The Foreclosure Secrets Guide

Foreclosure Secrets Guide1 The Definitive Step-By-Step Guide To Stop A Foreclosure In Process And Keep The H o u se “The Most Advanced Foreclosure Information Ever Created Just For Mortgage-Stressed Homeowners” Reviewed, Tested and Updated on March 16, 2009 The Foreclosure Secrets Guide WHAT TO DO WHEN YOU ARE LOOSING YOUR HOUSE Alfonso Inclan Copyright © 2008, Orbis Marketing, LLC. All Rights Reserved www.foreclosureinprocess.com Foreclosure Secrets Guide 2 Copyright Notice © MMVIII Alfonso Inclan and Orbis Marketing, LLC. This eBook contains material protected under International and Federal Copyright Laws and Treaties. Any unauthorized use, sharing, reproduction or distribution of these materials by any means, electronic, mechanical, or otherwise is strictly prohibited. No portion of these materials may be reproduced in any manner whatsoever, without the express written consent of the publisher. This eBook is published under Copyright Laws of the Library of Congress and The United States of America by: Alfonso Inclan and Orbis Marketing, LLC. All questions and inquiries should be directed to the contact information found on http://www.foreclosureinprocess.com/home.html Limits of Liability & Disclaimer of Warranty The information in this eBook is distributed on “as is” basis without warranty. While every precaution and the best effort have been taken in the preparation of the eBook, the author and publisher shall in no event have no liability to any person or entity with respect to any loss or damages, including but no limited to special, incidental, consequential or other damages caused or alleged to be caused directly or indirectly by the instructions contained in this book. The author and publisher make no representation or warranties with respect to accuracy, applicability, fitness, or completeness of the content of this eBook. They disclaim any warranties (expressed or implied), merchantability or fitness for any particular purpose. As always, the advice of a competent legal, tax, accounting, or other professional should be sought. The author and publisher do not warrant the performance, effectiveness or applicability of any sites or resources listed in this manual. All links are for information purposes only and are not warranted for content, accuracy or any other implied or explicit purpose. In no way should any of this information be considered a source of legal or accounting advice. Copyright © 2008, Orbis Marketing, LLC. All Rights Reserved www.foreclosureinprocess.com Foreclosure Secrets Guide 3 TABLE OF CONTENTS E-BOOK COVER…………………………………………………………………………… COPYRIGHT NOTICE…………………………………………………………………….. TABLE OF CONTENTS…………………………………………………………………… INTRODUCTION………………………………………………………………………….. Chapter 1 ALL THE SOLUTIONS YOU MAY HAVE……………………………………………… TYPES OF HOME LOANS……………………………………………………………….. UNDERSTANDING ARM’S……………………………………........................................ THE PROMISSORY NOTE………………………………………………………………. THE DIFFERENCE BETWEEN MORTGAGE AND DEED OF TRUST……………….. Chapter 2 REFINANCE………………………………………………………………………………. Reverse Mortgages………………………………………………………………. Hard Money Loans………………………………………………………………. NEGOTIATE………………………………………………………………………………. A key for successful negotiations……………………………………………........ ALL THE KNOWN WAYS TO NEGOTIATE…………………........................................ Mortgage Modification………………………………………………………….... Forbearance……………………………………………………………………...... FHA Forbearance…………………………………………………………………. Full Reinstatement………………………………………………………………... Repayment Plan…………………………………………………………………... Acceptable Reasons for Delinquency……………………………………. Hardship Letter…………………………………………………………... Hardship Letter example # 1……………………………………………... Hardship Letter example # 2……………………………………………... FHA Partial Claim………………………………………………………………... Freeze the rate…………………………………………………………………….. FHASecure……………………………………………………………………….. Veterans Administration Loans…………………………………………………... Assistance for Service Members on Active Duty……………………………….... SHORT SALE…….……………………………………………………………………….. Short Refinance..…………………………………………………………………. Short Payoff….…………………………………………………………................ How to Qualify for a Short Sale…………………………………………............... You Must Know about the Deficiency Liability………………………………….. DEED IN LIEU…………………………………………………………………………….. 19 20 20 21 23 24 25 27 28 29 29 30 31 32 33 34 37 38 42 42 43 45 45 46 47 48 9 10 12 14 15 1 2 3 6 Copyright © 2008, Orbis Marketing, LLC. All Rights Reserved www.foreclosureinprocess.com Signs of Predatory Lending……………………………………………… Lender Defense…………………………………………………………………… The Scariest Thing Lenders They Don’t Want You To Know………….. LLC. 5..... Defendants Motion to Dismiss Example………………………………… Court Hearing…………………………………………………………….. Post-Foreclosure………………………………………………………….……………………………………………………….…………………………………………………….... Beware of Foreclosure Scams……………………………………………………. Foreclosure Counseling Agencies……………………………………….. All Rights Reserved www. 1.... In Default…………………………………………………………………... Chapter 4 LEGAL DEFENSES OF A BORROWER Predatory Lending………………………………………………………………. Validation of Debt Example……………………………………………. Being Practical………………………………………………………….. 4. Notice of Sale (NOS). Sending the Request…………………………………………………….. Notice of Default (NOD)………………………………………………….. Court Hearing Questions and Responses Example……………………… MERS……………………………………………………………………. How To Submit a RESPA Complaint…………………………………… Workout Proposal………………………………………………………...com 4 53 53 53 54 55 56 57 57 58 59 59 59 61 63 64 66 69 71 73 74 75 77 79 80 81 82 84 85 88 90 91 93 94 95 96 99 100 105 107 109 .. Copyright © 2008. Notice of Insufficient Validation Example……………………………… Court Litigation…………………………………………………………………. Non-Judicial Foreclosures………………………………………………. Notice of Validation Example…………………………………………… Trustee Response………………………………………………………. • Redemption Period after Auction Sale…………………………… • Eviction………………………………………………………….. 3.. Court Complaint…………………………………………………………. Unscrupulous investors…………………………………………………... Disclaimer………………………………………………………………... Lender Response………………………………………………………… Notice of Insufficient Validation Example……………………………… FTC and HUD Complaint……………………………………………….foreclosureinprocess. The Foreclosure Process…. Orbis Marketing.. Validation of Debt………. Foreclosure Sale………………………………………………………….………………………………………………. Complaint Example……………………………………………………… Judicial Foreclosures…………………………………………………….Foreclosure Secrets Guide Chapter 3 FORECLOSURE………………………………………………………………………….. 2. Trustee Defense…………………………………………………………………. Objection to Relief From Stay …........ RAFFLE…………………………………………………………………………………… ALLODIAL LAND TITLE OR LAND PATENTS……………………………………….. Things Needed to Qualify for Chapter 7………………………………………… Automatic Stay…………………………………………………………………… Motion to lift Stay………………………………………………………………. Chapter 13……………………………………………………………………….. Things Needed to Qualify for Chapter 13………………………………………......Foreclosure Secrets Guide Wrongful Foreclosure Action…………………………………………… So. Tax Liability Exclusion Law……………………………………………………. Chapter 6 ADDITIONAL SOLUTIONS SHORT PAYOFF…………………………………………………………………………. CONCLUSION…………………………………………………………………………….com ...... Chapter 7 WHAT HAPPENS TO YOUR CREDIT………………………………………………….. LLC. What Happens if the Lender Didn’t Transfer my Loan?.. RESOURCES……………………………………………………………………………… 5 111 112 116 118 118 118 119 119 120 122 123 123 125 130 132 134 135 136 137 142 143 144 Copyright © 2008.... All Rights Reserved www... IMPROVE YOUR INCOME……………………………………………………………… RENT TO OWN…………………………………………………………………………... Orbis Marketing..foreclosureinprocess..………………………………………………. Chapter 7…………………………………………………………………………...………………. Chapter 5 BANKRUPTCY…………………………………………………………………………… Types of Bankruptcies…………………………………………………………….... TRANSFER OF THE PROPERTY………………………………………………………. Defendants Objection to Relief From Stay Example………….... 58% of these repos will be in 2008 from subprime loans or loans with variable (adjustable) terms. very slow the next 5 years after. the market sinks drastically. giving legal. AZ. So. Many of the strong solutions you will find in this book. I’ve been using them since years before with excellent results under the protection of federal and state laws that you can enforce too in the same way. Before you read this book.285. When this is done in massive transactions along with houses stuck in the market for non-selling. Marketing and Credit Counseling since 2002. Real Estate investments. if you are facing a rise in your monthly payment due to a change in your variable rate term. according to the Council of Mortgage Lenders. Sincerely. ask. and even with some personal cases. Repossessed properties are resold by lenders at foreclosure auctions. Residential and Commercial Loans. let me tell you that I am not an attorney. tax or financial advice. LLC. accountant. or simply you can’t pay. I do not claim to give you legal advice in this book to your specific circumstances. I hope that after reading this book you can sleep better and get some understanding to this rough situation. Mortgage Training and Consulting. RealtyTrac.873 properties with Foreclosures Filings in 2007 nationwide. first of all. You just need to know what to do. don’t panic. learn. apply and verify step by step most of the solutions you will learn as well. Although I am a Financial Educator in the State of Arizona doing Foreclosure Consulting.Foreclosure Secrets Guide INTRODUCTION 6 Repossessions of homes by lenders are expected to go up by 50% in 2008 as a result of the credit crunch. study.foreclosureinprocess.com . Seasoned Investors are expecting a huge decrease in house prices for the next 2 or 3 years. All of these situations directed me to research. the house prices will start rising very. All Rights Reserved www. What you are just going to read is what I have seen in many cases every day at my offices in Gilbert and Phoenix. Business Coaching. Orbis Marketing. tax advisor or real estate guru. This book definitively is not a substitute for the advice of a competent attorney. working closely with clients. Copyright © 2008. and my personal expectations are that after we reach the very deep bottom. I really think we are going to see a relief in the real estate market maybe in 10 years… at least! (That if we don’t have any other national catastrophic impact in the meantime)… So. expect at least 8 years of slow market from now.com reported 1. Orbis Marketing. but would you refinance my house??? Can I still make a profit?? What can I do??!!! 7 First and foremost. Keep improving your financial IQ. don’t stop learning. Sincerely. Alfonso Inclan Financial Educator and Credit Analyst Gilbert. read this book from the beginning to the end at once. taking as many notes as you can. All Rights Reserved www.foreclosureinprocess. After that. Then. apply what you decided the best option is for your case. Finally. LLC.com . read it again. 2008 alfonso@foreclosureinprocess. my first recommendation before reading this guide is to pray first with all your heart asking God for wisdom and discernment (James 1:5) to find and understand the best solution within this book. do it very.com/home. I REPEAT. forever. I decided to come at this computer and write this book as a result of that so many calls I still receiving EVERY DAY asking for the very same questions every time: • • • • • • • • My payment is rising!!! Has my house drop down in value? I couldn’t refinance!! Can I sell??? Can I buy another house and walk away from the one I have right now? Nobody could. And at this second reading.alfonsoinclan.foreclosureinprocess. so you can have a general idea.Foreclosure Secrets Guide Take in consideration that all the suggestions written in this book are the things I would do personally in that same situation. very slow so you can better learn and understand all this Foreclosure Process. Arizona February. READ IT AGAIN. Then.com Copyright © 2008.html http://www.com http://www. LLC.foreclosureinprocess. All Rights Reserved www.Foreclosure Secrets Guide 8 Chapter 1 Copyright © 2008. Orbis Marketing.com . Short Payoff 8. Raffle the house It is fundamental also that the borrower study and learn every step of the Foreclosure Process. Transfer the property 11. LLC.in this one single educational book.Foreclosure Secrets Guide ALL THE SOLUTIONS YOU MAY HAVE When a borrower is facing the monster of Foreclosure. Rent to Own 10. Give back the property (Deed in Lieu) 5. All Rights Reserved www. The solutions to stop or delay a Foreclosure are the following: 1. Refinance 2.com . Orbis Marketing. having the power of knowledge will make him feel more secure in every step to make. For every problem there is a solution. Improve the income 9. A deep understanding of the Promissory Note and the Mortgage or Deed of Trust will be crucial as well. Legal Defense 6. Good Luck. Everything is included –as never before. Sell 4. Bankruptcy The recommended additional solutions are: 7. 9 Copyright © 2008.foreclosureinprocess. Negotiate 3. I have seen many different cases on people wanting to refinance their homes.com . after that. It can be amortized for 40. 28 years variable (2+28 =30 years in total amortization). For example. there are several types of loans. Not even the interest rate! My personal interest was to proceed educating every single client to understand what he/she were doing with a home loan. In all these years. 3 or 5 years.Foreclosure Secrets Guide TYPES OF LOANS 10 The lending industry has been my forte since 2002. after that. The interest rate is lower than the 30 Yr Fixed loan. but the most common thing I found in most of them. Here you pay principal and interest. but just for a short period of time. LLC. this is the loan with the higher monthly payment. we will see the most common: • • • • • • • • FIXED LOAN ARM INTEREST ONLY BALLON NEGATIVE AMORTIZATION FHA SUBPRIMES 80/20 FIXED LOAN A Fixed loan is the one that its interest rate will not change. Orbis Marketing. but for purposes of this book. a 2/28 means: 2 years fixed. you still owe money at a variable interest for the remaining years. 30. All Rights Reserved www. was that they DIDN’T KNOW what type of loan they had their last years. In the lending market.foreclosureinprocess. you don’t owe anything else. Let’s start with the most well known. Today let me share with you the first thing you must know about: The different type of loans that exists in the market. 20 or 15 years. However. ARM An Adjustable Rate Mortgage (ARM) is fixed just for 2. Copyright © 2008. Because this loan pays just the interest part. this loan pays only interest and nothing to the principal. and you are just paying 1%. If you don’t pay the full amount or you cannot refinance at that time. The monthly payment is super-low because the 1%. BALLON This loan is used most in second mortgages.foreclosureinprocess. it is cheaper than a fixed or a normal ARM. it is used in combination with an ARM. In this way. your house may be foreclosed.com . and the interest rate is higher than a fixed. a borrower can have good credit. Most of subprime loans worked as 80/20’s 80/20 Originally. the other 6% is going to your loan balance month by month. although it has very good interest rates. These types of loans are designed for people lacking to fulfill the guidelines of the Fixed and FHA’s loans to purchase or refinance a house. FHA This type of loan is secured by the Federal Housing Administration (that means from the Government). your debt is growing. so the borrower doesn’t have to spend cash in the down payment. etc. so it is cheaper than a 100% loan. This is the famous 1% interest rate massively advertised some time ago. The borrower had to give 20% down payment in cash. or lack of down payment. All Rights Reserved www. Those guideline deficiencies are not just bad credit. a home loan had to be an 80% of the value of the home. with this loan your balance will be always $200k. It avoids Mortgage Insurance Premiums as well.Foreclosure Secrets Guide INTEREST ONLY 11 As how it says. LLC. If you borrowed $200k. It has to comply with strong guidelines and not many qualify for this loan. In this 80/20 program. Copyright © 2008. Usually it is an ARM in the 80% and a BALLON in the 20%. but it is the more dangerous. but the income is unverifiable. but must be paid off at 10 or 15 years. fixed just from 2 to 10 years. This type is more common with lower balances. It is amortized typically at 30 years. etc. there are 2 home loans. Orbis Marketing. recent bankruptcies. but if you got the 7% interest rate normally. Below good is SUBPRIME. not decreasing over time. collections that don’t have to be paid. unless you send extra payments to the principal. etc. SUBPRIME Good credit means Prime Credit. Most of the time. NEGATIVE AMORTIZATION This is the cheapest of all. Most of the time it is coming with a Mortgage Insurance Premium included. It can be amortized for 40. after that. For example. Some people chose this type of loan (variable or adjustable) because they knew they will move in 2 or 3 years to another city or another house. You may find the maximum rate in your cap that would double your initial rate… or more. you have to go to the documents you received from the title company the time you purchased or refinanced. due to bad credit. prepayment penalty. All Rights Reserved www. 28 years variable. The interest rate cannot go higher or lower than that cap stipulated in the promissory note at the moment of signing. etc. though. Orbis Marketing. so it makes a sense in this case. THE NOTE is simply the most important document in that bunch of papers. unverifiable income.foreclosureinprocess. I know you didn’t read it!! (or maybe you don’t have it anymore). the rate will adjust automatically to a VARIABLE rate. 3 or 5 years. but FINALLY TAKE A MOMENT TO READ IT IN DETAIL.Foreclosure Secrets Guide UNDERSTANDING ARMS Adjustable Rate Mortgages (ARM) typically starts with a lower interest rate and then reset to a higher rate after a few years. After the loan matures in 2. date when it adjusts to variable. Copyright © 2008. it must be refinanced or sold. Look at the Note for interest rate. 20 or 15 years. 12 Variable rate means that the interest rate will vary every 6 months or every year (depending in what you signed) and will adjust to the interest rate that is in the market at the time of adjusting. ARM’s are fixed for 2. you still owe money at a variable interest for the remaining years. It can go higher.com . and will sell the house. I will help you to understand it better. Maybe it’s the one you have right now. It has a cap. or lower. a 2/28 means: 2 years fixed. according to that current market. and your cap rate. Other reason was because it was easier and cheaper to qualify for an ARM than qualify for a normal fixed loan. Just look for THE PROMISSORY NOTE and THE MORTGAGE or DEED OF TRUST. An ARM is cheaper than a fixed. 3 or 5 years. you don’t owe anything else. (it may have an ADJUSTABLE NOTE addendum as well). if not. Now. A Fixed loan is the one that its interest rate will not change. LLC. 30. after that. lack of down payment. LLC. BAD CREDIT. Unfortunately. and you personally will know by sure what would be the right decision. It was over-inflated something called a REAL ESTATE BUBBLE. and most of the people forget all of this when it happens again. I’m seeing right now so many families without a house of their own and so many people without a job.000 dollars and you sold it for $300.000 dollars! The problem came when lenders stopped doing ARM’s as easy as before.000. It’s a cycling process. loosing the equity built in all the houses of the United States. An average 3 bedrooms 2 bath house in San Francisco. 13 Because of these type of loans –easy to qualify.house values were going up as crazy in those times. Copyright © 2008. this situation has happened several times before in history. That bubble is now shrinking to the normal pricing. Orbis Marketing. there was too much demand for houses nationwide. CA was valued at $750. You will not rely again in no-brain loan officers or will not choose an exotic loan anymore if you are not 100% sure what you are signing.foreclosureinprocess. being very difficult to qualify for refinancing or purchases.Foreclosure Secrets Guide This was the kind of loans massively advertised. Be prepared. remember? YOU CAN BUY A HOUSE EVEN IF YOU HAVE BANKRUPTCY. Because it was very easy to buy a house. this book will help you to choose the best option you may have. All Rights Reserved www. YOU ARE ILLEGAL IN THE USA OR YOU ARE NOT WORKING!!! DOESN’T MATTER!!! COME ON!! ENJOY YOUR AMERICAN DREAM RIGHT NOW!!! Mortgage companies just advertised what the lenders were offering.com . properties went up in value at incredible levels. Even you could make a big chunk of money in the transaction: you owed $200. If you are trapped in the real estate bubble. causing the house values to drop down drastically. Learn what you can do. Many people made a lot of money. such as the interest rate. this original document is the legal compromise itself and not any copy. This same document establishes that “The Lender may transfer THIS NOTE”.foreclosureinprocess. where payments are made. he will require the borrower to sign a security instrument to protect the Note in favor of the lender.Foreclosure Secrets Guide Before going further. That’s why this Promissory Note is a very valuable document that cannot be lost or destroyed. when payments are due. etc. dated. It is understood that a copy will not be enough evidence to proof this document or compromise. if the interest rate will change and when. any borrower must know their most important documents in the loan. In order for the lender to protect his interests. While this document is not a debt. In other words. This document is governed by state and federal law. All the agreed conditions between a lender and a borrower.com . what happens if payments are not made. 14 The Promissory Note sets forth the terms and conditions that apply to the loan repayment. signed and notarized. Any problems concerning this agreement are ruled by those laws. Copyright © 2008. giving protection to the lender and to the borrower as well. LLC. The Security Instrument may be in the form of a Mortgage or a Deed of Trust. this is the real evidence of a compromise made between BOTH parts. are placed in this document in writing. So. it is evidence of the debt. A Promissory Note will refer to itself as “THIS NOTE”. meaning that any written compromise is being done on that specific physical paper with the signatures printed on INK. PROMISSORY NOTE A Promissory Note is a legal contract in which the borrower promises to pay back a loan. A Mortgage or Deed of Trust is the guarantee of a property to a lender as a security for a Promissory Note. All Rights Reserved www. Orbis Marketing. this document (Mortgage or Deed of Trust) will secure a property to the lender if the conditions made in the Promissory Note are not satisfied or paid back. the lender needs to file a lawsuit in court to obtain a judgment. however. A Mortgage is a security interest a borrower signs and gives to the lender securing the promissory note signed for the home. If the borrower defaults to the guidelines settled in the promissory note. LLC. Parties: The Deed of Trust contains three parties: 1. Depending in which state a Borrower lives into the United States. there are significant differences on: the involved parties. The Trustee (the entity holding the title) Copyright © 2008. a Borrower is required to sign a security instrument in order to secure the Promissory Note. Most of U. This process is long. It will depend in the state where the property is located.Foreclosure Secrets Guide THE DIFFERENCE OF MORTGAGE AND DEED OF TRUST 15 When a Borrower gets a Home Loan. The Trustor (borrower) 2. Mortgage Most people think that a Mortgage is a Home Loan. Orbis Marketing.S. Deed of Trust A Deed of Trust (called also Trust Deed in some states) practically has the same purpose as a Mortgage. this document can be in the form of a Mortgage or a Deed of Trust. expensive and complicated.com . It is not. states use Mortgages in their transactions. which is called Judicial Foreclosure. the other states use a Deed of Trust instead of a Mortgage. The Beneficiary (the lender) 3.foreclosureinprocess. A Mortgage involves two parties: 1. This document creates a lien in the property that cannot be transferred or sold until the promissory note is paid. All Rights Reserved www. The Mortgagee (lender) The person who holds the title can be either the Mortgagor or the Mortgagee. the titleholder and the foreclosure process. The Mortgagor (borrower) 2. asp http://www. Orbis Marketing. in some states the lender may start a Judicial Foreclosure after a Trustee sale.com/foreclosure-laws/foreclosure-laws-comparison. The Foreclosure Process If the loan becomes delinquent.realtytrac.org/ Copyright © 2008. When the loan is paid off. depending in the state) which holds the land as security for a loan. This is called a Non-Judicial Foreclosure or Trustee Sale. less expensive and easier for the lender.Foreclosure Secrets Guide The Title Holder 16 A Deed of Trust transfers the title to the Trustee (an attorney or a title company. * In Arizona is possible to use Judicial and non-Judicial Foreclosures. then the Trustee can sell the property and pay the lender from the proceeds.com . It is completely determined by their state law. in most states using a non-Judicial Foreclosure the Redemption Right is not allowed after the auction sale. Web Information: Foreclosure Laws by State: Foreclosure Procedures by State: http://www. after the auction sale the lender cannot pursue the borrower for assets or wages (check your state laws. and the other shall be dismissed.foreclosureinprocess. LLC. the lender may elect to file a lawsuit against the borrower pursuing any pending debt. All Rights Reserved www. this document is available at public records. the trustee has the authority to sell the property without going to court. but cannot be used both in the same case. If the Foreclosure was on a Deed of Trust (or non-Judicial Foreclosure). the title is transferred to the borrower. though). Also. This is because the Deficiency Liability. If the house was sold for less than the balance.foreclosurelaw. However. This means faster. If the borrower defaults on the loan. Borrowers cannot change or choose how your loan is secured. The lender shall elect which to prosecute. Foreclosure Secrets Guide 17 Copyright © 2008.foreclosureinprocess. All Rights Reserved www. LLC. Orbis Marketing.com . com .Foreclosure Secrets Guide 18 Chapter 2 Copyright © 2008. All Rights Reserved www. Orbis Marketing. LLC.foreclosureinprocess. The interest rate –and the payment. other thing you can do is to call an experienced loan officer or a good realtor to give you a more accurate comparable of your property for free. and some other loan qualifying factors as well. Some ARM loans were fixed at 1. Many loans were designed to refinance after a short period of time. rates are going a lot higher.com and see for free what the average of your house value is. This problem is getting more aggravated because most of the houses don’t have equity anymore. 3 or 5 years. rising the monthly payments to unaffordable crazy levels. You just learned it could be at 2. The best you can do is to hire an appraiser and have a certified document showing the precise worthiness of your property. doing this impossible to refinance. Equity: difference between the debt and the value of a house If your house value is lower than the balance in your home loan.foreclosureinprocess. Sometimes there are huge differences! (Normal charges for a certified appraisal are around $350 dollars in Arizona) Remember. (there is a balance of $250.000 and the house is worth $200. All Rights Reserved www. as the ARMs. Refinancing is the first thing you must look for.can go suddenly higher or lower (you may receive 2 or 3 months before a notification for the adjustment).Foreclosure Secrets Guide REFINANCE In order to keep your house. At this time. It may be the same average value that an experienced realtor or loan officer gave you already for free.com . Sometimes a lender will make its own appraisal review and may discard your appraisal. Copyright © 2008. Orbis Marketing. 7 and 10 years as well. This is just to give you an idea. Period! Go to www. You CANNOT do a normal refinance. is very crucial that you have some certified equity in your house by an appraiser in order to refinance normally. LLC.000) so you don’t have equity.zillow. 