The Law Offices of Steven J. Grace

Archive for the ‘Foreclosure Defense’ Category

I was contacted last fall by a reporter from a large news organization asking for a comment on Illinois HB 1960, which was being presented in the Illinois Legislature. The reporter thought this bill was unfair to homeowners and he wanted my opinion on the matter.

Full Text of New Illinois Foreclosure Law; 735 ILCS 5/15-1505

The bill has since been passed and here is the actual language:

Sec. 15-1505.6. Objection to jurisdiction over the person.

(a) In any residential foreclosure action, the deadline for
filing a motion to dismiss the entire proceeding or to quash
service of process that objects to the court’s jurisdiction
over the person, unless extended by the court for good cause
shown, is 60 days after the earlier of these events: (i) the
date that the moving party filed an appearance; or (ii) the
date that the moving party participated in a hearing without
filing an appearance.

(b) In any residential foreclosure action, if the objecting
party files a responsive pleading or a motion (other than a
motion for an extension of time to answer or otherwise appear)
prior to the filing of a motion in compliance with subsection
(a), that party waives all objections to the court’s
jurisdiction over the party’s person.

Section 99. Effective date. This Act takes effect upon
becoming law.

What This Means

For the most part, this further limits a homeowners ability to properly defend a foreclosure. This statute essentially says that even if you stand up in Court, without an attorney, to merely learn about your case, that you have started the clock on your ability to dismiss the case for lack of personal jurisdiction. This really affects people who are acting as their own attorneys in their foreclosure case, or pro se defendants. This is because if you just show up once to your case, and then later on retain an attorney to defend your foreclosure you have effectively limited the defenses available to yourself, which includes motion to quash service and motions to dismiss for lack of service, or at the very minimum given yourself less time to prepare your defense. The Legislature had frivolous litigation and the lengthy court docket in mind when enacting this law, but at what cost? The media has already raised issues concerning faulty foreclosure practices and I feel as though this is just another blow for homeowners in the tragic foreclosure saga.

It is essential that you speak with a Chicago Foreclosure Attorney as early as possible in your case to avoid issues such as these. You can do so by calling Steven J. Grace, Esquire at 312-493-6912 or by filling out the form to your right.

The media has been making a big deal about the so called “Robo-Signing” scandals and the lack of proper documentation in many foreclosures. In fact, there was a nationwide foreclosure moratorium not even a year ago that has since been lifted. That’s how big of a problem there are with these mortgages. Now, supposedly the “proper safeguards are in place” and the foreclosure process is running properly.

A Little History

These mortgage issues can be blamed on:

M.E.R.S.- Mortgage Electronic Registration System

During the real estate boom, the mortgage companies created this company to facilitate the assignment of mortgages. MERS is basically a conduit or third party agent that enabled mortgage companies to buy and sell mortgage without having to actually go down to the Register of Deeds and file the proper paperwork. So instead, when Bank of America sells a persons mortgage to Chase, they could make this trade almost simultaneously, and that’s because MERS would be the only company that would keep record of the transaction. MERS would simply update the owner of the note and the mortgage. So the only mortgagor that would be listed at the Register of Deeds would be MERS “As third party agent”. This is why many local government have filed lawsuits against MERS, because by using this system they were effectively able to evade payment of real estate transfer taxes on thousands if not millions of transactions. It was a creative scheme.

The Securitization of Mortgages

The second cause of the lack of proper documentation in foreclosures is the trading that took place on Wall Street of mortgages and notes. There was such heavy volume of trading in mortgages at the height of the real estate boom that in many instances there’s no way to tell who owns what. Mortgages were bundled into trusts, bundles and REITS in order to make them look more attractive to investors. But, because of this sometimes there is a lack of chain of title as to who actually owns the right to foreclose. It can be quite complicated, but to put it simply a bank has to be able to prove it holds the mortgage in order to foreclose. Which can be quite the burden.

Going Forward

Nevada had just passed the Foreclosure Fraud Reform Act (A.B.284) which is effective October 1, 2011. This is a very interesting law that should prevent faulty foreclosures for many reasons. First of all, it essentially codifies the due diligence that must be done to establish the right to foreclose. The bank are now required to file the documents used to support a foreclosure to be filed in the county where the property is located. In addition, they must also file an Affidavit of Authority to foreclose. These affidavits are at the center of the “Robo-Signing” scandal. These affidavit essentially states, under notary, that the person has made the proper research to determine if the lender foreclosing in fact holds the mortgage. During the Robo Signing scandal many of these affiants that actually signed these documents admitted either in depositions or in the media that they in fact did NOT personally inspect the records. Thus, there is a strong likelihood that there have been banks that have foreclosed on properties they do not even own. This is a dangerous situation because renegade “lenders” could lie and claim to hold mortgages on overdue properties, falsify the documents, and hold a foreclosure sale. Essentially stealing the property free and clear.

In a lot of ways, Illinois already has a very similar process, and we’re very fortunate for this. There are many of these requirements already included in 735 ILCS 5/15-1101. Thus, because borrowers already have substantial legal rights, it is very important to have an attorney that understands what must be proven for a foreclosure sale to take place. Even if the bank has filed the necessary paperwork its important to make sure that they’ve proven their case by a preponderance of the evidence. To set up a consultation with an experienced foreclosure defense attorney, please fill out the form to the right or call (312) 493-6912.

A lot of people have come to me recently asking if they “can stop paying their mortgage”. This is what foreclosure lawyers call “Strategic Default”, which basically means to choose to default on a contract. Actually, the default can relate to any type of contract, including: credit cards, car loans, and yes, even mortgages. But for the most part, when you hear this term mentioned in the media its almost always on a segment regarding the housing crisis, which usually focuses on a borrower’s decision to default. The media has been surprisingly fair on this topic, usually painting both sides of the story.

Should I Stop Paying My Mortgage?

Well, this isn’t as simple as it sounds. There are a wide range of consequences that come with this topic, many of which are sometimes unforeseeable to the average person. You should always consult an experienced attorney before you make this decision, as it can definitely backfire, and I’ve seen it happen. One of the most important things to realize is that default, although it sounds harmless is actually a breach of contract. Yes, you can be sued. There are factors that go into the lender’s analysis as to whether or not this is likely, and it’s important to understand these fully. You must weigh the risk versus the reward, before you make a decision of this magnitude.

Is it a smart decision?

A property is deemed to be “Underwater” if the borrower owes more than it’s worth. This debt includes all liens and encumbrances that are recorded against a property, including second mortgages, tax liens, lawsuit judgments, etc. It has been estimated that almost 1/4 of all American homeowners are underwater on their mortgages which totals an astounding 11.2 million properties nationwide. In Chicago alone, its been estimated that up to 38% of all mortgages are underwater. The question then becomes whether or not it’s a smart decision to hold a property that may never have any value. You must look at the entire picture before you make such a drastic decision. Some factors to consider include: how far a house is underwater, safety of the neighborhood, comparable rental prices and desires to relocate. There are many moving parts when analyzing these situations and a good lawyer will be able to guide you by pointing out all the potential pitfalls and rewards.