old due process requirements will do so.

Upon reflection, these are just and proper concerns. After all, the lenders are victims. They did not choose loan terms, borrowers, and which properties would secure the loans. Clearly, borrowers forced the banks to unwillingly lend money, collect high fees, impose usurious interest, and retain the right to take away the borrowers' homes at the slightest allegation of default.

Indeed, Illinois and other judicial foreclosure states are imposing an undue burden by making the banks go to court at all. They have to serve a summons, file a form complaint, and, in a few cases, they are even made to ensure they are foreclosing on the right property, for the right sum, and against the right person. In other cases, the banks even have to prove the homeowner failed to make payments.

All of this goes far beyond the scope of anything a reasonable lender would expect to do in civil society. Therefore, I propose the Kelli Dudley Equity-Stripping Simplification Act of 2011. The key points follow:

1.  As soon as the bill becomes law, all homeowners, tenants, and other structure-dwellers are required to vacate the home, apartment, or other structure within 30 days.

2.  Homeowners, tenants, and other structure-dwellers are forbidden to take up residence in any new home, apartment, or structure.

3.  Homeowners, tenants, and other structure-dwellers who purport to have a possessory or ownership interest in any home, apartment, or structure shall be required to bring an affirmative case proving the possessory or ownership interest. The standard of proof shall be "beyond a reasonable doubt."

4.  Any lender may destroy or fail to maintain any property after it is vacated by the homeowner, tenant, or structure dweller and shall forever be immune to suit by any homeowner, tenant, or structure dweller for such damage. Any homeowner, tenant, or structure dweller taking any action to prevent destruction or waste of property shall be subject to a criminal sentence of not less than 50 years and a fine of not less than $500,000.00.

Foreclosure Training--August 8, 2011

The John Marshall Law School will host a foreclosure training on August 8, 2011 from 2:00 until 5:15 p.m. Two Cook County judges will talk about the foreclosure process.

The cost is $50.00. Three Continuing Legal Education credits are available for attorneys. However, you need not be an attorney to attend.

Advance registration is REQUIRED:

http://www.jmls.edu/events/index.shtml#080811fh

An Open Letter to My Banking Colleagues

Hi! We don't get much time to talk.

In case you don't understand, I can't speak with you directly. It is unethical for an attorney to have direct contact with a represented party. When you hire a law firm to pursue a foreclosure against my client, you are represented. So there's a bit of a wall between us from the time we meet.

I do listen, though, when I can. At a recent conference, one of you asked if it was true a foreclosure in Chicago takes three years.

"No, not if you hire competent attorneys."

"What do you mean?"

"A lot of delay comes when lender attorneys fail to do the paperwork correctly the first time. For example, if the complaint that is filed does not show me who you are and how you are related to the debt, I am going to attack it. I am going to do the things you would want your lawyer to do if you suddenly got a bill from me but didn't remember ever agreeing to pay me anything. Sometimes I am right, and the lawyer has to correct the mistake. That creates a delay. But the mistake wasn't on my part."

The conversation could have gone on for a long time. Turning in bad affidavits, not showing up in court, boarding up homes before there is a judgment of foreclosure, violating court orders, noticing cases up for "default" judgment where the homeowner has an appearance on file, giving the judge an incomplete packet to show why the foreclosure should be entered . . . . All of these acts create delays and give me an opportunity to counter-sue the bank or the attorney.

But I am not in the delay and counter-suing business. I am in the resolving problems business. I like to write to my colleagues about our problems and work out solutions. This doesn't make me a lot of money or get me a lot of publicity. It does, however, help people stay in their homes. In the end, clients would rather resolve a problem with a 15-minute phone call than with a lengthy court proceeding. It is my guess that this kind of problem-solving is also more cost-effective for banks.

I have a few colleagues, at least one at almost every Chicago firm, who take my calls and email messages and respond to me in a way that resolves problems or, at least, clarifies the extent of problems so we can do our court dates in an orderly way.

One of the issues that comes up from time-to-time is that busy law firms do not realize I represent someone. Even though I file the appropriate paperwork, send it to the firm, and often even talk to my colleagues at the firm about the case, someone does not enter my information in the computer. As a result, they contact my client directly or fail to give anyone notice of something happening in Court.

Both of these problems give rise to specific remedies. Contacting my client, a represented party, directly violates the rules governing attorneys and violates the Fair Debt Collection Practices Act. However, in the spirit of working together, I try to give at least one opportunity to correct the problem.

Likewise, failing to send me a copy of papers filed in court is an ex parte communication--the Judge can freely read anything filed in the court files. Filing something without sending me a copy is the same as talking to a Judge about a case without the other lawyer present. It is a serious violation. However, again, I like to give opportunities to work problems out.

The ex parte communication rule is not to be confused with a local rule we have here in Cook County that requires a notice of motion to be sent out at least five days in advance. That rule is designed to ensure everyone can get to the court date. It has nothing to do with ex parte communication--an old rule that exists in every jurisdiction that preserves the integrity of the judicial process.

So, banking colleagues, you see that my horns aren't as prominent as you may have heard. You think to yourselves, "How fortunate we are to have walking among us a paragon of honesty of integrity who takes time to work with colleagues in such a congenial way!"

Or, maybe you think, "Hey, she ain't that bad."

At the very least, you recognize that it is better to have your attorney resolve things with me through a phone call rather than get into a new counterclaim or costly pleading every time there is a problem. Some of your attorneys recognize this. Others don't seem so willing to work out problems and save you money.

To wit, please read the response sent to my colleague and to me when we complained of materials being filed and not sent to us even though my colleague's appearance is on file. I am protecting the name of the law firm, but I think the individual attorney would be proud to take ownership of her work. Please note we filed and mailed our appearance in April, our filing and mailing complied entirely with the rules promulgated locally, and this love letter was tendered to us yesterday, June 29, after we humbly requested materials be sent to us:

Mr. XXXXXX–

 

I have reviewed the above-referenced file and have confirmed that your information now appears as counsel of record for XXXXXXXX.

 

To avoid future confusion, please mail to our office a copy of your file-stamped appearances (or other filings) and notices of filing, in accordance with Illinois Supreme Court Rule 11(b)(3).  Our mailing address will appear in the court file or on the Complaint provided to you by your client, for your reference.  We ask that your office refrains from contacting various individuals in our office to ask to whom to send the filings, and instead mail the filings in accordance with the Supreme Court Rules.  Additionally, please make sure the Proof of Service complies with Supreme Court Rule 12 (I noticed that in this case it does not identify where you sent the appearance or by which method), so we can attempt to correct any problems moving forward, if problems continue to occur.  Adhering to these rules will ensure that our records accurately reflect your appearance and/or filings.

 

Finally, as you are aware, Cook County Local Rule 2.1(c)(i) requires us only to mail notice of motion on the fifth court day prior to the court date.  As the next court date is July 19, we have not yet sent notice.  We will continue to adhere to Local Rule 2.1(c)(i) moving forward, so you can expect to receive future notices a few days before presentment.