19 An ARM was designated to be sold or refinanced after the maturity of the deal. although a good certified appraiser will make a deep study of the area to find the most for your house. This is in addition to a good credit previously established. though. They will approve you a loan up 65% of your home value.foreclosureinprocess. age or income in consideration. do not matter if you work or not. you only qualify if you are a homeowner with at least 62 years old and at least 50% equity in your house. these loans are issued at much higher interest rates than residential or commercial loans. That’s it. All Rights Reserved www. Hard Money Lenders do not take credit. do not matter your income. Typically. For this loan. The lender keeps or resells your house when you die. LLC. REFINANCE WITH HARD MONEY LOANS This money is provided by private investors. Orbis Marketing.Foreclosure Secrets Guide REFINANCE WITH REVERSE MORTGAGES A Reverse Mortgage is a very convenient loan where you don’t have to make a mortgage payment anymore for life! You may also have cash back and stay free at your house until you die! 20 Do not matter your credit. do not matter your health. Copyright © 2008. the loan is purely against the collateral of the property.com . even they can give you cash out! The interest rate will be higher. Foreclosure Secrets Guide NEGOTIATE 21 If you see that you can’t refinance and you think that you might miss a mortgage payment very soon. Call to the Customer Service Phone that comes in your monthly mortgage bill. you will have to FORECLOSURE on the house. they are scared to death for hearing that word once again and again in every call! This is not the same situation as before. Tell him/her that if this is not possible.foreclosureinprocess. so you are calling to make a new arrangement on your loan. It doesn’t matter if the company that is in charge of your loan is a servicing company -not the original lender-.com . when they could take back your house as soon as possible. Use the word FORECLOSURE very clear. why? Because The Federal Reserve penalize lenders when they have many foreclosure records in their files. All Rights Reserved www. this is a higher inconvenience for them than for you. Tell them about what you are expecting in the near future: the payment may increase (if this is an ARM). They may have the resources to make an arrangement in your loan. LLC. Be frank with them and explain your situation. etc. Lenders are full of repossessed houses right now. Take this situation as a tool in your side. Orbis Marketing. it will be unaffordable for you and you will not be able to refinance due to the lack in equity. your job may be lowering the hours. (At this step we are in the understanding you are not late yet). Therefore. and use it! FORECLOSURE: when the property is repossessed from the lender due to non-payments on the mortgage The secret they don’t want you to know is that at this moment. and they are trying to avoid more of this. and resell it for a very huge profit in just one day! Copyright © 2008. call your lender. If you think the interest rise is not just a short-term fluctuation but will be a long-term trend you have the option of converting your mortgage into a fixed term). (Most variable mortgages give you the right to change to a fixed rate at any time. Also let them know that your house has dropped in value. when you talk to the lender.com . be very clear about your desire to keep the house as your primary residence. (In a 40 years fixed. Orbis Marketing. copies of the certified mail. Remember you can also be foreclosed if you are current in the first but in default of the second loan. If the person at the phone is not helping you. time expended. office department name at where the conversation was done. which may be catalogued as a short refinance with the same lender. It is possible to negotiate with lenders for a new loan for the price of the present home value in a fixed loan. If you have 2 loans. tell him/her you will ask for help in writing by CERTIFIED MAIL so it will be a written record of your call request. then. etc. some of them will truly not allow doing this. It really affects your credit and leads you to foreclose your home) Don’t forget to ask for the name of the person you contacted. I repeat: keep a record of all your calls. All Rights Reserved www. ASK ALSO FOR THE NAME AND ADDRESS OF THE PRESIDENT OF THE COMPANY AND SEND HIM A COPY. unless you are late. try it out of court! Try it! Try it! Some lenders will play on a payments “game”. If the manager is also not helping you. You may hear one of the most stupid answers of this negotiation: the lender will tell you that you need to be late 90 days in your loan in order to talk seriously about it and start negotiating (although many lenders are not requiring this).Foreclosure Secrets Guide 22 So. unfortunately. fax and address and write down in a CALL LOG all your records including the date and time you called. Say that you want to have a fixed rate for 40 years. DON’T DOUBT ABOUT IT. Request that your home loan needs to be changed to a fixed rate. copies of the letters you sent. ask to talk with the manager or supervisor (you may be disconnected in the transfer). Anyway. you need to do the same with both lenders. IT IS POSSIBLE. (VERY IMPORTANT) Copyright © 2008.foreclosureinprocess. phone numbers. the trends indicate it will lower for the next 8 years and you definitely will be unable to refinance or sell. LLC. names of the people you contacted. keeping a lower monthly payment DON'T FORGET TO REQUEST WHAT YOU WANT. (Remember that a missed mortgage payment is far more serious issue than missing any other loan or utility payment. direct phone. the payment is lower than 30 years fixed). Donald Trump says if we don’t make a negotiation without feeling embarrassed. Print proof of this and file it. Be prepared to provide proof of your financial information. I learned something it has been very useful to me: they taught us to always negotiate. do it! Negotiate in the Trump way. you must be working to be approved –keep reading-). and your letter has to be returned without being sign or read. Trump University. Because it will be temporary. If you know that is possible. Clearly explain your situation. stay in your home. Orbis Marketing. If you bought your home with a Veterans Administration (VA) guaranteed loan. 23 A delivery confirmation can be denied by the person in charge receiving all the documentation. (Yes. LLC.com . Without such information. call the VA office nearest you. You are not going to jail if you don’t afford the payments anymore. Keep reading. right? Copyright © 2008. Obviously. but a certified mail without a delivery confirmation is received anyway.. You may not qualify for the following secrets if you abandon your property. the same way as the other normal correspondence. (Fees are increasing everyday when a mortgage payment is late).foreclosureinprocess. That will not happen. such as your monthly income and expenses.usps. A KEY FOR SUCCESSFUL NEGOTIATIONS In my trainings of Real Estate Investments and Business in the University of Donald Trump. If you are already having problems making your payments. my friend. DO NOT IGNORE THE LETTERS FROM YOUR LENDER. and learn all you can of this temporary experience. it needs to be with fully knowledge in what you are saying and not just because. call your lender immediately. that is not a good negotiation.Foreclosure Secrets Guide Note: You don’t want to pay a delivery confirmation when send a certified mail. negotiate and negotiate to get what we want..com. they may not be able to help. a copy of this record is good in any court. whatever it happens. All Rights Reserved www. Also. The certified mail is recorded on line when it is received at www. LLC. All Rights Reserved www. let’s see the following options.Foreclosure Secrets Guide ALL THE KNOWN WAYS TO NEGOTIATE 24 If you didn’t had a solution to your claims negotiating with even any high level position manager and you already are behind in payments.com . Orbis Marketing. now you are in the endless list of borrowers closer to foreclosure. -maybe following that ridiculous advice to be 90 days late. that’s what they wanted isn’t?)-. they are ALL THE WAYS you have to negotiate and keep your home (you may apply the best option for you): • • • • • • • • • • Mortgage Modification Forbearance Full Reinstatement Repayment Plan FHA Forbearance FHA Partial Claim Freeze the rate FHASecure Veterans Administration Loans Assistance for Service Members on Active Duty Copyright © 2008. (well.foreclosureinprocess. Your lender has to give you some attention now! (They don’t feel good having many people living in their properties for free!) So. Foreclosure Secrets Guide MORTGAGE MODIFICATION 25 In simple terms. may want to pursue a legal defense. Nobody else. DON’T NEGOTIATE WITH THE PERSON CALLING FROM THE COLLECTIONS DEPARTMENT. Remember your credit will be damaged if you are late. In an effort to reduce overall payment obligations to a more affordable level. Reducing the interest rate 2.google. talk with him). Tell them you need to talk with THE LOSS MITIGATION DEPARTMENT. Orbis Marketing. There are hundreds of people in default trying to negotiate with these people every-single-day! You may qualify for a Mortgage Modification if you have recovered from a financial problem but your NET income is less than it was before the default (default = failure to pay). A Mortgage Loan Calculator is the one which is amortizing both Principal and Interest. TRY TO BREAK THIS RULE SINCE THE 1st MONTH. but this is now very hard to obtain negotiating out of court. (Lenders are changing rules every month and many lenders don’t require this rule). some lenders have lowered the balance of the loan in a loan modification. the changes most acceptable for lenders are: 1.com . Make your own numbers and find out how much can be the payments in your new loan. Note: Expect to wait a long time on the phone to talk with somebody at that department. Copyright © 2008. LLC. NOT EVEN WITH THE MANAGER. ☺ THE COMMON RULE IS THAT YOU MUST HAVE 3 MONTHS LATE IN ORDER TO TALK TO THE LOSS MITIGATION DEPARTMENT. Extending the amortization (from 30 to 40 years long) 3. (Only if you personally know the President of the company. Accepting just the interest part of the payment (interest only) –many lenders will not accept this. a Mortgage Modification is when your lender agrees to change the terms of the loan and adds all late payments and fees to the balance. If you are not working you may not qualify for a Loan Modification. Tip: Go to http://www. ANYWAY. Any borrower looking to match the present price of the house to his/her mortgage balance.foreclosureinprocess. they are the only department having the real authority to make a successful negotiation with you.com and look for MORTGAGE CALCULATOR. they will modify for a fixed loan (interest and principal)In the past. All Rights Reserved www. but the monthly payment is higher. Even attorneys! Keep your money safe. the borrower may not qualify. All Rights Reserved www. always write down the loan number in each page at the right upper side. and everything needed to prove that you have a steady income. Orbis Marketing. 2 months paystubs. LLC. which must disclose that you want to keep the property.500 per month and the expenses (including the mortgage) are $2.Foreclosure Secrets Guide 26 In a modification (depending in the lender). the payment is higher. you must provide the last 2 years of W2. showing expensive web sites or expensive advertising. When the amortization is longer. I warn you: They will do the same what you can do over the phone! And you will know more than those guys reading this book. If you qualify according to the guidelines of the lender.375 to $2. (Some lenders are now requesting to provide utility bills). Many are just starting with no experience at all. Tips: • • Could your lender approve a 50-year amortization? That can be cheaper. or is negative against expenses or has no income at all. even if you have a fax confirmation). You just need to ask for it (Remember Trump?). In short words. they not verify this. Lenders will accept any number given for gas and food expenses. Most ARM’s were amortized at 30 years. and always verify if they received the fax (many times they don’t. You must provide a Financial Statement Sheet (this form is provided by your lender) and also a Hardship Letter. If a loan has a shorter amortization period. so. If you change your loan to a higher interest rate. the payment is lower. will be added to your balance.foreclosureinprocess. the monthly payment will decrease considerably. For example: if the borrower has a NET income of $2. You can ask both to lower the interest rate and extend the amortization. you will owe more than before. the modification will have an actual change to the Mortgage Note itself by adding past due interest and past due escrow amounts (plus other fees) to the unpaid principal balance and then re-amortizing (recalculating) it over the new term. Secret Tip: in order to qualify.300. he/she may qualify with most lenders. If you have a home loan amortized at 15 years. If the borrower has an income higher than that. bank statements. any borrower must show that they have a surplus of a maximum of $200 dollars in income-expenses. Copyright © 2008. IMPORTANT NOTICE: There are on the internet several “professional foreclosure negotiators” advertising that they can get these Mortgage Modification plans approved even when the debtor cannot. in a MODIFICATION. the interest rate is very low.com . although it must be reasonable. but amortized to a 40 years. all your pending payments and fees. including a 2% INTEREST RATE! When you have to fax documents to the lender. but it can last for some more time depending upon the lender. sometimes the payments can be suspended as well. If you had trouble covering your mortgage payment each month before this happened. 27 A Special Mortgage Forbearance is when the lender is reducing the payments for a short period of time.com .. too.Foreclosure Secrets Guide FORBEARANCE The dictionary defines Forbearance as: Act of delaying. Here are the catches. I recommend a mortgage forbearance if you have a really small loan monthly payment and were only temporarily set back by some financial circumstances. You’ll have to find out what your specific lender can do for you. Every lender has different policies and procedures surrounding negotiations for Forbearances. that means you will pay your normal monthly payment PLUS small advances of the pending balance created by the months you were in forbearance. When the forbearance is over. The workout agreement must be approved by your lender. Usually a lender will give you around a year – or up to 18 months – to pay off the back payments you owe. once you start paying your loan again. Copyright © 2008. Usually a payment reduction or total suspension is allowed for less than 6 months. If your lender does agree to a workout agreement. All Rights Reserved www. What this means is. Your lender is only going to be willing to consider a reduction or suspension of your payments if they believe your problems are temporary AND you can repay the back payments within a year. Inactivity resulting in something being put off until a later time. they will expect you to repay the amount they allowed you to suspend (back payments) after the suspension period is over.. your re-payment period starts.foreclosureinprocess. But it is not that easy. this is not the option for you. Your lender can allow you to not make your payments for a while or allow huge temporary reductions. LLC. you will be entering in a REPAYMENT PLAN (more of this is explained later in detail). In addition to your normal monthly payment. Forbearance is designed for borrowers who have temporary financial problems caused by unforeseen problems such as temporary unemployment or health problems. Orbis Marketing. you will be also paying off the balance of the amount of the missed payments. If you qualify for a 24 month FHA Forbearance. Forbearance policies vary from lender to lender. It will increase your future monthly payments. is also possible to enter in a forbearance period which MAY be extended up to 24 months. Also. You may also negotiate to have the missed payments transferred to the principal balance of your current loan. or if you have already received a forbearance. Copyright © 2008. unless you extend the amortization. The technique of Forbearance is applied to student loans as well. though. They will transfer you to the proper department. Every missed day means more fees to pay. If you don’t think that a forbearance is the best option for you. LLC. Federal Housing Administration (FHA) Forbearance If you have a FHA insured loan. find their telephone number on your monthly statement or online from their website for Customer Service. Investment properties. Orbis Marketing.Foreclosure Secrets Guide 28 If you have the money each month to afford to pay off the back payments and can get your lender to agree to suspend your payments for a short period. call your lender(s). When you call your lender. (Every lender is different. or a severe disability.com . review more options on this book. your lender may ask you to make one or more payments to your account as an expression of your commitment to repay. trust me. if you have not yet made any payments to your account. you have to make the same negotiation with both lenders. Every day late is just acquiring new late fees. Remember that as soon as you have a financial hardship. vacant homes or dwellings set for a foreclosure sale within 30 days may NOT qualify for FORBEARANCE. you may require an upfront lump sum payment. You must furnish documentation to your lender to show that you would be able to meet the requirements of the new payment plan. call the lender on the line for Customer Service and tell them that you are looking for this option. Don’t wait. If you have 2 mortgages. If the Forbearance plan is for you. but this ONLY apply if the homeowner had a very special circumstance to qualify. This negotiation can allow you time to either delay/avoid foreclosure or sell your home. will be sort of like a short-term loan. death of a contributor to the family income. I remind you that lenders want to work with you. All Rights Reserved www. remember). Be patient. Evidence of your financial situation may be requested by you lender.foreclosureinprocess. Foreclosures cost them a lot of time and money. like a natural disaster. A Repayment Plan is to pay the normal $1. 29 A reinstatement occurs when you pay your mortgage company the total amount you are behind. Lenders don’t ask if the money is coming from a friend. This plan immediately brings accounts up to date. It works by re-distributing delinquent payments over a period of time (normally less than 12 months).000 plus $300+ (or so) in advance.foreclosureinprocess.000 dollars plus late fees. your bank account.000 dollars. The monthly amount is then added to the usual mortgage payment. if your monthly payment is $1. and you are 3 months late. This negotiation doesn’t modify the interest rate or the amortization. you owe $3. so you can maybe be creative with this. including any legal costs and penalties and you are permitted to make regular payments then your mortgage has been reinstated. All Rights Reserved www. insurance.Foreclosure Secrets Guide FULL REINSTATEMENT Full reinstatement is the dollar amount (including payment. until you pay in full the pending balance. a business. Orbis Marketing.000 dollars monthly payment. penalties etc.) required to bring the mortgage loan current. etc… they just want to see the money. you can return to the normal $1.com . After that. LLC. taxes. REPAYMENT PLAN The repayment plan doesn’t necessary applies to an adjusted ARM in default. but it can be good that you know about it. For example. Copyright © 2008. auto. etc. Unacceptable Reasons • • • • • • • Quitting a job to go back to school Quitting a job to stay at home and care for children Quitting a job for any reason Seasonal layoff job National economical crisis Co-borrower (brother) is leaving from home because getting married Voluntary reduction in hours worked.Foreclosure Secrets Guide ACCEPTABLE REASONS FOR DELINQUENCY • • • • • • • • • • • • • • • • • • • • • • • • Loss of job Reduction of income of a borrower (Curtailment of income) Temporary loss of income due to layoff Other temporary loss of income Excessive obligations Distant employment transfer Inability to sell property Inability to rent property Marital difficulties Health/Medical reasons Death of borrower Death of borrowers family member Illness of borrower Illness of a borrowers family member Military service One-time repairs (home.) Neighborhood problem Property problem Abandonment of property Natural disaster Failed business Incarceration Divorce Adjustable Rate Mortgage Reset 30 Note: The key word is “Temporary”. Orbis Marketing. LLC.foreclosureinprocess. reducing pay Copyright © 2008.com . A homeowner must be able to prove that he/she can afford the home once the modification has been completed. All Rights Reserved www. do not write a book because most likely it will not get the attention of an over worked. The following are 2 examples of Hardship Letters that you can modify according to your specific circumstances. late notices on your car. (You can find supporting comparable sales for your neighborhood for free at www. So. A hardship letter is a written explanation as to what “event” has caused you to fall behind on your mortgage and it is vital in helping you stop foreclosure. Identify the reasons for failing to keep current with your monthly payments and the DATES which coincide with the delinquency period.com ) (The price for a possible future foreclosure sale is around a 50% of present market price) Copyright © 2008. (Make them cry when they read your letter). 31 This letter acts much like an outline or biography of your current “life” issues that are affecting your ability to meet your financial obligations. LLC. Write with feeling and emotion. Please keep in mind that you are composing the hardship letter for your lender or servicer and because of the foreclosure crisis. they are extremely busy and back logged. with that in mind. That form can be provided by your lender.foreclosureinprocess. State your offer to resolve your debt.com . Do not be too vague in your explanation. Note: Along with your Hardship letter you must provide also a Financial Statement in writing.Foreclosure Secrets Guide HARDSHIP LETTER One of the items your lender or servicer will ask for during the loan workout or loan modification process is a hardship letter (along with other financial documents). In your financial hardship letter you should: • • • • • • • • • Keep it brief and to the point. Show them you are willing to participate in a Workout Solution or the desire to retain ownership of the house or property. All Rights Reserved www. last year's tax returns. Thank them for their time and consideration. Enclose bank statements from the past two months. or too technical. (Some lenders requires this only by phone). $12 an hour loss mitigation employee..zillow. Orbis Marketing. and anything else you can find that shows the financial trouble you are going through. Don’t forget to leave your current contact information. Usually 1 or at maximum 2 pages is more than enough to get your point across. Foreclosure Secrets Guide 32 HARDSHIP LETTER Name: (Your Name) Address: (Your Address) Lender Name: (Your Lender) Loan #: (your Loan #) To Whom It May Concern: This letter is to explain my hardship. I have a variable loan (ARM) that already adjusted in XXX 2008 on the property located at XXXXXXXXXXXXXXX. This is the house where I am living currently and I want to keep it as my primary residence. I tried to refinance and lower the payment, but the house value is now upside down. The debt on the loan is higher than the present value, and the value of this property is keeping down every month. Investors and economists say that it seems like this market will be fallowing down. Also, my hourly job decreased in the last months, but I understand it will be temporary. At this time, I’m working also in a part time so now I can afford the payments again. Unless you modify the terms of my mortgage, default and foreclosure will be my only remaining option. Therefore, foreclosure is “reasonably foreseeable”. I have also enclosed my financial statement and bank statements that demonstrate how, under my present financial circumstances, I would be able to afford the following terms: Proposed 40 Yr Fixed Interest Rate Proposed Mortgage Balance according a present Fair Listing Price Proposed P+I Monthly Payment based on 480 months to pay off the loan 2% XXXXXX XXXXXX Further, I have attached supporting comparable sales from this neighborhood demonstrating that this property is likely only worth approx. $XXXXXX and you will probably only recover $XXXXXX before fees and real estate commissions if you were to foreclose on my home and try to sell it within a year or more. With these things in mind, I request that you modify the terms of my mortgage loan. A reasonable Loan modification could allow me to keep this property, avoid foreclosure and prevent potential costly forensic accounting and litigation arising from possible irregularities in the Loan origination process and discrepancies in the promissory note assignments. Respectfully, _________________________________ XXXXXXX Date Copyright © 2008, Orbis Marketing, LLC. All Rights Reserved www.foreclosureinprocess.com Foreclosure Secrets Guide HARDSHIP LETTER EXAMPLE 2 (Date) (Company's representative) (Company's Name) (Company's Address) (Company's phone number) RE: (home address) Account number: (#) Dear (Ms/Mr. Brown:) 33 Due to the recent adjustment to the mortgage I currently have with your company, I am finding it very difficult to afford the new payment. I have a 3 year fixed rate which is now adjustable and is schedule to adjust again in Feb. 2008. Considering my current income, there will be no way I can afford the increased payments come February. Hopefully there is way to renegotiate the terms of my current mortgage to avoid default and help stop foreclosure on my home. Is it possible to have my current adjustable rate mortgage converted to a fixed rate? If this is not possible can the next rate change be postponed to a future date to allow me to hopefully refinance? Any other solutions you could provide would be greatly appreciated. I have had no problem making my payments for over three years now and do not want that to change. My mortgage was originally written by another company and bought by Countrywide. The original mortgage terms are terrible but it was the only loan I was qualified for at the time. I was assured that refinancing would be no problem but that turned out not to be true due to the downturn of the housing industry. The main problem is that my property is now worth about 30% less than what I paid for it which is preventing me from being able to refinance. I was researching on the internet and came across the Fannie Mae Announcement #06-18 (Oct. 4th 2006) regarding the servicing of Conventional Mortgage Modifications. I believe this addresses the situation I currently find myself in along with many other homeowners. Attached are recent pay stubs showing my current income. Thanks you for your time and consideration. Sincerely, (Home Owner Name) (Co-signer Name) (Home Owner Address) (Account #) Copyright © 2008, Orbis Marketing, LLC. All Rights Reserved www.foreclosureinprocess.com Foreclosure Secrets Guide FHA PARTIAL CLAIM If you have a subprime loan, you DO NOT qualify for this option. 34 This strategy applies only for defaulted FHA loans. Maybe you are a borrower in default of this type of loans and you don’t know. This is how it works: A borrower of a FHA loan in default can contact The Department of Housing and Urban Development (HUD) to work together with his lender. Under the Partial Claim option, a lender may be able to work with a borrower to obtain a onetime interest free loan from HUD FHA insurance fund to bring a defaulted mortgage current. This will bring the defaulted account up to date immediately. The lender will execute a promissory note and will be payable to HUD. This will be placed on your property until paid in full. The borrower doesn’t have to pay anything until it is refinanced, sold, the borrower leaves the property or when the mortgage matures. No interests are accumulated in this note. Partial Claim terms: • • • • • • • The note will be interest free. (0%) There will be no repayment penalty The note is payable to HUD Borrower is not required to make monthly payments Borrower can make partial payments but they must be by cashiers check or certified funds The Note will be due when the Mortgage is paid off or when the home owner sells the property The Home Owner can apply for a refund in the mortgage insurance premium when the note is paid in full Copyright © 2008, Orbis Marketing, LLC. All Rights Reserved www.foreclosureinprocess.com Provide proof of income. Prepare a letter of explanation for HUD stating the reasons you fell behind on the mortgage and what you have done to overcome the financial hardship. 2. 4.com .com Copyright © 2008. You begin paying back this amount after you pay off the mortgage. 5. must be included when submitting for a Partial Claim.Foreclosure Secrets Guide A Borrower may qualify for a Partial Claim if: • • • • • • • • 35 The loan is at least 4 months delinquent and no more than 12 months delinquent. Send it by certified mail. This will ensure that there will be no delays in the processing of your partial claim application.foreclosureinprocess. A copy of your taxes. Understand what a Partial Claim is. 6. LLC. Call your lender to get information regarding Partial Claim. Borrower may still qualify for a Partial Claim. All Rights Reserved www. Orbis Marketing. 7. 3. Gather your bank records for the past three to six months. Send the completed package to your lender. This will help you keep track of the process and give you peace of mind that it arrived at its destination. in their entirety. The Process of Partial Claim: Things you’ll need: • • • • Proof of income Tax returns Bank statements Letter of Explanation or Hardship Letter 1. Get your tax returns for the past two years. Double-check everything before you send it. but the Bankruptcy Court must give approval (In BK Chapter 7 you must surrender your house). Your lender also will send you a list of all necessary documentation needed to proceed with the Partial Claim process. The length of time will depend on your lender. Ask for HUD contacts to help you through the application process. Check this on line at http://www.usps. This is done so that HUD can be assured that you will be able to meet your financial obligations. The property is Borrower’s primary residence Borrower may or may not be in Foreclosure Borrower is able to begin making full mortgage payments Borrower has resolved the hardship that caused him to fall behind Borrower have the long-term financial stability to support the mortgage debt or make the payment Borrower don’t have the ability to repay the past due amount through a special forbearance or modification If filed for Bankruptcy Chapter 13. HUD provides you with an interest-free loan that is secured by your home. LLC. though. All Rights Reserved www.Foreclosure Secrets Guide Notes: HUD will loan you the money to bring the loan current… but you will have to pay all of the attorney fees upfront. Be sure the home for which you are applying for a partial claim is your primary residence. Copyright © 2008. You will not qualify for a partial claim unless you are at least four months and no longer than 12 months behind on your mortgage payments. Orbis Marketing.foreclosureinprocess. Secondary residences or investment properties do not qualify for this program 36 Know how many months you are behind on your mortgage payment. The only way that a partial claim can be approved is if you have been turned down for another plan by your mortgage company already.com . 2010 • If your mortgage has already reset. 2005.foreclosureinprocess. HOPE NOW members have agreed on a set of new industry-wide standards to provide systematic relief to these borrowers in one of three ways: Freezing current interest rates for five years Refinancing the existing loan into a FHASecure loan Refinancing the existing loan into a new private mortgage HOW TO QUALIFY FOR A FIVE-YEAR FREEZE: • Only sub prime ARM’s are eligible • You MUST be up to date with your mortgage payments (not late) • Your interest rate must reset between Jan.Foreclosure Secrets Guide FREEZE THE RATE On December 6th.com/uploadedFiles/FinalASFStatementonStreamlinedServici ngProcedures.americansecuritization. and July 31.com or http://www. and July 31. but who can at least afford the current starter rate. President Bush announced that representatives of HOPE NOW have developed a plan under which up to 1. meaning lenders may offer the relief programs but it’s not required. there are severe limitations of the plan. This program is voluntary. 1-888-995-HOPE. 1.pdf Copyright © 2008. 2008. Unfortunately. that means if your lender kept the loan on his books rather than sell it into a securitization pool.2 million homeowners could be eligible for assistance in their mortgage loans. 1. but will not be able to make higher payments once the interest rate goes up. All Rights Reserved www. LLC. They assembled a private sector group called "HOPE NOW Alliance". 2007 • Option ARM’s or Negative Amortization are not eligible • Only securitized loans are eligible for this plan. More information available at the following site: http://www. The HOPE NOW (frustration later?) plan is designed to help subprime borrowers who can at least afford the starter rate on a subprime loan. HOPE NOW has supported a toll-free hotline.com . 2007.hopenow. which is available 24-hours a day to provide mortgage counseling in multiple languages. 37 The HOPE NOW plan is to help homeowners who will not be able to afford a higher payment on their sub-prime loan once the interest rates goes up. you don’t qualify • The new payment must be at least 10 percent higher than your current payment • Are eligible only ARM’s made between Jan. • Investment properties don’t qualify Meet all the above criteria and you may qualify before the initial reset. Orbis Marketing. Ability to afford the refinanced loan 5. HOW TO QUALIFY: 1.foreclosureinprocess. All Rights Reserved www.gov/fhasecure Copyright © 2008. LLC. Have at least 3 percent equity in your home 2. is another option to help people mortgage-stressed to refinance. launched in the summer of 2007.com . More requirements in next page You can call at 1-800-CALL-FHA (1-800-225-5342) Or visit www. Orbis Marketing. Don’t have to be late in monthly payments 3.fha. This program is for homeowners whose interest rates reset between June 2005 and December 2009. Have a solid employment history 4.Foreclosure Secrets Guide FHASecure 38 FHASecure. Am I eligible for FHASecure? So long as you are current on your mortgage. the default must have been due to the payment shock of an interest rate reset or. especially if communication with the lender has broken down.gov I have an interest-only mortgage. If you are delinquent. please call 1-800-569-4287 or search online. please call 1-800-569-4287 or search www. possibly with the assistance of a HUD-approved housing counseling agency.gov).hud. and for a certain period of time. Whether you're current. is willing to take back a second mortgage to help bridge the gap between what is owed and your home's value. To find a HUD-approved housing counseling agency. Many lenders offer assistance to their borrowers to help them bring their mortgage current. and if the lender is willing to offer a second mortgage. All Rights Reserved www. Are there any programs for people already in foreclosure? It is possible that FHASecure may help homeowners already in foreclosure but each situation is unique and depends upon the value of your home and how much you owe. (They may keep posting new laws to help homeowners).foreclosureinprocess. to determine the best course of action. Must I be delinquent. in order to be eligible for FHASecure? No. Copyright © 2008. you are eligible for an FHASecure refinance. I have a fixed rate mortgage and have fallen on bad times.hud. in the case of an Option ARM.Foreclosure Secrets Guide 39 The Federal Housing Administration displays freely this FHASecure information in its website (http://portal. and FHA encourages homeowners facing reset to refinance before they fall behind on their mortgage. To find a HUD-approved housing counseling agency. the amount you can refinance will depend on the value of your property and how much you owe and if the lender. Orbis Marketing. the "recasting" of the mortgage to fully amortizing. What about me? Homeowners facing financial difficulties and unable to make their mortgage payments are strongly encouraged to contact their lender. Homeowners facing foreclosure are strongly encouraged to talk with their lenders. LLC. one month behind or multiple payments behind. or another eligible source. Homeowners may also want to contact a HUD-approved housing counseling agency to find out about programs that may be able to assist them.com . Eligibility How far behind can you be on a mortgage to qualify? What about more than 90 days? There isn't a limit on how far behind you can be on your mortgage or how many payments you've missed. current or delinquent and regardless of reset status. then you should ask your lender to consider a second mortgage to pay the difference or a short payoff on your existing loan. the ability to refinance into a FHA insured mortgage. the amount of the second could exceed the maximum loan limit for your area. Offering either of these options is at the discretion of the lender. Orbis Marketing. Although the FHA insured mortgage cannot exceed those loan limits. General How can FHA help homeowners stay in their homes? FHASecure gives homeowners with non-FHA adjustable rate mortgages (ARMs). What if the average home price is above the FHA loan limit for my area? Are the FHA loan limits changing for this program? FHA's geographical loan limits and how much it can insure are established by law. meaning that you pay towards principal and interest every month. All Rights Reserved www.Foreclosure Secrets Guide Paying Off Your Mortgage(S) and Your Home's Value What if I have a prepayment penalty and other refinancing costs and there isn't enough equity in my home for me to refinance? 