Although many articles on the web encourage homeowners to defend a foreclosure case on their own, the most that can probably be hoped is that they can delay the sheriff sale or eviction for a period of months. Getting actual justice in the case is probably not to be expected, however, as government judges are more likely to give preference to the banks that are paying the filing fees in the lawsuit.
Take the following story in the Wall Street Journal from Fort Myers, Florida, where courts are so far behind on foreclosure lawsuits that judges are now going through nearly one thousand of these cases every day. The point is not to judge the merits of the bank's complaint against the homeowners or the borrowers' circumstances or the legitimacy of the original loan or any potential servicing abuse. No, the goal of judges is, according to Lee County, Florida clerk of the circuit courts Charlie Green, to "get these cases off our books."
To get the cases off the books, judges have taken to conducting a twenty second hearing for foreclosure victims, asking two simple questions, and giving the owners a deadline to work out an agreement with the lender or face sheriff sale and removal from their home. The following experience quoted in the article is simply astounding in how little regard is shown to the homeowners and how much credit implicitly given to the bank's positions.
Hoping to save her house, Saundra Hill Scott arrived at the county courthouse clutching dog-eared mortgage bills and letters from her lender.
She need not have bothered. The foreclosure hearing lasted less than 20 seconds, with Judge John Carlin asking her two questions: Are you current on your mortgage and are you living in the home? She answered no and yes and then offered to show him her paperwork.
"I don't need to see that. That's between you and the bank," he said as he gave Ms. Hill Scott, her husband and three grandchildren 60 days to work out a deal with their lender or vacate their three-bedroom house.
Two questions! The judge asked the defendants two questions and then gave the responsibility of working out the mortgage with the homeowners to the original bank that is suing them to kick them out of their home. And the next eight hundred or a thousand people will be treated in exactly the same disrespectful manner, regardless of any predatory lending, fraudulent inducement of debt, or mortgage servicing fraud issues.
Can anyone seriously imagine this same judge asking the lender two questions and, based upon those answers, dismissing the case completely? It could certainly be done.
First question: were your borrowers able to afford this loan for the long term at the time it was originated?
Second question: do you own the original note and would you be able to produce it for the court's and defendants' inspection?
For a significant number of foreclosure cases, the lender's truthful answer to both questions would be "No." Many homeowners facing foreclosure were given adjustable rate mortgages (ARMs), Option ARMs, and other creative financing packages to get them into a house that they would never be able to afford for longer than a few years.
But these types of loans were designed from the beginning to spread the risk of default around. The originator sold the loan to a Wall Street firm, which packaged the loan with others and sliced up various rights to it. The mortgage servicer got to collect payments and take a fee, while the thousands of end investors around the world got a small percentage of the monthly income the loan generated. The original loan paperwork, however, may have been destroyed or lost somewhere along the line.
Maybe the judge could ask another question and immediately dismiss a thousand foreclosure cases a day. "Did the originating bank provide any real consideration for this loan or was the money created out of nothing; i.e., bank reserves?" All loans that banks create are from nothing, with the borrowers' promise to pay the only factor that creates a debt at all.
After all, who has the burden of proof in a foreclosure case? Certainly not the homeowners, who are the defendants -- so why should they be given the two-question treatment and then have their home scheduled for an auction? At the rate these judges are going, massive fraud and corruption will be missed in any number of mortgages. Who could possibly keep up with the subtleties of hundreds of foreclosures every day?
The smugness and superiority complexes the judges in this article exhibit should give most homeowners and foreclosure victims a good sense of how difficult it will be to argue and win a case against a mortgage lender. Some choice quotes are below:
"A guy hasn't paid his mortgage in over a year,'' says Judge Cary. "What's there to talk about?"
"The problem is that the lenders have spent all this money on attorneys and filing fees," says Judge Cary. "You are so far into it, would you really stop it at that point? It's an expensive proposition."
Many judges, including Judge Carlin, are giving homeowners much more time to stay in their houses than the law requires.
"That's pretty humane considering that many homeowners have been living rent-free for more than a year,'' says Robert Hill Jr., a Fort Myers lawyer who represents lenders.
The most important point for homeowners currently trying to stop foreclosure to remember is that they absolutely need to file an answer to the bank's complaint in the time allowed. When they do not do this, the banks and courts make it very, very easy to lose a foreclosure lawsuit. While researching the various issues that can be used as a defense or consulting with an attorney is best, any kind of written response can be considered an answer to a complaint.
The judges say they sympathize with the homeowners' hardships, but often the cases can be decided after a brief hearing because there are no legal issues in dispute which would warrant a lengthy trial. Some homeowners don't understand they are required to file paperwork before the hearing to challenge the lender's case. Many of them never file the documents or hire lawyers, the judges say.
The simple act of filing a couple of motions can mean the difference between extra months to defend the case, save up money, and move out comfortably -- or a 15 second foreclosure hearing. If nothing else, homeowners serious about defending their homes should at least consult with someone familiar with the law and file an answer. They should not expect justice, but they can hope to force the courts to respect their rights to a trial and due process.
Posted By George Beckus Esq.