 

Thank you in advance for your cooperation.

 

Aukse Stase Rimas

Associate Attorney

So, "refrain" from contacting us to work out problems.

If you, dear colleagues, share this view, then we cannot work out problems. We are left to litigation.

Let's step back from this and think about how attorneys can be instructed, by the client, to work cooperatively, professionally, and courteously to ensure matters are concluded efficiently and that additional liability does not arise.

Kelli Dudley
Attorney at Law

The Fed is on the Run from my Criticism

In past posts, I have criticized the Fed for caving in too quickly concerning the robo-signing scandal. I believe they settled with the offenders far too quickly, they entered into a consent agreement that offers no real relief to aggrieved homeowners, and they made no significant provisions for homeowners who lost their property due to wrongful foreclosures. I was crushed, of course, when, without regard for my criticism, they entered into the consent agreements.

Today, I attended a conference where an OCC staff member sat on a panel and promoted the virtues of the consent agreements. I could barely control my anger as he spoke.

Still convinced of my relevance, I followed the OCC staff member as he left the room. He picked up his pace. I picked up my pace.

Outside, I got his attention despite his obvious efforts to ignore me.

"You mentioned that the consent agreements require the lenders to exercise better control over their foreclosure counsel?"

"Yes."

"You might be interested in a case I have pending. Counsel brought in the original note with an allonge, but the allonge is a signed piece of paper to which a sticker bearing the name of the borrower and the loan number has been attached. She displayed it in open court. I think it is a problem."

"This is why we gave them four months until the consent agreements are effective. If you see this four months from now, you can use our complaint process."

At least I had him on the run for a minute.

Law firm Fisher and Shapiro sued over foreclosure cases

Law firm Fisher and Shapiro sued over foreclosure cases

Fisher & Shapiro Sued for Falsifying Affidavits in Support of Foreclosure

Today, my firm, in cooperation with Progressive Law Group, filed a class-action lawsuit against Fisher & Shapiro. The lawsuit is pending in the Federal District Court for the Nothern District of Illinois, Eastern Division.

Fisher & Shapiro is the law firm that previously admitted to falsifying affidavits to get foreclosure judgments. In Cook County, Illinois, alone, the firm has admitted to submitting false affidavits in 1,700 cases. The lawsuit, in essense, asks for damages under the Fair Debt Collection Practices Act based on the firm having made false representations in an effort to collect a debt.

The devastation caused by firms like Fisher & Shapiro is clear in this case. Many of the addresses affected have been abandoned by homeowners fearing they will be evicted or even illegally locked out of their home by the bank--as has happened to so many others.

This story is not about a single foreclosure. Fighting single foreclosures is a challenge, and I continue to do it. In case after case, the law falls to the side in favor of expediency, with the bank eager to take over a home, evict the homeowner, and begin the process of letting the property rot into the ground without being secured, without utilities, without weatherization, and without any maintenance. The banks turn away thousands of dollars offered in good faith by homeowners seeking to stay in their homes, anxious to modify their loans and make regular payments while maintaining the property.

This story is about a simple example I use almost every time I talk to the public. Homeowners understand. Maybe this time the court will agree.

My example is this: A driver who is accused of rear-ending another car in an auto accident faces certain presumptions. The law assumes, in many states, that the car in the rear caused the accident. However, the person seeking damages must still follow the proper procedures. The plaintiff must file a proper complaint that sets out the required allegations needed for a "tort" (injury) case. The plaintiff must serve the defendant with a summons and complaint in the way mandated by state law. The defendant can answer, and can even deny every allegation the plaintiff makes. The defendant and plaintiff can go through the discovery process to gather facts. In the end, there may even be a trial. The defendant who looked so negligent in the beginning may be able to prove the plaintiff was at fault. For example, the plaintiff may have been backing up and may have driven into the defendant. Even if the defendant loses, he or she still received due process of law, a legal idea of fairness pre-dating the Constitution.

In foreclosure cases, however, due process is not always followed. I have written about violations of due process in other blog posts.

In this case, the false affidavits that were filed represented perjury. They enabled the Plaintiff to get a larger judgment than that to which it may have been entitled.

The bank's attorneys admitted to altering affidavits signed by bank employees after the fact. In some cases, they would unstaple the affidavits, insert more pages, and re-staple the affidavits before submitting them to the judge.

Like the driver in the "rear-end" car accident, a person accused of failing to pay his or her mortgage may look guilty. However, the homeowner is still entitled to due process. In the foreclosure arena, due process has been run over in the interest of banks receiving quick judgments. It is time to back up. We already ran over at least 1,700 people.

Feds Determined to Deny Due Process to Foreclosure Defendants

As I have pointed out before, the banks need to do some time. Perjury is a jailable offense, and it is perjury to sign a false affidavit. The banks have admitted to signing false affidavits, a large part of the robosigning scandal. Instead, the Federal regulators are determined to let the banks escape punishment and to not even require any meaningful change in practices.

After the robosigning scandal became public, the states' attorneys general began an investigation that has resulted in a weak draft settlement. I have written about the proposed settlement and its problems on this blog before.

Around the time of the weak proposal by the attorneys general, the Fed stated it had performed a cursory review of a few foreclosure files and concluded that there was not problem. The Fed maintained that no foreclosure was done where there was not a "substantial default." As I mentioned in a previous blog post, this was a mischaracterization of the evidence--foreclosure in the absence of any default by the homeowner is extremely common. Moreover, the Fed ignored due process. Even if one is in "substantial default," one is entitled to legal protections. These include the right to notice and the opportunity to be heard about the alleged default (due process) and the right to cure the default and save the home (redemption).

Now, it appears that Federal regulators will let the banks off the hook with a settlement even weaker than the proposed attorney general settlement. The settlement is in the form of a consent decree (court order), making it more likely that the banks will try to use the settlement to say that homeowners have lost their rights to any legal action for the banks' wrongdoing.

The settlement allows banks to appoint their won "monitor"--a committee chosen by the Board of Directors of each bank. The bank's committee will tell the Fed what needs to be done.

The primary duty of the banks under the settlement is to comply with existing law. Problems like assignments from Mortgage Electronic Registration Services (MERS) are handled on a business as usual basis--with banks promising to get the documents required to do a foreclosure from MERS this time. This is a legal requirement that should have been followed in every foreclosure.

The banks can retain an independent consultant to conduct reviews of completed residential foreclosures. The review will only cover those with judgments or foreclosure sales (auctions) from January 2009 until December 2010.

The independent consultant will set criteria for evaluating the reasonableness of fees and penalties set during the foreclosure process. This circumvents another requirement that the review will include evaluating whether fees and penalties were consistent with the loan documents.

In the end, the bank can give a "reasonable" sum of money if mistakes were made in a foreclosure.

These procedures, under control of the banks, further circumvent due process by placing a stamp of approval on foreclosures that were already completed. This indicia of legitimacy may be invoked to stop actions by the states or by individual homeowners to redress the mistakes made by the banks.

