Foreclosure Defense On Fha Loans (24 Cfr 203.604)

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cyadra

LoanSafe Member
Jun 9, 2014
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Thanks for this case, very interesting, and is something I have said since day one. Once that time limit is passed, if a meeting has not been established, the lender can NEVER foreclose, heck I would argue that they shouldn't have even accelerate the loan.

What I also find interesting is that no one ties a very small but important part of the code to the face to face requirement: 203.496 Extension of Time..With respect to any action required by the mortgagee or lender within a period of time prescribed by this subpart the Commissioner may extend such period. By interjecting this into your answer or SMJ you are basically telling the court that the banks has not provided or offered into evidence anything from the Commissioner that states that the time requirement is waived. This ties the courts hands, because now you are also saying to the court, hey you can't go back and change anything in regards to time either. The only person who could fix this is the Commissioner.

Now in this case I am assuming that Countrywide was the original lender and then they were bought out by BOA. This doesn't answer the question of what happens when the loan is simply sold from one bank to another, and the original bank never followed the HUD regulations.

The only remedy the banks have is to offer a modification which would reset the loan.
 

PatZZ

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Jan 30, 2011
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Thanks for this case, very interesting, and is something I have said since day one. Once that time limit is passed, if a meeting has not been established, the lender can NEVER foreclose, heck I would argue that they shouldn't have even accelerate the loan.

What I also find interesting is that no one ties a very small but important part of the code to the face to face requirement: 203.496 Extension of Time..With respect to any action required by the mortgagee or lender within a period of time prescribed by this subpart the Commissioner may extend such period. By interjecting this into your answer or SMJ you are basically telling the court that the banks has not provided or offered into evidence anything from the Commissioner that states that the time requirement is waived. This ties the courts hands, because now you are also saying to the court, hey you can't go back and change anything in regards to time either. The only person who could fix this is the Commissioner.

Now in this case I am assuming that Countrywide was the original lender and then they were bought out by BOA. This doesn't answer the question of what happens when the loan is simply sold from one bank to another, and the original bank never followed the HUD regulations.

The only remedy the banks have is to offer a modification which would reset the loan.
Precisely regarding 24 CFR 203.496. I have this included in my answer. Namely saying that despite the fact that at some point, the servicer should have realized they had violated the note and mortgage and the regulations, but instead of requesting an extension of time to perform, they lied and/or ignored the conditions precedent and foreclosed anyhow. Prior to foreclosure, there is a form the servicers must complete where HUD asks if the meeting was held, and if not, why not. Most servicers lie and just say it was held OR attempted because how would HUD ever find out the truth. Certifying to lies to HUD is a crime.

Offering a good mod is the easy solution, but in many states/courts, they know the judges are biased and on their side so they just choose to win the foreclosure and move on. If the courts were honest and if the homeowners were guaranteed due process, things would be very different.

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PatZZ

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Jan 30, 2011
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Don't know if anyone in NJ has noticed how we never see appellate cases regarding 24 CFR 203.604 in the NJ courts. As an attorney once told me, NJ courts despise this defense. Stupid me was thinking this was/is the case in the rial court, but homeowners might fare better in the appellate court. But I now believe it is a state-wide conspiracy. Here's why.

After the homeowner loses on this defense in the "bank's" rotten trial court, the only option available is to appeal. So why don't we see any in NJ? There are countless appellate cases in other states. I have no proof, but I believe the following is going on:
  1. The NJ trial court refuses to stay the judgment, or refuses a stay w/o a huge bond
  2. With no stay granted, the homeowner can still appeal
  3. But the case then is intentionally delayed by the appellate court until the home is sold.
  4. Once the home is sold, the appeal is moot
Yes, I would bet this whole scenario is set up and planned, no doubt by some powers in Trenton and/or Chris Donut Christie.

Of course, another possibility is people may have a hard time finding or paying counsel. But the counsel problem should be an issue regardless where we live, yet other states still have a slew of appeals.

Says a lot about America, supposedly the greatest nation, when our courts are one big fraud. And we're financing the fraud.

So wish there was a way to see if homeowners are pleading the face-to-face in their answers.
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PatZZ

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Jan 30, 2011
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Yes. This is the 2nd recent win on this same issue.

For anyone else reading this, this case deals with the issue of a borrower who files BK, surrenders the home in the filing, yet still answers the foreclosure complaint and defends using the face-to-face defense. Some courts are saying yes, this is possible.

This is very critical, especially in states where the foreclosure court is not sympathetic to the defense. Remember, BK is federal.
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PatZZ

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Jan 30, 2011
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perplexing

LoanSafe Member
Oct 19, 2017
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I don't see how claiming this helps, in the long run. It just resets the statute of limitations until they have a face-to-face meeting (during which they have the same interest of doing nothing to help.) If there was no valid acceleration, you've just told them so and they'll use that against you, to do it validly, right?
 

PatZZ

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Jan 30, 2011
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I don't see how claiming this helps, in the long run. It just resets the statute of limitations until they have a face-to-face meeting (during which they have the same interest of doing nothing to help.) If there was no valid acceleration, you've just told them so and they'll use that against you, to do it validly, right?
That is a valid point I have considered. Hate to give the opposition this tip however. This thread gets an incredible amount of views, but few posts. Probably more than a few foreclosure mills have been eyeing it. If they hadn't already considered this, they will now. Hate to help the prosecution. But oh well. Despite the fact that this could conceivably happen, how often would it actually happen? i.e., A homeowner omits this defense, still wins the case or it gets dismissed, & then when the complaint is refiled, they win on the SOL). IMO, lenders & their counsel should pursue a totally different course of action when this defense is raised. I won't mention it here.

