Americans face post-foreclosure hell as wages garnished, assets seized

[NACBA]

By Michelle Conlin

NEW YORK (Reuters) - (This corrects paragraph 28 to show financial institutions in Maryland have 27 years, not 36, to collect deficiency judgments)

Many thousands of Americans who lost their homes in the housing bust, but have since begun to rebuild their finances, are suddenly facing a new foreclosure nightmare: debt collectors are chasing them down for the money they still owe by freezing their bank accounts, garnishing their wages and seizing their assets.

By now, banks have usually sold the houses. But the proceeds of those sales were often not enough to cover the amount of the loan, plus penalties, legal bills and fees. The two big government-controlled housing finance companies, Fannie Mae and Freddie Mac, as well as other mortgage players, are increasingly pressing borrowers to pay whatever they still owe on mortgages they defaulted on years ago.

Using a legal tool known as a "deficiency judgment," lenders can ensure that borrowers are haunted by these zombie-like debts for years, and sometimes decades, to come. Before the housing bubble, banks often refrained from seeking deficiency judgments, which were seen as costly and an invitation for bad publicity. Some of the biggest banks still feel that way.

http://news.yahoo.com/americans-face...iacontentstory

[Brian4Liberty]

Wow. People thought they could walk away by letting the bank repossess the property. Looks like it will be coming back to haunt people (well, average people, not the crony banksters who can steal trillions and get away with it).

[NACBA]

Wow. People thought they could walk away by letting the bank repossess the property. Looks like it will be coming back to haunt people (well, average people, not the crony banksters who can steal trillions and get away with it).

Exactly--and the Fed Gov thru Fannie Mae is behind a lot of these cases.

[NACBA]

So who is Dyck-O’Neal, Inc.

Our firm has anticipated that there would be a rush by the banks to file deficiency judgment actions against homeowners as the clock ticked down to the July 1st, 2014 deadline. In fact, in June 2014 – Dyck-O’Neal, Inc., filed 323 deficiency cases in Broward County alone. We have also been retained to defend more deficiency judgment cases than the total amount of deficiency judgment cases we defended in all of 2013.

However, it is not just the banks doing the suing this time around. It’s also third party companies like Dyck O’Neal. Dyck O’neal, a company based out of Texas, has been filing thousands of deficiency judgment claims throughout the state and country. Since banks are well aware of the high costs in litigating claims against homeowners, most of them have chosen to act more efficiently and assign (sell) their deficiency judgment claims to third party collection companies like Dyck-O’Neal, Inc., for probably pennies on the dollar. These companies then attempt to squeeze whatever they can from homeowners in deficiency judgement actions and in many reported instances use harsh, harassing and aggressive methods to make the succumb to their demands. About 7 out of 10 deficiency judgment cases we are currently defending have Dyck O’Neal Inc. listed as the plaintiff. Dyck-O’Neal, Inc.,as been buying deficiency judgments from banks and going after homeowners like you since 1988. They are well versed and experienced in this game. You can be sure that they strategically chose which deficiency judgment claims to buy from the banks.

- See more at: http://southfloridalawblog.com/dyck-....beQyT7iK.dpuf

[NACBA]

Fannie Mae going after years-old unpaid mortgage debt
August 7, 2014
By Kimberly Miller, The Palm Beach Post, Fla.
Advertisement


Aug. 07--The fight for their home ended long ago with the fall of a foreclosure court gavel -- or so they thought.

This summer, hundreds of South Florida residents are facing new foreclosure ramifications as banks pursue the unpaid mortgage debt for homes that were sold at the auction block up to five years before.

In a month-long period beginning June 1, about 110 lawsuits were filed in Palm Beach County against former homeowners by a Texas-based debt collection company named Dyck O'Neal. The same firm filed more than 300 cases in Broward County and nearly 200 in Miami-Dade County.

The lawsuits seek to collect deficiency judgments -- the balance left on borrowers' unpaid mortgages after deducting for what was recouped at a home's foreclosure sale.

Homeowner attorneys interviewed by The Palm Beach Post were surprised to learn that Dyck O'Neal is filing on behalf of federal mortgage backer Fannie Mae, which has stepped up its efforts to collect back mortgage debt.

Until now, deficiency judgments were so rarely sought that many homeowners gambled the banks would never come after them -- walking away from homes they could afford but that were so underwater the investment no longer made sense.

Others had no idea what lurked years down the road, thinking that losing the house was the worst that could happen.