The provision for payment of money shows perhaps the greatest disregard for the special position of homeowners and the right of redemption. Law in the United States recognizes that real estate is non-fungible. For example, one cannot be compensated for losing the opportunity to own one house by substituting another or with payment of money. This is true even if one is buying a McMansion in a tacky subdivision--if the buyer selects the McMansion on Lot A, he or she cannot be forced to instead accept the identical McMansion on Lot B. This is because the law recognizes that real estate is unique, the opposite of money--where one $1 bill is generally as good as the next.

Because of this special status, additional barriers exist before real estate is taken away. One of the most notable of these in the foreclosure area is the right of redemption. This is the right to pay off the sum owed and save the property. Preventing someone from doing this--for example, by refusing to take the money or making it impossible to pay--is called "clogging the equity of redemption."

If homeowners in foreclosure were charged too much in fees and penalties that had to paid to redeem the property, then the right of redemption was clogged. A home was lost where it might have been saved through exercising the right of redemption if the extra fees and penalties had not created a "clog." The mere payment of money is not sufficient to make these homeowners "whole," or in the same position as they would have been had the equity of redemption not been clogged.

It is upsetting that many consumer advocates bemoan the possibility that the settlement will be used to prevent future lawsuits or actions, but do not grasp the harm that has been done to the concepts of due process and redemption. These ideas protect the rights of every litigant, and the concept of redemption helps guarantee a home can be saved in many circumstances. Actions that undermine these concepts make it more likely that a home will not be a good investment in the future--it will remain subject to being taken in an arbitrary and unjust way.

The rush of the Fed to bargain away your rights is one more reason to consult with a HUD-certified housing counseling agency or reputable lawyer right away if you are in foreclosure. If it becomes more difficult to vacate (set aside) wrongful foreclosures, it will be more important than ever to fight each foreclosure carefully when it is initially filed in court.

The entire proposed settlement is here: http://cdn.americanbanker.com/media/pdfs/040111CandD.pdf

Homes Boarded Up Without Due Process

One of the most frustrating parts of representing homeowners in foreclosure is the lack of respect for simple due process. Due process is a very old concept meaning that people are entitled to notice and an opportunity to be heard (by the court) before action is taken against them.

Generally, due process is why we have trials for clearly guilty and repugnant people. I recall a professor at Indiana State University who, with a cohort, picked up a hitchhiker, a young man from Terre Haute. They hung him from a hook in a deserted barn. They brutally raped and killed him, videotaping the entire thing. The professor was found not guilty because the tape was obtained improperly and was excluded from evidence.

After that, the professor returned to work. My school could not fire him because it was a state institution. He would have been entitled to due process before he could be fired.

I think my clients, people who try to buy homes, are at least as nice as a raping, video-taping, murdering college professor. Unfortunately, they are deprived of their homes in some cases without any due process of law.

The attached story is the worst case I have ever seen. My client and her children returned from school and work to find their home boarded up. Their possessions were stolen and ruined as the interior of the house was destroyed (even though banks say they take these actions to "preserve" property). They were not served with a summons, there was no court order, there was no hearing, and they were entirely deprived of any right to say they lived in their home, defend their foreclosure, or do anything else on their own behalf. They could not even pack and leave in an orderly manner--even people who are evicted through the legal process are given time to get out.

When we got back in, several months later, there was peanut butter and jelly on the table. Clearly, the home was occupied by kids who packed sandwiches for school lunch, expecting to come home. Instead, they never got to come back to their home.

After a judge ordered the bank to give the home back, they came and boarded it up a second time.

If you face foreclosure, remember that no one except a judge can order you to leave. This is done through a written court order. It must be directed at you, not someone else who lives in the house, "unknown persons," or "occupants." Only the Cook County Sheriff can do evictions in Chicago--evictions here are not done by random street thugs.

Contact the police immediately if someone tries to interfere with your right to possession. Seek a lawyer to advise you of your rights.

Read more at:

http://gapersblock.com/mechanics/2011/04/04/not-a-wonderful-life-the-effects-of-aggressive-foreclosure/

Commentary on Halting of 1700 Foreclosures Due to Fraud

My piece is about 15 minutes in on the 3/29 episode.

http://firstbusinessnews.com/

"Perjury is a jailable offense. It remains to be seen whether it is a jailable offense for big banks."

Pictures and Video of the March on Bank of America and Madigan

From my super-great friend, comrade, and task-master (responsible for me getting the post about Fisher & Shapiro up within hours of first seeing the court order), Holly, here are pictures and video of the March 24 March on Bank of America and Madigan:

http://www.youtube.com/watch?v=mW_eS99xy7I

http://www.facebook.com/profile.php?id=1076019908#!/album.php?fbid=10150130840232884&id=576932883&aid=300968

Let's do it again 'til we don't have to!

It's not a crisis; it's a crime! Bank of America should do some time!
It's not a crisis; it's a crime! Lying lawyers should do some time!

Foreclosure Mill Ordered to Vacate at Least 1,700 Orders

First things first: you heard it here first. This story is not out in the mainstream press. When people say I am ahead of the curve, they aren't just making a veiled reference to my second job as a Victoria's Secret model.

I was also ahead in another way. In the words of pre-teens everywhere:

Told ya so
Told ya so
Told ya, told ya, told ya
Told ya so!

I have been fighting the firm of Fisher & Shapiro, in different corporate guises, for years. In fact, one of their attorneys lashed out at a homeowner in an impermissible way when I was a student working for a legal clinic. This led to my first opportunity to draft a complaint under the Fair Housing Act.

We succeeded in helping the client with the Fair Housing Act claim, and we are winning the foreclosure battle.

In an important victory for homeowners, the Circuit Court of Cook County, Illinois has issued General Administrative Order 2011-001. This Order finds that representatives of Fisher & Shapiro, a large foreclosure mill that processes thousands of foreclosure cases each year, falsified affidavits it submitted to the Court. Using these false affidavits, Fisher & Shapiro tricked the Court into entering unjustified orders and judgments depriving people of their homes. A common trick was to have a bank employee sign an affidavit. The lawyers would then detach the signature sheet, insert more "facts" (such as more money supposedly owed by the homeowner), then reattach the signature sheet without the knowledge of the affiant. This is a form of perjury, specifically, knowingly submitting perjured documents to the court, it violates the rules governing attorneys, and it wrongfully deprives people of their homes.

Under the Order, Fisher & Shapiro must turn in motions to vacate the orders and judgments it lied to obtain. This includes at least 1,700 cases; however, common sense says that the number of cases to which the attorneys admitted is the tip of the iceberg. The cases are on hold until the problem is resolved.

If you are a homeowner, this may cause a judgment previously entered against you to be vacated. Even if your foreclosure is not final, this may delay your case.

