Should you delay foreclosure?

You have to give lawyer Mark Stopa points for bluntness.

He’s one of a number of Tampa Bay foreclosure defense attorneys who have been marketing a simple strategy:

If you suspect foreclosure is imminent, stop making your monthly house payments. Hire a lawyer to frustrate the bank. Use the yearlong delay to build a nest egg with the deferred house payments. Enjoy living in the house mortgage-free.

“The biggest mistake homeowners make is to keep paying when they know they’re in trouble,” Stopa said this week.

When I wrote about this break-the-bank-and-save-a-bundle strategy online this week, a surprising number of readers gave Stopa cyberspace kudos for taking lenders down a notch.

The bitterness is understandable.

A report this week showed that lenders filed 4,586 fresh foreclosure lawsuits in September against Tampa Bay home­owners. Banks auctioned or repossessed another 2,100 homes. Each month presents a similar picture.

But the premeditated freeloading advocated by Stopa gives many people the ethical heebie jeebies. If you can’t afford the mortgage, it’s your duty to unload the house. In fact, about 90 percent of homeowners view foreclosure as a fait accompli and throw themselves at their lenders’ mercy.

But Stopa made a compelling, if self-interested, case for resisting. His prime delaying tactic is asking a judge to dismiss a case under the loophole that the originating lender isn’t the same one initiating the foreclosure. It can take bank attorneys half a year to sidestep the legal minefield.

Stopa assumes bankers are more amenable to modifying and refinancing mortgages once they’ve been slapped around a bit. He said lenders have stiffed consumers of their share of billions of dollars of stimulus the government poured into the banking system.

Stopa charges a $1,300 flat fee, though he admits that handling the initial paperwork consumes little more than 15 minutes of his time. More time-consuming legal wrangling sometimes comes later. So is it worth the money to hire a foreclosure attorney? It depends on how legally savvy homeowners are.

Lawyers make grand claims about fending off the foreclosure wolves, but remember that Florida’s overstretched judiciary hasn’t exactly been breaking speed records. I know a guy in Tarpon Springs who hasn’t paid a dime on his mortgage in two years. The homeowner has no legal representation, but the sad sack lender has yet to give him a well-deserved heave-ho.

A foreclosure task force commissioned by the Florida Supreme Court concluded in August that both plaintiffs and defense attorneys sometimes play fast and loose.

A handful of Florida law firms — known as “foreclosure mills” amongst their detractors — handle 90 percent of cases for banks. Such assembly line processing inevitably invites errors.

But the task force also had tart words for the foreclosure rescue community. Defense attorneys are apt to file “boilerplate motions to dismiss” meant only to delay rather than illuminate.

The Supreme Court supports mandatory mediation when foreclosure threatens a principal residence. In the Florida courtrooms where it’s been tried, lenders and homeowners have settled out of court 73 percent of the time.

Where does that court-unclogging recommendation leave attorneys like Stopa? Best not to worry. Fifty-thousand Tampa Bay foreclosure cases a year provide plenty of pickings.

Banks may not be able to produce the mortgage note.

Has the Bank lost the Promissory Note to your home but they are still trying to foreclosure? Well, you are in good company because these circumstances occur frequently. The first thing you should do is contact an attorney who can help you fight the foreclosure because you have a good defense. If a bank cannot prove ownership of the Note they therefore, do not have the right to enforce the Promissory Note. What does this mean for you? It means that the Bank cannot foreclose on your home and the Foreclosure will be dismissed!

Once you have been served with a Summons and Foreclosure Complaint, you need to file something with the Court within 20 days. This is exactly why you need a Foreclosure Lawyer. If you do not serve the proper discovery during the interim between being served with the Foreclosure Complaint and the Final Summary Judgment Hearing, then you are a sitting duck. Many people file what they believe to be a good Answer (response to the Complaint) with the Court. They believe that they have fended off the evil Bank because they do not hear from the Bank or the Bank’s attorney for weeks, or even months. I can assure you, this is only the calm before the storm! I will bet dollars to doughnuts that you will receive a Motion for Summary Judgment and soon thereafter you will find yourself waiting on a fast approaching Court date. You have essentially put the nails in your own coffin. You will not be able to begin initiating discovery and building a case against the Bank at this point. The time to fight the foreclosure is NOW! As soon as your receive a Summons with the Complaint to Foreclosure, call an attorney and discuss your options. Make sure the attorney can articulate all of the steps that will be taken to vindicate your rights in this foreclosure defense. If they have lost your Promissory Note, then you need to start doing Discovery and building a case against the Bank. “Discovery” means all of the lawyers techniques and tools that a lawyer uses to get the proper information from the bank. Incriminating information showing that the Plaintiff did not follow the rules, and therefore is not entitled to Foreclose on your home. It’s not magic, but foreclosure lawyers are familiar with exactly what forms need to be filed and more importantly, the precise time to file each of those forms.

The Bank is not going to be able to Foreclose on your home unless they can either produce the Original Note or prove that they are entitled to enforce the Note. They usually prove this via a chain of title, or a sequential set of assignments from the original Lender/Mortgagee to the Plaintiff. There are reasons that it is difficult for the Bank to produce the Note, such as the following:

Bank’s bundle mortgages into securitized Trusts which are then sold to investors. The Bank uses Securitized Trusts as a tax shelter, and many times Banks do not record their Assignment with the Comptrollers office. So did the Bank actually lose the Note? My guess is that they probably sold the Note to investors and no longer have possession or even ownership. Or the bank has either hidden or destroyed the Note because they did not want to pay their taxes. These banks which have not paid taxes, did not record an assignment proving ownership, sold the Note to investors and still try to foreclose on your property to get a windfall should be punished. Hopefully, we as lawyers can protect the people who have been taken advantage of by the banks. After all, it was the banks who have created this subprime mess in the first place and it is a few unscrupulous banks which perpetuate the destruction of our economy. After all, does it make sense to sell a property at a Judicial Sale for tens of thousands of dollars less than its value, when they could instead reduce the interest or principal to help lower the payments for those in foreclosure?

It’s understandable that most distressed homeowners who are served with foreclosure papers are intimidated and their natural instinct is to vacate the property. That is exactly what the banks, who probably can’t even foreclose on the distressed homeowners want. Everyone who is served with foreclosure papers has 20 days to respoond. That is why it is imperative to see an attorney who is proficient in foreclosure defense. Without responding to the foreclosure papers you may be giving up your home when you don’t have to.

Posted by George Beckus Esq 12/15/2009