40 If you do not have sufficient equity in your home to add your prepayment penalty and/or other refinancing costs into your new FHA mortgage.com .foreclosureinprocess. and the lender may offer you a second mortgage to make up the difference between the value of your property and what you owe. teaser rates or balloon payments. Why should I consider refinancing into a FHA insured mortgage? FHA insured mortgages do not allow for prepayment penalties. They are offered at market rate with terms up to 30 years and are fully amortized. but only if the combined amount is within the FHA geographical loan limit. With FHASecure. your lender could offer you a second mortgage to make up the difference. including standard refinancing costs. the lender will not automatically disqualify you because you are delinquent on your loan. Copyright © 2008. If I have first and second mortgages can both loans be included in FHASecure? Yes. If the combined amount exceeds the FHA loan limit and/or the loan-to value limit. Does it matter that the value of my home is now less than what I still owe? Not to FHA but the mortgage lender considering the refinance would have to be willing to accept a short payoff on the existing loan OR to hold a second mortgage to make up the difference needed to pay off the existing mortgage and the home's value. LLC. when a lender is willing to combine a first and second mortgage. LLC. based on their capacity to make the monthly mortgage payments. Orbis Marketing. contribute to neighborhood decline and cost local governments due to additional services and lost revenues. Unfortunately. Copyright © 2008.foreclosureinprocess. Does this program help responsible people who pay their bills on time? Any homeowner who is current on their mortgage can refinance to a FHA insured loan at any time if it makes financial sense for them to do so. taxpayers do not pay for FHASecure or other FHA programs. it is now possible for them to refinance into a more affordable FHA insured mortgage and the lender may execute a second mortgage at closing to pay the difference. and potentially avoid foreclosures that contribute to neighborhood decline. To find a housing counseling agency. And for those homeowners with non-FHA adjustable rate mortgages who are current but owe more than their home is worth.com . why is FHA making it available? FHA recognizes that foreclosures and vacant properties affect home values. Why isn't FHA going after the lenders who approved these types of loans in the first place? FHA was established to insure mortgages. They should contact their lender or a HUD-approved housing counseling agency for assistance. All Rights Reserved www.cfm If this program won't help everyone.Foreclosure Secrets Guide Is this program going to help people who shouldn't have gotten a home loan in the first place? 41 People will still have to qualify for a FHA insured mortgage. property depreciation and decreased revenues to the locality. those who shouldn't have gotten a home loan in the first place will not be able to qualify for FHASecure or other FHA refinancing options. FHA borrowers pay their own way.hud.gov/offices/hsg/sfh/hcc/hccprof14. homeowners can call 1-800-569-4287 or visit http://www. FHA is offering this program to help prevent that type of negative impact on a community. It does not have the authority to regulate transactions that do not involve FHA financing. What is this program going to cost taxpayers? Because the borrower pays the FHA mortgage insurance premium. All Rights Reserved www. Under this statute. and re-amortize the new loan as a normal loan modification.va.foreclosureinprocess. Contact the US DEPARTMENT OF VETERAN AFFAIRS (VA) at 1-800-827-1000 or http://www. Copyright © 2008. your lender may be able to reduce the interest rate.gov 42 ASSISTANCE FOR SERVICE MEMBERS ON ACTIVE DUTY If the mortgage payments are behind due to military service.com . are recognized also National Guard Members who were called to active state duty in response to a national emergency declared by the President of the United States.Foreclosure Secrets Guide VETERAN'S ADMINISTRATION (VA) LOANS If you have a VA backed loan mortgage. Orbis Marketing. They also may be able to take the past due mortgage amount added to the current principal mortgage balance. homeowners should call their mortgage lender and ask about the Service Members Civil Relief Act (SCRA). LLC. SCRA allows active military members to suspend or postpone some civil financial obligations. This could result in a lower monthly payment. The SCRA was designed to assist and protect important rights of active duty military members and reservists who are in active federal service. Foreclosure Secrets Guide SHORT SALE If you: • • • Owe more than the property’s fair market value Cannot refinance Cannot negotiate with your lender in any way 43 Then. All Rights Reserved www. you may want to sell it at $250k…that’s what it is supposed to be. a bunch of interested buyers in your area will come to see your property and will definitely buy from you when they compare the others. YOU MUST OFFER YOUR PROPERTY LOWER THAN THAT BY A 5%.foreclosureinprocess.com .000. HOW TO SHORT SELL YOUR PROPERTY VERY QUICK If you want to sell FAST your property in a declining market. If similar or comparable ACTIVE houses in the market are being sold by $190k. the property’s physical condition and local real estate market conditions. Copyright © 2008. you can sell the property as normal) (Please don’t leave the house yet!) SHORT SALE is defined as a negotiation of the loan terms for less than the existing loan balance. because THE PRICE. LLC. Orbis Marketing. Every week keep looking at the competition prices to keep lowering the price in order to be cheaper than them! This way. you must proceed to make a SHORT SALE (If you have Equity. it must be following these market rules: You must need to sell it for less than you owe (certain exceptions apply).000 in your loan and your house is worth $200. a secret not even those “experienced” Realtors know about it!) is to take a look in the selling prices around your property. They will buy from you VERY QUICK. isn’t? But you know what is happening these days? NOBODY will buy your house at this price! (That’s why there are thousands of houses in sale right now for more than 8 months in a row) The secret to sell it faster (and this is a real secret that I’m giving to you. If you owe $250. due to factors such as the borrower’s financial circumstances. my friend. and in front of you. the buyer may not qualify anymore or the house has dropped down more in value. Depending on the negotiation developed by this person with your lender. it can be a successful outcome or not. the prices are being offered to you quite different: one apple is priced at $3 dollars. no one of them followed my advice. LLC. the second one is priced at $2 dollars and the third apple is priced at $1 dollar. It is said by experienced investors that an additional 30% to 50% will drop down on house values here in the Valley of Phoenix by 2009. After entered your property in the Real Estate market by a really good and really experienced Realtor and you finally have found a QUALIFIED buyer (to find a buyer can take from one day to several months). The results were that ALL OF THEM lost their houses. All of them! I remember some of them laugh of me and others get mad. All Rights Reserved www. You want to know that a foreclosure is stopped when a short payoff transaction is approved and your house will not start foreclose proceeds until the lender decided what to do. At this time (Feb 2008). still the same minding for many people). same color and same taste. you know how is this…nobody knows. In the beginning of 2007 I told some of my friends and clients to sell their properties. be aware. Orbis Marketing. the $1 dollar apple! There’s no sense on this … Unfortunately.Foreclosure Secrets Guide This is a very clear and simple example of this: 44 You are shopping apples. because house prices are dropping the value drastically every month! When you short sale your house. So. there are 3 apples of the same size. you must do it through a very good Realtor experienced in Short Sales.foreclosureinprocess. unfortunately. the Short Sale transaction will just began. if you decide to sell. (But. However. which one would you buy? Of course. There is a similar average for the national scenario. We just need to be prepared) Copyright © 2008. At that time. you must do it as soon as possible. and this can last from one month to eight months! By the end of the transaction. all of them were thinking to sell at the top market price to make huge profits (as today. Your lender can easily turn down the offer of your buyer if that Realtor misses just one thing. the same rule applies for your home. the bubble crunch was not so hard as today.com . causing them to lose millions of dollars. SHORT PAYOFF For a Short Payoff. must be through a Real Estate Investor which can negotiate for you a lower balance in your mortgage debt for 65% or less of the fair market value. LLC.php SHORT REFINANCE For a SHORT REFINANCE. you must work closely with a seasoned loan officer or financial advisor who originates home loans. A Short Payoff is not illegal as many unknowledgeable people can say. Under the FAIR HOUSING LENDING the banks cannot give you any special treatment or discounts because if they do. Your Promissory Note and Deed of Trust (or Mortgage) states that the homeowner will be responsible for 100% of the debt and a representative (like a Realtor or Loan Officer) will be requested for this as well. they will negotiate a SHORT REFINANCE for you in coordination with both you and your lender in order to refinance for less than you owe.com . then transfer the note back to you through a hard money lender. More information for SHORT PAYOFF in page # 130 Copyright © 2008.Foreclosure Secrets Guide 45 Watching the following video. It seems to be more effective a SHORT PAYOFF as this type of investors will work as a third party NOT as your representative. Very few lenders are willing to negotiate a short sale or short refinance if the homeowner is current.speculativebubble. This video will make you seriously think about where we are going right now: The Real Estate Roller Coaster http://www. will graphically explain to you what has been happening all these years.foreclosureinprocess. This is not a Short Sale and for this reason it may exclude tax liabilities. Orbis Marketing.com/videos/real-estate-roller-coaster. they must offer the same exact discount to ALL of their borrowers. you MUST be late in your mortgage payments. These transactions must be handled by experienced negotiators in order to be successful on this. and many of them are not accepted by lenders. All Rights Reserved www. of which they can turn around and file a law suit against the bank. Short sales and short refinances are not easy. To show a hardship in your situation. You must proof you can’t pay the same amount as before.Foreclosure Secrets Guide HOW TO QUALIFY FOR A SHORT SALE 46 You may be wondering how you can sell or refinance for less than the balance in your loan. lightning. If you have MI. The proposed selling or refinancing price is more than the lender would be able to sell the property for after foreclosing on the loan. the lender is being paid by this insurance… and the borrower lose the house anyway. Sometimes it may be confusing. storms. etc. 4. Hazard Insurance is the insurance that protects the policy holder against property damages made by fire. and there's no realistic expectation that your financial condition will improve within the foreseeable future. LLC. 6. The property was purchased or refinanced at the top of a seller's market at an overinflated price. It’s not that easy… again.foreclosureinprocess. Why? There is no sense for a lender to receive a short payment when the mortgage insurance will pay them the full amount in a Foreclosure. The property's value has decreased to an amount that's below the loan balance due to local and national economic conditions that are beyond your control. 5. 3. The lender would have to pay MORE MONEY to sell the property if forecloses on the present loan.com . 2. but this is as simple as that the borrower is paying a monthly premium for Mortgage Insurance included in the mortgage. you may not qualify for Short Sale. Copyright © 2008. All Rights Reserved www. and has had a substantial drop in value. In order to the lender accept your offer to SHORT SELL your house they will consider the following: 1. flooding. Mortgage Insurance is a policy that insures the lender against the borrower defaulting on a loan. and it is only covering the LENDER NOT the borrower. even with cash buyers. Orbis Marketing. because if the borrower forecloses in the property. THE PROPERTY MUST NOT HAVE MORTGAGE INSURANCE. Mortgage Insurance is not included in 80/20 loans due to this insurance is only designed for loans with more than 80% LTV (100% loan for example) I have seen many homeowners trying to short sell a property with MI and they have never being approved. Please do no be confused with Mortgage Insurance and Hazard Insurance. Remember that the DEFICIENCY LIABILITY is JUST for the first loan. A qualified CPA must be contacted for concerns in tax consequences.Foreclosure Secrets Guide YOU MUST KNOW ABOUT THE DEFICIENCY LIABILITY 47 If you short sell a property. for the purpose of avoiding any federal tax penalties that the Internal Revenue Service may attempt to impose. This 1099 income is your TAX LIABILITY. But if that was your principal residence. I’m talking more about it into the chapter of Bankruptcy. thanks to the Mortgage Forgiveness Debt Relief Act of 2007 (up $500. well… borrowers may be paying huge taxes on that liability unless they file a report of insolvency with the IRS or file bankruptcy. taxpayers may rely only on opinions of counsel that meet specific requirements set forth in the regulations. All Rights Reserved www. including a requirement that such opinions contain extensive factual and legal discussion and analysis. Orbis Marketing. you should request to your lender -before selling the property.foreclosureinprocess. you may avoid that Tax Liability. and was not intended or written to be used. If the borrower doesn’t get that waiver. Circular 230 Disclosure: Internal Revenue Service regulations provide that. for the purpose of avoiding certain penalties under the Internal Revenue Code. LLC. Also read page # 129 on SHORT PAYOFF.000 if you file your taxes jointly or $250. you may be still pending with that debt. if you owed 250k and sold by 150k) the remaining debt (named DEFICIENCY LIABILITY or FORGIVEN DEBT) will be given back to you next year by the IRS in a form of 1099 INCOME. Any such tax advice therefore cannot be used. Copyright © 2008. although if the SHORT SALE was for an investment property… YOU MAY HAVE TO PAY TAXES! The Deficiency Liability does not apply for all states (Oregon for example). If you have a second loan or more liens in your property. The same liability will apply if you foreclosed for less than the balance or given the property in deed in lieu (next page).com . If your state allows this. Any tax advice that may be contained herein does not constitute an opinion that meets the requirements of the regulations. (for example.a WAIVER of the Deficiency Liability.000 if file individual). Foreclosure Secrets Guide DEED IN LIEU OF FORECLOSURE 48 If you couldn’t refinance the property. etc. Orbis Marketing. All Rights Reserved www. if you have an 80/20 loan in the house… you don’t qualify for a Deed-in-Lieu. This won't save your house. You are now released from the liability of the mortgage payments Also.foreclosureinprocess. LLC. judgments. your lender will mark your mortgage note as "paid". The escrow then records the deed used for transferring legal ownership of the mortgaged property and sends a copy to you. Copyright © 2008.com . The lender then sells the property. Deed-in-lieu is a process in which the borrower in default of the loan obligation gives back his property to the lender. a Warranty deed and a Quit Claim Deed Agreement in Lieu of Foreclosure Reveals the terms and conditions of the deed-in-lieu. You may qualify if: • • • • You are in default and don't qualify for any other option You couldn’t sell the house before foreclosure You don't have another FHA mortgage in default. such liens are tax liens. any other liens attached to your house will not make you qualify. and is signed by both the lender and borrower Warranty deed Quitclaim Deed Conveys legal ownership of the property to the lender A document which a person transfers ownership to other After signing these documents. See the following page for ELIGIBILITY You have to sign legal documents through an escrow company: An Agreement in Lieu of Foreclosure. but it will help your chances of getting another mortgage loan in the near future. you couldn’t qualify for any negotiation with your lender to stay in the property and you couldn’t sell the property. then you may be able to voluntarily "give back" your property to the lender (deed in lieu) in order to avoid foreclosure. Also. 3. which is to be signed by both the mortgagor and mortgagee. Orbis Marketing. you are the mortgagor): DEED-IN-LIEU OF FORECLOSURE OPTION The Deed-in-Lieu of Foreclosure allows a mortgagor in default. which contain all of the conditions under which the Deed will be accepted. Deed-in-Lieu must be completed or foreclosure initiated within six (6) months of the date of default. or used as a rental for more than 12 months.foreclosureinprocess. to sign the house back over to the mortgage company. LLC. The mortgagor must be 31 days delinquent or more at the time of the Deed-in-Lieu 4. 6. All Rights Reserved www.000 compensation is not paid to mortgagor until they have vacated the property. Under no circumstance should the mortgagor be encouraged to default on their mortgage for the purpose of qualifying for this option. Exceptions: when it is verifiable that the need to vacate was related to the cause of default (job loss. and the subject property was not purchased as a rental investment. not to exceed $2. The property must be owner-occupied. death). Copyright © 2008. If the Deed-in-Lieu follows a failed special forbearance agreement or the preforeclosure sale program.000 compensation. divorce. Warranty Special Deed is executed.com . • • ELIGIBILITY 1. Mortgagor must agree to “written” agreement of property conditions. Mortgagee will develop a written Deed-in-Lieu of Foreclosure Agreement. FACTS • • • • • • • Mortgagee can pay.Foreclosure Secrets Guide 49 The US Department of HUD has the following information on its web site (the mortgagee is your lender. unless the mortgagee qualified for an extension of time by first trying a different loss mitigation option or an extension of time was approved by HUD prior to the expiration of the time requirement. which verifies the borrowers need to vacate the property. to the mortgagor. The $2. Mortgagor(s) compensation must be applied to any junior lien(s) placed on the mortgage property. no “walk-a ways” or investment properties. and documentation. 2. Mortgagees may determine that a “current” mortgagor is eligible for the Deed-in-Lieu of foreclosure option. 5. transfer. who does not qualify for any other HUD Loss Mitigation option. The mortgagor must provide documentation of a reduction in income or an increase in living expense. then the Deed-in-Lieu must be completed or foreclosure initiated within 90 days of the failure. All Rights Reserved www.000. Mortgagor will convey property vacant and free of personal property unless HUD has approved an occupied conveyance.hud. The dollar amount of consideration payable to and/or on behalf of the mortgagor is not to exceed $2.gov 1-888-297-8685 www. Mortgagor is to provide a statement describing the general physical condition in which the property will be conveyed.Foreclosure Secrets Guide DEED-IN-LIEU AGREEMENT • • • • • • • • 50 • Mortgagor(s) does not own any other FHA-insured mortgages and/or or mortgage held by HUD.com . Mortgagor(s) agreement to provide evidence that certain utilities.gov Copyright © 2008. built-in fixtures and equipment to be delivered to the mortgagee on or before the transfer date. and homeowner’s association dues are paid in full to the transfer date unless otherwise agreed to by the parties.foreclosureinprocess. assessments. Orbis Marketing. Notification to the mortgagor that there may be income tax consequences as a result of the Deed-in-Lieu of Foreclosure. Agreed upon transfer date of property to mortgagee within the Agreement. LLC. you may contact NSC at: National Servicing Center E-mail: hsg-lossmit@hud. Itemization of the keys. Acknowledgment that mortgagor(s) who complies with all of the requirements of the Agreement shall not be pursued for deficiency judgments. If you have any question. com . LLC.foreclosureinprocess. Orbis Marketing. All Rights Reserved www.Foreclosure Secrets Guide 51 Copyright © 2008. Foreclosure Secrets Guide 52 Chapter 3 Copyright © 2008. Orbis Marketing.com . All Rights Reserved www.foreclosureinprocess. LLC. All Rights Reserved www. and there is a grace period of (generally) 15 days. Don’t get discouraged. fourth. Other states may start Pre-foreclosure actions when the homeowner defaults his/her mortgage loan the third. you have to know all your foreclosure rights under your state law. Copyright © 2008. and the following is a standard of this process in a non-judicial system state. You must check your state law. A clear example of this is when you go to a pawnshop and give a watch in exchange for $200. the pawnshop sells the watch. The same case is here. Only if the payment is sent after the 30th day. There are several stages where the homeowner still has an opportunity to find a solution. After the first 30 days late in the payment. from the beginning to the end: #1 DEFAULT Mortgage payments are established to be paid on the 1st day of every month. At 60 days late. it will be easier to miss the following months. you gave your house as a security for the money borrowed. After 90 days of non-payment (three months).Foreclosure Secrets Guide FORECLOSURE If you followed all the options described in this book and there was no way to stop foreclosure on your specific case. If you don’t pay back the money. or keep being late very often. but it is not reported to the credit bureaus as late payment.com .foreclosureinprocess. after the grace period or after the 15th day of the month. That means the borrower can wait to pay until the 15th day and not have any late fees. Don’t make a habit for this). The foreclosure process can vary by state. you will receive a second notification for this. then it is reported to the credit bureaus as late. Here in Arizona is on the 90th day (the third month). A late fee is imposed to the payment. the lender will send you by mail a notification about the missing payment and will include late fees in your bill. A borrower is officially late in the mortgage payment. you may have started a pre-foreclosure action by your lender (most common practice). Orbis Marketing. 53 Maybe at this point you still don’t understand what is happening. (You have to know that from a psychological point of view. LLC. the lender uses his right to sell this security interest. If you didn’t pay. fifth or sixth month after. THE FORECLOSURE PROCESS I will disclose now The Foreclosure Process step by step. if a borrower miss the first payment. You can keep negotiating with the lender(s). though. This is stipulated in your mortgage loan under the acceleration clause. At this point.Foreclosure Secrets Guide #2 NOTICE OF DEFAULT 54 After 90 days in default (in most cases).com . Note: This Notice of Default (NOD) is just to let you know that you are BEING OFFICIALY AND LEGALY WARNED of a Mortgage default and need to do something about it. Your lender will publish a legal notice in a local newspaper of the pending foreclosure (subject to local laws). LLC. your lender will then order a Trustee to record a Notice of Default (NOD) at the County Recorder’s Office. with just a Notice of Default filed. In addition. your lender may make a demand for payment in full. I you have a second mortgage in default too.foreclosureinprocess. You will receive a copy of the Notice of Default as well. You are in PRE-FORECLOSURE now. Don’t do this! Pre-foreclosure is like a grace period. TRUSTEE: A Trustee is a neutral person or entity authorized by a trust document to handle certain property matters on behalf of another. Many people getting this letter think it is an official foreclosure and leave the house that same night. to sell it or preparing to leave. Orbis Marketing. Copyright © 2008. A second mortgage can start a foreclosure action. which is included in most standard mortgage contracts. All Rights Reserved www. only the FIRST is allowed to start a Foreclosure process. ONLY if the first is current. YOU CAN LEGALLY STAY AT THE PROPERTY without making any payments either to keep negotiating with the lender. The Notice of Default officially opens the pre-foreclosure stage. your lender is unable to claim back the property and sell it. Foreclosure Secrets Guide 55 Within this period. or if you can not payoff the full amount including all pending fees within your State’s Pre-foreclosure period (2 to 3 months in AZ). Some states allow a reinstatement period until five days before the auction sale. as it is determined by state laws. LLC. The Pre-foreclosure period in Arizona is within two to three months. The trustee also will mail a copy of this notice to all affected parties. but also any missed payments. Finally. it is also published once a week in county local newspapers over a three or four-week period. Once you reinstated the loan and missed another payment again.com . you have a Reinstatement Right (or full payment of the pending debt) which can be done anytime in this grace period. then: You will receive a NOTICE OF SALE indicating the time and location of the auction or foreclosure sale. From the NOD to the sale of the property. Orbis Marketing. This same notice will be recorded at the County Recorder’s Office in the county where the property is located. Remember not only will you owe the balance of the mortgage. A Notice of Sale must be posted at your property at least 20 days before the Auction sale (in Arizona). the lender will start the foreclosure process from the beginning. #3 NOTICE OF SALE If you cannot negotiate successfully with the Loan Mitigation Department any of the options described in this book. although most states have shorter periods. Some states allow the Pre-foreclosure or grace period to last for as long as 6 months. All Rights Reserved www.foreclosureinprocess. a processor or by the local sheriff. The length of this grace period varies. Copyright © 2008. legal fees and late fee penalties. This may be served by mail. Maybe one normal day you will stand out of your home and find this notice posted on the front door of the property. Foreclosure Secrets Guide #4 FORECLOSURE SALE 56 The foreclosure sale typically occurs on the county courthouse in which the property is located. If there are no bids higher than the opening bid settled by the lender. sheriff's. interest accrued. When there is no buyer. but it also can be conducted at the same property address or the trustee’s office.com . Then. anyone can participate in the auction. the next day to pay the full bid price in cash. It sometimes is equal to the outstanding loan balance. trustee or foreclosure sale). the property will be purchased for the lender by the attorney or trustee conducting the sale. The winner of the auction will receive the trustee’s deed to the property when paid (usually next day). The time frame from the first month late in the mortgage payment to the auction sale is normally around six months in Arizona. If the house was bought by the same lender at the foreclosure sale. The lender sets the opening bid. then to any secondary lenders. If everything is paid and there is some money left. bidders must have a deposit check for the stipulated minimum and financing lined up to take over the property. it will be sent to the homeowner (now exhomeowner). All Rights Reserved www. At the foreclosure sale (this can be called an auction. the property will be deemed as a Real Estate Owned or REO. The proceeds of the sale are paid to the primary lender. however. and within seven days the property ownership is legally transferred by the trustee. Copyright © 2008. The winning bidder has until 5:00 p.foreclosureinprocess. Orbis Marketing. LLC. the lender can sell it later at a lesser price in a REO sale. The property will be auctioned to the highest bidder. attorney fees and any additional fees associated with the sale. The time and location of the Auction Sale are designated in the Notice of Sale you received before. the lender buys the house itself.m. Redemption period: The period during which a borrower may reclaim the title and possession of property by paying the debt Your right here is simply that you can buy the home back from the person who bought it at foreclosure. * Arizona does not allow the Redemption Right. so now you may look for new ways to find a loan (or cash) to pay the redemption amount. Copyright © 2008. Orbis Marketing. NOBODY CAN LEGALLY TAKE YOU OUT OF YOUR PROPERTY. Here. you may postpone an eviction legally. expect an eviction process usually within 2 to 4 weeks from the auction. If this is not possible in your State. you may stay rent-free at the property more days. months. However.Foreclosure Secrets Guide #5 POST-FORECLOSURE Redemption Period after an Auction Sale 57 If you still into the property after the closing have happened. IT’S THE LAW. and up a year if your State laws allow for a redemption period after auction sale.foreclosureinprocess. a Judge will send to the homeowner a letter of eviction with the date that the house must be vacated. The homeowner can stay rent-free at the house until that day. weeks. UNTIL THERE IS A LEGAL EVICTION FROM COURT.com . Eviction: The legal act of removing someone from a property Your state foreclosure laws will determine how soon the new owner can start an eviction. under your State law. LLC. In this way. the new owner can file an eviction. It must be understood that an EVICTION PROCESS must be started first at COURT. NOT EVEN A POLICEMAN OR SHERIFF. after