Where is Blackacre anyway???

Pt II: So You're a Distressed Property Consultant: How to Stay Compliant with NY's Foreclosure Prevention & Responsible Lending Act of 2008

Back on July 29, 2009, I authored a discussion on what activities and/or circumstances would cause a service provider to be labeled a Distressed Property Consultant under New York's Foreclosure Prevention & Responsible Lending Act of 2008.  Please review that discussion and keep in mind the exceptions when it comes to the Homeowner as well as the Consultant. I promised a Part II to review compliance if you are a Distressed Property Consultant and, well, better late than never! If you know me personally, you are aware of the circumstances of the past few months and as such, I am sure understand the delay.

Section 265-b enumerates which activities are forbidden to Distressed Property Consultants:

1. Providing services without a written, fully signed contract with a homeowner;

2. Charging or collecting payment from a homeowner before completion of services;

3. Taking a Power of Attorney from a homeowner;

4. Keeping any original Loan Documents or any original documents relating to the distressed home loan;and

5. Inducing a Homeowner to executing a Contract that does not comply with the provisions of the Act.

The Contract

Section 265-b lists very specific requirements when it comes to the Contract for Distressed Consultant Services.  First, it must be in writing and must contain the entire agreement of the parties.  Therefore, oral agreements pre- and post-contract are not enforceable and the agreement is enforceable only as to those provisions contained within the four corners of the written Contract.  Also, the proposed Contract must be provided to the homeowner, in advance, for his review. 

Content & Form

The NY legislature laid out very specific requirements as to the form and content of the Distressed Consultant Contract.  First, as to the font, it must be in at least 12 point type and in the same language that was used between the Consultant and the Homeowner to discuss the Consultant's services.  For example, if the parties conversed in Spanish about the proposed services, then the resulting written contract must be in Spanish.

The Contract must provide full disclosure.  It must include:

1. the exact nature of the services to be provided by the Consultant and anyone who is associated with the consultant;

2. the total amount and terms of compensation for such services;

3. the name, business address, and telephone number of the distressed property consultant and the address (if different), phone & fax number or email address of the distressed property consultant where the homeowner can send communications to the consultant;

4. it must be dated and personally signed by the homeowner and the distressed property consultant before a Notary Public;

5. It cannot limit the liability of the Distressed Property Consultant nor waive any provisions under this Statute and cannot require arbitration of any dispute arising under the Contract;

6. it must contain a specific Right to Cancel:

    a. 14 point boldface type;

    b. Containing the following language with the Distressed Property Consultant accurately entering the date the right to cancel ends and his name -

NOTICE REQUIRED BY LAW

YOU MAY CANCEL THIS CONTRACT, WITHOUT ANY PENALTY OR OBLIGATION AT ANYTIME BEFORE MIDNIGHT OF _________________________ (FIFTH BUSINESS DAY AFTER EXECUTION).

_______________________________________ (THE"CONSULTANT") OR ANYONE WORKING FOR THE CONSULTANT, MAY NOT TAKE ANY MONEY FROM YOU OR ASK YOU FOR MONEY UNTIL THE CONSULTANT HAS COMPLETELY FINISHED DOING EVERYTHING THIS CONTRACT SAYS THE CONSULTANT WILL DO.

YOU SHOULD CONSIDER CONSULTING AN ATTORNEY OR A GOVERNMENT-APPROVED HOUSING COUNSELOR BEFORE SIGNING ANY LEGAL DOCUMENT CONCERNING YOUR HOME. IT IS ADVISABLE THAT YOU FIND YOUR OWN ATTORNEY, AND NOT CONSULT WITH AN ATTORNEY RECOMMENDED OR PROVIDED TO YOU BY THE CONSULTANT. A LIST OF HOUSING COUNSELORS MAY BE FOUND ON A THE WEBSITE OF THE NEW YORK STATE BANKING DEPARTMENT, www.banking.state.ny.us OR BY CALLING THE BANKING DEPARTMENT TOLL FREE AT 1-877-BANK-NYS (1-877-226-5697).  THE LAW REQUIRES THAT THIS CONTRACT CONTAIN THE ENTIRE AGREEMENT BETWEEN YOU AND THE CONSULTANT. YOU SHOULD NOT RELY ON ANY ORAL AGREEMENT OR PROMISE.

    c. The date for the Right to Cancel: it is midnight of the 5th business day following the day the Contract was executed by both parties.

    d. Notice of Cancellation:

        1. must be in writing and delivered by the homeowner or the homeowner's representative, to the Property Consultant to the address, fax or email address specified in the notice.