If you think you might be affected, take these steps:

1. Consult with a reputable attorney about your rights. Some unethical attorneys will be eager to take your money by pretending they are in some way responsible for this matter having come to light or that they can speed up the process of having your order vacated. See my first post ever on this blog for information about how to sort out the good from the bad in attorneys. I have a searchable list of those affected by this court order. My email is listed on this blog.

2. Beware of anyone too eager to sign you up for a class action. Some attorneys will do this without caring about your best interests. Class actions are a great way to vindicate consumers' rights, but some attorneys care more about their fee than the sum each person who was harmed should receive.

3. Consult with a HUD-Certified Housing Counseling Agency. You can find one at www.hud.gov These agencies provide FREE services.

4. Watch your mail for a court date and go to court on the appointed day. See my other blog posts for tips on what to do in court. Let the Judge know if you are interested in saving your home. Take documentation about what you have done, such as applying for a loan modification.

Not from Cook County? Contact me. Fisher & Shapiro is active all over Illinois. If you are not from Illinois, watch this space. Fisher & Shapiro have firms all over the country--all contain the word "Shapiro" except for one: Korde & Associates. It stands to reason that faulty affidavits have been filed in cases besides those identified in the current court order, and relief may be available.

Predatory Borrowers?! Come into my parlor . . . .

I need to activate my network. Who knows Isabella Rossellini? I need to borrow her spider outfit from Green Porno.

In the spider segment of Green Porno, Ms. Rossellini dons a spider outfit and describes how the male spider creeps slowly toward the female spider. He does not want to cause the female spider's web to vibrate as he approaches for mating. The female spider is much larger than the male spider, and she might eat him. The male spider hurriedly takes care of the business of mating (in a charmingly unconventional way) and scurries off.

This segment has long been a joke in my house. After all, I'm not diminutive in stature or personality.

However, in the course of helping homeowners defend themselves in court, I am not quite as intimidating. The plaintiffs--foreclosing lenders or those who assert they bought loans and have the right to foreclose--are pretty confident. It is an uphill battle to get even some small amount of due process--a matter of following long-established legal rules designed to give each person a say in court before action is taken against them. Gaining a substantive win for my client is difficult. Eating the foreclosing lawyer is out of the question.

Given the hard work those of us who help homeowners do for modest gain, I was surprised to find a new term in a training manual written by a well-heeled law firm providing "how-to" advice to attorneys who represent lenders: "predatory borrower." (A link to the training follows at the bottom of this post.)

"Predatory" implies that one seeks to devour another, such as when even baby spiders devour each other immediately upon being hatched in a later production by Ms. Rossellini (Seduce Me). "Predatory" sometimes is used to mean that a person (or corporation, for those of us who don't believe that corporations are people) wants to take unfair advantage of another.

For example, banks are said to engage in "predatory lending" when they make loans that they know the borrower cannot possibly repay. They make the loan knowing the consumer cannot possibly benefit from it. The loan is extended to make a profit for the lender by putting the borrower at an unfair advantage.

With many neighborhoods being full of abandoned and boarded-up homes following foreclosure actions, it is easy to see what is "predatory" about "predatory lending." Even though there is no statutory definition, we know it when we see it on our block, in the eyes of a homeless friend, in the numbers of companion animals who are euthanized when their families' homes are lost, and in the devastating loss of wealth among working, middle-class people.

It is not so easy to see what is "predatory" about a person who is losing his or her home to foreclosure. The homeowner may have borrowed foolishly, may have been overly optimistic about income, may have failed to read the fine print, may have had an unexpected job loss or illness, or may have simply wanted more home than he or she could afford. It is hard to see how any of these scenarios indicate "predatory" behavior when--regardless of reason--the end result is almost always loss of the home with a possible money judgment against the borrower that may lead to garnished wages or frozen bank accounts.

Fortunately, the highly-paid attorneys at Locke Lord Bissell & Liddell, a firm of nearly 600 internationally, were able to solve the legal riddle that I could not. A predatory borrower, they tell us in a web-published power point designed for attorneys foreclosing against homeowners, is virtually anyone who seeks to represent himself/herself to fight foreclosure. Practices they describe as "predatory" include demanding proof that the company seeking to take one's home owns the note and has the right to foreclose. Another "predatory" tactic is seeking to rescind (cancel) the loan according to right afforded by several consumer-protection statutes. Also "predatory" is pointing out to the court that the underlying loan was fraudulent or that the homeowner was misled about the loan terms. In other words, almost anything a homeowner (or homeowner's attorney) could say would be "predatory." Since I regularly represent my clients in the ways indicated above, I think it only fair warning to the other lawyers that I wear the spider suit to demonstrate my predatory nature.

The publication suggests foreclosing attorneys aggressively fight these "predatory" creatures seeking to save hearth and home. Among the tactics are removing the case to Federal court. In a stink-bomb that impermissibly (according to the ethical rules governing attorneys) casts a shadow on the impartiality of the bench, the attorneys state that Federal judges will not deal fairly with homeowners who represent themselves--the homeowners will get lost in a tangle of rules and judicial impatience. The document further instructs attorneys to take advantage of differing rules governing fraud in Federal court as opposed to most state courts. Generally, Federal courts require that more facts be pled to show that fraud took place than do state courts.

What particularly troubles me, as an attorney, is the endorsement by attorneys of efforts taken only for vexation and delay and the demonizing of those who seek to represent themselves. Our courts are open to the public--anyone can go to court. Anyone (a person, NOT a corporation) can represent himself or herself and have a "day in court." Perhaps not everyone is equipped to make the most of this opportunity, and attorneys may be advisable in most cases. However, equal access to justice is as important to our justice system as scurrying away quickly is to male spiders--if we are going to survive, we must ensure that everyone can access the courts.

Attorneys are sworn not to do things for harassment, vexation, or delay. While I may disagree with a fellow attorney about a legal issue, I do not file pleadings unless I think they are legally meaningful. I might salivate thinking of causing my opponent a sleepless night with an ill-founded pleading, but I will not act on the impulse. No matter how angry I become, I know I am not a hatchling spider--I have to act with some restraint and avoiding gobbling up the other guy.

Finally, it is a bit troubling that forum-shopping, changing courts just to get a judge who might be harsher on pro-se litigants, would be contemplated. While every lawyer tries to guess about which judge might be "friendlier" to this or that side, a good lawyer relies on legal arguments and the ability to apply the law to the facts of a given case. Advising the public that Federal judges do not respect the rights of pro-se litigants reflects very poorly on the professionalism of the big-firm attorneys who prepared the training materials.

Even if the attorneys who represent banks cannot operate in an ethical manner, you can. Consider hiring an attorney if you face foreclosure. Listen to what the attorney says to be sure he or she is recommended legal strategies that make sense--not just to "buy time" or frustrate the other side (even though these can be unintended results of legitimate legal maneuvers).

Consult with a HUD-Certified Housing Counseling Agency. Whether you are in foreclosure or not, the counselors at this FREE resource can guide you in practical way through your options, including applying for a modification whether you are in foreclosure, have defaulted on your mortgage, or are current.

