Maryland Foreclosure Lawyer Blog

Maryland Gov. Martin O'Malley recently signed a bill intended to cure defective Deeds of Trust thereby paying the way for Maryland's foreclosure steamroller to crush the rights of individual homeowners. At the same time Governor O'Malley took no action to protect these same homeowners with minimum standards of due process.

When a homeowner in Maryland purchases a home they have clear title for about 15 seconds before they sign it away. The lender who made it possible for the homeowner to purchase the property wants their investment to be protected. The lender accomplishes this by having the new homeowner sign a Deed of Trust. Specifically, upon receiving the deed to their property the new homeowner signs a deed giving that property to someone else to hold in case the property owner defaults on their mortgage. If the homeowner defaults the lender would instruct the trustee named under the Deed of Trust to sell the property. In Maryland, the trustee had to be a natural person in order to sell the property.

In Maryland, the mortgage foreclosure crisis sent defense lawyers scurrying to find ways to keep people in their homes. At the same time, lender's lawyers cut as many corners as possible in an attempt to process as many cases as possible thereby making as many people homeless as possible. While some forward thinking lenders recognized that it was more profitable to modify an existing mortgage and keep the homeowner in their home, most lenders, servicers, and plaintiffs lawyers practiced the scorched earth policy that allows vacant homes to devalue neighborhoods and be torn apart by vagrants and drug dealers.

One of the most recent challenges to foreclosures developed when foreclosure attorneys realized that many of the original Deeds of Trust named corporate entities as the trustee. As previously mentioned, only a trustee who is a natural person could sell the property. Maryland case law held that naming a corporate trustee voided the power to sell the property. The question that arose was whether this void power could be revived by the unilateral action of the lender in substituting a natural person for the corporate trustee. I felt that the defect could not be cured by the subsequent naming of a natural person. The reason was relatively basic. The four corners of the paper containing the Deed of Trust defined the powers to which both parties agreed. If one of those powers was void, allowing one party to the contract to unilaterally modify that contract violated all common law and modern rules of contract law.

Continue reading "Challenging Maryland's New Foreclosure Law on Corporate Trustees" »

Attitudes make a difference. For example, recently a client retained me to represent him in a mortgage foreclosure dispute. In discussing the case with the client I noted that he had previously spoken with the attorneys representing the lender. While the client expressed frustration because of his economic reversal, he did not appear to be antagonistic to either his lender or the lenders attorney.

In the vast majority of foreclosure defense cases that I have had, my clients have had the overall sense that the attorneys who represented the lender are arrogant, disrespectful, and seemed to take great pleasure in forcing them out of their homes. "Why", I asked, "are you not describing your lenders attorney with four letter terms of endearment?" His answer spoke volumes-"because the lawyers in that office treated me with respect. They returned my phone calls and spoke to me like a human being with problems."

I contrasted his story with that of so many other clients that have retained me. In the vast majority of cases, attorneys who have represented lenders have been rude, disrespectful, and treated my clients like vermin. They refused to answer phone calls, and when they did, they appeared to take great pleasure in winning the battle to put my client and his family out of their home and into the street.

Yesterday I got a phone call from the attorney who treated my client with respect. The attorney wanted to know what my clients objectives were in the case. I was able to have a frank discussion with the attorney. After the five minute phone call I was able to e-mail my client and start the process for what hopefully will be mutually beneficial resolution for the case.

About ten minutes after I sent the e-mail I started to review correspondence I received that day. One of the letters from opposing counsel in another case chided my client for being a "deadbeat" who did not deserve to share the air that we all breathe. He concluded his letter by demanding a settlement proposal from my client.

Just from the facts stated here, how many of you feel that the first case will settle under terms that are acceptable to both parties? In the second case, what do you think the chances of settlement are?

Attitude goes a long way. The first lender will probably settle the case and begin receiving payments on the mortgage. However, the second lender will probably spend more money on attorneys than they would have spent by modifying the loan.

In a presumed effort to protect homeowners against foreclosure rescue schemes, the administration has warned:

There is never a fee to get assistance or information about Making Home Affordable from your lender or a HUD-approved housing counselor.

Beware of any person or organization that asks you to pay a fee in exchange for housing counseling services or modification of a delinquent loan. Do not pay - walk away!

The problem is that you, the borrower may have a valid claim against the lender. The HUD approved housing counselor cannot and will not advise you of your rights.

Walking away from a potential lawsuit (the foreclosure) without being informed of your rights may shield a lender from liability resulting from wrongs that the lender committed. Additionally, your will not know if you have a valid defense to a foreclosure or even an action against the lender to recover damages.

I have not found any government sponsored program that will examine the loan package and give you an opinion of whether you have a claim against the lender. Not one!

In fact, most government help agencies screen your package before it is submitted to the lender. While this may sound like a good approach, the opposite may be true if it has the effect of rejecting marginal applications. That is the difference between help and advocacy.
A lawyer will advise you of your rights, liabilities, defenses and claims. An attorney will advocate on your behalf in order to achieve a beneficial result.

Yes, you will have to pay an attorney, such as myself, for doing my job, and you will have to pay me up front because I recognize the reality of your financial position. But most attorneys, me included, will provide you with a free basic legal opinion.

Remember, most people who are reading this have already tried to reason with their lender and loan servicer without any result, or for that matter, any respect. What makes you think that times have changed? If you think that it is the Making Home Affordable (MHA) program then I believe that you are mistaken. MHA has no regulatory agency overseeing the lender's acceptance or rejection of your application. So far, the best overseer is the court.

You read the last sentence correctly. The very thing that you may have feared the most, a foreclosure action, may be your salvation. Once a lender sees that its actions may form the basis for a defense to the foreclosure, or better yet, an affirmative claim against it for a damage award, the lender may think twice about rejecting a reasonable loan modification.