Foreclosure Defense

Create Leverage . . .Before you can create leverage, you must know three things:

  • who owns your loan
  • what is the net present value (npv) of your loan
  • is your loan predatory

If you are or have been pursuing a loan modification on your own, or with the help of a professional, you have been playing by the Big Banks' rules of engagement, and you have almost no control over events that affect your home.

Your loan may have been “securitized.” If your loan was securitized, it was bundled together with several thousand other loans, transformed into a mortgage backed security (think stocks or bonds) by a Wall Street investment bank (think Goldman Sachs), and then “sold” to the pool of Investors that ultimately funded your loan. Instead of dealing with your lender, your loan is being “serviced” by a bank-affiliated loan “servicer.”

Of course, Servicers are supposed to act in the best interest of the pool of owners (Investors), but Servicers typically act in their own best interest unless they are forced to comply with the legal agreement which protects the Investors.

If you want or need a loan modification, your strategy is to force your Servicer to act in the Investors' best interest. But that's easier said than done! If you don't know the identity of the Investors, your Servicer may be free to continue to act in its own best interest, and that's definitely not in your best interest!

Were all of the documents properly and legally signed (“robo-signers”), notarized, assigned, endorsed and recorded? If not, a pending or threatened foreclosure can be stopped!

Why the NPV Analysis? The NPV Analysis will determine if foreclosure or a loan modification is in the best interest of the Investors. In other words, the NPV Analysis compares the outcome of two possible events: foreclosure or modification. A positive NPV means that modifying your loan would be in the best interest of the Investors versus foreclosing on your home. Of course, this is the outcome you want!

A positive NPV also makes it more difficult for your servicer to continue to act in their own best interest, and, instead reinforces your servicer's legal obligation to act in the Investors' best interest. and, because you know the identity of the investors, you could bring the positive npv outcome to their attention.

Because servicers typically ignore their legal obligation and responsibility to the Investors, before a loan can be modified, the servicer's tendency to foreclose must, itself, be modified. After all, if the servicer is free to act in its own best interest, it usually will!

If your loan was predatory when originated, it is predatory now, and evidence of this fact can be persuasive in both superior court and bankruptcy court ― and servicers know this. In some cases, the Investors can be held legally responsible for the acts or omissions of the lender and/or the mortgage broker that originated the loan.