Save home from foreclosure: Courts can waive off mortgage

sara

Can courts waive off your mortgage debts? Well, yes, they can. Two recent legal decisions - one in a New York and another one in a Tampa, Florida have canceled homeowner's entire mortgage as the lender was unable to provide the mortgage paperwork to the court. Let's check out what happened in both the cases:

The New York case…
A New York resident was facing foreclosure this September. The borrower requested for a copy of the mortgage deed on his home. The lender, PHH Mortgage, was unable to provide the required papers to the court. Thus, the court waived off the entire mortgage debt. Do you want to know the amount waived off? It's $461,263.

The Florida case…
A Tampa based woman, facing foreclosure, requested her lender to provide her with the original mortgage paperwork. However, to her delight, she found out that the lender didn't have the deed. Thus, the foreclosure court stopped the proceedings and has threatened to cancel the entire debt if the lender couldn't produce the paperwork in the court.

(Source: "www.mainstreet.com/article/moneyinvesting/real-estate/new-way-fight-f oreclosures?page=1")
These decisions by the foreclosure courts have left the mortgage lenders in shivers.

In 2008, the University of Iowa has concluded in a study that mortgage companies have the habit of misplacing important documents related to mortgage. The most surprising fact is that, it has been found that 40% of the time, the original note was misplaced by the lender.

Though it's not easy, but homeowners can go ahead and ask their lenders to produce the required paperwork if they are facing foreclosure. However, nothing's guaranteed and they would require the help of a good real estate lawyer.

Guest

Though the incidents go in favor of the mortgage borrowers who will be better off in this period of real estate crisis, the lenders would be in a bad state. Moreover, I feel such decisions would badly affect the mortgage market which is showing signs of recovery. I hope a bill would be passed in the future wherein the terms and conditions of waiving off the mortgage would be mentioned clearly. Thus, it would help both the borrowers and lenders.

adonis · Posted: Wed Nov 25, 2009 9:58 pm Post subject:

Hey Sara,

Another incident of waiving off mortgage by the court took place with an Long Island couple. There property had gone into foreclosure. However, the Suffolk Judge Jeffrey Spinner, gave them a nice Thanksgiving present and wiped out $525,000 in mortgage payments as demanded by their bank. The court had declared the foreclosure decision of the bank as "harsh, repugnant, shocking and repulsive" act.

The borrowers, an aged couple, had been paying off only interest on their mortgage. Thus, they had no equity in the property. They had requested the lender to restructure their loan. However, as per the borrowers, the lender did not co-operate with them.

The lender, on the other hand, has claimed that they would appeal against the judgment at the higher court and try to overturn it. The bank has also claimed that they were extremely co-operative with the consumers and have modified loans through the Obama administration's Home Affordable Modification Program and other loan modification initiatives.

(source - foxnews.com/story/0,2933,577105,00.html )

smithsussane · Posted: Thu Nov 26, 2009 10:59 pm Post subject:

I agree with the fact that it's the lender's responsibility to maintain the documents related to the borrower's loan. However, it's quite shocking that the court would forgive the debts. I don't think this would help the mortgage market. Rather, such decisions can further hamper the recovery of the real estate market from the crisis that it's going through.

riseabove · Joined: 09 Nov 2009 Posts: 214 1.30 Dollars($)

If the lender is foolish enough to not be able to prove their legal debt, then yes they deserve to lose their right to recover it, but come on you have to wionder how often this will work. surely if it';s widespread enough to make a difference to many people it'll just start another mortgage domino effect?

Banks not being able to recover debt means they lose money, and on a large enough scale it's not too different to what started the credit crunch to start with.

Great for a few people, potentially catastrophic for the wider community if it's widespread.

That said, I'd love it if my bank just lost my mortgage - instant end to my financial worries for the foreseable future- like winning the lottery really.

gmakerley · Posted: Fri Dec 11, 2009 10:01 am Post subject:

i doubt it's a matter of "how often this will work," quite frankly. it does, of course, make sense, for a borrower to use a defense such as asking the mortgagee to produce the documentation surrounding the mortgage.

okay...rise...being selfish here? what's good for the goose is not good for the gander, or something like that? just kidding here, of course.

i agree that this isn't going to be rampant in the country - few lenders are inefficient in such a manner. but i wonder why copies of the documents that are recorded in the land records in various locales wouldn't be sufficient to make a judge happy. they'd be easy to obtain and deliver to the court on a timely basis and would presumably save face as well as plenty of dollars for the lenders.

UMAR_MUGHAL76 · Joined: 20 Oct 2009 Posts: 11 2.62 Dollars($)

HI
t';s widespread enough to make a difference to many people it'll just start another mortgage domino effect?

Banks not being able to recover debt means they lose money, and on a large enough scale it's not too different to what started the credit crunch to start with.

Great for a few people, potentially catastrophic for the wider community if it's widespread.

That said, I'd love it if my bank just lost my mortgage - instant end to my financial worries for the foreseable future- like winning the lottery really.

gmakerley · Posted: Sat Dec 12, 2009 6:40 pm Post subject:

umar, the copying of someone else's post to pretend it's yours is downright ridiculous and rather rude.

i hope you have a little more sense than that in the future.

Guest

I recently did a refi and to date the new mortgager has not wired monies to the settlement compnay. Now the servicing sid eof the new mortgage has accepted the first payment with out nothing being done close on the loan. Settlement company sent me a letter saying to to continue paying old mortgage becuase they feel and have cancled nor did not file the new mortgage. My old mortgage lender now has me 2 months late on mrtgage payments. What a mess! Any clues to correct this issue fast.

gmakerley · Posted: Mon Dec 21, 2009 9:09 am Post subject:

attorneys will be falling all over themselves to hear of your quandary. have you contacted any? have you contacted the regulatory agency charged with oversight of this new lender? you need to act, and act fast. go both routes, if necessary. this is a travesty.

Guest

I am in need of a lawyer. How do I ask to take this case with out paying a fortune up front.

gmakerley · Posted: Thu Dec 31, 2009 11:27 am Post subject:

you need to shop around, quite frankly. i think you've already wasted time, and your next opportunity to find one is next week now.

starting right now, you ought to be checking with friends, loved ones, clergy, etc. - whoever you know and may have trust in - to recommend to you a good lawyer who might be willing to work with and for you. presumably, in a case such as you describe, a lawyer might ask for an upfront fee that will later be offset by an award by the court.

a fortune? i suppose that's highly individualized - my fortune is perhaps more or less than yours. you'll have to be the judge of that. but they'll talk to you for free, so get on the horn and start asking around.

csorrell211 · Joined: 02 Feb 2010 Posts: 1 1.12 Dollars($)

Hi guys. For all the best info on Florida mortgages please go to -
http://www.flmortgage.us

gmakerley · Posted: Tue Feb 02, 2010 9:33 am Post subject:

having very quickly previewed this florida site, i have to say i cannot recommend it at this time to anyone. the author appears to be located in the United Kingdom (across the Atlantic Ocean, in case you didn't do well in geography), and that leads one to wonder just how much expertise there might be lending itself to a site concerning mortgages and real estate in the State of Florida.

before relying on any specific claims on that site, do your homework.

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