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Home Foreclosures: 17.3.4.5 Recording a Lis Pendens or Other Notice

In order to cash in on the homeowner’s equity, rescuers may attempt to mortgage or resell the home promptly after acquiring it. If the new owner or lender is truly a “bona fide purchaser,” the homeowner may not be able to get title to the house back or unwind the rescuer’s mortgage transaction.147

Home Foreclosures: 17.3.4.6 Evaluating the Competency of the Consumer and Determining Whether Family Members Have Conflicts of Interest

People who are vulnerable—sometimes because of desperation or a trusting nature, but sometimes because of incompetency—are preyed upon by foreclosure rescuers. The attorney should be alert to any questions about the homeowner’s competency and evaluate the need for a guardian ad litem. Sometimes it may be advisable to enlist the assistance of a local Office of Public Guardian (OPG), or similar agency, in helping to determine the competency of a homeowner.

Fair Debt Collection: 15.3.1 Overview

The right to privacy is recognized in some form in almost all jurisdictions.166 Various statutes and regulations protect consumers’ privacy, either generally or with respect to specific information, such as banking, health care, or receipt of public benefits.167 Protection of confidential information is also required by the rules governing lawyers and health care professionals, among others.168 The FDCPA and state debt collection statutes protect s

Fair Debt Collection: 15.5.1 Overview of Elements

The law of libel and slander is subject to complex local variation, and decisions are often inconsistent even within the same jurisdiction. The development of a particular jurisdiction’s case and statutory law therefore requires especially close scrutiny. The law of defamation has its own vocabulary and requirements of pleading, damages, and privilege, which will be discussed here only as relevant to debt collection.

Fair Debt Collection: 15.6.1 Description of the Two Torts and State Variants

Malicious prosecution and abuse of process are both torts that apply to wrongful use of judicial or quasi-judicial processes.325 Malicious prosecution is the more widely accepted and precisely defined of the two. Some courts restrict malicious prosecution to criminal proceedings,326 but more commonly both of these torts may be applied to either criminal or civil proceedings.

Fair Debt Collection: 13.7.3.8 Midland Funding and Regulation F Do Not Preclude Most FDCPA Claims Involving Bankruptcy Proofs of Claim

The Midland Funding Court did not consider whether consumers can bring claims related to a bankruptcy proof of claim when those claims do not focus exclusively on the time-barred status of the debt. Many courts have confirmed that the Supreme Court ruling does not preclude a debtor from asserting a claim that the debt collector violated the FDCPA when it falsified or misrepresented the amount owed in a proof of claim.463 Similarly, Reg.

Consumer Bankruptcy Law and Practice: 17.1.4.1 Generally

An attorney who undertakes representation of farmers in financial difficulty should become familiar with some of the unique aspects of farm finance. Historically, farms have benefited from special laws that reflect Americans’ support for family farms, and farm finance exemplifies this support. For example, state law should be consulted as there may be special protections that are available to farmers that face foreclosure.47

Truth in Lending: 5.15.10.2 Coverage

The escrow cancellation notice must be provided in any closed-end credit transaction secured by a first lien on real property or a dwelling for which an escrow account was established in connection with the transaction.1665 “Real property” includes vacant and unimproved land.1666 “Dwelling” includes vacation and second homes, as well as manufactured homes, boats, and trailers used as residences.1667

Home Foreclosures: 5.14.1 Overview

The COVID-19 pandemic that began in March 2020 had a significant impact on mortgage delinquencies. As part of the broad response to the emergency, federal and state legislation sought to limit potential foreclosure activity. As discussed below, several of these measures placed temporary holds on foreclosures. In addition, governors, state banking agencies, and court systems took steps to restrict foreclosure activity in many jurisdictions.

Home Foreclosures: 8.2.3.2 Documents to Review for Loan Origination Claims

Certain types of home loans trigger disclosure requirements. For example, variable rate disclosures are required for variable rate loans.7 At a minimum, advocates should obtain copies of the loan note and the mortgage or deed of trust. The Loan Estimate and Closing Disclosure, Truth in Lending Act (TILA) disclosure and HUD-1 settlement statement, or TILA/Real Estate Settlement Procedures Act (RESPA) Integrated Disclosure, whichever set of documents is applicable, should also be reviewed.

Home Foreclosures: 8.2.2.2 Document Sources

The most common sources of documents are: the homeowner; the lender or owner of the loan; the settlement agent; the title insurance company; the broker; the servicer; and the registry of deeds or other public office where security interests are recorded.