Technically speaking, the lender should not be able to have a meeting 4 years down the road after default. That is still a violation of the regulation. The regulation has a specific timeline for the meeting to be held. The meeting is geared to STOP a foreclosure, not to play games during a foreclosure. Any lender attempting to have a meeting after years of default would not have any serious intentions, other than being able to resume the foreclosure process. That's an argument the borrower should strongly make in the event something like this happens. The homeowner has permanently lost all the options they had available when the loan was only 2 months delinquent. The only way this would be fair to the homeowner is if the court required the lender to work with the homeowner as if the loan was at the point when it was 2 months in default. Anything else would be a joke.

For years, I have been following countless cases using this defense. Following dismissal, most times, the case sits and the lender does nothing. Others appeal. I saw a case once where Wells simply filed the complaint again w/o doing anything.

Borrowers have to look at everything, especially their state statutes on the SOL, their states history of decisions in foreclosure cases, and then make a decision. If they think they can LATER win on a SOL claim, then they have to play poker with a valid defense. Fact is though, most foreclosure cases never get to the point where the SOL will ever apply. For cases where the foreclosure complaint is filed early after default, with few or no defenses, that case will be long over before getting anywhere near the SOL. Many FHA homeowners may find this is their only defense since foreclosure defenses are few. In my state, I think I have seen 3 SOL appeals in the last 6 years - they lost. Even in cases where the lender waited years to foreclose, if they filed before the SOL ran, I think the borrower would be taking a big chance by holding out on a defense in hopes of a dismissal and a refiling after the SOL. After all, we lose probably 97% of the time - at least.

Borrowers need to know the history of wins/losses on the SOL in their state. Borrowers can certainly win in NY. But they have a very high chance of losing in FL and my state. Many states have a big distaste for a homeowner getting a free house, so the court, sua sponte, will amend or falsely reinterpret the SOL right there in the courtroom so the lender can win. That's what happened in my state. Where I live, there is a statewide court conspiracy to do anything at all to make sure borrowers lose in court. And that extends even to our appellate courts. One almost has to have God standing in the courtroom to have judges be fair. So homeowners need to know what's happening in their courts before playing poker with defenses. Of course, as you probably know, once you pass on defenses in the lower court, you cannot raise them in the appellate court. Anyone living in a state where they know the courts will hold the lender liable for not holding the face-to-face meeting would be taking a substantial risk by holding back and hoping for a dismissal (or a homeowner win) and then getting a 2nd bite at the apple when/if the lender refiles after the SOL. That's a lot of ifs and buts and hopes. "In the long run" entirely depends on how long the run is.

Lastly, many borrowers are looking for a delay or to get themselves into a bargaining position with the lender, not a "free house." Many borrowers get great loan mods or other settlements to end the process. In any court where the judge is fair and abiding by the law and contract, the lender is in a huge predicament. Holding out on this defense is not a decision I will make.

That's my analysis for what it's worth.
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perplexing

LoanSafe Member
Oct 19, 2017
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It's an excellent analysis.

I considered not posting this but after several years of exposure in this thread - and how obvious the pitfall to doing this is without anyone mentioning the obvious - I'd rather homeowners see it coming... because attorneys aren't that stupid. They have critical-thinking skills and use this, I'm sure. I'd rather a homeowner insist on a face-to-face meeting, earlier on, knowing that the lender might be ***king up the process on purpose, just to point out the invalid acceleration later, as they near the SOL.
 

PatZZ

LoanSafe Member
Jan 30, 2011
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It's an excellent analysis.

I considered not posting this but after several years of exposure in this thread - and how obvious the pitfall to doing this is without anyone mentioning the obvious - I'd rather homeowners see it coming... because attorneys aren't that stupid. They have critical-thinking skills and use this, I'm sure. I'd rather a homeowner insist on a face-to-face meeting, earlier on, knowing that the lender might be ***king up the process on purpose, just to point out the invalid acceleration later, as they near the SOL.
True, attorneys aren't that stupid (I guess). But I've read a voluminous number of cases and opinions over the years. Lawyers do often miss stuff and they can make the dumbest arguments sometimes.

I have Google alerts set up to alert me whenever anything about 24 CFR 203.604 is posted on the internet. And I have a separate alert set up to notify me about cases where this was at issue. I've been doing this for over 6 years. So far, never seen a case where the issue of the SOL arose after a prior dismissal of a foreclosure case regarding the face-to-face meeting.

When the lender/servicer fails to have the face-to-face meeting as per the regulations, it will always be an issue. Here's a bad analogy. If the police fail to read a suspect his Miranda rights at the time of arrest, and then the suspect sits in jail for 5 years, the police will not be able to make it right by reading the suspect his Miranda rights 5 years later. The court would have a big laugh about that. Timeframes in law and contract have meaning. And the timeframes must apply and have meaning when a party is trying to steal away our property. I'm ready to fight and will take it to the highest court !!!
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vondes

LoanSafe Member
May 28, 2017
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Not only is HUD fully ignoring its agency responsibilities to enforce its own regulations, HUD PAYS OUT CLAIMS to these same criminal lenders who repeatedly violate regulations to which they have certified compliance. Seems HUD could care less.