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Have you missed
one or more
mortgage
payments?
Do you foresee not
being able to make
mortgage payments
in the future?
Are you living in
fear of foreclosure?
If you’ve answered
‘yes’ to any of these
questions, you’re in
the right place.
Avoid Losing Your Home
Seminar: America’s Housing Crisis
How to Avoid Losing Your Home
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Peter Spino, Jr.
Senior Foreclosure Prevention Counselor
Community Housing Innovations, Inc.
Brooklyn Law School, JD 1996
Admitted in New York & Massachusetts
CONGRATULATIONS!
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OVERCOMING FEAR IS YOUR
GREATEST OBSTACLE.
BY COMING HERE,
YOU HAVE DONE THAT.
IT IS ONLY GOING TO GET EASIER.
What the Federal Government is doing…
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Prior to President Obama’s recent “MAKING
HOME AFFORDABLE PROGRAM,” there were a
few lender and legislative attempts to help with the
Foreclosure Crisis, but they provided limited value to
borrowers.
Crisis Continues to Grow
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IRVINE, Calif., April 16 /PRNewswire/ -RealtyTrac(R) (www.realtytrac.com), the leading online
marketplace for foreclosure properties, today released its
U.S. Foreclosure Market Report(TM) for Q1 2009, which
shows:
 Foreclosure filings -- default notices, auction sale notices
and bank repossessions -- were reported on 803,489
properties in the first quarter, a 9 percent increase from
the previous quarter and an increase of nearly 24 percent
from Q1 2008.
 One in every 159 U.S. housing units received a foreclosure
filing during the quarter.
N.Y.S. Action: Residential Foreclosure Program
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In New York, foreclosure filings increased 150% to
almost 39,000 homeowners since 2005.
Governor Paterson helped to legislate:
 90 day pre-foreclosure notification period
 $25 million counseling fund
 New requirement that lenders meet with borrowers
facing default
Source: 6/20/08 www.lohud.com,“Fixing Mortgages” A Journal News Editorial
What is foreclosure in NYS?
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FORECLOSURE TIMELINE
BORROWER DELINQUENT - 2 to 3 months late with mortgage
Payments; although this timeframe has been greatly expanded recently.
90 DAY PRE-FORECLOSURE NOTICE – For all subprime and nontraditional loans.
ACCELERATION LETTER – Mortgage Default and entire balance
becomes due.
FORECLOSURE CASE INITIATED – Lender files a Lis Pendens,
Summons and Complaint with court.
Foreclosure Timeline
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ANSWER DUE – You have 20 days to answer if served personally and
30 days if by mail.
MANDATORY SETTLEMENT CONFERENCE – Must be held within
60 days from Lender filing proof of service for all subprime and nontraditional loans.
BORROWER ANSWERS – Borrower presents defenses and counterclaims. Discovery begins and Lender will make a Motion for Summary
Judgment. If denied, there is a trial or settlement.
DEFAULT – When borrower fails to answer.
Foreclosure Timeline
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MOTION FOR ORDER OF REFERENCE – Lender makes this motion
and Judge will sign Order. Court appoints a referee to compute amount
owed by borrower.
MOTION FOR JUDGMENT OF FORECLOSURE AND SALE- Lender
submits this to court. Once signed, Lender schedules auction with
referee and advertises auction in newspaper.
AUCTION – The bank attempts to auction the property. If there is no
third party buyer, the Lender will take title. If the property is sold for
less than is owed, the bank may seek a deficiency judgment; although
we don’t see this happening very often.
FORECLOSURE DEFENSE
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Litigation
Defenses to Foreclosure
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 Predatory Lending
 Loan Fraud
 Standing and Capacity to Sue
 Affirmative Allegation of Ownership
Defenses to Foreclosure
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 Banking Law Sec. 6-1 and 6-M
 NY General Business Law Sec. 349
(Deceptive Practices Act)
 Truth in Lending Violations
 RESPA Violations
Predatory Lending
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A loan based upon the appraised value of the
property without regard to ability of the
borrower to repay.
Loan Fraud
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• Bank or Broker misrepresents income to the lender
• Bank’s appraiser overvalues property
• Negligent Underwriting
• No Due Diligence
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Ways of Perpetrating Loan Fraud
Failure to
disclose
terms and
conditions
before loan
closing
violates
Reg. Z.