the auction sale. All Rights Reserved www. com . you may want to stay at the property all this process (until they give you an eviction letter) and save. there is no way they can give you back.Foreclosure Secrets Guide EVICTION 58 The day considered for the eviction. blocked pipes. my friend. damaged roof. most lenders use to give you compensation money if you leave the house clean and in good conditions within the first 15 days after the auction sale. Sometimes the buyer will prefer to have the house occupied than vacant. They will usually agree to hold the eviction if you are in the process of moving. All Rights Reserved www. fans. I understand many lenders don’t worry about stoves. LLC. the county sheriff will be present at the property to conduct this humiliating process. broken walls. they just want to see the property in good conditions. so it cannot be vandalized or having other problems. call to the new owner or the sheriff’s office and ask for more days to move out. If they seized your belongings. save and save all you can! Please. You need to know that after an auction sale. Orbis Marketing. Nobody knows what is going to happen tomorrow. If you decided to foreclose. free of broken windows. Learn the foreclosure laws of your state: http://www. Even suing the county or the new owner will not work. as long as you are not asking for a month or more to live rent-free. It can be from $500 to $2. perforated ceilings. You can avoid this bad situation. The personal belongings are usually just put in the front lawn or everything may be seized into the property depending in the new owner decision.000 dollars.foreclosurelaw. Your kids and family have to be feed every day and you must be the responsible to supply all their needs.org/ Copyright © 2008. and strive for a fresh start. just requesting more time to stay in the property or simply moving out before the eviction. refrigerators.foreclosureinprocess. or dishwashers staying in the house. Tip: you can request to be a caretaker of the house while the buyer’s plans to remodel can be finalized. keep the most cash you can. Before the eviction date. find better options to produce more money. missing doors. etc. let the government laws work in your side. do not leave the property the first month you are late and start renting out next month! Federal and State laws protect you so you can legally stay rent-free into the property all this time. Remember everything must be disclosed in writing. DO NOT SIGN ANYTHING you not clearly understand until those documents are first reviewed and approved by your Realtor. so you can achieve a better solution with more knowledge and power. though. The investor does not loose anything. They may contact you offering certain services asking for an upfront fee. so be aware. Investors of this type say they may give you a sum of money when the property is sold. call them selves “Foreclosure Counseling Agencies”. Loan Officer. Some of them also may request you to move out as soon as possible. Unfortunately. If you still want to have a good representation. Look for references. Do you remember the Notice of Default? And the Notice of Sale? 59 These documents were recorded at the county’s office. you cannot do anything about it. predatory lending and/or consumer rights. keeping the proceeds just for them. and couldn’t resell it. LLC. and they ask you for this so they can rent the property to somebody else for a few months. All the information they have is the same you can do over the phone. Orbis Marketing. Check the history of the investor’s company at local District Attorney's Consumer Fraud. the best you can do is to contact an attorney that is doing this type of work. Financial Advisor or your Attorney. That means it is public! Anybody can enter to revise these files and find who is in a foreclosure process. Look for an attorney who specializes in loan modifications. If you signed a quitclaim deed. the lender will foreclose the property.foreclosureinprocess.com . so they can be the legal owners of the property with the right to sell and keep all the profit. You do. If that “buyer” does not make any payments to your mortgage. You have more information here. there are many people doing this. All Rights Reserved www. you may have some investor buyers knocking at your door while you are in Pre-foreclosure. You will have a foreclosure recorded in your credit. and ask all the questions you can as many attorneys don’t know what they are doing either. Some of these investors will try to rush you and sign a document. your State’s Attorney General or the Real Estate Commission. Copyright © 2008. A common scam is that they push you to sign a QUITCLAIM DEED (now you know what it is). FORECLOSURE COUNSELING AGENCIES Some people that don’t have anything else to do. and you will be responsible for the pending debt.Foreclosure Secrets Guide BEWARE OF FORECLOSURE SCAMS UNESCROPOLOUS INVESTORS If you are trying to sell your property by yourself or without professional guidance. com .Foreclosure Secrets Guide 60 Chapter 4 Copyright © 2008.foreclosureinprocess. LLC. All Rights Reserved www. Orbis Marketing. which is not completely understandable and fair to me. or maybe they don’t have enough interest to solve this kind of situations.Foreclosure Secrets Guide LEGAL DEFENSES OF A BORROWER Every homeowner needs to know that government reports are confirming widespread abuse by many lenders. many lenders (especially subprime banks) have been doing illegal procedures while handling the confidential paperwork behind borrower’s knowledge. The best reason here is that when a lender or servicer has been found guilty of any violation of the law. realtors and title companies that have overcharged thousands –if not millions. Even many court judges don’t have enough knowledge about it. LLC. Orbis Marketing. Also. 61 If a home owner has been trying to negotiate with his/her lender to no avail and all the options included in this book have been already considered. I warn any homeowner that wants to proceed in this way: it will be tough. All Rights Reserved www. it may be possible to force these debt collectors to accept any crazy negotiation the borrower may have in a loan modification. if not. I have found some court litigations that have not enforced the Law effectively. you have to give up your house”. Even it’s possible to have a claim for refund or monetary damages. in order to avoid litigation. before to write this chapter. if the borrower finds illegal and abusive procedures of banks and third parties in his/her home loan. a legal defense may be necessary to enforce their consumer rights. That sentence is completely understandable and fair. But the Law is the Law and it must be followed at what it is. Copyright © 2008. however. Many judges will say: “well.of unknowing homeowners.com . I have consulted several Predatory Lending.foreclosureinprocess. I don’t understand why judges may say that even if there is legal evidence of fraud on the borrower’s loan or if the loan was originated in abusive circumstances. And to be sincere. Most homeowners don’t know that there are so many laws protecting them as consumers. due to the incompetence of some judges or attorneys. I am also really impressed for this because. Real Estate and Foreclosure attorneys and many of them they don’t either have any idea in what you are just going to read. unfortunately. it may lead to delay a foreclosure process indefinitely or to keep the title free and clear. you owe that money and you have to pay. Orbis Marketing.com . Lender Defense • FDCPA. 1. Bankruptcy • A complete separated chapter for this defense Copyright © 2008. LLC. real estate brokers and title companies don’t want you to know. Court Litigation • For both judicial and non-judicial foreclosure states 5. Predatory Lending Defense • Abusive circumstances when originating the loan 2. All Rights Reserved www.foreclosureinprocess.Foreclosure Secrets Guide 62 This is the information what mortgage. RESPA and FCRA guidelines 3. Trustee Defense • Only for non-judicial foreclosure states 4. The following defenses may be used by homeowners that want to enforce the Law on their side. many homeowners let their houses end in foreclose or bankruptcy without knowing they were abused on their consumer rights. In the last years. Copyright © 2008.com can be helpful as well.com . all of these situations and more. I’ve seen a huge potential for greedy mortgage companies to abuse on a pool of low-income homeowners or a group of minorities. Many will think they cannot afford an attorney. but we can say that Predatory Lending is the action of intentionally placing consumers in loan products with significantly bad terms and/or higher costs than loans offered to similarly qualified consumers in the region. If a borrower can afford legal services. etc. many will not have access to the internet. homeowners involved in predatory lending will not fight against this type of abuse. If they don’t win. All Rights Reserved www. Predatory lending practices can leave victims homeless and defeated. the sick. While the definition of predatory lending varies by every advisor. Very often. the National Association of Consumer Advocates website http://www.net will help to find a qualified attorney in any state. the foreign and the poor. In order to fight Predatory lending.foreclosureinprocess. all costs may be paid by the guilty lender. or they may think it’s impossible. the awareness that homeowners need to be protected by predatory lending laws is growing every day. it is mandatory to hire an attorney specialized in Predatory Lending or FORENSIC AUDITS or FORENSIC ACCOUNTING. While the procedures of these lenders may not always be illegal. which is extremely terrifying for any company). the consequences can be the same: the homeowners may lose their home and the professionals who apparently “helped them” end up making a huge profit. Orbis Marketing. the banks know it very well.napa. women or the elderly that are financially vulnerable. I recommend also looking for a class action attorney as well (class action means court litigation of various persons complaining on the same case at the same time. LLC. with a sense of not having self-respect and hope. or they will leave the house right away.Foreclosure Secrets Guide PREDATORY LENDING DEFENSE 63 The definition of Predatory Lending has not been defined yet by Federal Law or by the states. Unfortunately. and with their credit ruined for years as well. etc. Also if win. Some attorneys will charge for their services until they win. It is possible to find free or cheaper legal services in the state’s bar associations or asking to the clerks of any court. These “helpers” are predators – seeking their prey from the minorities. or they don’t speak English. Also contacting the Attorney’s General office or using http://www.google. they will not charge anything. only for the purpose of enriching the originator and with little or no benefit to the consumer. many will say “let it go” or “I don’t care”. the aged people. Leaving signature lines or any other important line-item in blank in any form.125 %!). Unexpected costs at closing that were not explained prior to the signing. The monthly payments on the mortgage loan were higher after the closing than on the initial disclosures. The homeowner have refinanced the loan several times. Copyright © 2008. which can be a tremendous advantage for the borrower. 6.com . The homeowner refinanced to a significant higher interest rate than the past home loan (had a 5% interest rate and refinanced to a 10% interest rate. for example). 7. Orbis Marketing. 2. All Rights Reserved www. The homeowner was required to buy credit insurance and pay the premium included in the monthly payment of the home loan (this is the insurance that will repay the debt at death or becoming disabled). 3. The home loan is a Balloon. 4. 8. 64 (Note: Just having one or more of the following items does not mean anyone has been a victim of predatory lending. 10. and in each instance increased either the monthly payment and/or the total amount owed on your home. The Promissory Note reveals that the interest rate calculation will change to require a payment with "daily interest" in instances when payments are late. The lender or broker altered any information entered on the loan application. Good Faith Estimate Special Information Booklet Truth in Lending HUD-1 Settlement Statement 11. Interest rates changed at the last time and the homeowner was not notified prior to the signing (even if it changed 0. LLC.foreclosureinprocess. the penalties are enhanced damages and rescission (that means to cancel the loan). 9. 1. 5.Foreclosure Secrets Guide SIGNS OF PREDATORY LENDING The items below are a good way for any homeowner who wants to know if a lender could be misleading them about their home loan. If a lender is found guilty of Predatory Lending. Any of the following disclosures are missing in the existing loan file. I recommend having a consultation with an attorney who specializes in predatory lending to discuss any suspicions and to possibly register a complaint). Unreasonable Yield Spread Premiums (the fee paid from the lender to the broker in the back). MANY LENDERS WERE DOING VIOLATIONS OF TILA AND PREDATORY LENDING AS EASY AS DRINKING A GLASS OF WATER. This was done very often by dishonest realtors and bad loan officers in conjunction with corrupt appraisers. AND BORROWERS DIDN’T KNOW. 21. 19. The homeowner was given a subprime loan when he/she would be qualified for a prime loan. Copyright © 2008.500!! 22. The loan contract includes a clause with “Mandatory Arbitration”. but just a qualified attorney can advise accordingly. 65 17. a non-profit consumer advocacy group. 18. This is called Steering & Targeting. more mortgages in AfricanAmerican and Hispanic homes are subprime loans compared to the mortgages of whites in the same level of income. LLC. there was a considerable amount of money paid in the back… cash. MAKING AN APPOINTMENT WITH A QUALIFIED ATTORNEY JUST TO REVIEW YOUR DOCUMENTS IN DETAIL. MAY ABSOLUTELY KNOCK YOUR SOCKS OFF! DAY BY DAY. but some lenders charged $1.Foreclosure Secrets Guide 12. There might be more items to identify Predatory Lending in every case. Recording fees are aprox $10 dollars in AZ. According to a study from the Center for Community Change. Abusive prepayment penalties (more of 3 years prepayment or costs of more than 6 months interest). (Don’t believe it). The appraisal was over-inflated to sell the house at a higher price or to be refinanced with a higher loan amount. The borrower was encouraged to include false information on the loan application.com . which can be only enforced after the first three years of the origination of the loan. Obviously.foreclosureinprocess. EVEN IF YOU THINK YOU DON’T HAVE ONE OF THESE POINTS. meaning that the borrower cannot seek legal remedies in court if a predatory lending situation is found. More than 8% of the loan amount in fees. 20. 16. Orbis Marketing. Excessive closing fees. 15. 14. and these appraisers didn’t write down those problems within the appraisal to make things happen. All Rights Reserved www. Violations to the Truth in Lending Act (TILA) may be a legal right of rescission. The loan amount on the loan obtained was higher than the value of the home (for example the 125% loan-to-value loans) 13. Some houses were full of termites or the roof almost falling. appraisers. insurance and title companies. then selling those loans in huge bunches to other investors.foreclosureinprocess. A borrower must be informed in writing for every transaction in the loan. Orbis Marketing. This Federal Act regulates the costs and procedures of obtaining a mortgage and was imposed because the companies related with the selling and buying of real estate. Lenders were closing loans everywhere everyday. such realtors. The final HUD-1 or HUD-1A allows the borrower to know specifically the costs of the loan and to whom the fees are being allotted. LLC. repossessions.Foreclosure Secrets Guide LENDER DEFENSE In 1974 the Congress of the United States passed The Real Estate Settlement Procedures Act (RESPA) to solve the problems created in the process of real estate agreements. lenders. different companies paying commissions each other for the referral of a home buyer. borrowers having the following scenario: • • • • • • • Recent bankruptcy Really bad credit with collections. and title companies to lenders. late payments. were doing unfair practices in those transactions. And this is a serious issue for them now. like lenders to realtors.com . others every 3 months and others sold it when they had a predefined quantity of loans. etc Unemployed Employment unsteady or unverifiable Residence unsteady or unverifiable Fake documents from illegal aliens or double identity persons No savings at all. All Rights Reserved www. foreclosures. I’m exposing here how was that very profitable business in the advantage of people following the “American Dream” (which is now “The American NightMare”): The original lender qualified and funded home loans at 100% loan-to-value (that means NO DOWN PAYMENT) to incredibly no-qualifying borrowers. for example. Some lenders did this activity every month. even with no checking accounts or retirement funds Would anybody lend $350.000 dollars or more to anyone showing this financial scenario without any reason? Copyright © 2008. RESPA requires lenders to provide a good faith for all the approximate costs of a particular loan and a HUD-1 (for purchase real estate loans) or a HUD-1A (for refinances of real estate loans) at the closing of the real estate loan. 66 The Act prohibits rewards between lenders and third-party settlement service agents in the real estate settlement process. The problem is that many lenders have failed to comply with this Federal Law in the greedy rush to originate more and more loans in the “Real Estate Bubble” made from 2001 to 2006. realtors. I repeat: many lenders have failed to comply with RESPA and other laws in the greedy rush to originate more and more loans in the “Real Estate Bubble”. 400 loans in that month. leaving the original creditor with huge profits from the deal. appraisers. Many subprime loans have been sued for the same reason of illegal fees and abuses on the loan.com .Foreclosure Secrets Guide 67 These lenders did it nationwide.making $5 BILLION dollars PER MONTH for this kind of transactions. they put it for sell in the secondary market. all of these lenders also stopped their extraordinary money making machine. offices and homes as well. being forced to refinance or sell the property. consequently causing the borrowers with those financial scenarios (or even with good credit now) couldn’t refinance or sell any more. Copyright © 2008. They perfectly knew what they were doing (their employees maybe not). Those lenders knew the “Bubble” will expire some day. furniture stores. hazard insurance agencies. title agencies. They knew the recession monster was coming already. They knew it would be temporary. All Rights Reserved www. for years! They perfectly knew what they were doing. including all the hidden fees since the origination of the loan. Lots of borrowers found their payments were missing after 2 or 3 months late. Why cheat millions of borrowers to make a colossal profit if one day it would be stopped? What is the reason that lenders took that kind of risk? This is because two nasty reasons: 1. their biggest target was to profit from the huge prepayment penalty involved in this kind of loans.foreclosureinprocess. etc) starting loosing their jobs. other investors bought these loans (for the benefit of the high interest rates proceeds or for reselling). loan officers. real estate investors. Additionally. Orbis Marketing. An amazing record of lender servicing abuses has been appeared all over the country. and obviously being extra-charged with outrageous late fees. then force to refinance or sell to charge a huge prepayment penalty. being trapped overnight in the now de-inflated “Real Estate Bubble”. These lenders knew those loans will be foreclosed some day. millions of people involved in related businesses (as construction workers. LLC. causing homeowners to lose their houses and ruin drastically their dreams and credit. everyday. After the original lender obtained for example. The charge for high interest rates and illegal hidden fees was not enough to these greedy lenders. The lender/servicer then got their abusive high prepayment penalty quick and easy. I have the knowledge of lending companies -that they are not in the market anymore. Here. When the “Real Estate Bubble” stopped its crazy growth. architects. Lenders/servicers will do anything possible to charge everything they want to the subprime borrower. Why? Because every loss is completely tax deductible for them or even passed to the borrower as a 1099 income. 68 My understanding is that if a lender short-sells or pays to sell a foreclosed property they will not lose anything at the end. For this cause. I strongly believe the people of this country have been involved in a false illusion originated for the incontrollable greed of lenders behind a government fallacy. or they can simply avoid litigation by modifying a loan. I have heard about people suicide for loosing their houses or employments. I have heard about people on deep depression for the same reason of loosing properties. I have seen hard working humans loosing everything they had.Foreclosure Secrets Guide 2. leaving them into the worst debt in history. Orbis Marketing. with the approval and stimulation of the “top guys” without considering people’s hearts and dreams. Is my personal perception that the only reason of making those huge profits was injecting capital to the weaken country economy after the terrorist attacks of 2001. If any lender or servicer is facing a lawsuit based on legal violations on a mortgage. Copyright © 2008. All Rights Reserved www.com . Lenders/servicers would not have any loss at the end. I am writing these lines to let people know how to defend themselves against these lenders. Must be remembered also those 0% interest rate to buy cars all over the country and those 0% credit cards so people could buy anything anywhere anytime. Mortgage lenders must be forced to make new arrangements with their borrowers or definitively to be severely punished and/or having their unfair contracts cancelled. LLC.foreclosureinprocess. guess what they will do? 99% of the time they will cave to the borrower demands and approve a sweet and affordable loan modification much better than anyone could have ever imagined or obtained on a simple negotiation or modification. A debt collector must proof that a CERTAIN BALANCE IS REALLY DUE AND OWING IN THE NOTE. Orbis Marketing. If a lender is claiming a certain balance is due. The debt collector must provide a certified copy dated after the borrower’s request not before. All Rights Reserved www. and evidently. This document must show by law. the present collecting lender/servicer and the BORROWER’S signature (borrower’s signature may be not necessary if that was waived in the Deed of Trust or Mortgage under “Transfers Clause”).foreclosureinprocess.Foreclosure Secrets Guide The Scariest Thing Lenders They Don’t Want You to Know 69 I know many lenders are praying to anyone not read these lines. 3. If they cannot proof the existence of the note. It means the physical paper signed at the settlement. A debt collector must have a LEGAL PROOF OF ASSIGNMENT if they are not the original lender. then there is no note. Their hidden secret is the following: In order to any bank or lending institution to be entitled to make a claim on a debt (they are debt collectors). This proof of assignment must show that the original promissory note was sold. they must have to proof the following: 1. and with the condition to have permission to inspect the physical note. which must be sworn to and dated. how anyone can know if they are the legal collector of borrower’s money?) This proof they are the OWNER of the Promissory Note. A debt collector must be in possession of the ORIGINAL PROMISSORY NOTE.com . transferred or assigned FROM THE PAST NOTE HOLDER to the present lender/servicer trying to collect the debt. the signature of the past note holder. That means there is no debt. I don’t care. This evidence must be provided by the person responsible for preparing and maintaining the account general ledger. The lender must be the NOTE HOLDER in order to be entitled to make a claim. Copyright © 2008. A debt collector must proof the existence of the ORIGINAL PROMISSORY NOTE. 2. so it can be analyzed and verified from malicious extra charges. a borrower can legally request evidence such a general ledger and accounting records of the alleged pending debt. and not a simple copy (signatures can be fraudulently copy and pasted to any document using the present technology). 4. (If they don’t have this. LLC. there is no owner of the debt. This must be a document showing the borrower’s signature in INK. miscalculating the interest and not properly amortizing the loan. All Rights Reserved www. of whom we are going to talk later]. if they either have all the requirements cited above. How they calculate their numbers to collect? Can they charge anything they want? If they claim that the records of prior servicers are missing. where is our SSN information right now? Handled by whom? They even have been not able to provide evidence of the general ledger and accounting records. they can’t make a claim on the debt by law. Copyright © 2008. then there is no rightful way for anyone to PROVE UP THE BALANCES AND AMOUNTS THEY CLAIM ARE OWED. missed or simply unavailable. but I think that can be interesting to find out.Foreclosure Secrets Guide 70 My record at the time of this writing is that since 2001. Some lenders will say the note was destroyed or lost intentionally [the industry maintains this practice. then they may be trying to hide the beneficial owners and shield them from any assignee liability arising from the actions of the servicer who they hire. fraudulent selling of the loan or misreporting the credit report. supervise and most importantly AUTHORIZE to foreclose upon the borrower. which is unfair and illegal. Without the note. However. 85% of subprime lenders have been not able to verify the holding and the ownership of the note. specially the company named MERS. then the note may be void and a legal nullity in the state. Furthermore. Many Prime lenders do not transfer the loan to other investors and stay as original creditors since the origination of the loan. if there are missing assignments of the original note and the assignment went from Lender A to Lender B to Lender D without an intervening assignment from Lender B to Lender C and From Lender C to Lender D. LLC.com . I don’t have enough information for how many notes are also missing into the Prime lending. Some have been destroyed. adding fees not legally owed to the principal balance. Orbis Marketing. there is NO POSSIBLE WAY to determine who ever held a rightful interest in the note and who the borrower may have claims or counter claims against and who should be presently before the court as a real party in interest. They may have improperly inflated the principal balance or the escrow account by not applying the payments correctly. since subsequent endorsements are not recorded to avoid payment of taxes and hide true and real beneficial interests. Federal Circuit Courts have ruled that the only way to prove the perfection of any security [including promissory note] is by actual possession of the security.foreclosureinprocess. Prime or Sub-prime. If the Note is missing right now. -I am.Foreclosure Secrets Guide Being Practical In my Financial Seminars. – Said John.000 dollars. John started paying back every month on time and everything was looking good. -My name is Daniel and I’m coming for the monthly payment that you owe to Paul -Well… I have the commitment with Paul not with you. He sold the debt to me and now I am the person you have to pay every month. One day. -Yeah. How is that? That’s why many lenders are doing illegal actions taking away homes without having a legal ownership of the debt. LLC. how can I help you? -I’m looking for John Doe. -Good morning. you have to give me something of your property. Orbis Marketing. Daniel. A borrower made a commercial contract with New Century Mortgage. and now Countrywipe is collecting all the payments. I like to give an example of this situation: 71 John Doe is in need of money and goes with Paul. but if you don’t pay me. -Are you the owner of the original note and you have a document where you can proof that there were a legal assignment of the note? -…ahhrr… I have everything of that in my files (debt collectors don’t know anything about it). And these debt collectors know the borrowers don’t know their rights. Copyright © 2008.foreclosureinprocess. but Paul and me we made a deal. there is a person knocking on the door of John: John opens the door of his house. right… Unfortunately this is the same action that is happening in real life on hundred of thousands of foreclosures right now.com . his best friend to borrow him $10. -I understand. All Rights Reserved www. NEW CENTURY is bankrupted. Many borrowers signed with this bank. A party trying to collect a debt that is not of its own. Remember. I am not an attorney. LLC. why is Countrywipe Bank trying to take away those homes now? A Borrower has a legal right to ask them for a proof of their ownership.com . I do not claim to give you legal advice in this book to your specific circumstances. All Rights Reserved www. EXTORTION = the gaining of property or money by any kind of force. One of the biggest subprime lenders was NEW CENTURY. HARASSMENT = unsolicited words or conduct which tend to annoy. Then.foreclosureinprocess. a Borrower may be the legal owner of the property until a lending company can proof they are the owner of the promissory note… which may not exist anymore. The information provided in this eBook is provided just for personal information. closing home loans as crazy everyday.Foreclosure Secrets Guide 72 What about if Paul already died? That situation would be the same as when the original creditor filed bankruptcy and now no longer exists anymore. alarm or abuse another person. Now. tax or financial advice. accountant. Copyright © 2008. This book is not a substitute for the advice of a competent attorney. tax advisor or real estate guru giving legal. Under no circumstances does the information in this content represent a legal recommendation to sell. by default. Do you know what is this called? FRAUD = the use of deception for unlawful gain. buy or hold any property. This book is intended just to educate homeowners in default of their mortgage. However. In the following page any homeowner in this situation will know how to defend against any debt collector. Orbis Marketing. If they don’t have it… well… that means THERE IS NO OWNER. 1990). Recovery of statutory damages for the class is limited to 1% of the debt collector's net worth or $500. 15 U. the borrower is entitled to an award of actual damages.C.C.S. Lucas.. Orbis Marketing. The FDCPA Section 15 809 gives loan borrowers certain consumer rights. 1991). 775 F. the DEBT COLLECTOR must suspend any and all collection activity (including the foreclose of the property) UNTIL the debt has been legally validated.Conn.C. 15 U. 502. If the debt collector fails to comply with the “VALIDATION OF DEBT NOTICE". The FDCPA contains special damage provisions for class actions. Copyright © 2008. the DEBT COLLECTOR (lender/servicer) must validate the debt by Federal Law. qualify to be in Federal Court for statutory claims (Consumer Fraud Act). 304. §1692k. Cacace v. embarrassment. The debt collector may be held "liable for any mental and emotional stress.S. whether or not a loan servicing is transferred.000. and the reason for the request.S. statutory damages up to $1. Any borrower needs to know that starting a defense before being late on the mortgage monthly payments. Not later than 30 days after receiving the request.S. 305 (D. which includes borrower’s name and account number.C. If a borrower sends a “VALIDATION OF DEBT” to the present DEBT COLLECTOR (which may be a loan servicer or lender). During this 30 days period. §1692k(a)(2)(B). Supp. A single violation is sufficient to support judgment for the consumer. §1692k(a). The request should be in writing and must include the words “VALIDATION OF DEBT”. costs and attorney's fees. because this is designed for any DEBT COLLECTOR. Actual damages include emotional distress. 