        2. The Contract must include (2) copies of a Notice of Cancellation in the following form:

NOTICE OF CANCELLATION

YOU MAY CANCEL THIS CONTRACT, WITHOUT ANY PENALTY OR OBLIGATION, AT ANY TIME BEFORE MIDNIGHT OF _____________________________ (ENTER DATE).

TO CANCEL THIS CONTRACT, SIGN AND DATE BOTH COPIES OF THIS CANCELLATION NOTICE AND PERSONALLY DELIVER ONE COPY OR SEND IT BY FACSIMILE, UNITED STATES MAIL OR ANY ESTABLISHED COMMERCIAL LETTER DELIVERY SERVICE, INDICATING CANCELLATION TO THE DISTRESSED PROPERTY CONSULTANT AT ONE OF THE FOLLOWING:

NAME OF CONTRACTOR: ________________________________
STREET ADDRESS:______________________________________
CITY, STATE, ZIP:______________________________________
FACSIMILE:___________________________________________

I HEREBY CANCEL THIS CONTRACT

Name of Homeowner: ___________________________________________

Signature of Homeowner:________________________________________

Date:_________________________________________________________

    e. Compliance with Notice of Cancellation: If a Distressed Property Consultant receives the Notice of Cancellation within the proscribed time frame, the Consultant must, within (10) days, return the original Contract and any other documents signed by the Homeowner to the Homeowner.  Cancellation, of course, releases the homeowner from any obligation to pay the Distressed Property Consultant.

PENALTIES FOR VIOLATION

If a Distressed Property Consultant violates this Statute, the legislature has crafted the following penalties:

1. Court can declare Contract to be null and void;

2. If the homeowner incurs damages because of the violation, the homeowner can recover actual and consequential damages, as well as costs, from the Consultant;

3. If the Consultant intentionally or recklessly violates the provisions of this Statute, the Court can award to the homeowner treble (3x) damages, attorney's fees and costs;

4. An application can be made by the Attorney General to issue an injunction forcing the Consultant to cease and desist from engaging in future distressed consulting activities without requiring proof that any person has been injured or damaged and also can require restitution; and

5. The court can fine the Consultant not more than $10,000 for each violation.

There you have it - if you are offering any type of services to a Homeowner who is behind on their mortgage, real estate taxes etc., first determine if you are a Distressed Property Consultant (and not a member of an exempt category) and if your Homeowner and their financial distress is covered by the Statute.  If so, make sure you are in compliance by following the tenets outlined above.  The penalties can be severe but at least now, you have an outline for a plan of compliance.

My Favorite Three Words This Morning: Powermonkeys are "Out for Delivery"

I am an admitted tech geek. I am always seeking and evaluating the next big thing - especially if it is going to make me more efficient and/or free me from the constraints of an office.  That is where my two newest purchases come in: the Verizon MiFi 2200 and the Power Monkey Classic v2.

The Verizon MiFi 2200 allows you to become your own hot spot network (for up to 5 devices no less!) for wireless internet access.  Your personal hot spot has 3G access through Verizon's network.  I can't tell you how many times I have my net book and if there is a wireless internet signal, it is secured. The Verizon MiFi creates a wireless network for you anywhere you can access the Verizon 3G network (which has fantastic coverage).  So, you can revise that contract at the beach and enjoy the outdoors. You can pick up this baby for a cool $99 and the monthly service runs approximately $60.00.  That service includes 5gig of bandwidth a month which should be more than enough unless you are downloading/watching videos etc.

