Universities and Student Loan Companies Want You to be The Biggest Loser

President Obama announced changes to student loan laws this week. It's not enough, but it's a welcome start in an area that is one of the biggest scams in the country. And it's a scam largely perpetrated by our institutions of higher learning (which I'll just call "Universities," but I also mean colleges, vo-tech schools, etc).

Here's how the Student Loan Scam works. UM (which stands for "University of Money") needs more money. They want to pay faculty more, put on more fancy dinners for visiting scholars, build a house for thier president, and start a campus in El Salvadore. So, UM can do one of two things: (1) budget efficiently to afford these things, or (2) raise tuition.

 Well, UM knows that student loan money is the easiest dollar to get. Students can sneeze on a student loan application and get tens of thousands of dollars in loan money. There is no thought as to how the fine art major will repay $80,000. The loans come fast and furious, and they're not just for tuition. Need a housing loan? Here's an extra $15,000. Need a summer loan? Here's $5,000. Need a loan to take bar exams or medical licensing or similar exams? Here's another $10,000.

Everyone feeds off this easy money. Local housing raises rents. The campus bookstore increases textbook prices. The exam review courses raise their rates. You get the idea.

So, UM decides it's much easier just to raise tuition. There is absolutely no motivation for UM to trim its budget or act with any semblance of fiscal responsibility at all. If they need more, they know the students can get it, so they charge more.

And the increasing price of tuition has beared out that this is exactly what is happening. Tuition hasn't raised with inflation. If inflation raised at the same rate of tuition, a loaf of bread would cost $25. Tuition has increased at it's own exorbitant rate.

So student debtor (who we'll just call "debtor," because she won't be a student forever, but will be a debtor forever), takes out more, because that's what it takes to afford going to UM.

Who loses in this equation?

The University? Not the University (or faculty, or bookstore, etc)--they got their tuition money, and lots of it.

The Student Loan Company? No way. The laws are designed to make sure they get paid--they have powers than none of your other creditors have. They can garnish your wages without a court order and without even suing you. They can tack on 23% interest overnight if they want to. Some professions may even bar you from being licensed if you're in default on student loans. Student loans are also completely and totally immune from, and nondischargeable in, bankruptcy. And before you start with the "well that's government money, we need to make sure the taxpayers don't get fleeced" talk, the protections also apply, for no apparent reason, to private lenders as well.

The Poor, Downtrodden, Children, or Society? Not really. If you amassed huge debt be a teacher, you're still gonna teach. Social workers are still gonna be social workers. In fact, saddled with student loan debt, you're probably more likely to take any job you can, no matter what the salary, making you good cheap labor for businesses.

Student Loan Debtors? Bingo. You're gonna pay no matter what. You have no recourse. You are, as they say, "The Biggest Loser" here.

Remember that student loans aren't just for doctors and lawyers--the trucker, the IT specialist, or the guidance counselor all, among many others, are professions that incur debt.

It's time to end this student loan scam once and for all. I would urge you to push your congressman for student loan reform. Many proposals are being suggested, including allowing debtors to discharge private student loans in bankruptcy. It's time something be done to even the bar, as more and more, students are continuing victoms of this scam, perpetrated by our universities and the student loan companies themselves.

Questions? Call us today at 954 987-0515 or http://www.weaverlegalgroup.com/.

Whats this about new HARP refinance changes?

Much has been made in the news recently about new changes to the HARP (Home Affordable Refinance Program) program that is supposedly going to help homeowners. Although the changes may be helpful to some, there are a few things you should know before you jump on board.

First, the program is a refinance of what you currently owe--not what your property is worth. In other words, if you're underwater now, you'll be underwater after the refinance. It doesn't reduce the amount you owe.

Certainly, if you have an insanely high interest rate, and refinancing through the program will lower your payment dramatically, then it may be a benefit. But if the payment is at or near the same, you're just replacing one loan with another.

The big concern is that by refinancing, you may lose valuable defenses should you ever go into foreclosure. Right now, your loan may have been bought, sold, assigned, securitized, and sold as an investment on Wall Street. That provides you a number of defenses to foreclosure, if you end up there. But if you refinance, and then default afterward, you've lost those defenses. You've now got a foreclosure that's much tougher to defend.

Before you jump on board with refinancing your loan with another loan of the same value and losing all your foreclosure defenses (enticing, isn't it), you should make sure you're eligible. Your loan needs to be owned by Fannie Mae or Freddie Mac. And--and this  is the good part--you need to be current on your mortgage payments. So if you're already in foreclosure, this option isn't for you anyway.

What you want to look for are any changes in HAMP (Home Affordable Modification Program). That's the modification program for borrowers who are in default on their loans, and which guarantees to lower your mortgage payment (if you qualify, of course).