"The whole thing was devastating," said Palm Beach County resident Rose Weinstein, who had an Orlandocondominium foreclosed on in 2010 and a deficiency lawsuit filed against her June 29. "I had lost my job, I lost the condo and now here I am being sued by some bozo company bottom feeder."

A change in Florida law that went into effect July 1, 2013 reduced the timeline that banks and mortgage companies have to file for a deficiency judgment from five years to one year after a foreclosure is final, which is when the home is sold at auction. However, because banks mortgage companies had five years under the old law, the new law gave them until July 1 of this year to file deficiency judgments for any foreclosure finalized since July 1, 2009.

The law change, however, did not alter the 20 years that debt collectors are allowed to collect on the debt once the claim has been filed by garnishing wages, placing liens on investment properties or drawing from other assets.

While tens of thousands of South Florida borrowers whose foreclosures were finalized within the five years leading up to July 1 have now escaped the threat of a deficiency judgment, many of those who didn't have been stunned.

"People are getting served with these deficiency suits and are absolutely shocked," said Paul Baltrun, director of corporate development for the Law Office of Paul A. Krasker in West Palm Beach. "The size of the judgments -- we're not seeing $30,000 -- these are at a minimum of $100,000."

The suit against Weinstein, which was filed in Orange County, could seek as much as $170,000, her attorney at the Krasker law firm said.

Dyck O'Neal did not return a message seeking comment for this story. Fannie Mae spokesman Andrew Wilsonconfirmed Dyck O'Neal is filing the lawsuits in Dyck O'Neal's name but "at the end of the day, they are pursuing the debt for (Fannie Mae's) benefit."

Wilson said the government-sponsored entity wanted to preserve its right to collect on the deficiencies, explaining the rush to file before July 1. He said Fannie Mae is strategically pursuing former homeowners who may have walked away from their mortgage even though they had the ability to pay.

In 2011, FICO, the nation's leading credit-scoring company, announced it had developed a way to identify borrowers who could afford to pay their mortgage but chose foreclosure instead -- often as a way to stay in their homes payment-free for years as their foreclosure wended its way through the courts.

Wilson didn't want to elaborate on how Fannie was identifying former homeowners, but FICO's tool looked at factors such as spending habits, whether other debts were being paid, and housing depreciation.

"When someone had the ability to pay their mortgage, but chose not to, that caused losses to Fannie Mae that we should not have suffered," Wilson said. "We have the right to pursue those payments and try to reduce those losses."

But attorneys said they also believe some former homeowners are being pursued if their financial situation has improved since the recession, such as finding a full-time job.

"These people have started over and thought this was behind them, but it's like the night of the walking dead. It's a new nightmare coming after them," said South Florida real estate attorney Roy Oppenheim.

Not everyone who lost a home during the recession owes a deficiency. Former homeowners who went through a short sale, deed-in-lieu of foreclosure, or defended their foreclosure in court, were often able to get their deficiency judgments waived by the bank, Oppenheim said.

Homeowners facing a deficiency judgment may be able to negotiate the debt down, or could declare bankruptcy if they can prove they don't have the assets to make payments.

Attorneys who have battled the banks for years in foreclosure court, say the recent uptick in filings is just the tip of the iceberg. The new one-year timeline to file following the final judgment will act as a motivator for banks to file.

"The shorter deadline means they have a shorter time to make a decision, and I think they will err on the side of filing," said foreclosure defense attorney Michael Wasylik. "In March, no one had ever heard of Dyck O'Neal. It's definitely a phenomenon."

[helmuth_hubener]

It all depends upon the contract. Here is the lesson:

If you want to get a mortgage, be sure to get one that is non-recourse.

In a non-recourse mortgage, the lender's only method of enforcing the loan is foreclosing on the home. That means that the contract states you may default on the mortgage and walk away and that even if the property is then sold for less than you owed, you are not obligated to make up the difference. This means that you can never lose more than you actually lay out in cash. The lender understands this going into the deal, so you aren't taking advantage of the lender by walking away from the mortgage.

Taking out a mortgage that is not non-recourse is like speculating in real estate using margin. Margin is extremely risky. Watch out for that margin call. You can lose more than 100% of your initial investment! That's what's happening right now to these unfortunate creditors NACBA describes.

[osan]

This is a load of corrupt nonsense.

When you go to business school, one of the first things they teach you is that business transactions entail risk for all parties. That is the nature of doing business. It is the nature of being alive.

What this means in the case at hand is that when a bank issues a mortgage, they are assuming the risk of default. When an honest default occurs, they repossess the assets tied DIRECTLY to the note and recoup as much of the investment as possible and they eat the rest. That is the nature of the risk that the lender assumes and that risk is reflected directly in the interest rate charged on the note. This higher the risk, the higher the interest. This is typical of the marketplace.

