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Judge’s Ruling an NJ Foreclosure Game Changer

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Judge’s Ruling an NJ Foreclosure Game Changer

April 26th, 2019 by

On the surface, this may not seem like a big deal, but here is why it is important to a homeowner who may be facing or fighting foreclosure.

Here is how it helps the homeowner.

Foreclosures are filed in state court.  In New Jersey, the state courts have become more unfavorable to homeowners since 2012, and they

often rubber stamp bank requests even where the documents are missing.  Courts have made it easier and easier for banks to obtain foreclosure judgments in New Jersey.

Where the State Court allowed the bank to get a judgment including money not owed by the homeowner and the Federal Court ruled that by seeking to collect money not owed the attorneys involved violated Federal Law.  When a bank seeks to collect money it is not owed, a homeowner can sue in Federal Court instead of State Court.  Federal Courts apply the law more accurately than the State Courts.

Homeowners that go on the offensive level the playing field.  A homeowner that shows the bank they are not afraid to fight when their rights are violated, creates leverage.

The number of ways banks and their collection attorneys violate homeowner rights is never-ending and always evolving.  Federal Courts can hear claims where a bank refuses to honor a loan modification, misapplies money paid to the bank, or where the bank breaks into a home.  These are the types of violations that happen on a daily basis across the country.  These are violations of homeowner rights ignored by the State Courts.

Additionally, banks process foreclosure cases as quickly and inexpensively as possible and don’t look into details unless forced to.  Often times they haven’t even looked at the repayment history or loan servicing file before filing a foreclosure.  This increases the chance for an error on by the debt collecting lawyers.  Finding these errors and turning them into leverage for the homeowner is the foundation to creating a smart and effective legal plan for combating foreclosure.

Denbeaux & Denbeaux doesn’t just think about how to defend a foreclosure, they have developed tools to utilize several Federal Laws that allow homeowners to go on the offensive if their rights have been violated by the loan owner, servicer, attorney or their representatives.  The Denbeaux firm uses the Real Estate Settlement Procedures Act to obtain a homeowner’s complete loan servicing file.  This includes loan payment history, letters sent by the loan servicer, loan modification applications, phone call records, and other documents that often demonstrate violations of Federal Law that can be acted upon by the homeowner.

Going on the offensive is the best way a homeowner facing foreclosure can improve their situation.  The banks, loan servicers, and their attorneys take matters seriously when they get sued with legitimate claims.  They pay attention in part because they are under a close watch from the Financial Consumer Protection Bureau (CFPB) which pays attention to how often financial institutions get sued, and the reasons for the lawsuits.  The ruling in Psaros v. Green Tree Servicing demonstrates the difference between operating in State Court and Federal Court and shows that homeowners facing foreclosure have many rights, but only if they are willing to directly stand up for themselves.

Three Sneaky Foreclosure Tricks of Loan Servicers

June 24th, 2017 by

The best time to get a consultation for foreclosure prevention is before you miss a mortgage payment.

Many homeowners have told us that it is matter of pride that they maintain control of the situation. However, while they think that they have the situation under control, the loan servicer can be moving them closer and closer to foreclosure and eviction without them even knowing it.

When the third mortgage payment is missed it will trigger default and begin the foreclosure process.

Here are three ways that homeowners may be mislead :

  1. Told to miss payments. The loan servicer says to miss payments and go into default to a get a modification.
  2. Trial modification gone wrong.The loan servicer loses the application, payments, or breaches the final modification agreement.
  3. Dual tracking the homeowner. Dual tracking is when the loan servicer is simultaneously processing your loan modification and pushing forward the foreclosure process.

Here are the three warning signs that you need to take action by calling a foreclosure defense attorney:

  1. You are falling behind in payments and the loan servicing company is giving you false or misleading information about what you can do to save your home.
  2. You have applied for a loan modification and you are getting foreclosure notices at the same time from the loan servicing company.
  3. Your loan servicer outright lied to you about stopping the foreclosure while your loan modification application was being reviewed.

Always deal from a position of strength, rather than weakness, and make financial decisions based on facts that than emotion.