Question? Call us at (954) 987-0515 or http://www.weaverlegalgroup.com/.

Should you pay the HOA/Condo Association?

One question I often get is this:

"I'm in foreclosure. Not sure I'm keeping the house. Should I keep paying the Homeowner's Association (or Condominium Association, which, for the purposes of this post, I'll just call the HOA)?"

I advise that you do pay your HOA if possible. HOAs can be nasty, even when you're in foreclosure, and they're not an enemy you want to deal with.

You've probably noticed that in your foreclosure case, the HOA is named as a defendant with you. As a defendant, the HOA has a right to participate in your foreclosure case. And when HOAs don't get paid, their main goal in your foreclosure case is to get your house sold, ASAP, so that they can get an owner of the property that does pay the HOA.

Take this example: A lawyer friend of mine is working on a modification for a client. The bank seems to be in agreement on the mod. Problem is, a foreclosure sale date is coming up. Luckily, the bank actually agrees that they will cancel the foreclosure sale, to give the homeowner more time to complete the modification. So bank agrees, attorney agrees, and all is fine, right?

Not so fast. On the day of the hearing to cancel the sale, guess who shows up? The HOA. And they want the house sold. They convince the judge to sell it. Result: Homeowner loses his home and the modification, even though he and the bank were in agreement...all because the HOA wasn't getting paid.

Also remember that if you're renting your property, the law now allows an HOA to compel your tenant to pay rent to it, instead of you.

And remember, you don't know what the future holds. Let's say you don't want the house (or can't afford it) today, so you stop paying the mortgage and your HOA dues....well, 8 months later, you get a better job, or you just change your mind. You want to keep the house. You try for, and get a modification. Congratulations! .....Except all this time, you haven't been paying the HOA. So now, they foreclose on thier HOA lien, and you lose the property anyway. And when it comes to dealing with foreclosures, HOAs are much more difficult to defeat in court than banks.

So, given you don't know what the future holds, I'd strongly suggest you pay the HOA. They're just not an enemy that you want to have, and being current with them and keeping them off your back, can get you more time in your home, and a better chance at keeping your home if you modify your mortgage loan.

Call us today for more info at (954) 987-0515 or check us out at http://www.weaverlegalgroup.com/.

Why Banks Don't Modify Loans

So the other day, a friend says to me:

"I don't understand. My house is $100K upside down, but the bank would rather foreclose, then modify my loan. I want to pay. They won't let me. They'd rather foreclose, where nobody's gonna buy the house, the bank will have to buy it and hold it, and they'll never get a penny from me because I aint got nuthin'".

My answer to him was that banks just don't do what's in their own financial interest. If they did, they wouldn't have needed 12 billion dollars from Congress in 2008 or whatever it was. You can't use common sense business principles with banks.

But there's a real question here, as to why banks don't modify loans, and why they'd rather foreclose than modify. There are a few possible answers.

#1 - Default/Foreclosure Insurance - Many loans are insured, and banks receive the full value of the loan on foreclosure. If a loan holder can get full value from insurance, why putz around with a borrower that may or may not be able to afford a modified payment amount?

#2 - Your Servicer Benefits From Foreclosure - In foreclosure-world, there's the party that owns the loan, and then there's your servicer. The servicer is like a manager--they collect your payments, calculate what you owe, send you notices, handle escrow payments, and, if needed, handle the foreclosure process.

In foreclosure, servicers get more money, because there's more work involved. And then there are fees that are made off of appraisals, inspections, and other items made necessary by the foreclosure. The servicer is in no rush to end this gravy train. It's like saying that you'll get $50 to mow the grass, but if the grass gets to be 2 feet high, you'll get $100. So...you'd naturally only mow the grass when it gets to be 2 feet high. When you get more money when things go bad, there's no incentive to make them better. As you can see, what's in your servicer's financial interest is not what's in the bank's financial interest.

The problem is that it's usually the servicer that makes the decision to modify your loan or not. See the conflict of interest here? Why get a loan out of foreclosure, when the servicer can let it drag on, and make more money?

#3 - Investor Guidelines - As I'll talk about in another post, many loans were included in loan pools, sliced and diced in the investment market, and invested in by investors. There's no one "owner" of your loan, so there's no one person that can make a decision on modification. There are only investors, who agreed to certain guidelines, and those guidelines often don't mention how or when to modify loans--after all, the investments were made years before the foreclosure crisis ever happened. The Plaintiff in your foreclosure case, is governed by those guidelines....and their hands are tied by those guidelines.

#4 - Tax Reasons - Foreclosures are losses for the bank. Those losses provide a tax benefit. This is one reason why many banks will foreclose, but then delay the foreclosure sale. They get the benefit of showing the loss on their books without actually having the property in their name.

