Andrew D. Cotlar Cotlar Andrew D. Your Tool Box for Mortgage - - PowerPoint PPT Presentation
Andrew D. Cotlar Cotlar Andrew D. Your Tool Box for Mortgage Your Tool Box for Mortgage Foreclosure Defense Foreclosure Defense Andrew D. Cotlar, Esq. Andrew D. Cotlar, Esq. Cotlar & & Cotlar Cotlar Cotlar 23 West. Court St.
Andrew D. Cotlar, Esq. Andrew D. Cotlar, Esq. Cotlar Cotlar & & Cotlar Cotlar 23 West. Court St. 23 West. Court St. Doylestown, PA 18901 Doylestown, PA 18901 Tel: 215 Tel: 215-
345-
7310 Email: Email: Acotlar@hotmail.com Acotlar@hotmail.com www.cotlarlaw.com www.cotlarlaw.com
But a many a starving farmer But a many a starving farmer The same old story told The same old story told How the outlaw paid their mortgage How the outlaw paid their mortgage And saved their little homes. And saved their little homes. … … Yes, as through this world I've wandered Yes, as through this world I've wandered I've seen lots of funny men; I've seen lots of funny men; Some will rob you with a six Some will rob you with a six-
gun, And some with a fountain pen. And some with a fountain pen. And as through your life you travel, And as through your life you travel, Yes, as through your life you roam, Yes, as through your life you roam, You won't never see an outlaw You won't never see an outlaw Drive a family from their home. Drive a family from their home.
Woody Guthrie, Pretty Boy Floyd
Woody Guthrie would be appalled
Mortgages bought and sold
Investors sue to foreclose
Filed by foreclosure mill law firms
Little contact with their client (LPS)
Why are homeowners delinquent?
Lost jobs
Profligacy
Unexpected sudden debts
Predatory lending
Federal attempts to encourage loan modifications have largely failed failed
Competing values: families v. investments
No “ “pot of gold pot of gold” ” for attorneys for attorneys
2 months of arrearages
Act 91 Notice
30 day extension if you consult with credit counselors and apply for for emergency loans emergency loans
Foreclosure Complaint filed
Mediation program, Bucks County
Answer filed (or default judgment if no answer)
Foreclosing attorney lists for trial if answer filed
Obtain judgment at trial
Schedule Sheriff’ ’s sale s sale
May be several adjournments of Sheriff’ ’s sale s sale
Sheriff’ ’s sale held; deposits made s sale held; deposits made
Sheriff’ ’s deed issued and transfer of property at Settlement s deed issued and transfer of property at Settlement
Eviction proceedings if necessary
Private right of action for actual damages and 2x finance charges, rights of rescissions, costs and attorney charges, rights of rescissions, costs and attorney’ ’s fees. s fees.
1 year statute of limitation from closing, but you can assert it as a defense to foreclosure at any time. assert it as a defense to foreclosure at any time.
Details are specified at Federal Reserve Board Regulation Z Regulation Z
Basic concept: All fees must be disclosed and cannot be excessive. excessive.
3-
day right of rescission must be given
Implemented by Federal Reserve Board Regulation X
Private right of action for damages, attorneys fees and costs costs
3 year statute of limitations
Prohibits kickbacks, unearned fees, etc
Requires HUD sheet to be accurate
Servicing requirements if you challenge the calculation of amounts owed, e.g. no credit reporting while they verify. amounts owed, e.g. no credit reporting while they verify.
Limited to home loans $50k and below
Anti-
usury law requiring notices prior to foreclosure
Independent private right of action
Plaintiff can recover excessive interest x3, costs and attorney fees attorney fees
Statute of limitations is 4 years
Lots of exceptions; big one is for national banks, which follow more favorable federal law follow more favorable federal law
Fair Debt Collections Practices Act, 15 U.S.C. 1692 et seq. 15 U.S.C. 1692 et seq.
Prohibits abusive debt collection by debt collectors
Fair Credit Extension Uniformity Act
Nearly identical protections and covers debt collectors AND creditors in PA. 73 P.S. creditors in PA. 73 P.S. § § 2270.2 et seq. 2270.2 et seq.
