Monthly Archives: October 2012

Do you really want the cheapest lawyer?

I was in court yesterday with two of my clients. As we were waiting for their case to be called, we got to observe something that I have been seeing all too often – a lawyer that did not even know who his client was.

Over the last 20 years, I have seen so many changes in the legal profession. The number of law schools and graduating classes of law students in Michigan has skyrocketed, while our client base has seen its disposable income drop. More and more legal information is available online. And non-attorneys are more aggressively trying to carve into a market of services previously only provided by licensed attorneys. As a result, lawyers are changing their business models to do a higher volume of often lower quality work in order to keep their prices competitive.

You might think all of these changes are good news for consumers. I disagree. To demonstrate my point, please allow me to share what I witnessed in court yesterday.

An older, gentleman in a suit entered the courtroom about 30 minutes after the 9:00 a.m. docket had started. He sat down next to a younger woman who was sitting alone. He was disheveled and short of breath. He began to talk to her, and it appeared to me that he was her lawyer. Now, I prefer to meet my clients outside the courtroom and find a conference room to speak privately to review any concerns. But it is not unusual for a lawyer to meet his client in the courtroom. This is especially true if the lawyer is running late for court, as this gentleman was.

Then the case was called. “Case Number… Ms. X.” The gentleman stood up and walked forward. He looked back at the woman he had been sitting next to, motioned with his hand and said “Come on, Ms. X.” She stared at him and replied “I am not Ms. X.” The lawyer proceeded to completely embarrass himself. It was clear that he did not know (1) who his client was or (2) where his client was. No other “Ms. X” stood up in the courtroom after hearing the case called. Beyond this, it was also clear that the woman sitting next to that lawyer did not know who her lawyer was or where her lawyer was. He left the courtroom without the case being heard. I have to wonder what will happen next for his client.

My clients’ case went well. I am glad they got to see this incident. However, sadly when people are selecting a law firm, their decision is often based only on price. If you are shopping around for a lawyer to help you, I encourage you to take more into consideration than who is the cheapest. Ask him or her who will be assigned to your case, how his/her office will prepare you for your court date(s), who will represent you at court, and what experience that person has with cases similar to yours.

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New mortgage foreclosure trend: address errors

In recent months, I have noticed 2 address-related problems for people facing mortgage foreclosure:

1. Mortgage companies changing correspondence address listings in their computer records to a different street number than the mortgaged property address; and

2. US Postal workers flagging homes receiving foreclosure correspondence as “vacated.”

As to the first problem, with record level foreclosures and frequent reassignments of mortgage accounts, it is not surprising that a mortgage company or servicing agent could make the honest mistake of entering an address incorrectly. However, this is very difficult for you, the homeowner, to catch such a mistake until after the fact. The cynic in me sees this as a rather questionable error. Foreclosure avoidance notices (with strict deadlines) going to the wrong address? Suddenly the homeowner has no ability to respond, because he/she never got the notice? It seems very suspicious, if not down right mailicious. And if the mortgage company shuts down your online access to your account in the process of a default on payments, it can be very difficult to stay informed about the status of your loan other than by mail deliveries.

As to the second problem, if your mail is delivered while you are at work, you may not realize that postal workers monitor addresses to determine if a property is vacated or if a resident may have moved. When you go through foreclosure, you will get various solicitations from “foreclosure rescue” companies along with legitimate mail from the major foreclosure law firms and your mortgage company. Post Office employees recognize these return addresses and start to question whether you still live at your home. In particular nowadays with so many monthly bills being sent via email, if the majority of your incoming mail is foreclosure-related or junkmail, and if your mail carrier hasn’t seen you at home during delivery hours, a well-intentioned worker may take it upon him or herself to decide you do not live there anymore. Next, they will start returning mail addressed to you. And you are none the wiser.

My advice for the first problem is the same as for the second: get to know your US Post Office letter carrier! Stop him or her some day and introduce yourself. Let them know that you do live there. If they find something going to your zip code that has the wrong street number on it, they may redirect it to you. And if they know you’re still in the home, they won’t go adding you to their “moved” list.