The problem all of us encounter at one time or another is "low battery".  I wish these companies would create a larger capacity battery (especially on the iTouch - that runs out ridiculously fast!).  But, until they do, you can solve this problem easily with a Power Monkey.  This sleek little device is powered by a rechargeable lithium battery and will give you approximately an additional 40 hours on your mobile tech toy (be it a blackberry, iTouch, etc.).  It comes with a slew of adapters to power almost any device.  I ordered 4 - one for each of us in my family as we are constantly recharging and it gets annoying.  At approximately $60.00 each, everyone should have one!

So look for me on the beach, with my new toys in hand, working on contracts and closing statements!

Real Estate Law Update: New York State Decisions of Interest

JOHNSON v. MELNIKOFF, 2008-08857 [2d Dept 8-4-2009] 2008-08857

Decided on August 4, 2009.

In an action, inter alia, pursuant to RPAPL article 15 to determine title to real property, the defendant Bank of New York Trust Company, N.A., appeals, as limited by its notice of appeal and brief, from so much of an order of the Supreme Court, Kings County (Demarest, J.), dated September 11, 2008, as granted that branch of the plaintiff's motion which was for summary judgment declaring that its mortgage on the subject property is null and void, and denied that branch of its cross motion which was for ...

DECISION & ORDER In December 1998, the plaintiff purchased the subject property. She financed her purchase with a mortgage loan. In April 2004, the plaintiff had certain discussions with representatives of a company allegedly offering services for refinancing mortgage loans. Two months later, the plaintiff, believing that she was signing documents that would effectuate a refinancing of her mortgage loan, unwittingly executed a deed conveying title to the subject property to ...

MAIORINO v. GALINDO, 2008-06047 [2d Dept 8-4-2009] 2008-06047

Decided on August 4, 2009.

In an action, inter alia, to impose a constructive trust on certain real property, the defendants Steve Galindo, Michael Madia, James Napolitano, Demo Works, Inc., Kitchen Designs by Dependable, Inc., and "ABC Corp.," as successor in interest to Kitchen Designs by Dependable, Inc., appeal, as limited by their notice of appeal and brief, from so much of an order of the Supreme Court, Nassau County (Warshawsky, J.), dated May 22, 2008, as denied those branches of the defendants' motion which were to ...

DECISION & ORDER The plaintiff, Edward Maiorino, who was a 50% shareholder in the defendant Demo Works, Inc. (hereinafter Demo), alleged, inter alia, that the defendant Steve Galindo, who was also a 50% shareholder in Demo, improperly diverted assets of Demo to improve real property in Bethpage (hereinafter the Bethpage property). The defendant Michael Madia had purchased the Bethpage property in his own name and financed the purchase by obtaining mortgages for the full purchase ...

BYRON v. HAAS, 2008-01977 [2d Dept 7-28-2009] 2008-01977

Decided on July 28, 2009.

In an action to recover damages for fraud and breach of contract, the plaintiff appeals, as limited by her brief, from so much of an undated order of the Supreme Court, Kings County (Schmidt, J.), as granted that branch of the cross motion of the defendant John Spanakos pursuant to CPLR 3211(a)(7) which was to dismiss the complaint insofar as asserted against him and, in effect, upon searching the record, dismissed the complaint in its entirety insofar as asserted against the defendants Michelle Haas, ...

The plaintiff commenced the instant action to recover her commission asserting fraud and breach of contract theories of liability, and the defendant John Spanakos counterclaimed against her to recover damages for libel per se and malicious prosecution. The plaintiff moved, pursuant to CPLR 3211(a)(7) and CPLR 3016(a), to dismiss the counterclaims, and Spanakos cross-moved, pursuant to CPLR 3211(a)(7), to dismiss the complaint insofar as asserted against him. The Supreme Court ...

LEIST v. TUGENDHAFT, 2009-03562 [2d Dept 7-21-2009] 2009-03562

Decided on July 21, 2009.