We have found that every foreclosure case is unique and every family situation is unique. Denbeaux and Denbeaux has handled thousands of foreclosure cases in New Jersey with most of the loan servicers, banks and attorneys who represent them. We know what violations to look for in both state and federal statutes. In your free consultation we will review your documents and tell you what your options are, what strategies can be used and what the consequences and likely outcomes will be. You will feel more in control because you will be dealing from a position of strength with the facts.

Judge Finds Mortgage Modification Agreement a Valid Contract

November 2nd, 2016 by

A homeowner raised a valid claim for breach of contract when a mortgage holder failed to grant a mortgage modification after the homeowner fulfilled requirements of a trial modification agreement, a New Jersey federal judge has ruled.

Charles Toutant, New Jersey Law Journal

A motion to dismiss the homeowner’s breach of contract claim was denied after U.S. District Judge Freda Wolfson of the District of New Jersey found the elements of breach of contract were fulfilled by the plaintiff’s successful completion of the trial modification agreement and the defendants’ subsequent refusal to modify terms of the mortgage.

Wolfson’s Monday ruling in Block v. Seneca Mortgage Servicing, which was designated for publication, could put the lid on a common practice in the mortgage industry, according to plaintiff’s attorney Joshua Denbeaux—a homeowner complies with the requirements of a trial modification agreement, also known as a trial payment plan, only to see the mortgage company refuse to modify the mortgage terms.

Homeowner Florence Block, who defaulted on the $580,000 loan on her Bernards home, was named in a foreclosure action in January 2013. In May 2014, she reached an agreement with Seneca Mortgage Servicing that would lower her monthly payment if she made a deposit and six monthly payments on time. She completed her obligations under the agreement by November 2014, but the next month her loan was sold and the servicing of the loan was transferred to Ocwen Loan Servicing. Ocwen initially refused to provide a modification but said it would do so after Block’s counsel provided proof of her full compliance with the trial modification agreement with Seneca. But Ocwen failed to credit $32,543 in trial modification payments to Block’s loan balance, she claims.

Ocwen never followed through, and in March 2015, a company called Fay Servicing took over for Ocwen. Fay Servicing refused Block’s request for a loan modification but provided a new trial modification agreement requiring a down payment and six monthly payments.

Block filed suit against Seneca, Ocwen, Fay and the mortgage holder, ARLP Securitization Trust, Series 2015-1 in January. She raised breach of contract claims and also raised claims under the Fair Debt Collection Practices Act, Real Estate Settlement Procedures Act and the New Jersey Consumer Fraud Act. The defendants moved to dismiss all four counts.

The motion to dismiss FDCPA claims against Ocwen were granted in part and denied in part. Motions to dismiss RESPA and FDCPA claims against Fay were granted. Wolfson denied the motion to dismiss the Consumer Fraud Act claim against Seneca.

In refusing to dismiss the breach of contract claims, Wolfson found the plaintiff properly alleged a contract between the parties, a breach of the contract, damages flowing from the breach and that the party stating the claim performed its own contractual obligations. She rejected the defendants’ argument that the Seneca trial modification agreement is a valid contract due to lack of proper consideration by the plaintiff.

Plaintiff Block defaulted on the mortgage because she was suffering from cancer, and she died about a month ago, said Denbeaux of Denbeaux & Denbeaux in Westwood, who represented the plaintiff along with the firm’s Adam Deutsch. A mortgage modification would permit her daughter, who moved into the house to care for her mother, to stay there and make the mortgage payments, Denbeaux said.

Wolfson cited cases from the Fifth and Seventh circuits, which found no contract existed and explained why they were wrong, he said. Her ruling that the trial modification agreement is a contract is likely to be cited by other courts, he said.

“There are tens of thousands of people in this situation. The district courts throughout the country have gone in different directions on this issue,” Denbeaux said. “We laid out all the facts and [Wolfson] had a full record in front of her for the first time anywhere in the country as to what happens with this trial modification nonsense.”

