Time Is Running Out!

by Chris Markham. 0 Comments

This column begins with a bold statement – I hope you’re not behind in your mortgage. There. I said it. The way things are going right now in Maryland (and DC and Virginia to a point), those that are waiting for a loan modification, a short sale or some other type of homeowner relief are in a little bit of trouble. Prior to this date, banks were relatively slow in pulling the trigger on foreclosures. Sure, in some instances (usually when the property wasn’t entirely underwater in value or the property maintained its selling price throughout the duration of the “troubles”) banks were on that foreclosure, lickety-spit. But for most people, the banks kind of hung back, waited for the results of loss mitigation and then, after all of the options were exhausted, the property went to auction.
As previously mentioned, these glory days are disappearing fast. In the beginning of the crisis, Maryland enacted a bunch of laws that protected homeowners from the banks, and the courts were fairly well disposed to rule against the banks in all manner of legal proceedings. The intended effect of these acts were to ensure that homeowners (and voters) had every opportunity to save their homes. The unintended effect was that Maryland’s recovery from the crisis was slow – slower than the recoveries in the states that were hit the hardest – California, Florida and Arizona. These three states essentially took the homeowners out of the equation; usually, if the bank said something happened, it happened. Courts took the banks’ words on things, and people were foreclosed on left and right – even if they had a legitimate claim against being foreclosed upon.
As an aside, one such incident was a bank foreclosed upon a property but, in filing the paperwork, transposed the address numbers. Upon receiving the foreclosure notice, the homeowner began fighting the bank. Undeterred, the bank foreclosed on the property, and it took two years for the bank to finally admit its mistake and it settled with the homeowner for an undisclosed sum
Now, apparently, the crisis is over in states that saw the worst of it, and banks and government in Maryland are seeing that the recovery is slow in coming to the “Free State”. Therefore, Maryland is beginning to adopt the stance that other states have taken for so long – the banks are right, and the foreclosure show must go on.
There has been a recent line of cases that have eliminated the following arguments homeowners have used to avoid foreclosure. These include: the loan against the property was securitized/assigned/transferred without my permission and/or knowledge; the bank cannot provide the original note, so the bank can’t go forward with a foreclosure; the loan was obtained against the property fraudulently; or, one of my favorites, there cannot be a lien against the property, as liens are illegal as per United States Maritime Law.
Recently, Maryland Courts have determined that it doesn’t matter if a lender has sold/assigned/transferred a loan to another servicer, either with or without the knowledge of the borrower. Basically, it all comes down to once the bank has the loan, it can do whatever it wants with it. Further, it doesn’t matter if the loan was securitized (and the bank made a ton of money in the process); it all goes back to the fact that the bank can do what it wants with the loan.
The original note theory gained some traction in the early days of the crisis. However, as more and more notes were lost (or misplaced, or whatever), the courts were more disposed toward accepting what is known as an “Affidavit of Lost Note,” basically a statement providing that, at one time, the bank had the original note, but now it is nowhere to be found.
Next, at this point in the crisis, about five or six years have passed since the last of the bad loans were issued. Usually, the statute of limitations for loan fraud is two to three years. As a result, a borrower that feels as though they’ve been wronged, for the most part, has no time left to file any sort of claim.
Finally, the “no lien” rule is similar to that of the “super secret US Treasury bank account” argument (look it up – it’s fascinating). You can’t use the laws of the sea to govern transactions on land, just as you wouldn’t use the law of the land to govern transactions at sea.
Going forward, choices are limited to those facing foreclosure. If you’re one of those doing the facing, things will move quickly. Get help now!

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