So I talked with my lawyer, who also happens to be the co-author on our 42 rules book.  He told me to expect a law suit from Deutsche Bank who seems to now own my house. Their lawyers have filed an unlawful detainer complaint, which I got in the mail today and immediately faxed to my lawyer, who is now going to start filing motions and all that legal stuff to block not only the eviction, but also the sale of the house which was done illegally, and with no notice to me at all.

No wonder people are getting thrown out of their houses, the banks seem to do whatever they want, no matter who it hurts, and unless you have a good lawyer you will probably find your self and all of your possessions on the street.  Whatever happened to the Obama $ to help people keep their houses?d

I did get a letter back from WaMu saying that I did not make enough income to afford the house, which is untrue, and if they had looked at the application, instead of pulling financial from third quarter of last year, they we would see we qualified by almost any measure.  So it seems that if you have too much $ you are not eligible for a loan modification, and if you have too little you get foreclosed on.  I feel like Goldilocks, trying to find the amount that is “just right.”  But that decision has now been taken out of my hands.

OK, so what is next.  My lawyer told me to expect that I will be served with the lawsuit by a process server in the next few days.  So I guess I will wait to see if the wheels of justice will roll over me.  In the meantime I have kept every scrap of paper for the last 2.5 years this has dragged on.  Maybe one day I will find the time to organize the folders, but the best time line for my full story can be found in the introduction to my book, and this blog.

Wish me and my lawyer well!

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When I went to get the mail yesterday afternoon, this was quite a surprise, as it was stapled to the door posts of the house.  I tore it down of course, and then called my lawyer to find out what was happening on the sale reversal, and the lawsuit against the bank.  More later when I know more.

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The holidays were quiet, and we had been told that the sale date of the house (which was January 20th) was not going to happen since we had a new application with new financials in at WaMu (now Chase).

However, that was either a lie, or as I suspect, the left hand does not know what the right hand is doing. One department at the bank was processing the application, while the other department was foreclosing on the house. My guess is that this is not that unusual at Chase or any other bank, since they don’t want to do modifications anyway, and to them foreclosure is better than nothing.

I believe in California you have to give at least 30 days notice on the sale of a house for foreclosure, but my lawyer says 60 days.  We were not notified, and the only way I found out that the bank bought the house was a real estate guy showing up at my door telling me the bank now owned the house and that they had asked him to sell the house.

I was shocked to say the least and called my lawyer right away.  After some investigating by him, he found that indeed the house had been taken possession of by the bank, and without due notification.  He is now filing an injunction with the SF court to overturn the sale of the house.  On top of that we are filing a law suit on a variety of counts against the bank.

That is all I know now, except to say that my lawyer says this is a regular practice by banks, and that sometimes the only way to get a loan modification is to sue them. I am sure this is probably discouraging to others in my situation who are reading this.

Wish me luck!

David

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Good news, but we will still be in limbo for a while. The house foreclosure sale date is now January 20th 2010.  Don’t ask me why they postponed it for 3 months, I am just thankful that I don’t have to deal with this again over the holidays.

On another note I saw on the news today that there was a huge line (3000-4000 people) at the Cow Palace in San Francisco for people who wanted help in dealing with their home mortgage, and getting reduced payments or modifications.  This is a NACA event, and evidently they have had some success in dealing with the banks (certainly more than I have).  I also heard from a friend in LA that they did the same thing there a week ago at the Collusium and they had a line of the same length.  So there seems to be a big need for this and no one really has taken the banks to task about the problem, even the government.  I have mentioned in past blogs that even Senator Feinstein has gotten involved with my mortgage situation, and that even her involvement has really changed nothing.

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To date we have put in 8 applications for a loan modification to WaMu over 2 years.  We just found out that the application we submitted in May had been lost, and that they were using old financial records from 18 months ago in our application instead of the newest most up to date numbers.  Even though we have written confirmation of their receiving the application, and the ID number of the representative that received them, WaMu said that their imaging system did not come on line until June, which is their excuse for not having the most recent application. In addition, the negotiator we were assigned seems to be just denying every application as a way to clear her desk (our lawyer had several others with her and all were denied).

