Getting Mixed Signals

[snook]

Greetings to all....I have been trying to gather up as much info as I can...I am now officially 3 months in default of payments with Countrywide Bank on an investment property in Florida.

If it goes into foreclosure:
My wife is not attached to the loan, but we file taxes jointly...I believe I can prove some financial hardship, but we are current with all other bills....
We still invest in our IRA's, my sons college fund, but thats about it....the rest goes for paying bills in my primary house...My assests are tied up in IRA's and equity in my home....

Has anyone dealt with Countrywide?? Will they come after me with a defiency judgement??

One attorney said no, another says yes, a real estate buddy of mine says yes as well....any thoughts....we have a difference of about 90,000 between what we owe and what the property is worth...thanks

[lrprn]

Given the current state of the real estate market, it's hard to predict what any lender is going to do and when if you simply stop making payments. However, the lender does have every right to take you to court and get a deficiency judgment against you. I would make decisions based on that fact.

If Countrywide does file a court case to get the deficiency judgment, then you could file bankruptcy (probably will have to be Ch 13 if your income is well above the median in your state) to stop the deficiency judgment before it's granted. Since it sounds like you can't or don't want to pay off the $90K deficiency, that's the most direct option to deal with this issue.

Although Ch 13 can have its own disadvantages, it's better than having $90K hanging over your heads for many more years than a 5-year Ch 13 plan which would wipe it out.

Were the two lawyers you spoke with bankruptcy lawyers? If they were, ask about whether filing Ch 13 is a possibility for you if Countrywide does pull the trigger on the deficiency judgment.

[creditwrench]

Don't mess with Mr. BK!

Greetings to all....I have been trying to gather up as much info as I can...I am now officially 3 months in default of payments with Countrywide Bank on an investment property in Florida.

If it goes into foreclosure:
My wife is not attached to the loan, but we file taxes jointly...I believe I can prove some financial hardship, but we are current with all other bills....
We still invest in our IRA's, my sons college fund, but thats about it....the rest goes for paying bills in my primary house...My assests are tied up in IRA's and equity in my home....

Has anyone dealt with Countrywide?? Will they come after me with a defiency judgement??

Most likely they will not come after you for a deficiency balance even if they do foreclose. In Florida as well as a few other states lenders such as countrywide are having real problems in courts because many defendants are getting smart enough to use RESPA demand letters and demanding the original note in court rather than just letting them get away with phony copies of notes. Federal courts are getting very strict with lenders over this issue as well. No note, no foreclosure allowed in some courts.

Of course, Countrywide cannot produce the original note because they don't have it. They don't have it because the same week the note was finalized and the loan check was cashed and deposited they sold the note to CWABS for cash. CWABS is another corporation under the Countrywide corporate umbrella. CWABS stands for CountryWide Assets Backed Securities. CWABS immediately bundles all the notes during a given time period and sells them to a trustee such as Bank of New York or Duetsch Bank or any one of many others nationwide. The trustee then grades the notes they buy into bundles of notes according to the credit ratings of the homeowners whose notes they have. Then the trustee puts them on the securities markets and sells them to investors world wide. The trustee has the notes somewhere and the original lender has only a copy which he uses to foreclose on acting as the servicer of the note.

That puts them into the position of being a 3rd party debt collector and subject to FDCPA rules and regulations when trying to foreclose. Their lawyers are also 3rd party debt collectors and can be sued under FDCPA, FCRA, RESPA, HOEPA and other such laws. The foreclosure petition usually names Countrywide or other mortgage servicer as the plaintiff. The trustee seldom files the lawsuit. The result is that most foreclosure actions are filed by false and fictitious plaintiffs who are not the party of first interest in the case.

Furthermore, most states have laws which demand that each time a note is transferred their has to be an assignment of note and mortgage document filed with the county recorder in the county in which the property is located. That is almost never done.

All of the above can be causes of action against the plaintiff in federal court. Once the case gets to federal court the defendant becomes the plaintiff and the whole ballgame suddenly has a new inning and a new possible outcome because the only question before the federal court is whether or not the defendant broke the law. The fact of default by the homeowner cannot even be used by the defendant as a defense.

Local courts do not even understand this stuff and don't want to understand it. To stop the foreclosure you have to take them to federal court.

My students have stopped the process in local courts in some instances. That happens fairly often too because there are defects in the action or the sale which can be attacked. Every case is different even though seemingly similar.

But there is seldom if ever a reason to mess with Mr. Bk and his minions. People only fiddle with the minions who are the flunkies of Mr. Bk out of fear or the lack of knowledge.

Don't let fear or lack of knowledge chase you into a BK court. Learn the law and how they violate the law and how to vigorously defend your rights and you won't have to file BK.