Look to the junk bonds: super high interest rates - 30% and more, which is outrageous. The reason? You are better than 99% likely to lose the investment. But if perchance you get a hit, you make out like a bandit. Treasury bonds, OTOH, are the antithesis of the junk bond. Their risk is considered so low that the interest rates associated with them are often well under one percent.

Back to mortgages, what we see with the above captioned deficiency laws is the legitimized elimination of nearly all risk for the bankers. If after having seized the direct assets I find myself yet at loss and am able to then approach and lay claim to unrelated assets, I am basically saying that I assume zero risk in the mortgage venture in question. If that be the case, then the interest rate for such a note should be capped by law at something very much under one percent.

These bastards want to have their cake and eat it, too. Such laws should be challenged and repealed yesterday because they serve as a backdoor mechanism for excusing lenders of all risk in the face of non-fraudulent default. If the default can be demonstrated as having its core in fraud, I would say all bets are then off because the borrower can then be said to have broken faith. But in the absence of such a circumstance, the banks should be forced to shoulder their share of the risk by either repealing the offending laws or by capping interest rates to properly reflect the level of risk they assume, which is very nearly zero.

The crookedness of this system never ceases to astound me, nor nauseate.

[Brian4Liberty]

Exactly--and the Fed Gov thru Fannie Mae is behind a lot of these cases.

Probably. Didn't the government purchase all of the "bad mortgage debt" from the banksters at full face value? Now it is in their hands.

[Brian4Liberty]

Dyck O’neal, a company based out of Texas, has been filing thousands of deficiency judgment claims throughout the state and country. Since banks are well aware of the high costs in litigating claims against homeowners, most of them have chosen to act more efficiently and assign (sell) their deficiency judgment claims to third party collection companies like Dyck-O’Neal, Inc., for probably pennies on the dollar. These companies then attempt to squeeze whatever they can from homeowners in deficiency judgement actions and in many reported instances use harsh, harassing and aggressive methods to make the succumb to their demands.

And of course the government will turn them over to the vultures for pennies on the dollar...

[Dianne]

You have to keep in mind also, the banks never loaned a dime to the home purchaser. They sold the loan on wall street before it was even made, in many cases seven to ten times to different investment firms. By the time your 100,000. loan closes, the bank may have made $700,000. to $1,000,000. off your loan. Once you are foreclosed upon, they continue to pool your loan into other investor schemes. That's what all the billions of settlement dollars are for... bank racketeering and fraud. Fannie Mae aka the U.S. Government are right in the middle of the racketeering and fraud, thus the attitude of "Too Big To Jail".

[helmuth_hubener]

And of course the government will turn them over to the vultures for pennies on the dollar...

Debt collectors are not vultures. What do you think of people who incur debts and then decide to not pay them? People that is, who make solemn promises, only to later break them and rip off those who trusted them? Myself, I do not think highly of such people. People should keep their contracts. People should be honest.

Debt collectors are simply trying to get what justice can be got for the victims of such dishonesty. And indeed, the realities of the world often mean that what justice is available is only a very small amount -- "pennies on the dollar."

[phill4paul]

Debt collectors are not vultures. What do you think of people who incur debts and then decide to not pay them? People that is, who make solemn promises, only to later break them and rip off those who trusted them? Myself, I do not think highly of such people. People should keep their contracts. People should be honest.

Debt collectors are simply trying to get what justice can be got for the victims of such dishonesty. And indeed, the realities of the world often mean that what justice is available is only a very small amount -- "pennies on the dollar."

If one pays into a mortgage only to have it repossessed, through no fault of their own, what then? They were not being dishonest about the transaction. They fully intended to pay it off. The people that lost their jobs do to economic turmoil were victims. Follow the money to the perpetrators that kept them from fulfilling their financial obligations.

[Brian4Liberty]

Debt collectors are not vultures. What do you think of people who incur debts and then decide to not pay them? People that is, who make solemn promises, only to later break them and rip off those who trusted them? Myself, I do not think highly of such people. People should keep their contracts. People should be honest.

Debt collectors are simply trying to get what justice can be got for the victims of such dishonesty. And indeed, the realities of the world often mean that what justice is available is only a very small amount -- "pennies on the dollar."

Are you a debt collector or something?

Purchasing debt and harassing people is what you call "justice"? And in this case, there are many more parties involved in dishonesty than just homeowners who were foreclosed on.