So we have to again, go through the lengthy process of submitting another application to WaMu (our 9th) which has to be some sort of record. According to our lawyer, WaMu needs 3 days to process the application and hopefully will assign it to a different negotiator, and postpone our current sale date of October 20th. Our lawyer also said that this process would probably go into the new year (2010), making the process over 2 years in length (November will be 2 years).  Everyone wishes it was over, WaMu, National City, our lawyer and especially us.  For me this has been an exercise in patience, and understanding that not much of this situation is under my control, and that I can only do the best I can, ask for help, and hope the result turns out to be positive.

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OK, so here is the current situation.  We did get the foreclosure sale postponed until October 20th.  We were told we did not qualify for the Obama Plan because our debt to income ratio was too high.  When I asked,  this was being calculated on our old interest rate (7.5%), which is what started this whole mess in the first place.  We also told them that we were negotiating with our second mortgage company to resolve the mortgage for x% one time payment, which would remove that debt.  However, we can’t do anything with the second mortgage until the loan modification on the first is approved (remember this is our 8th application and the last one went in to WaMu in March.  The San Francisco Chronicle also agrees that the banks are doing a terrible job on mortgage modifications, and the government laws are worthless (and so are being ignored by the banks).

It is almost 2 years now since this process started (Nov. 07) and nothing has changed.  I think the banks bureaucracy is stronger than Feinstein’s and the US Govt.  Even their executive committee can’t seem to get any resolution (I got a letter from them in June saying they were working on it), in the meantime I have had to get the foreclosure sale postponed every month since march.

What a pain in the ass!  And the stress!  I am still not sleeping.  Although the decision about not letting the bank run my life was a good one. At this point I am considering looking at suing the bank for “pain and injury” inflicted by this *&^%$ process.

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I sent out letters months ago to every government official I could think of, from my city council person to the President of the United States (and his wife) about the mortgage situation with my house and the current foreclosure actions.  The only one I got a response from was the office of Senator Diane Fienstein.  Of course their response was like any bureaucracy “here fill out this form.”  Which I did and sent it in with my new book on foreclosure (since the introduction to the book goes into my situation in great detail).

In my response to them it said the next sale date for the house was July 16th, so they were calling to see if the house had already been sold.  I told them no,  so they going to “open a case” and then pass it on to the Controller of Currency, who in turn may contact the bank on my behalf.

In talking to the woman who called from Senator Fienstein’s office I found out that she had 200 more mortgage cases on her desk to deal with, and that sometimes their intervention helps and sometimes it does not.  She could not guarantee me anything, but at least I have the government bureaucracy now trying to deal with the bank bureaucracy on my behalf.

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In June we went through this fire drill in that the day before the house was to be sold, the sale had not yet been postponed.  We finally did get it postponed until July 16th (today).  So we knew it was coming.  I called my lawyer and asked if we could try to not deal with this at the last minute, and they agreed.  I got a call from my lawyer on Monday saying that they had talked with WaMu and that the house sale would be postponed, and that they would get back to me with confirmation of this.

Confirmation never came, and by 9:00 last night I was getting very nervous.  After 18 months of this I am kind of paranoid around these things.  So I called a foreclosure listing hot line and put in the trustee sale number for my house.  Sure enough the recorded voice said not only was the house for sale today at 2:00 P.M. but they gave a starting bid price (not good news for me).  I think the lawyer took their eye off the ball.

At 9:00 last night I started calling every number I had for my lawyer, cell, office, etc.  stating that the sale had not been stopped and that we had about 6 hours (8am - 2 pm) to get the sale stopped in the morning (another fire drill).  The lawyer called WaMu again and oops, the loan negotiator at WaMu forgot to stop the sale (not a big surprise).  I have heard too many stories (even from my lawyer) of people who’s homes were sold at auction, only to get an agreement for a loan modification on the same house a week or two later.  Almost always the left hand does not know what the right is doing.  That is a good rule of thumb (pun intended… see I have not completely lost my sense of humor), don’t trust anyone to do anything, make sure you confirm it with an independent source, and if the house is your’s YOU have to protect it, don’t expect anyone else to take this responsibility (even if you pay them too, like a lawyer or loan modification firm).