DECISION & ORDER The plaintiff commenced this action, inter alia, for specific performance of a purported contract for the sale of real property and filed a notice of pendency against the defendants' beachfront property located in Westhampton, New York. The purported contract consisted of a "Memo of Sale," subscribed by no one, sent as an attachment to an e-mail from the defendants'"listing agent" to the plaintiff's attorney. The plaintiff wrote on the memo of sale that he unconditionally accepted ... General Obligations Law ' 5-703(2) states that a contract for the sale of real property "is void unless the contract or some note or memorandum thereof, expressing the consideration, is in writing, subscribed by the party to be charged, or by his lawful agent thereunto authorized by writing." Assuming, arguendo, that an e-mail is sufficient to comply with the statute of frauds with respect to contracts for the conveyance of real property (see General Obligations Law ' 5-703[ 2]; ...

New FHA Making Home Affordable Loan Modification Guidelines Announced by HUD Secretary Donovan Today

Evidently the government is serious about getting these delinquent mortgages modified - here is another positive change to HAMP:


Press Release from HUD:

WASHINGTON - U.S. Department of Housing and Urban Development Secretary Shaun Donovan today announced the Federal Housing Administration (FHA) has implemented changes to its loan modification program to ensure consistency with the Obama Administration's Home Affordable Modification Program. By August 15th, FHA borrowers will be able to significantly reduce their monthly mortgage payments by seeking a loan modification through their current mortgage company or loan servicer under the new FHA-Home Affordable Modification Program (FHA-HAMP).

"Today, we're bringing another important tool to the table to help struggling families who are desperate to keep their homes," said Donovan. "Tens of thousands of FHA borrowers will now be able to modify their mortgages in the same manner as so many others who are taking advantage of the Administration''s Making Home Affordable program. This is just the latest tool we are providing to help homeowners prevent foreclosures through the Making Home Affordable program. Earlier this month we announced an expansion of the Home Affordable Refinance Program to borrowers who are up to 125 percent underwater. Together, these actions will significantly increase the help available to homeowners.

"The Helping Families Save Their Homes Act of 2009, signed into law on May 20, allows FHA to give qualified FHA-insured borrowers the opportunity to reduce their monthly mortgage payment by modifying the mortgage through FHA-HAMP. FHA released the program's implementation guidelines today. FHA expects all servicers to implement the changes by August 15. The program permanently reduces a family's monthly mortgage payment through the use of a partial claim, which defers the repayment of mortgage principal through an interest-free subordinate mortgage that is not due until the first mortgage is paid off.

FHA has used the partial claim option in the past, which allows a lender to advance funds on behalf of a borrower, to reinstate a delinquent loan that was up to 12 months delinquent. Now, this program will allow HUD to bring the borrower's payment down to an affordable level. This will be accomplished by bringing the mortgage current, buying down the loan by up to 30 percent of the unpaid principal balance and deferring these amounts in a partial claim.

FHA will pay an incentive to loan servicers for each FHA loan modified under this program. A Mortgagee Letter, along with detailed requirements for the FHA-Home Affordable Modification Program, was distributed to all FHA lenders today. The implementation of this program will further the Obama Administration's efforts to stabilize the housing market by helping homeowners to stay current on their mortgages and stay in their homes, therefore preventing the destructive impact of foreclosures on families and communities.

Making Home Affordable, a comprehensive plan to stabilize the U.S. housing market, was first announced by the Obama Administration on February 18. More than 200,000 trial loan modifications are already underway, tens of thousands of refinancings have closed, and informational mailings about the program have been sent to more than one million borrowers who may be eligible.

FHA borrowers who are experiencing difficulty making their mortgage payments should contact their loan servicer or HUD's National Servicing Center at (888) 297-8685 to determine if they qualify for the FHA-Home Affordable Modification Program. The Mortgagee Letter, with detailed information about the program, is available on the HUD website. Non-FHA borrowers can find information about the Obama Administration's Making Home Affordable program at www.makinghomeaffordable.gov.