15 U. although anytime after being late it is possible to dispute any debt as well. and humiliation caused" by improper debt collection activities. A debt collector who has violated any provision of the FDCPA is liable for actual damages. Class action relief is also available. 15 U. LLC. 505 (D. §1692k(a)(1).foreclosureinprocess. it must be sent by certified mail). Supan v. It cannot be written on the payment coupon or other payment medium supplied by the lender or servicer and it must be in a separated piece of paper. Supp. 785 F.Conn. Inc. the debt collector must provide the borrower all documentation within 30 days of receipt of the request (so. whichever is less.Foreclosure Secrets Guide VALIDATION OF DEBT 73 A borrower can send to the lender/servicer a request named “NOTICE OF VALIDATION” (or NOV) pursuant the FDCPA (Fair Debt Collection Practices Act) to legally ask for the documents that lenders don’t want anybody to know.000.com . Medical Bureau of Economics. All Rights Reserved www. To facilitate this. All Rights Reserved www. When a borrower receives the Notice of Sale from the Trustee or a Judge. Note: In the monthly mortgage billing notice are printed the name of the present lender/servicer and the loan number. The borrower may want to verify his/her documents to find out who really is the original lender (validation letter must be sent JUST to the present debt collector). and if the borrower has already received a Notice of Sale from the Trustee or a Judge. if the debt collector cannot validate the debt.foreclosureinprocess.com . See the FDCPA LAW at: http://www. LLC. FCRA and RESPA. the borrower may file a lawsuit for fraud. so it will be possible to defend in writing against any fraudulent and abusive lender. if he/she suffers damages due to the lender's servicing of the loan. but should be sent separately to the customer service address by Certified Mail. the property is now being handled by other party than the lender. I’m providing letters (which have been reviewed and approved by different attorneys) for every case in specific: validation letters for THE LENDER. Note: any one trying to enforce a foreclosure is a DEBT COLLECTOR.ftc. A borrower may bring a private right of action under FDCPA.Foreclosure Secrets Guide Sending the Request If a Borrower has concerns about who is the original lender or who is the company that is collecting the monthly payments.gov/bcp/edu/pubs/consumer/credit/cre27. Borrowers may want to copy and paste the letters for every step of the foreclosure in process and fill them with the borrower’s personal information. validation letters for THE TRUSTEE in a non-judicial foreclosure and other set of letters for THE COURT in a judicial foreclosure. (The < >’s in letters must be deleted and filled with the information of every case) The VALIDATION OF DEBT letter SHOULD NOT be included with the mortgage payment. that letter must be sent to them as well. Orbis Marketing. The strategy used here is for validation of the note basically. so. 74 The VALIDATION OF DEBT must be sent to the present lender/servicer (the one who is collecting the debt). OR FORCE THE LENDER TO MAKE THE BEST OF THE MODIFICATIONS ON THE LOAN. the Promissory Note and Mortgage/Deed of Trust must have the original lender information.pdf Copyright © 2008. A borrower SHOULD continue to make the required mortgage and escrow payments until the validation is resolved. A MOTION is a request asking a court to do something. LLC. A borrower must know that some attorneys will charge for their services until they win. I recommend a Borrower use these template letters included in this book as a stimulation to create their own with the help of a consumer rights protection.com . Again. the National Association of Consumer Advocates website http://www. The few I met with real knowledge on this were the most expensive ones (I have spent too much money and time on this investigation). Every state has Rules of Civil Procedures that govern how motions are formatted along with other rules of the court. which is extremely terrifying for any company). debt collection. Even consumer right attorneys or foreclosure attorneys or real estate attorneys do not have any idea what I’m talking about.napa. which are not into any court. Searching “Lawyer Referral Services” at the web will find attorneys charging $35 dollars for 30 minutes counseling (in Arizona). mortgage servicing fraud or class action attorney (class action means court litigation of various persons complaining on the same case at the same time. If there is no winning. foreclosure.Foreclosure Secrets Guide DISCLAIMER: The reader will find formal letters in the following pages that can be used to legally request documentation to lenders and trustees (the debt collectors).com can be helpful. All Rights Reserved www. Anybody wanting to start a legal defense with the promissory note strategy may want to consult several attorneys before find someone with knowledge on this. or to show a Borrower how it should be filed. If a borrower can afford legal services. real estate. the attorney will not charge anything. Motion to Dismiss = Request to Dismiss 75 The Motion examples can be used as a guide to answer and try to dismiss a mortgage foreclosure complaint in court. It is possible to find free or cheaper legal services in the state’s bar associations or asking to the clerks of any court. Copyright © 2008. In my personal research. If a Borrower do not understand the rules.net will help to find a qualified attorney in any state.google.foreclosureinprocess. Some other template letters are Court Motion format letters that are just to be used in a court complaint. or a Borrower don’t have the time to learn the basics or do his/her homework (as studying the site jurisdictionary) then a Borrower may want to hire an experienced attorney to file the paperwork for him/her. the proceedings that are shown in this book should be taken only if a Borrower understands the rules of the court. I have found that so many attorneys don’t know about this strategy. and some will charge the lender if win. also many of them asked me to keep in touch with them to let them know about my investigations. although these letters can work as official evidence in court. Many attorneys told me they think it will not work. Also contacting the Attorney’s General office or using http://www. Orbis Marketing. That’s illegal. That might be appropriate for some borrowers who wish to defend themselves in court. You cannot use these letters as a third party. All Rights Reserved www. You Modification Companies are herein warned. Copyright © 2008.foreclosureinprocess. LLC. It is not possible. with years of experience and a strong court relationship (some attorneys are very good friends of judges). Orbis Marketing. let me tell you that many modification companies all over the country has been trying to sue me because lenders and trustees are sueing them. THIS EBOOK IS DESIGNED ONLY FOR BORROWERS AS A PERSONAL EDUCATION IN THIS MATTER AND THEY CAN LEGALLY USE SIMILAR LETTERS FOR THEMSELVES. but lenders they can sue you if you use these letters. and then enters an order either granting or denying the motion. On court litigation. To fill the following template letters. it is recommendable to use different words to create letters a little different from the template included and written with the specific borrower needs. the Judge considers the written motion and any other response or objections. must be with a GOOD attorney (remember many don’t know anything about it). You cannot sue me. Those persons who represent themselves in legal matters. start with that in mind. Both parties are notified of the decision on the motion. just giving advice on how to file motions and argue cases.Foreclosure Secrets Guide 76 Also. no experience and no court relationship.com . I’m not liable for any lawsuits you may have when using these letters in behalf of your clients. but cannot afford the higher fees of having the lawyer take over the case completely. If you start this. unless the borrower studied and got prepared well enough to convince a judge. An attorney told me that many judges will not give the reason to a “pro se” even if he/she is coming with all the law at his/her side. THE NOTE STRATEGY IS TO FINALIZE AT COURT. in some cases. If a borrower wants to have a good fight in court. this fight will cheaper if a borrower made all the initial validation with the debt collectors. CRITICAL UPDATE (on September 2008): I have found that many borrowers being “pro se” (or representing themselves) are having hard time at court. If an attorney was hired for representation at court. winning a case against a licensed attorney from a major lender. Attorneys can be hired as “coaches”. are referred as “Pro Se” or “Pro Per” litigants. This is because it will not be nice to have somebody with no license. (The following form is to delete the < >’s and fill them with borrower’s information) ATTENTION MODIFICATION COMPANIES: if you are buying this eBook to use these strategies for your clients and make a profit. ZIP> <DATE> Re: Loan Number # To Whom It May Concern: You are in receipt of a NOTICE OF VALIDATION under the authority of The Fair Debt Collections Practices Act (15 USC 809) regarding the loan number cited above. It is not now. STATE. As I don’t have any document that can substantiate your legal standing to collect this alleged debt or a portion thereof in the past. 1. I am not in receipt of any notification of assignment. You were required to send me written notice of the assignment. <BORROWER> which makes you a person entitled to enforce a claim against me. This notification is required under RESPA 12 USC section 2605.com . I am unable to find documentation of any contractual relationship between you. sale or transfer of the servicing not less than 15 days before the effective date of the transfer and another notice 15 days after the date of the transfer as well. please document and verify the “debt” by complying in good faith with this request for validation and notice that I dispute part of. However.Foreclosure Secrets Guide VALIDATION OF DEBT CERTIFIED MAIL # <BORROWER 1> <BORROWER 2> <ADDRESS> <CITY. I may have paid you in error. ZIP> <PHONE NUMBER> 77 <LENDER> <ADDRESS> <CITY. All Rights Reserved www. Providing proof of notification and delivery will be evidence that you have not violated the requirements of that Section. sale or transfer for this promissory note. or all of the alleged debt. I am in receipt of your company’s letter informing me you are handling the account mentioned above. <LENDER> and me. However. Orbis Marketing. STATE. Copyright © 2008. In order that I can make arrangements to pay an obligation which I may owe. according to my records you did not comply with this requirement. nor has it ever been my intention to avoid paying any obligation that I officially owe.foreclosureinprocess. after reviewing my records. LLC. RESPA. shall be not any data furnished to the credit report agencies. 7. If you cannot provide legal evidence that you have a legal standing to collect this debt. which you know is false with the intention that others rely on the written communication to their detriment. State that the original note is available for physical inspection and copying. all fees incurred. are unenforceable unless the party to whom the contract is extended could have rejected the clause without impunity. 9. LLC.until you legally validate this debt. NW. DC 20580 Copyright © 2008. FCRA. associations. 8. This information should cover the entire life of the loan and the full accounting of the alleged obligation that you are now attempting to collect. 5. All Rights Reserved www. Orbis Marketing. corporations. Produce a copy of the account and general ledger statement showing the loan history including all payments made. Washington. and other laws. Consumer Response Center 600 Pennsylvania Avenue. what has been paid out of the escrow account. Identify by name and address all persons. 4. Disputing the “debt” _________________________ <NAME> Cc: Federal Trade Commission. providing the address of the company holding the document and their phone number for contact.com . 3. Verify under penalty of perjury that you know and understand that certain clauses in a contract of adhesion. 6. Verify that you know and understand that contacting me again after receipt of this notice without providing procedurally proper validation of the debt constitutes the use of interstate communications in a scheme of fraud by advancing a writing. such as a so-called forum selection clause. Please provide a certified copy of the original promissory note and state under penalty of perjury that you are the holder in due course of the promissory note and will produce the original for my own and a judge’s inspection if we go to a trial to contest these matters. Further derogatory reporting to one or more of the credit bureaus may constitute violations of the FDCPA.Foreclosure Secrets Guide 78 2. and how all payments were applied. including mortgage insurance company if applicable. or any other parties having an interest in legal proceedings regarding the alleged debt. I understand that under the FDCPA you are required to verify this debt within 30 days and must suspend any collection activity –including the foreclose of the deed of trust on this property.foreclosureinprocess. foreclosureinprocess. Isn’t? Most lenders will send a copy of a GENERAL Assignment of Deed of Trust/Mortgage. but will not contain their name or the name of the past note holder. etc. the following letter example called NOTICE OF INSUFFICIENT VALIDATION (or NOIV) must be used to write a response letter and send it back to the desperate lender. the name and the signature of both the beneficiary and the original creditor must be disclosed in the same document § 3-204 (d). (The following form is to delete the < >’s and fill them with borrower’s information) Copyright © 2008. A borrower will know when his/her debt collector doesn’t have the note when a response is sent back. Most of the time. NOT A BORROWER WHO HAS READ THE FORECLOSURE SECRETS GUIDE! Pursuant the Uniform Commercial Code Section 3-204. Most lending companies will send anything but the items requested. The requesting borrower has to be not confused. Any borrower after reading this book will know that as well.usps. 79 They perfectly know what the legal requirements are.com . LLC. All Rights Reserved www. they will be shocked if they can’t proof the possession of the original promissory note. So.com under “track and confirmation” which is a free certified mail confirmation service that can be accepted in any court. unless a clause in the deed of trust/mortgage waives that (most deeds of trust disclose this at clause #20). I recommend having printed evidence of the delivery for free at http://www. If the lender didn’t send anything as requested. debt collectors will send the following: • • • • • Validation papers printed from a computer Nothing certified (notarized) and not dated recently Nothing showing the name and signature of the original lender or past note holder Nothing proving the notification of a transfer Simple copies. This response must be sent certified mail as well. The signature of the borrower must be included as well into the assignment or transfer. why they don’t send it? It must be because they don’t have it. Even most attorneys get confused with this. which may be 85% possible. Orbis Marketing. That letter will say the Deed of Trust/Mortgage is being assigned to another party.Foreclosure Secrets Guide LENDER RESPONSE After a lender receives this type of written request. I request an explanation in how you are entitled to make a claim on a promissory note being not the note holder. ZIP> <PHONE NUMBER> <LENDER> <ADDRESS> <CITY. I can’t keep sending my payments until you provide me legal information in who is the holder of my original promissory note. Please provide a certified copy of the original note dated after my first request. Please keep in mind that the purchaser of a claim is not entitled to enforce anything. If you are not the holder of the note. Attorney General and State Banking Copyright © 2008. Sincerely. ZIP> <DATE> RE: ACCT # _____________________________ 80 To whom it may concern: On <DATE> I sent a letter regarding a NOTICE OF VALIDATION (see attachment). Orbis Marketing. you sent me back a response dated on <00/00/00> which failed or refused to comply with my request. STATE. In the event you cannot comply accordingly with my VALIDATION OF DEBT. I request the facts in how the original was unavailable and an explanation in how this can be justifiable under Rule 1002 of the Federal Rules of Evidence.Foreclosure Secrets Guide NOTICE OF INSUFFICIENT VALIDATION CERTIFIED MAIL # <BORROWER 1> <ADDRESS> <CITY. you must suspend all collection activity to this account (including a foreclose in the deed of trust of this property) sending me written evidence that a deletion request has been submitted to the credit bureaus. However. As you may understand. RESPA. _________________________ <NAME> Cc: FTC. All Rights Reserved www. LLC.com .foreclosureinprocess. If the note is missing or destroyed. I will wait for a significant reply within 15 days (as I already gave you 30 days). STATE. The basis for my letter is that you were required to validate a debt. a legal proof of assignment and ALL other items included in my initial letter of validation. LLC.gov or call toll-free. In addition. Washington.. identity theft. If this is the case. Write: Office of RESPA and Interstate Land Sales. Good luck. A borrower may want to apply a Trustee Defense or a Workout Proposal if don’t want to go to court immediately or keep negotiating with the lender. stop.W.ftc. for a pattern or practice of noncompliance. Under certain sections of the RESPA. which is great and terrible. and your houses.S. the borrower may want to contact an attorney to advice of legal rights. and avoid them. All Rights Reserved www. then the following letter may be used as an idea in how to negotiate. Department of Housing and Urban Development. deceptive. The FTC works for the consumer to prevent fraudulent. plus additional damages. TTY: 1-866-653-4261. Borrower may want to contact the Federal Trade Commission (FTC). The FTC enters Internet. Room 9154. If a debt collector didn’t respond accordingly after 15 days of receiving the insufficient validation notice. consumers can initiate lawsuits and obtain actual damages. Orbis Marketing. and other fraud-related complaints into Consumer Sentinel. the state’s Attorney General Consumer Protection Office must be contacted. telemarketing. 1-877-FTC-HELP (1-877-382-4357). remember the Lord. consumers also may obtain court costs and attorney's fees. a secure online database available to hundreds of civil and criminal law enforcement agencies in the U. An aggressive attorney may advice to a complaining borrower to don’t wait for any response from the FTC and start a lawsuit immediately against the lender after the first 30 days of the Validation Letter. and provide copies of all records. visit http://www. 451 Seventh Street. and your daughters. your sons.” Copyright © 2008. 81 The borrower also should contact the Department of Housing and Urban Development (HUD) to file a complaint under the RESPA regulations. Nehemiah 4:14 …”be not ye afraid of them. To file a complaint with the FTC or to get free information on consumer issues.foreclosureinprocess. In successful actions. DC 20410. and unfair business practices in the marketplace and to provide information to help consumers spot. S. and fight for your brethren. your wives.Foreclosure Secrets Guide FTC AND HUD COMPLAINT If a borrower believes his/her mortgage servicer has not responded appropriately to a written inquiry. and don’t forget to keep praying all the time. and abroad. a Trustee defense (living in a non-judicial foreclosure state) or a Workout Proposal may not be necessary anymore.com . Once you are ready to send your RESPA violations complaint. and the number of violations is in the thousands so the more detailed and professional the complaint is the more weight it will carry. RESPA Complaints can be submitted confidentially to HUD as well. and 5. 20410 The RESPA Division does have a limited number of staff.foreclosureinprocess. D. Often times regulators or investigators will miss even the most generic of violations so listing the appropriate violations will help them do their job better. phone number. Write a detailed summary of what happened or what's happening that leads you to believe that a violation is taking or has taken place. LLC. Make sure you list the specific section of the RESPA statute that was violated. Check your spelling and make sure the complaint is coherent and easily understood to the reader. If a complaint is going to be filed with the RESPA division. 2. If you believe you have a potential litigation matter with RESPA to HUD. if they need to contact you. and phone numbers of the alleged violators of RESPA.com . and address in the complaint so that an investigator can contact you for more information. Copyright © 2008. Room 9154 Washington. 4. I would recommend that you submit your complaint to your attorneys prior to submission to the HUD office or let your attorneys file the complaint for you.Foreclosure Secrets Guide HOW TO SUBMIT A RESPA VIOLATION COMPLAINT 82 The Real Estate Settlement Procedures Act (RESPA) under the United States Department of Housing and Urban Development (HUD) has a mechanism for consumers and others to file a complaint with RESPA if RESPA violations are being committed or you believe that RESPA violation is being committed. Include your name. addresses. SW. All Rights Reserved www. please make sure you follow the following steps so your complaint gets the most attention from the investigators: 1. fewer than 30. List the names. 3. you will send it to this address: Office of RESPA and Interstate Land Sales United States Department of Housing and Urban Development 451 7th Street.C. Orbis Marketing. others are totally ignoring this process. ALL LENDERS ARE NOT LOWERING THE BALANCE ANYMORE with this strategy. 83 My experience is that I have been contacting by phone many lenders to investigate where the original promissory note is located physically. Copyright © 2008. Additionally. Many lenders are not willing to talk about it over the phone. Where is the note? Nobody could give me information over the phone. at this time. Also. and no one knows about it. Orbis Marketing. Many companies related to real estate (such as mortgage brokers. IF ANY HOMEOWNER WANTS TO PURSUE THE NOTE STRATEGY. THE REASON: Lenders are expecting the borrower now go to Court FIRST so they can approve a modification that lowers the balance and/or cancel a second loan. there was no company anymore. as they know now that many borrowers will not proceed to file a complaint in court BECAUSE OF FEAR. etc) are closed after these years. LLC. Some lenders gave me the name of the title company who is holding the original note. title companies. MUST BE WILLING TO GO TO THE END: THE COURT.Foreclosure Secrets Guide Update: All communications for the NOTE STRATEGY must be in writing.foreclosureinprocess. real estate brokers. nothing over the phone. bank statements. proof of income may not be necessary. Some lenders are just lowering the interest rate and extending the amortization. W2.com . but when I called to the title company. All Rights Reserved www. paystubs. LLC.com . you cannot call to my house.Foreclosure Secrets Guide 84 WORKOUT PROPOSAL <BORROWER 1> <ADDRESS> <CITY. ZIP> <PHONE NUMBER> <LENDER> <ADDRESS> <CITY.foreclosureinprocess.xxx $xxx. FIXED Principal and Interest $xxx. STATE. My Workout proposal is the following: Interest Rate: Amortization: Payments: New Loan Amount (market price): New Monthly Payment: Fees paid in advance: First Monthly Payment: 2% 40 Yrs. you cannot foreclose my home under the authority of The FDCPA 15 USC 809 (b). is my desire to propose a workout for a new agreement. therefore. Any information obtained will be used for that purpose. All Rights Reserved www. you cannot send me any more collection letters. you have not provided evidence that your company is the legal note holder. you cannot report any derogatory information to the credit bureaus and of course. ZIP> <DATE> RE: ACCT # _____________________________ To whom it may concern: This is an attempt to avoid litigation. _________________________ NAME Copyright © 2008. STATE. At this time. specifically between YOU and ME. Sincerely. by law. Orbis Marketing. which can be beneficial for both parties.xx $0. In order to avoid long legal procedures and a possible record of fraud in your history. You can mail it to <ADDRESS>.00 <Two months later> Please send me a Workout Package to sign according this proposal in no less than 15 days. Unfortunately.foreclosureinprocess. Also. Orbis Marketing. Knowledge is Power. There might be a penalty of $1. must do his/her homework to feel more confident doing these disputes. so he/she can avoid a fight with the Trustee. and keep all copies. Copyright © 2008. This borrower may want to start sending notice validation letters to lender/servicer and the trustee at the same time. 85 (A borrower may want to keep saving the monthly payments apart while the note is found -in a money market account so it can earn better interests than a savings account-. borrower or “debtor” anymore until the debt is confirmed by legal proof.a consumer. If a borrower has already received the Notice of Sale while reading this book. most lenders will not accept this situation and will try to find a remedy sending the debt to a trustee to sell the property in foreclosure.com . remembering it may take years to find the note). by law it must be stopped any collection activity until the debt is validated. by law they cannot contact –in writing or by phone. All Rights Reserved www.000 for every mailing or recorded call from the invalidated lender. There are more monetary penalties for these violations. or look at the local law library or look in the local library or make an extensive research on any web searcher. if they couldn’t validate this debt. Invalidated lenders not even can report any derogatory information to the credit bureaus. I know these defenses may sound impressive or hard to believe at first hand. that’s why I suggest anyone in doubt to ask a qualified attorney about this. at this time the borrower may have decided already to file a complaint in court against the lender/servicer. LLC. It is imperative to keep a record of every letter sent and received. or maybe the lender/servicer is now accepting a loan modification. the validation of debt strategy may be considered by the borrower in order to find out if the note is really owned by any debt collector involved. At this time.Foreclosure Secrets Guide TRUSTEE DEFENSE After the dispute letters were sent to the lender and there was not any legal verification of the items requested. so any homeowner can understand how consumer rights works and feel more secure to defend this cause. have already tried to negotiate with the lender to no avail in the past and is living in a non-judicial foreclosure state. If the harassing calls are recorded that will be perfect. Any borrower who wants to enforce everything what I am writing here. com . It might be because THEY DON’T HAVE IT. which means a process not involving any court. that they are in serious problem if they don’t provide proof of the possession of the promissory note. But remember. and may want to start giving $1. a Trustee is ruled as a DEBT COLLECTOR. I don’t know why. a borrower can legally request in writing the Trustee or Judge (depending in the borrower’s state) to force the foreclosing lender to provide proof of the note ownership. after the 4th month. They may loose the property. is that the lender may start harassing with calls and letters). If a borrower is already in default. the borrower may receive the Notice of Sale from a Trustee. not the borrower. MOST LENDERS do not provide a legal proof of assignment (or assessment) when asked in a validation of debt or at the time of filing the Notice of Default. If there was not any negotiation settled between both parts. a Trustee’s Sale will be done ONLY in states implementing a NON-JUDICIAL FORECLOSURE process. As we have seen in past chapters. must understand that the lender will not be stay silent. it also may be possible to make a legal fight based in the same allegations. A Trustee may be a title agency or an attorney. All Rights Reserved www. With this. The reader must be reminded that a Trustee is like an intermediary or a third party looking to fairly intercede between the lender and the borrower. LLC.000 dollars everyday to the borrower (what I want to say. For the same reason. negotiated. it will be stronger to win a lawsuit. and they must also be following the FDCPA. the proof can be a certified copy of the assignment of the original note.Foreclosure Secrets Guide 86 A borrower that already disputed a debt with his/her lender. Copyright © 2008. It will be imperative to record everything.foreclosureinprocess. A Trustee is liable for this action. it may be now the best time to negotiate with the lender and force them to accept any conditions from the borrower. transferred or sold to the new lender claiming for the payment. If the borrower has a “VALIDATION OF DEBT” done and recorded by certified mail BEFORE BEING IN DEFAULT. and win. Orbis Marketing. I have also the understanding that very often. Again. for example. though. The lender knows at this time. It may be possible that a lender/servicer will send the Notice of Default after 3 months without receiving a payment. a Trustee may be inclined more to the side of the lender than the borrower’s. Period. which says on (c) The failure of a consumer to dispute the validity of a debt under this section may not be construed by any court as an admission of liability by the consumer. SETTING FORTH THE BASIS OF YOUR DISPUTE. that document must show by Federal Law the following statement (named as MINI-MIRANDA): 87 THIS FIRM IS ATTEMPTING TO COLLECT A DEBT. Orbis Marketing. And a Trustee IS a debt collector. Every borrower must check this legal standing of their lenders.foreclosureinprocess. it may be not a problem. Copyright © 2008. I am providing letter examples for a court Judge used in a judicial foreclosure state.com . The Federal Law clearly says that a borrower or debtor can dispute THE VERIFICATION OF THE DEBT. can cite the Fair Debt Collection Practices Act § 809 Validation of debts [15 USC 1692g]. (The following form is to delete the < >’s and fill them with borrower’s information) Is recommended to use own words and make the letter a little different from this. LLC. IF A BORROWER DISPUTE THE DEBT IN WRITING WITHIN 30 DAYS.Foreclosure Secrets Guide When a Borrower in default receives the Notice of Sale. Any Debt Collector is regulated by the FDCPA. Every homeowner must make their homework to learn all these details. The following template letter is to be filled and sent to the Trustee in charge of the sale of the property after the Notice of Sale is received. IF THE CREDITOR IDENTIFIED IN THIS NOTICE IS DIFFERENT THAN YOUR ORIGINAL CREDITOR. After these Trustee’s template letters. Almost all subprime loans have been bought and sold many times to other investors. With this citation included in a written dispute after the 30 days. WE WILL PROVIDE A BORROWER WITH THE NAME AND ADDRESS OF THE ORIGINAL CREDITOR IF A BORROWER REQUESTS THIS INFORMATION IN WRITING WITHIN 30 DAYS. If the borrower has failed to dispute the debt in writing before the 30 days of receiving the notice. THE DEBT SET FORTH ON THIS NOTICE WILL BE ASSUMED TO BE VALID UNLESS A BORROWER DISPUTE THE DEBT BY PROVIDING THIS OFFICE WITH A WRITTEN NOTICE OF YOUR DISPUTE WITHIN 30 DAYS OF YOUR RECEIPT OF THIS NOTICE. WE WILL OBTAIN AND MAIL VERIFICATION OF THE DEBT TO YOU. The Notice of Sale from the Trustee is used just in the states of non-judicial foreclosures. even if they are not transferred. These court letter examples may be used also if the trustee’s letters were ignored or not satisfied. All Rights Reserved www. therefore I may have paid them in error. ZIP <DATE> RE: TS NO: ____________________________ Loan # _____________________________ Order # _____________________________ APN # _____________________________ 88 To whom it may concern: I am in receipt of a Notice of Sale of my property located at < ADDRESS >. I am unable to find any documentation that I owe this debt or that <LENDER> as a debt collector have any legal standing to collect anything (if any liability even exists) OR <LENDER> had any legal standing to collect this alleged debt or a portion thereof in the past. I am sending this response by certified mail in order to make an opposition to this NOTICE OF SALE. LLC. This letter is stating that the property will be sold.Foreclosure Secrets Guide NOTICE OF VALIDATION CERTIFIED MAIL # BORROWER 1 BORROWER 2 ADDRESS CITY. Orbis Marketing.foreclosureinprocess. STATE. Copyright © 2008. I respectfully request YOUR COMPANY to provide a DEBT VALIDATION under the authority of The FDCPA (15 USC 809).com . STATE. All Rights Reserved www. my reason is that there is a LACK OF STANDING on this notice. pursuant to the power of sale under a certain Deed of Trust. ZIP PHONE NUMBER TRUSTEE NAME ADDRESS CITY. the following conduct is a violation of this section: (6) Taking any non-judicial action to effect dispossession or disablement of property if – (A) there is no present right to possession of the property claimed as collateral through an enforceable security interest.com . Legal proof of existence of the original note in question and contact information for physical inspection. LLC. I look forward to resolving this matter as quickly and efficiently as possible. Legal proof of assignment to substantiate their claim. specifically the past note holder naming the present company as a person entitled to collect a debt against me 89 4. the FDCPA 15 USC 5 (c) says that the failure of a consumer to dispute the validity of a debt under this section may not be construed by any court as an admission of liability by the consumer.foreclosureinprocess. proving that a certain balance is really due and owing in the note. Unless these items are provided. Without limiting the general application of the foregoing. Please suspend your efforts to foreclose the deed of trust on my property until this debt has been validated.Foreclosure Secrets Guide Please provide me the following: 1. Legal proof of ownership of the original note which entitles any lender or person to be THE NOTE HOLDER of the debt in claim 2. I will not recognize the claim of <LENDER> for the property located at <ADDRESS>. ________________________ BORROWER 1 Cc: <Foreclosing lender> Cc: FTC ________________________ BORROWER 2 Copyright © 2008. If this validation notice is after the (30) days of the date received by me. All Rights Reserved www. Respectfully. Please also follow the FDCPA (15 USC 1692f808)(6) which states that: A debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt. Orbis Marketing. 