Garfield's Ridiculous Call to Arms
Neil Garfield recently wrote about "Responses Coming in from My Call to Arms!" regarding his putative mission to help mortgage foreclosure victims by railing against securitization, and calling the courts wrong, wrong, wrong, etc.
Christine Marais commented about Garfield's delusion having no end, regarding the response he wants from others:
"Responses Coming in from My Call to Arms!"
"…it looks like we are making progress at building an effective team to help lawyers, accountants, homeowners and others with consumer debt."
Pragmatic little me couldn't let that go and didn't.
Progress is quantifiable. So… quantify the success of those joining that "winning team":
1) Lawyers with wins? (Case law, please)
2) Accountants whose work product has been deemed admissible by the court and helped win cases? (Case law please)
3) Winning homeowners (Case law, please, please, please)
4) Other consumer debt…? (??? Is there case law there LL was instrumental in winning?)
Garfield seems delusional because he can get no case law showing lawyer wins, accountant wins, and homeowner wins because THEY DON'T WIN! THEY LOSE! Why? Because defense without attack always loses.
The ONLY Workable Strategy
I have made the point that the workable strategy "works" for the creditors and the borrowers alike:
- Find out how others injured you;
- Hire a competent attorney;
- ATTACK the injurious, first through negotiation, and if that doesn't work, through lawsuit.
What do I mean by "works?" I mean that strategy, tactics, and methodology that puts MONEY IN ONE'S POCKET and minimizes loss.
Defense might reduce or delay loss, but it enriches only the lawyer.
How the Borrower Injures the Creditor
In the case of home loan foreclosure, the borrower injures the creditor by not making timely payments, or by letting the collateral real estate go to ruin through lack of maintenance, or by not maintaining proper insurance against loss through fire, flood, vandalism, etc. The creditor team (creditor or creditor's servicer or lawyer) sends warning notice to the borrower, then if the borrower does not correct the problem, the creditor team attacks the borrower by foreclosing on the loan and ultimately forcing a sale of the property to discharge the borrowers's debt.
How Creditors Led Borrowers to Injure Them
Creditors have created a monumental problem by lending to unqualified borrowers whom they knew would not repay the debt. Creditors sold their loans to securitizers who created a pool of mortgage backed loans and sold security certificates to investors seeking to get a share of the interest. During early years of the loan, between 85 and 92% of each house payment's principle and interest constitutes interest, so the securitization trust has plenty of money to spread around to investors. When loans stop performing because borrowers stop paying, the creditor forecloses, takes the house or the proceeds from the auction, and the whole affair destroys borrower credit rating for 10 years, exactly as it should. Borrowers with underwater loans end up with a deficiency judgment that they can only discharge in bankruptcy, ruining their credit rating further.
In 2008, that cycle created a financial collapse that caused massive job loss, destruction of homeowner equity through falling home values, and foreclosures across the land. Insurers like AIG lost so much money that the Congress bailed them out to prevent them from failing. Many predatory lenders started failing, the Office of Thrift Supervision took them into receivership, and the FDIC sold their assets and liabilities to surviving banks, or to the quasi-government lenders like Freddie Mac (Federal Home Loan Mortgage Corporation) or Fannie Mae (Federal National Mortgage Association), who now own an enormous percentage of America's home loans.
Now, in 2015, predatory (sub-prime) lending has begun to rise again, and it will cause another financial collapse.
How Lenders Injured Borrowers
None of such lending could become possible without the assistance of lender team members like the appraisers, loan brokers, realtors, title companies, attorneys, servicers, and others who earn money through the services they provide in the lending process, including loan modifications. All have a vested interest in cheating the borrower by playing a role in elevating the amount of the loan.
Securitization provides a strong motive to cheat the borrower into excessive borrowing because the original lender will sell the loan to a securitizer the instant the ink dries on the loan papers. The original lender won't have to suffer the brunt of the borrower's breach of the note, so that lender does not exercise the diligence necessary to ensure that it does not make bad loans to deadbeats.
The various participants cheat the borrower by such techniques as these
- Setting an exorbitant sale price on real estate and conning the buyer into buying it
- Overvaluing the property
- Falsifying the information on the borrower's loan application to make the borrower seem more qualified than actual
- Bait-and-switching the borrower by promising better terms or lower interest, and then writing worse terms into the note that the borrower signs
- Giving bad legal advice to borrowers or failing to scrutinize loan documents
- Charging excessive interest or loan origination fees
- Miscalculating the closing costs to make the loan seem cheaper than actual
- Putting wrong property description on the loan documents
- Adding other properties as collateral to the security instrument
- Failing properly to disclose the borrower's rights and risks to the borrower
- Failing to give the borrower sufficient advance notice of the cost and terms of the loan so that borrower cannot shop around for better terms and lower cost.
- Rushing the borrower through closing so the borrower does not have time to read all the documents before signing.