If you do go to court for yourself, prepare neat documents based on samples you can find at the Clerk of Court's office. The Clerk cannot give legal advice, but can show you where the header of your case goes, where to place your contact information, and how to find your case number. Number each allegation you make, and try to make each fact a single, concise sentence: "1. I have made all my payments on time as is shown by the attached cancelled checks." Write the facts in plain language without "legalese." Send a copy to the other side. Write "Judge's Courtesy Copy" on another set and give it to the Judge's clerk before the hearing. Never try to talk to the Judge directly unless it is a court date that all parties know about in advance (unless you have followed the rules and are presenting an "emergency motion"--which should be used only in extraordinary circumstances).

At the hearing, have extra copies in case they are needed by the Judge or other lawyer. Arrive early, tell the clerk you are there, and wait quietly. Speak calmly and professionally. Stick to the facts. Look at and talk to the Judge. If the other side says something that is untrue, make a note on a piece of paper and remember to bring it up, calmly, when it is your turn to talk. Do not become upset if the Judge asks you to come back another time; not every court date is designed to be the date when you argue. Sometimes, the Judge just needs to find out what has been filed and when it will be time to argue. Do not leave until you have a copy of that day's order signed by the Judge--it is your only record of what the Judge decided. Going to court can seem frightening, but it is possible to calmly make your point even when you feel like you are going to be sick--I do it almost every day.

Ask questions and seek the help you need. Although pro bono agencies are stressed, some jurisdictions have "help desks" or on-line resources like www.illinoislegalaid.org.

Perhaps you'll come across a lawyer that doesn't dress as fancy as the ones at Locke Lord Bissell & Liddell and has time and respect for homeowners. If you do, come up and say hello to me. I hardly ever eat anybody.

Here's a link to the offensive post. Adjust your monocle and enjoy:

http://www.scribd.com/doc/51363333/LockeLordBissell-on-Dealing-With-ProSe-Defendants

Won't Get Fooled Again?

My husband is a huge fan of Pete Townsend. The Who's song (properly titled without the question mark) is about how things sometimes do not change after a revolution.

It appears this is true in the case of housing. Though we are supposed to be rebuilding after a crash, the fraudsters who brought you the housing bubble are at it again.

Unlike my husband, I am a fan of John Mellencamp. It is my job to keep you in your little pink house. In this case, I agree with The Who, however: the housing market appears to have gone through a radical change, but the fraudsters are still about the business of stripping your equity (wealth).

I have long said that those of us interested in helping consumers stay in their homes need to watch out for the next wave of fraud. My very first blog post here was about unethical practices among those who say they "defend" foreclosure.

Today, MSN has a link talking about "alternative" ways to finance the purchase of real estate. The premise is that many consumers have decimated credit ratings, little savings, and no hope of getting a mortgage. I have conspicuously not posted a link to the horrible article offering "hope" that these dispossessed people can again be installed in a little pink house.

The MSN article, replete with trust-inducing symbols like something that says "investopedia" on it, urges consumers to wipe out further wealth to "invest" in property without involving any risk to banks. No analysis of the long-term risk to the "investor" is presented. As in the past housing bubble, we are to believe that real estate ownership is an end in itself. We are asked to disregard recent developments showing that our legal system, ever so quick to complete a foreclosure, no longer values real property as unique and subject to great scrutiny before ownership is taken away.

Looking back at the bubble that just burst, consumers took out unafforable loans. Lenders and investors put up some money for the housing purchase or to pay off debts or pay the borrower cash in a refinance. In most cases, the loan was quickly sold so the first lender got paid regardless of whether the loan was ever repaid, converting the loan into an investment gamble for the new purchaser of the loan. If the loan did not get repaid as planned, the purchaser of the loan could foreclose on the home, get a judgment against the homeowner, and collect on a mortgage insurance policy that guaranteed loan repayment. This sometimes resulted in a payment that, in the end, exceeded anything contemplated by the terms of the original loan.

A great deal of wealth was stripped from communities through this process. Homeowners who went through foreclosure lost their downpayments, their sweat equity, their expectations of home ownership, and their credit rating. In some cases, they were subject to a deficiency judgment, meaning their home, after foreclosure, was not worth enough to satisfy the mortgage debt and they were liable for the difference. Despite these risks to homeowners, the lenders' attorneys often decry people who are unable to pay their mortgage loan as miscreants who have "no skin in the game" (presumably, meaning the homeowners have nothing to lose--except their home, credit rating, financial security, and dignity).

Although these losses are enormous, the new wave designed to revive the buying/financing frenzy could be even more disastrous to homeowners. The worst case scenario for a homeowner in the situation above would be to declare a Chapter 7 bankruptcy. Certain assets would be protected from creditors in this situation, but the house subject to the mortgage would be lost in exchange for the opportunity to wipe the slate clean as to monies owed in the future--the deficiency judgment could be eliminated.

The new options will further rip wealth from the community. The MSN article urges people to take rob their retirement accounts and life insurance policies to buy homes.

These two savings vehicles are often exempt from creditor action and are often not taken during bankruptcy proceedings. I am sure a topic of many closed-door meetings has been: "How do we take those retirement and life insurance assets?" So far, the primary way this money has been stripped from consumers is through bad investments on Wall Street. However, even with bad investments, some people retain significant retirement savings.

If, as the MSN article urges, consumers are induced to voluntarily withdraw their secure savings and "invest" in real estate, it will benefit the banking community tremendously. First, those troubling, unreachable assets will be converted into a reachable asset: real estate. The homeowner can be induced to take a mortgage in the future, and pledge the home as collateral. Alternatively, the home can be taken to satisfy other debts if a lien is attached or if the homeowner declares Chapter 7 Bankruptcy.

Another benefit to lenders is that those who use their own funds to purchase homes will reduce the available housing stock, restore value currently drained out of neighborhoods as the banks that foreclosed allow the homes to rot, and increase the appraised value of surrounding homes. This will fuel another surge of mortgage lending and inflate the next bubble--one that will leave consumers with even less when it bursts.

Hang on to your savings! The foreclosure crisis has shown us that it is the intent of the lending industry to turn us into a nation of renters--people who can be dispossessed with almost no due process. "Investing" our retirement funds in a market that has been shown to work against our interests, absolving the banks of the need to put any "skin in the game" is a clear way for us to get fooled again.

Listen to WHPK Weds., 3/23, 3 - 4 pm

I will be discussing foreclosure issues and the reasons the proposed settlement to let lenders who robosigned mortgage foreclosure documents off the hook is insufficient with Alan Thomas on WHPK in Chicago.

Chicago listeners can tune in at 88.5

Others can steam the show live http://www.whpk.org/stream/ from 3 until 4 pm Central Time on Wednesday, March 23.

Bank of America Falsifies Your Insurance Data

A group of activists recently posted email and materials showing that Bank of America falsifies customers' insurance information. The link is at the bottom of this post. Mortgages and insurance are two topics that put most people to sleep. But this is important to YOU and can affect whether YOU will be foreclosed upon for no reason. YOUR home can be taken even if you are in full compliance with your payments and mortgage agreement.