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The
mortgage
broker
appoints an
attorney to
represent the
borrower,
that attorney
in fact
represents
the broker.
The
broker’s
purpose is
to ensure
that the
loan closes
and that
broker and
lender
receive
their fees.
Rushing
the
borrowers
through
100-page
contracts
without
fully
explaining
their
contents.
Closing
loans with
borrowers
who do not
speak
adequate
English with
an attorney
who does
not speak
the
borrower’s
language.
Ways of Perpetrating Loan Fraud:
When projected payment schedule is wrong
because actual payments due are higher.
Introductory
“teaser”
rates
Negative
Amortization
Loans
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Adjustable
Rate Loans
Option ARMs
Goals of the Foreclosure Defense
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Goals of Foreclosure Defense
 Obtain damages
 Delay the foreclosure for an extended
period of time
 Better bargaining position for re-
negotiation of the loan, including possible
reduction of the principal amount.
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Advocacy:
“The mortgage
crisis could have
been alleviated
by the
involvement of
more lawyers.”
-Michael Schill,
Dean, UCLA
School of Law
Source:
The Wall Street Journal
June 18, 2008
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Your foreclosure counselor, your
lender and you decide what to do
next…
THERE ARE OPTIONS TO FORECLOSURE:
 Reinstatement
 Forbearance
 Short Sale
 Short Refinance
 Deed in Lieu of Foreclosure
 Loan Modification
What You Can Do
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OPEN THE LETTERS. THEY DO NOT BITE.
CALL OR WRITE TO YOUR
LENDER’S (BANK’S) LOSS
MITIGATION DEPARTMENT
IMMEDIATELY.
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If you’ve just lost
your job…
Your lender may
agree to a
forbearance where
they allow the
homeowner to
delay payments for
a short period of
time.
Forbearance
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An agreement
made with a
lender to accept
less than amount
owed by a
borrower via a
sale of the
property to a
third party.
The lender
releases the
borrower from
the mortgage,
preventing
foreclosure.
You qualify
If…
If…
Then..
• The loan is at least two months
delinquent; homeowner can prove to
be a victim of a hardship
• You are able to sell your house within 3 to 5
months; and
• You get a new approved appraisal.
• Tax ramifications are better than with
foreclosure and your credit rating, although
harmed, is not as devastated than being
foreclosed upon.
Short Sale
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Short Refinance
Similar to a short
sale but the lender
allows borrower to
obtain a refinance
at a lower loan
amount thereby
reducing principal
If you are speaking with a servicer
of loans, then you must go to
another lender.
Only a few lenders doing right now.
Similar to refinancing but more
difficult and longer process.
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DEED IN LIEU
OF
FORECLOSURE
 Lender agrees to allow a borrower
to sign the property over to the
bank without having to foreclose.
This used to be extremely difficult,
but now most lenders will at least
consider. Lender forgoes
deficiency judgment.
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The lender will agree to
add the amounts due to
the back of the loan.
This agreement consists
of adding the past-due
payments and penalties
to the remaining
principal, so that the
homeowner can pay off
the past-due amounts
over the life of the loan.
This is possible only
after careful debt
evaluation.
Loan Modification
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Loan Modification
 There are a lot of companies out there
claiming they can help you modify the
terms of your loan, for a fee.
 CHI is funded by the New York State
Division of Housing and Community
Renewal to do this for you at no charge.
 Modifications are not guaranteed and
you still must qualify.
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MAKING HOME AFFORDABLE
PROGRAM
IF YOU
QUALIFY
 Incentives have been put in place to
encourage the banks the lower
payments to 31% of your debt
to income.
 Lenders will generally lower your
interest rate as low as 2% for a 5-year
term.
 Lender may agree to extend the
term of your loan.
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www.makinghomeaffordable.gov
 Lenders may consider reducing
the principal amount of your
mortgage; although not likely.
 The plan provides for refinancing
of loans guaranteed by Fannie
Mae and Freddie Mac.
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Loan Modification
REQUIRED DOCUMENTS FOR
LOAN MODIFICATION
 One month of paystubs
 Two months of bank statements
 Hardship Letter
 Financial Statement
 W2 and/or tax return
Thank you all for coming.
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PLEASE ASK QUESTIONS
AND TAKE DOWN MY NUMBER
Peter Spino
914-595-0980