During the recent election campaign, President-Elect Obama called for a 90-day memoriam on foreclosures to give homeowners more time to find a solution. The thinking behind the proposal is that rampant foreclosures will only deepen the economic crisis.

However, according to an article in American Banker, the plan has mortgage servicing companies nervous. No surprise that they oppose the plan - after all, they will suddenly have less money coming into their coffers and be prohibited from taking back homes.

Some lenders, such as JP Morgan Chase, have temporarily stopped foreclosing on homes. Chase has pretty deep pockets and can afford this largesse, but the smaller lenders and servicing companies are the ones that stand to lose the most in the event of a mandatory federal moratorium.

The hope among the smaller companies is that the voluntary suspension by the larger lenders will be enough to stave off federal intervention.

But let’s not think for a moment that JP Morgan Chase is playing “good cop,” or acting out of corporate benevolence. If foreclosures stop then the bank doesn’t need to worry about having huge inventory of houses on the corporate books. In addition, letting past due balances pile up gives mortgage companies the ability to tack on continued late fees and other default-related fees - the bread-and-butter of the mortgage servicing industry.

So is a 90-day moratorium a good idea? Probably not in the long run, though it’s an easy sell to the public. 90 days doesn’t give a homeowner a ton of time to get out from under the crushing mortgage debt, and it lets servicers jack up the mortgage balance significantly.

A better idea? Homeowners should face the problem head-on and consider foreclosure defense, workouts and Chapter 13 bankruptcy.

During the height of the housing boom, getting a home loan was easy. Lenders offered attractive incentives like low down payments and low initial interest rates. However, once the bubble burst, housing values plummeted as obtaining a loan became increasingly difficult. Now, many homeowners that took advantage of the lending boom have found themselves living in homes that are worth less than they owe on them.

Since they are falling behind on the mortgage and they cannot recover the money by selling, an increasing number are opting to let the bank take the home in foreclosure. Called walking away, this may not be the best course of action.

Someone considering letting the lender foreclose and simply walking away from the property may not have considered all the effects that a foreclosure can have. Having a foreclosure on your record may make it harder to get a new mortgage for at least five years. There is also the effect of foreclosure on your credit score to consider. With loans being much harder to get even for the best qualified consumers, you need to protect your credit rating at all costs.

Walking away from a home because you don’t like owing more on your home than the current market value is a bad idea. Home values rise and fall periodically - after the current market conditions have stabilized they will likely rise again. If you walk away now you’re locking in your losses rather than possibly reaping gains in the future.

Of course, if you can’t afford to make the mortgage payments then you may decide to walk away. But before you do, be sure to contact an experienced foreclosure lawyer to help you determine your best option.

It seems as though it’s getting more difficult to make ends meet. Homeowners are being forced into foreclosure in record numbers. If you’re one of them, or think you might be in the near future, you’re probably wondering what to do.

Just the word “foreclosure” conjures images of despair and desperation for many. However, much of the fear is brought about because so few homeowners understand how a foreclosure works. This is why it’s a good idea to consult with an experienced foreclosure lawyer if you are facing foreclosure.

Most people are under the impression that if they’ve fallen behind on their mortgage payments, there is no alternative but to accept foreclosure as an inevitability.

But the worst thing to do in a foreclosure case is nothing. Why? Because an experienced foreclosure lawyer can review the case, help you mount a defense, and put you in a better legal position. Whether there are problems with the loan itself, overcharging by the bank or just the need for a steady and in negotiations, a lawyer can guide you effectively.

Besides representing you in court during foreclosure proceedings, an experienced foreclosure lawyer can also help you find an alternative to foreclosure.

If you’ve been presented with foreclosure papers, all is not lost. Contact me for a free phone consultation to discuss your options.

Homebuyers face scammers who try to take you for a ride. This sort of predatory lending practice has become all too common in recent years. Homeowners end up unable to pay their mortgage and usually end up facing foreclosure. However, the State of New York has made amendments to existing legislation that punishes those that practice predatory lending.

The new legislation places restrictions on what are considered “high cost loans.” The law defines a high cost loan as one that exceeds certain boundaries, such as if the total “points and fee” exceeds 5% for a loan over $50,000 or 6% for a loan less than $50,000. The amended law now prohibits certain loan practices, such as lending money without considering the homeowner’s ability to pay, financing points and fees that exceed 3% of the total loan, giving kickbacks to mortgage brokers, and several others. There are to be no more balloon payments on loans of less than 15 years in duration and lenders are now required to provide a list of financial counselors to the borrower prior to the loan’s approval.