HUD News Release 09-137

Pt I: Are You A Distressed Property Consultant? Don't Run Afoul of NY's "Foreclosure Prevention and Responsible Lending Act of 2008"

I had an instant messenger conversation last night with a good mortgage broker friend of mine who was very upset. Her client's home was due to be auctioned shortly, even though there was a loan modification in progress. The consultants,retained by the homeowner to assist in filing an Order to Show Cause to stop the sale, refused to supply any documents without a $500 weekly payment (they had already collected a decent sum up front). After a heated discussion with the consultants, my friend threatened to file a complaint with the authorities to which the consultant promptly replied that he had a lawyer, he didn't do anything wrong and he wasn't concerned. I realized at this moment that this gentleman had no idea that he was violating the law but he most certainly was and there are serious consequences involved. New York enacted the "Foreclosure Prevention and Responsible Lending Act of 2008 effective September 1, 2008 but utterly failed to properly educate members of the real estate industry in its application and proper compliance. To obtain the pertinent provisions of the law, I did a quick google search but failed to turn up the actual statutes themselves (This Act amended NY's Banking Law, Real Property Law (RPL) and Real Property and Proceedings Law (RPAPL). I was only able to find interpretations of the Act which did not fully provide the definitions and rules pertaining to Real Property Consultants. As a member of the New York State Bar Association, Real Property Section, I am subscribed to their email listserve. Anyone who knows me can attest to my practice of keeping every email so I was able to do a quick search and find the text of the law. In this post, I will provide the tools to assist you in understanding and complying with the law so that you don't end up with a visit from the NY Attorney General's office. Those who have actually heard of the Act think it only applies to loan modification companies. The statute is far broader in its definition of Distressed Property Consultants and the services they provide. The Act amended NY's Real Property Law by adding Section 265-b which defines certain terms including "distressed homeowners", "distressed property consultants", and "distressed home loans" among others.

Distressed Home Owners
The Act defines in Sec 265-b(1)(a) the "Distressed Home Owner" as a natural person who is the mortgagor with respect to a distressed home loan or who is in danger of losing a home for nonpayment of taxes. Therefore, if your client is a corporation, LLC, Trust etc., they are not natural persons and therefore not Distressed Home Owners under this Act. In conjunction with this definition, it is imperative to view same in light of the definition of "distressed home loan" in subsection (d) which defines it as a home loan that is in danger of being foreclosed because the homeowner has one or more defaults under the mortgage that entitle the lender to accelerate full payment of the mortgage and repossess the property, or a home loan where the lender has commenced a foreclosure action. To be a Distressed Home Owner, your client must be in default under the terms of their Note and Mortgage which entitles the Lender to accelerate the loan. You must examine the Mortgage, discern the acts that constitute a default as well as under what circumstances allow the Lender to accelerate the loan.   Further, the act defines a "home loan" as a loan in which the debt is incurred by the homeowner primarily for personal, family or household purposes, and the loan is secured by a mortgage or deed of trust on property upon which there is located or there is to be located a structure or structures intended principally for occupancy of from one to four families which is or will be occupied by the homeowner as the homeowner's principal dwelling. The loan must be secured by your client's principal residence and have been originated as a residential loan to be covered by this Act.

Distressed Property Consultants & Consulting Services

Section 265-b(1)(c) Defines the nature of the consulting services covered by the statute. Such definition is very broad and encompasses far more than loan modification:

(c) "Consulting services" means services provided by a distressed property consultant to a homeowner that the consultant represents will help to achieve any of the following:
(i) stop, enjoin, delay, void, set aside, annul, stay or postpone foreclosure filing, a foreclosure sale or the loss of a home for nonpayment of taxes;
(ii) obtain forbearance from any servicer, beneficiary or mortgagee or relief with respect to the potential loss of the home for nonpayment of taxes;
(iii) assist the homeowner to exercise a right of reinstatement or similar right provided in the mortgage documents or any law or to refinance a distressed home loan;
(iv) obtain any extension of the period within which the homeowner may reinstate or otherwise restore his or her rights with respect to the property;
(v) obtain a waiver of an acceleration clause contained in any promissory note or contract secured by a mortgage on a property in foreclosure;
(vi) assist the homeowner to obtain a loan or advance of funds;
(vii) assist the homeowner in answering or responding to a summons and complaint, or otherwise providing information regarding the foreclosure complaint and process;
(viii) avoid or ameliorate the impairment of the homeowner's credit resulting from the commencement of a foreclosure proceeding or tax sale; or
(ix) save the homeowner's property from foreclosure or loss for non-payment of taxes.