Joseph Froehlich of Locke Lord in New York, representing ARLP and Fay Servicing; Jason Kislin of Greenberg Traurig in Florham Park, representing Ocwen; and Steven Penaro of Alston & Bird in New York, representing Seneca, did not respond to messages about the case.

Contact Charles Toutant at [email protected] On Twitter: @ctoutantnjlj.

Jury Awards Man $2.5 in Punitive Damages Against Ocwen for Willfully Violating the FCRA

June 2nd, 2016 by

Jury Awards Man $2.5 in Punitive Damages Against Ocwen for Willfully Violating the FCRA

Attorney Adam Deutsch of the law firm Denbeaux and Denbeaux talks about the award of $2.5 in punitive damages in a foreclosure case. He explains why the jury made the award, how the case developed and what homeowners in NJ can expect if they find themselves in a similar situation.

“Mr. Daugherty had a balloon note mortgage, and he had to pay an $80,000 balloon payment,” said Nolan, with the law firm of Hamilton Burgess Young and Pollard. “He wasn’t behind on his mortgage payments, yet the credit report showed he was five months behind. It said he was in foreclosure, and he wasn’t. Ocwen even acknowledged he wasn’t in foreclosure.”

The lawyers of Denbeaux and Denbeaux are trusted experts and trusted authorities in handling foreclosure cases which stem from loan servicing errors. These loan servicing error fall under federal laws and require that the case be tried in federal court. We’re experts there, too.

Judge’s Ruling a NJ Foreclosure Game Changer

February 16th, 2016 by

Why is this important?
It is the idea that the best defense is to be able to be in control and have an aggressive offensive strategy. This applies to whether you are trying to stop a foreclosure, get a loan modification, or believe that you were subject to fraud.

This is why this ruling is such a game changer for you. It allows you to turn the tables on the banks, loan servicers, and even their attorneys.

A loan servicer trying to foreclose on your home is subject to the same laws as that apply to a debt collector.  A law firm that represents a loan servicer is also subject to the same laws. In a foreclosure action both the loan servicer and the law firm are subject to penalties and enforcement under federal laws as debt collectors and can be sued by a homeowner.

What changed?
In the landmark case [Psaros vs. Gree Tree Servicing ] brought and won this year by Denbeaux and Denbeaux, possible favorable outcomes for foreclosure defense shifted more in favor of the homeowner.

The takeaway for New Jersey homeowners facing foreclosure as explained in the articles “Debt collectors beware: Judge’s Ruling Could Change the Game” by David Porter of the Associate Press, and ‘These Are People’s Lives You’re Playing With’:The Fight to Curb Debt Collector Lies” by Alan Pyke is this: a law firm who represents a bank in a foreclosure case can be held responsible for the mortgage company’s loan servicing errors.

Both the loan servicer and the law firm that represent them can have complaints filed against them and the law firm can be made to testify and provide evidence against their client.

Judge’s Ruling a NJ Foreclosure Game Changer

Joshua Denbeaux, Esq.

On the surface this may not seem like a big deal, but here is why it is important to a homeowner who may be facing or fighting foreclosure.

Here is how it helps the homeowner.

Foreclosures are filed in state court.  In New Jersey, the state courts have become more unfavorable to homeowners since 2012, and they often rubber stamp bank requests even where the documents are missing.  Courts have made it easier and easier for banks to obtain foreclosure judgments in New Jersey.

Psaros v. Green Tree Servicing is a good example, where the State Court allowed the bank to get a judgment including money not owed by the homeowner, the Federal Court ruled that by seeking to collect money not owed the attorneys involved violated Federal Law.  When a bank seeks to collect money it is not owed, a homeowner can sue in Federal Court instead of State Court.  Federal Courts apply the law more accurately than the State Courts.

Homeowners that go on the offensive level the playing field.  A homeowner that shows the bank they are not afraid to fight when their rights are violated, creates leverage.

The number of ways banks and their collection attorneys violate homeowner rights is never-ending and always evolving.  Federal Courts can hear claims where a bank refuses to honor a loan modification, misapplies money paid to the bank, or where the bank breaks into a home.  These are the types of violations that happen on a daily basis across the country.  These are violations of homeowner rights ignored by the State Courts.