3. pursuant FDCPA (15 USC 809) this property cannot be sold by YOUR COMPANY at the scheduled date until this request has been legally validated. Complete records of the general ledger and accounting of the alleged unpaid promissory note. Therefore. Thank you in advance for your cooperation. LLC. For this reason. If they are recorded stating that over the phone. Unfortunately. supervisors or even the president of the company will tell you this. (The following form is to delete the < >’s and fill them with borrower’s information) Copyright © 2008.foreclosureinprocess. Orbis Marketing.com . it must be necessary to send a second letter. it will be an additional powerful tool to fight against them. Trustee clerks don’t know ANYTHING about it and they don’t understand the Promissory Note and legal transfer guidelines that we are talking about. They even will tell you that they are NOT DEBT COLLECTORS! Even managers. if a borrower did not receive a satisfactory resolution for the Notice of Validation from the Trustee. All Rights Reserved www.Foreclosure Secrets Guide TRUSTEE RESPONSE 90 The duties of a Trustee are to effectively manage every concern of the security instrument which is the Mortgage or Deed of Trust depending in the state. I know that trustees are not responding to the validation of debt request and let the lenders/servicers to take charge of that. as a person entitled to collect a debt on me. If the note is missing or destroyed. was required to provide proof of legal standing to substantiate the claim of <LENDER>. as a debt collector. ZIP PHONE NUMBER TRUSTEE NAME ADDRESS CITY. 2. Orbis Marketing. The basis for my letter is that YOUR COMPANY. 4. STATE.com . I am not in receipt of legal proof of ownership of the note I am not in receipt of legal proof of existence of the note nor contact information I am not in receipt of legal proof of assignment of the note I am not in receipt of legal proof of a certain balance due on the note As <LENDER> and your company have failed to proof the existence of the note. 3. I request the facts in how the original was destroyed and an explanation in how this can be justifiable under Rule 1002 of the Federal Rules of Evidence. then there is no note. Copyright © 2008. <LENDER> and your company have no legal standing to collect this debt unless due course status has been established. YOUR COMPANY failed or refused to supply these legal requirements: 1.Foreclosure Secrets Guide NOTICE OF INSUFFICIENT VALIDATION CERTIFIED MAIL # BORROWER 1 BORROWER 2 ADDRESS CITY. ZIP <DATE> RE: TS NO: ____________________________ Loan # _____________________________ Order # _____________________________ APN # _____________________________ 91 To whom it may concern: On <DATE> I sent a letter regarding a NOTICE OF VALIDATION (see attachment).foreclosureinprocess. A promissory note is the “instrument” or the security interest in which must be perfected by possession ONLY. LLC. Therefore. STATE. All Rights Reserved www. However. All Rights Reserved www. 92 Your company has 10 business days to respond to this letter accurately. If more time is in need it may be requested so in writing.foreclosureinprocess. I will also submit the basis for my argument and all correspondence to a legal firm specializing in Class Action Lawsuits. I have been damaged financially. This is the last chance to cease and desist all Foreclosure efforts. Your help and cooperation is greatly appreciated. Thank you in advance for your cooperation.Foreclosure Secrets Guide As a result of the harassment and attempt of extortion I’ve been exposed. and emotionally. ________________________ BORROWER 1 ________________________ BORROWER 2 Cc: <Foreclosing lender> Cc: FTC Cc: RESPA Cc: Attorney General Cc: State Banking Copyright © 2008. I look forward to resolving this matter as quickly and efficiently as possible. by law it must be suspended any and all collection efforts (including the foreclose of the deed of trust on this property). In addition. socially. LLC. If your company cannot substantiate that I am obligated to contract with <LENDER>. This request is being sent CERTIFIED MAIL to insure it is processed in a timely manner.com . If this matter is not corrected within 10 business days I will have no other choice but to initiate complaints against your company for violations of the law with the applicable administrative agencies. Respectfully. Orbis Marketing. I strongly suggest to keep looking for information on this. even if the attorney is operating just as a coach in the preparation of these letter examples or the borrower’s litigation. I have to say that IN SOME STATES (Virginia for example) borrowers are winning these cases when filing against the lender for FRAUD. All Rights Reserved www. We are going to talk about that later. That’s it. I insist. Other states have many judges granting these cases to the lenders and complaining borrowers are not winning. Taking this fight to the court may be intimidating for some and exciting for others. all of this may look like a crazy stuff. Copyright © 2008.com . Any borrower need to know that there is another resource: the borrower still can appeal in Superior Court filing a WRONGFUL FORECLOSURE ACTION. First. A borrower can search “Lawyer Referral Services” at the web where attorneys charge $35 dollars for 30 minutes counseling (in Arizona). the defendant and a judge. especially information about the state’s procedures.Foreclosure Secrets Guide COURT LITIGATION If a process of validation has been ignored by the lender and/or trustee and they keep trying to foreclose the property and don’t want to make any negotiation. It is better to not file anything at court if an attorney has not criticized a motion or complaint. Orbis Marketing. which is one of the worst things that can happen to a lender. respectful and courteous with no screams at all. if a borrower is not doing a research in other sources. 93 Some aggressive attorneys will file litigation in Court for Fraud after the first 30 days of sending the validation of debt if that is not sufficiently validated. Everybody has their time to talk and it’s supposed nobody will interrupt each other and everybody will remain calm. let’s start with the first step in Court: a Complaint. LLC. Working with an attorney will be the best.foreclosureinprocess. I suggest consulting at least 3 attorneys at this price to get a better advice. Going to court is like 3 persons getting together to talk about a concern: the complainer. Many borrowers get discouraged after a decision like that. the next step is to file a Court Litigation. the difference between each other is just the confidence in what they are doing. the following step is to litigate in court. others states name it different. the lender will send the case directly to the trustee after the 4th month (average). Validation letters may not have stopped the Trustee’s foreclosure at this time. If the borrower already sent validation letters to lender and/or trustee. In some states this court is named also as circuit court. has to pay that fee). the borrower must file a complaint at the district court (at trial or court of first instance) at least five days before the scheduled sale’s date (depending in the state) to stop the sale legally. a summons to the defendant party and a certificate of service. will be awesome to contact local and national media as well.foreclosureinprocess.Foreclosure Secrets Guide In Non-Judicial Foreclosures 94 For borrowers living into the non-judicial foreclosure system states. The District Courts are the general trial courts (where parties present their first arguments) of the United Federal Court System. Along that. and the requested validation has not been satisfied. Copyright © 2008. Orbis Marketing. If a borrower has not been successful in stopping a foreclosure. All of this has to be mailed by certified mail to every party involved and keep a copy. A plaintiff (person making the complaint) must file at the district court a complaint. The objective of this litigation is to enforce Federal Laws against the lender. LLC. All Rights Reserved www. Every court has free information in how to file a complaint or a motion as “pro se” (without an attorney). To file a complaint in Arizona is around $350 dollars (whoever files it. and if the borrower has the guts. but the borrower has now a powerful tool to fight against the lender. A borrower can waive this charge if requests to the clerk of the court and qualifies to proceed in “forma pauperis”.com . sending complaining letters to every regulative agency available may be beneficial. going to court will be only if the lender files a claim or complaint against the borrower or if the borrower files a complaint against the lender. All Rights Reserved www. LLC. A good saving idea is to prepare all the defense letters (NOV and NOIV for lender. the complaint letter will not be necessary. they will lose the case by default. the borrower can file a COMPLAINT in the District Court where the property is located (not in the district court where the borrower lives). if a borrower is pursuing the Note Strategy. It will depend in the affordability of every borrower. In that case. and complaint to court) at once and let the attorney direct the borrower in the whole process at the same consult.com . which is the response to a lender’s complaint (shown after the complaint letter example).foreclosureinprocess. it must be stopped by law once the complaint was filed. Remember that many attorneys are not familiar with this type of fights and every state is different. The following format letter is to have an idea in how to file a complaint. So. If the lender/servicer already filed a complaint against the borrower in court. (The following COMPLAINT form is to delete the < >’s and fill them with borrower’s information) Copyright © 2008. If the lender/servicer does not send back a response in time. and the lender/servicer must send a response back (or MOTION) with the evidence to rebut the facts of the complaint. Orbis Marketing. 95 If the lender has not been able to provide legal proof of ownership. must be advised by a local attorney on this fight.Foreclosure Secrets Guide COURT COMPLAINT A complaint can be filed by a borrower when all the written requests have been sent to the lender/servicer and/or Trustee with no satisfactory responses. the required letter is a MOTION. If there is a foreclosure sale. trustee. A qualified attorney must be consulted to verify everything is in compliance with the borrower state statutes. LLC.000> home loan. Defendant wants to foreclose the home through <TRUSTEE>. Plaintiff. Orbis Marketing. 6. 4.com . Plaintiff bought a home at <ADDRESS>.Foreclosure Secrets Guide <NAME> <ADDRESS> <CITY. ZIP> <PHONE NUMBER> (Plaintiff) UNITED STATES DISTRICT COURT DISTRICT OF _____(state)_________ CASE # ____________________ <NAME> Plaintiff. asks the Court to impose punitive damages to Defendant for Harassment. Plaintiff bought that home with the approval of a <$250. 7. therefore. STATE. On <DATE>. <LENDER> Defendant ___________________________________________/ 96 COMPLAINT 1. vs. Plaintiff denies the legal standing of Defendant to foreclose. promising Plaintiff to repay that amount to the lender within 30 years. Fraud and Attempt of Extortion. Plaintiff requested Defendant to produce to Plaintiff the documents described in the Validation of Debt which is attached as an exhibit to this action. Plaintiff is a citizen of the State of _________________ 2. 5. All Rights Reserved www. Defendant is not the lender.foreclosureinprocess. 8. __________________________ <NAME> (Plaintiff) <ADDRESS> <TELEPHONE> Copyright © 2008. Defendant is a corporation with its principal offices at ________________________________ 3. ______________days after service of this summons on you.com . STATE. ____________________________ CLERK _________________________________ DATE ____________________________ (By) DEPUTY CLERK Copyright © 2008. Orbis Marketing. exclusive of the day of service. If you fail to do so. <LENDER> Defendant ___________________________________________/ 97 SUMMONS YOU ARE HEREBY SUMMONED and required to serve on _______(PLAINTIFF’S name and address)________ an answer to the complaint which is served on you with this summons.Foreclosure Secrets Guide <NAME> <ADDRESS> <CITY.foreclosureinprocess. Any answer that you serve on the parties to this action must be filed with the Clerk of this Court within a reasonable period of time after service. judgment by default will be taken against you for the relief demanded in the complaint. LLC. All Rights Reserved www. ZIP> <PHONE NUMBER> (Plaintiff) UNITED STATES DISTRICT COURT DISTRICT OF _____(state)_________ CASE # ____________________ <NAME> Plaintiff. vs. com . < NAME > hereby certify that on _________________. ZIP CODE> CERTIFIED MAIL # ____________________________________ < NAME 1> ________________________________ < NAME 2> Copyright © 2008. STATE. LLC. I mailed a true and correct copy of the above and foregoing complaint via certified mail to the persons listed below: <LENDER> <ADDRESS> <CITY.foreclosureinprocess. All Rights Reserved www. Orbis Marketing. 20____.Foreclosure Secrets Guide CERTIFICATE OF SERVICE 98 I. depending in the state) the lender will send the case immediately to the court and will open a file. (A list of states into this system is at the end of this eBook). The following letter template is a Motion to Dismiss a Foreclosure Sale with supportive attachments.com . the motion must be signed in front of a Notary Public. they don’t have to contact a trustee. a judge can officially make the borrower pay through the court or will foreclose the property. Orbis Marketing. and many of that ideas work better depending in the state. usually after the 4th month (or more. Then. The court will send a summons (or notice) to the borrower address notifying the complaint FROM THE LENDER. When a house is in default. A Motion is simply a Request. Note: if a borrower is not filling the Motion or the Complaint by himself. (The following form is to delete the < >’s and fill them with borrower’s information) Copyright © 2008. it is called a MOTION. It can also be used as response if the lender or trustee filed a complaint against the borrower after the requests.foreclosureinprocess. 99 REMEMBER: THE FOLLOWING MOTIONS ARE JUST FOR JUDICIAL FORECLOSURE STATES. All Rights Reserved www. So consult an attorney before to file it. When a person responds to that notification requesting anything. Motion to Dismiss = Request to Dismiss. Every attorney has different ideas in how to file a Motion. LLC.Foreclosure Secrets Guide Judicial Foreclosures For borrowers living in the judicial foreclosure system. It may be possible to pay a fee to file a motion. Foreclosure Secrets Guide <NAME 1> <NAME 2> <ADDRESS> <CITY, STATE, ZIP> <PHONE NUMBER> (DEBTORS) 100 UNITED STATES DISTRICT COURT DISTRICT OF _____(state)_________ CASE # XX-XXXXX <LENDER> Plaintiff, vs. <NAME 1> <NAME 2> Defendants ___________________________________________/ DEFENDANTS MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM UPON WHICH RELIEF CAN BE GRANTED <NAME>, Defendant, respectfully moves this Honorable Court to grant this motion to dismiss case number XX-XXXX-XX with prejudice. <LENDER> (hereinafter referred as “lender”) and its counsel has failed to state a claim upon which relief can be granted. I, <NAME>, of age and competent to testify, state as follows based on my own personal knowledge: Copyright © 2008, Orbis Marketing, LLC. All Rights Reserved www.foreclosureinprocess.com Foreclosure Secrets Guide 1. I deny the following allegations: Paragraphs #___, #___ and #___. 2. I affirm the following allegations: Paragraphs #___, #___ and #___. 101 3. I am unable to find any documentation considered Evidence Admissible in Court that verifies I owe this debt or that “lender” has any legal standing to collect anything (if any liability even exists). I also don’t have any documentation that “lender” had any legal standing to collect this alleged debt or a portion thereof in the past; therefore, I may have paid them in error. 4. I am not in receipt of any document which verifies that “lender” has standing to sue in any Court by virtue of being duly registered as “lender” or by “lender” meeting the minimum contacts requirements for in personam jurisdiction. 5. I am not in receipt of legal proof of ownership on the original note, which entitles “lender” to be THE NOTE HOLDER of the debt in claim. 6. I am not in receipt of legal proof of existence of the original note in question. 7. I am not in receipt of legal proof of assignment to substantiate their claim, specifically the past note holder naming “lender” as a person entitled to collect a debt against me. 8. I am not in receipt of any notification of assignment, sale or transfer for this promissory note. 9. I am not in receipt of the complete records of the general ledger and accounting of the alleged unpaid promissory note, proving that $_________________ is really due and owing in the note. 10. My credit report has derogatory information from this matter. As “lender” does not have legal standing to collect this debt, shall be not any data furnished to the credit report agencies. Sincerely, ____________________________________ <NAME 1> ________________________________ < NAME 2> Copyright © 2008, Orbis Marketing, LLC. All Rights Reserved www.foreclosureinprocess.com Foreclosure Secrets Guide Memorandums of Law Memorandum of law in support of the point of law that party alleging to be creditor must prove standing 102 <LENDER> has failed or refused to produce the actual note or other debt obligation that <LENDER> alleges < NAME > owes. Where the complaining party cannot prove the existence of the note, then there is no note. To recover on a promissory note, the plaintiff must prove: (1) the existence of the note in question; (2) that the party sued signed the note; (3) that the plaintiff is the owner or holder of the note; and (4) that a certain balance is due and owing on the note. See In Re: SMS Financial LLc. v. Abco Homes, Inc. No.98-50117 February 18, 1999 (5th Circuit Court of Appeals.) Volume 29 of the New Jersey Practice Series, Chapter 10 Section 123, page 566, emphatically states, “...; and no part payments should be made on the bond or note unless the person to whom payment is made is able to produce the bond or note and the part payments are endorsed thereon.” It would seem that the mortgagor would normally have a Common law right to demand production or surrender of the bond or note and mortgage, as the case may be. See Restatement, Contracts S 170(3), (4) (1932); C.J.S. Mortgages S 469 in Carnegie Bank v Shalleck 256 N.J. Super 23 (App. Div 1992), the Appellate Division held, “When the underlying mortgage is evidenced by an instrument meeting the criteria for negotiability set forth in N.J.S. 12A:3104, the holder of the instrument shall be afforded all the rights and protections provided a holder in due course pursuant to N.J.S. 12A: 3- 302" Since no one is able to produce the “instrument” there is no competent evidence before the Court that any party is the holder of the alleged note or the true holder in due course. New Jersey common law dictates that the plaintiff prove the existence of the alleged note in question, prove that the party sued signed the alleged note, prove that the plaintiff is the owner and holder of the alleged note, and prove that certain balance is due and owing on any alleged note. Federal Circuit Courts have ruled that the only way to prove the perfection of any security is by actual possession of the security. See Matter of Staff Mortg. & Inv. Corp., 550 F.2d 1228 (9th Cir 1977), “Under the Uniform Commercial Code, the only notice sufficient to inform all interested parties that a security interest in instruments has been perfected is actual possession by the secured party, his agent or bailee.” Bankruptcy Courts have followed the Uniform Commercial Code. In Re Investors & lenders, Ltd. 165 B.R. 389 (Bkrtcy.D.N.J.1994), “Under the New Jersey Uniform Commercial Code (NJUCC), promissory note is “instrument,” security interest in which must be perfected by possession...” Memorandum of law in support of the point of law that to prove damages for default of a debt, party must enter the account and general ledger statement into the record through a competent fact witness Copyright © 2008, Orbis Marketing, LLC. All Rights Reserved www.foreclosureinprocess.com Foreclosure Secrets Guide To prove up claim of damages, creditor must enter evidence incorporating records such as a general ledger and accounting of an alleged unpaid promissory note, the person responsible for preparing and 103 maintaining the account general ledger must provide a complete accounting which must be sworn to and dated by the person who maintained the ledger. See Pacific Concrete F.C.U. V. Kauanoe, 62 Haw. 334, 614 P.2d 936 (1980), GE Capital Hawaii, Inc. v. Yonenaka 25 P.3d 807, 96 Hawaii 32, (Hawaii App 2001), Fooks v. Norwich Housing Authority 28 Conn. L. Rptr. 371, (Conn. Super.2000), and Town of Brookfield v. Candlewood Shores Estates, Inc. 513 A.2d 1218, 201 Conn. 1 (1986). See also Solon v. Godbole, 163 Ill. App. 3d 845, 114 Il. Memorandum in support of the point of law that when jurisdiction is challenged, the party claiming that the court has jurisdiction has the legal burden to prove that jurisdiction was conferred upon the court through the proper procedure. Otherwise, the court is without jurisdiction. Whenever a party denies that the court has subject-matter jurisdiction, it becomes the duty and the burden of the party claiming that the court has subject matter jurisdiction to provide evidence from the record of the case that the court holds subject-matter jurisdiction. Bindell v City of Harvey, 212 Ill.App.3d 1042, 571 N.E.2d 1017 (1st Dist. 1991) ("the burden of proving jurisdiction rests upon the party asserting it."). Until the plaintiff submits uncontroversial evidence of subject-matter jurisdiction to the court that the court has subject-matter jurisdiction, the court is proceeding without subject-matter jurisdiction. Loos v American Energy Savers, Inc., 168 Ill.App.3d 558, 522 N.E.2d 841(1988) ("Where jurisdiction is contested, the burden of establishing it rests upon the plaintiff."). The law places the duty and burden of subject-matter jurisdiction upon the plaintiff. Should the court attempt to place the burden upon the defendant, the court has acted against the law, violates the defendant's due process rights, and the judge has immediately lost subject-matter jurisdiction. Prepared and submitted by: ____________________________________ < NAME 1> ________________________________ < NAME 2> Copyright © 2008, Orbis Marketing, LLC. All Rights Reserved www.foreclosureinprocess.com Foreclosure Secrets Guide DECLARATION 104 Fifteen days from the verifiable receipt of this motion to dismiss, an order shall be prepared and submitted to the court for ratification, unless prior to that time, “lender” presents a competent fact witness to rebut all articles of < NAME >’s affidavit, making their statements under penalty of perjury, supporting all the rebutted articles with evidence which would be admissible at trial, and sets the matter for hearing. Prepared and submitted by: ____________________________________ < NAME 1> ________________________________ < NAME 2> CERTIFICATE OF SERVICE I, < NAME > hereby certify that on _________________, 20____, I mailed a true and correct copy of the above and foregoing motion to dismiss via certified mail to the persons listed below: <LENDER ATTORNEY> <ATTORNEY LAW FIRM>, <ADDRESS> <CITY, STATE, ZIP CODE> CERTIFIED MAIL # <LENDER> <ADDRESS> <CITY, STATE, ZIP CODE> CERTIFIED MAIL # ____________________________________ < NAME 1> ________________________________ < NAME 2> Copyright © 2008, Orbis Marketing, LLC. All Rights Reserved www.foreclosureinprocess.com LLC. Anyway. Also. A format for the exhibit cover is included in the following page. it will not be considered as valid evidence at the hearing (ask your legal coach or attorney). THIS IS A GOOD TIME TO CONTACT THE LENDER AND MAKE A MODIFICATION BEFORE THE HEARING – When they see a summons from a borrower and they have not complied accordingly with the dispute letters. etc.foreclosureinprocess. Every different matter is filed in different exhibit marked as A. Copyright © 2008.).com . All Rights Reserved www. The court will determine a limited period of time to file these exhibits before appearing in court hearing. the third step may be the Notice for HEARING. Orbis Marketing. C. The letters sent and received from the trustee can have a top cover as “Exhibit B”. This will be the time to file copies of all letters sent and received along with copies of the certified mails. etc. in order to be well prepared for a hearing. I have the understanding that if a document is not filed as Exhibit before the time limit. a borrower must be well informed and trained in what to do and what to say at the court hearing (don’t forget to make copies!) I am providing some examples at court hearings that can be helpful for any litigant borrower. the next step is the counterpart to file a motion (or objection. Generally. each party has an opportunity in court hearing to present their side of the case. etc. they are more willing now to accept a reduction on interest rates. This way. opposition. For example. everybody at the hearing can easily find the exhibit in reference. wave all fees and REDUCE THE BALANCE TO THE PRESENT MARKET PRICE.Foreclosure Secrets Guide COURT HEARING After a complaint has been filed (from the lender or the borrower). the “Notice of Validation” can have a top cover named “Exhibit A”. It can include witness and exhibits (exhibits are like an attachment to the case paperwork. B. After a response has been filed. providing documents or other items introduced as evidence during a trial or hearing – NOV’s for example). each party presenting exhibits should mark them as exhibits and make copies for the judge and for the counterpart. including the harassing letters and recorded calls as well. fix the term. 105 That means the plaintiff and the defendant must be face to face both at court in front of a judge. All Rights Reserved www. Orbis Marketing.Foreclosure Secrets Guide 106 EXHIBIT ______ Copyright © 2008. LLC.com .foreclosureinprocess. xx ? Lender: -because that are the accounting records Defendant: -Did you provide it at this hearing as requested? Lender: -…nnnoo… Defendant: -“lender”. is this a copy of your signature? –I don’t know. yes or not? Lender: -NO Defendant: . Defendant: -Who is MERS? Lender: -MERS is an associate of “lender” Copyright © 2008. not my signature. -So.foreclosureinprocess.Foreclosure Secrets Guide COURT HEARING QUESTIONS AND RESPONSES EXAMPLE To remember: Borrower cannot recognize any signature until he/she can see it in INK.can you explain to me how a person can be entitled to enforce a debt without being the note holder? Lender: -MERS is the note holder. -Are you sure? –I’m sure. I thought that was a SCAM Defendant: -“lender”. Judge: -What do you want to do with the property? Defendant: -I don’t know. Orbis Marketing. -He was asked again: is this your signature. 107 A Defendant was asked: -is this your signature? Defendant said: I don’t know. All Rights Reserved www.xxx. yes or not? Defendant said: NO. that is a copy. Judge: -Why did you get late on the mortgage monthly payments? X Defendant: -because a representative of “lender/servicer” told me to be late 3 months in order to negotiate with the loss mitigation department Y Defendant: -because “lender/servicer” couldn’t verify me they were the legal owner of the note. that question is for the person who made that copy. are you the holder and owner of the promissory note. I just want to know who the note holder of the property is.com . how do you know that I owe exactly $xxx. LLC. your Honor. correct. why you are foreclosing the property if you are a separate party from MERS? Lender: . How you said now you were trying to negotiate with them? Defendant: -In that time. Copyright © 2008.separate from MERS. Defendant: -who is foreclosing the property MERS or “lender”? Lender: -MERS Defendant: -but MERS is not the servicer.yes. LLC. I understand now I had to talk with MERS not with “lender”. Orbis Marketing. that is true.is MERS a financial institution? Lender: -NO Defendant: -if Mortgage ELECTRONIC Registration Services (MERS) is doing everything electronic. correct? Lender: -It is not the servicer.… Judge: -if you had an adjustable loan and it changed after 2 years. Defendant: -A servicer is a separate independent legal entity.foreclosureinprocess. 