Therefore, if you perform loan modifications and/or workouts, short sales, credit repair your services are covered.  If you assist a distressed home owner with obtaining financing, including refinancing or any type of loan or advance, your services are covered (Note exception below for licensed mortgage bankers & brokers).  If you provide "consulting" services wherein you assist a distressed home owner in defending a foreclosure defense action, your serviced are covered.  Or, if you do anything whatsoever that will result in "saving" the home owner's property from foreclosure or loss from non-payment of taxes, your services are covered.  Paragraph (ix) is extremely broad and ambiguous - what constitutes "saving"? That will require clarification by the courts in the future.

What is a Distressed Property Consultant?
While you may have determined that your client is a distressed homeowner who has a distressed home loan and your services are covered by the Act, but the question remains - are you a Distressed Property Consultant?

The Act defines "Distressed Property Consultants" as an individual or a corporation, partnership, limited liability company or other business entity that, directly or indirectly, solicits or undertakes employment to provide consulting services to a homeowner for compensation or promise of compensation with respect to a distressed home loan or a potential loss of the home for nonpayment of taxes.
Note: A consultant does not include the following:
(i) an attorney admitted to practice in the state of New York;
(ii) a person or entity who holds or is owed an obligation secured by a lien on any property in foreclosure while the person or entity performs services in connection with the obligation or lien;
(iii) a bank, trust company, private banker, bank holding company,savings bank, savings and loan association, thrift holding company, credit union or insurance company organized under the laws of this state, another state or the United States, or a subsidiary or affiliate of such entity or a foreign banking corporation licensed by the superintendent of banks or the comptroller of the currency;
(iv) a federal Department of Housing and Urban Development approved mortgagee and any subsidiary or affiliate of such mortgagee, and any agent or employee of these persons while engaged in the business of such mortgagee;
(v) a judgment creditor of the homeowner, if the judgment creditor's claim accrued before the written notice of foreclosure sale is sent;
(vi) a title insurer authorized to do business in this state, while performing title insurance and settlement services;
(vii) a person licensed as a mortgage banker or registered as a mortgage broker or registered as a mortgage loan servicer as defined in article twelve-D of the banking law;
(viii) a bona fide not-for-profit organization that offers counseling or advice to homeowners in foreclosure or loan default; or
(ix) a person licensed or registered in the state to engage in the practice of other professions that the superintendent of banks has determined should not be subject to this section.
Therefore, a Distressed Property Consultant does not necessarily have to be a natural person.  Further, if you are an attorney, a Lender, Servicer, Mortgage Banker, Mortgage Broker, Judgment Creditor, Title Insurer, or a Non-Profit you are exempt.

In my next post, I'll discuss Distressed Property Consultant compliance, proscribed activities and more. Stay tuned!

Foreclosure Defense Bar: Heads Up! Forensic Exam of TBW Mortgage Corp Loan Docs Could Be Fruitful

Those engaged in foreclosure defense should take a closer look at loans originated by TBW  when structuring their defense strategy...

Florida Company Reaches Multi-state Agreement Over Non-traditional Loans
Carrie Bay | 06.25.09

Taylor Bean & Whitaker Mortgage Corp. (TBW), a wholesale lender based in Ocala, Florida, has agreed to pay 13 states and the District of Columbia $9 million in fines after regulators took a closer look at the company's nontraditional mortgage loans made in 2006.The examination alleged TBW, currently one of the 10 largest wholesale mortgage lenders in the United States, altered borrowers' income and asset information in order to qualify applicants for mortgage loans they couldn't afford and put them into so-called exotic loans, such as interest-only mortgages, payment option adjustable-rate mortgages, and stated income loans.