At the writing of this blog I did hear that the house sale had been postponed (but have not yet confirmed it) and I do not know yet what the next sale date will be.  My guess is that we will be going through the same fire drill next month.  Who knows when this will end…

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We have a second mortgage with National City.  It started out as a credit line (which I got a credit card for), and is a HELOC which we warn against in Rules 12 and 14 in my new 42 Rules for Saving Your House from Foreclosure. Since I have not worked out my first mortgage loan modification with WaMu, there seems to be no sense in dealing with the second until that happens.  But these people are relentless, and have an automated dialing system.  When I don’t answer my phone they call 4-5 times a day.  If I do answer my phone and explain the situation to them they call at least 2X a day anyway, like that will make things go faster.

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An interesting story in the NY Times about PennyMac (Private National Mortgage Acceptance Company.  Stanford Kurland, the past second in command at Countrywide Financial (who’s CEO Angelo Mozilo) is under indictment and in and out of court)  was part of the management team that started CountryWide in offering the low teaser-rate adjustable loans (like the one I got) that put us in the current housing crisis.

On the surface PennyMac seems to be a good idea.  Their goal is to keep people in their houses (which I applaud).  However they started out their fund with hundreds of millions of dollars of cashed in Countrywide stock, because unlike the rest of us, they knew when to get out before the roof fell in. They are also getting money for PennyMac from some large investors.  These are smart (and rich) guys, just not necessarily ethical ones.  Mr. Kurland, now CEO of PennyMac, and his cronies are making millions from the home mortgage mess (a mess they helped to create).

How it works is that PennyMac recently they bought about $250 million in distressed loans from the FDIC (government) who acquired them from failed banks for about $40 million (about 17 cents on the dollar).  This gives them a lot of latitude to do a loan modification, write down the loan, cut the interest rate and make the mortgage into something that the homeowner can support and keep paying month after month. It is a win-win situation. PennyMac gets a piece of whatever they can collect from the homeowner (20 - 40%) and the government gets the rest. The homeowner stays in their house, foreclosures go down, and the crashing economy moves on.

Here is an example of how this (legal) scam works.  You have a loan for 400k that is in default with Bank “A”.
Penny Mac buys that bad loan for LITERALLY pennies on the dollar. They pay Bank “A” (10%) or 40k for that mortgage. Penny Mac then turns around and renegotiates with you, the homeowner to rewrite your 400k loan, which was at 7.5% interest toas little as 3%. Bank “A” gets rid of a bad loan, and makes 40k. Penny Mac makes 360k right off the top, before interest. You (the homeowner) are essentially happy you can stay in your home, but you never realize that it was Countrywide that sold you the bad loan in the first place, before it was repackaged and resold a dozen times between lenders.

However, the ethical side of this does not look so good. As one lawyer said ““It is sort of like the arsonist who sets fire to the house and then buys up the charred remains and resells it,” said Margot Saunders, a lawyer with the National Consumer Law Center, which for years has sought to place limits on what it calls abusive lending practices by Countrywide and other companies”  Or in a column by op-ed writer Gail Collins: said in the New York Times that “It’s like Jeffrey Dahmer selling body parts to a clinic.” Or this, in a Times story by Eric Lipton: Or as another reporter from the New York Times put it a bit more graphically “It is like Jeffrey Dahmer selling body parts to a clinic.”

PennyMac hopes to achieve a profit of at least 20% annually (not bad in a recession economy), and it is actively courting other investors for another $750 million to build its portfolio, which now consists of $800 million in loans, to as much as $15 billion in the next 18 months. So in today’s economy what do you do when you are caught stealing billions of dollars like CountryWide did? Change your name and steal more, after all America is the land of opportunity.

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