The Meaning of the Loss of Home

When Bob Lawless posted yesterday (April 17) the table showing the daily filings for March, 2008, it got me thinking about what exactly those numbers mean, and specifically, about the families who are represented by those statistics and in the middle of financial crises. And while I recognize that not all, or even most, of these filers are losing their homes in the process of bankruptcy, some will be. And this fact really tugged at my emotions.

Here's why: A couple weeks ago, a colleague and friend gave me a wonderful book for a birthday gift--"Geography of Home: Writings on Where We Live," by Akiko Busch. Busch beautifully describes the history and meaning behind many places within the home--from the front door, to the library, to the kitchen, to the garage. As I read the book, I began to better understand what I, and I would expect most of us, intuitively know: our homes are so much more than shelters.

Whether it's true or not, our homes represent hope, the American Dream come true, safety, an environment where we can nurture ourselves and those we love, a place where we can welcome and spend time with our friends, and a place where we can escape from so many of the nagging demands of everyday life--and maybe most important, and as my dad would say, they are places for making memories. And for each person who reads this, home probably represents something more, something different, something unique to your own life.

When I combine what I learned from Busch's book with the bankruptcy rates, I am forced to think more deeply about just what an awful experience it must be for those families who must sacrifice their homes in an effort to escape their debts. And it makes me question the integrity of a system/society that seems relatively OK with this.

Comments

[Mike Dillon]

Professor Thorne,

As bad as it may be for homeowners being *legitimately* foreclosed on for whatever reasons, imagine how it feels for the, now most likely, millions of homeowners that are losing their homes to ILLEGAL foreclosures and whose last ditch efforts to save their home involve having to file bankruptcy for no other reason than they could either not find or simply not afford competent legal counsel to help them halt an illegal foreclosure initiated by Mortgage Servicing Fraud.

[AMC]

http://www.nytimes.com/2008/04/20/business/20gret.html?_r=1&oref=slogin

Piling On: Borrowers Buried by Fees

By GRETCHEN MORGENSON

* * * * * * *

The case out of the Eastern District of Louisiana, overseen by Judge Elizabeth W. Magner, is especially depressing. It involves Dorothy Chase Stewart, an elderly borrower and widow whose original loan of $61,200 was serviced by Wells Fargo. Judge Magner cited “abusive imposition of unwarranted fees and charges,” and improper calculation of escrow payments, among other things. She found Wells Fargo negligent and assessed damages, sanctions and legal fees of $27,350.

The heart of the case is that Wells Fargo failed to notify the borrower when it assessed fees or charges on her account. This deepened her default and placed her on a downward spiral that was hard to escape. And Wells Fargo’s practice of not notifying borrowers that they were being charged fees “is not peculiar to loans involved in a bankruptcy,” the court said.

During a 12-month period beginning in 2001, for example, Well Fargo assessed 13 late fees totaling $360.23 without telling Ms. Stewart or her late husband, whose name was on the loan before he died. Even though the terms of the mortgage required that Wells Fargo apply any funds it received from the Stewarts to principal and interest charges first, the late fees were deducted first. This meant that the Stewarts’ mortgage payments were insufficient, making them fall further behind — and keeping them subject to more late fees.

Then there were the multiple inspection fees Wells Fargo charged the borrowers. Because its computer system automatically generates a request for property inspections when a borrower becomes delinquent — to make sure the property is being kept up — the $15 cost of the inspections piled up. The court noted that the total cost to the borrower for one missed $554.11 mortgage payment was $465.36 in late fees and property inspection charges.

FROM late 2000 and 2007, Wells Fargo inspected the property on average every 54 days, the court found. But the court also determined that inspections charged to Ms. Stewart had often been performed on other people’s properties. Of the nine broker appraisals charged to Ms. Stewart from 2002 to 2007, two were said to have been conducted on the same September day in 2005 when Jefferson Parish, where the Stewart home was located, was under an evacuation order because of Hurricane Katrina.

The broker appraisals were conducted by a division of Wells Fargo that charged more than double its costs for them, the court found. It concluded that the charges were an undisclosed fee disguised as a third-party vendor cost and illegally imposed by Wells Fargo. The bank also levied substantial legal fees and failed to credit back to the borrower $1,800 that had been charged for an eviction action but that had been returned by the sheriff because it never occurred.

While Wells Fargo claimed that the borrower owed $35,036, the judge said the actual figure was $24,924.10. The judge ordered Wells Fargo to provide a complete loan history on every case pending with her court after April 13, 2007.

A Wells Fargo spokesman said the bank “strongly disagrees with many aspects of the recent bankruptcy rulings in New Orleans and plans to appeal these matters. Wells Fargo continuously works to enhance its bankruptcy procedures to comply with the requirements of the bankruptcy courts throughout the country.”

[Patches]

I don't want to be redundant, so I will not. The story that AMC pointed us to is so common! Not only do I see it from consumers who are not in bankruptcy but I also see these tactics in bankruptcy as well. See also “Misbehavior and Mistake in Bankruptcy Mortgage Claims” by Katie Porter.

I see these same mistakes by servicers every week. Debtors cannot understand how the costs got so high and how their delinquency got so high. I wish it was just a matter of understanding but it is not. We are seeing some of our more sophisticated and educated debtors falling victim to these same fees. It is so discouraging to see the manner in which servicers handle their accounts. Who would want to buy a home when you know that it will just be farmed off to a servicer to whom you cannot have personal contact?