Home Foreclosures: 8.2.2.3 Storing Documents

Documents in mortgage lending cases may come from a number of different sources. In addition, what is not included in a set of documents may be more important than what is included. For this reason, document handling procedures and chain of custody issues are important should a case go to trial.

Home Foreclosures: 8.2.5.1 Payoff Amount

The payoff amount is typically the amount the homeowner is required to pay to satisfy the loan and obtain a release of the mortgage or re-conveyance of the deed of trust. In addition to principal and interest owed on the loan, the payoff amount will include any prepayment penalties, late fees or other fees that the servicer believes are due. It may be useful to compare the current payoff amount to any previous payoff statements that the homeowners obtained to determine if any improper fees or charges have been assessed.

Home Foreclosures: 8.2.5.3 Contact History

Most servicers maintain a contact history detailing communications with the homeowner and other third parties. The contact history may also list important events in the loan’s history such as the date letters were sent to the borrower or the date the loan was referred to a default servicer. Automated calls to the borrower may also be recorded in the contact history. Note that different servicer departments (e.g., collections, loss mitigation, foreclosure, tax, insurance) may maintain separate contact histories. When possible, it is best to obtain a consolidated contact history.

Home Foreclosures: 8.2.5.3a Periodic Statements

For closed-end loans, servicers are required to send periodic statements to borrowers on residential mortgage loans unless an exemption applies.40 Exemptions to the periodic statement rule apply to reverse mortgages, timeshare plans, and if the servicer provides the consumer with a coupon book that provides specific information about the loan, a practice not much used anymore.41 Small servicers, as defined an

Home Foreclosures: 8.2.5.5 Pooling and Servicing Agreement

Pooling and servicing agreements (PSAs) broadly govern the securitization of residential mortgage loans including the formation of the trust (which becomes the owner of the loans), the servicing of the loans in the trust, and the duties of various parties to the trust agreement. The PSA may outline the loss mitigation or workout options available to the servicer and the parameters of the servicer’s authority to implement those options.

Home Foreclosures: 8.2.5.6 Transfer of Servicing Notice

Lenders are required at the time of application for most mortgage loans to disclose to each applicant whether the servicing of the loan may be assigned, sold, or transferred at any time during the term of the mortgage.51 If the servicing of a mortgage is transferred after the mortgage loan is made, both the former and the new servicer must notify the borrower in writing of the transfer.52 Since many servicing problems occur at or near the time of transfer of servicing, the information contained in t

Home Foreclosures: 8.2.5.6a Bankruptcy Notices

If the borrower filed a chapter 13 bankruptcy case to cure a mortgage default after December 1, 2011, Bankruptcy Rules 3001 and 3002.1 require the servicer to disclose prepetition default fees and arrearage amounts on the initial proof of claim, send notices of any mortgage payment changes, send notices of any fees and expenses that are charged to the borrower’s account during the case, and file a response at the end of the case indicating whether the borrower has fully cured the default.53

Home Foreclosures: 8.2.6 Mortgage Transfer of Ownership Notices

When defending against a foreclosure or challenging servicing abuses it is important to know not only who the servicer is, but also who is the current owner of the mortgage. The identity of the current mortgage owner, however, may not always be apparent. Many mortgages today are assigned by the loan originator to a purchaser on the secondary market. Very often the mortgage owner at the time of foreclosure (or even shortly after the loan closing) is not the bank or mortgage company that originated the loan.

Home Foreclosures: 8.2.7.1 Land Records

The mortgage or deed of trust and any related assignments should be available from the local land registry in-person or online. Local land records also can be checked to determine: the number of loans a particular lender made in that locality; the names and addresses of the affected homeowners; whether a lender has an unusually high number of foreclosures or is repeatedly flipping loans. In property flipping cases, the land records will identify the seller of the property, and in foreclosure rescue cases, the land records will show who acquired title to the property from the homeowner.

Home Foreclosures: 8.2.7.2 Consumer Complaints

Through state freedom of information acts, records of consumer complaints to local consumer protection agencies, attorney general offices, and licensing divisions can be obtained to see whether similar complaints have been made about the potential defendants in the past. The Better Business Bureau should also be contacted for copies of any complaints. In addition, the Federal Trade Commission’s website has a search function that allows users to identify Federal Trade Commission (FTC) complaints filed against any entity.

Home Foreclosures: 8.2.7.3 Newspaper Articles/Internet Searches

Using the internet and other electronic database services to conduct a search on a topic of interest or to discover information about a particular lender or party involved in the transaction can prove fruitful.60 Similarly, searches of newspapers and other periodicals are often a useful source for information about potential defendants.