108 Defendant: -So.com . but I understand that every lender has modification plans available and “lender” didn’t want to accept any modification at all. correct? Lender: . Judge: -I thought you didn’t recognize “lender” as your lender. that is what you accepted in the loan Defendant: . and “lender” didn’t tell me anything about that company. I didn’t know how all this business was working before. correct. All Rights Reserved www. the paper document? Lender: -eerrr… I don’t know.Foreclosure Secrets Guide Defendant: . how can you explain that MERS is in possession of the physical note. Their website states this: “MERS is an innovative process that simplifies the way mortgage ownership and servicing rights are originated. I don’t want to say this was with the intention to deceive or abuse a borrower. Almost every funded home loan included an almost hidden clause designating MERS as the beneficiary of the loan. letting know or understand this important point to the borrower. In few words. This situation has caused a huge disadvantage for every borrower due to the lack of disclosure concerning the true identity of the mortgagee. sold and tracked. but never with someone called MERS. I can say that if homeowners couldn’t negotiate with their lender or servicer for a modification in the loan that can save their home from foreclosure. All Rights Reserved www. After a huge research in this company. etc. MERS is not a lender or a financial institution. there was nobody from the original lender or from the escrow agency. MERS is simply a company that was created in the early 1990’s by the mortgage banking industry to streamline the mortgage process by using electronic commerce to eliminate paper. MERS is practically a huge electronic warehouse holding digital documents and tracking numbers. New Century. LLC.foreclosureinprocess.. Copyright © 2008. Regularly. MERS eliminates the need to prepare and record assignments when trading residential and commercial mortgage loans”.Foreclosure Secrets Guide MERS 109 Every homeowner should look at their promissory note and find out if one of the clauses is defining MERS as the beneficiary of the loan. Orbis Marketing. and as long as I know. First Magnus. MERS is not a system of legal record or a replacement for the public land records (Mortgages or Deed of Trusts must be recorded in the county land records).com . may happened because MERS didn’t allowed it or maybe MERS was not able to modify the loan due to the inexistence of the note. there is no physical paper documented in the files of this company. Borrowers thought they were doing a loan with Wells Fargo. Millions of loans have been originated by MERS and borrowers around the country have never been aware of this. MERS stands for Mortgage Electronic Registration System. Created by the real estate finance industry. but sounds like. Period. a creditor suing a debtor or making a claim in court. Any request regarding obtaining a certified or verified copy of the promissory note will need to be made through the loan servicer of the mortgage loan in question. entitlement.com . If a borrower found MERS in his deed of trust or mortgage.Foreclosure Secrets Guide In their website. Inc. but the law does not recognize any legal consequences. MERS has no legal authority to foreclose upon any borrower and according to their own written documents NEVER HOLD THE NOTE OR OWN "ANY" BENEFICIAL INTEREST IN THE NOTE. MERS is only a “nominee” of the original lender. By Law. then. LLC. must have a beneficial interest in the note and must be evidenced. or liabilities to one ostensibly designated as “Nominee”. Orbis Marketing. Copyright © 2008. (MERS) serves as the mortgagee of record on mortgage loans in a nominee (form of agency) capacity for the lender. its successors and assigns. if a note is lost or missing. And remember. Who is right? We have to remember that a creditor or a debt collector. Information regarding the current servicer can be obtained by calling a toll free Servicer Information System at 1(888) 6796377 or by calling the MERS Help Desk at 1(888)680-6377.foreclosureinprocess. but the servicer. is very possible that the original note may be lost or missing. It is the current servicer that holds loan specific information and all questions regarding the specifics of a loan should be directed to the servicer”. in order to be entitled to claim a debt. there is no debt. must be in physical possession of the original note signed with INK. rights. MERS also states the following: 110 “Mortgage Electronic Registration Systems. All Rights Reserved www. My personal records are that lenders/servicers are saying that MERS is the owner of the promissory note and MERS says they are not. foreclosureinprocess. UPDATE: some courts in some states request that the borrower keeps making the monthly payments to the clerk of the court until the lender finds the original note. don’t worry.Foreclosure Secrets Guide WRONGFUL FORECLOSURE ACTION 111 If the lender failed to provide legal proof of ownership as requested by the borrower. Now is time to go to the State Superior Court and file a Wrongful Foreclosure Action against the lender. Lis Pendens: Latin for Pending Litigation A property cannot be sold. the Foreclosure Process will be on hold until the lender provides the legal documents required. For this matter to be in effect. The primary allegation is that the lender trying to foreclose the property has no legal standing to do so. but a judge at court granted the case in the favor of the lender. Mortgage Servicing Fraud or Foreclosure to finalize this last process (it will be cheaper as the borrower almost did all the work). but it will be very complicated and not recommended at all. The Wrongful Foreclosure Action must be also filed along with a LIS PENDENS against the property and look for an order from the court to prevent foreclosure.com . not everything is lost. The borrower can still litigate a Wrongful Foreclosure Action as “Pro Se”. We are talking “Major Leagues”. Consumer Rights litigation. they will not find it especially if the original creditor filed bankruptcy! However. Orbis Marketing. a Borrower must hire an Attorney whose main emphasis is on Real Estate. It is a secret for me that if they didn’t do it at first instance… why should they do it after the years??? We just want to make a fair modification to the loan! Copyright © 2008. the wrongful foreclosure action filed in superior court is potentially the most powerful weapon in the arsenal of a borrower. LLC. Some times. All Rights Reserved www. although the borrower can stay at the property all this time rent-free protected by the state laws. it could take years… Sometimes… it may never even happen as well… There are cases that are pending since 10 years ago! This happens because the lender can’t find the original promissory note and the extra paperwork that now the Superior Court is requesting. Because of this. (This last process could seriously delay a Foreclosure) While filing bankruptcy to avoid or delay Foreclosure is a big headache for Lenders. or trespassed if there is a Lis Pendens recorded on title. if the lender finds and provides the documentation requested the foreclosure will take place normally. edcombs. file a Wrongful Foreclosure Action against the lender. To find a mistake in the paperwork will be very complicated to anybody who is not related to these guidelines. the only thing remaining to fight against any lender is: Find ANY mistake or abusive act made by the lender: Predatory lending. with this allegation.com . An attorney in California.Foreclosure Secrets Guide So.com/cm/news/news178. violations of RESPA. LLC.probono. Copyright © 2008. violations to the Truth in Lending Act. Update: I have found now that many Prime Lenders (those who didn’t transfer the note) have MORE PROBABILITIES TO NOT HAVE THE ORIGINAL NOTE. The complaint may be now on the allegation that there is an “illegal. But. A Borrower can find more information about any possible legal defenses in the following link: http://www.foreclosureinprocess. JUST 4 LENDERS HAD THE ORIGINAL NOTE IN POSSESSION. told me that out of 1. If the note was not found and the court granted the case. What Happens If The Lender Didn’t Transfer the Loan? 112 If the mortgage company is the same since the beginning. Orbis Marketing. And. Any lender – as a debt collector .abanet. a Borrower can still fight for the legal possession of the original note. so a Borrower may get the home back free and clear.must be in possession of the original promissory note to be entitled to collect a debt.000 cases.net/ http://www. fraudulent or willfully oppressive sale of property under a "power of sale" contained in a mortgage or deed of trust”. still room to file a Wrongful Foreclosure Action claim to enforce this right as well.html Pro bono: Provision of services free of charge A Borrower may want to know that even if the property was already sold at the auction sale. who has fight thousands of these cases.org/legalservices/probono/directory. it may be possible to file this Wrongful Foreclosure Action as well. Just bring to the attorney all the documents from the mortgage and ask him to find any violations. abuses or predatory lending on it. All Rights Reserved www. abusive charges. if the note was already found or was in possession of the lender.asp For other sources of inexpensive or Free Legal Services contact: http://www. etc. That’s why I recommend looking for a good attorney. If a Borrower is into the Foreclosure Process now. Mortgage Servicing Fraud or Consumer Rights litigation will be the best. may be penalized to pay the lender’s attorney fees. However.Foreclosure Secrets Guide Some other interesting allegations that may fit to file a Wrongful Foreclosure Action: • • • • • • • • • • • • Breach of contract A missing agreement between borrower and lender Superfluous and obligatory Insurance on the property Payments not applied correctly Deliberate infliction of emotional suffering Incorrect interest rate (maybe it was already adjusted) Violation of Business and Professions Codes Violation of Civil Codes Foreclosure process not stopped after partial payments Wrong impound accounts Wrong description of Bankruptcy Chapter 13 plan Quiet title 113 If part or all of above can be proved as fraud or malicious. may want to start looking what defense or negotiation will work best for him/her and stop the process as soon as possible. LLC. qualify to be in Federal Court for statutory claims (Consumer Fraud Act). if the borrower doesn’t have comprehensible evidence of his claim. Orbis Marketing. Copyright © 2008. Foreclosures. punitive damages against the lender can be obtained.com . All Rights Reserved www. The borrower may have damages compensation for emotional distress as well. My recommendation is that in order to have a successful outcome of this last step (the Wrongful Foreclosure Action and Lis Pendens Filing) to hire an Attorney whose main emphasis is on Real Estate.foreclosureinprocess. Homeowners must remember that starting a legal defense for any of the abuses we have discussed in this book before being late in the mortgage. Orbis Marketing. LLC. All Rights Reserved www.com .Foreclosure Secrets Guide 114 Copyright © 2008.foreclosureinprocess. Foreclosure Secrets Guide 115 Chapter 5 Copyright © 2008. LLC. Orbis Marketing.com . All Rights Reserved www.foreclosureinprocess. To walk through the bankruptcy process. It gives the opportunity to start all over again. assets and income. however. They have a Self Help Center for filers without an attorney. it provides a huge emotional relief and a fresh start. collections. Orbis Marketing. TAX OR FINANCIAL ADVICE. at the end. Filing bankruptcy is a long and time-consuming process where the filer must provide a big bunch of papers showing financial and personal information. Another alternative to stop or delay foreclosure. Depending in how a person rebuilds his finances and credit history. LLC. It is possible to file bankruptcy individually.foreclosureinprocess. forms and directions anybody may need to file a case. he may have fair credit in two years after being discharged from a bankruptcy chapter 7. YOU MUST HIRE A GOOD BANKRUPTCY ATTORNEY AND A TAX ADVISOR TO DIRECT YOU AS TO YOUR UNIQUE CIRCUMSTANCES. I recommend to the person thinking about it fully understand what bankruptcy is. etc. The County’s Bankruptcy Court will give all the information. Imagine a life with no debts! Filing Bankruptcy is not a bad thing really. However. Many wealthy people as Donald Trump or Robert Kiyosaki have had to file bankruptcy before. car loans. The bankruptcy process demands filling out long schedules and boring forms about existing debts. building a massive empire of real estate afterwards (not just buying their own homes). etc. where persons can learn everything about it. they do not give legal advice. Copyright © 2008. For the most part the bankruptcy process is actually well structured and simple. Debt listings must include mortgages. To be bankrupted is one of the worst of the credit scenarios and is a crazy chaos to be plunged into this. most people hire an attorney and their cost will vary in every case. credit cards. medical debts. All Rights Reserved www.Foreclosure Secrets Guide BANKRUPTCY 116 LIMITATIONS OF USE OF THIS INFORMATION: YOU MAY NOT RELY ON THIS INFORMATION OR LINKS AS A LEGAL. They also provide information in how to get free or cheap legal advice. and it is supposed that a bankrupted person will be more cautious in his financial decisions in the future. just to give an idea. although overstressing and dishonorable for some. filing bankruptcy may be the best option for some homeowners mortgage-stressed who has been trying to solve this matter to no avail. how difficult the entire process is and what the benefits are.com . The most difficult part is to decide which bankruptcy chapter is best for every situation. This is not supposed to depress anybody or to think nothing is worthy anymore. filing documents. Be sure to list every account you owe. the bankruptcy court will not know about it. so you will still owing that missed debt after the discharge. if you fail to disclose some of them.com .foreclosureinprocess. researching. Orbis Marketing. It will be a lot cheaper as well. even if you don’t think you owe them any money… You’ll never know. After a bankruptcy is discharged. you don’t have any debts any more by law… until you start getting debts again by your own decision. It is too much paperwork and information to learn. fill and supply. If you feel comfortable reading.Foreclosure Secrets Guide Let me warn the reader: 117 If you don’t feel right even filling out a job application. you may decide to do it yourself. LLC. writing. You must make a list of all of your creditors. All Rights Reserved www. filling forms. and you have the time for all of this. creating letters. Copyright © 2008. you must hire a qualified person to do it for yourself. studying. Copyright © 2008. The debtor must have a solid job and enough income to cover the new payment arrangements of his debts over time. Filing properly a Chapter 13 will stop a foreclosure right away. The credit cards included under Chapter 13 are of last priority and may be discharged at the end of the repayment plan without having them to be paid back at all. the debtor may keep the house and avoid foreclosure.com . This how it works: The legal protection of Bankruptcy Chapter 13 lets a debtor pay off the unpaid and late payments on a repayment plan.foreclosureinprocess. Note: The existing record is that most of the Chapter 13 petitioners file Chapter 7 before the ending of the 5 years repayment plan. he/she will not qualify. I will talk just about the types that will work better in the foreclosure process. These types are Chapter 13 and Chapter 7 BANKRUPTCY CHAPTER 13 If the borrower is behind in his mortgage payments with no realistic way to get current. failing to make the payments will restart the foreclosure as how it was left before filing Chapter 13. filing Bankruptcy Chapter 13 can stop the foreclosure forever legally. If the debtor make all the payments under the plan. LLC. for the purpose of this book. If he/she fully paid all the promised payments to the end. All Rights Reserved www. usually from 3 to 5 years. but at this time. So the debtor may stay just with his mortgage payments at the end of the 5 years plan. However. THINGS NEEDED TO QUALIFY FOR CHAPTER 13: Basically. Some “debt consolidation companies” are just doing Chapter 13 to their clients. If the debtor earns cash or is self employed. which is the same category of credit cards. A court appointed trustee will supervise the debtor through the length of the repayment plan.Foreclosure Secrets Guide TYPES OF BANKRUPTCY 118 Bankruptcy laws has several ways of filing depending in your specific case. this fact will convert a second mortgage (which is a “secured” mortgage) to an “unsecured” debt. If there is no more equity in the house (it is very possible due to the market conditions). will see that foreclosure open up never again. the debtor must be a wage earner and have a steady source of income to proof the ability to satisfy the repayment plan. almost facing foreclosure but anyway wanting to keep the home. Orbis Marketing. Note: This rule may help a borrower in default to eliminate the payments of the second mortgage at the time of discharge. This plan must be approved by the Court. A bankruptcy attorney must be consulted to revise new changes to the law. Taxes and some Students Loans will not apply. This rule was used before. LLC. they will take back the product) are optional to be included. These loans are unsecured. like most credit cards. If a mortgage loan is also included. 1. For example. this will be waiting for this borrower next year to pay income taxes on it. the IRS will submit back to the borrower as TAXABLE INCOME in a 1099 form. deed in lieu or short payoff. it may be closed by the creditor without asking anything. Copyright © 2008.foreclosureinprocess.com . All Rights Reserved www. If the debtor keeps a car loan outside of the bankruptcy. if a borrower was forced to sell a home he couldn’t longer afford.Foreclosure Secrets Guide BANKRUPTCY CHAPTER 7 119 Filing Chapter 7 will freeze the foreclosure at least two to four more months (and maybe several more after it is discharged). this new tax law does not protect anybody from paying taxes if a homeowner foreclosed his principal residence and had a home equity loan that was used to pay luxury stuff like vacations or a car (House improvements are OK). that tax liability has been eliminated until December 31st. after they see the bankruptcy in his credit. but very common on some banks). if a car loan is included in the bankruptcy. thanks to the Mortgage Forgiveness Debt Relief Act of 2007. Unfortunately. Although Child Support. debtors don’t have anything to give up. it is recommendable to keep saving as much money as possible. 2007). the debtor must give up his house etc. 2009. (This tax break is retroactive to Jan. a new passed law says a borrower may not have to pay this tax liability if that was his primary residence for at least two of the last five years. In the mean while. but as today. With the new legislation. Chapter 7 will cancel all debts as well. legally. the debtor must give up the car. TAX LIABILITY EXCLUSION LAW If a borrower foreclosed. Orbis Marketing. looking to provide new shelter to the family after this storm is over. All secured loans (means if the debtor doesn’t pay. he no longer has to worry about a hefty tax bill. allowing a borrower to live in his home all this time. Then. So at the very least. may stand a pending balance called Deficiency Liability. and if this is the case. On unsecured loans. Update: it is now until 2012. the lender may not report the payments as before (this is illegal. If the borrower owed $250k and the property got sold by $150k. there is a difference of $100k!! That difference the lender will submit to the IRS as Capital Loss. If a debtor thinks to leave open a credit card to keep building credit after the discharge. and the lender sent the loss to the IRS. depending in the state. he may lose also other properties he wants to keep if the bankruptcy trustee orders to turn over some items. A bankruptcy is discharged when is approved by the bankruptcy court. no money in the bank. He must pay. he doesn’t qualify for Chapter 7. boats.Foreclosure Secrets Guide 120 Also. Bankruptcy Chapter 7 doesn’t discharge tax liabilities. Period. If a debtor had dismissed a bankruptcy Chapter 7 or Chapter 13 within the past 180 days. THINGS NEEDED TO QUALIFY FOR CHAPTER 7: To qualify for bankruptcy chapter 7. A Qualified CPA must be consulted for this matter. etc. he must figure out whether he would has enough left over. and also. Bankruptcy Chapter 7 will exempt a debtor from a tax liability before it is on the IRS. and dismissed when it is denied. unless he claims for proven insolvency to the IRS or qualify for Bankruptcy Chapter 7 before the debt gets to the IRS files. The main point here is that if the average income over the six calendar months before filing for bankruptcy is less than the median income for a household of the size in his state.com . to file Chapter 13. after subtracting certain expenses. for example a wedding ring. Orbis Marketing. All Rights Reserved www. He can file Chapter 7. he doesn’t qualify for Chapter 13. (Chapter 7 means not have to pay anything else anymore).foreclosureinprocess. he passes. A debtor may not be eligible for Chapter 7 if his average gross income from the last 6 months at filing exceeds the state median income or if he present income is more suitable for Chapter 13. he doesn’t qualify for either one.. If a debtor is doing more money than the median. No equity in his house. extra cars. If a debtor had discharged a bankruptcy Chapter 13 within the last six years. a debtor must don’t have any assets to sell and pay to his creditors. if the borrower incurred in foreclosure or short payoff for investment or vacation properties and there is a pending debt. collectibles. If a debtor had discharged a bankruptcy Chapter 7 within the last eight years. Copyright © 2008. He must pay huge taxes for that Deficiency Liability to the IRS (this is worst than being sued by the lender for the same debt). he will not be able to get rid of this. He’s done. LLC. etc. the case will be dismissed and the debtor may be prosecuted for fraud. All the income and assets are counted BEFORE the date of filing. LLC. If he deliberately lies or fails to disclose important financial information and the court discovers this action. Orbis Marketing.foreclosureinprocess. Copyright © 2008. that doesn’t matter. If the debtor wins the lottery after filing bankruptcy and before the discharge. All Rights Reserved www.Foreclosure Secrets Guide A bankruptcy file can be dismissed by the following reasons: • • • • • • • • • • • Lying to the Court The debtor filing was fraudulent The debtor pulled huge quantities of cash money from credit cards within the last 3 months The debtor clearly have tried to cheat his creditors The debtor abused of the bankruptcy system The debtor concealed assets so he can keep them for himself Giving assets to his friends or relatives to hide them from creditors or from the bankruptcy court Running up debts for luxury items when he was clearly broke and had no way to pay them off Hidden property or money from his spouse during a divorce proceeding Lying about income or debts on a credit application The debtor violated a court order 121 The debtor must sign all the paperwork under "penalty of perjury" swearing that everything is true.com . the borrower will have to wait 3 to 4 more months on AUTOMATIC STAY if filing Chapter 7.com . so typically. Orbis Marketing. so the lender can start the foreclosure process again.Foreclosure Secrets Guide THE AUTOMATIC STAY 122 When a signed and dated paperwork is submitted to the bankruptcy court and is received a File Case Number. For borrowers filing Chapter 13 the Automatic Stay will be enforced until a monthly payment is missed again. Then. All Rights Reserved www. LLC.foreclosureinprocess. the sale will be legally suspended until the bankruptcy is discharged. the bankruptcy court will issue to all his creditors. The Automatic Stay order to all creditors to immediately cease and desist their collection activities. without excuses! Because of the AUTOMATIC STAY. if a borrower had his house waiting on foreclosure. that day will be the day the debtor officially filed bankruptcy. an order called Order for Relief. which is including a clause named AUTOMATIC STAY. Copyright © 2008. I don’t know why.com . Because of the problem of lenders not being able to provide a legal proof of ownership in the note. to prove that they really OWN THE NOTE. asking the bankruptcy court to proceed with the foreclosure sale. when a lender is requesting a Motion to Lift Stay. These Courts are requesting more documentation from lenders. Orbis Marketing. MOST LENDERS do not provide this requirement at the time of filing. the state of California sends the Notice of Sale 3 months before the auction sale). All Rights Reserved www. requiring more documentation from lenders in this Process. Note: Although Bankruptcy is ruled by Federal laws. the homeowner may receive a copy of a letter from his lender. in California. and even more if the lender is slow. if a homeowner files for bankruptcy after the Notice of Sale was received. a borrower may have been rent-free in his house almost a year since the first missed payment. 123 If this is approved by the court. The lender will immediately pursue this motion to lift the automatic stay order. Copyright © 2008.Foreclosure Secrets Guide MOTION TO LIFT STAY After filing bankruptcy and having granted the AUTOMATIC STAY. But. based on the same reason of lender to proof the ownership of the note. after the lender files a Motion to Lift Stay. some states will not allow an Automatic Stay if a Foreclosure Sale Notice is already filed. Therefore. the lender will file a motion to lift the stay and the court could easily give permission to schedule the foreclosure sale before a discharge. Must be checked the State Laws OBJECTION TO RELIEF We have already discussed how the Foreclosure Process is.foreclosureinprocess. LLC. the following step is the Objection to Relief from Stay. filed by the borrower for lack of STANDING. For example. At this time. In Bankruptcy Court. called MOTION TO LIFT STAY. the Bankruptcy Court is now dealing with another company completely different to the one is in the original documents! When a file is opened. (As long as I know. the sale will still postponed at least two more months. there is a trend now in most Bankruptcy Courts. lenders must provide documentation showing they own the note. transferred or sold to the new lender/servicer asking for the lift of the automatic stay.com . before to file it at the court. The following letter is another idea in how anybody can personally file this Objection to Relief from Stay in the Bankruptcy Court. The proof can be the assignment of the original note negotiated.Foreclosure Secrets Guide 124 With this. you can request the Bankruptcy Court to ask this lender to provide proof of the note ownership. LLC. Orbis Marketing. (The following form is to delete the < >’s and fill them with borrower’s information) Copyright © 2008.foreclosureinprocess. All Rights Reserved www. My recommendation is that it is necessary to consult first a Bankruptcy Attorney to comment in the borrower’s Motion. vs.foreclosureinprocess. All Rights Reserved www. <NAME>.: 2:08-BK-00000-XXX> <Adversary No. I.: 2:08-ap-00000-XXX> <LENDER > Movant. of age and competent to testify. <LENDER> (hereinafter referred as “lender”) and its counsel has failed to state a claim upon which relief can be granted. STATE. Defendant. respectfully moves this Honorable Court to grant this objection to relief from stay case number XX-XXXX-XX with prejudice. Orbis Marketing. <NAME 1> <NAME 2> Defendants ___________________________________________/ DEFENDANT’S OBJECTION TO RELIEF FROM STAY FOR FAILURE TO STATE A CLAIM UPON WHICH RELIEF CAN BE GRANTED <NAME>. ZIP> <PHONE NUMBER> (DEBTORS) 125 UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF _____(state)_________ Chapter __ <CASE No. LLC.com . state as follows based on my own personal knowledge: Copyright © 2008.Foreclosure Secrets Guide <NAME 1> <NAME 2> <ADDRESS> <CITY. #___ and #___. which entitles “lender” to be THE NOTE HOLDER of the debt in claim. I deny the following allegations: Paragraphs #___. ____________________________________ <NAME 1> ________________________________ <NAME 2> Copyright © 2008. I am not in receipt of any notification of assignment. I affirm the following allegations: Paragraphs #___. therefore. All Rights Reserved www. #___ and #___.com . My credit report has derogatory information from this matter.Foreclosure Secrets Guide 1. 8. 126 3. Orbis Marketing. 6. had any legal standing to collect this alleged debt or a portion thereof in the past. I may have paid them in error. shall be not any data furnished to the credit report agencies. I also don’t have any documentation that “lender”. 5. LLC. sale or transfer for this promissory note. I am unable to find any documentation considered Evidence Admissible in Court that verifies I owe this debt or that “lender” has any legal standing to collect anything (if any liability even exists). I am not in receipt of legal proof of existence of the original note in question. proving that $_______________ is really due and owing in the note. Sincerely. 7. 4. I am not in receipt of legal proof of ownership on the original note.foreclosureinprocess. 2. I am not in receipt of the complete records of the general ledger and accounting of the alleged unpaid promissory note. As the company of “lender” does not have a legal standing to collect this debt. 20____. STATE. LLC. making their statements under penalty of perjury.com . <NAME> hereby certify that on _________________. ZIP CODE> CERTIFIED MAIL # ____________________________________ <NAME 1> ________________________________ <NAME 2> Copyright © 2008. ZIP CODE> CERTIFIED MAIL # <LENDER> <ADDRESS> <CITY. I mailed a true and correct copy of the above and foregoing motion to dismiss via certified mail to the persons listed below: <LENDER ATTORNEY> <ATTORNEY LAW FIRM>. Prepared and submitted by: ____________________________________ <NAME 1> ________________________________ <NAME 2> CERTIFICATE OF SERVICE I. unless prior to that time. “lender” presents a competent fact witness to rebut all articles of <NAME>’s affidavit. Orbis Marketing.Foreclosure Secrets Guide DECLARATION 127 Fifteen days from the verifiable receipt of this objection to relief. All Rights Reserved www.foreclosureinprocess. STATE. an order shall be prepared and submitted to the court for ratification. <ADDRESS> <CITY. and sets the matter for hearing. supporting all the rebutted articles with evidence which would be admissible at court. foreclosureinprocess. After The Wrongful Foreclosure Action. will not have sense to file a lawsuit in Superior Court. Only in this way. Whether or not you should file a Chapter 7 bankruptcy. if not.bankruptcylawnetwork. the lender will come to the hearing without the requested documents. A discharge may be done about the same time as if the lender files a response.com . This is intended as a peripheral exposure to the available options. All Rights Reserved www. this is only a matter of time. Remember: The Bankruptcy Process is the very last resource. Please return to the chapter of Wrongful Foreclosure Action. will differ depending on your personal situation and should only be undertaken after careful reflection. if the motion is not properly filed or defended. For this reason. some lenders are most likely to wait until the discharge and not respond a request.com Nothing enclosed in this book should be construed to constitute advice for your personal circumstances. Recommended link: http://www. Is strongly recommended to consult a bankruptcy attorney about this. The house will be lost. proving the ownership of the original note. What they are asking is just to lift the Automatic Stay. until the promissory note is found by the “lender”. a lender can legally take the home away from a borrower. but by no means this is a complete or exhaustive analysis of the bankruptcy laws or their alternatives. as a car or his home. the judge may grant the case to the lender asking the borrower to leave the property immediately (it must be in writing to truly leave the property). The concept of filing Bankruptcy Chapter 7 is to be debt free and to have a fresh start. the borrower may stay in his house for years or may stay forever. Orbis Marketing. the borrower’s motion will be dismissed. Chapter 13 bankruptcy. The borrower needs to convince the Bankruptcy Judge to stay in the property after the discharge. the lender will have the opportunity to start the Foreclosure Process for a second time.Foreclosure Secrets Guide An immediate response from the lender may be a request for court hearing. examination and after consultation with an attorney experienced with such matters. 