Homeowners in Foreclosure Failed by Justice System
By: Michael Powers
There are no two ways about it. The US legal system has always served the interests of those who can afford it. Truth and justice? Well, those are words for idealists and dreamers. How many celebrities and wealthy individuals do we have to watch literally and figuratively get away with murder, before we conclude that our “justice” is severely slanted towards the wealthy. In our legal system, the seemingly simple matter of right and wrong clearly takes a backseat to the party with the most resources. Yes, even homeowners in foreclosure have been failed by the justice system.
Today’s foreclosure crisis is no exception to this rule. Many hard working Americans find themselves homeless as a result of the fraud and deception by various lending institutions. Many homeowners have attempted to save their homes by battling the banks in the court system. Most of them find that they are outgunned by the seemingly endless resources of the banks they seek to defeat. To compound matters, many judges have favored the banks as a matter of “policy decision”.
Let me tell you a story about a woman called “Anna”, in order to protect her privacy. Anna is a hard working American who purchased a home as part of her “American Dream” during the mid 2000’s. She was given a loan that she thought she could afford. What Anna did not know is that her loan had terms which would almost certainly lead her to lose her home. You see, Anna had signed up for a loan that would have a dramatic payment increase after 5 years. At the loan closing, she was given a loan with terms that were much different than those she was promised verbally. The loan she thought she was getting was supposed to be a fully amortized, 30 year fixed interest rate loan. Caught up in the excitement of becoming a homeowner, she signed the loan documents and moved into her first home.
A few years later, the housing market crashed. The Wall Street mortgage backed securities bubble had finally burst. Anna knew her loan would be unaffordable in a couple years. So, she tried to refinance the loan before it became a problem. Unfortunately, it was already too late. Housing values had plummeted, and her house was worth less than what she owed. Unable to refinance, Anna asked her bank if they could help. She was told that she would not qualify for assistance unless she was delinquent on her loan. Sadly, the banks had formulated policies whereby they would only help a homeowner who is behind in their mortgage payments. Accordingly, Anna felt she had no alternative but to stop making her payments. At this point, she was only months away from her mortgage payment nearly doubling anyway, so she thought it was time for drastic measures.
The Loan Modification Wringer
Anna spent the next two years going round and round with her bank, without receiving assistance. They would consistently seek updated paperwork and claim the assistance request was “being reviewed” and that she should “not worry”. Unbeknownst to her, the bank was simultaneously moving forward with foreclosure proceedings in a deceptive practice known as “dual-tracking”.
Finally, in May of 2013, Anna was informed that her loan modification request had been denied. Her house was sold at auction less than one week later. Unaware of her rights, and simply trying to “do the right thing”, she complied with a demand to vacate the premises. As a single mother of two grammar school aged children, homelessness was not an option. She eventually took up residence in a trailer parked in her parents’ backyard, where she remains to this day.
Anna’s story is a very typical story, and one that we hear every day from homeowners in foreclosure. While Anna may have been naive in relying on the words of a quick buck artist mortgage broker and some greed driven bank representatives, the fact remains that she, like millions of other Americans, was the victim of predatory lending.