Certain elements have been added that provide assistance to homeowners facing foreclosure. Lenders are required to provide a written notice to the homeowner 90 days before any foreclosure proceedings can begin. This time is to allow the homeowner time to come up with a way of preventing the foreclosure and prevents the homeowner from being blindsided. The amendments also require a settlement conference, where all involved parties must meet within 60 days of the proof of service being filed with the courts. The lender or a representing attorney must appear with authority to dispose of the matter. In these situations, the court can appoint an attorney if the homeowner cannot afford one.

In response to the predatory lending practices of the past, the State of New York has taken steps to help homeowners defend themselves against foreclosure. If you find yourself facing foreclosure, contact me immediately to set up a time to talk about your options.

New York foreclosures tend to take anywhere between 7 to 18 months. The time it takes is subject to factors such as how quickly the courts work and how many people must be served with foreclosure papers. The foreclosure begins with the lender filing a lis pendens on the property and filing a lawsuit against the borrower and anyone with a possession interest in the property.

Foreclosures are handled differently from state to state, so it’s important to know exactly how they are handled where you live. In many states, more and more properties are held by deeds of trust instead of mortgages. In these trust states, foreclosures are handled at the county level, which means that the time it takes to foreclose on a property is considerably less than in mortgage states. However, most mortgages in New York are handled by mortgages and foreclosures require judicial action before a property can be sold at auction. The non-judicial methods, which are available in New York, are rarely used because of the higher possibility for title disputes.

In New York, after a lis pendens has been filed, it usually takes anywhere between 7 and 18 months for a property to be ready for auction. The reason for this period of time has to do with the courts and the number of parties involved in the foreclosure. Everyone involved in the foreclosure, which includes the mortgage holder, lenders, the homeowner, and any possible tenants of the homeowner, all require notification by the courts.

When a homeowner receives notice of a pending foreclosure, the worst thing that person can do is nothing. It is important for a borrower to examine his or her options. Some lenders will be willing to restructure a mortgage instead of proceeding with a foreclosure. Other options, such as Chapter 13 bankruptcy may also be able to stop foreclosure proceedings.

Before filing for bankruptcy, however, you should talk with an experienced foreclosure defense lawyer to review your options. Often, a mortgage bank has violated various state and federal laws; these violations can be used to defend the foreclosure and get you help without filing for bankruptcy.

In the previous post, we established the consumer’s right to rescind a loan under TILA. This second part of the series details how a consumer’s right to rescind can be extended beyond the normal three days.

According to the TILA, your lender must have informed you of several crucial details.

You must have been given proper notice of your three-day right to rescind your loan. This provision is meant to give you time to go over the details of the loan, and to give you a chance to change your mind about risking your home as a security interest. The document must specify the following:

a) The retention or acquisition of a security interest in your principal dwelling;
b) Your right to rescind the transaction;
c) How to exercise your right to rescind, using a form that designates the address of the creditor’s place of business;
d) The effects of rescission, and;
e) The date the rescission period expires.

Another thing your creditor should have disclosed is an accurate computation of the following:

a.    The annual percentage rate (APR), which is the effective interest rate you will be paying on the loan;
b.    All finance charges, meaning any fees paid directly or indirectly to the lender;
c.    The Amount Financed, which is the mortgage amount you applied for;
d.    The Total of Payments;
e.    The Payment Schedule, and;
f.    Other disclosures and limitations.

All of these charges must be accurate to a certain degree of tolerance, which is $35. This means that if you paid $10,040 dollars when you should have only paid $10,000 as stipulated in the contract, your creditor has violated the agreement and can be held liable.

To summarize, you must have been made explicitly aware of your right to rescind and of all the fees you have agreed to pay for. Failure to properly disclose ANY of these extends your right to rescind your loan to up to three years since the signing.

Defending foreclosure effectively means that you need to know all of the laws, and use all the defenses, at your disposal.  One of the tools to use may be the Truth-In-Lending Act (also known as TILA).

Enacted in 1968, this law is meant to protect consumers from inaccurate or unfair credit billing, by stipulating full disclosure of all key terms and conditions of credit by their lenders. Violations of TILA can mean severe penalties for the creditor, but more importantly, you can use it to keep your home through a special provision known as the right to rescission.

When one rescinds a loan, it will be as if the loan never happened.  You will be entitled to a return of the interest and fees you have paid to the lender to date.

Take note, however, that this right applies only to a non-purchase money security interest on your primary residence. This means TILA applies only to transactions on your primary home - whether it’s a regular house, a trailer, or a boathouse.

This right to rescind normally lasts for three business days, starting from the day you signed the agreement. However, this time period can be extended to three years under special conditions:

1.    You are not properly notified of your right to rescind your agreement.
2.    Your lender fails to properly disclose all credit terms of the transaction, as according to the TILA.

If either case happens, you may be able to rescind your loan in order to halt an impending foreclosure.