First, let me make mortgages exciting to you. In order to buy a home, most of us have to take out a loan.

The bank wants to ensure you will repay the loan, so you give the bank a mortgage. Essentially, you promise that if you do not comply with all the loan terms, the bank can foreclose on your home--meaning they go through a legal procedure to sell your home and use the money to satisfy what you owe.

Most of us know that not paying our monthly mortgage bill will result in our home being taken away. However, very few people understand that your mortgage and note also require you to do other things. Your home can be taken if you do not comply. For example, you cannot fail to pay me for rewiring your house. If you do, I will file a mechanic's lien and your mortgage company will likely start a foreclosure. Other common problems come from payment of taxes and insurance. Many of us believe these bills are guaranteed to be kept current because we pay the sums to the mortgage company each month as part of our payment. We foolishly trust the lender to handle our money as agreed.

If we fail to keep our home insured, the bank will buy "force-placed insurance." This is a policy that only insures the lender's interest in the home. If the home is destroyed, the lender gets paid. You get nothing for your home or possessions. The force-placed insurance comes from a crony of the mortgage company and costs many times what your homeowners' policy costs.

It makes sense for mortgage companies to be able to keep the home insured. No lender would want to make a loan secured by a pile of rubble.

However, abuses come in because of the profit the lender can make from buying force-placed insurance from a crony and from foreclosing on your home without cause.

Typically, the lender sees that your insurance has lapsed. The lender buys the force-placed insurance and demands you repay the sum. This may be a lump sum or a repayment made through increasing your monthly payment to replenish the escrow account that is used to pay for your insurance. If you cannot make the payment demanded, the lender can foreclose on your home.

Problems come in when the lender causes your insurance to lapse or falsely accuses you of not having insurance. In some cases, the lender takes your money into an escrow account and fails to pay your insurance company as agreed. This leads to a force-placed policy and can result in a huge payment for you, a profit for the lender and its crony insurance agency, and an excuse for the lender to foreclose on your home.

In other cases, the lender falsely accuses someone of not keeping their home insured. The same cycle as above ensures, except there is a homeowner desperately trying to show the lender they have complied and their home has always been insured. The lender can choose to ignore this, make profits off the force-placed crony insurance, and even foreclose.

A very early case I had as a lawyer was a young professional woman who was falsely accused by her lender of not keeping homeowners insurance. By the time she hired me, she was in foreclosure and the lender was in the final stages of getting a judgment to take her home. The homeowner had dozens of fax confirmation sheets where both she and her insurance agent had faxed letters, policies, and proof of insurance showing the policy had never lapsed. The lender chose to ignore every one of these faxes and all of the calls and certified letters directed to showing them the foreclosure was wrong.

When I entered the case, the foreclosure attorney would not speak to me. When I tried to approach him about the matter, he stated he had filed his "form foreclosure" that "worked every time." He refused to discuss any details. I scrambled to file pleadings showing that my client was not in default and should not lose her home.

Luckily, one day, the foreclosing attorney was busy and sent another lawyer to court. We spoke in the hallway.

"What is this case about?" he asked.

I showed him the complaint alleging my client's insurance policy lapsed and the many, many communications to the contrary sent to the lender.

"Why are we here?!" The lawyer exclaimed.

"That," I stated, "would be for you to tell me."

My client was very, very fortunate to find an attorney to represent her in court. She saved a lot of money in fees and a lot of trouble and worry by the good luck that a sane attorney covered court one day and was willing to review the facts of the case and see that his client was wrong.

However, my client should never have been placed in peril of losing her home. Although there are some legal remedies available for situations like this, none make up for the risk of losing one's home and the sleepless nights it entails.

This is why the Bank of America/Balboa Insurance scandal is important to YOU. The bank subcontracted with a dishonest insurance company to mislead consumers about the status of their insurance policy, to overcharge them on insurance policies, and to set consumers up for wrongful foreclosure.

The lesson from this is to protect yourself. Keep insurance policies up-to-date. If you pay through an escrow account with your lender, contact your insurance agent now and then to confirm the payments are being made, and carefully monitor any charges for force-placed insurance. If the lender accuses you of lapsing, fax proof (keep the confirmation sheet). Send a letter disputing the allegation and showing the proof of insurance to your lender via certified mail. Keep the return receipt. Consult with a lawyer early on to prepare for a wrongful foreclosure and to assert all your legal rights.

There is a war on to take our homes. Fight back. Document everything. Keep your documents. Call your lawyer. Trust no one.

March on Madigan, March 24 (Thursday), 11:00 am

The Chicago Anti-Eviction Campaign, along with other Chicago social justice and housing advocates, is having a March on Madigan, Thursday, March 24, 2011, at 11:00 am. The tentative route is to Bank of America to HUD offices to Attorney General Madigan's office. We have requested a meeting with Attorney General Madigan.

Email for details. Plans are tentative as we check the proposed route to ensure it is accessible for people with disabilities.

Why Ben Bernanke is Wrong

When private attorneys gathered proof that foreclosing lenders cut corners and broke the law in conducting foreclosures, the attorneys general of all 50 states and the Fed had an opportunity. If homes were taken from owners under fraudulent pretenses, then there was potential to return homes or money to consumers. Future foreclosures could be subject to additional scrutiny to prevent people from wrongfully losing their homes. Those who purposefully falsified documents could, in some cases, go to jail.

This hope, prevalent in Fall 2010, fizzled Thursday. Consumer advocates were told the Fed's investigation found no wrongful foreclosures among several thousand foreclosure files examined. According to advocates at the meeting, "wrongful foreclosure" was defined very narrowly: a foreclosure when the homeowner was not "substantially" in default. (See http://www.huffingtonpost.com/2011/03/10/fed-reports-finds-no-wron_n_834010.html .)

The finding that the foreclosure process has been pristine comes while a proposed settlement agreement by the attorneys general that does little more than rubber-stamp the past bad acts of the lenders is pending. The settlement reiterates existing law at its best, allows an inadequate amount to compensate homeowners by allowing writedowns of loan balances, and provides no relief for those who lost their home because of falsified documents.

Bernanke, and the Fed, are wrong.

Relying on "substantial defaults" by borrowers to justify breaking the law in the process of foreclosure ignores due process and the right of redemption. Both are ancient legal doctrines on which the United States is based. Each of these ideas provides protection to everyone involved in a legal dispute.

Due process means that action is not taken against you in court without your having notice and the opportunity to be heard. This concept is flexible, and varying interpretations have been applied. It is almost undisputed that anyone who is a defendant in a lawsuit must recieve a summons and copy of a complaint.

Due process also means the right to confront witnesses who testify against you. A witness often appears in court, raises his or her right hand, and swears to tell the truth. Most of us realize that if we do this and then lie, we can look forward to a jail sentence for perjury. After the witness testifies, you (usually through your lawyer) have the right to cross-examine the witness. You can ask questions to clarify whether the witness is telling the truth or to bring out facts in your favor.

