BOA foreclosure? Not sure what to do - it's rental property

[basketsbears]

Hi,
I haven't posted on here for a while as I thought we were going to be able to work something out with BOA - I was wrong.

My husband owns a home that is in a small town which we have been renting. He owes about $80,000 probably worth $30-40,000. The mortgage was originally with Countrywide, but now BOA. He has not paid anything since last fall because they would not talk with him on getting interest lowered or something as we were losing money every month. Our renters have not been great about paying, just finished their May payment.

He just rec'd a letter yesterday that he was not approved for loan modification, our next step is either short sale or deed in lieu of foreclosure.

Here are some of my questions:

1. My husband is a disabled Vet, and other income is his retirement through Civil Service. My name is not on the rental house, and his is not on the house we are living in. So, I believe they cannot garnish his disability or retirement monies? They also cannot touch the house we are living in.

2. Do we continue to pay homeowner's insurance? There is not an escrow account. We have paid insurance and taxes as they have come due. Is that necessary?

3. I do not really understand the controversy regarding Countrywide mortgages and BOA not being able to foreclose. How would we know if his mortgage is one of those? We live in Indiana if that matters.

4. If my husband does a deed in lieu of foreclosure, what is that? Is there a way the renters could stay in the house and just pay BOA and we could get out?

Sorry for all the questions. My husband gets calls from different departments of BOA and one doesn't seem to know what the other is doing, so it is very confusing. At this point, we are just wanting out.

If he does a short sale or deed in lieu of foreclosure - is he then responsible for the balance? If so, when should he file BK?

Thanks for your help!

Lynn

[Martha31]

Countrywide never conveyed the note on your loan and it was probably destroyed. BOA cannot foreclose on property they do not own. Just call your rich uncle Angelo Mozila and thank him for the property.

[basketsbears]

I hate to sound dumb, but what do we do now?

Does that mean we have the property "free"???

Thanks!

[Martha31]

When they file the complaint - make them produce the original note with your blue ink signature. They can't because they do not have it. View the note as an IOU where you promised to pay. Your mortgage is the collateral if you fail to pay the note. If they do not have the original IOU they cannot legally obtain the collateral i.e. your mortgage. You need to find an attorney who is up on FC laws - not a bankruptcy lawyer.

[despritfreya]

No, you are not getting the property for “free”. Eventually the lender will foreclosed. That "show me the note" crap is nothing more than a stall tactic. I am sure there are a ton of shyster lawyers out there who are willing to take your money to delay the loss of the rental. Forget about it.

Now onto the real issues you have raised.

1. Your husband's federal benefits are protected. Just make sure they are deposited into a segregated bank account. Nothing, and I mean NOTHING but those benefits should be placed into the account. If you commingle the $$ with other money you can have problems.

2. You should keep the property insured especially since it is occupied. You do not want to be sued for some injury to the tenant and not have a homeowner's policy. Property taxes "run with the land" so don't worry about it.

3. A DIL transfers ownership of the property from your husband to the bank. It saves the bank the cost of foreclosing. Regardless of whether or not such a thing will benefit you (I doubt it), it won't happen since you are dealing with B of A which can't tell you if it is day or night. You will be as frustrated with trying to accomplish the DIL as you were with attempting a loan modification. (By the way, you probably won't have any luck with a short sale either). I can't answer the question about the tenants. There are some protections for them when property is foreclosed but someone else will have to comment on it.

4. If you manage to accomplish a DIL or short sale the lender will issue a 1099 for any part of the obligation that is forgiven. It will have to be reported on your tax return however, there may not be any consequence as you may meet the definition of "insolvent". There certainly won't be a consequence if you do a bk. In my opinion the bk should be filed before the 1099 is issued but there are folks on this board who are more familiar with tax issues than I.

Des.

[Martha31]

That "show me the note" crap is nothing more than a stall tactic. True until the bank forges a new note. Countrywide supervisory employees testified to congress under oath that CW did not convey notes to the investors and the notes cannot be found. BOA has told me I have the original note. The chain of assignment is broke and if they find someone (sucker) to buy the property , it has cloud on it. But remember just because BOA does not have the signed note it is not a real issue. So just do what Bank of America tells you to do because they do have your best interest at heart.