PA Unfair Trade Practices and Consumer Protection Law
Staple in litigation; 3x damages, costs and attorney fees
Applies to mortgage loans
Must prove elements of fraud
Common law torts, e.g. fraud, misrepresentation, etc. e.g. fraud, misrepresentation, etc.
Federal Courts can’ ’t issue injunctions (Anti t issue injunctions (Anti-
injunction Act)
Up-
front payment is possible: flat rate or hourly drawn upon non non-
refundable retainer
Or combination of the two with credit for amounts paid
NB: FTC rules, 16 CFR 322.7:
Option 1: Collect an advance fee, place it in your escrow account and draw upon it on an hourly basis. account and draw upon it on an hourly basis.
Option 2: Charge an advance flat fee and make it clear the fee is earned upon receipt. is earned upon receipt.
No flat fees collected for not actually providing legal work.
Therefore, BEWARE of companies that want to affiliate with you to avoid the scope of state or federal regulations. you to avoid the scope of state or federal regulations.
Inherent in every PA contract
Especially for FHA insured mortgages
HAMP participating lenders have additional duties: see their service agreement and HAMP guidelines (U.S. Treasury) service agreement and HAMP guidelines (U.S. Treasury)
See, e.g. NV and AZ AG complaints against Bank of America. Great detailed examples of bad faith: Great detailed examples of bad faith:
Assurances of no foreclosure pending loan modification discussions when proceeding with foreclosure anyway; discussions when proceeding with foreclosure anyway;
Falsely telling customers they must be in default to obtain a modification; modification;
Promising to make loan modifications permanent only to renege on the deal; the deal;
Conjuring bogus reasons for denying modifications. (Andrew Martin and Michael Powell, Martin and Michael Powell, “ “Two States Sue Bank of America Over Two States Sue Bank of America Over Mortgages, Mortgages,” ” New York Times, Dec. 17, 2010) New York Times, Dec. 17, 2010)
Predatory lending
Lender provides loan to applicant when it knew or should have known
repayment was not possible repayment was not possible
Compare loan app and credit history
Look at appraisals
Discovery: request entire file and look at underwriting comments, , especially for any especially for any “ “overrides
”
Note on abusive lending practices. [PA Banking Dept.]
Making a loan without regard to the borrower’ ’s ability to repay; s ability to repay;
Loan flipping;
Excessive fees and packing;
Aggressive and deceptive marketing;
Home improvement scams;
Prepayment penalties
Balloon payments
Negative Amortization (paying less than interest and principal/ month) month)
Could trigger information for counterclaim under FDCPA if its inaccurate. inaccurate.
See Allen v. LaSalle Bank, NA Allen v. LaSalle Bank, NA, 2011 U.S. App. LEXIS 587 , 2011 U.S. App. LEXIS 587 (3d Cir. 2011) (holding that reinstatement letter from (3d Cir. 2011) (holding that reinstatement letter from foreclosing attorney to defense attorney claiming fees and foreclosing attorney to defense attorney claiming fees and costs in excess of those authorized by New Jersey law costs in excess of those authorized by New Jersey law violated Fair Debt Collections Practices Act 1692(f)(1) violated Fair Debt Collections Practices Act 1692(f)(1) because such amounts were not authorized by agreement or because such amounts were not authorized by agreement or permitted by law). permitted by law).
But see Wright v. Phelan, Wright v. Phelan, Hallinan Hallinan & & Schmieg Schmieg, 2010 U.S. , 2010 U.S.
not apply to attorney not apply to attorney-
to-
attorney communications)
10 day automatic open, Pa. R.C.P. No. 237.3.
Otherwise… …
Prompt filing of petition (82 day delay is too much time; within a a month preferred) month preferred)
Reasonable excuse or explanation (lack of sophistication not an excuse) an excuse)
A meritorious defense (see above)
Making Home Affordable program (before foreclosure)
Short sale; must be by consent of all interested parties
Forbearance (temporary) (beware of waivers)
Loan modification/ HAMP (new terms, new principal, new interest rate, etc.). e.g. Countrywide agreement with PA interest rate, etc.). e.g. Countrywide agreement with PA attorney general attorney general
Deed in lieu of foreclosure
Relocation expenses paid with settlement
Transfer deed with lease back (e.g. Fannie Mae program)
Reverse mortgage for older adults with equity in property.