Can your home suffer foreclosure even if it has no mortgage or liens?
Imagine you own a home – free and clear—no mortgage, no liens, it is all yours. Imagine you are advised that a bank has shown up at your property to foreclose on “their” mortgage and take possession of your property. Just a mistake, right? You talk to the company, they back off and you go on about your business.
Imagine that several months later you learn that the “free and clear” home has been foreclosed on; the bank has broken in, changed the locks and thrown away all the contents of the home.
Could not happen? Think again, because it did.
It has required the home owners to sue the bank with whom they apparently had no mortgage relationship and are now in the process of being required to litigate the matter. (Cardoso v. Bank of Am., No. 1:10 CV 10075, D. Mass.).
What about home owners who have worked out loan modification agreements with lenders who come home to find locks changed and homes seized.
Or, homeowners who have no relationship with “Bank A” coming home to find that “Bank A” has broken in, changed the locks and taken possession of…, oh, sorry the wrong home.
These are just a few actual examples of the problems being experienced by homeowners across America in the midst of robo-signing of foreclosure court filings and the apparent complete breakdown of communication between banks and their “servicers”
In the real estate boon, more than ever before, banks and mortgage institutions engaged in the securing of mortgages only to bundle large numbers of individual mortgages together and sell them off to other institutions. The other institutions, in some cases, sold all or part of those bundles to other institutions, who bundled various of the mortgages and sold to other institutions and so on.
Before the big boon, the mortgage company “servicers” were largely restricted to sending out statements and collecting payments. With the filing of over 2.9 million foreclosures (2010) came an expanded role for servicers. They began dealing with servicing securitized loans, dealing with delinquent loans, performing property preservation and changing locks to keep out homeowners. Often servicers are not paid until they accomplish their job– taking possession of the home.
In some cases, servicers have been involved in negotiating loan modifications under the government legislation called the Home Affordable Modification Program (HAMP). Often, the people handling the loan modification work-outs are simply not communicating with the people handling the foreclosure process. This results in people who, in good faith, believed they had reached agreements to satisfy their mortgage holders coming home to homes with changed locks and furniture piled up out front or gone altogether.
In many foreclosure cases the institution trying to foreclose can not or does not properly produce any reliable documents to prove they actually hold an interest in the property upon which they are trying to foreclose because the mortgage has been sold so many times to so many banks. If fact it may be fair to wonder whether homeowners really have any idea who their mortgage companies really are and mortgage holders are apparently having the same problem.
What can homeowners do?
- Know who your actual mortgage holder really is and the legal connection with any other entities, such as service providers.
- If something has happened in your life and it is causing a financial crisis requiring you to temporarily become delinquent in your mortgage, contact your mortgage holder.
- Do not ignore your mortgage company. If they are contacting you and you are behind in mortgage payments, they are not going away and ignoring them is the fastest way to compel them to action.
- Document, again, document all your contacts with anyone connected with your mortgage. Confirm with written follow ups of agreements and conversations.
- Do not fly blindly. If your mortgage company tells you something you do not understand ask them to explain it to you until you do and, then, document the explanation.
- If you think you are over your head in the process, consult with an attorney. Consulting an attorney for advice or to better explain a particular point does not require that you hire that attorney permanently.
- Be honest and realistic with yourself and with your mortgage company.
- If you believe your loan is heading for foreclosure despite your best efforts, consult an attorney for advice.
And, by all means, if you come home to a locked house, furniture in the front yard and a foreclosure notice on the door, but you are not behind in your mortgage, contact an attorney and the police immediately.