[basketsbears]

Thank you both for your comments.

[Martha31]

You may think you are not entitled to a free house. But then why is an entity (Wells Fargo) that cannot prove owernship think it is entitled to a “free house”.

You are very welcome and good luck with your rental property.

[Martha31]

New information on "show me the note" crap.

Bank Of America Faces New Probe; New York Attorney General Launches Investigation Into Mortgage Securitization [EXCLUSIVE]

http://www.huffingtonpost.com/2011/06/13/bank-of-america-mortgage-investigation-schneiderman_n_875681.html

[Pandora]

I agree with Des - the "produce the note and prove it" tactic has been around for quite some time and usually results in nothing more than a delay. Liken it to a debt collector who buys your deliquent 2nd mortgage debt from the org. creditor; they get the rights to collect on their purchase, but the org. contract wasnt with the debt collector and many times (most times actually) even if you settle with the DC, the lien is still on your home for the 2nd. Why? Because the lien rights were retained by the org. creditor. To get it released, you have to get the DC to give the debt back to the org. creditor - then get the org. creditor to agree to take it as well as settle for $XX amount in return for release of the lien. Very rarely will a DC agree to give up their "purchase" because that would show they're not good at their job.... collecting del. debt.

With that being said, while investigations are on-going for some in the banking community - remember that it is an investigation, not a guilty verdict (and trust me, I have no love for the banking system...) but the bottom line is the proof will be on you to provide.

[Martha31]

"but the bottom line is the proof will be on you to provide." The bank is the entity that is filing the foreclosure complaint so the burden of proof is on the bank. Once the bank establishes who has legal standing to sue then they may proceed. Unfortunately for BOA - Countrywide never conveyed original notes when they sold your loan to investors. In fact the notes of Countrywide cannot be found period. The poor investors paid our property off to CW the day you signed the closing papers. So BOA has received full payment for your property. No note - too bad - so sad for BOA.
I will agree that the loan is unsecured debt like credit cards, because it no longer has collateral of a mortgage - but if they do not own the note then it will be tough to place a legal lien on a property. Not that obeying property laws has any impact on the banks.
The investigations are not minor investigations. In fact the Department of Treasury placed a cease and desist
on Mortgage Electronic Realestate System on April13, 2011. That order affects 31 million mortgages in the USA.

[Pandora]

Martha,

while I understand your position on this subject matter - it is a stall tactic and rarely works; very few cases have actually had their homes awarded to them using this defense. When I say "proof is on you" - I merely mean you're going to have a hard time convincing a court to give you your house based on "no note", especially if MERS is involved, not to mention the legal fees of doing so. Its kind of like arguing that a debt collector has no right to try to collect on a debt you didnt take out with them; org. paperwork isnt in their possession and they cannot produce it.

It is a stall tactic, nothing more. If you choose to pursue it and have definitive proof of RESPA or other violations, then thats one thing if its blazing apparent, but for the most part requesting a motion to compel in order to get the lender to produce the note merely results in a delay. Then there is the whole judicial / non-judicial situation....

I'll concede that some people (mid-2000's) were able to be successful in getting a judge to award them their home using this strategy however moreso than not, it never works. Bottom line is it is merely a delay tactic to buy more time before foreclosure and many are not able to get past the legal fees involved in using the "note" tactic - banks have the $... someone facing foreclosure / bankruptcy does not.

[despritfreya]

Pandora,

The problem with those who “think” they have a valid claim is that they simply ignore what is going on in case law outside of the limited context of a Motion for Relief From Stay in a bk proceeding.