[helmuth_hubener]

If one pays into a mortgage only to have it repossessed, through no fault of their own, what then?

This statement does not accord with reality. Mortgages are not repossessed. Property is repossessed. People do not have property repossessed through no fault of their own. People have property repossessed because they did not fulfill the contractual prerequisites to not having it repossessed. That is: through fault of their own.

They were not being dishonest about the transaction. They fully intended to pay it off.

Well then they were honest at that time. And then, when they chose to instead not pay it off as they promised, they were being dishonest. See definition: honest.

Now, promises are an interesting and special area of honesty. They are future-oriented. Unforeseen events can conspire to make it very difficult to keep promises. So if the creditors are making payments on the debt, continually and voluntarily trying to pay it down, then by showing their continued honoring and respect for their promise they show character and honesty. If, on the other hand they are trying to hide from, dodge, and skip out on the "vulture" debt collectors, making them use force (wage garnishment, etc.) in order to get anything, they are showing their dishonest character.

The people that lost their jobs do to economic turmoil were victims.

Yes, everyone is a victim. I would never presume to try to go up against this entrenched cultural behemoth. I didn't say anything to contradict their (nor your, nor anyone else's) treasured, sacred victimhood. I merely pointed out facts. If these victims wanted the consequences of a non-recourse mortgage, they should have signed a non-recourse mortgage. If they instead didn't want to incur hundreds of thousands of dollars of full-recourse debt that would follow them the rest of their lives, then they should not have done that.

Choices have consequences. Most of these victims were literate. Perhaps they should have chosen to read.

Just a thought, phill.

[helmuth_hubener]

Purchasing debt and harassing people is what you call "justice"?

Yes. Obviously. Absolutely. Anyone with any sense of justice whatsoever would agree with me. How would you feel if someone bought a car from you, paid half upfront, and promised the other half in a month, then did not pay?

You would maybe feel you wanted your money.

You might despair, however, of ever being able to collect it, not being specialized in such things. If a company offered you some percentage of the money in return for assigning the debt to them, you might very reasonably jump at the opportunity. Then, they can go about getting the money from the dishonest buyer.

And in this case, there are many more parties involved in dishonesty than just homeowners who were foreclosed on.

Just because little Sally jumped off a cliff / got a tattoo / robbed the convenience store, does that make it right for little Brian to do it?

[Brian4Liberty]

Yes. Obviously. Absolutely. Anyone with any sense of justice whatsoever would agree with me. How would you feel if someone bought a car from you, paid half upfront, and promised the other half in a month, then did not pay?

Nobody suggested that people not repay their debts, except for you in your straw-man.

You might despair, however, of ever being able to collect it, not being specialized in such things. If a company offered you some percentage of the money in return for assigning the debt to them, you might very reasonably jump at the opportunity. Then, they can go about getting the money from the dishonest buyer.

Yes, there are dirty jobs to be done. It is a necessary part of the ecosystem, almost akin to, shall we say, vultures.

Just because little Sally jumped off a cliff / got a tattoo / robbed the convenience store, does that make it right for little Brian to do it?

LOL. Running out of ways to instigate?

[TheCount]

It's a travesty that these people are being held to the terms of a contract that they agreed to.

[Lucille]

But hey, the "TBTF" banks are doing very well, and that's what's important here. Just ask their partners in crime known as CONgress. (BIRM)

It's a travesty that these people are being held to the terms of a contract that they agreed to.

Everyone but the bankstas. CONgress negotiated with the financial terrorists, and taxpayers and homeowners got screwed.

I'd also love to know where the banksta bailout provision is in the CONstitution.

[helmuth_hubener]

Nobody suggested that people not repay their debts, except for you in your straw-man.

Nobody suggested that anyone suggested that people not repay their debts, except for you in this straw-man I have quoted above.

Yes, there are dirty jobs to be done. It is a necessary part of the ecosystem, almost akin to, shall we say, vultures.

What I did suggest, what I explicitly stated, in fact, is that debt collectors are not vultures. This was to contradict your own belief that people collecting just and honest debts in a just and honest way are "vultures."

These debts were freely entered into. These contracts were freely and voluntarily signed. It's a honest deal. Now in my opinion it is a reckless sort of a deal these unfortunate creditors decided to get into, and that many creditors still daily decide to get into. But that is their choice. Now some of them are stewing in it, and that is indeed unfortunate for them.

Debt collection is an honorable and noble profession. When I collect a debt, my conscience affirms it as a good thing I have done. Debt collectors work to bring this messy and imperfect world we live in just a little closer to the ideal of justice.