DSNews.Com Default Servicing In Print and Online - Formerly REO Magazine

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Tags: TBW, subprime, mortgage, forensic, foreclosure, default, realestate, loan, loanmodification, shortsale

Why Retain An Attorney for a Real Estate Transaction? Ask Maria Espinosa

CNN recently posted a video on their website detailing the "shocking" story of a woman who paid her mortgage but whose home is being foreclosed upon, jumping on the fraud bandwagon and telling the stories of homeowners preyed upon by the real estate & banking industry. The video leaves out more than it tells, in an obvious attempt to manipulate the truth for their story.

Maria Espinosa, a Nevada realtor, apparently purchased her home, without counsel and without purchasing an Owner's policy of title insurance.  It appears that a previous owner in the chain of title had a VA mortgage that was never satisfied and as such, brought an action to foreclose.  She sought redress from Chicago Title who advised her to retain a lawyer and visit the ALTA website, wherein the message was to potential home buyers to purchase title insurance so that if there is a title claim, the title company will not only insure the property but pay to defend such title.  Ms. Espinosa finally retained an attorney who admits he has only 18 months of experience in real estate and foreclosure defense who just states "he has never seen anything like this before".

I learned of this video through the New York State Bar Association Real Property List Serv's forum wherein my esteemed colleagues brought up a valid point yet again - why would anyone, who is about to make one of the biggest purchases of their life, choose to do so without retaining a real estate attorney?  This topic is discussed, ad nauseam, on the listserv but is often not publicized...until today and here on my blawg.

I am amazed at the mentality of the realtors and abstract companies of other states who are so resistant to attorney involvement, nevermind the

Federal Trade Commission, which for years has lobbied heavily against having attorneys involved in residential real estate transactions. However, it has become clear, in light of the collapse of the Housing Market, that the rationale was to keep the people blind to the greed of those certain mortgage brokers and bankers, realtors, appraisers and title companies who made fortunes selling homes riddled with toxic mortgages and funded with fraud, kickbacks and the like. They told those people, "We are saving you money", "It is like buying a car" or "The attorneys are just trying to control everything and get rich in the process".  What they didn't tell them was "We want you at the closing table with NO ONE to look after your interests" or "We want you to take out a loan you can't afford or understand".

Numerous times I have engaged in discourse, in various internet forums, with members of the real estate industry who had been vocal and derisive of attorney involvement in real estate transactions. I heard their closing horror stories of deals falling apart because of the lawyer's failure to prepare contracts in a timely manner or instructing their client to not move forward etc. While I agreed with them that retaining any attorney for a closing was not conducive, I argued that the retention of a real estate attorney was a necessity and would eliminate their apprehension. A real estate attorney has a far different focus than the average litigation attorney and the expertise to close a transaction without issue. Most importantly, the real estate attorney is the only party who only represents the interest of the buyer or seller and probably one of the least of the expenses paid at closing, especially compared to the thousands of dollars paid over to the realtors.

In New York State (particularly downstate), it is customary to retain attorneys for real estate transactions.  And it shows: New York had a 23% decrease in foreclosures in 1st Quarter 2009 as compared to 1st Quarter 2008 and compared to a 24% increase nationally!

So, while I am sympathetic to the plight of Ms. Espinosa and others out there in the same position, I can't help but shrug my shoulders and say it all could have been avoided or at the very least, addressed with no out of pocket expenses, had she had a lawyer at her side when she bought that home.

NY Governor Looking to Expand Protections for Defaulting HomeOwners, Tenants

I find it utterly amazing that Patterson credits New York's 23% decrease in foreclosures in 1st Quarter 2009 as compared to 1st Quarter 2008 (compared to a 24% increase nationally) to his New York Foreclosure Prevention & Lender Responsibility Act of 2008 where the credit should lie in New Yorkers' steadfast resolve to be represented by attorneys for the biggest transactions of their lives.

While politicians continue to churn out legislation after legislation eliminating borrower choice, capitalism and so forth, perhaps the Department of Justice's position that lawyers create an unfair monopoly in the area of real estate closings should be revisited as the lawyers are the only ones out there who can preserve our freedom to choose and protect the average American from being misled into a toxic mortgage. 

