Although not exactly new news, this is great news for those of you that are being sued for foreclosure by some entity that you’ve never heard of. Check the public records in your county and see whether the mortgage was transferred to this unknown entity. If so you may be able to use that fact as an affirmative defense to the foreclosure action.

I read the comments that people had posted about that story. The comments were mixed. A lot of people wanted to know where they could refinance into a loan like that. Their rate was something like 4.4% fixed. Other people just thought they were dumb to sign the loan documents in the first place. Whatever. One of the postings caught my eye.

This woman from somewhere in the Tampa, Florida area posted that she had given rent money for a house and went to start moving in and discovered that the house didn’t belong to the landlord anymore. There was a foreclosure notice on the door, not a notice that it was going to foreclosure, but had actually been sold the day before. So between the time that she gave the landlord the rent, plus deposit, it had gone on the auction block and sold, probably back to the lender. She said she gave this landlord $3,700. So she went to the sheriff. Sheriff told her it was civil, because there may not have been criminal intent.

Apparently she was able to get a partial repayment out of the landlord and a promissory note that she would be paid back next Tuesday. I’ll gladly pay you Tuesday … So that’s why the sheriffs maintain that it is a civil matter and not criminal. I always thought that was for a judge to decide, and a tricky business even for the judge. How do you know what’s on someone’s mind? Since foreclosure auctions are scheduled months in advance, the landlord had to know his house was going on the block.

If the Federal Government is going to hand out grants to local govs for purchase and refurbishment of foreclosed houses, let’s tell our local governments what to do with those homes and that money. What if those homes were rented out to families that had lost their homes to foreclosure? Or instead of doing that sell off those homes that were refurbished to investors, and put the money into a pool to help displaced families, refugees from the foreclosure crisis. Is that already the plan? My experience with local governments has convinced me that they seldom have a real plan. So let’s make sure that the plan benefits the community. I know it’s a strange concept, but those guys are elected officials. They might listen if enough people told them the same thing.

What if the local governments passed local ordinances that the owners of foreclosed homes (the lenders who foreclosed that is) had to at least attempt, make an honest effort to keep those homes occupied. That way you wouldn’t have block after block of empty homes, that wind up being targets for vandals, drugs, crime and all that.

What if assumable fixed rate mortgages became popular again? They used to be the thing to have. And if you actually had a decent interest rate connected with that fixed rate assumable you were in great shape if you wanted to sell. I am old enough to remember the eighties, and remember that I bought a home and was happy to get a mortgage at 14% fixed. Sounds crazy now, doesn’t it? That was a VA loan in 1984 I think. And it was a good deal. Conventional loans at that time were around 16%.

There are some assumable mortgages out there now. FHA and VA likely still offer them. But, just follow the money, the mortgage industry in general would much prefer to write a new loan every time somebody buys something.

I would like to hear input on how the foreclosure crisis can be fixed. What are your thoughts? I would also like to hear from people that have successfully worked out mortgage modifications with their lenders. And which lenders are really working with people. Allowing modifications is voluntary on the part of the lenders and many of them say that they have modifications available, but I’m hearing that they are rarely taking place.

I successfully worked out a modification years ago with Chase Manhattan. This was way before the boom bust crisis, though. It worked very well for me. I had been laid off and my ex stopped paying child support in the same month. It was an FHA mortgage and that’s probably why I was able to get a modification through. Before the mortgage was modified it was an adjustable rate mortgage, that started out at something like 5% and then could go up no more that 2% a year and no more than 6% over the life of the loan. It was tied to treasury bills as to how much it went up; and it could also go down, but I don’t think it ever did. Once the modification was done, I wound up with a 30 year fixed rate mortgage at 6.5% or so. It was a good deal. And they let me finance in the payments that were past due, which were maybe two or three.

How do these measures help someone that is already in foreclosure? The first one, giving local governments money to buy up foreclosed houses sounds like  version of NIMBY (not in my backyard) to me. It might help a little, by not having a falling down abandoned foreclosed house next door that drives down your property values. But it still does nothing to help the people that already got thrown out or are soon to be thrown out.

And what are the local governments planning to do with these refurbished properties? Sell them? We all know how well that’s working right about now. They could rent them out. Look what a great job local governments to with the Section 8 programs. In Daytona Beach Florida there is a two year wait for qualified low income families to be placed into a Section 8 rental. All the while there are empty properties all over town. Go figure. Sounds like a much better deal for the lenders in the scenario than anyone else.

As for offering a tax credit to people that buy foreclosed homes … who would be those people? Investors? I’d say so. Nothing wrong with investors getting a tax break, but, see, this still doesn’t help the homeowner to work himself out of foreclosure. By the time an investor buys a foreclosure, the original homeowner that was foreclosed on is already out of luck. So that one doesn’t help too much either. The investors that still have money, by luck or design, are already sitting pretty. Why are they getting a break anyway?

Thank you for all of the e-mailed comments. Now please post comments for me. It’s easy, don’t be scared.

I wrote an e-mail to Florida AG, Bill McCollum yesterday. He hasn’t responded yet. I’m hoping he will, I was going to post it up here.

On another note, I’ve started doing a study of which mortgage companies are successfully completing the most foreclosures in my area of the country. I’m in southwest Florida. After a quick look through county foreclosures, I can already conclude that it is the same banks, lenders, entities that are plastered all over the court records. The same few law firms are also stamped on the filings.

I also wrote an e-mail to Florida Attorney General Bill McCollum to tell him that people in Florida facing foreclosure need some backup from his office. From what I’ve heard and seen first hand, a lot of these foreclosure filings are completely out of compliance with due process, civil process, and notification laws. Not to mention legal collection practices.

I am in the middle of my own personal foreclosure crisis. A rental property, not my home, thank goodness. It was not sheer stupidity on my part, only partial stupidity. Gullible, more like. And I may be in a little better shape than many people, since I am not upside down on the equity. That is if I can make the foreclosure go away before the lender sucks all the equity out of it through legal fees, which they seemed to have pulled out of the air.

My personal mess has a few extra wrinkles in it. The property is mine, my ex quitclaimed it to me when we broke up. The note is not in my name, because there was a substantial prepayment penalty and I was trying to wait for it to expire before refinancing. I am named as a defendant in the foreclosure action, along with everyone that ever went near it. Along with me, my ex, the lender is suing two former tenants that were evicted a long time ago; the roofer that was paid in full a long time ago; the former mortgage company that originated the mortgage; and some unknown company. The lender that is suing is not the lender at all. It is a different bank entirely as a trustee for a securities company that I have never heard of.

I have decided to fight back. I am looking for likeminded individuals, business people, attorneys, paralegals, investors, and anyone else that wants to help. I am trying to form a network of people that believe that the situation has spun out of control and it is unreasonable to expect the government to step in before it’s too late.