Chase foreclosures continuing despite self-imposed moratorium?

From the information posted in this article, it appears that at least some Chase foreclosure actions are continuing despite their statement that they have stopped them in all 23 states that require judicial oversight.

JPMorgan Chase & Company and Bank of America Corporation announced that they were holding off on court-based foreclosures until they could sort out issues with them.

But, in Lee County, court records indicate that both of those banks kept on receiving court judgments that allowed the sale of mortgages on foreclosed houses at public auctions.

Who really owns your loan?

On Thursday, the stock market reacted negatively to the foreclosure crisis and punished bank stocks.  Why the negative outlook?

According to a story in yesterdays Marketplace program, investors are worried about the validity of documents, but not just the documents between the banks and the homeowner, but the documents between the banks and the scads of people who they sold the loans to, in little bits and pieces.

It may just be that in all the excitement, the banks didn’t do a very good job of tracking all the transactions and the documentation for those transactions, which might make it extremely difficult to actually prove who owns the loan.

So what does this mean?

If it isn’t possible to prove who owns the loan, it would be very difficult to banks or anyone else to prove they have the authority to demand that you pay them your mortgage payments, in a court of law.  This likely means though that, barring some high-level litigation by state’s Attorney’s General or a class-action lawsuit, you would have to challenge the bank in court to prove it has the authority to accept your payments or foreclose on you.  This is not without precedent; people have successfully gotten their loans dismissed because the bank couldn’t prove it owned the loan.

Another scenario is that banks might be forced to take back the loans they can’t properly document, and this is perhaps the main reason the banks stocks got hammered yesterday.  If the securitazation transaction is reversed, the bank would still have to document the original transaction, but I think they are more likely to have this paperwork.

A little bright news for borrowers.

Chase widens foreclosure review to 41 states

With Attorneys General from all 50 states now breathing down their back, Chase is expanding its review of foreclosure practices to 41 states, according to this article in the Wall Street Journal.  In an interview JPMorgan Chase CEO Jamie Dimon says this:

“No One has been evicted out of a home who shouldn’t have been.”

Oh really?  What about Judi Moser?

She showed Channel 2 Action News reporter Richard Elliot what’s left of her life after deputies and crews evicted her from her home of 29 years — only to put it all back when they learned the bank made a mistake.”

And then they said, ‘Oops, wrong, we made a mistake. Let’s put everything back,'” said Moser.

Moser said it all started when she hit some tough times and called her mortgage holder, Chase Bank, to make a home loan modification.She said she was approved and sent Chase $4,000.But, she said, Chase never processed the paperwork, which caused a mistaken foreclosure in February, and last week’s eviction.

That story isn’t an anomaly.  We’ve seen quite a few stories where people are in the process of a loan modification and they get foreclosed upon, a process called parallel foreclosure which Chase has admitted to practicing.  For example:

We were in the middle of a loan mod when we got the foreclosure notice stapled on our home…we called Chase they said to ignore it and we continued with the loan mod.

That’s right, Chase actually told the homeowners to ignore the foreclosure notice and they lost their home.

Chase refuses to foreclose

Well this is a story with a strange twist:  A customer walks away from his house, hands Chase the keys, and three years later, having received no payments, Chase still refuses to foreclose and is trying to get the customer to take the house back.

chase wont foreclose on my house.i closed my company in 2007 walked into my local chase handed them the keys to my house and told them i was walking away from the house i then filed bankruptcy on half million dollars in debt including 150 thousand on the house. i was granted bankruptcy feb.2008. my problem is chase still has not foreclosed on my house. they keep calling me wanting to refinance a house i have not lived in for three years they keep suggesting i rent it out or something.i have told them i have a new job 800 miles from the house i do not want the house and would they please please take it back by foreclosure but so far they wont and they keep calling. the last call they asked where was i employed now what was my income

Chase faces more pressure to stop all foreclosures

Chase has so far announced that it is temporarily halting 56,000 foreclosures in 23 states due to incorrect documentation procedures, but new developments are putting pressure on Chase to extend their foreclosure moratorium further.