New York Governor Wants Stronger Mortgage Protections
Carrie Bay | 06.15.09

New York Gov. David A. Paterson has proposed legislation that would build upon the state's subprime lending reform law enacted last year. The measure centers on providing additional protections for homeowners and tenants, establishing safeguards against foreclosure rescue scams, and preventing urban blight caused by foreclosed homes.According to Paterson, more needs to be done to prevent predatory lenders from taking advantage of New Yorkers. He also says lawmakers can no longer allow tenants who live in foreclosed properties to find their leases terminated without reasonable notice, nor can they let struggling homeowners who are looking for help lose their homes to loan modification scams.

For more please read: DSNews.Com Default Servicing In Print and Online - Formerly REO Magazine

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Tags: loanmodification, subprimemortgage, foreclosure, tenants, wallstreet, realestate

DON'T SAY I DIDN'T WARN YOU! NY Attorney General's Crackdown on the Loan Modification Industry

This investigation comes as no surprise - I have been speaking with clients and those who wanted to jump on the loan mod bandwagon about the New York Foreclosure and Lender Responsibility Act of 2008 and its effect on them, but often to deaf ears.  Most people weren't even aware of the Act or just shrugged their shoulders and continued with business as usual.
NEW YORK, NY (June 9, 2009) - Attorney General Andrew M. Cuomo today announced his office is taking legal action against a leading New York foreclosure rescue company for charging illegal up-front fees and engaging in consumer fraud. The company targets homeowners facing foreclosure by claiming that it can save their homes, but often fails to provide the services promised.

The Attorney General’s Office served a notice of intent to sue on American Modification Agency, Inc. (“Amerimod”) and its owner and President Salvatore Pane, Jr. Amerimod is headquartered in Uniondale, NY and claims to operate in all 50 states, servicing thousands of consumers nationwide.Today’s notice is part of Cuomo’s investigation into the so-called “foreclosure rescue” industry. Cuomo’s Office also has also served subpoenas on fourteen other companies in New York and across the country that offer loan modification services.

Capitalizing on the current economic downturn and housing crisis, these companies scour foreclosure notices and filings and prey on consumers desperate to save their homes from being foreclosed. The companies promise that they will negotiate with the consumers’ banks to lower mortgage interest rates, lock in fixed rates, get late fees and past due payments forgiven, and even reduce principal balances. The Attorney General’s investigation is in response to complaints from homeowners across New York that these companies fail to deliver as promised, charge illegal, up-front fees and use misleading advertising to lure consumers into services that oftentimes leave them further in debt, facing a worsened threat of foreclosure.

“This economic climate has bred an environment in which scam artists and opportunists are able to prey on vulnerable consumers on the brink of losing their most valuable possession - their home,” said Attorney General Cuomo. “Companies that charge homeowners up front fees for loan modification services, put homeowners into contracts that don’t disclose cancellation rights, or lure consumers with misleading claims violate not only our trust but the law. Today’s notice and the subpoenas issued nationwide are part of my Office’s multi-tiered effort to stamp out this kind of abuse and protect homeowners across the country.

”The Attorney General’s investigation into Amerimod found that the company charged homeowners heavy, up-front fees in advance of providing any services, a violation of New York law. In addition, the company uses misleading advertising full of unsubstantiated claims that it has success rates of 90 to 100 percent and that it is fully licensed. Amerimod also fails to provide contracts that include required notice of right to cancel, and fails to provide Spanish-speaking consumers with Spanish contracts, also in violation of New York law.

CUOMO ANNOUNCES INTENT TO SUE ‘AMERIMOD’ LOAN MODIFICATION COMPANY IN INVESTIGATION OF FORECLOSURE RESCUE SCAMS TARGETING HOMEOWNERS NATIONWIDE

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Tags: loanmodification, mortgage, scam, Cuomo

Some Legal Humor This Morning

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Courtoons » Blog Archive » Monday, May 4, 2009

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Tags: criminallaw, humor, cartoons, lawyers