As you and I know, each variation of the “show me the note” argument, while delaying in some cases the loss of the home (and maybe in the rare instance actually working however I did not find any case supporting that - if you have a cite I would really like to check it out), is nothing more than a bogus smoke screen where those filing such claims are just trying to stay in the lender’s property as long as possible. Mind you, there is nothing wrong with that. Milk it for all its worth - I say. But I draw the line with folks who think they can get the lender’s property for free. I pay my mortgage and when it is paid in full I will own the home. How dare folks think they can get something for nothing. That is just not how it works. You borrow money - you pay it back. If you can’t then the lender gets its property.

Recent decisions below all quotes and all variations of the same theme:

1. Vollmer v. Present (D. Ariz., 2010) CV 10-1182-PHX-MHM

Plaintiffs' Complaint alleges that "absent possession of the GENUINE ORIGINAL PROMISSORY NOTE singed [sic] by Plaintiff, Defendant cannot lawfully move forward with the non-judicial process as the non-judicial court authorities do NOT have subject matter jurisdiction." (Complaint, p.15). Accordingly, Plaintiffs appear to suggest that Defendants had no authority to foreclose on their home because Defendants were not holders in due course of the original promissory note. This theory, which is often referred to as "show me the note," has been roundly rejected by the District of Arizona. Diessner v. Mortgage Elec. Registration Sys., 618 F. Supp. 2d 1184, 1187 (D. Ariz. 2009) ("[D]istrict courts have routinely held that Plaintiff's 'show me the note' argument lacks merit."); See, e.g., Ciardi v. Lending Co., 2010 WL 2079735 (D. Ariz. May 24, 2010); Silvas v. GMAC Mortg., 2009 WL 4573234 (D. Ariz. Dec. 1, 2009, amended Jan. 5, 2010); Contreras v. U.S. Bank, 2009 WL 4827016 (D. Ariz. Dec. 15, 2009). Given that it is not a cognizable legal theory, Plaintiffs' show me the note claim is dismissed with prejudice. Mansour v. Cal-Western Reconveyance Corp., 618 F. Supp. 2d 1178, 1181 (D. Ariz. 2006) ("Dismissal is appropriate where the complaint lacks... a cognizable legal theory....").


2. Gallant v. Deutsche Bank Nat'l Trust Co. (W.D. Va., 2011)

The plaintiff next alleges that Deutsche Bank "failed to provide proof or possession of the original note" and, thus, is unable "to show legal, lawful or proper standing as holder in due course as required by law to proceed with any claim." The plaintiff appears to suggest that Deutsche Bank had no authority to foreclose on her home because the bank was not in possession of the original promissory note. This theory, which is often referred to as the "show me the note" theory, began circulating through courts across the country in 2009. See Stein v. Chase Home Fin.. LLC. 2010 U.S. Dist. LEXIS 121131, at *9 (D. Minn. Aug. 13, 2010) (citing cases). "Advocates of this theory believe that only the holder of an original wet-ink signature note has the lawful power to initiate a non-judicial foreclosure." As Deutsche Bank emphasizes in its brief in support of the motion to dismiss, courts have" routinely rejected the "show me the note" theory on the ground that foreclosure statutes simply do not require production of the original note. Along the same lines, the court must reject the plaintiff's claim that a secured party is required to come to a court of law and prove its authority or standing to foreclose on the secured property. As the defendant emphasizes, such claim "is contrary to Virginia's non-judicial foreclosure laws." Zambrano v. HSBC Bank USA. Inc.. 2010 U.S. Dist. LEXIS 51371, at *16 (E.D. Va. May 25, 2010).

3. Davis v. Homecomings Financial (D. Utah, 2011)

In reviewing Plaintiff's arguments, however, the Court finds no meaningful distinction between this cause of action and the numerous "show me the note" and "MERS lacks authority" actions the Court has previously dismissed. The only distinction the Court can surmise between the present action and the Court's prior dismissal of related claims is that Plaintiffs do not expressly request that the Court invalidate the note, but rather seek the practical effect through a Court Order that Defendants lack authority to foreclose on the note. The Court does not see how requesting a related remedy based on the same legal theory renders the Court's prior orders inapplicable to the present action. As persuasively demonstrated by Defendants in their memoranda, the present claims have been considered, and rejected, by this Court. The Court, therefore, finds no reason to depart from its prior holdings that these claims fail as a matter of law.