Foreclosures are not the basis for good Perry Mason episodes. Because foreclosure lawsuit rely heavily on documents, much of the testimony is often done by affidavits--written statements. The person signing an affidavit promises to tell the truth just as if she or he were in court. For this reason, we call affidavits "testimony substitutes."

Affidavits are also cross-examined. You (or your lawyer) have the right to read the affidavit and examine the facts it discusses. This is largely accomplished by attaching all paperwork relied upon by the person signing the affidavit to the affidavit. If this done, you or your lawyer can look though the paperwork and find errors in accounting or other mistakes. However, most lenders attach no paperwork to the affidavits.

Another way your lawyer can cross-examine the person who signs an affidavit is by taking his or her deposition--asking questions while the person is under oath. This means the affiant must be knowledgable about what the affidavit says. In the case of robo-signing, the person was not knowledgable. Robosigners signed affidavits without reading them, without attaching paperwork, without checking the facts, and without understanding anything about the cases. These "affiants" sat in front of a large stack of papers and signed without reading.

In addition to ignoring due process, the rubber-stamping of past foreclosures also violates the right of redemption. Rights of redemption vary from state to state. Generally, it is your right to save your home sometime before or after it is sold in a foreclosure auction by paying the money you owe.

In medieval England, it was not uncommon for a person buying land to lose it if the payment was a "day late or dollar short." Courts came to see this could be harsh--someone losing their land to due a late payment, even if it was the last payment due and every other payment was on time. Judges created "redemption" to help in this situation.

Bernanke wants to take us back to the European Middle Ages--before redemption. Virtually every step in modern foreclosure practice is designed to keep you aware of your rights, aware of the allegations in your case, and able to pay off your loan if possible. By rushing the cases through and not following the steps, lenders ensure homeowners cannot take advantage of this important right. Interfering with this right is called "clogging the equity of redemption."

An important step in the foreclosure process that involves both due process and redemption is that the bank has to prove its allegations before the home is taken. Laws vary, but generally a lender has to prove that it has the right to foreclose (owns the note), that you are in default, and the amount you owe.

Many people, like Bernanke, think this isn't important. If you are accused of missing a payment, your home should be taken with no trial. It is easy to understand why this is wrong by thinking of a car accident in which you rear-end another vehicle.

In the car example, you are, in some states, presumed to have caused the accident because you hit the other car from behind. This would make you liable for all damages.

However, even with this presumption, the other driver must follow all the usual steps to sue you. You receive a summons and complaint, you have the opportunity to answer, and your case can proceed to trial to decide whether you really hit the other car, how much damage was caused, and other facts.

In foreclosure, the bank should have to prove its allegations. This includes the sum you owe, which you must know in order to be able to redeem the property.

When people like Bernanke urge that homeowners are not entitled to fair and equal treatment in the courts, they threaten to take away rights that evolved over hundreds of years. Rubber-stamping bad bank behavior after the fact puts homeowners in a unique position, deprived of basic legal rights. Merely stating that one is "substantially in default" is not enough to win any other legal case. However, Bernanke and others are prepared to allow banks continue to take homes away without due process and without respect for the law.

Contact Your AG: Oppose the Robosigning Settlement

For a few minutes there, it seemed like we had the big banks cornered. Being the rats they are, they fought. Of course, it was not an honest fight. The banks, as usual, turned to back-door deals rather than any sincere change in policy or procedure.

The robosigning scandal came to light in the fall of 2010. Attorneys who represent homeowners had deposed bank representatives. For the most part, these were staff who signed affidavits swearing the bank truly owned the right to foreclose on a home, that the homeowner had failed to make payments, and facts required by law (even if judges don't enforce the requirement) to support a judgment of foreclosure.

In the depositions, employees testified under oath that they did not read or examine the affidavits they were signing. An affidavit is a substitute for in-court testimony, and signing an affidavit is the same as raising one's hand in court and swearing to tell the truth, the whole truth, and something like the truth. A failure to testify honestly in court is perjury, a jailable offense. Signing a false affidavit is committing perjury. In addition to the person signing the affidavit, an attorney can also be sanctioned if he or she knowingly offers perjured testimony (by putting a liar on the stand or turning in a falsified affidavit).

So, if you or I turned in a false affidavit: jail. If a banker turns in a false affidavit: ??? Well, thar's still gold in them thar hills, and we can't stop 'em from gettin' at it. (Of course, by "hills" I mean our pockets and by "gold" I mean a roof over our heads. But who can quibble when the bankers have been delayed in doing the good work of turning the broke into the broke and homeless?)

The glimmer of hope has already turned in to the gleam of more profits in a bankster's eye. In the short term, there was a lot of Internet buzz and it seemed change was on the way as banks halted foreclosures, attorneys general and Federal law enforcement agencies issued subpoenas for files, and affidavits offered by banks were subject to more scrutiny. However, less than six months later, the attorneys general and law enforcement agencies are ready to flip the switch and restart the machine that takes away home with no thought, no due process, and no justice.

The attorneys general have offered a settlement agreement to the banks. Much has been made of the length of the settlement agreement. However, 27 pages leaves a lot of room to use flowery language and hide the truth.

A thorough critique of the proposal would be longer than the proposal itself. Here, I am setting forth three simple points that, in themselves, are enough to send homeowners into the street to protest this latest giveaway.

1. The settlement will not require the original note to be produced. This gives official sanction to one of the most nefarious banking practices. Because loans have been transferred from bank to bank so many times, the original paperwork is "lost." Banks seek to foreclose without proving they own the debt and, therefore, have a right to foreclose. When a homeowner objects, the bank states that it has possession of the original note and, under legal technicalities (many of them fictional), has carte blanche to take the home. When the bank cannot produce this original note, it produces a robosigned affidavit saying, "Look, we really have it. We just can't find it. Maybe the dog ate it."

As long as the requirement of having the original note remains in place, a requirement that mirrors long-established commercial law, attorneys can argue that the affidavits are insufficient. Giving the green light to spurious affidavits will enable banks to continue foreclosing on debts they do not own.

A true danger is present for homeowners. If I falsely claim to own the right to foreclose on your home, present persuasive (if false) affidavits, and walk away with your home, the true owner of the debt still remains unsatisfied and could appear at any time and assert its legitimate right to collect. The collateral for the loan would be gone, so the rightful creditor would resort to garnishing wages and attaching other assets. This will further drain wealth from working communities.

As a simple matter, I can freely claim to own the right to foreclose on any home I wish. If your home is better than mine, look out! I may be sunning myself by your pool next year.

2. The settlement does not provide enough money to compensate injured homeowners. The banksters have walked away with bailouts, stipped wealth from working communities, received windfall tax breaks, and continue to escape financial responsibility. From a financial point of view, this settlement is like creating a clean-up fund for the Gulf oil spill using a couple of dollars from between somebody's couch cushions. A really poor somebody who has more pennies than quarters. There is no private right of action for a homeowner whose home is taken by a bank that is not complying with the settlement agreement.

