By Christine Springer
Today, I'm talking about Sam Sanchez and his $100,000 principal reduction.
I met Sam Sanchez when I went to buy a car. While we were waiting for an answer from the finance department, we talked about my work. He then oh-so-casually mentioned that he was in a Chapter 13 and the bank had filed a Motion to Lift Stay.
My ears perked up. What?
I had been thinking a lot then about Chapter 13 adversary proceedings, simply because Barbara Forde was having trouble getting any traction for borrowers in state courts.
I asked him what he wanted to do with the home. (That is usually the first question I ask homeowners when they contact me for help.) He said he wanted to keep the home because his wife loved it, and she worked very hard to keep it beautiful for their family.
I called Barbara Forde from the dealership to ask her if she was interested in taking on an adversary proceeding case.
I had been wanting an opportunity to work on a Chapter 13 case to see if we could get better outcomes for homeowners.
Here is why I love the adversary proceeding for foreclosure defense:
1) During the recession, many people had a lot of unsustainable debt because of the economy. Many had experienced a job loss, medical bills or another financial hardship that made it difficult to pay their bills.
2) Bankruptcy courts were already used to dealing with people who cannot pay their debts. I thought there was a very good possibility that the bias against "deadbeat homeowners" wouldn't be an issue in bankruptcy court.
3) At that time, Barbara was having difficulty getting traction from state courts on foreclosure defense cases.
4) My audit process did not have to change to find evidence for a bankruptcy proceeding. Essentially, an adversary is positioned similarly to a lawsuit in state court. And, frequently I found even more evidence that was proffered by the bank's lawyers in the bankruptcy that gave us even more leverage for the homeowner.
5) There weren't any helpful cases for homeowners in Arizona, so finding another way besides filing a lawsuit in state court was paramount. It really wasn't until the Steinberger case decision in 2014 that we saw things shifting more fairly toward homeowners.
I looked at Sam's loan paperwork, the recorded documents, and the bankruptcy paperwork, and found a lot of good factual evidence that Barbara could use to build a legal case.
Barbara represented Sam and I did the paralegal work. Barbara went on to negotiate a $100,000 principal reduction for Mr. Sanchez, no trial necessary.
This was a huge win for us, because it was still near-impossible at that time to get the courts to side with borrowers.
Here is the Sanchez Stipulated Order for Modification of First Deed of Trust and Note:
Christine Springer is not an attorney and this post is not intended to be legal advice.