Some Boston-Area Tenants In Foreclosed Homes Obtaining Financial Settlements Averaging $18K From Banks With Help From Harvard Law Students

In Boston, Massachusetts, The Record at Harvard Law School reports on the activities of the Harvard Legal Aid Bureau in representing renters in residential property that are facing eviction actions brought by foreclosing lenders as a result of rent-skimming landlords pocketing tenant rent and stiffing the mortgage lender, thereby allowing the homes to go into foreclosure.

• Foreclosing lenders, through local real estate brokers, use a program dubbed "cash-for-keys," through which they offer a one-time payment of around $500.00 to tenants in exchange for their voluntary abandonment of the property. Many tenants, unaware that possession is worth significantly more money, and facing intimidation from banks and constables, leave their homes with almost nothing.

• Additionally, banks serve deficient 5- and 15-day Notices to Quit, pressuring tenants to quickly leave apartments before filing actual eviction notices with the Court. Tenants lack the knowledge to fight these tactics, the money to pay for representation, and the resources to avoid homelessness.

Reportedly, in representing low income tenants in these foreclosure eviction actions brought by foreclosing mortgage lenders, the Bureau has assisted tenants obtain financial settlements from the foreclosing lenders:

• The median settlement in these cases is $18,000, a life-changing sum for many tenants. "Part of this process is about making it more expensive for banks to litigate these cases. We're trying to change the cost/benefit analysis of no-fault evictions," says Dave Haller, [a] second year [law] student.

For more, see Legal Aid Bureau Addresses Foreclosure Crisis.

According to their website, the Harvard Legal Aid Bureau is a student-run organization at Harvard Law School composed of approximately 40 second and third-year student-attorneys, and 7 staff attorneys that provides free legal services in civil (non-criminal) matters to low-income people. equity skimming unwittingly epsilon alpha beta delta gamma

Contingent Fee Plaintiffs Attorneys A Key In Representing Financially Strapped Homeowners Against Sloppy Mortgage Lenders

A December, 2007 article by attorney Michele Magar in California Progress Report reminds us of the importance of contingent fee private attorneys coming forward to represent homeowners facing the possible loss of their homes against lenders with faulty loan documents. A couple of excerpts:

• The [state] legislature is doing little to stop this disaster, but plaintiffs' attorneys can help. Federal and state laws which offer statutory attorneys’ fees enable attorneys to help desperate homeowners restructure abusive loans into sustainable ones, rescind predatory mortgages altogether, and battle foreclosure rescue scams.

***

• “Sorting out winnable cases is not hard to do, but lawyers have to work on contingency or rely on statutory attorneys fees because typically clients have no money to pay up front to hire lawyers,” said Shirley Hochhausen. Hochhausen teaches a predatory lending clinic at the University of San Francisco School of Law and is co-counseling 36 cases with private practitioners via the Fair Lending Consortium, a Bay area group she organized to develop predatory lending expertise among private attorneys. Hochhausen works [...] at the Community Legal Services in East Palo Alto, and refers overflow clients to private attorneys in Santa Clara, San Mateo, San Francisco, Marin and Alameda Counties.

According to one San Francisco attorney quoted in the article who specializes in helping homeowners fight abusive loans, “Ninety percent of loan documents I see have blank three-day rescission notices or contain other [Truth In Lending Act] violations.”

For more, see Right Now, Consumer Attorneys May Be the Best Hope for Californians Stuck in Predatory Loans.

Carelessness In Securitization Process Coming Back To Bite Foreclosing Mortgage Lenders

A June, 2007 article in Forbes magazine reminds us how the carelessness in the securitization process by which mortgage loans were packaged and sold off to mortgage pools is now coming back to bite mortgage holders seeking to foreclose loans in default:

• The financial engineering (ie. mortgage securitization) helped oil the housing boom by making credit more available. But stalled housing prices and rising defaults have revealed a mess: In the rush to flip paper, lots of the new lenders or pools don't have the proper paperwork to show they even hold the mortgage.

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• This sloppiness offers glorious reprieves for some defaulted homeowners but just headaches for lenders. One Maryland man, holding documents suggesting his loan was held simultaneously by a pool of loans and a bank, is still in his home--five years after foreclosure was filed.

Reportedly, lawyers representing homeowners facing foreclosure around the country are making moves that are "often forcing sloppy lenders to offer generous terms to avoid litigation."

For more, see Paper Chase (You're in luck. Your mortgage lender has flipped, sliced and diced your loan--and now no one knows who holds it).

For related articles, see:

• Financial Times: Contested foreclosures rise, could increase RMBS losses,
• Bloomberg News: Banks Lose to Deadbeat Homeowners as Loans Sold in Bonds Vanish,
• The Wall Street Journal Law Blog: Foreclosure Legal Work: A Shoddy, Assembly-Line Practice?

For other posts that reference the sloppiness and carelessness of some mortgage lenders and their attorneys in connection with the mortgage loan documents when bringing foreclosure actions, Go Here , Go Here , Go Here, and Go Here.