My final point was that two wrongs don't make a right. Just because the fractional reserve banking system as it exists today is, in my opinion, a massive fraud engaging in embezzlement, does not mean that failing to keep your word is somehow right because of that. Your word is your word. A contract is a contract. Yes, the bank should not have loaned you money that was not theirs to loan. But if you took that money and promised to pay it all back -- no exceptions, no matter what real estate values did -- then you've got to pay it all back. The people hunting you down and holding you to your word are not the bad guys.

[cbc58]

They sold the loan on wall street before it was even made, in many cases seven to ten times to different investment firms. By the time your 100,000. loan closes, the bank may have made $700,000. to $1,000,000. off your loan.

That's not the way it works and this is wrong information. A bank can securitize loans and sell them into the secondary market, and then that market can package them into MBS investments , but it is "points" (percentages) in profits - not what you describe.

[Brian4Liberty]

Debt collection is an honorable and noble profession. When I collect a debt, my conscience affirms it as a good thing I have done. Debt collectors work to bring this messy and imperfect world we live in just a little closer to the ideal of justice.

We all have our opinions. It is commendable when someone conducts any legal business in an "honorable and noble" manner, regardless of the business.

[helmuth_hubener]

It is commendable when someone conducts any legal business in an "honorable and noble" manner, regardless of the business.

Ahh. Yes. Do you retract your insulting comments calling these honorable and noble debt collectors "vultures," then?

[Madison320]

If one pays into a mortgage only to have it repossessed, through no fault of their own, what then? They were not being dishonest about the transaction. They fully intended to pay it off. The people that lost their jobs do to economic turmoil were victims. Follow the money to the perpetrators that kept them from fulfilling their financial obligations.

No, you can't go there. You can't forgive a debt just because the person "intended" to pay the loan.

[Brian4Liberty]

No, you can't go there. You can't forgive a debt just because the person "intended" to pay the loan.

There is the issue of collateral forfeiture, which is very important in open, honest, and dare we say, honorable lending. As our resident debt collection expert has informed us, better be careful with the fine print in the contract.

[Madison320]

There is the issue of collateral forfeiture, which is very important in open, honest, and dare we say, honorable lending. As our resident debt collection expert has informed us, better be careful with the fine print in the contract.

Of course the bank should only be able to repossess the house and the govt should not bail out the banks. But you can't go down the "2 wrongs make a right" path. Just because the govt is bailing out banks doesn't make it right to break a contract with a bank. Also the post I responded to made it sound like it's not the borrower's fault if he loses his job because he intended to pay off the loan. Also when a bank repossesses a house it's not like the borrower is losing anything. He doesn't have a right to a house that he hasn't paid for.

[Madison320]

Ahh. Yes. Do you retract your insulting comments calling these honorable and noble debt collectors "vultures," then?

I can't believe I'm actually agreeing with you. There's always a first.

[helmuth_hubener]

I can't believe I'm actually agreeing with you.

Well, thank you. I do not believe that you actually understand much of what I write. If you did, I think you might agree. Or at least not hate me.

[tangent4ronpaul]

I'd hate to be the insurer of Mr Dyck O'Neal. He sounds like an accident waiting to happen. Scumbag!

-t

[PRB]

Wow. People thought they could walk away by letting the bank repossess the property. Looks like it will be coming back to haunt people (well, average people, not the crony banksters who can steal trillions and get away with it).

is this a new law or just not known or rarely enforced in the past?

can't they still walk away if they discharge it with bankruptcy?

[helmuth_hubener]

Just to clarify: I did not intend to be taking the side of the bankers in this matter, and I am sorry if it has come off that way. I think that fractional reserve banking is horrible and leads to disastrous consequences that reverberate throughout society. The whole system is a mess. The system is the problem, and not the poor people who took out mortgages on homes they couldn't afford and then ended up not being able to keep up on.

Also not the problem are the contractor specialists hired to collect the debts. They're just doing their job. The debts they're collecting are valid. It is unfair to disparage them.

I gave the only productive, practical advice in the thread for avoiding ever being in this situation yourself. I hope that it will be useful to some people here, and that no one from RPF will ever find themselves trapped in such a lamentable situation. If my proactive and positive approach seems "obnoxious" to moderators like Brian and makes them hate me, so be it. They can just ignore me, please, and bellyache impotently to each other 'til the cows come home.

Or don't come home.

Either way, they'll probably whine about 'them dirty cows,' and offer no solution. Me, I'll just pick up a lasso.