Friday, June 7, 2019

Cook County Foreclosure Lawsuit Against Banks Continues

Back in 2014, Cook County filed a lawsuit against Wells Fargo, HSBC, and Bank of America related to the banks’ foreclosure practices, according to an article in the Cook County Record. While the outcome of that case limited the damages available to Cook County and to affected borrowers, a recent federal case could allow Cook County to have federal judges reconsider the ruling. We want to say more about the 2014 case and its connection to foreclosures in Chicagoland, and the possible implications of the recent case for reconsidering what banks owe when they engage in predatory lending practices.

Getting the Facts of the Case: Cook County’s Recent History Suing for Discriminatory Lending Practices Leading to Foreclosure

The 2014 lawsuit alleged “the lenders engaged in discriminatory predatory lending practices against racial and ethnic minority borrowers,” and that those discriminatory lending practices “fueled a wave of foreclosures, stripping equity from minority borrowers and sending them into default.” As a result, homes throughout the Chicago area and its suburbs ending up vacant, and property values in neighborhoods across the region declined. As the article explains, that lawsuit resulted in a 2018 court ruling in which federal judges “limited the kinds of monetary damages the country could demand from the big banks.”

In short, the 2018 decision said that Cook County could only obtain “direct costs the Cook County Sheriff’s Office and courts may have been forced to pay to handle a larger than usual number of foreclosure cases.” Cook County had sought much more extensive damages that would have included payment for “depressed property tax collections” as well as for “increased blight and crime.” While the 2018 ruling came as a disappointment for consumer advocates and for Cook County, a recent federal court ruling suggests that Cook County may in fact have been able to seek some of those additional damages.

New Federal Case Expands Possibilities for Damages in Foreclosure and Predatory Lending Cases

While the recent case occurred in the 11th Circuit Court of Appeals, it could prove to be persuasive in Illinois. In that case, the 11th Circuit ruled that the City of Miami should be able to move forward with a predatory lending claim against several big banks, including both Wells Fargo and Bank of America, which were also named in the Cook County suit. The 11th Circuit specifically clarified that “the connection between the banks’ alleged actions and the lost property tax revenues and other economic woes the city suffered” could show that the big banks proximately caused those harms. Accordingly, the Court allowed the city to move forward with its lawsuit seeking more extensive damages against the named big banks.

According to Judge Stanley Marcus, who authored the decision, “proximate cause asks whether there is a direct, logical, and identifiable connection between the injury sustained and its alleged cause.” Judge Marcus emphasized that the city showed there was indeed proximate cause because it proved that the bank’s conduct was “necessarily and directly connected to” the harms that occurred in the city.

Cook County is now using the language from that decision to argue that it should be entitled to seek broader damages from the big banks named in its lawsuit.

Learn More from a Foreclosure Defense Lawyer in Oak Park

If you need help with foreclosure defense or what to learn more about your options if you were the victim of predatory lending practices, an Oak Park foreclosure defense attorney can assist you. Contact the Emerson Law Firm for more information.

See Related Blog Posts:

Is a Short Sale Better Than a Foreclosure?

Recent Court Case Addresses Role of Third-Party Buyers in Foreclosure Sales

Friday, April 19, 2019

Is a Short Sale Better Than a Foreclosure?

Many homeowners in Oak Park, Illinois are getting to the point at which the foreclosure crisis no longer feels like a threat as neighborhoods throughout Chicagoland continue to recover. However, many homeowners continue to face foreclosure, and a lot of those individuals do not understand their options when it comes to foreclosure defense and methods for keeping their home. In some cases, foreclosure avoidance tactics allow the homeowner to keep his or her house, while in other cases, they do not.

A recent article in Forbes discusses the difference between a short sale and a foreclosure. We want to say more about whether a short sale is better than a foreclosure, and to provide more information about other ways of avoiding owing money once a short sale goes through.

What is a Short Sale?
Many homeowners are confused about the distinction between a short sale and a foreclosure. They do have certain similarities, with the most obvious being that both a short sale and a foreclosure result in the homeowner losing the property. However, a short sale can be much better for your credit. A short sale, importantly, is not foreclosure. As such, it is a way of avoiding foreclosure.

So what is a short sale? As the article explains, a short sale is a type of sale that involves selling your house for a total price that is less than what you owe on your mortgage. For instance, if you purchased your home at the height of the market for $500,000, it may have declined significantly in market value since then. As a result, with the mortgage payments you have already made, let us say you still owe $475,000 on the mortgage. However, with the current market, your home is valued at only $400,000. You are able to find a buyer for that amount, but it leaves you with a deficit of $75,000. Since “you are technically coming up short” by $75,000, this type of sale is known as a short sale.