Additionally, banks process foreclosure cases as quickly and inexpensively as possible and don’t look into details unless forced to.  Often times they haven’t even looked at the repayment history or loan servicing file before filing a foreclosure.  This increases the chance for an error on by the debt collecting lawyers.  Finding these errors and turning them into leverage for the homeowner is the foundation to creating a smart and effective legal plan for combating foreclosure.

Denbeaux & Denbeaux doesn’t just think about how to defend a foreclosure, they have developed tools to utilize several Federal Laws that allow homeowners to go on the offensive if their rights have been violated by the loan owner, servicer, attorney or their representatives.  The Denbeaux firm uses the Real Estate Settlement Procedures Act to obtain a homeowner’s complete loan servicing file.  This includes loan payment history, letters sent by the loan servicer, loan modification applications, phone call records, and other documents that often demonstrate violations of Federal Law that can be acted upon by the homeowner.

Going on the offensive is the best way a homeowner facing foreclosure can improve their situation.  The banks, loan servicers, and their attorneys take matters seriously when they get sued with legitimate claims.  They pay attention in part because they are under a close watch from the Financial Consumer Protection Bureau (CFPB) which pays attention to how often financial institutions get sued, and the reasons for the lawsuits.  The ruling in Psaros v. Green Tree Servicing demonstrates the difference between operating in State Court and Federal Court and shows that homeowners facing foreclosure have many rights, but only if they are willing to directly stand up for themselves.

$5M Jury Award for One Foreclosure Fraud Makes U.S. Punishment Look Trivial

November 14th, 2015 by

$5M Jury Award for One Foreclosure Fraud Makes U.S. Punishment Look Trivial

Article by David Dayen in theintercept.com 11/13/15 tells of  a couple’s foreclosure fight and award of $5 million in damages.

Article suggests that the Department of Justice let big banks escape from paying $32 trillion and settle for less that a tenth of a penny on the dollar.

By David Dayen

A Texas jury’s recent decision to award over $5 million in damages and fees for the fraudulent foreclosure of a single home suggests that the big banks could have been on the hook for as much as $32 trillion — before the Justice Department and state attorneys general settled for $25 billion, or less than on tenth of a penny on the dollar.

In the trial in Harris County district court, the jury awarded Houston foreclosure victims

Mary Ellen and David Wolf $5.38 million on November 6, on the grounds that Wells Fargo Bank and Carrington Mortgage Services knowingly submitted false documents to kick them out of their home.

The Wolfs had taken out a $400,000 home equity loan from Carrington (then known as New Century), which was immediately sold into a mortgage-backed trust administered by Wells Fargo. The loan was never properly placed into that trust, however, breaking the chain of title and making it impossible for Carrington or Wells Fargo to legally enforce the lien.

They put the Wolfs into foreclosure anyway, relying on a transfer document fabricated (or “robo-signed”) by Tom Croft, a New Century employee. New Century did not own the promissory note or deed of trust and could therefore not legally transfer the lien, and Croft signed off without personal knowledge of the underlying loan.

The jury agreed with the Wolfs that this made the foreclosure invalid, and awarded the family $150,000 in financial injuries, $40,000 for mental anguish, $5 million in punitive damages and $190,000 in attorney’s fees. Wells Fargo can seek a new trial, ask the judge to reduce the damages, or appeal the case, though they haven’t done so yet.

Numerous court depositions released in 2010 revealed that robo-signing of mortgage documents in an attempt to prove ownership of loans and secure foreclosures – in other words, foreclosure fraud — was a widespread industry practice. Two years later, the five leading mortgage servicing companies, including Wells Fargo, paid $5 billion in fines and $20 billion in credits in return for federal and state prosecutors agreeing not to pursue civil charges.

With the jury award in the Wolf family case, we can now assess the true financial exposure on these banks and mortgage companies. There have been roughly 6 million foreclosures since the beginning of the financial crisis in 2008, and virtually all of them were completed with robo-signed, fabricated or fraudulent documents in one form or another. If we apply the $5.38 million jury award to all of those loans, you have a potential cost from the foreclosure fraud scandal of $32.28 trillion.