It seems like something that you used to see in old black and white movies. Someone, most likely a farmer was being foreclosed on and at the last moment the debtor would take in a big bag of money into the local bank and save their home/farm. Well with the advent of out of state servicers you cannot sit in front of a Banker at your local Bank and make your payment or work out some way of saving your home. NO! In fact if the United States is going to guarantee the loan it has to be farmed off to a servicer. No if, ands or buts’. How easy would it be to drive into your local banks’ drive thru facility and write a check or pay by money order on the day that it is due? You could do that on the way to the supper market or before you pick up the kids from school. You would know that you know that you know that the payment was there on time and you would have a receipt to show for it. Now you send in your check “by snail mail”, they get it but wait a week to cash the check. They may even say that you paid late and charge a late fee and less of your regular payment went toward principal and interest. (Legal Equity Stripping)

Each new week brings more of the same. What is different this year than past years is the frequency of the bad news that we have to deliver. I have posted in the past that it used to be common place to be able to provide a measure of hope when people are facing foreclosure through Bankruptcy. Chapter 13 Bankruptcy for the most part has provided that added extra bit of help that got consumers over the hump and got them on the path to save their home. Now it seems as if the servicers have found their way around the system and are still, while the debtors are protected in Bankruptcy, adding fees that they should not. In Re: “Parsley 05-90374 S.D. Tex.” showed that the servicers know that their “computers” are adding those fees but will not stop them, justifying them instead by assuring the courts that any fees that should not be charged during the pendency of a Chapter 13, are wiped away upon discharge. YA RIGHT! What ends up happening is that the debtors come in post-discharge and say “they still say I owe X amount”, “I thought I would be current?”. Debtors attorney has to write up letters gather evidence spend more time and who pays? It should be automatic but it is not. Debtors Chapter 13 Bankruptcy attorneys only get paid $2-$3k on legal work that in any other legal field would bring in $10k given the time, expertise, deadlines and paperwork involved.

In theory debtor attorneys take their fees by paying less to unsecured creditors, but what ends up happening when a Mortgage is involved along with…. say a vehicle w/(adequate protection payments). More and more of the debtors “theoretical” disposable income is eaten up and in turn it leaves less and less for Attorneys fees. Even for post-petition work that we are permitted to charge for but often cannot without detriment to the debtors confirmed chapter 13 Plan. Do we get a pound of flesh or a pound of blood? It’s one or the other. Just like the “Merchant” we get neither. What we do get is the satisfaction of helping people. If we didn’t have that, this would be a sorry business.

Just the other day a debtor, out of the blue bought the whole office BBQ lunch (Rudys) (good stuff). One last story: Around Christmas, I got to talk to debtors who had a current Ch 13. They had received a letter from the Trustee indicating that their Plan was deficient due to an amended POC. Their Ch 13 Lawyer had committed suicide and wanted to hire us. Well, I took a look at the case and the letter and noticed something was off. I called the Trustee, and the girl who sent the letter (whom I have known for over 10 yrs) and pointed it out. Well the case was not deficient and the debtors had one payment left, the Trustee confirmed the mistake . We did not charge them a dime. Later on about two months later, the older couple brought in 5 dozen home made tamales. “They were so good, I could eat one of them” (Cheech and Chong Christmas story).

[wolfspirit21]

Hello,
I have been fighting servicing fraud since the hurricane, and only 40 days away from the sheriffs sale! I feel that bankruptcy is my only option at this point.
Have written OCC, FCC, FDIC, FBI- even the president's dog, and they all turn a blind eye/deaf ear to the epidemic of fraudulent foreclosures that is sweeping across the country.
These 'F' agencies must stop ignoring the facts. Reminds me of what my Mom used to tell me... if one kid in the class makes bad grades n hates the teacher, then the child likely has the problem. If most/all of the children hate the teacher and have poor grades, the teacher is usually at fault. It would seem to be a slight 'red flag' when foreclosures have increased 112% in a year. How bad must it get before something is done to stop it? How many more families will suffer the pain of having their homes taken from them illegally? I pray for justice to all who have lost a home, and strength to all who still fight the battle. Know you are not fighting the battle alone. There is still hope.

[wolfspirit21]

Hello,
I have been fighting servicing fraud since the hurricane, and only 40 days away from the sheriffs sale! I feel that bankruptcy is my only option at this point.
Have written OCC, FCC, FDIC, FBI- even the president's dog, and they all turn a blind eye/deaf ear to the epidemic of fraudulent foreclosures that is sweeping across the country.
These 'F' agencies must stop ignoring the facts. Reminds me of what my Mom used to tell me... if one kid in the class makes bad grades n hates the teacher, then the child likely has the problem. If most/all of the children hate the teacher and have poor grades, the teacher is usually at fault. It would seem to be a slight 'red flag' when foreclosures have increased 112% in a year. How bad must it get before something is done to stop it? How many more families will suffer the pain of having their homes taken from them illegally? I pray for justice to all who have lost a home, and strength to all who still fight the battle. Know you are not fighting the battle alone. There is still hope.

[virginia dale]

My name is Virginia dale

I have been fighting to save my home for over five years.

The money store/Fairbanks capital/ homeq servicing/ Wachovia equity
Servicing LLC.

The name on the original suit was homeq servicing.

I have filed over 100 motions and appeals, because I could not find an
Attorney to

Represent me. Legal aid said, not enough funds to help everybody and no
Attorneys

To address the issues.


Their voice, Missouri does not have any anti predatory lending laws.

Don't you think something is wrong?

I am scheduled to be evicted, Sept. 17, 2008. After all this fighting.

Please help me..

vwynndale@kc.rr.com
7932 park ave
Kansas city, MO.
816-822-1903

State court case# 0716-cv13874
State court case# 0816-cv23044

Bankruptcy case # 04=40152 (dismissed 11/2007