Other than the shortfall, a short sale works much like any other home sale. Many homeowners work with real estate agents and advertise the property in the same way they would another house. However, the bank has a final say in who gets to buy the house in a short sale.

Why is a Short Sale Usually Preferable to a Foreclosure?
When a homeowner completes a short sale, the expectation is usually that the bank is going to forgive the remaining amount of debt. In the example above, the bank would be forgiving the $75,000 that the homeowner still owes on the mortgage. In some cases, however, the bank tries to recoup the money.

As the article clarifies, some short sales result in the mortgage lender filing a “deficiency judgment” against you in an attempt to obtain the “shortfall” amount from the sale. In the example given above, the lender might seek a deficiency judgment for $75,000. While some states do not allow mortgage lenders to file deficiency judgments in these circumstances, Illinois law does allow for deficiency judgments after a short sale, but there are ways to avoid them.

If the short sale agreement between the homeowner and the mortgage lender expressly states that the mortgage lender is giving up its right to seek the “shortfall” amount, the lender cannot file a deficiency judgment. Even if the lender will not agree to this type of clause, it is important to know that the lender will not automatically receive a deficiency judgment. Rather, the mortgage lender will need to file a claim, and the court will need to award the deficiency judgment. Under Illinois law, deficiency judgments are prohibited after a deed in lieu of foreclosure, and they are permitted after a foreclosure.

Contact an Oak Park Foreclosure Defense Attorney
If you have questions about short sales, avoiding foreclosure, and deficiency judgments, an Oak Park foreclosure defense lawyer can help. Contact the Emerson Law Firm today for more information.

See Related Blog Posts:

Recent Court Case Addresses Role of Third-Party Buyers in Foreclosure Sales

How the Government Shutdown Has Affected Foreclosures

Sunday, March 10, 2019

Recent Court Case Addresses Role of Third-Party Buyers in Foreclosure Sales

If an Oak Park resident’s home goes into foreclosure, there are a number of steps that exist before the property goes through the process for a judicial foreclosure and the home is sold. Since Illinois is a judicial foreclosure state, all foreclosures go through the court system. However, in some cases, the homeowner is continuously taking action to attempt to retain possession of the home and to stop the foreclosure. What happens when a judgment of foreclosure is entered and the house is sold to a third party, but the homeowner appeals the judgment in an attempt to keep the property?

That is the basis for a recent case that went before the First Appellate District of Illinois, Deutsche Bank National Trust Co. v. Roman (2019). According to a recent article in about the case, the court had to determine whether a third-party buyer is a party to the foreclosure case, and whether an appeal can reverse a foreclosure judgment and sale. The court ruling could have implications for other foreclosure judgments and sales in the Oak Park area.

Getting the Facts About the Case

As the court explained in the background of the case, the matter had “a long litigation history.” We want to provide some basic facts about the background to make clear how the court reached its conclusion. In short, the defendants, Cesar and Irene Romans, owned a residential property in Chicago that went into foreclosure. The bank initiated the foreclosure process, and after approximately a year and a half, the court entered a judgment of foreclosure and sale.

The Romans appealed, and the case went through a lengthy litigation process. More than four years after the court entered the judgment of foreclosure and sale, a judicial sale of the property was scheduled. The Romans attempted to stop the judicial sale, arguing that they never received a grace period notice and that they never received a proper notice of default. The lower court agreed to an emergency motion to stay the sale of the property, but the court ultimately found against the Romans and permitted the sale to move forward a couple of months later. The buyer of the property was a third-party buyer unconnected to the foreclosure case. The Romans continued to appeal the judicial sale.

The plaintiff argues that the Romans’ appeal is moot because the property already had been conveyed to a third party under Illinois Supreme Court Rule 305(k).

Does a Third Party’s Acquisition of Property Render an Appeal Moot?

In the present case, the court had to determine whether a third party’s acquisition of the property in question rendered the appeal moot under Rule 305(k), and thus whether the third party was a “party to the foreclosure proceedings,” according to the article.

The court ultimately concluded that a third party buyer in a judicial foreclosure sale is not a party to the lawsuit, and that public policy behind Rule 305(k) is to prevent a third party from “losing [a] property due to facts unknown to him at the time of the sale.” Accordingly, the court clarified that, in a foreclosure case where the third party buyer has no other stake in the foreclosure proceedings than as a purchaser, an appeal from the former homeowners who went through the foreclosure process is moot under Rule 305(k).