This obviously represents the extreme edge of the possible financial hit to the industry. A small number of foreclosures may have been completed properly. And while the settlement didn’t preclude individual civil lawsuits most foreclosure victims don’t have the wherewithal or fortitude for a protracted legal fight like the Wolf family did.

It’s law enforcement’s job to step in and protect the rights of vulnerable victims lacking resources. And the contrast between the penalty banks actually paid, and what they could have been put on the hook for, could not be more stark. The $25 billion National Mortgage Settlement – and calling it that is extremely generous, since banks got credit to pay off the penalty through routine activities like bulldozing blighted properties and donating homes to charity – represents roughly 0.08 percent of the total possible exposure.

That barely qualifies as a slap on the wrist for breaking the centuries-old American property rights system, and fraudulently mocking up foreclosure documents to cover it up.

Disclosure: I’ve written a book that will be released next May, Chain of Title, detailing these foreclosure fraud practices and the individuals who exposed them.

Episode 10 – Bank Denial of HAMP loans against TARP’s Purpose for Homeowners Facing Foreclosure

July 31st, 2015 by

Josh Denbeaux joins Adam Deutsch on the FCRT

Josh Denbeaux, Partner at the law firm of Denbeaux and Denbeaux makes his inaugural guest appearance on the Financial Consumer Rights Talk program with host Adam Deutsch Esq. Today they discuss the latest news relating to the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) calling for further investigation of servicers it claims may be denying too many Home Affordable Modification Program (HAMP) applications.

Data from SIGTARP and Treasury show denials on average fell sharply to 69% in 2013 after peaking in 2012 at 82%. The average as of April was 63%. Other statistics show cumulative HAMP denials have climbed significantly over time, increasing by 1 million since 2012. The top reasons applications get denied are incomplete applications and insufficient income, according to SIGTARP.

Adam Deutsch and Josh Denbeaux question why banks have provided only $11 billion out of $29.8 billion in loans since any reduction in principal as part of the HAMP program will reimburse the banks so they are not actually taking a loss?

Another issue discussed in the program is Treasury’s role in the program, given that SIGTARP made 176 recommendations designed to protect TARP programs and dollars, but can only provide protection if Treasury implements those suggestions.  What is Treasury’s reason for failure to implement 104 of those recommendations made by SIGTARP?

Further into the program, Adam and Josh make the point that Congress has created a private right of action that homeowners who are cheated out of their rights whether it was through HAMP or other loss mitigation options as it was part of the TARP agreement.

“TARP is not supposed to be just a bailout of the largest financial firms, but was always supposed to include a bailout of homeowners at risk of foreclosure. Congress rejected Treasury’s initial proposal TARP just be a bailout of some of the largest financial fir, instead in recognition of the foreclosure crisis, Congress made foreclosure mitigation an express part of the law authorizing TARP. Among other things preserving home ownership is an explicit purpose of the law, and that the need to help families keep their homes is one of the considerations the Secretary of Treasury is required by law to consider in exercising  his authorities under TART.” Page 99 of the SIGTARP report

Special Inspector General for the Troubled Asset Relief Program Christy Romero

Ocwen Fails Loan Mod Test in Mortgage Settlement

May 7th, 2015 by

Adam Deutsch, Esq.

It has long been my personal opinion based upon experience representing homeowners facing threat of foreclosure that having Ocwen as a loan servicer meant the homeowner had the best possible chance of obtaining a

loan modification that made financial sense both for the homeowner and lender.

Recently, the trend is shifting and the new report that Ocwen has failed a compliance test regarding loan modification and loss medication processes is troubling.  It is evident that Ocwen’s approach of cost cutting is preventing it from improving compliance and maintaining its stature as a leader of creative problem solving in the servicing industry.