There is no end to unforeseen problems when it comes to surviving foreclosure. When in doubt, it cannot hurt to make a friendly introduction of yourself to your neighborhood letter carrier.

 

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Foreclosure defense myths & scams

First things first. Real estate law is state law. That means that the laws that set up the rules for mortgages and foreclosures are different in every state. Yes, some federal laws (Truth in Lending Act or “TILA” for example) can govern the rules for the actual loan documents, but it is state law that allows a bank to take a mortgage (or lien) against land and, upon a default, repossess that land through foreclosure. So the important thing to remember is that the rules of foreclosure may be different in your state than in other states. I have been seeing all sorts of nationally-publicized cases outside of Michigan on the issue of foreclosure, but these cases do not necessarily create case law for Michigan judges to follow. Foreclosure in Michigan is a function of Michigan law. In Michigan, a bank can foreclose through two routes: (1) foreclosure by advertisement and (2) judicial foreclosure.

Second, with the real estate industry still smoldering from its crash and burn in Michigan over the last several years, we are seeing all sorts of new industries cropping up related to foreclosure avoidance, alternatives to foreclosure and foreclosure defense. Since most Michigan foreclosures are by advertisement, that means that when a house goes into foreclosure a listing is posted in the legal notices section of the local newspaper. Many predatory groups subscribe to these legal news publications and actively solicit business from homeowners who are facing foreclosure. This is legal in Michigan, despite being very deceptive in many cases.

Third, since many people try to find help online, there has been an explosion of foreclosure defense websites. You should be wary of trusting everything you read online no matter what, but I also encourage you not to rely on the advice of a non-attorney, an anonymous blog site, or an out-of-state site. For example, I received a phone call last night. The caller explained that his home was in foreclosure and that he wanted me to argue “the Veal case.” I had not heard of this case, and so immediately he doubted my knowledge of foreclosure law. He stressed to me that he had done a lot of research online, and this was being cited as good case law, holding that an institution cannot foreclose unless it both (1) owns the mortgage (or lien on the land) and (2) owns the “note” (the promissory note or contract for the debt).

So I looked up the case. The case name is Veal v. American Home Mortgage Servicing (aka Veal v. AHMS or In Re Veal). It is a US Bankruptcy Appeals Panel decision out of the 9th Circuit.  Now, Michigan is in the 6th Circuit, so 9th Circuit cases are not binding case law here. But more importantly, Veal merely held that the Bankruptcy Court in Arizona made an error by not holding an evidentiary hearing (or mini trial) when a Debtor in a Chapter 13 repayment plan bankruptcy disputed a claim that was filed by a servicing agent of a mortgage company requesting payment under the Chapter 13 plan. The BAP simply remanded the case back to the Arizona Bankruptcy Court and did not rule on the validity of the mortgage or its right to foreclose. So I next looked up the bankruptcy case. It was filed in 2009 but it is still pending at the end of 2012. The Debtors have switched attorneys during the case, and it appears the case is about to be dismissed. A dismissal means their debts would not go away, and the mortgage would not be avoided. In short, Veal is not the great homeowners’ rights opinion it is being trumped up to be in the blogosphere.

That argument, about whether a company can foreclose if it does not both own the lien and the note, was made a few years ago in Michigan. For a while, it was accepted here. I even made the argument in court for my clients in the past. The Michigan Court of Appeals case was Residential Funding v. Saurman (more commonly called “the MERS decision”). However, that decision has been overturned by a final decision from the Michigan Supreme Court. (Often referred to as “the Residential Funding decision”). If you attempt this argument in 2012 in Michigan, you will fail. Fair or unfair, the Supreme Court has spoken on its interpretation of Michigan foreclosure law.

There are other defenses to foreclosure, but I cannot stress enough that each case is unique and that relying on random blogs is not a solid legal argument. That caller had used this argument while trying to represent himself in a lawsuit against his mortgage company. The case was dismissed – with prejudice. That means any claim he might have had is gone. He is permanently barred from suing the mortgage company over this dispute again. This is your home. This is probably your largest investment. Do not rely on urban legends and anonymous internet posts. If you believe you have a valid mortgage foreclosure defense, consult with a local attorney. And do it quickly. The law limits the time you have to act.

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