3. The settlement puts new procedures in place for foreclosure proceedings, or, more accurately, reiterates steps that are already required (but ignored in many jurisdictions). If these are ignored now, it is hard to fathom why the settlement, entirely lacking in teeth as it is, would cause a change. Even worse, the new procedures only protect those whose homes have not yet been taken. For the millions of people whose home is presently rotting into the ground after a wrongful foreclosure, there is no relief.

Consumers should call their state attorneys general and object to the settlement agreement. A list is on the web here: http://www.consumerfraudreporting.org/stateconsumeragencieslist.php

And, of course, we need to take to the streets. Protests are being planned to let the powers that be know that this kind of compromise with the corporations that destroyed our economy is entirely unacceptable.

Modifications Denied?

Most people know that mortgage loan modifications are available in some cases. These are covered by HAMP ("Obama Plan") as well as through the mortgage company (private modifications).

There is a lot of controversey surrounding modifications. One of the dirtiest tricks, which will go down as one of the worst things ever done to average homeowners by big corporations, is mortgage companies tricking homeowners into not paying their mortgage. Homeowners seeking better loan terms call the mortgage company and ask for consideration for a modification. The mortgage company representative tells the homeowner that a modification cannot be considered unless the homeowner defaults on his or her loan.

The trusting homeowner defaults even though he or she had the money for the mortgage payment and intended to pay. When he or she calls to ask about the modfication, she or he hears that the loan is in foreclosure status. In the blink of an eye, the home is tied up in court and, in many cases, ultimately lost to foreclosure and bought back by the lending bank at a bargain price.

In other cases, homeowners send paperwork many, many times but are told it was never received. While the homeowner is standing at the fax machine, sending the paperwork for the twentieth time, the mortgage company runs into court and completes a foreclosure.

Finally, mortgage companies sometimes deny the modification outright. Often, the homeowner receives no official notice--the information may come via a phone call when the homeowner inquires about the status of a modification application. Sometimes, no answer is ever given or a "temporary modification" is never made "permanent."

HAMP and similar programs do not mandate that mortgage companies play fair. To the contrary, most programs turn the other way as mortgage companies run amok with excuses for their inexcusable conduct.

Fortunately, there are other legal theories available to homeowners. A few are set forth below, but you should consult with an attorney if you believe you have been treated in an unfair way.

1. Use the mortgage company's inaction defensively. If you are in foreclosure, take paperwork proving you have sent every document requested to the mortgage company, but still have gotten no answer. Some judges will delay entering a foreclosure judgment until the mortgage company provides an answer. This assumes you are in a judicial foreclosure state. This tactic will not work in the states where the mortgage company can automatically sell your home without going to court. Remember to document your allegations; judges are used to desperate people (understandably) saying anything to delay foreclosure. Be the person who has all the documentation in order!

2. Assert violations of the Equal Credit Opportunity Act (ECOA). The act requires lenders send you a letter to tell you that your request to change the loan terms was rejected and to explain why the request was rejected. This only applies if you requested the modification while your loan was current.

Another section of the ECOA forbids discrimination--and it does not matter whether your loan was current when you applied for the modification. Consider whether your loan was denied for a prohibited reason. Denial for a prohibited reason can include the lender's stereotyping of the area where you live. It is illegal for the lender to discriminate against you directly, but also to discriminate based on the racial make-up of your neighborhood. At this point, it is fairly clear that lenders deny modifications in African-American and Hispanic areas more frequently than in areas that are predominantly white. This is also known as "redlining."

3. Fair Housing Act--The Fair Housing Act prohibits discrimination in the same way as the ECOA.

One terrific aspect of a fair housing case is that one can file a complaint at no charge with HUD ( www.HUD.gov ) or a state human rights organization. This makes it easier for individuals to assert the important right to be free from discrimination in housing.

Do not assume the lender has done everything right. Raise questions when it appears your modification request did not get fair consideration.

The Good, the Bad, and the Unethical: Hints for finding a good lawyer

There is a lot of fraud directed toward homeowners in foreclosure. Rescue scammers, including attorneys, realize that a homeowner faced with the loss of his or her home is vulnerable. Homeowners will pay a lot of money for nothing from a lawyer with a fancy office and slick story while viewing me with distrust because I tell the truth: I cannot guarantee a result.

Many attorneys are taking unethical actions. These include soliciting clients at the courthouse. This is illegal.

Other attorneys promise to "delay" the foreclosure. This is unethical. The rules governing attorneys do not allow anything to be done just to cause a delay. There are many steps an attorney can do, if justified after reviwing an individual case, that happen to also slow down the foreclosure. But, an attorney who promises "a delay" without carefully considering every aspect of your case is breaking the rules--the same rules that guard against the attorney stealing your money or selling your confidential information.

Another unethical practice is taking money on a monthly basis, often equivalent to half one's mortgage payment. This is not permitted because attorneys are required to charge a fee that is reasonable related to services performed. During a lawsuit, there are many months when the attorney does not do anything. For example, the judge may have given the bank's attorney a month to file a paper, and the homeowner's attorney is simply waiting.

I had a recent email inquiry from someone outside my state who wanted to know how to find a good attorney, and may answer is below. For those in foreclosure, one of the most important things is to start out talking to a HUD-Certified Housing Counseling Agency. These services are FREE. A lawyer may be needed, but the counselor can help homeowners get a good start. A listing is available at www.hud.gov

Here are some tips for seeking an attorney that is not out to take advantage of you. There is no substitute for your good judgment after you speak with theGood attorneys:

--Don't advertise with huge ads on the back of phone books or on late-night TV or on billboards

--Don't tell you you have only one option, such as bankruptcy

--Don't sell products like a "forensic loan analysis" or say they are "experts" in areas like being a "short-sale" expert or "modification" expert

--Won't take your money for something another service will do for free. Free services include HUD-Certified Housing Counseling Agencies. There are exceptions--some people choose to hire me once I tell them there are other options. In cases where they have the money, that is fine

--Have a written retainer that tells you your rights and responsibilities

--Have a clear billing plan based on an hourly rate (NOT a monthly payment regardless of whether work is done that month) OR based on recovery from a third-party as a contingency of winning where the main goal is to sue someone and win money (rarely the case with mortgages; almost always the case with things like car accidents)

--Provide you with monthly statements or bills or some other way to know what is being done for you and why you are being asked to pay

Try going to your bar association to see if they have a referral service. It is best if these attorneys are screened. Check the state disciplinary records (official records maintained by the state disciplinary board, usually available online--NOT just a site that lets comsumers post comments) before hiring anyone. The latter often contain falsified information that attorneys post for each other as "satisfied clients."

Bear in mind that every case has a deadline called a statute of limitations. Once this passes, the legal claim is lost. Never delay in seeking an attorney, and always be clear with attorneys about dates as you describe your case.


.