Contact an Oak Park Foreclosure Defense Lawyer

An Oak Park foreclosure defense lawyer may be able to help you to stop a foreclosure at various points in the process. Contact the Emerson Law Firm today to learn more about your options.

See Related Blog Posts:

How the Government Shutdown has Affected Foreclosures
Reading the FDCPA: Are Foreclosure Actors Debt Collectors Under the Law?

Thursday, February 7, 2019

How the Government Shutdown has Affected Foreclosures

Just because the government shutdown is over does not mean that it is not having lingering effects; its effects are still being felt among government employees and consumers across the country. One area in which the government shutdown is still plaguing consumers concerns homeowners working on foreclosure avoidance and homeowners who are in government mortgage programs. How is the shutdown continuing to impact these groups of people? In short, during the government shutdown, many employees from the U.S. Department of Housing and Urban Development (HUD) were furloughed, meaning that they were in effect sent home from work without pay. As you might recall, the government shutdown lasted over a month.

During that time, people who were relying on HUD services to avoid foreclosure did not get the help they needed, according to a recent article in The Hill. And that lack of help has now put a significant number of homeowners at risk of losing their houses.

How the Government Shutdown Affects Homeowners Who Need Mortgage Help
During the government shutdown, a large number of HUD workers were furloughed, which meant that those workers could not handle cases related to foreclosure—from requests for modifications to questions about foreclosure cases that already have been started. As a result of being unable to handle new cases coming in and questions pertaining to existing cases, many HUD employees returned to work once the shutdown ended to find that cases “piled up while critical agency resources were unavailable.”

The fact that so many HUD workers were furloughed also means that they were unavailable to provide information to homeowners who are facing foreclosure this month. Indeed, according to the article, one elderly woman had been working with a HUD representative prior to the shutdown after being wrongfully denied entry into a foreclosure avoidance program for newly widowed spouses by her lender. But because no one at HUD could help that woman during the month of January—a critical time for her case, which is coming up for foreclosure this month in February—she may now be at much greater risk of losing her home.

This particular example is only one of many related to the lingering harms of the government shutdown on homeowners hoping to avoid foreclosure.

Millions of Borrowers may Have Been Affected by the Shutdown
The article underscores that more than nine million borrowers currently have mortgages provided by, or insured by, government agencies including HUD or the U.S. Department of Agriculture (USDA). The majority of these homeowners are “low-income, seniors, and/or residents of rural areas.” That is to say that most of these homeowners do not have other places to turn for help in avoiding foreclosure. If the government agency that handles their mortgage is closed, then most of those homeowners simply do not get help or answers to their questions. While many HUD employees were furloughed, so were employees at the USDA.

Currently, the article suggests that “thousands” of homeowners likely may lose their homes in the near future due to the shutdown—had HUD and the USDA been open, those homeowners would not be facing foreclosure today. Since the government shutdown lasted for such a long time, there is currently a “substantial backlog of requests for assistance,” which means that those same homeowners may not be able to obtain help from HUD or the USDA any time soon.

Consumer protections advocates argue that the agencies should extend foreclosure deadlines by the same amount of time as the government shutdown and should “issue a stay on foreclosures until they clear the backlog of pending requests for assistance.” Whether such steps will be taken remains to be seen.

Contact an Oak Park Foreclosure Defense Lawyer
In the meantime, if you need help avoiding foreclosure, an Oak Park foreclosure defense attorney can assist you. Contact the Emerson Law Firm to learn more.

See Related Blog Posts:

Reading the FDCPA: Are Foreclosure Actors Debt Collectors Under the Law?
Foreclosure Evictions Postponed for the Holiday Season

Wednesday, January 2, 2019

Reading the FDCPA: Are Foreclosure Actors Debt Collectors Under the Law?

A recent case to go before the U.S. Supreme Court, Obduskey v. McCarthy Holthus LLP, raises an issue that links foreclosure actions with the Fair Debt Collection Practices Act (FDCPA). More specifically, the issue in the case is whether a party taking foreclosure actions can be defined as a debt collector under the FDCPA, and thus whether a homeowner who is being subjected to those foreclosure actions has rights related to the foreclosure under the FDCPA. We will say more about the case and how its outcome could impact both homeowners and consumers more generally in the Oak Park, Illinois area.