According to Bloomberg Business, Ocwen maintains 70% of its employees in India.  One can only imagine this has exacerbated the companies communication and compliance problems.  Ocwen CEO Ronald Faris stated that Ocwen will be looking to contract its operations in an effort to improve compliance.  This is an acknowledgment that the company grew too big, too fast which has resulted in preventable injuries to many borrowers.”


Ocwen Fails Loan Mod Compliance Test in Mortgage Settlement

MAY 7, 2015 8:00am ET

Ocwen Financial failed a test to determine whether it had notified borrowers of missing or incomplete documents for loan modifications in a timely manner, according to the national mortgage settlement monitor.

Joseph A. Smith Jr., the settlement monitor, plans to file a report Thursday with the U.S. District Court for the District of Columbia outlining corrective actions taken by Ocwen, which passed eight other tests.

Ocwen reported preliminary first-quarter earnings last week in which it said it does not expect to face any fines or actions from regulators that would have a material impact on its results.

In December, Smith launched an investigation of Ocwen saying he could not rely on the Atlanta servicer’s internal review process.

The retesting of metrics began last year after a whistleblower contacted Smith claiming that Ocwen was selecting its own samples of loan files instead of taking a statistical sample. Smith then created a hotline to allow any concerned employees to contact him.

The results of the current review by the independent accounting firm McGladrey show that Ocwen failed just one metric, on loan mod documentation, that it had previously claimed to have passed. The company passed eight other tests including one that its internal review group claimed to have failed on terminating force placed insurance agreements.

To put Ocwen’s results in perspective, last year, Green Tree Servicing failed eight tests during one testing period, prompting further scrutiny of nonbank servicers’ processes.

Ocwen has replaced an unnamed executive who had previously led the internal review group that was created to comply with terms of the 2012 national mortgage settlement, Smith said. The company also has reorganized its employees, adopted corporate governance principles and enhanced the monitor’s access to information, Smith said.

The settlement allows banks and servicers to correct all violations, and it only subjects them to financial penalties if their mistakes reach a specific “error threshold” after corrective actions have been taken. No bank or servicer has yet paid financial penalties for failing any of the 33 metrics being tested by independent reviewers working for Smith.

Ocwen said it is committed to being fully compliant with all the rules and regulations related to its business.

“We are pleased with the progress we have made so far working with the monitor, and we will continue to make every effort to improve all aspects of our compliance procedures and processes,” the company said in an emailed statement.

The 2012 national mortgage settlement with federal regulators and 49 state attorneys general resulted from servicers’ “robo-signing” foreclosure documents and other lapses. Ocwen became a party to the settlement after purchasing mortgage servicing rights from Residential Capital, the former lending arm of General Motors that later belonged to Ally Financial.

The Financial Consumer Rights Talk – Episode 2

March 4th, 2015 by

Adam Deutsch Discusses Developing Topics Related to Consumer Rights

The Financial Consumer Rights Talk 3-3-2015: Attorney Adam Deutsch discusses the recent struggles of Ocwen Financial Corporation in an ironic twist that sees Ocwen losing servicing contracts because it is too successful at resolving delinquencies with distressed homeowners.

Click to Play Podcast

Ocwen has recently been fired by multiple investors who claim that Ocwen’s common practice of working with debtors to modify their loan allowing, them to make payments and stay in their homes, is costing them billions. Does this indicate a flawed system in which it is more profitable for loan owners to foreclose no matter the circumstances rather than getting a steady flow of income from modifying? Adam Deutsch weighs in.

Episode 2 – Financial Consumer Rights Talk – Ocwen Financial Corporation

March 2nd, 2015 by

Attorney Adam Deutsch discusses the recent struggles of Ocwen Financial Corporation in an ironic twist that sees Ocwen losing servicing contracts because it is too successful at resolving delinquencies with distressed homeowners.

Ocwen has recently been fired by multiple investors who claim that Ocwen’s common practice of working with debtors to modify their loan allowing, them to make payments and stay in their homes, is costing them billions. Does this indicate a flawed system in which it is more profitable for loan owners to foreclose no matter the circumstances rather than getting a steady flow of income from modifying? Adam Deutsch weighs in.

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