In particular, Bank of America has announced it is halting all foreclosures in all states to investigate documentation irregularities and at least one title company has singled out Chase and announced it won’t be insuring the title for any purchases of homes foreclosed upon by Chase until the issues have been resolved.

Additionally, California is the latest of at least 9 states that have announced they are investigating the matter.

Update:  While Chase has not said it will widen its foreclosure moratorium past the current 23 states, it has stated (WSJ 10/9/10) but it claims to be “widening” its document review beyond those 23 states.

For people facing foreclosure, it may be a good time to request a review of all documentation related to the foreclosure.  In other words, make them show what they have and specifically challenge whether the people who claim to have reviewed the documents actually did.

New roadmap for fighting foreclosure and getting your loan balance reduced

An excellent article in today’s Wall Street Journal spells out some of the growing tools that homeowners have to fight foreclosure and apply pressure to the people who actually own their sliced-and-diced loan to reduce their loan balance.

LOXAHATCHEE, Fla.—Israel Machado’s foreclosure started out as a routine affair. In the summer of 2008, as the economy began to soften, Mr. Machado’s pool-cleaning business suffered and like millions of other Americans, he fell behind on his $400,000 mortgage.

But Mr. Machado’s response was unlike most other Americans’. Instead of handing his home over to the lender, IndyMac Bank FSB, he hired Ice Legal LP in nearby Royal Palm Beach to fight the foreclosure. The law firm researched the history of Mr. Machado’s loan and found two interesting facts.

First, the affidavits IndyMac used to file the foreclosure were signed by a so-called robo-signer named Erica A. Johnson-Seck, who routinely signed 6,000 documents a week related to foreclosures and bankruptcy. That volume, the court decided, meant Ms. Johnson-Seck couldn’t possibly have thoroughly reviewed the facts of Mr. Machado’s case, as required by law.

Secondly, IndyMac (now called OneWest Bank) no longer owned the loan—a group of investors in a securitized trust managed by Deutsche Bank did. Determining that IndyMac didn’t really have standing to foreclose, a judge threw out the case and ordered IndyMac to pay Mr. Machado’s $30,000 legal bill.

First, if banks are no longer allowed to use robo-signers and actually have to review documents, they may avoid foreclosure as an option.  Second, they may not actually have the authority to foreclose, as evidenced by this story.  In any event, it is worth pursuing actually making the bank prove that it has done the proper research and has the right to foreclose.

Mr. Machado and his lawyer, Tom Ice, say they now want to convince the owners of the mortgage to cut Mr. Machado’s loan balance to between $150,000 and $200,000—the current selling price for comparable homes in his community near West Palm Beach. “The whole intent was to get them to come to the negotiating table, to get me in a fixed-rate mortgage that worked,” Mr. Machado said.

If it proves difficult for the bank to foreclose, reducing the loan balance so they at least get some payment may be their best choice, and having proved you aren’t going to let them foreclose without having done everything precisely right, they may simply give in.

Good luck!

Chase admits it practices parallel foreclosure

This is the first time I have seen Chase actually admit they instigate a parallel foreclosure whenever someone applies for a loan modification.  In the case of this great story from CBS 5 News in Arizona.  In this case, even though the homeowners had worked out a modification with Chase and made all required payments, Chase “accidentally” foreclosed anyways.

Incorrect documents not stopping Chase from foreclosing in Pacific Northwest

Chase has admitted that documents related to foreclosures (and the authority of Chase to foreclose on a given property) have not been sufficiently reviewed for accuracy so they stopped paused 56,000 foreclosures in order to review their process.

However, ever the opportunist, Chase chose not to freeze foreclosures in the Pacific Northwest states of Washington, Oregon, and Idaho, because those states do not have a judicial process involved in foreclosures.  In other words, they are continuing with the same practices in those states, because they didn’t or can’t get caught there like they did elsewhere.

Everything Chase does just seems to reinforce the image that they don’t actually care about the customers, just the money they bring in.