Facts of Obduskey v. McCarthy Holthus LLP

The facts of the case are relatively simple. The plaintiff and homeowner, Dennis Obluskey, took out a mortgage in 2007 through Magnus Financial Corporation. His mortgage ultimately was sold to Wells Fargo, which then became the mortgage servicer. The homeowner got behind on mortgage payments between 2007 and 2009. By 2009, Wells Fargo began a nonjudicial foreclosure.

As a side note, Illinois is not a nonjudicial foreclosure state. To be clear, states in the U.S. either are judicial foreclosure states or nonjudicial foreclosure states. Illinois is a judicial foreclosure state, which means that any foreclosure needs to go through the court system. Nonjudicial foreclosure states allow a lender to foreclose on a home without going through the court system. Although the case at issue arises out of a nonjudicial foreclosure state, its outcome nonetheless could affect the rights of homeowners and consumers in judicial foreclosure states given that it could expand the definition of “debt collector” under the FDCPA.

Now, back to the facts of the case. In the language of the foreclosure notice to the homeowner, Wells Fargo indicated that its counsel, McCarthy Holthus LLP, “may be considered a debt collector attempting to collect a debt.” McCarthy, however, did not ask the homeowner to make any payments on the debt. The homeowner later filed a claim alleging that McCarthy and Wells Fargo violated the FDCPA.

Does the FDCPA Apply in Any Foreclosure Cases?

The question that the U.S. Supreme Court will need to address is whether the FDCPA is applicable in any foreclosure cases, and specifically in nonjudicial foreclosures. The case previously was heard by the 10th Circuit, which concluded—in line with a previous decision from the 9th Circuit—that the FDCPA is not applicable in nonjudicial foreclosure cases. Other circuits have disagreed. For example, the U.S. Courts of Appeals for the 4th Circuit, the 5th Circuit, and the 6th Circuit all have determined that the FDCPA does apply in these foreclosure cases. The 7th Circuit, which hears cases out of Illinois, has not ruled on the issue.

Are threats of foreclosure attempts to collect debts? Do such foreclosure attempts then make lenders debt collectors in certain circumstances? The Supreme Court will hear the case on January 7, 2019, and the decision likely will be handed down in May or June. If the Supreme Court determines that lawyers who are carrying out foreclosure proceedings are debt collectors under the FDCPA, it would broaden the scope of who can be a debt collector under the law and thus would broaden the types of situations in which a consumer may have FDCPA protections.

Contact an Oak Park Consumer Protection Lawyer

If you have questions about the FDCPA and consumers’ rights and protections, you should speak with an Oak Park consumer protection attorney. An advocate at our firm can discuss your situation with you. Contact the Emerson Law Firm for more information.

See Related Blog Posts:
Advocates Seek Consumer Protection from Abusive Debt Collection Tactics
Wells Fargo Admits to Hundreds of Wrongful Foreclosures

Friday, December 14, 2018

Foreclosure Evictions Postponed for the Holiday Season

Foreclosure activity continues in the Chicago area and throughout Illinois and the country, although foreclosure rates generally continue to decline. Indeed, a recent report from Business Wire indicated that serious delinquency rates were at their lowest in years, but 4.4% of mortgages remain at “some stage of delinquency.” In other words, more than 4% of mortgages are anywhere from 30 days past due to at the point of foreclosure eviction or foreclosure sale. The current foreclosure inventory rate is at about 0.5%. Despite the fact that foreclosure rates continue to decline or remain relatively low, it is important to remember that a number of homeowners are still facing foreclosure.

While Fannie Mae and Freddie Mac will continue to move through various stages of the foreclosure process during the holiday season, a recent article in HousingWire reported that both will be suspending foreclosure eviction lockouts between December 17, 2018 and January 2, 2019 for the holiday season.

Extending Timeline for Foreclosure Evictions in December

For Fannie Mae properties, any single-family homes, as well as two to four-unit properties, will have an extended timeline for foreclosure evictions. Starting December 17, no families will be evicted from those properties until after January 2 of the new year. Similarly, the foreclosure eviction timeline will also be extended for Freddie Mac properties, but the extension is a broader one. All foreclosed Freddie Mac properties that are currently occupied homes will not face evictions during the same time period.

According to the Fannie Mae vice president of single-family real estate, “We believe it is important to extend the timeline of help for struggling borrowers during the holidays.” Fannie Mae also encourages homeowners who are facing foreclosure to use this extra time to seek other options for foreclosure prevention. The Freddie Mac vice president of single-family servicer performance management echoed these sentiments, emphasizing how the mortgage servicer is “suspending evictions from Freddie Mac-owned homes to help provide families with a greater measure of certainty during the upcoming holiday season.”

