I hope that homeowners don’t let the banks change the message and place the blame on them.  Right now, the banks, the media and, I think, the general public just don’t get it. For some reason, the new scapegoat for the foreclosure mess is the borrower who is delinquent with their mortgage payments or the borrower who is “trying to get their home free and clear of their mortgage.”  The focus should be on the banks and other mortgage servicers who failed to provide the required home ownership counseling, including default counseling, when a borrower was in trouble.  Fannie Mae guidelines and Federal Law require pre-acceleration counseling and/or notice before a mortgage can be foreclosed.  Just the same way the banks were in a rush and sloppy to close on these mortgages, they were and are in just as much of a rush, and equally as sloppy, to remove people from their homes.

According to federal law, a mortgage loan creditor is required to give notice of the availability of home ownership counseling when a default occurs. During the past few years, banks and mortgage servicers failed to do this on an enormous scale. These entities, through their actions, effectively denied borrowers the opportunity to avoid foreclosure. These lenders refused and/or neglected to disclose to borrowers the options mandated by law that, as servicers and owners of these loans, they were required to offer help to borrowers to catch up on their loan payments before declaring the borrower in default and accelerating the mortgage.

A condition precedent before a bank can file a foreclosure is for the bank or servicer to evaluate a borrower to determine the borrower’s ability to pay monthly installments or a modified payment amount. Additionally, they were to examine the reason given by the borrower for the default and to determine the borrower’s interest in keeping the property. In many cases, there was a blanket failure to give the borrower any opportunity to work out the debt. The banks and servicers were also obligated to inform borrowers, in a timely fashion and in writing, about applicable foreclosure alternatives. Many times, this didn’t happen.

In addition to those failures, Lenders failed to provide Notices of Acceleration, Notices of Default, and Notices of Transfer/Assignment of the note and mortgage as required in the Mortgage and Note. Most, if not all, of the aforementioned notices had to be given before a foreclosure could legally occur.

The effect of this non-compliance, legally affects the ability for the bank to carry out a foreclosure. The banks and servicers cannot and could not legally pursue foreclosure unless and until they demonstrate compliance.

In my view, I believe homeowners, especially those who have already lost their homes, are entitled to recover damages because laws were broken and because homeowner’s credit standing has been damaged. Relief to borrowers may include actual and statutory damages, including the awarding of their attorney fees and costs. Only time will tell what the real outcome of all this will be, but in the meantime don’t let the banks blame it on you, the homeowner.

If you are interested in learning more about this topic, you can either post a comment to this blog, contact me, Larry Tolchinsky, a Florida foreclosure attorney, by email, or call me at (954) 458-8655 and I will be happy to answer your questions.  I offer a free initial consultation.