Despite all this...I'm proud to say Weaver Legal Group gets some good results on our loan modifications. There are definitely tricks to the trade that can improve your odds. Come see us to talk about your situation. Call us for a free consultation, (954) 987-0515.

Two New Cases Give More Help to Homeowners

Recently, two new cases have provided some extra ammo for foreclosure defense attorneys.

In a case called Glarum v. LaSalle Bank, an appellate court has ruled that the affidavits banks have used for years, are legally insufficient to support foreclosure.

WHAT IT MEANS: To get foreclosure, at some point in the process, the banks will file an Affidavit of Indebtedness--essentially a verified document where someone from the bank swears under oath that the homeowner owes X dollars and that the bank owns the loan. The catch is that the person swearing to this in the affidavit, usually doesn't have personal knowledge of the information in the affidavit. They usually provide the information based upon reviewing a computer screen with information. But they don't actually have the loan paperwork in front of them, nor have they personally reviewed the paperwork, nor are they even responsible for keeping and maintaining the paperwork, as is required to prevent the affidavit from being hearsay. The Glarum case ruled that this was insufficient to constitute "personal knowledge" and that an affidavit in such cases, was hearsay.

This is a huge blow for banks. Many affidavits filed in foreclosure cases are now invalid, and for future cases, banks are going to have to file affidavits with much more stringent standards, that they may not legally even be able to meet. It means that a good foreclosure defense attorney needs to review these affidavits with an old toothbrush (whatever that means) to point out flaws. If done properly, it's an incredible defense against foreclosures.

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In the case Feltus v US Bank, the Court ruled that a bank can't submit a different note after having filed a note attached to the Complaint.

WHAT IT MEANS: In 90% of our cases, the bank will attach a promissory note to the Complaint. Yet, after filing the Complaint, the bank will file "the same" promissory note in the court file, a second time. The problem is that the second note--which is supposed to be the same as the first--isn't the same. Many times that second note suddenly has new endorsements and signatures on it, which allows the bank to foreclose. The Felton case means that the bank can no longer do this. The note attached to the Complaint is the note in the case, period. The only option is for the bank to amend the Complaint with the new note.

This could lead to many cases getting dismissed, or otherwise, forcing the bank to amend their complaints. In the hands of a good foreclosure lawyer, the Felton case can open a huge array of new defenses.

JW quoted in article about former Broward Chief Judge

Even though it's kind of old news, it's still worth noting for those of you who missed it, as a display of how corrupt things had become in Broward's foreclosure-world.

For about a year, Chief Judge Victor Tobin was the Chief Judge in Broward County. He reigned during the height of the biggest foreclosure crisis in Broward's (and the state's and country's) history. As Chief Judge, he dictated policy in the circuit, directed how tens of thousands of foreclosure cases would be handled, and was generally the figurehead of the Broward Judiciary.

During his time, he was hardly a friend of homeowners. Judge Tobin refused to adopt any mandatory mediation program until he absolutely had to, as dictated by the Supreme Court (Miami and Palm Beach had mediation programs long before Broward). He instituted administrative orders making it harder for homeowners to get foreclosure sales cancelled. He started a "rocket docket," a system where hundreds of foreclosures a day are heard one after the other, with little attention to the details of each case, and which routinely trampled upon the due process rights of homeowners.

Well, just this year, Judge Tobin left the judiciary, and went into private practice. With whom, you may ask?

How about Marshall Watson, one of the biggest foreclosure firms in the state.

It has to make you wonder how close Judge Tobin was with Marshall Watson while he was Chief Judge, and how his relationship may have clouded his decisionmaking as Chief Judge. I would imagine that for Judge Tobin to be working at Marshall Watson, he would do what any job-seeker would. He would need to talk to the higher-ups at the firm, maybe have a lunch or two, negotiate salary, etc etc. And the logical conclusion was that he was doing all this, while he was also the supposedly impartial Chief Judge of the County, implementing those homeowner-unfriendly decisions.

Had Judge Tobin been more even handed in his treatment of foreclosure-related matters, maybe this wouldn't be an issue. But he wasn't. So it is. And regardless of any actual impropriety, the whole thing just looks bad. The judge presiding over Broward during the largest foreclosure crisis in history goes to the largest foreclosure firm the day after he leaves. It just looks like it stinks.

The New Times wrote about this story, and I was quoted. It can be found here:
http://blogs.browardpalmbeach.com/pulp/2011/05/victor_tobin_marshall_c_watson.php

(I should note that since July 2011, the new Chief Judge Peter Weinstein has somewhat righted the ship, and so far appears to be a very fair and even handed Chief Judge. Even though he rarely personally presides over foreclosure cases, his appointment of Judge Garcia-Wood to the foreclosure division has been a step in the right direction.)