The original lender lends the money to the borrower to purchase a home. Many companies will make the loan with no intent on keeping a relationship with the borrower. It only takes a license to become a mortgage company. The original lender will often sell its loan at a discount. Original lenders usually concentrate on making loans and profiting from the origination fees instead of holding the loan and servicing the loan for a more extended time. Conservative banks such as Commonwealth bank are far more likely to originate the loan and keep it for servicing as a service to their best customers. KHC and conventional banks own loans for an extended period. The loans are rarely sold and conform to best practices.
Original Lenders as a Parties in Mortgage Foreclosure Loans
However, some servicers and holders are happy to buy loans that are less than prime loans. This is because they are looking to generate fees often from them being in default. Original lenders sell both conforming and non-conforming loans. But only conforming loans can be insured by FHFA. The Federal Housing Finance Agency (FHFA) has underwriting guidelines for Fannie Mae and Freddie Mac Loans. The non-conforming loans are more often found in sub-prime lending and are generally more commonly sold.
The holder of the note as a party.
A holder of the note purchases the loan from the prior owner of the note or original lender. They hope to make money from added fees they will charge with an expectation that the loan will be in default or that they will be able to charge for added services such as forced placed insurance and other required services. Often, the money the bank collects and holds during the year will not pay for property taxes until the end of the year. The bank makes interest from this money it holds and may also charge for paying the taxes at the end of the year.
If the loan is in good standing, the new owner of the note will be a holder in due course if the note is sold. If the loan is in default, the new owner of the note is only a holder of the note. Many advantages go with a holder in due course. Primarily you can not sue a holder in due course for problems you have with the original lender. If the loan is in default, the statute of limitations is running. If the loan is up to date and not in default, the holder is probably a holder in due course.
The attorney for the bank as a party.
The attorney for the bank makes a profit from the time he spends foreclosing on your loan. Typically, this runs about $250-350 per hour. The longer it takes for him to foreclose, the higher the attorney fees are that you pay to get the home out of foreclosure. The attorney for the bank has no duty to give you advice. The bank’s attorney will typically never tell you about all of your options. He will explain how you must pay the bank in full or on time. The bank’s attorney will explain how you can move somewhere else immediately. He won’t explain to the homeowners how you can sue the bank properly. He works for the bank. The FDCPA also applies to Attorney for the bank if the loan is in default.
If you are planning to keep a home that is in foreclosure remember, you should file your Chapter 13 early. The longer you wait to file a Chapter 13, the higher the attorney fees will be and the more arrearage you will have to pay to catch the mortgage up. If your goal is to catch up a mortgage to save a home you should file any Chapter 13 early. You can defend the foreclosure to obtain time to find another home, sell the house, get a mortgage modification, or workout agreement. But curing a default normally requires filing a Chapter 13 or obtaining a mortgage modification.
The servicers or debt collector as parties in mortgage foreclosure loan.
The Servicers do not own the loan. Instead servicers only collect mortgage, student and auto loans. Servicing companies charge the lender and you for every letter and phone call they make. They make money from the late fees they collect and applications for mortgage modifications they process. Servicers keep about 40% of the late fees they charge and collect. They love keeping you in default because every dollar they can collect and pay to fees increases their profits and commissions. Feed and penalties added to your loan eat up the equity in your home or auto. The FDCPA does not cover servicers unless the loan is in default. Servicers become debt collectors only when loans become in default. Then they can be sued for untruthful and unfair conduct.
Servicers care about profit. Servicers rarely care about your outcome. The fact is, the more you are in default, the more money they make. Collection law firms operate the same as servicers. The more work they do or the longer the foreclosure takes the higher their legal fees. Although servicers Naviaent might pretend to help you, they make more money from your loan being in default. Again servicers do not fall under the fair debt collection practices act unless the debt is in default. For student loans this is normally 270 days overdue. For mortgages, this is usually 30 days after the mortgage became due, not when the loan was accelerated. They have no obligation to tell you all of your options or best deal that is available.
The judge as a party.
If you depend on the bank, bank’s attorney or servicers for accurate advice, remember they work for themselves and the bank. They do not work for you. And you are not a lawyer. You have not spent 35 years learning the rules, and they will fully take advantage of it. The judge also does not work for you. His job is to be impartial and to correctly apply the law to the arguments you have made. At some point the case may be sent to the commissioner for a sale and it best to make sure you are not being overcharged by the servicer or bank.
And there are well over 100 different legal defenses to foreclosures from truth in lending violations to servicing violations under the CFPB which your foreclosure lawyer can use.
Since October 2016 under 12 CFR 1024, the rules in effect require servicers to reasonably process mortgage modifications, force-placed insurance, and loss mitigations, among other topics. but you find them in various sections outside the CFPB rules. Be sure to find an attorney who knows these rules.
Parties in Mortgage Foreclosure loans Nick Thompson
If you are thinking about filing bankruptcy, don’t delay because timing is crucial. I am here to help you. So, contact my office right away to start the conversation. Nick C. Thompson, Bankruptcy Lawyer: 502-625-0905.