128 Most of the times. or any bankruptcy. ONLY recommendable if the borrower doesn’t have any other option. depending in the outcome. Copyright © 2008. after the Objection to Relief from Stay comes forward with the declaration containing an attachment of the assignment. If the lender never brought the required legal documentation. so by default. If the lender. the petitioner is required to surrender every secured property. LLC. When a Bankruptcy Chapter 7 is discharged. this case will fit for a lawsuit on Superior Court: The Wrongful Foreclosure Action. All Rights Reserved www. LLC.foreclosureinprocess. Orbis Marketing.com .Foreclosure Secrets Guide 129 Chapter 6 Copyright © 2008. a Second Mortgage is waived.). something that he did not have before with this strategy. Now the homeowner could gain equity in his home again. A Short Payoff Investor will negotiate the promissory note with the lender to reduce the loan amount at 65% or less. Orbis Marketing.000 $ 70. Additionally. This is an example: Mortgage Balance: Present Fair Market Value: 65% Negotiation: New Mortgage Balance: Instant Equity In The Property: $300. the SHORT PAYOFF INVESTOR will negotiate the non-performing note of the home with the bank at a discount of a maximum of sixty five percent (65%) of the FAIR MARKET VALUE (F. in most cases. In a SHORT SALE the homeowner will lose his property. Loan Forbearance or FHA Partial Claim. LLC.000 $130.000 $200.M. NOT even with a Loan Modification. two.foreclosureinprocess.com .000 $130. In a Short Payoff. this note will be transferred to a Hard Money Lender to loan the money back to the homeowner. a homeowner may be LIABLE for TAXES in an investment home. How This Works: 130 With the homeowner written authorization. three and up to six months late. that’s the difference between SHORT PAYOFF and SHORT SALE. then. in a Short Sale. Visualize this process as a "Short Refinance" through a Real Estate investor. which is NOT the case in a SHORT PAYOFF (consult your Tax Adviser).Foreclosure Secrets Guide SHORT PAYOFF There are some investors that are using the SHORT PAYOFF strategy to negotiate with the lender. With a SHORT PAYOFF negotiation the HOMEOWNER will KEEP THE PROPERTY UNDER HIS NAME. with this system they could reduce a mortgage debt almost by half and the new payments could be lower. All Rights Reserved www. NOT in a SHORT PAYOFF.V. Copyright © 2008. A homeowner doesn’t have to leave his home during negotiations.000 Even if there are one. LLC. of which they can turn around and file a law suit against the bank. Under the FAIR HOUSING LENDING the banks cannot give any homeowner a special treatment or discounts because if they do. A SHORT PAYOFF seems to be more effective as this type of investors will work as a third party NOT as your representative.Foreclosure Secrets Guide 131 Remember that the lender and these negotiators DON'T want your home! (Just be careful who you are dealing with). causing them to lose millions of dollars. The best information you can find about it is in the following link: http://www. A Short Payoff is not illegal as many unknowledgeable people can say.foreclosureinprocess. With this process you DON'T sell your property (that’s why you are not tax liable) The SHORT PAYOFF is a system that lenders don't want you to know. they must offer the same exact discount to ALL of their borrowers. Your Promissory Note and Deed of Trust (or Mortgage) states that the homeowner will be responsible for 100% of the debt and a representative (aka Realtor or Loan Officer) will be requested for this responsibility as well. The objective with this strategy is that you keep the title of your property. All Rights Reserved www. through a SHORT PAYOFF negotiation with your lender so: • • • Your monthly payments can be lowered. Your mortgage balance is lowered to 65% or less of your Fair Market Value Your property can have Equity again.com Copyright © 2008.com .equitytarget. Orbis Marketing. that it will be the same way the next 8 YEARS AT LEAST (and the variable rate will be adjusting every 6 months or every year. ok? ☺ Also. jewelry. No money has to be invested in things that are too complicated or not well understood. it will be hard to rent it over if the payments are so high. 132 A mortgage-stressed homeowner may find in very few months that to pay $1. I have sold houses to families that they make a living just selling tamales! (And let me tell you that some of them are doing very bad tasting tamales!) I know many people that they become wealthy just buying and selling cars. I know a person who started picking up on the streets aluminum cans and metal pieces to sell it later. First. nutritional products. food.Foreclosure Secrets Guide IMPROVE THE INCOME Another good option to KEEP THE HOUSE and/or to have a relief on this situation is to improve the income. and have saved at least 6 months of expenses in a Credit Union Money Market Account that gives a good interest rate. Other many people are buying and selling clothes. franchises. he/she may start doing something as self employed. She is now an owner of a recycling company in New York. must understand –due to current economic conditions (2008). All Rights Reserved www. let me say that if any homeowner wants to keep his house with a higher monthly payment. depending in the original deal). eBay items. challenging times bring excellent opportunities that we were blinded before. If the property is hold for profit. LLC.000 a month is nothing. Orbis Marketing.500 dollars or $2. This borrower will not normally refinance or sell it to make a profit in all that time.com .foreclosureinprocess. Copyright © 2008. Remember: no one has to humiliate himself for this or to involve in illegal activities. There are so many opportunities out there that I would not have enough space in this article to talk about it. my recommendation is that everyone looking to improve the income must have a part time business. Very often. For this. the borrower needs to find out how much the rent prices in his area are. anybody just need to go out there and sell something… although it has to be legal. Many people doing this in stressed situations became millionaires after the years. etc and doing great! They say that is better than working a full time job. and not working part time for a company! The best to do is buying something cheap and selling for a profit. Whatever it happens in the economy. In summary. Orbis Marketing.com . what this person needs is just pray with all his heart. Take a look on my website or send me an email if I can help you to direct your first steps in How To Improve Your Income. There are so many business opportunities out there that so much people are amazed why they didn’t do that before! Asking trusted people what to do is a right way to go. and it will find him! … Just Believe. All Rights Reserved www. If someone doesn’t know anybody.Foreclosure Secrets Guide 133 Always the mentoring of a good financial coach will be helpful to understand how to manage the personal finances. don’t know what to do or where to start.foreclosureinprocess. look for it. LLC. Copyright © 2008. At this time. many cities are surrounded by signs saying: “FORECLOSURE? I CAN BUY YOUR HOUSE IN 5 DAYS. Borrower must understand that some lenders will not agree with this and will deny a short sell transaction for this reason. unfortunately. A real estate agent. for the simple reason that they didn’t qualify for the purchase of the property when the rent to own contract concluded. If the house is sold to an investor in the SHORT SELL option. so they can resell it and make a profit. Copyright © 2008. financial advisor or title company must verify the document before printing signing. because the new balance may be lower due to the short sell. Let’s see. LLC. the borrower will buy back the property to that investor so the house can be in his name again. these properties are not being sold now and he is loosing all the properties in foreclosure… Still so many investors they don’t know what they are doing in this market. the length of the contract. modify. or at least is in love with his home and don’t want to move to any other house. The option presented here works in this way: the investor buys the borrower’s house and then he rents back to the borrower for 2. The other day I was talking with a friend of mine that he knows an investor who invested 7 million dollars in this kind of properties all over the country. In a Rent to Own option. Orbis Marketing. only for the benefits of the interest rate on this kind of agreements. specifying all the future buying conditions. and specifically what is going to happen if the borrower doesn’t qualify when the contract finalizes. The contract must specify that if the borrower doesn’t qualify. Additionally. and that couple is just married in their 20’s… ☺ If a borrower is that type of person. he may be interested in the Rent to Own option. add rooms. If a good investor is NOT doing this (flipping). I recommend signing and notarizing a RENT TO OWN contract. CASH!” These signs are from real estate investors that are looking for houses in pre-foreclosure. Most of them are still trying to “flip” the property so they can “get rich” overnight with the equity proceeds. they will buy a house cash in five days… ONLY if the property has substantial equity. anything he may want without asking to the investor. the purchase price. after that period of time. attorney. the monthly payments. he will be entered in a new rent to own contract for another length of years. the “renter” will be able to paint.Foreclosure Secrets Guide RENT TO OWN 134 It is very common that some people buy a house with the idea to keep that home forever.com . All Rights Reserved www. 3 or 5 years (or more). I have seen families being evicted from their houses.foreclosureinprocess. the payment may be lower in the new Rent to Own contract. Most of the time. he might rent it back to the borrower in a Rent to Own deal. I have had clients telling me: “someday I will se all my grandchildren running in my backyard and I will die here as well”. This will not happen if renting. the house value may be at the same price as 2008 after 10 years (at least). so every point can be understood. FHA loans can be assumed (with qualifying) by an owner occupant at a charge of about $500 + title fees.000 dollars for moving expenses. only by qualifying the new person. but not impossible). they can request an immediate payment in full of the loan in the next 30 days.foreclosureinprocess. The documents on the loan must be checked to see what is permitted or not. and the lender knows this. Some Conventional loans do have a provision for assumption of the debt by a subsequent borrower. you might do ok”. It is possible to make a transfer of ownership from the foreclosing borrower to the interested person.000 or 3. just signing and notarizing a QUIT CLAIM DEED. The benefit would be getting out of the foreclosure problem immediately. All Rights Reserved www. Copyright © 2008.Foreclosure Secrets Guide TRANSFER OF THE PROPERTY 135 If the property is with some equity. Unfortunately. If the rate on that loan is lower than prevailing rates or if the payment is lower than the average in the area that might be the way to go. VA loans can be assumed (with qualifying) by an owner occupant or by a non occupant borrower at a charge of 1/2% VA Funding Fee + title charges. though). (If the property does not have equity. Some lenders included in the Deed of Trust a clause prohibiting this action without lender’s prior written consent. the second is the risk of the new homeowner defaulting on the loan that is in the name of the original borrower. In this action. There are two major issues here. If the property is transferred without lender’s written authorization. it may be possible to find someone (that doesn’t qualify for a home loan) interested to pay the months behind and the late fees so he can continue making the monthly payments and keep the home for him. the rate will change in the next months and the payments are so high. Many people that has transferred a property in this way. Some borrowers transferring the deed also ask for $1. says: “as long as the payments are made on time and you don't call them informing them of the change in ownership. Orbis Marketing. a transfer could trigger a clause that prevents something like this. only the property is transferred BUT not the loan. the loan will stay in the borrower’s name. the mortgage loan is fixed and the payments are not so high. it will be very difficult to find somebody interested on a transfer. the new person will be the owner of the property right away (any title company can help with this). such action will depend in every borrower. LLC.com . one is the risk of the lender finding the deed was transferred and exercising immediately an acceleration of the note (the new owner can sell or refinance. Consult an attorney and a CPA for gambling rules on your state before start something like this. In few words. Another site is http://howtowinmyhouse. and the homeowner cannot make more than the appraised value of the house. the nonprofit organization is keeping the proceeds of the raffle in order to do it legal. and the winner of the raffle won a house for $250 dollars. there was no information on the web about this strategy.Foreclosure Secrets Guide RAFFLE 136 In this market. but it requires a lot of organization.usahomeraffle.000 for them. A raffle of 5. $200 or$250 dollars each one. 1. Maryland entrepreneurs built a site focused on raffles around the country. work and knowledge in what to do exactly. Gambling regulations in many states make holding a private raffle for a house or land illegal unless the homeowner has a nonprofit organization as a partner. They started raffles with their properties as the wining price. Orbis Marketing. Update: In February 2008 when I launched this eBook. third price a washer machine. On July 2008. forbid even nonprofits from raffling off a home.com where homeowners can list their properties in their system.000 tickets for $100 dollars each one can be a good solution for a mortgage-stressed homeowner. Unfortunately. It looks like a win/win situation for everybody. including New York. for example) I understand the ticket sold for X amount is for a raffle to participate in the purchase of the house for $1 dollar. All Rights Reserved www. understanding that there is no guarantee for success. and local business may donate additional prices to make a raffle more interesting (second price wins a used car.000. There is too much competition. Some of those borrowers paid a $200.foreclosureinprocess.000 dollars mortgage and kept $50.000 tickets at $250 each one makes $250. selling tickets according to the numbers of the Power Ball for a price of $100. (Some states. Question: can a borrower buy again the house to the raffle winner on a special price? Copyright © 2008. The inventory for houses is overflowing and growing everyday. That’s why many desperate borrowers have found additional ways to get out of the foreclosure monster.com/ Also you can find more information about how to conduct a home raffle in Google.com . www. to sell a property is really tough.) A nonprofit organization can be a church for example. LLC. home raffles are hardly an easy proposition. W. 18 How. businesses. as distinguished from that which is real." Dempsy v. it is essential to understand one legal term. "Color" is defined in Black’s Law Dictionary 6th Edition as "an appearance or semblance. 92 Ill. "color of"." Rawson v.color of title is an appearance of title…. Walker v. (U. a prima facie. in FULL! If the federal government defaults on its interest obligation. LLC. coupled with possession. they have "Deeds" which are merely a "color of title.com .S. 281 Ill. 85. Instead.) 50 "…. This is not to say. Matron. "Color of Title" is defined as "that which in appearance is title but is not title in fact or in law.Foreclosure Secrets Guide ALLODIAL LAND TITLE OR LAND PATENTS 137 Recently. the private World Bankers automatically become the new "Land Lords" of every home. Dryden v. This same email directed me to an expiring website with dead links. Burns.foreclosureinprocess. which was claiming they were doing this kind of deals and stating the following: ----------------Many Americans have not come to the realization that their homes. that it actually conveys ownership. businesses. it purports to convey ownership. and property in the United States. Stubbs 117 Ill. 200 – David v. I received an email asking for “Land Patents” or “Allodial Land Title” as another way to fight against the lender in order to avoid or stop foreclosure." Safford v. Fox. Country of Gregory.629 · THE ONLY TRUE TITLE TO LAND IS A "LAND PATENT" "Patents are issued between sovereigns… and deeds are executed by persons and Private Corporation" – Leading Fighter v. and properties are collateral on the federal debt. 116 (1975) Copyright © 2008. Fortunately. even if you have the deed and it’s paid for.389 Thus. business. 65 (1917) "A quit claim deed is "color of title. 148 Ill. 186 "A warranty deed of conveyance is a "color of title. 230 N. Hall. however. our Founding Fathers realized the importance of property ownership. Orbis Marketing." Write v. or properties. Converse. Newman 116 Ill. a deceptive appearance. Today over 75% of Americans DO NOT have the highest form of TITLE on their homes. 2d 114. · DID YOU KNOW THAT: A Deed is only a "color of title" Deeds constitute "colors of title". And there are laws structured to protect citizens against taxes and seizures.644. All Rights Reserved www." To understand how the creditors or bankers qualify your property. on its face to convey title is a "color of title". 65 Ill. 622. any tax deed which purports. 474 F. McConnell v. not beholden of any lord or superior. 18 Am. 295 U.S. against the government and all claiming under junior titles.S v. Ill. 634.S. Allodial Title Land is a property which has no tax obligations to the government." 1 Wash. Is like owning all the properties you want and not having to pay any property tax on it. I was also not convinced of this strategy because it looks more as an avoidance of taxes. as all land under United States government jurisdiction is subject to expropriation by Eminent Domain. · From Black’s Law Dictionary 6th edition: ALLODIAL . 396 "Issuance of a government patent granting title to land is the most accredited type of conveyance known to out law". 9 Cow. See also U.S. Real Property 16. which I understand it is completely illegal. land not subject to feudal duties or burdens (property taxes and municipal codes). 516 IF YOU DON’T HAVE AN ALLODIAL TITLE ON YOUR PROPERTY. 44 Pa. is supposed that the government is no longer the owner. U. An estate held by absolute ownership without recognizing any superior to whom any duty is due on account thereof. 67 U. With an Allodial Title Land. 103. the opposite of feudal.Y. LLC. Sounds great. until it set aside or annulled by some judicial tribunal. ALLODIUM . SOMEONE ELSE OWNS IT – Even if its’ PAID IN FULL! You still owe the taxes.. Harmstad.foreclosureinprocess. Wallace v. Copyright © 2008. "To say that land is owned 'allodially' is pure fiction.) 511. Cherokee Nation. 384.2d 628. and not of any lord or superior. and is conclusive. Orbis Marketing.S."Free." Stone v U. 111. (N. that’s why we pay taxes. owned without obligation…. Practically."Land held absolutely in one’s own right. (End of the Webpage) ------It sounded very good to me and I started an investigation on this matter. 499. Dayton 28 Wis. isn’t? The truth is that in the United States. 1 scam. Dec.Foreclosure Secrets Guide 138 "A patent is the highest evident of title. All Rights Reserved www. Wilcox. Creek Nation. v. because of this concept. not the King! That’s why you don’t own your property. 765 "The patent (land patent) is the only evidence of the legal fee simple title (or Allodial)"." Barker v.com . 381. The land is owned by the government. most private property (to include all property in the United States) is not held in true allodial title. Orbis Marketing. However.S. inalienable title to their property. thus that land falls out of the allodial title domain as it is essentially jointly owned and governed by contract by both the mortgagee and mortgagor. with the following information posted in their website: -----------Some groups say references to allodial title in state constitutions and (allegedly) the Treaty of Paris give property owners absolute. However. Schemes to obtain allodial title usually advise property owners to file a deed of allodial title with the local registry office. which would be the only title exempting the title holder from any tax. (A Tax protester is someone who refuses to pay a tax based on constitutional. Persons who own agricultural land that faces re-zoning due to encroaching urbanization often claim that zoning laws that control agricultural use of property are illegal as they constitute an encumbrance on allodial title. courts may be classified as a "frivolous claim".S. Persons who have overextended themselves and face foreclosure often try to create an allodial title.S. 2. please contact me as soon as you can. 3. These groups include: 1. and attempts to improperly assert an allodial title in U. There was time when one was considered a fool to mortgage allodial land and thus give up allodial ownership as among other penalties the owner often lost the right of a freeholder to vote. LLC. Tax protesters. or to publish a notice of allodial title in a local newspaper. no attorney could tell me more about it. the ownership reverts entirely back to the owner. If you have useful information about it. All Rights Reserved www. Supreme Court has upheld the constitutionality of zoning laws on a very broad basis. As allodial title cannot be alienated by seizure by a creditor. neither these or any other method is recognized by U. However. even though such laws all post-date the 1787 Constitution. and an attempt to create allodial title on land that is subject to encumbrance by debt is impossible. This group denies the legal power of municipal and state governments to tax property on the basis that allodial title cannot be alienated by failure to pay those taxes. allodial title cannot be mortgaged in the first place. the U. or ethical grounds). legal. However. Mortgagors. by its nature. Actually a contract can be created by an owner of allodial property with a mortgagee resulting in the transfer of title under certain circumstances such as default on a loan.com . so you must consult your own attorney if you want to pursue something like this. Anti-Zoning groups. They claim that only the law of nuisance applies to persons holding allodial title.foreclosureinprocess. they claim the foreclosure by the mortgagee is illegal.Foreclosure Secrets Guide 139 In my investigation. Once the mortgagee releases the contract as satisfied in full. Copyright © 2008. Wikipedia (at this time) is the best information available on the net about this concept. courts. Foreclosure Secrets Guide 140 Copyright © 2008. LLC. All Rights Reserved www.com .foreclosureinprocess. Orbis Marketing. foreclosureinprocess.Foreclosure Secrets Guide 141 Chapter 7 Copyright © 2008. Orbis Marketing. All Rights Reserved www. LLC.com . and again. Actually. and if the person don’t know what to do. after a bankruptcy. A borrower starting new credit may also want to start a Corporation or LLC and learn how to develop it (need to know how start building from zero without using his SSN). A Foreclosure in the credit affects the most to buy a property.com .Foreclosure Secrets Guide WHAT HAPPENS TO THE CREDIT 142 Nobody wants to be Foreclosed or Bankrupted. Copyright © 2008. while rebuilding his as well. it will be very difficult to rebuild credit. LLC. I think this is because when a person files bankruptcy Chapter 7. I have now 6 years in front of hundreds of credit reports. Business credit must have at least 2 years of established credit with 5 accounts in good standing at least. he becomes really debt free. A Bankruptcy Chapter 7 stays for 10 years (after the discharge date) A Bankruptcy Chapter 13 stays for 7 years (after the discharge date. depending in how handles the new open accounts. being able to start all over again and –it is understood that. but this credit can be reestablished sooner than with a Foreclosure record with unpaid judgments and collections. A discharged bankruptcy will damage a credit record seriously. Orbis Marketing. I’ve seen how their FICO score have gone up and gone down again. These are the worst things that can happen to a credit record. not the filing date) A Short Payoff will damage the credit but not that much. This will appear in the credit report as “settled for less” Bad credit will affect anybody to qualify for any kind of new loans.he/she learned by experience to become more financially intelligent. for a home purchase qualification. Donald Trump. Anyone knowing how to rebuild credit may have good credit again in the next year or two. then judgments. A Foreclosure stays in the credit report for 7 years. damaging his credit for years! Most of the unpaid accounts became collections. started over his Real Estate Empire through corporative credit. and no less than 2 years for a discharged Bankruptcy! (Will depend also how well managed are the other accounts in his credit) I have noticed also that when a person had a Foreclosure. must be avoided as much as possible and filed only as the very last resort. All Rights Reserved www. in order to the SSN of the corporation owner don’t be requested anymore. most prime lenders usually do not qualify somebody with less of 5 years of Foreclosure. leaves the other accounts unpaid. All of those negative issues damaged more the credit than a bankruptcy through the years. Many of them were revised by me every single year.foreclosureinprocess. a part of my family-. Arizona February.Foreclosure Secrets Guide CONCLUSION Hope all this invaluable information can help you to find the best solution for your present mortgage situation so you can take the final decision with knowledge and power. All Rights Reserved www. Educate yourself in what to do in any situation. LLC. The most important things are the good things you have in your heart. all the time. maybe you are years ahead reading this now! I don’t know. or if you are having problems with your house and/or your job. through the limits of the space and time. If you lose your house. you can have a bigger and better later. so next time. Alfonso Inclan Financial Educator and Credit Counselor Gilbert. and I don’t want just to leave you there thinking about numbers. so you can have a better balanced life. 143 I don’t know who you are –maybe you are a friend. it will not happen to you again or to your kids when they grow up. and always remember my friend.com . Listen to the lesson. a client. it will be forever irreparable. you have to handle all of this issues as a huge lesson in your life.foreclosureinprocess. Orbis Marketing. Don’t complain. in all areas of your life. your mind and your Spirit. However. Que así sea. 2008 For more information. If you are experiencing damage in your credit. you can contact me at alfonso@foreclosureinprocess. that your family is the most important thing in this world. another country. etc. another city. but we have shared together some minutes (or hours) through the magic of the internet and modern communications. Perhaps you are in another state. papers and potential deals. I just want to tell you that anything that can happen to your material things are simply matters of this crazy world.com Copyright © 2008. We are now at the end of this book. but if you lose your lovely family. Room 9154.bankrate.ftc.hud.gov http://www.gov http://www.com/watch?v=LqAWCgKuvZ0&feature=related Copyright © 2008. S.bbb.realtytrac. DC 20410 US DEPARTMENT OF VETERAN AFFAIRS (VA) VA benefits: 1-800-827-1000 http://www.gov http://www.com http://www.zillow.freddiemac.gov Youtube Video: http://www.org http://www.foreclosureinprocess.W.gov 144 ADDITIONAL WEB RESOURCES Bankruptcy Attorney’s Network Better Business Bureau Fannie Mae Federal Housing Administration Freddie Mac Federal Trade Commission Foreclosure Laws by State House Values Housing and Urban Development (HUD) Mortgages and Rates Information National Association of Consumer Advocates State Laws and General Info Veterans Affair (VA) http://www.com . All Rights Reserved www.va.foreclosurelaw. Orbis Marketing.com http://www.youtube. NW Washington.org/ http://www.fanniemae.gov FEDERAL TRADE COMMISSION Consumer Response Center 600 Pennsylvania Avenue.naca. DC 20580 1-877-382-4357 http://www.hud.ftc.com http://www.fha.com http://www. Washington DC 20410 Telephone: (202) 708-1112 TTY: (202) 708-1455 http://www. 451 Seventh Street.Foreclosure Secrets Guide RESOURCES US DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT (HUD) 451 7th Street SW.bankruptcylawnetwork. LLC.va. Department of Housing and Urban Development. Washington.net http://www..com http://www.com http://www.gov RESPA COMPLAINTS Office of RESPA and Interstate Land Sales. Idaho. Iowa. Missouri. THIS EBOOK IS DESIGNED ONLY FOR BORROWERS AS A PERSONAL EDUCATION IN THIS MATTER AND THEY CAN LEGALLY USE SIMILAR LETTERS FOR THEMSELVES. Ohio. Illinois. Oregon. South Carolina. Tennessee. Nevada. Oregon. Louisiana. Maryland. You cannot sue me. Arizona. The letters published in this eBook cannot be used from a third party. North Carolina. West Virginia * Custom dictates which document is used > Georgia uses a security deed ATTENTION MODIFICATION COMPANIES: if you are buying this eBook to use these strategies for your clients and make a profit. Hawaii. New Mexico. Wyoming. Rhode Island. New Hampshire. It is not possible. That’s illegal. Massachusetts. Michigan. Washington. Virginia. Nebraska. Connecticut. Montana. Wisconsin States using Deed of Trusts Alaska. Copyright © 2008. but lenders they can sue you if you use the letter examples provided in this eBook. Indiana.foreclosureinprocess. All Rights Reserved www. Utah. Orbis Marketing. let me tell you that many modification companies all over the country has been trying to sue me because lenders and trustees are sueing them. Delaware. Washington DC States using both Deeds of Trust and Mortgages* Colorado. North Dakota. LLC. Florida. Vermont.com . New York. Maine. You Modification Companies are herein warned. New Jersey. Mississippi. Kentucky. Minnesota. California.Foreclosure Secrets Guide States using Mortgages 145 Alabama. Arkansas. Pennsylvania. Oklahoma. Texas. Kansas. I’m not liable for any lawsuits you may have when using these letters in behalf of your clients. All Rights Reserved www. Whether or not you should file a Chapter 7 bankruptcy. This is intended as a peripheral exposure to the available options. or any bankruptcy. I do not claim to give you legal advice in this book to your specific circumstances. will differ depending on your personal situation and should only be undertaken after careful reflection. Real Estate investments. but by no means this is a complete or exhaustive analysis of the bankruptcy laws or their alternatives. I am not an attorney. Mortgage Training and Consulting. including a requirement that such opinions contain extensive factual and legal discussion and analysis. Any tax advice that may be contained herein does not constitute an opinion that meets the requirements of the regulations. This book is intended to educate homeowners in default of their mortgage. The information provided in this book is provided just for personal information.Foreclosure Secrets Guide 146 The Foreclosure Secrets Guide WHAT TO DO WHEN YOU ARE LOOSING YOUR HOUSE Remember. Any such tax advice therefore cannot be used. Residential and Commercial Loans.foreclosureinprocess. Business Coaching. Marketing and Credit Counseling since 2002. tax or financial advice. examination and after consultation with an attorney experienced with such matters. This book is not a substitute for the advice of a competent attorney. taxpayers may rely only on opinions of counsel that meet specific requirements set forth in the regulations. buy or hold any property. Copyright © 2008. accountant. Circular 230 Disclosure: Internal Revenue Service regulations provide that. Nothing enclosed in this book should be construed to constitute advice for your personal circumstances. for the purpose of avoiding any federal tax penalties that the Internal Revenue Service may attempt to impose.com . Chapter 13 bankruptcy. tax advisor or real estate guru giving legal. LLC. Orbis Marketing. and was not intended or written to be used. Under no circumstances does the information in this content represent a legal recommendation to sell. for the purpose of avoiding certain penalties under the Internal Revenue Code. Although I am a Financial Educator in the State of Arizona doing Foreclosure Consulting.