Families anxious to keep their homes
Legal and moral battles are being waged in courtrooms across the country. Struggling homeowners are pitted against conniving bankers. The courts and the judges are places of last resort for many families anxious to keep their homes. When home loan modification fails, many homeowners are left with no choice but to walk away, or take their banks or lien-holders to court.
Those who choose to fight can only hope to find a judge who understands the roots of the mortgage crisis and who is willing to make conscientious decisions. In many California courts, once the judge sees the documents of foreclosure, the homeowner is immediately put on the defensive. The judge wants to hear of some illegality or irregularity in the foreclosure process before considering any arguments regarding morality or compassion.
Two excellent arguments don’t stand
An “unlawful detainer” proceeding is an accelerated method for recovery of possession of a property. Most of the time in these cases, we see families become practically defenseless in protecting their homes. Even with a well-founded argument that some aspect of the foreclosure is illegal, many judges simply wash their hands and refuse to analyze the issues. For example, in San Jose, we argued that a homeowner was not adequately informed of the terms of the loan contract she had signed.
We explained that the client, who speaks little English, did not understand the entire loan document and that no Tagalog (Filipino) interpreter was available to assist her as she signed the contract. We also pointed out that the loan was approved without the lender verifying the income of the borrower. The judge acknowledged that we had excellent arguments, but he declined to rule in the favor of the homeowner, stating that we should pursue the action in a different court.
Amazing judicial wisdom
In another case, we filed a lawsuit in the Eastern District Federal Court in Sacramento, arguing that the trustee of the loan should be restrained from foreclosing because the lender had not properly transferred the authority to foreclose to that trustee. Amazingly, the wise judge contested that the trustee had every right to foreclose despite the lack of proper transfer and simply brushed our argument aside. That lawsuit remains on the dockets on appeal.
In yet another case, this one in San Francisco, we demanded that a lender show the original promissory note that our client signed when he purchased the house. The judge asked why that was necessary when there was a certified copy available. Generally, a promissory note is a written promise to pay a loan. We averred to the judge that, under the law, the original note and the deed of trust must go hand-in-hand.
We went on to explain that this is legally necessary to show that the holder of the note has the authority to foreclose. The judge whined that our efforts to secure that original note would be a useless paper chase. Well, we followed the paper trail clear down to San Diego and found that the note had been illegally altered. That altered note will be shown to the appeals panel.
Some judges are stepping up
On a more positive note (no pun intended), two cases come to mind. In Oakland, a federal judge refused to approve a foreclosure because the lender, a major bank, had ignored an automatic stay when our client filed for bankruptcy. We are now preparing a complaint against that bank. This was a minor victory, but that battle has yet to be won. In the other, we filed a complaint against Indymac, a once-major home financing company. The complaint is over a year old, the homeowner is still legally on the property and has not paid on the mortgage for over two years. The lender is clearly at fault.
While we don’t have hard statistics on how many homeowners are suing the banks to retain their homes, it appears that common folks are striking back at the banks that are trying to foreclose. Lawyers for those banks often have trouble building a defense because juries tend to sympathize with the borrowers.
Many judges are new to foreclosure issues. They still must be educated and informed. However, in some parts of the country, like Florida, the tide is beginning to turn. The judges are increasingly holding bankers not just to the technicalities of their written contracts, but to their verbal commitments as well. One Federal judge expressed his frustrations to us when he stated that he gets these types of lawsuits all the time. But the judge did not say how many times he took the safe approach and sided with the banks and their herds of lawyers.
Misleading the way to an American Dream
Banks and other lenders purposely made bad loans during the mortgage boom. They were making money on quantity, not quality. Looking only for signatures on spurious loan contracts, they mislead countless folks hoping for an American dream. They then made tons more money by selling those home loans to Wall Street investors. As their greed grew, they cast even wider nets looking for signers-on-the-dotted-line with little regard to their financial abilities.
Now they want to gain back the properties through foreclosures so they can sell them again. On one hand we have lenders, once pushed by avarice or greed, are attempting to gloss over past legal and verbal commitments to regain titles to the properties. On the other hand we have misled and misunderstood homebuyers trying to keep a home intact on those same properties.
Will judges listen to the homeowners? Will our courts give both sides equal consideration? One thing is sure: Homebuyers are beginning to stand up to the mighty banks. Another thing is most clear: Judges need to have a better appreciation of what is happening between powerful lenders and homeowners facing homelessness.
Foremost, judges must quit clearing court dockets on the basis of who has more lawyers simply because they won’t (or can’t – for any number of reasons) try to understand what’s transpiring legally – and morally – in their courtrooms, these battlegrounds across the country. Will homelessness spawned by greed be the final outcome of this war? Stay tuned for more news from the front.
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Lazaro Law Group, Professional Corporation represents immigrants all over the United States and the US Embassy in Manila. The firm’s offices are located in San Francisco, Fremont/Newark/Union City, and Sacramento, California. Attorney Johnson Lazaro can be reached at (415) 800-5775 or toll free at (855) 4-LAZARO. His email is This e-mail address is being protected from spambots. You need JavaScript enabled to view it .
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This article should not be taken as legal advice for any individual case or situation. The information is intended to be general and should not be relied upon for any specific situation. This is not meant to create a lawyer-client relationship.
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