- Force-placing exorbitantly priced flood and hazard insurance
- Failing to notify the borrower of changes in servicer or creditor
- Offering loan modification orally (not in writing) and inducing the borrower to miss payments or underpay (breach the note) in order to qualify
- Sending home invaders (property preservation felons) into the property, pretending to winterize it during alleged abandonment, while they change the locks and steal chattel (electronic equipment, jewelry, and other valuables) belonging to the occupant.
That by no means comprises a comprehensive list of the legion of ways borrowers get injured in the lending and servicing process. But every one of these and other injuries gives the borrower a valid causes of action (reason to sue) against the lender and / or other injurious parties.
The Problem with Garfield's Foreclosure Pretense Defense
Neil Garfield and his ilk, the "foreclosure pretense defense" attorneys around the land who "get it" (embrace his philosophy of foreclosure defense with frivolous arguments about the lending and securitization background activities) DO NOT CARE about the foregoing list of crookedness. They don't care because it takes a lot of work, skill, experience, and expertise to examine the loan-related documents, and re-do the calculations in order to find the fraud, other tortious conduct, contract breaches, regulatory breaches, legal errors, flimflams, corkscrewing, backstabbing, and dirty dealing associated with the loan.
Furthermore, most of their prospective clients have breached the note because they cannot afford the payments, and do not have money even to hire a lawyer. So such clients cannot pay the typical lawyer fee of $10,000 to $20,000 for a 40 to 50 hour mortgage examination. And of course, neither Garfield nor his minions have the technical competence to do such an examination. Therefore, they don't tell the borrower about all the ways the lender team cheats the borrower. Instead they focus on losing foreclosure related arguments like securitization, assignment robosigning, standing, and so on.
In fact, foreclosure pretense defense lawyers do anything they can to protract the foreclosure process. They refuse to examine the mortgage for causes of action (injuries against the borrower at the inception of the loan). They recycle pleadings they have used for other clients in similar or the same situation. And they charge $300 to $1000 a month for skillfully using their lawyer skills to delay the foreclosure. At the end, many don't even show up for the summary judgement hearing in which the judge orders the auction of the house to pay off the debt. Such lawyers can collect $20,000 to $30,000 per client for dragging out the foreclosure. This is, of course, crooked, and borrower clients should file bar complaints against such attorneys, and complain to the state Attorney General.
The Proper Strategy for Foreclosure Victim Lawyers
What should such lawyers do? Well, the client comes to them upset over the accusation that the client breached the contract. All foreclosure disputes deal with breach of contract - the borrower violated the terms of the note. Doesn't it make sense that the lawyer should look at the note and underlying circumstances for evidence that someone injured the borrower? After all, the creditor claims the borrower injured the creditor. What happens if the creditor or someone else injured the borrower? Couldn't that constitute a contract breach that renders the loan invalid in some way? Couldn't that justify the borrower's breach of contract, or justify a claim for damages?
The lawyers should find such injuries and launch an attack against the creditor and whoever else injured the borrower.
But they don't. This means that if the borrower loses the house to foreclosure and by properly, timely attacking the other injurious parties, the lawyer could have prevented that loss and won sizable damages for the borrower, but the lawyer didn't, then that could constitute a crystal clear case of LEGAL MALPRACTICE for which the borrower should sue that lawyer. Yes, even though the borrower breached the note by failing to make payments, the lender or agents breached it first, justifying a lawsuit against them that the borrower's lawyer never bothered filing. That looks like legal malpractice to me.
Bottom line, a lawyer should not take a foreclosure defense case without requiring the client to purchase a mortgage examination first. Failure to do so demonstrates rank greed and incompetence.
If the lawyer gets the mortgage examined and finds causes of action, THEN the lawyer can sue the injurious parties for hurting his client, and he can win compensatory damages, punitive damages, legal fees and costs, and/or setoffs from the debt, or a nice monetary settlement or a loan modification to the advantage of the borrower.
Proof: Mortgage Attack Brings Borrowers Gargantuan Wins
Review these example cases of borrowers who did it the right way:
- FLORIDA 1ST DISTRICT AFFIRMS $250K PUNITIVE DAMAGE AWARD IN PATE V BOA
- CA COURT AFFIRMS $250K FOR DUAL TRACKING IN BERGMAN V JPMCB
- IF THE SERVICER'S HOME PRESERVATION COMPANY STEALS YOUR STUFF…
- HOW TO HAMMER OUT CASH FOR MORTGAGE VICTIMS
- BROWN v QUICKEN LOANS SHOWS HOW TO PUNISH ABUSIVE MORTGAGEES
Summary and Conclusion
The lender uses this simple strategy against borrowers. Borrowers should use it against them. Why? Because it WORKS:
- Find the injuries
- Hire a competent attorney
- Artfully ATTACK the injurious
Garfield doesn't grok the above reality, or even acknowledge its possibility. So his call to arms will fizzle because he ignores the ONLY workable strategy for mortgage victims.