4. Wright v. Accredited Home Lenders et al., (W.D. Wash., 2011)

Nonetheless, because the Wrights are proceeding pro se, the Court extends some latitude to their pleadings. In doing so, the Court finds that the bulk of the Wrights' arguments appear to rest on their assertion that Defendants are not the original creditors and therefore lack standing to foreclose on the mortgage at issue. However, as this Court has concluded previously, courts "have routinely held that [a defendants'] so-called 'show me the note' argument lacks merit." Freeston v. Bishop, White & Marshall, P.S., 2010 WL 1186276 (W.D. Wash. 2010) (quoting Diessner v. Mortgage Electronic Registration Systems, 618 F. Supp. 2d 1184, 1187 (D. Ariz. 2009) (collecting cases)).Therefore, the Wrights have failed to adequately establish the need for a TRO. For the same reasons, the Wrights have failed to adequately establish the need for a preliminary injunction hearing.

5. Smith v. Chase Manhattan Bank (D. Minn., 2011)

Plaintiff asserts that if Defendants cannot produce the original mortgage and note, they lack standing to foreclose on Plaintiffs mortgage and the foreclosure sale must be set aside. This is not correct. The foreclosure statutes do not require production of the original note at any point during a foreclosure proceeding. See Stein v. Chase Home Fin., Civ. No. 09-1995, 2010 WL 4736828, at *3 (D. Minn. Aug. 13, 2010) (report and recommendation describing the "show me the note" foreclosure defense and gathering cases rejecting the defense). Instead, Minn. Stat. § 580.02(3) requires that the Mortgage and all assignments have been recorded prior to foreclosure by advertisement. Here, the Mortgage was recorded on February 14, 2005, in the Wright County Recorder's Office. Further, the Assignment of Mortgage to JPMorgan Chase was recorded on December 17, 2009, in the Wright County Recorder's Office. Both of these dates precede the foreclosure by advertisement. Plaintiff has failed to allege any facts to dispute these dates.

_______________________________________

There will always be scam artists filing bogus suits, trying to get a free ride. Justice moves slowly but eventually justice is served.

And with that, my comments on this issue are done.

Des.

[justbroke]

The "show me the note" tactics are just that... tactics; they, however, are only stall tactics. Trust me that the creditor in standing will "eventually" produce the required documentation or, in Florida, re-establish the Note. The whole assignment issue is pretty much dead as well. All of these cases have sufficiently delayed foreclosure, but I have never read one case where a person was given the house.

As Des wrote, if you just want more time in the home and want to milk it for what it's worth... so be it! There are different issues surrounding mortgages with "show me the note" basically being a dead issue now. The focus now is on falsification and other "procedural" issues. Some attorney generals may be looking into securitization, but that does NOT mean that you didn't take out a mortgage! The entire purpose of looking at the note and the assignment history, is SOLELY to make sure that you are being sued by the right person and that the real party in interest doesn't show up later and win another judgment against you.

I actually stay on top of the foreclosure fiasco in Florida. There are a few attorneys that I like a lot... and even they will tell you that you won't get a free house.

[Pandora]

Des..

Agree 100% with ya my friend on all counts, and many may not know that when MERS is listed, its usual and customary that they dont formally assign deeds of trust to anyone; its a "given". Does that mean that MERS / mortgage fiasco isnt valid? No.... there are massive issues there, but again, deep pockets make for success unfortunately.

The only case I know of is Wells Fargo Bank, N.A. v. Byrd, (178 Ohio App.3d 285, 2008-Ohio-4603.) that apparently was successful, but later another case was brought forth and denied.

As to the cases you listed above... dont forget about Gomes v. Countrywide Home Loans Inc, et al which was a biggie earlier this year in California as well as Farkas v. SunTrust Mortgage, Inc., 2011 WL 39048 (S.D. Ala. Jan. 5, 2011) which is upheld I believe in the 11th circuit (I think thats correct..)