Yet, to be clear, not all foreclosure activity is suspended. Only foreclosure evictions have been suspended. This means that other foreclosure activity, including both pre-foreclosure and post-foreclosure activity, will continue throughout December 2018 and into the new year.

Avoiding Foreclosure This Holiday Season
If you are facing foreclosure, there are numerous options that may be available to you this holiday season. An article from HGTV cites the following as common options for homeowners who are facing foreclosure:

  • Contact your lender to work out a compromise; 
  • Sell the home through a short sale, which often does not result in a profit for the homeowner but allows the homeowner to avoid damaging his or her credit any further and allows the homeowner to avoid foreclosure; 
  • Deed in lieu of foreclosure, through which the homeowner essentially signs the home back over the bank (but is not the best option for preserving a homeowner’s credit, and typically is only an option after a short sale and other possibilities no longer are available); and 
  • Chapter 13 bankruptcy, which can allow a homeowner to stay in his or her home while developing a repayment plan to pay off debt (once the homeowner files for Chapter 13 bankruptcy, the automatic stay prevents the foreclosure process from going any further). 

Contact an Oak Park Foreclosure Defense Attorney
If you need assistance avoiding foreclosure this holiday season, you should speak with a foreclosure defense lawyer in Oak Park as soon as possible. Contact the Emerson Law Firm to learn more about your options.

See Related Blog Posts:
Wells Fargo Admits to Hundreds of Wrongful Foreclosures
FHFA Report on Foreclosure Prevention

Thursday, November 8, 2018

Wells Fargo Admits to Hundreds of Wrongful Foreclosures

A number of erroneous foreclosures have been linked to Wells Fargo bank. Back in August 2018, Wells Fargo admitted that it had “accidentally foreclosed on” almost 400 homes due to a software glitch that denied homeowners the ability to seek mortgage modifications, according to a report from CBNC. This week, Wells Fargo announced again that it had “improperly foreclosed on 545 customers after wrongly denying them mortgage loan modifications, up from the 400 borrowers the company disclosed in August,” according to a recent article in Bloomberg.
While Wells Fargo is based in California, it provides mortgages to homeowners across the country, including in the Chicago area. What should Oak Park residents know about these “accidental foreclosures” and the harm caused by Wells Fargo’s actions? First, we want to provide some background information about the wrongful foreclosures that were reported in August, and then to speak to the new information this November about additional “accidental” foreclosures that have affected consumers and homeowners.
Alleged “Glitch” Results in Hundreds of Foreclosures That Should Not Have Happened
As the CNBC report explains, between 2010 and 2015, almost 400 Wells Fargo mortgage customers “lost their homes when they were accidentally foreclosed on after a software glitch denied them the ability to modify their mortgages as they sought federal aid,” In August, Wells Fargo “apologized” to those homeowners who were affected, and planned to remedy the serious errors by providing $8 million to customers who were impacted. According to Tom Goyda, the senior vice president of Wells Fargo, “during the course of an internal review, we determined that an automated calculation of error may have affected the decision on whether or not to offer or approve some mortgage modifications between April 13, 2010 and October 20, 2015, when the error was corrected.”
Goyda apologized for the “error” and said that Wells Fargo had plans to provide “remediation to the approximately 625 customers who may have been impacted.” While 400 homeowners actually lost their homes due to Wells Fargo’s mistake, as the report underscores, hundreds more were affected.
New Errors Revealed Regarding Wells Fargo Mortgage Accounts and Foreclosure
In August, Wells Fargo issued an apology to homeowners affected by its so-called “accidental” foreclosures and provided a remedy of $8 million, yet just this month, the bank again reported that nearly 150 additional homeowners were foreclosed on “accidentally” due to Wells Fargo errors. While the bank indicated that 625 customers in total had been affected when it made its announcement back in August, now it says that 870 customers in total actually were affected.
It is important to also underscore that these “accidental” foreclosures are not the only problem currently linked to Wells Fargo. The bank has been cited for improperly assessing fees on certain accounts, and fraudulently openning accounts for up to 3.5 million Wells Fargo customers who never wanted an account opened.
Learn More from an Oak Park Foreclosure Defense Lawyer
If you were one of the hundreds of homeowners with a Wells Fargo mortgage who faced foreclosure as a result of the bank’s error, you may be eligible for compensation. If you need assistance with foreclosure defense and keeping your home, you should speak with an advocate about getting started on your case. An experienced Oak Park foreclosure defense attorney can assist you. Contact the Emerson Law Firm for more information.
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